TIDMCAMK
RNS Number : 5859V
Camkids Group PLC
10 August 2015
10 August 2015
Camkids Group plc
("Camkids" or the "Group")
Trading statement, distributor update and extension of payment
terms
Camkids Group plc (AIM: CAMK), a leading Chinese designer,
manufacturer and distributor of branded outdoor clothing, footwear
and equipment for children, announces the following trading
update.
The Board expects that the Group's turnover for the year ending
31 December 2015 will broadly be in line with market forecasts. The
order book was down 45% for Autumn / Winter on a year-on-year
basis, which is marginally more than the previously announced
reduction on the year-on-year Spring / Summer order book.
The Board considers that the current difficult macro-economic
conditions in China represent an opportunity for Camkids to review
its arrangements with underperforming distributors. Following the
conclusion of this review, the Board has decided to terminate the
Group's relationship with three of its existing distributors. These
distributors represented approximately 17.5% of the Group's
revenues in 2014 and this figure is expected to be no more than
14.5% of revenues in the first half of 2015.
The termination arrangements, which are subject to ongoing
negotiation, are expected to include a requirement that the Group
purchases back the inventory held by the distributors, for an
amount totalling approximately RMB285 million. Furthermore, the
Board anticipates that the Group will be required to make
contractual compensation payments to the outgoing distributors in
relation to their stores, totalling approximately RMB70
million.
Camkids has already identified two new replacement distributors
to cover the entirety of the territories previously covered by the
outgoing distributors. The Board anticipates that the majority of
the repurchased inventory will be resold to the new distributors
but likely at a substantially reduced price. As a result of these
exceptional costs, the Board expects that the Group will report a
meaningful net loss after exceptional items in its 2015 results.
The Group's cash reserves will be substantially reduced by virtue
of the sums being paid to the distributors. Notwithstanding this,
the Board believes that replacing the outgoing distributors is
necessary and acquiring all of their remaining Camkids inventory
will ensure that this is not sold in such a way as to damage the
Camkids brand.
The Board continues to review the Group's cost base and strategy
and looks forward to the benefits of its enhanced distributor
network. None of the Group's distributors, including the outgoing
distributors and the new distributors, are connected to any
director or substantial shareholder of Camkids or any of their
family members.
The Group also intends to repurchase approximately RMB80 million
of inventory from its remaining distributors. In keeping with its
social responsibility practice in previous years, this inventory
will be donated to children in poorer areas of China. The Board
also sees this as an important exercise in promoting the Camkids
brand throughout China, as well as in preventing discounted sales
of its products. In addition, on account of the continuing
difficult trading conditions in China, the Group has agreed with
its distributors to temporarily extend payment terms from 120 days
to 180 days until the end of 2015.
Camkids' Chairman, Zhang Congming, commented: "Trading
conditions remain difficult in China and we anticipate the trend of
decreasing order books continuing into 2016. However, we are
seeking to use these conditions to our advantage in replacing
underperforming distributors at a lower cost than we would
otherwise have been able to had trading conditions been better.
"Excluding the exceptional costs of replacing certain
distributors and repurchasing unsold inventory, we anticipate that
Camkids will achieve a small operating profit for the year ending
31 December 2015, which, although behind market forecasts, we
consider to be encouraging given the current macro-economic
climate."
-Ends-
For further details, please contact:
Camkids Group plc
Zhang Congming, Executive Tel: +44 (0) 20 7653
Chairman 9850
Ng Pei Eng, Chief Finance www.camkids-ir.com
Officer
Allenby Capital Limited
Alex Price / James Reeve / Tel: +44 (0) 20 3328
Nick Athanas 5656
a.price@allenbycapital.com www.allenbycapital.com
Media enquiries:
Newgate
Adam Lloyd / Robyn McConnachie Tel: +44 (0) 20 7653
/ Andre Hamlyn 9850
camkids@newgatecomms.com
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 1,336
franchised retail outlets, and continues to develop its e-commerce
business and currently has over 200 product lines on offer through
its existing online partners of Taobao and JD.com.
Camkids has received a number of prestigious awards. In
September 2014 it was announced that Camkids had been included in
the rankings as one of "The Top 500 Asia Brands". In addition to
this prestigious award, the Group's Chairman has also been honoured
as one of the "Top ten new brand creators in Chinese industry".
For more information please visit www.camkids-ir.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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