TIDMCAMK
RNS Number : 1331L
Camkids Group PLC
23 April 2015
23 April 2015
Camkids Group plc
("Camkids" or the "Group")
Final results
Camkids Group plc (AIM: CAMK), a leading designer, manufacturer
and distributor of branded outdoor clothing, footwear and equipment
for children and teenagers in China, today announces its final
results for the year ended 31 December 2014.
Highlights
-- Group revenues decreased marginally by 6% to RMB1,016 million (2013: RMB1,083 million)
-- Gross profit decreased marginally by 6% to RMB376 million (2013: RMB402 million)
-- Gross margin was maintained at 37%
-- EBIT* decreased by RMB68.9 million to RMB235.2 million (2013: RMB304.1 million)
-- Net profit after tax decreased by RMB52.5 million to RMB173.7
million resulting in a margin of 17.1% (2013: 20.9%)
-- Footwear business revenues increased to RMB345 million (2013: RMB337 million)
-- Camkids remains cash generative with year-end net cash of
RMB401 million (2013: RMB313 million)
-- Total number of stores increased to 1,398 at 31 December 2014 (31 December 2013: 1,285)
-- Growing middle classes in China's second and third tier
cities expected by the Directors to be the new drivers of the
domestic retail market
-- Change of Government policy leads to the Company expecting a
baby boom that may last for five to eight years. Camkids has
therefore introduced a new range of products designed for children
aged 2 and older
*Earnings before interest and taxation ("EBIT") is a non IFRS
measure which the Group uses to assess its performance. It is
defined as earnings before interest and taxation.
The illustrative average exchange rate for the year 2014 is 1
GBP : 10.1219 RMB.
Commenting on the final results, Zhang Congming, Executive
Chairman of Camkids, said: "We are pleased with our performance
during 2014 in what remains a challenging time in China. During the
year ahead we expect the industry to continue to consolidate and
the larger players to gain market share at the expense of the
smaller operators and we hope to be able to take advantage of
this.
"In the first two months of the current year sales were down 5%
and the order book for this year's Spring/Summer collection is down
38% on last year. The Board expects this trend to continue into the
second half of 2015. As a result, our previously announced review
of our projected cost base for 2015 and beyond has resulted in the
Board taking the decision to delay the planned construction of its
new plant. Instead, we will focus our production on the most
productive manufacturing lines and adjust our work force
accordingly. We will continue to review our cost base in light of
the difficult market.
"Camkids remains committed to increasing its advertising and
marketing efforts and the Board remains confident in the Camkids'
product portfolio and is optimistic about the Group's medium-term
prospects."
-Ends-
For further information:
Camkids Group plc
Zhang Congming, Executive Chairman
Ng Pei Eng, Chief Financial Officer +44 (0) 20 7653 9850
Allenby Capital Limited
Alex Price / James Reeve / Nick
Athanas +44 (0) 20 3328 5656
Newgate
Adam Lloyd / Robyn McConnachie
/ Jasper Randall +44 (0) 207 653 9850
Notes to editors
Camkids is a leading Chinese designer, manufacturer and
distributor of branded outdoor clothing, footwear and equipment for
children and teenagers.
Based in Fujian province in China, the Group focuses on
children's sportswear for outdoor activities, combining
functionality and innovation. The products are mid-range price
based, targeting mid and high range markets within China.
The three main product areas are:
-- Camkids outdoor clothing - all weather jackets, waterproof
trousers, shirts, tops and T-shirts, woollen sweaters, jeans,
trousers shorts and skirts
-- Camkids footwear - hiking boots, outdoor leisure footwear, flip-flops, sandals and boots
-- Camkids equipment and accessories - telescopes, backpacks,
technical packs, tents, sleeping bags, headgear, caps, kettles,
headlights and torches.
The Group designs its entire product range and manufactures the
majority of its footwear. Outdoor apparel and accessories are
currently manufactured by third party OEMs.
Camkids' primary route to market for the sale of its products is
through its network of distributors. The Group has established an
extensive distribution network across 29 provinces, 4
municipalities and 5 autonomous regions within the PRC and is
successfully expanding its presence in tier 3 and tier 4 cities.
The Group has 17 authorised distributors operating over 1,389
franchised retail outlets, and is in the early stages of developing
an online e-commerce platform to target online retail.
Camkids has received a number of prestigious awards. In January
2014, the Group was recognised by Asia Brand Association as the Top
Brand in China for 2013 and one of the top ten Industry Customer
Satisfaction Brand's. The Group's Chairman also received one of
Brand China's 'People of the Year' awards.
For more information please visit www.camkids-ir.com
Executive Chairman's statement
Overview
Trading conditions in 2014 have been challenging for all market
participants and, in view of this, we are pleased that we have only
suffered a marginal decline in both our revenue and profit figures.
Importantly, we have been able to keep our average receivable days
at approximately 149 days in FY2014 -and have seen a reduction in
our receivables in absolute terms.
We have seen a number of factors that have resulted in the
cancellation and postponement of sales orders, in particular the
reduced growth of the Chinese economy and the Chinese Government's
on-going anti-corruption and frugality campaigns which have had an
impact on overall consumption trends. Gift giving cash equivalent
vouchers that can be used in department stores was once an
important part of Chinese culture. Today, official policy forbids
gift giving as it can be considered bribery. Such curtailment has
had repercussions across a large number of consumer products.
Against the backdrop of slower sales growth in a competitive retail
market, major international brands are offering greater discounts
and/or adjusting their price points in order to attract more sales
from increasingly cost conscious consumers. Nevertheless, we are
pleased that we were able to maintain our gross margins at 37%
(2013: 37%). The increasing competition we are seeing as more
players, both domestic and international, enter the market is also
transferring across from the adult market into the children's
segment.
On a mid-to-long terms basis the Directors believe that the
growing middle classes in China's second and third tier cities will
be the new drivers of the domestic retail market. The Chinese
middle classes are willing to spend more time and money on their
recreation activities and tourism and the Company expects this to
be a driver for growth in the long term.
The number of Camkids stores has increased to 1,398 by end of
2014 compared with 1,285 at the end of 2013. However, given the
current short-term trading environment, our distributors are
currently reviewing the situation and we expect that they will be
consolidating some of their stores.
At the Autumn/Winter 2015 sales fair, held in Jinjiang in
January 2015, we launched a new brand ambassador to promote our
products and to associate our brands with a healthy active
lifestyle. Camkids has created a family of four cartoon camels that
are adventurous and love outdoor activities, to encourage children
to pursue a healthy active lifestyle in line with the Company's
brand values.
New product range for young children from 2 years old
upwards
The Third Plenary Session of the 18(th) Communist Party of China
Central Committee in November 2013 decided to relax China's family
planning policy by allowing couples to have a second child if one
of the parents is the only child in his or her family. According to
the School of Sociology and Population Studies of Renmin University
of China, approximately 90 million babies would be born if all
these couples had a second child. The Chinese Government is
anticipating at least one million more babies to be born in 2015
than in 2014 as a result of this significant policy change. With
the prospect of the family planning policy being eased still
further in the future the Company expects a baby boom that may last
for five to eight years. As a consequence, Camkids sees the
introduction a new range of products designed for children aged 2
and older as an important development to ensure the sustained long
term growth potential of the Company.
New product range - cycling
In September 2014 the Chinese Government unveiled plans to
accelerate the development of sports to promote "all kinds of
sporting resources" and required State-owned sports venues to
become more accessible to the public. The Group believes more
people will take up outdoor activities as they adopt healthy
lifestyles in response to the Government initiative. Calls by the
Chinese Government to protect the environment have led the Company
to believe that this will lead to consumers adopting less-polluting
lifestyles, such as cycling.
Financial results
As previously reported, the market in which the Company operates
has become more challenging with sales and profits in 2014 both
affected. Revenue for the year decreased marginally by 6% to
RMB1,016 million (2013: RMB1,083 million) with gross profit at a
similar level of 6% to RMB376 million (2013: RMB402 million). The
Company's gross profit margin for the year remained roughly stable
at 37% and Camkids continues to be cash generative with a cash
position at the year-end of RMB401 million (2013: RMB313
million).
Despite the difficult trading conditions experienced throughout
the year, the Camkids footwear business has continued to perform
well, with sales and profits slightly ahead of the prior
period.
Clothing business
The Group's clothing business offers a wide range of outdoor
clothing, such as waterproof jackets and trousers, ski jackets,
shirts and t-shirts. Revenue in this division decreased marginally
by 6% to RMB589 million (2013: RMB625 million). Camkids outsources
the manufacturing of its clothing to third party OEMs and due to
the Company's scale and strong relationship with the contract
manufacturers we continue to have strong pricing power.
Footwear business
As announced in September 2013, the Group has ceased
manufacturing OEM orders as part of its strategy to focus on the
higher margin Camkids' branded products. Revenue in this division
increased to RMB345 million (2013: RMB337 million), representing
34% of Group revenue.
Equipment and accessories business
Camkids sub-contracts all of the manufacturing of its equipment
and accessories, which include caps, torches, socks and sleeping
bags, to third parties. This business contributed sales of RMB82.4
million (2013: RMB91.9 million) representing 8.1% of Group revenue
during the period. Gross profit was RMB36.1 million (2013: RMB40.5
million), generating a gross profit margin at 43.8% (2013: 44.1%)
which is higher than the average for the Group.
Product development
The emphasis of our R&D effort is to enhance the quality of
our products and reinforce the credibility of the Camkids brands.
The Group's ability to satisfy the consumer's preference for
fashion, style and value for money is an essential factor in the
continued success of the business. We have invested heavily in
testing equipment to ensure the materials used in our products are
safe, comfortable, durable and suitable for children. We have also
worked extensively with independent design firms to increase our
product development capabilities and ensure the Group's product
portfolio stays ahead of market trends and fashions.
Marketing and branding
With the expansion of the middle classes, Chinese consumers are
now more educated, fashion conscious and active on social media.
Marketing spend has increased during the period, largely as a
result of the number of events the Group has sponsored in order to
raise the profile of the Camkids brand. These activities include
the launching of a charity campaign for the collection of old
children's clothing and shoes for re-use in less affluent parts of
the country, the sponsorship of university students cycling to
Tibet and sponsorship of the National floorball team. These
campaigns form part of the Group's corporate social responsibility
strategy which were publicised through the media by newspaper, TV
and internet. These activities, along with other events in various
provinces, have helped to secure the position of the Camkids brand
in the market. To enhance its brand image in China, the group has
changed all the logos in the stores to include a mountain peak, a
trademark owned by the Group. This logo suits a more outdoor
inspired image for the Group's brands and compliments Camkids'
established image of the camel.
During the year the Company participated in several
international trade shows (such as Beijing ISPO 2014, Asia Outdoor
Trade Show in Nanjiang and the Jinjiang Shoes Trade show) to
showcase the Group's new and innovative products and distinguish
the Camkids brand from its competitors.
The Group has also invested in the ongoing training of our
distributors retail staff to enhance their sales skills and product
knowledge. This programme of constant improvement is vital as
customers are now demanding much higher levels of customer
service.
Awards
During the year the success of the Group, its management and
employees has been recognised by numerous awards:
-- The China Top Sales of Teenager Outdoor Sport Footwear Award
2013 - China Industrial Information Issuing Center. This is the
3(rd) year running Camkids has received this award.
-- Top 500 Asia Brands, September 2014 - 9(th) Asia Brand Ceremony
-- The Most Competitive Brand Leader in China Children and
Teenager Outdoor Sport Equipment -The 10(th) China Corporate
Integrity & Competiveness Forum Summit 2014
-- China Shoe Industry's Most Influential Brand - Shoes hc360.com
-- 2014 Jinjiang Top 10 Business Man - awarded to Mr. Hong Qinming
-- Jinjiang Industry Special Contribution Award of the Year - awarded to Mr. Zhang Congming
E-commerce
As previously announced, the Group has identified e-commerce as
a source of significant growth for the business as more Chinese
consumers do their shopping on-line via their smartphones and other
internet enabled devices.
In November 2014 Camkids reported that online sales from its
Chinese Double 11 day, a national online shopping carnival which
took place on 11 November 2014, were encouraging with Camkids being
ranked 3(rd) in the children's outdoor sales after Anta and Nike
Kids. Double 11 day draws in millions of Chinese shoppers looking
for discounts, who typically spend significant sums on China's
e-commerce sites during that one day of discounts. Whilst still in
its infancy, the Board is confident that its online business has
significant growth potential.
A draft of China's first e-commerce law will be completed by end
of 2015 to include provisions for an honest trade environment, the
quality of goods and services, protection of consumers' interests
and intellectual property rights. As a consequence the e-commerce
platform service providers are now more stringent in their criteria
on the selection of on-line merchants and the partnerships we
signed with Taobao and JD.com are important for Camkids in ensuring
the integrity of our on-line offer.
The increasingly regulated environment for on-line transactions
is good news for Camkids as it will ensure that only good quality
and reliable brands are sold on-line.
Production
Following the Group's review of planned costs for 2015, the
Board has decided to discontinue use of older, less productive
machinery which will result in the laying off of about 170 jobs.
Plans for the construction of new plant will be deferred until
there are signs of a pick-up in sales orders. As part of the cost
cutting measures, the Board has also engaged a professional team to
review the Group's production processes looking at efficiency and
productivity. The Board anticipates that this extensive review will
lead to initiatives that will cut wastage, improve productivity,
achieve better profit margins and improve Camkids' competitiveness
in the market.
Outlook
The Board expects that trading conditions in 2015 will continue
to be challenging. The industry is expected to continue to
consolidate and the larger players with the financial resources to
invest in branding and product development will continue to gain
market share. As a result, Camkids is committed to increasing its
advertising and marketing efforts to include campaigns on TV and in
the media. The Group will also maintain its focus on R&D to
design new, innovative and functional products.
Revenues for the first two months of 2015 were approximately RMB
156m (unaudited), some 4.9% down on the RMB 164m generated in the
first two months of 2014. The Group's original order book for its
spring/summer collection 2015 (H1:2015) was RMB 378m, some 13% down
on the H1:2014 order book. However, the difficult trading
conditions within China at the current time have resulted in
cancellations of orders. Added to this, increased price pressure
and competitiveness from international brands has necessitated
price reductions of between 5% and 12% across the Group's brands
with effect from 1 April 2015. This has resulted in the final order
book standing at RMB 269m, 38% down on the H1:2014 order book. The
Directors anticipate that a similar trend will be experienced for
the Group's H2:2015 order book. The Board continues to review the
Group's cost base in 2015. Further announcements will be made at
the appropriate time.
In light of the challenging market conditions the Company is
anticipating, the Board of Camkids has decided not to propose a
final dividend. The Directors believe that it is in the best
interests of the Company to conserve its cash during this period
and have adopted a conservative approach to cash management. As
part of this, all of the Company's Directors, supervisory level and
above employees have agreed to reductions in their salaries. The
Board recognises the importance of a dividend to its shareholders
and intends to resume the payment of a regular dividend as and when
market conditions improve.
Zhang Congming
Executive Chairman
23 April 2015
Financial Review
Basis of reporting
The Group financial statements in this report have been prepared
in accordance with International Financial Reporting Standards
("IFRS"), as adopted by the EU, together with the associated
International Financial Reporting Interpretation Council ("IFRIC")
interpretations and those parts of the Companies (Jersey) Law 1991
applicable to entities reporting under IFRS.
Accounting policies
The Group has reviewed its accounting policies in accordance
with IAS 8 and determined that they are appropriate for the Group.
These have been consistently applied.
Results overview
Operating Results
Revenue has decreased by 6.2% to RMB1,016 million (2013:
RMB1,083 million) resulting in a gross profit of RMB375.8 million
(2013: RMB401.6 million) and profit before tax decreased by 21.7%
to RMB238.5 million (2013: RMB304.7 million).
The decrease in revenue is as a result of Group's distributors
adopting a cautious approach given the macro-economic backdrop in
China and the reduction in consumer spending. Certain of the
Group's distributors requested the postponement or cancellation of
some orders, totalling RMB79 million. The R&D department
continued to design new innovative and highly technical products
and introduced a new product range to include cycling clothing. The
Chinese government is relaxing its one-child policy, allowing
couples to have a second child to ease the rapidly ageing society.
The Group believed this a growth potential and has expanded the
product age group to include younger children from 2 years old
onwards. The Group has 17 distributors and together they operated
1,398 Camkids stores in China as at 31 December 2014.
Breakdown by products group for FY2014 and FY2013
FY2014 FY 2013
Product group Per cent. Average Per cent. Average
of Group gross profit of Group gross
total margin total revenue profit
revenue margin
------------- -------------- --------------- --------
Camkids clothing 57.9% 35.9% 57.7% 36.3%
Camkids footwear 33.9% 37.3% 31.1% 37.8%
Camkids accessories 8.1% 43.8% 8.5% 44.1%
OEM and ODM footwear - - 2.7% 23.3%
------------- -------------- --------------- --------
100.0% 37.0% 100.0% 37.1%
------------- -------------- --------------- --------
The Group's top five distributors contributed 40.7% of total
revenue for FY2014 (2013: 49.5%).
Expenses
Selling and distribution expenses increased by 78.4% to RMB91.0
million (2013: RMB51.0 million), approximately 9.0% of the Group's
total annual revenue (2013: 4.7%). This is mainly attributable to
increased advertising and renovation subsidy fees for the new
retail shops and renovation of existing shops. During the period,
the Group has changed its logos in all the retail stores to include
mountain peak, which is a trademark registered by the Group.
Camkids has sponsored the Jinjiang Cycling Championship, organised
events like "Bring the Children Out" and "Winter Care". These
events encouraged parents to spend time with their children
enjoying outdoor activities like hiking and cycling. In the Winter
Care event, the Group set up collection booth in shopping malls to
collect recycled clothing and shoes for children living in mountain
region area. This event was broadcast by Hunan Satellite TV
station. E-commerce is growing rapidly with more Chinese shopping
online via desktop and mobile devices, the Group has increased its
online advertising on Taobao and JD.com and participated in Chinese
Double 11 day, the country's national online shopping day. Camkids
ranked 3(rd) in children's outdoor sales after Anta and Nike Kids.
During the period, the Group opened 233 new retail shops and
renovated 292 existing stores. Every year our distributors will
access the performance of their stores and in 2014 they have closed
about 120 stores due to reasons like relocation of stores, expiry
of the store tenancy agreement and unsatisfactory performance of
the store.
Administrative expenses have increased to RMB49.6 million from
RMB46.6 million, mainly caused by R&D expenses and Trade shows
expenses. The Group believes an increased design capacity is vital
in enabling the Group to continue to create a diversified product
portfolio and quality products. R&D expenses include salary
increment required for staff retention and external design
consultancy fees to increase its capabilities. The Group has
participated in 3 international trade shows, ISPO Beijing 2014
(which was attended by Allenby Capital Limited, the Group's
nominated adviser and broker), Asia Outdoor Trade show in Nanjiang
and Jinjiang Shoes Trade show to further enhance its brand and
product appeal, distinguishing its brand from its competitors.
The Group's profit before tax decreased by 21.7% to RMB238.5
million, reflecting the reduction in revenue and the increase in
expenses. This resulted in an operating profit before tax margin of
23.5% (2013: 28.1%). Camkids will continue to design and develop
more innovative and high quality products that appeal to the
consumer preference on styles and fashion.
Taxation
Camkids' PRC operating subsidiary is subjected to the income tax
rate of 25%, which is in accordance with PRC Enterprise Income Tax
Law that came into effect on 1 January 2008. The Group's net profit
after tax decreased by RMB52.5 million to RMB173.7 million
resulting in a net profit margin of 17.1% (2013: 20.9%) which is in
line with the Group's decreased revenue and gross profit.
Balance sheet
Camkids maintained its strong balance sheet with a net cash
position of RMB401.5 million (2013: RMB313.4 million).
Net assets at 31 December 2014 were RMB867.9 million, increased
from RMB711.9 million last year. This is mainly attributable to the
net profit recorded in the year. Trade receivables decreased by
RMB74.6 million which is in line with the decrease in Camkids
revenues. The Group's current payment terms are 120 days and all
the debts are within the credit terms and there are no bad debts
during the period. The average receivable days remain stable at
approximately 149 days in FY2014. (FY2013:140 days).
Earnings per share
The earnings per share (basic and diluted) for FY2014 based on
the weighted average number of ordinary shares outstanding for the
year ended 31 December 2014 of 76.2 million is approximately 22.5
pence. The exchange rate is based average exchange rate for 2014 of
1 GBP : 10.1219 RMB.
(2013: based on the 75.4 million shares outstanding was
approximately 31.0 pence based on average exchange rate for 2013 of
1 GBP : 9.6826 RMB).
Dividend policy
The Group declared an interim dividend of 2.4 pence per share in
scrip or 2.0 pence per share in cash for the financial period 30
June 2014. This dividend was paid on 19 December 2014. The Board
has decided not to propose a final dividend.
Ng Pei Eng
Chief Finance Officer
23 April 2015
Consolidated statement of comprehensive income
Year ended 31 December 2014
31 December 31 December
2014 2013
Note RMB'000 RMB'000
Revenue 1,015,942 1,083,261
Cost of sales 3 (640,171) (681,630)
------------ ------------
Gross profit 3 375,771 401,631
Other income 12 32
Selling and distribution
expenses (90,962) (50,980)
Administrative
expenses (49,634) (46,590)
------------ ------------
Operating profit 4 235,187 304,093
Finance income 3,781 1,085
Finance cost 8 (494) (480)
------------ ------------
Profit on ordinary
activities before
taxation 238,474 304,698
Income tax expense 9 (64,807) (78,560)
------------ ------------
Profit after taxation 173,667 226,138
Profit for the period 173,667 226,138
Other comprehensive income - -
------------ ------------
Total comprehensive income
attributable to owners of the
parent 173,667 226,138
============ ============
Earnings per share:
Basic and diluted
(RMB) 10 2.28 3.00
============ ============
Consolidated statement of financial position
For the year ended 31 December 2014
31 December 31 December
2014 2013
Note RMB'000 RMB'000
Non-current assets
Land use rights 12 39,332 9,745
Property, plant and
equipment 13 53,351 37,446
92,683 47,191
------------- ------------
Current assets
Inventories 15 43,519 31,790
Trade and other receivables 16 408,244 475,595
Cash and bank balances 17 407,472 319,432
------------
859,235 826,817
------------- ------------
Total assets 951,918 874,008
Current liabilities
Trade and other payables 19 67,354 132,246
Short term borrowings 20 6,000 6,000
Income tax payable 10,616 23,870
------------- ------------
83,970 162,116
Equity
Stated capital account 21 74,996 61,499
Statutory reserves 22 48,896 43,169
Translation reserve 9,051 9,051
Accumulated profits 735,005 598,173
867,948 711,892
Total equity and liabilities 951,918 874,008
============= ============
Consolidated statement of changes in equity
For the year ended 31 December 2014
Year ended 31 December 2014
Audited Stated capital Translation Accumulated Statutory Total
account reserve profits reserve RMB'000
RMB'000 RMB'000 RMB'000 RMB'000
As at 1 January
2013 61,499 9,051 410,758 23,545 504,853
Comprehensive
income
Profit for the
year - - 226,138 - 226,138
Other comprehensive - - - - -
income
Total comprehensive
income 61,499 9,051 636,896 23,545 730,991
--------------- ------------ ------------ ---------- ----------
Transaction
with owners
Dividends paid - - (19,100) - (19,100)
--------------- ------------ ------------ ---------- ----------
Total transaction
with owners - - (19,100) - (19,100)
--------------- ------------ ------------ ---------- ----------
Transfer to
statutory reserve - - (19,624) 19,624 -
As at 31 December
2013 61,499 9,051 598,173 43,169 711,892
--------------- ------------ ------------ ---------- ----------
Comprehensive
income
Profit for the
year - - 173,667 - 173,667
Other comprehensive - - - - -
income
Total comprehensive
income 61,499 9,051 771,839 43,169 885,559
--------------- ------------ ------------ ---------- ----------
Transaction
with owners
Dividends paid 13,497 - (31,108) - (17,611)
--------------- ------------ ------------ ---------- ----------
Total transaction
with owners 13,497 - (31,108) - (17,611)
Transfer to
statutory reserve - - (5,727) 5,727 -
--------------- ------------ ------------ ---------- ----------
As at 31 December
2014 74,996 9,051 735,004 48,896 867,948
--------------- ------------ ------------ ---------- ----------
Consolidated statement of cash flows
For the year ended 31 December 2014
Note 31 December 31 December
2014 2013
RMB'000 RMB'000
Cash flow from operating activities
Profit for the period before
taxation 4 238,474 304,698
Adjustment for:
Loss on disposal of property,
plant and equipment 8 47
Depreciation of property,
plant and equipment 13 4,399 3,861
Amortisation charge 12 243 243
Interest income 7 (3,781) (1,085)
Interest expense 8 494 480
------------ ------------
Operating cash flows before
movements in working capital 239,837 308,244
Decrease in inventories (11,729) (6,772)
Increase in trade and other
receivables 67,351 (83,648)
Increase/(decrease) in trade
and other payables (64,892) (1,862)
------------ ------------
Cash generated from operating
activities 230,567 215,962
Interest received 7 3,781 1,085
Interest paid 8 (494) (480)
Income tax paid 9 (78,061) (75,213)
------------ ------------
Net cash generated from operating
activities 155,793 141,354
Cash flow from investing activities
Proceeds from disposal of
property, plant and equipment 8 120
Acquisition of land use rights 12 (29,830) -
Acquisition of property,
plant and equipment (20,319) (5,431)
------------ ------------
Net cash used in investing
activities (50,141) (5,311)
Cash flow from financing activities
Issue of new shares - 65,714
New bank loans obtained 6,000 6,000
Repayment of bank borrowings (6,000) (6,000)
Dividends declared and paid
(gross) (17,611) (19,100)
Fixed deposit pledged for
security of bills payable - 5,200
------------ ------------
Net cash generated from /
(used in) financing activities (17,611) 51,814
Net increase in cash & cash
equivalents 88,040 187,857
Cash and equivalent at beginning
of period 319,432 131,574
------------ ------------
Cash and cash equivalent
at end of period 407,472 319,432
------------ ------------
Notes to the financial statements
1. General information and basis of preparation
The financial statements have been prepared in accordance with
International Financial Reporting Standards as adopted by the
European Union ("IFRS") issued by the International Accounting
Standards Board ("IASB"), including related Interpretations issued
by the International Financial Reporting Interpretations Committee
("IFRIC").
The financial statements are measured and presented in the
currency of the primary economic environment in which the key
trading entity operates (its functional currency). The financial
statements of the Group are presented in Chinese Renminbi ("RMB").
The functional currency of Ming Wei is also Chinese Renminbi
("RMB"). All financial information presented in RMB has been
recorded to the nearest thousand.
The financial information set out in this announcement does not
constitute the Group's statutory financial statements for the year
ended 31 December 2014, but was derived from those financial
statements. The auditors have reported on the statutory financial
statements for the year ended 31 December 2014; this report was
unqualified.
The financial information set out in this announcement was
approved by the board on 23 April 2015.
The directors have paid an interim dividend of 2.4 pence per
share in scrip or 2.0 pence per share in cash in respect of the
year ended 31 December 2014.
2. Critical accounting judgements and key sources of estimation uncertainty
In the application of the Group's accounting policies, which are
described in Note 1, 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.
2.1 Critical judgements in applying the entity's accounting policies
The following are the critical judgements, apart from those
involving estimations (see below) that management has made in the
process of applying the Group's accounting policies and which have
the significant effect on the amounts recognised in the financial
statements.
Impairment of financial assets
The Group follows the guidance of IAS 39 - Financial
Instruments: Recognition and Measurement, in determining whether a
financial asset is impaired. This determination requires
significant judgement, the Group evaluates, among other factors,
the duration and extent to which the fair value of a financial
asset is less than its cost and the financial health of and
near-term business outlook for the financial asset, including
factors such as industry and sector performance, changes in
technology and operational and financing cash flow.
Acquisition of Jinjiang Li Hong
Ming Wei has acquired the land use right for a new plot of land
through the acquisition of all equitable interest in Jinjiang Li
Hong on 09 November 2014. The land is 12,831 square meter with a
usable area of 8,340 square meter located at Jinjiang City, Nei
Keng Town, Zai Nei Village for commercial use. Li Hongis a dormant
company with no trading activities. Li Hong is now a 100% owned
subsidiary of the Group.
In determining the appropriate accounting treatment for the
above transactions, the directors considered IFRS 3 "Business
Combinations" (Revised 2008). However, they concluded that the
substance of this transaction was an assets purchase rather than a
business combination, therefore not treated in line with IFRS
3.
2.2 Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources
of estimation uncertainty at the end of the financial year /
period, that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within
the next financial year, are discussed below.
Allowance for trade and other receivables
Management reviews its loans and receivables for objective
evidence of impairment at least quarterly. Significant financial
difficulties of the debtor, the probability that the debtor will
enter bankruptcy, and default or significant delay in payments are
considered objective evidence that a receivable is impaired. In
determining this, management makes judgment as to whether there is
observable data indicating that there has been a significant change
in the payment ability of the debtor, or whether there have been
significant changes with adverse effect in the technological,
market, economic or legal environment in which the debtor operates
in.
The allowance policy for doubtful debts of the Group is based on
the ageing analysis and management's on-going evaluation of the
recoverability of the outstanding receivables. Once a debtor has
been identified as having evidence of impairment, it is regularly
reviewed and an appropriate impairment provision applied. The
carrying amounts of the Group's trade and other receivables as at
31 December 2013 and 2014 were RMB 475.6 million and RMB 408.2
million, respectively. No provisions to any of these debts have
been provided for during any of these periods and none are past
due.
Impairment of intangible assets and land use rights
Determining whether intangible assets or land use rights are
impaired requires an estimation of the value in use of the
cash-generating units (CGU) to which intangible assets have been
allocated. The value-in-use calculation requires the entity to
estimate the future cash flows expected to arise from the CGU and a
suitable discount rate in order to calculate present value. There
were no impairment triggers identified at the year end. The
carrying amount of the land use rights as at 31 December 2013 and
2014 were RMB 9.7 million and RMB 39.3 million, respectively.
Provision for income taxes
The amount of income tax is being calculated on estimated
assessable profits based on the completed contract method which is
in accordance with the tax rules and regulations applicable in the
PRC. Where the final tax outcome of these matters is different from
the amounts that were initially recognised, such differences will
impact the income tax and deferred tax provisions in the period in
which such determination is made. The carrying amounts of the
Group's income tax payables as at 31 December 2013 and 2014 were
RMB 23.9 million and RMB 10.6 million, respectively.
3. Business segments
The Group applies IFRS 8 Operating segments. Per IFRS 8,
operating segments are based on internal reports about components
of the Group, which are regularly reviewed and used by the board of
directors being 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's reportable operating segments are as follows:
1) Footwear. These are outdoor footwear that are design and
manufactured in house for sales to distributors in the PRC under
the Camkids brand.
2) Apparels. These are outdoor apparels that are design by the
in house R&D team, outsource to external contract manufacturers
for sales to distributors in the PRC under the Camkids brand.
3) Accessories. These are accessories that are design by the in
house R&D team, outsource to external contract manufacturers
for sales to distributors in the PRC under the Camkids brand.
4) OEM Sales. Manufacture and sale of footwear under the terms
of OEM agreement entered with the PRC export intermediaries.
5) Unallocated amount. These amounts include selling &
distribution expenses, administrative expenses, interest income and
expenses, trade receivables, intangible assets, fixed assets, other
payables which are not allocated to segments. These expenses are
for the design, manufacture and distributors for the outdoor
footwear, apparels and accessories to the distributors in the
PRC.
The CODM monitors the operating results of each segment for the
purpose of performance assessments and making decisions on resource
allocation. Performance is measured based on segment gross profit
as management believes that such information is the most relevant
in evaluating the results of each segment. Segment assets and
liabilities are presented inclusive of inter-segment balances.
Geographical segments
As the business of the Group is principally engaged in the PRC,
no reporting by geographical location of operation is
presented.
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
Distribution sales OEM sales
Footwear Apparels Accessories Footwear Unallocated Total
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
Revenue and results:
Revenue from external
distributors 344,909 588,626 82,407 - - 1,015,942
Segment profit 128,683 211,034 36,054 - - 375,771
Unallocated other income
and expenses
Interest income 3,781 3,781
Other income 12 12
Selling & distribution
expenses (90,962) (90,962)
Administrative expenses (49,634) (49,634)
Interest expenses (494) (494)
Profit before tax 238,474
----------
Assets and liabilities
Assets 32,908 58,475 15,689 - 844,846 951,918
Liabilities 17,967 31,852 2,202 - 31,949 83,970
Depreciation and additions
Depreciation 917 1,301 1,028 - - 3,246
Additions to property,
plant and equipment 1,790 2,538 2,006 - - 6,334
Revenue from the Group's top three distributors represent
approximately RMB274.7 million (or 27.0 per cent) of the total
revenue for the year ended 31 December 2014, comprising RMB 101.6
million (10.0 per cent), RMB97.4 million (9.6 per cent) and RMB75.7
million (7.5 per cent), respectively.
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
Distribution sales OEM sales
Footwear Apparels Accessories Footwear Unallocated Total
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
Revenue and results:
Revenue from external
distributors 337,079 625,118 91,886 29,178 - 1,083,261
Segment profit 127,548 226,790 40,502 6,791 - 401,631
Unallocated other
income and expenses
Interest income 1,085 1,085
Other income 32 32
Selling & distribution
expenses (50,980) (50,980)
Administrative expenses (46,590) (46,590)
Interest expenses (480) (480)
Profit before tax 304,698
----------
Assets and liabilities
Assets 30,583 42,652 13,470 906 786,397 874,008
Liabilities 27,266 73,515 8,960 - 52,375 162,116
Depreciation and additions
Depreciation 809 1,231 1,009 86 - 3,135
Additions to property,
plant and equipment 677 1,029 843 72 - 2,621
Revenue from the Group's top three distributors represent
approximately RMB345.7 million (or 31.9 per cent) of the total
revenue for the year ended 31 December 2013, comprising RMB120.2
million (11.1 per cent), RMB119.4 million (11.0 per cent) and
RMB106.1 million (9.8 per cent), respectively.
4. Profit for the year and auditor's remuneration
The Group's profit before taxation is arrived at:
2014 2013
RMB'000 RMB'000
--------- ---------
After charging:
Cost of inventories recognised
as expenses 577,902 624,637
Depreciation of property, plant
and equipment 4,399 3,861
Loss on disposal of fixed assets 8 47
Amortisation charge 243 243
Research and development expenses 12,358 9,668
Fees payable to the company's
auditor for the audit of parent
company and consolidated financial
statements 920 920
5. Aggregated directors' remuneration
The total amounts for directors' remuneration were as
follows:
2014 2013
RMB'000 RMB'000
--------- ---------
Directors
* Salaries and related cost 2,925 2,925
* Retirement scheme contribution 10 10
* Directors' fees 1,012 933
The Group reimburses the directors for expenses incurred by them
or their service companies in the performance of their duties for
the Group.
2014 2013
---------------- ------------------------------------------- -------------------------------------------
Short-term Post employment Short-term Post employment
employee benefits benefits - employee benefits benefits -
- Salaries Retirement - Salaries Retirement
and related scheme contributions and related scheme contributions
costs costs
---------------- ------------------- ---------------------- ------------------- ----------------------
Zhang Congming 1,170 5 1,170 5
---------------- ------------------- ---------------------- ------------------- ----------------------
Hong Qinming 975 5 975 5
---------------- ------------------- ---------------------- ------------------- ----------------------
Ng Pei Eng 780 - 780 -
---------------- ------------------- ---------------------- ------------------- ----------------------
Jacques-Franck
Dossin 405 - 395 -
---------------- ------------------- ---------------------- ------------------- ----------------------
Richard Sweet 405 - 395 -
---------------- ------------------- ---------------------- ------------------- ----------------------
Mircle Yap 202 - 143 -
---------------- ------------------- ---------------------- ------------------- ----------------------
6. Staff costs and numbers
The average number of persons employed by the Group during the
year including executive directors is analysed below:
2014 2013
------ ------
Administrative 103 103
Sales & marketing 75 64
Research & Development 104 100
Production 1,033 975
------ ------
1,315 1,242
------ ------
Group employment costs - all employees including executive
directors
2014 2013
RMB'000 RMB'000
--------- ---------
Wages and salaries 68,208 55,350
Retirement scheme contribution 6,813 4,897
75,021 60,247
--------- ---------
7. Financial income
2014 2013
RMB'000 RMB'000
--------- ---------
Interest income 3,781 1,085
3,781 1,085
--------- ---------
8. Finance costs
2014 2013
RMB'000 RMB'000
--------- ---------
Interest expense 494 480
494 480
--------- ---------
9. Taxation
2014 2013
RMB'000 RMB'000
--------- ---------
Current income tax 64,807 78,569
Income tax expense 64,807 78,560
--------- ---------
The tax rate used for the reconciliations below is the
Enterprise Income Tax ("EIT") rate of 25 per cent, payable by
corporate entities in the PRC on taxable profits under tax law in
that jurisdiction.
The charge for each period can be reconciled to the profit or
loss per the consolidated income statements as follows:
2014 2013
RMB'000 RMB'000
Profit before taxation 238,474 304,698
Profit multiplied by standard
rate of EIT of 25% 59,619 76,175
Effect of:
Tax effect on non-deductible
expenses (8) 394
Different tax rates in different
countries 1,740 1,991
--------- ---------
61,351 78,560
--------- ---------
10. Earnings per share
The calculation of basic and diluted earnings per share at 31
December 2014 was based on the profit attributable to ordinary
shareholders of RMB177,124,000 (2013: 226,138,000). The weighted
average number of ordinary shares outstanding during the year ended
31 December 2014 and 2013 and the effect of the potentially
dilutive ordinary shares to be issued (of which there are none) are
shown below.
2014 2013
Profit attributable to equity
holders (RMB'000) 173,667 226,138
Weighted average number of shares
('000) 76,234 75,428
Basic and diluted per share (RMB) 2.28 3.00
-------- --------
11. Dividend
The directors have declared and paid a final dividend for the
year ended 31 December 2013 of 2 pence per share. The dividend has
been paid on 11 July 2014 by the Company, of which GBP460,270.55
was paid in cash and issue of 1,653,439 in new shares.
The directors have declared and paid an interim dividend for the
period ended 30 June 2014 of 2.4 pence per share in scrip or 2.0
pence per share in cash. The dividend has been paid on 19 December
2014 by the Company, of which GBP1,326,264.64 was paid in cash and
issue 678,292 in new shares.
12. Land use rights
2014 2013
RMB'000 RMB'000
Cost
Balance at beginning and end of year 12,146 12,146
Additions 29,830 -
--------- ---------
41,976 12,146
--------- ---------
Amortisation
Balance at beginning of year 2,401 2,158
Charge for the year 243 243
--------- ---------
Balance at end of year 2,644 2,401
--------- ---------
Carrying value 39,332 9,745
--------- ---------
The land use right is a plot of land where the Group's
factory/office are located, at Jinjiang City, Qing Yang Town, San
Guang Tian Village for commercial use.
As at 31 December 2014 and 2013, the land use right was
mortgaged to secure a short term loan of RMB 6 million as set out
in Note 20.
The Group has acquired the land use right for a new plot of land
through the acquisition of all equitable interest in Jinjiang Li
Hong on 09 November. The land is 12,831 square meter with a usable
area of 8,340 square meter located at Jinjiang City, Nei Keng Town,
Zai Nei Village for commercial use. The remaining useful life of
the land use right is approximately 42 years and will amortised
over the remaining useful life from January 2015.
In determining the appropriate accounting treatment for the
above transactions, the directors considered IFRS 3 "Business
Combinations" (Revised 2008). However, they concluded that the
substance of this transaction was an assets purchase rather than a
business combination, therefore not treated in line with IFRS
3.
13. Property, plant and equipment (Group)
As at 31 December Buildings Plant and Motor Office Others Construction Leasehold Total
2014 RMB'000 machinery vehicles equipment RMB'000 in progress improvement RMB'000
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
Cost
At 1 January 2014 47,111 12,430 2,999 3,604 546 - - 66,690
Additions - 2,104 - 564 - 16,230 1,420 20,318
Disposals - (88) - (66) - - - (154)
Transfer 4,230 - - - - (4,230) - -
----------- ---------- --------- ---------- -------- ------------- ------------ --------
At 31 December 2014 51,341 14,446 2,999 4,102 546 12,000 1,420 86,854
----------- ---------- --------- ---------- -------- ------------- ------------ --------
Accumulated
depreciation
At 1 January 2014 19,697 6,924 699 1,872 52 - - 29,244
Charge for the year 2,200 1,046 540 356 98 - 158 4,398
Disposal - (79) - (60) - - - (139)
----------- ---------- --------- ---------- -------- ------------- ------------ --------
At 31 December 2014 21,897 7,891 1,239 2,168 150 - 158 33,503
----------- ---------- --------- ---------- -------- ------------- ------------ --------
Net book value
At 31 December 2014 29,444 6,555 1,760 1,934 396 12,000 1,262 53,351
At 31 December 2013 27,414 5,506 2,300 1,732 494 - - 37,446
As at 31 December
2013
Cost
At 1 January 2013 47,111 10,646 1,349 3,373 - - - 62,479
Additions - 2,620 1,824 439 546 - - 5,429
Disposals - (836) (174) (208) - - - (1,218)
----------- ---------- --------- ---------- -------- ------------- ------------ --------
At 31 December 2013 47,111 12,430 2,999 3,604 546 - - 66,690
----------- ---------- --------- ---------- -------- ------------- ------------ --------
Accumulated
depreciation
At 1 January 2013 17,577 6,616 474 1,769 - - - 26,436
Charge for the year 2,120 1,015 382 292 52 - - 3,861
Disposal - (707) (157) (189) - - - (1,053)
----------- ---------- --------- ---------- -------- ------------- ------------ --------
At 31 December 2013 19,697 6,924 699 1,872 52 - - 29,244
----------- ---------- --------- ---------- -------- ------------- ------------ --------
Net book value
At 31 December 2013 27,414 5,506 2,300 1,732 494 - - 37,446
At 31 December 2012 29,534 4,030 875 1,604 - - - 36,043
14. Investments in subsidiary undertakings
Company 2014 2013
RMB'000 RMB'000
Cost
1 January 8 8
Additions - -
--------- ---------
31 December 8 8
--------- ---------
Details of the subsidiaries, all of which have a 31 December
year end, are as follows:
Subsidiary Class of % owned Country Nature of business
share of registration
------------------------ --------- -------- ----------------- ---------------------------
Camkids (HK) Holding Ordinary 100% Hong Kong Investment holding
Limited company
------------------------ --------- -------- ----------------- ---------------------------
Jinjiang Ming Wei Ordinary 100% PRC Selling outdoor
Shoes & Garments footwear, accessories
Co., Limited (held and apparel products
through Camkids (HK) to wholesale distributors
Holding Limited)
------------------------ --------- -------- ----------------- ---------------------------
Jinjiang Li Hong Ordinary 100% PRC Dormant Company
Clothing Co., Ltd
(held through Jinjiang
Ming Wei Shoes &
Garments Co., Limited
)
------------------------ --------- -------- ----------------- ---------------------------
On 09 November 2014, Jinjiang Ming Wei has entered into an
agreement to acquire all equitable interest in Jinjiang LiHong, a
dormant company. The cash consideration of RMB29.83 million was for
a land use right of a commercial land of usage area 8,340 square
meter located at Jinjiang City Nei Keng Town Zai Nei Village.
Jinjiang is now a 100% wholly owned subsidiary of Jinjiang Ming
Wei.
15. Inventories
2014 2013
RMB'000 RMB'000
Raw material 3,283 1,903
Work in progress 4,734 5,268
Finished goods 35,502 24,619
--------- ---------
43,519 31,790
--------- ---------
16. Trade and other receivables
2014 2013
Group Company Group Company
RMB'000 RMB'000 RMB'000 RMB'000
Trade receivables 377,870 - 452,506 -
Advance payments to suppliers 27,553 - 22,900 -
Amounts owed by subsidiary
undertakings - 65,748 - 65,748
Other receivables 2,821 - 189 -
408,244 65,748 475,595 65,748
--------- --------- --------- ---------
The directors consider that the carrying amount of trade and
other receivables approximated their fair value.
The ageing of Group trade receivables is as follows:
2014 2013
RMB'000 RMB'000
--------- ---------
Current 39,165 136,834
31-60 days 113,390 126,069
61-90 days 133,324 127,392
Over 90 days 91,991 62,211
17. Cash and cash equivalents
2014 2013
Group Company Group Company
RMB'000 RMB'000 RMB'000 RMB'000
-------- -------- -------- --------
Cash at banks 307,437 - 319,386 -
Cash on hand 35 - 46 -
Fixed deposits 100,000 - - -
407,472 - 319,432 -
-------- -------- -------- --------
A charge over bank balances has been registered, for securing
all monies due or becoming due from the Company to its bankers.
18. Financial risk management
The Group's overall financial risk management programme seeks to
minimise potential adverse effects of financial performance of the
Group. Management has in place processes and procedures to monitor
the Group's risks exposures whilst balancing the costs associated
with such monitoring and management against the costs of risk
occurrence. The Group's risk management policies are reviewed
periodically for changes in market conditions and the Group's
operations.
The Group are exposed to financial risks arising from its
operations and the use of financial instruments. The key financial
risks include credit risk, liquidity risk, interest rate risk,
foreign currency risk and market price risk.
As at 31 December 2013 and 2014, the Group's financial
instruments mainly consisted of cash and bank balances, trade and
other receivables, trade payables, other payables and accruals.
Interest rate risk
Interest rate risk is the risk that the fair value of future
cash flows of the Group's financial instruments will fluctuate
because of changes in market interest rates.
The Group's exposure to interest rates on financial assets and
liabilities are set out below:
Weighted Variable Non-interest Total
Average Interest Bearing
Effective Rate RMB'000 RMB'000
Interest
RMB'000
-------------------------- ----------- ---------- ------------- ---------
As at 31 December
2014
Financial assets
Cash and bank balances 0.01-0.4% 307,437 35 307,472
Fixed deposits 3% 100,000 - 100,000
Trade receivables - 377,870 377,870
Financial liabilities
Trade and other payables - 64,119 64,119
Interest-bearing
bank borrowings 8.40% 6,000 - 6,000
-------------------------- ----------- ---------- ------------- ---------
As at 31 December
2013
Financial assets
Cash and bank balances 0.01-0.4% 319,386 46 319,432
Fixed deposits - - -
Trade receivables - 452,506 452,506
Financial liabilities
Trade and other payables - 121,298 121,298
Interest-bearing
bank borrowings 8.077% 6,000 - 6,000
-------------------------- ----------- ---------- ------------- ---------
The Group's exposure to interest rate risk due to the
fluctuation of the prevailing market interest rate is confined to
bank deposits and bank borrowings.
Interest rate sensitivity
Fair value sensitivity analysis for fixed rate instruments
The Group does not account for fixed rate financial assets and
liabilities at fair value through profit and loss. Therefore a
change in interest rates at reporting date would not affect profit
and loss.
Cash flow sensitivity analysis for variable rate instruments
For variable rate financial assets, the Group has determined
that the carrying amounts of bank deposits and bank borrowings
based on their notional amounts, reasonably approximate their fair
value because these are mostly short term in nature or are reprised
frequently. Below is the table which shows the impact on the
interest income, using 100 basis points:
As at 31 December
2014 2013
Basis points RMB'000 RMB'000
Interest income
Increase in interest income 100 3,074 3,194
(Decrease) in interest
income 100 (3,074) (3,194)
Interest expense
Increase in interest expense 100 60 60
(Decrease) in interest
expense 100 (60) (60)
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 bank balances, trade
receivables, prepayments and amounts due to a shareholder.
As at the end of the 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 31 December 2014, substantially all
the cash and bank balances as detailed in Notes 17 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 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 407,472 319,432
Trade receivables 377,870 452,506
Prepayments 30,374 23,089
Other receivable - -
--------- ---------
815,716 795,027
--------- ---------
Camkids Group plc 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 balance sheet.
Trade receivables that are past due but not impaired
Camkids Group plc's trade receivables that are not impaired are
as follows:
2014 2013
RMB'000 RMB'000
--------- ---------
Current 39,165 136,834
31-60 days 113,390 126,069
61-90 days 133,324 127,392
Over 90 days 91,991 62,211
--------- ---------
377,870 452,506
--------- ---------
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 Renminbi.
Interest rate risk
The Group has interest rate risk with the banks for banking
facilities as set out in Note 20. Except for the term loans, the
Group has no recognised or undisclosed financial instruments as at
balance sheet date.
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 the on-going research and development programs, trade and other
payables. Trade and other payables are all payable within 12
months.
The Board receives 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.
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.
The Group monitors capital using a gearing ratio, which is net
debt divided by total equity plus net debts. The Group includes
within net debt, loans and borrowings, trade and other payables.
Equity includes equity attributable to the equity holders of the
Group.
The gearing ratios as at 31 December 2013 and 2014, were as
follows:
2014 2013
RMB'000 RMB'000
--------- ---------
Total debts
Trade payables 52,021 109,741
Short term borrowing 6,000 6,000
--------- ---------
Net debt 58,021 115,741
Total equity 867,948 711,892
========= =========
Total capital 925,969 827,633
========= =========
Gearing ratio 1:16.0 1:7.2
========= =========
Trade payables
Camkids Group plc's trade payables that are not impaired are as
follows:
2014 2013
RMB'000 RMB'000
--------- ---------
Current 25,031 71,434
31-60 days 26,990 38,307
61-90 days - -
--------- ---------
52,021 109,741
--------- ---------
19. Trade and other payables
2014 2013
Group Company Group Company
RMB'000 RMB'000 RMB'000 RMB'000
--------- --------- --------- ---------
Trade payables 52,021 - 109,741 -
Other payables 2,882 - 1,740 -
Other tax payable 3,235 - 10,948 -
Accrued liabilities 9,216 2,293 9,817 2,130
Advance from customers - - - -
Amounts due to subsidiary - 10,368 - 17,050
Bills payable - - - -
--------- --------- --------- ---------
67,354 12,661 132,246 19,180
--------- --------- --------- ---------
Trade payables and accruals principally comprise amounts
outstanding for on-going costs.
The directors consider that the carrying amount of trade and
other payables approximated their fair value.
Trade payables are paid between 30 to 60 days of receipt of the
invoice.
20. Short term borrowings
2014 2013
RMB'000 RMB'000
--------- ---------
Short term borrowings 6,000 6,000
Effective interest rate (annual) 8.40% 8.08%
Short term bank borrowings are secured by pledge of the Group's
fixed assets and land use rights.
21. Stated capital
Ordinary shares of no par value
2014 2014 2013 2013
Company Company Company Company
Number of RMB'000 Number of RMB'000
shares shares
----------- --------- ----------- ---------
Issued:
Balance at beginning
of year 75,427,629 61,499 75,427,629 61,499
Share issue due to scrip
dividend (11 July 2014) 1,653,439 11,007 - -
Share issue due to scrip
dividend (19 December
2014) 678,292 2,490 - -
77,759,360 74,996 75,427,629 61,499
----------- --------- ----------- ---------
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.
22. Reserves
(a) Statutory reserve
According to the relevant PRC regulations and the Articles of
Association of the subsidiary, it is required to transfer 10 per
cent of its profit after income to the statutory surplus reserve
until the reserve reaches 50 per cent of their 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 per cent of the registered capital.
(b) Translation reserve
The translation reserve comprises all foreign currency
differences arising from the translation of the financial
statements of foreign operations.
23. Operating lease commitments
As at each of the balance sheet dates, the future aggregated
minimum lease payments under non-cancellable operating leases
contracted for but not recognised as liabilities, are as
follows:
2014 2013
RMB'000 RMB'000
--------- ---------
Within one year 10,588 677
After one year but before five years 2,468 1,480
After five years 6,974 7,441
--------- ---------
20,030 9,598
--------- ---------
Operating lease payments represent advertising and trademark
license.
Capital commitments
As at 31 December 2014, the Group has an unpaid capital
contribution to its subsidiary Jinjiang Mingwei of an amount
approximately RMB4.5 million (HK$5.7 million).
24. Related party transactions
Inter-group balances
In order for individual subsidiary companies to carry out the
objectives of the Group, amounts are loaned to them on an
unsecured, interest-free and repayable on demand basis. At the year
end the following amounts were outstanding:
2014 2013
RMB'000 RMB'000
--------- ---------
Loan from Camkids HK to Jinjiang Mingwei 13,215 7,009
Loan from Jinjiang Mingwei to Camkids
Group 12,750 2,004
Loan from Camkids Group to Camkids HK 68,130 50,702
Key management compensation
Key management personnel are the executive officers of the
company including executive directors. Key Management personnel
compensation is analysed as follows:
2014 2013
RMB'000 RMB'000
--------- ---------
Short-term employee benefits - Salaries
and related costs 3,702 3,567
Short-term employee benefits - Retirement
Scheme contributions 27 21
3,729 3,588
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR IJMBTMBTTBMA
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