TIDMCAMK
RNS Number : 6989A
Camkids Group PLC
30 September 2015
30 September 2015
Camkids Group plc
("Camkids", the "Company" or the "Group")
Interim Results
Camkids Group plc (AIM: CAMK), a leading Chinese designer,
manufacturer and distributor of branded outdoor clothing, footwear
and equipment for children and teenagers, today announces its
interim results for the six months ended 30 June 2015.
Financial Summary
-- Revenues decreased by 40.3% to RMB 274.0 million
(approximately GBP28.4 million) (H1-2014:
RMB 458.8 million)
-- Gross profit declined by 50.2% to RMB 87.2
million (approximately GBP9.0 million) (H1-2014:
RMB 175.0 million)
-- EBIT* decreased by 92.2% to RMB 9.8 million
(approximately GBP1.0 million) (H1-2014: RMB
126.0 million)
-- Net profit after tax declined by 91.2% to
RMB 8.0 million (approximately GBP0.8 million)
(H1-2014: RMB 90.6 million)
-- Net cash position 9.3% lower on 30 June 2015
at RMB 440.5 million (approximately GBP45.6
million) (30 June 2014: RMB 485.5 million)
representing 1.0 pence per share
* 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 exchange rate as at 29 September 2015 is 1 GBP:
9.66 RMB.
Commenting on the results, Zhang Congming, Executive Chairman of
Camkids, said: "2015 has been a challenging year for the Company.
The slow-down in the economy, increased competition, lower consumer
spending power and pressure on pricing have all affected Camkids'
financial and operating performance. Nevertheless, Camkids remains
a strong brand in China and through the hard work of our R&D
team the Group continues to develop and launch new, innovative,
high-quality products to further improve our market position. We
are pleased to have signed an agreement with Walt Disney to license
their trademark for the Captain America and Avengers characters and
we believe that this important collaboration will help to further
strengthen our brand in China. This agreement was signed following
an extensive period of due diligence, during which a team from Walt
Disney visited our manufacturing facility to satisfy themselves as
to the quality of Camkids' operations.
"The Board believes that despite the challenging market
conditions our brand and market position are solid and we view the
future with reasonable confidence."
- Ends -
For further details, please contact:
Camkids Group plc
Zhang Congming, Executive Tel: +44 (0) 20 7653
Chairman 9850
www.camkids-ir.com
Media enquiries:
Newgate
Adam Lloyd / Robyn McConnachie Tel: +44 (0) 20 7653
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 1,267
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.
Executive Chairman's statement
Overview
Trading conditions during the period under review have been
difficult and the Board anticipates that this will remain the case
for the remainder of 2015 and into 2016. Increased competition from
both domestic and international players entering the children's
segment, pricing adjustments, the recent swing of the financial
market affecting consumers' confidence and reduced spending have
all been affecting our sales. As previously reported, our order
book was down 38% for Spring/Summer and 45% for Autumn/Winter,
respectively, on a year-on-year basis. As a result, our 2015 H1
sales decreased by 40.3% to RMB 274.0 million. Despite the drop in
our order book, Camkids continues to maintain its focus on the
development of new, innovative and functional products. Following
the deal with Walt Disney our product range will include items
incorporating the Captain America and The Avengers characters.
Camkids plans to utilise these opportunities to invest in
advertising and marketing to further strengthen its brand.
Financial results
The Board reports that revenue for the six months ended 30 June
2015 decreased by 40.3% to RMB 274.0 million (H1-2014: RMB 458.8
million). Gross profit declined by 50.2% to RMB 50.2 million
(H1-2014: RMB 175.0 million). Earnings before interest and taxation
("EBIT") decreased by 92.2% to RMB 9.8 million (H1-2013: RMB 126.0
million).
The Group's net cash position as at 30 June 2015 was RMB 440.5
million, which is a 9.3% decrease on the comparable period last
year (H1-2014: RMB 485.5 million). This was prior to the proposed
change in distributors which is discussed in the next section.
Change of distributors
In April 2015 our routine performance monitoring highlighted
that three of our distributors had underperformed since the
beginning of the year. Following the release of our annual results
for the period ended 31 December 2014, the Board concluded that the
distributors in question had failed to invest adequately, had
undertaken little or no local advertising or marketing activities
in support of the Camkids brand and had also experienced high rates
of staff turnover, resulting in inexperienced sales staff. Our
operating management also considered that the level of inventory
held by these three distributors was excessively high, being in
excess of 40% of their aggregate purchases from Camkids (rather
than the 20% norm for the Group's other distributors), and that
they were making no concerted effort to shift inventory from prior
years. As at 31 July 2015, the level of receivables owed by these
three distributors was RMB 59.5 million. These distributors operate
across approximately 200 stores.
As announced on 10 August 2015, following a detailed review of
the available options, the operating management team decided that
the long-term commercial interests of Camkids were best served by
removing the three distributors and replacing them with two new
partners who would promote the Camkids' brand and maintain the high
standards the Group expects of its appointed distributers.
The relevant distribution agreements contained certain
provisions for termination and compensation payments which are to
be paid in the event that Camkids decides to terminate the
distribution agreement. In accordance with this, the parties have
agreed that:
-- Camkids will buy back all unsold inventory at a discount of
between 10% and 20% of the original sale price, for a total amount
estimated around RMB 285 million; and
-- Camkids will pay compensation to the distributors based on
historic sales per store and agreed distributor net profit
margins.
Our agreement with the two new distributors, who will cover the
territories previously covered by the out-going distributers,
provides for the following:
-- the new distributors have agreed to take over all inventory
repurchased from the terminated distributors at a discount of 15%
to 60% to Camkids' buy-back price (dependent on the age of the
inventory), estimated around RMB 142.9 million, thereby resulting
in a loss for Camkids estimated at RMB 142.1 million;
-- the new distributors will take over selected stores from the
terminated distributors, will be responsible for any new mall
deposits and will re-negotiate the terms of franchises with
franchisees directly. Those stores not selected will be closed and
the cost of the closure will be the responsibility of the
terminated distributors; and
-- the new distributors will be responsible for the cost of
transferring the bought-back inventory to their warehouses and for
any other costs incurred in the transfer of the distribution
arrangements.
This is a very important strategic decision taken by the
operating management and reflects its desire to do what it
considers to be in the interests of the long-term growth of the
Group. The operating management team believes that the
underperformance of these three regions has adversely impacted
Camkids' brand and the morale and goodwill of its other
distributors.
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September 30, 2015 04:00 ET (08:00 GMT)
The exact cost to the Group of the termination arrangements will
take some time to compute with clarity, as it requires a detailed
examination of the age and condition of inventory. However, at the
date of approval of these interim statements the Directors estimate
that the loss on buy-back and re-sale of the inventory will be
approximately RMB 142.9 million, and the cost of compensation
settlements will be approximately RMB 70 million. Representatives
from Camkids, the terminated distributors and the new distributors
are currently conducting a stock take for the inventory and stores
transferred and the Group plans to sign the agreement in early
October.
From a cash flow standpoint, Camkids will pay to the exiting
distributors an estimated amount of RMB 285 million less trade
receivable outstanding as at the date of agreement (Net Amount),
which will be disbursed as follows:
50% of the net amount - upon completion of the
stock take
Balance 50% of the net - within 3 working days
amount upon taking over the inventory
and completion of the
transferred of stores
Resale of the inventory to the new distributors will trigger the
following payments:
- RMB 15 million upon commencement of stock take
- RMB 18 million in October 2015
- RMB 18 million in November 2015
- The balance will be in 9 equal instalments over the period December 2015 to August 2016
Donations in kind
Camkids designs, manufactures and distributes teenage outdoor
wear and equipment, primarily focused on children between the ages
of 8 and 12. The Group takes its commitment to corporate and social
responsibility seriously and the Directors consider that this
contributes greatly to the positioning of the Camkids brand in
China. In 2012 the Group launched a charitable campaign to collect
a proportion of unsold children's clothing and shoes from its
distributors for distribution and use in less affluent parts of
China and in the last financial year the Group reacquired surplus
inventory from distributors for inclusion in the scheme. In the
year ended 31 December 2014 the cost for this campaign was
approximately RMB 11.8 million.
The Board considers that the policy has a number of commercial
benefits for the Group and the Camkids brand, for instance removing
older products from the retail space (which can be detrimental to
the Group's brand and degrade in quality over time whilst in
storage). The Directors consider the commercial interests of the
Camkids business and the promotion of brand awareness in China in
the longer term are better served through the donation of surplus
distributor inventory to disadvantaged children rather than by
encouraging distributors to reduce inventory levels by "dumping"
older and heavily discounted product into the market. The operating
management also feels that this would have an adverse impact on the
Group's new agreement with Disney. The widely publicised slowing in
the Chinese economy has resulted in a significant increase in the
levels of older and slower-moving inventory held by distributors.
Management has therefore decided to take this opportunity to
continue its established policy of buying back surplus Camkids
inventory on a selective basis for charitable donation, but on a
significantly enhanced level to reflect the current difficult
trading conditions. In the year ended 31 December 2015 the cost to
the Group of such donations is expected to be approximately RMB 80
million.
As at the end of June 2015, the Group's distributors operated a
total of 1,267 Camkids branded retail stores, a decrease of 131
from 31 December 2014 (H1-2013: 1,336 retail stores). The
distributors and their franchisees have been reviewing and
restructuring their stores according to local retail market
sentiment. Consolidating their resources is anticipated to put them
in a better position to manage the difficult trading environment
ahead.
E-commerce
E-commerce sales accounted for approximately 1.5% of our total
revenue in H1-2015. (H1-2014: 0.9%). The Group believes that
China's remote villages and counties represent a huge potential
market for Camkids. Major logistic companies are gradually
expanding their delivery scope to accommodate the increasing demand
from these areas. Updating consumers on the Company's latest
developments is an important tool for communication with its
customers and promotion of the brand. The Group has therefore
started an online account on Sina.com (an equivalent of Twitter in
China) which updates subscribers on the Company's latest news and
events.
Spring/Summer trade fair
Camkids' Spring/Summer 2016 sales fair was held at the Group's
manufacturing facility in Fujian province between 29 August and 4
September 2015 and was the first opportunity for the Group to
showcase the first series of the Captain America and Avengers
character related products. Initial feedback from the distributors
has been encouraging, bearing in mind the general market
sentiment.
Research and development
The Group continues to focus on and invest heavily in research
and development and it remains an important part of the Group's
strategy of translating innovative ideas into product sales. The
team has been developing innovative and fashionable products that
meet the requirements of consumers while, at the same time,
managing the manufacturing costs and keeping Camkids' products
competitive.
Manufacturing facility
Following our review of planned costs for 2015, the Group is
currently operating on four production lines at 68% capacity and it
will continue to review its production plans based on orders
received. An independent consultancy team has been engaged to
review the Group's production processes in order to reduce waste
and improve productivity.
Board Changes
On 29 September 2015 Jack-Franck Dossin and Pei Eng resigned as
Directors of the Company.
Suspension of shares
On 29(th) September 2015 the Company's Nominated Advisor,
Allenby Capital, resigned with immediate effect. This caused AIM to
suspend trade in the Company's shares pending the appointment of a
new nominated adviser. The Company is committed to its listing on
AIM and is currently investigating options in this regard.
Outlook
As previously announced, the Board expects that trading
conditions in 2015 and 2016 will continue to be challenging. The
recent volatility in the Chinese stock market and the devaluation
of the Renminbi currency have affected the overall business
environment, already characterised by declining consumer confidence
and lower spending. Nevertheless, the Board believes that despite
the challenging market conditions our brand and market position are
solid and we view the future with reasonable confidence.
Zhang Congming
Executive Chairman
30 September 2015
Financial Review
Results overview
The Group's order book for Autumn/Winter 2015 decreased by 52.0%
as compared with the order book for Autumn/Winter 2014. As noted
above, our distributors are facing excess inventory as retail
trading conditions remains challenging. The slowing Chinese economy
has resulted in lower consumer confidence, which appears to be
resulting in lower consumer spending.
Operating results
Revenue decline for the period was driven by:
-- a slowing Chinese economy;
-- political policy impacting consumer spending; and
-- an increasingly competitive retail market as international
brands offer greater discounts or adjust their retail prices and
more brands enter the children's segment.
Revenue decreased by 40.3% to RMB 274.0 million (H1 2014: RMB
458.8 million) with gross profit decreasing by 50.2% to RMB 87.2
million (H1 2014: RMB 175.0 million). Operating profit before tax
decreased by 90.9% to RMB 11.5 million (H1 2014: RMB 126.4
million).
The difficult trading conditions within China, coupled with
price pressure and competition from international brands, has
necessitated price reductions of between 5% and 12% across our
products. Our order book for H1 2015 was 38% down on the H1 2014
figure and our H2 2015 order booking is RMB 292.5 million, 52% down
on the H2 2014 number.
The breakdown of proportion of the Group's revenue and gross
profit margin by products group for H1 2015 and H1 2014 is as
follows:
H1 2015 H1 2014
Product group % of Average % of Average
Group gross Group gross
total profit total profit
revenue margin revenue margin
--------- -------- --------- --------
Camkids clothing 52.8% 29.6% 52.9% 37.0%
Camkids footwear 38.9% 33.6% 38.2% 38.1%
Camkids accessories 8.3% 37.9% 8.9% 45.3%
OEM and ODM
footwear 0.0% 0.0% 0.0% 0.0%
--------- -------- --------- --------
100.0% 31.8% 100.0% 38.1%
--------- -------- --------- --------
The Group's top five distributors contributed 40.5% of total
revenue for the period (H1 2014: 41.4%).
Expenses
Selling and distribution expenses for the period under review
increased by 91.5%, approximately 18.5% of the Group's total
revenue (H1 2014: 5.8%). This is largely attributable to increased
advertising costs as the Group rebrands its retail stores (which
include new display shelves) and sponsored a number of local events
to raise the Group's profile. It has also increased its e-commerce
advertising on Tmall and JD.com and other online advertising
through Sina.com (an equivalent of Twitter in China).
During the period, the Group opened 74 new retail stores and
renovated 256 of its existing stores.
Administrative expenses as a proportion of revenue were
approximately 9.8% (H1 2014: 4.9%), and were largely attributable
to R&D expenses.
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In view of the challenging market conditions, remuneration for
the Board as well as supervisory level and above employees has been
reduced by 5% -10%.
As a result of the above, the Group's operating profit before
tax decreased by 90.9% to RMB 0.7 million resulting in an operating
profit before tax margin of 0.3% (H1 2014: 27.6%).
Balance sheet
Camkids maintained its strong balance sheet during the period,
with a net cash position of RMB 440.5 million as at 30 June 2015
(31 December 2014: RMB 401.5 million; and 30 June 2014: RMB 485
million). However, this is prior to the effect of the distributor
changes and charitable donations, further details of which were
announced on 10 August 2015 and have been discussed above.
As referred to in the Executive Chairman's Statement above,
Camkids' agreements with its distributors contain provisions in
relation to the repurchase of unsold Camkids products the payment
of compensation should Camkids decide to terminate those
agreements. The agreements also include similar provisions in the
event the distributors do not exercise their priority renewal
rights and the agreements are effectively allowed to expire. No
distributor has ever failed to renew an agreement in the history of
the Group.
Net assets increased to RMB 875.9 million, an increase from RMB
867.9 million at 31 December 2014. Trade Receivables decreased by
RMB 71.6 million reflecting the trend in the order book. As
announced on 10 August 2015, the Group has temporary increased the
current payment terms to 180 days until the end of the 2015, after
which it will revert back to 120 days. This is on account of the
continuing difficult trading conditions in China faced by the
Group's distributors.
Earnings per share
The earnings per share (basic and diluted) for H1 2015, based on
the weighted average number of ordinary shares outstanding for the
period ended 30 June 2015 of 75.4 million, is approximately 1.0
pence per share.
Huang Peijin
Financial Controller
30 September 2015
Consolidated statement of comprehensive income
Six months ended 30 June 2015
Unaudited Unaudited Audited
6 months 6 months Year
to to ended
30 June 30 June 31 December
2015 2014 2014
RMB'000 RMB'000 RMB'000
Revenue 274,002 458,847 1,015,942
Cost of sales (186,794) (283,840) (640,171)
---------- ------------ ------------
Gross profit 87,208 175,007 375,771
Other income 13 - 12
Selling and distribution
expenses (50,596) (26,418) (90,962)
Administrative
expenses (26,777) (22,633) (49,634)
---------- ------------ ------------
Operating profit 9,848 125,956 235,187
Finance income 1,943 719 3,781
Finance cost (253) (238) (494)
---------- ------------ ------------
Profit on ordinary
activities before
taxation 11,538 126,437 238,474
Income tax expense (3,538) (35,806) (64,807)
---------- ------------ ------------
Profit after
taxation 8,000 90,631 173,667
---------- ------------ ------------
Profit for the period 8,000 90,631 173,667
Other comprehensive
income - - -
---------- ------------ ------------
Total comprehensive
income attributable
to owners of the
parent 8,000 90,631 173,667
========== ============ ============
Earnings per share
Basic and diluted
(RMB) 0.10 1.20 2.28
Consolidated statement of financial position
for the six months ended 30 June 2015
Unaudited Unaudited Audited
As at As at As at
30 June 30 June 31 December
2015 2014 2014
RMB'000 RMB'000 RMB'000
Non-current assets
Land use rights 38,860 9,624 39,332
Property, plant
and equipment 62,169 36,494 53,351
---------- ------------
101,029 46,118 92,683
---------- ---------- ------------
Current assets
Inventories 38,994 30,967 43,519
Trade and other
receivables 338,879 333,417 408,244
Cash and bank
balances 446,513 491,505 407,472
---------- ------------
824,386 855,889 859,235
---------- ---------- ------------
Total assets 925,415 902,007 951,918
========== ========== ============
Current liabilities
Trade and other
payables 43,468 77,131 67,354
Short term borrowings 6,000 6,000 6,000
Deferred tax - 3,553 -
Income tax payable - 12,799 10,616
---------- ---------- ------------
49,468 95,930 162,116
Equity
Stated capital
account 74,996 61,499 74,996
Statutory reserves 48,897 43,169 48,896
Translation reserve 9,051 9,051 9,051
Accumulated profits 743,003 688,805 735,005
---------- ------------
875,947 802,524 867,948
Total equity and
liabilities 925,415 902,007 951,918
========== ========== ============
Consolidated statement of changes in equity
for the six months ended 30 June 2015
Stated
capital Translation Accumulated Statutory
account reserve profits reserve Total
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
As at 1 January
2015 74,996 9,051 735,004 48,896 867,947
Comprehensive
income
Profit for
the period - - 8,000 - 8,000
Other comprehensive
income
Movements
in foreign - - - - -
exchange reserve
--------- -------------- -------------- ------------ ----------
Total comprehensive
income 74,996 9,051 743,004 48,896 875,947
--------- -------------- -------------- ------------ ----------
Transaction
with owners
Dividends - - - - -
paid
--------- -------------- -------------- ------------ ----------
Total transaction - - - - -
with owners
--------- -------------- -------------- ------------ ----------
As at 30 June
2015 74,996 9,051 743,004 48,896 875,947
--------- -------------- -------------- ------------ ----------
As at 1 January
2014 61,499 9,051 598,173 43,169 711,892
Comprehensive
income
Profit for
the period - - 90,632 - 90,632
Other comprehensive
income
Movements
in foreign - - - - -
exchange reserve
Total comprehensive
income 61,499 9,051 688,805 43,169 802,524
Transaction
with owners
Dividends - - - - -
paid
Total transaction - - - - -
with owners
As at 30 June
2014 61,499 9,051 688,805 43,169 802,524
As at 1 January
2014 61,499 9,051 598,173 43,169 711,892
Comprehensive
income
Profit for
the year - - 173,667 - 173,667
Other comprehensive
income
Movements
in foreign - - - - -
exchange reserve
--------- -------- ---------- --------- ----------
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
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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 six months ended 30 June 2015
Unaudited Unaudited
6 months 6 months Audited
to to Year ended
30 June 30 June 31 December
2015 2014 2014
RMB'000 RMB'000 RMB'000
Cash flow from operating
activities
Profit for the period
before taxation 11,538 126,437 238,474
Adjustment for:
Loss on disposal of
property, plant and
equipment 43 8 8
Depreciation of property,
plant and equipment 2,565 2,090 4,399
Amortisation charge 472 121 243
Interest income (1,943) (719) (3,781)
Interest expense 253 238 494
---------- ---------- ------------
Operating cash flows
before movements in
working capital 12,928 128,175 239,837
(Increase)/decrease
in inventories 4,526 823 (11,729)
(Increase)/decrease
in trade and other receivables 76,670 142,177 67,351
Increase/(decrease)
in trade and other payables (24,463) (55,114) (64,892)
---------- ---------- ------------
Cash generated from
operating activities 69,661 216,061 230,567
Interest received 1,943 719 3,781
Interest paid (253) (238) (494)
Income tax paid (21,460) (43,323) (78,061)
---------- ---------- ------------
Net cash generated from
operating activities 49,891 173,219 155,793
Cash flow from investing
activities
Proceeds from disposal
of property, plant and
equipment 95 8 8
Acquisition of land
use rights (29,830)
Acquisition of property,
plant and equipment (10,945) (1,154) (20,319)
---------- ---------- ------------
Net cash used in investing
activities (10,850) (1,146) (50,141)
Cash flow from financing
activities
Issue of new shares - - -
New bank loans obtained 6,000 6,000 6,000
Repayment of bank borrowings (6,000) (6,000) (6,000)
Dividends declared and
paid (gross) - - (17,611)
Net cash used in financing
activities - - (17,611)
Net increase in cash
& cash equivalents 39,041 172,073 88,040
Cash and equivalent
at beginning of period 407,472 319,432 319,432
---------- ---------- ------------
Cash and cash equivalent
at end of period 446,513 491,505 407,472
---------- ---------- ------------
Notes to the financial information
1. General information
Camkids Group plc ("the Company" or "Camkids") was incorporated
and registered as a limited liability nil par value company under
the laws of Jersey on the 10 August 2012 and with company number
111245. The Company's registered office is at 13-14 Esplanade, St
Helier, Jersey JE1 1BD. The Company is domiciled in Jersey.
This financial information is for the Company and subsidiary
undertakings.
Camkids Group plc is a holding company for Camkids (HK) Holding
Limited, Jinjiang Mingwei Shoes & Garments Co., Ltd ("Ming
Wei") and Jinjiang Lihong Clothing Co., Ltd (together, the
"Group").
The principal place of business of the Group is in the People's
Republic of China ("PRC").
This interim financial information is unaudited and has not been
reviewed by the auditors under International Standard on Review
Engagements (UK and Ireland) 2410.
This consolidated interim financial information has been
approved for issue by the board of directors on 30 September
2015.
2. Accounting policies
The June 2015 interim consolidated financial information has
been prepared in accordance with the principles of 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"). They do not include all of the information required for
full annual financial statements, and should be read in conjunction
with the consolidated financial statements of the Group for the
year ended 31 December 2014. All principal accounting policies of
the Group are consistent with those set out in the Annual Report
and Accounts for 2014, have been consistently applied to all
periods presented and are consistent with those which the Group
expects to apply in its forthcoming financial statements for the
year ending 31 December 2015.
The financial information is measured and presented in the
currency of the primary economic environment in which the key
trading entity operates (its functional currency). The financial
information of the Group is 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.
Intra-group balances and transactions and any income and
expenses arising from intra-group transactions are eliminated on
consolidation. Unrealised gains and losses arising from
transactions with associates and joint ventures are eliminated
against the investment to the extent of the Group's interest in the
investee.
The financial information of the subsidiary is prepared for the
same reporting period as that of Group, using consistent accounting
policies.
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) Design, manufacture and sale of outdoor footwear, apparels
and accessories under the "Camkids" brand to distributors in the
PRC.
2) Manufacture and sale of footwear under the terms of OEM
agreement entered with the PRC export intermediaries.
The CODM monitors the operating results of each segment for the
purpose of performance assessments and making decisions on resource
allocation. Performance is based on assessing progress made on
projects and the management of resources used. 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 six month ended 30 June 2015 is as
follows:
Six month ended 30 June 2015
Distribution sales
Footwear Apparels Accessories Unallocated Total
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
Revenue
and results:
Revenue
from external
distributors 106,635 144,682 22,685 - 274,002
Segment
profit 35,839 42,778 8,591 - 87,208
Unallocated
other income
and expenses
Interest
income 1,943 1,943
Other income 13 13
Selling
& distribution
expenses (50,596) (50,596)
Administrative
expenses (26,777) (26,777)
Interest
expenses (253) (253)
Profit before
tax 11,538
----------
Assets and
liabilities
Assets 37,825 62,170 20,053 805,367 925,415
Liabilities 14,406 14,288 1,320 19,454 49,468
Depreciation
and additions
Depreciation 553 740 522 - 1,815
Additions
to property,
plant and
equipment 6,782 9,072 6,401 - 22,255
Revenue from the Group's top three distributors represent
approximately RMB71.4 million (or 26.1 per cent) of the total
revenue for the six months ended 30 June 2015, comprising RMB25.7
million (9.4 per cent), RMB23.7 million (8.7 per cent) and RMB22.0
million (8.0 per cent), respectively.
(MORE TO FOLLOW) Dow Jones Newswires
September 30, 2015 04:00 ET (08:00 GMT)
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
Footwear Apparels Accessories Unallocated Total
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)
Administration
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 RMB101.6
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 six months ended 30 June 2014 is as
follows:
Six months ended 30 June 2014
Distribution sales
Footwear Apparels Accessories Unallocated Total
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
Revenue
and results:
Revenue
from external
distributors 175,220 242,682 40,945 - 458,847
Segment
profit 66,761 89,685 18,561 - 175,007
Unallocated
other income
and expenses
Interest
income 719 719
Other income - -
Selling
& distribution
expenses (26,418) (26,418)
Administrative
expenses (22,633) (22,633)
Interest
expenses (238) (238)
Profit before
tax 126,437
----------
Assets and
liabilities
Assets 27,252 47,481 12,066 815,208 902,007
Liabilities 27,319 31,456 4,027 34,905 97,707
Depreciation
and additions
Depreciation 475 662 465 - 1,602
Additions
to property,
plant and
equipment 244 340 239 - 823
Revenue from the Group's top three distributors represent
approximately RMB124.5 million (or 27.1 per cent) of the total
revenue for the six months ended 30 June 2014, comprising RMB44.0
million (9.6 per cent), RMB43.2 million (9.4 per cent) and RMB37.2
million (8.1 per cent), respectively.
4. Taxation
Pro-forma Pro-forma
6 months 6 months Year ended
to to 31 Dec
30 Jun 30 Jun 2014
2015 2014 RMB'000
RMB'000 RMB'000
----------- ---------- ------------
Current income
tax 10,844 32,252 64,807
Deferred taxation (7,306) 3,553 -
Income tax expense 3,538 35,805 64,807
----------- ---------- ------------
The taxation charge for the six month ended 30 June 2015 has
been based on the estimated effective rate of 25% in China.
5. Earnings per share
The calculation for basic and diluted earnings per share for the
relevant period was based on the profit attributable to ordinary
shareholders for the six months ended 30 June 2015, 30 June 2014,
and the year ended 31 December 2014 of RMB8,000,000 (30 June 2014:
RMB90,631,000; 31 December 2013: RMB173,667,000). The weighted
average number of ordinary shares outstanding during the six months
ended 30 June 2015, 30 June 2014, and the year ended 31 December
2014 and the effect of the potentially dilutive ordinary shares to
be issued (of which there are none) are shown below.
Pro-forma Pro-forma
6 months 6 months Year ended
to to 31 Dec
30 Jun 30 Jun 2014
2015 2014 RMB'000
RMB'000 RMB'000
----------- ---------- ------------
Profit attributable
to equity holders
(RMB'000) 8,000 90,631 173,667
Weighted average
number of shares
('000) 77,759 75,428 76,234
Basic and diluted
per share (RMB) 0.10 1.20 2.28
6. Dividend
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.
No dividend was declared for the year ended 31 December
2014.
7. Inventories
As at
----------------------------------
Pro-forma Pro-forma
30 Jun 30 Jun 31 Dec
2015 2014 2014
RMB'000 RMB'000 RMB'000
Raw material 2,454 4,473 3,283
Work in progress 3,031 5,191 4,734
Finished goods 33,509 21,303 35,502
---------- ---------- ----------
38,994 30,967 43,519
---------- ---------- ----------
8. Trade and other receivables
As at
----------------------------------
Pro-forma Pro-forma
30 Jun 30 Jun 31 Dec
2015 2014 2013
RMB'000 RMB'000 RMB'000
Trade receivables 306,316 308,867 377,870
Advance payments
to suppliers 24,753 23,700 27,553
Other receivables 7,810 850 2,821
---------- ---------- ----------
338,879 333,417 408,244
---------- ---------- ----------
9. Other events
Change of distributors
The Camkids sales team monitors the performance of all of our
distributors closely and has done since the business began
manufacturing and selling its own branded apparel and footwear for
children and teenagers under the "Camkids" brand in 2009. Many of
our distributors have worked with us throughout that period. Our
April 2015 routine performance review highlighted that three of our
distributors had significantly underperformed since the beginning
of the year. Following the release of our annual results for the
period ended 31 December 2014, the Board concluded that the
distributors in question had failed to invest adequately, had
undertaken little or no local advertising or marketing activities
in support of the Camkids brand and had also experienced high rates
of staff turnover, resulting in inexperience selling staff. The
management of Camkids also considers that the level of inventory
held by these three distributors is excessively high, at over 40
per cent of their sales rather than the 20 per cent norm for other
of the Group's distributors, and that the distributors were making
no concerted effort to shift inventory from prior years. As at 31
July 2015, the level of receivables owed by these three
distributors was RMB59.5 million. These distributors operate
approximately 200 stores.
Therefore, as announced on 10 August 2015, following a detailed
review of the available options, the operating management team
decided that the long-term commercial interests of Camkids were
best served by removing the three distributors and replacing them
with two new partners who would promote the Camkids brand and
maintain the high standards the Group expects of its appointed
distributors.
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