Interim results and maiden dividend declaration

Camkids Group plc

("Camkids" or the "Group")

Interim results and maiden dividend declaration

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 unaudited results for the six months ended 30 June 2013.

Financial highlights

The illustrative exchange rate as at 16 September 2013 is 1 GBP : 9.76049 RMB.

* 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.

Commenting on the interim results, Zhang Congming, Executive Chairman of Camkids, said: "The Board is pleased to announce these strong results for the first half of 2013. The Group's order book has grown during the period with a new distributor appointed in Shanghai and 75 new stores opened since the year end. At the end of this year the Group will discontinue its non-core OEM operations in order to focus on areas of growth. Having taken initial steps to commence e-commerce sales, the Group is also looking to focus its forthcoming expansion in fast growing tier three cities in China, which have considerable government support and are benefiting from increasing urbanisation. The Board believes that the long-term outlook for Camkids remains promising.

"The Board is aware of the challenging competitive environment in which it operates and has noted that some of its distributors are becoming more cautious. Though this sentiment has not impacted the Group's trading to date, the Board adopts a conservative stance towards its prospects for the first half of 2014 and will update the market at the full year pre-close in early 2014. The Board, however, anticipates that the results for the current financial year will be in line with market expectations, and this confidence in the Group's future is reflected in today's announcement of a maiden interim dividend of 2.3 pence per share."

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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 teenage 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 - 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 across the majority of provinces in China.

The children and teenagers outdoor and sportswear market was worth RMB10.9 billion in annual sales in 2012 and is forecast to grow at a CAGR of 16.9% between 2012 and 2016.

In September 2012 the Group was included as one of the top 500 brands in Asia, following earlier recognition as one of the top ten children's shoe brands at the China Shoe Industry Summit Forum in 2010.

In March 2013 the Group received an award for the China Top Sales of Teenager Outdoor Sport Footwear 2012 for the second year running.

For more information and to view an investor relations video please visit www.camkids-ir.com.

*All market statistics are derived from independent market research carried out by Euromonitor International in 2012 commissioned by the Company.

Executive Chairman's Statement

On behalf of Camkids Group, a leading Chinese designer, manufacturer and distributor of branded outdoor clothing, footwear and equipment for children and teenagers, I am delighted to present the Group's interim results for the six months ended 30 June 2013.

The Board is pleased to report that solid progress has been made during the period.

The Group continues to focus on innovation and design in order to retain Camkids' status as an innovative and leading designer of children's and teenager's clothing, footwear and equipment, and the Board is pleased to have increased its R&D capabilities during the period. During the period a number of the Group's larger competitors have struggled to continue to grow and have reduced their prices in order to sell excess stock, which has resulted in the Group experiencing some increased price pressure. However, it is pleasing to note that the childrenswear divisions of these companies have continued to perform well, which validates Camkids' strategy which has consistently focused on childrenswear.

Sales and distribution

Camkids has continued to invest in sales and marketing during the period, running product evaluation events in August 2013 that brought together distributors to provide feedback on new products that were then launched at the spring/summer 2014 sales fair earlier this month. Other marketing and promotional events have included sponsorship of sporting events and a children's summer camp in Taiwan, as well as fashion shows which took place on 1 June 2013, Children's Day in Hunan and Shangzi Provinces. These activities have helped to raise the profile of the Camkids brand amongst the Group's target customers.

Camkids' distribution was enhanced with the successful appointment of a distributor to cover Shanghai during the period under review. This distributor has already opened a number of stores in Shanghai, including two in well known, high-end shopping malls; the Shanghai Westgate Mall and New World City.

The Board is excited that during the period the Group launched an e-commerce site, considerably broadening Camkids' access to potential customers. Camkids has signed an agreement with Taobao, the largest e-commerce website in China, and is pleased to be in the initial stages of selling the Group's products through this popular site, which can be viewed at http://mwmuying.tmall.com.

Research & Development

R&D continues to be a focus for Camkids as the Board works on driving product innovation in order to remain at the forefront of its markets. In line with its stated strategy at the time of its admission to AIM, the Group utilised part of the placing proceeds during the period and established a clothing R&D centre, focused on developing ideas for the Group's clothing division. Overall, the R&D team has increased to a total of 109 staff (31 December 2012: 82).

Production

As previously announced and committed to at the time of the Group's admission to trading on AIM, the Group has opened its fifth production line which has been in operation since May 2013. This additional line is currently running at a utilisation rate of approximately 86.6% and the Board expects that this rate will increase further.

Given the strength of the Group's distribution network, as well as its focus on developing innovative products, Camkids intends to increase its focus on the production and manufacturing of the Group's own brand products. In line with this strategy, and in order to maximise the Group's efforts on its own brand products, the Group intends to cease manufacture of OEM products for other brands with effect from the end of the current financial year. This will enable Camkids to be fully focused on its own higher margin product range.

Dividend

The Board is pleased to announce that the Group intends to pay a maiden interim dividend of 2.3 pence. The interim dividend will be payable on 22 November 2013 to shareholders on the register at the close of business on 25 October 2013.  This is driven by the Board's confidence in the future growth strategy for the Group.

Strategy and outlook

In light of the challenging competitive environment in tier one and tier two cities, and as the Chinese government focuses on growing and developing tier three cities, the Board is actively pursuing its stated expansion strategy into tier three cities. This will allow Camkids to access the increasingly affluent populations in these cities, which are being positively impacted by ongoing urbanisation and increases in disposable income. These tier three cities will be targeted with the mid to lower end of the Group's product ranges. The Board believes that this strategy will be of long-term benefit to the Group.

Camkids has noted that some of its distributors are becoming more cautious in relation to the overall current trading environment for the sector. Though this sentiment has not impacted the Group's trading to date, the Board adopts a conservative stance towards its prospects for the first half of 2014 and will update the market at the full year pre-close in early 2014.

The Board continues to view the future with confidence and remains committed to its progressive dividend policy based on the Group's long-term prospects.

Zhang Congming

Executive Chairman

16 September 2013

Financial Review

Basis of reporting

The Group financial information in this report have been prepared in accordance with the principles of International Financial Reporting Standards ("IFRS"), as adopted for use in the EU, together with the associated International Financial Reporting Interpretation Council ("IFRIC") interpretations.

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 throughout the period and are the ones the Group expects to apply in its forthcoming financial statements for the year ending 31 December 2013.

Results overview

Operating results

Revenue growth for the period has been driven by Camkids' strong market position and the Group's ability to increase selling prices due to the innovative and advanced products that it produces. This is also driven by the increase in the number of stores during the period, including two high profile stores that were opened in Shanghai.

Revenue increased by 20.9% to RMB433.8 million (H1 2012: RMB358.8 million) with gross profit increasing by 25.0% to RMB165.9 million (H1 2012: RMB132.7 million). Operating profit before tax increased by 15.4% to RMB121.9 million (H1 2012: 105.7 million).

The breakdown of proportion of the Group's revenue and gross profit margin by products group for H1 2013 and H1 2012 is as follows:

The Group's top five distributors contributed 49.1% of total revenue for the period (H1 2012: 47.4%).

Expenses

Selling and distribution expenses for the period under review increased by 61.4%, approximately 5.3% of the Group's total revenue (H1 2012: 4.0%). This is largely attributable to increased advertising costs as the Group increased its promotional activities and sponsored a number of local events to raise the Group's profile.

Additionally, the costs incurred were associated with the fit out of new and existing stores, as well as increased staff. During the period, the Group opened 115 new retail stores and renovated 126 of its existing stores. New distributors were appointed in Anhui in March 2013 and in Shanghai in May 2013.

Administrative expenses as a proportion of revenue were approximately 4.9% (H1 2012: 3.6%), and were largely attributable to increases in staff numbers as well as some salary adjustments that were required for staff retention. R&D expenses also increased during the period driven by the new R&D centre for clothing, and the resultant increase in headcount.

Despite these expenses, the Group's operating profit before tax increased by 15.4% to RMB121.9 million resulting in an operating profit before tax margin of 28.1% (2012: 29.4%). Camkids will continue to design and develop more innovative and high quality products to seek to ensure the Group maintains its profit margins.

Taxation

Camkids' PRC operating subsidiary is subject to an income tax rate of 25%, which is in accordance with the PRC Enterprise Income Tax Law that came into effect on 1 January 2008. The Group's operating profit after tax increased to RMB90.2 million (H1 2012: RMB79.2 million), an increase of 13.9%.

Balance sheet

Camkids has maintained its strong balance sheet during the period, with a net cash position of RMB288.0 million as at 30 June 2013 (31 December 2012: RMB130.7 million). This includes the proceeds of the placing that was conducted when the Group joined AIM on 24 December 2012 which totalled £6.4 million gross. These IPO proceeds were not included in the cash position as at 31 December 2012, as these proceeds had not been received by the Group at that time.

Net assets increased to RMB595.0 million, an increase from RMB504.9 million at 31 December 2012. As previously announced, the Group has revised the payment terms it grants to its distributors from 90 days to 120 days, which is in line with the PRC industry standard. All trade receivables are within the 120 day limit and the Group has no bad debt.

Earnings per share

The earnings per share (basic and diluted) for H1 2013 based on the weighted average number of ordinary shares outstanding for the period ended 30 June 2013 of 75.4 million is approximately 12.3 pence.

Ng Pei Eng

Chief Finance Officer

16 September 2013

Consolidated statement of comprehensive income

Six months ended 30 June 2013

Consolidated statement of financial position

for the six months ended 30 June 2013

Consolidated statement of changes in equity

for the six months ended 30 June 2013

Consolidated statement of cash flows

for the six months ended 30 June 2013

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 and Jinjiang Mingwei Shoes & Garments 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 16 September 2013.

2. Accounting policies

The June 2013 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 2012.  All principal accounting policies of the Group are consistent with those set out in the Annual Report and Accounts for 2012, 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 2013.

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 2013 is as follows:

Six monthended 30 June 2013

Revenue from the Group's top three distributors represent approximately RMB133.7 million (or 30.8 per cent) of the total revenue for the six monthended 30 June 2013, comprising RMB46.8 million (10.8 per cent), RMB45.0 million (10.4 per cent) and RMB41.8 million (9.6 per cent), respectively.

The segment information provided to management for the reportable segments for the year ended 31 December 2012 is as follows:

Year ended 31 December 2012

Revenue from the Group's top three distributors represent approximately RMB287.6 million (or 31.5 per cent) of the total revenue for the year ended 31 December 2012, comprising RMB98.5 million (10.8 per cent), RMB95.7 million (10.5 per cent) and RMB93.4 million (10.2 per cent), respectively.

The segment information provided to management for the reportable segments for the six month ended 30 June 2012 is as follows:

Six monthended 30 June 2012 - Pro-forma

Revenue from the Group's top three distributors represent approximately RMB109.8 million (or 30.6 per cent) of the total revenue for the six monthended 30 June 2012, comprising RMB38.6 million (10.8 per cent), RMB36.0 million (10.0 per cent) and RMB35.3 million (9.8 per cent), respectively.

4. Taxation

The taxation charge for the six month ended 30 June 2013 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 2013, 30 June 2012, and the year ended 31 December 2012 of RMB90,153,000 (30 June 2012: RMB79,171,000; 31 December 2012: RMB198,318,000). The weighted average number of ordinary shares outstanding during the six months ended 30 June 2013, 30 June 2012, and the year ended 31 December 2012 and the effect of the potentially dilutive ordinary shares to be issued (of which there are none) are shown below.

6. Dividend

The Group has announced that it intends to pay a maiden interim dividend of 2.3 pence. The interim dividend will be payable on 22 November 2013 to shareholders on the register at the close of business on 25 October 2013.

7. Inventories

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