Preliminary Results

Camkids Group plc

("Camkids" or the "Group")

Preliminary 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 maiden preliminary results for the year ended 31 December 2012.

Highlights

The illustrative exchange rate as at 8 April 2013 is 1 GBP : 9.5 RMB.

Commenting on the preliminary results, Zhang Congming, Executive Chairman of Camkids, said: "The Board is pleased to report on a successful period for the Group, which culminated in Camkids joining AIM in December 2012. The results are ahead of market expectations and the Board believes that there is considerable potential for further growth in our target markets.

"The Group has made considerable progress during the period and has invested the funds raised at IPO in its already strong R&D team as well in brand building, promotion and increasing its marketing expenditure. The Board intends to invest further in R&D during the current year in order to retain Camkids' status as an innovative and leading designer of children's and teenagers' clothing, footwear and equipment, as well as on establishing a new production line at its manufacturing facility, brand building, promotion and enhancing its distribution network. The Board is optimistic about the future prospects of the Group and remains committed to delivering shareholder value."

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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.

The children and teenagers outdoor and sportswear market is currently worth RMB10.9 billion in annual sales and is forecast to grow at a CAGR of 16.9%* between 2012 and 2016. The Group currently has an 11.1%* market share by total sales volume.

Camkids' primary route to market for the sale of its products is through its extensive network of distributors across the majority of provinces in China.

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 please visit www.camkids-ir.com.

*All market statistics have been provided by Euromonitor International in 2012 on behalf of 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 our maiden preliminary results since the Group successfully joined AIM on 24 December 2012.

Overview

The Board is pleased to report that the Group has achieved strong results for the period and that these are ahead of market expectations. This has been achieved by focusing on the Group's stated strategy of designing and manufacturing fashionable, premium products aimed at a growing market. During the period under review Camkids has continued to focus on mid and high end markets in Chinese tier one and two cities, supplemented by sales into some tier three cities. The Board is pleased with the progress that the Group made during the year as Camkids continued to strengthen its presence in the Chinese domestic marketplace.

Since the year end, Camkids was pleased to appoint a new distributor for the Anhui province to further strengthen our presence in that territory. The Board plans to roll out 20 stores in that region starting from March 2013.

In March 2013, the Board was pleased to receive an award for the China Top Sales of Teenager Outdoor Sport Footwear 2012 for the second year running, as well as being awarded the Consumer Most Trusted Brand from China Industrial Information Issuing Center, and I am one of two speakers invited to make a speech at the Beijing People's Conference Hall at the ceremony.

Financial Results

Revenue increased by 23.0% to RMB912.5 million and the Group's gross profit margin has improved to 37.1% from 35.9% in 2012, underpinned by:

The Group's profit before tax has increased by 25.2% to RMB267.6 million, after deduction of the expenses relating to the listing of Camkids on AIM in December 2012. Although the Group only received the proceeds from the IPO in early January 2013, Camkids' net cash position as of 31 December 2012 was RMB130.8 million (2011: RMB 73.9 million).

Clothing Business

Camkids offers a wide range of outdoor clothing such as weather jackets, waterproof trousers, ski jackets, shirts, t-shirts and skirts. The revenue from the clothing business has increased by 26.8% to RMB517.3 million, which is approximately 56.7% of the Group's annual revenue in FY2012 (2011: 55.0%). The Group currently outsources the manufacturing of its clothing and accessories to independent third party OEMs but Camkids still achieved an average gross profit margin of 36.9% (2011: 36.0%). This margin is achievable because Camkids is one of the few companies targeting the children's outdoor clothing and accessories market and, when combined with the Group's strong brand, this means that the Group has strong pricing power. To ensure that the Group's high quality standards are met by these OEMs, Camkids conducts random evaluations of their performance and regularly sends its own highly trained quality controllers to the various manufacturing facilities in order that they can inspect the quality of the manufacturing process at different phases of the process.

Footwear Business

The Group manufactures the majority of its footwear products internally at its production facility in Jinjiang City, Fujian province. Camkids currently operates four footwear production lines with a total capacity of approximately 3.2 million pairs of footwear per annum for its Camkids branded footwear products and the OEM footwear products. The Group's production utilisation rate for 2012 was approximately 92.2% (unchanged from 2011). Camkids intends to increase its production capacity by adding one more production line in this facility by the second quarter of 2013.

Within Camkids branded footwear, revenue has increased by 21.0% to RMB283.1 million, which is approximately 31.0% of the Group's annual revenue in FY2012, an average gross profit margin of 36.8% (2011:35.3%).

In terms of the OEM footwear, Camkids manufactures footwear for two well known Western sports brands and this aspect of the footwear business contributed approximately 3.6% of the Group's annual revenue in 2012 with a gross profit margin of 22.9% (2011: 4.3% and 23.5% respectively). The Board continues to shift the Group's focus to the sale and marketing of its own Camkids brand (which attract a higher margin) and is shifting away from actively marketing OEM sales orders which command a lower gross profit margin.

Equipment & accessories business

Camkids offers a wide range of equipment and accessories from caps, torches, socks, sleeping bags, and tents.  The Group sub-contracts all of the manufacturing of its equipment and accessories to third party OEMs, which are located principally in southern China. The Group maintains the same standard procurement policy and procedure for all contract manufacturers. Although it only forms approximately 8.7% of the Group's annual revenues for FY2012 (2011:9.2%), this part of the business contributed a higher average gross profit margin of 46.0% (2011: 42.9%).

Research and development

As at 31 December 2012 the Group had an experienced design team of over 80 employees focused on developing products that reflect the latest trends and consumer preferences. In recent months this team has worked on developing features including GPS location, anti-slip characteristics, water resistance and breathability into Camkids' products. These features ensure that the Group's product range is well positioned to meet the requirements of children and teenagers during their outdoor sports activities.

Once the ideas are developed, the management team will select about 50 - 55% of the designs for inclusion in the product lines. The process is demand-driven to ensure that the Group's products lines are aligned to customers' requirement. Given the Group's focus on R&D, Camkids holds a number of patents specifically for children and teenager' outdoor footwear. The Board intends to expand the Group's R&D facilities and strengthen the R&D team, as well as investing more advanced equipment to ensure that the Group's profit margin remains strong.

Sales & distribution

The Group's products are sold and marketed under the recognised Camkids brand, through our 15 authorised distributors operating over 1,100 retail outlets across 29 provinces, four municipalities and five autonomous regions within PRC. The Group's distributors are given distribution rights over their respective territories and are not allowed to market or sell brands of other competing companies in any Camkids store or outlet. The Board recognises that effective brand promotion and marketing are crucial to creating consumer recognition, trust and awareness of the Camkids' brand and its products.

All distributors require the Group's prior approval to determine the location of a retail outlet and Camkids will contribute towards the costs of fitting out the new store (on average of RMB50,000 per new store). The Group also contributes towards the cost of periodic renovations of the retail stores on average every two to three years.

The Group has six personnel dedicated to travelling to visit Camkids' distributors and their stores periodically so as to ensure that the stores are properly managed. The Group also supports its distributors by providing market information on customer trends and preferences, product information, product display equipment and sales skills.

The Camkids Board has identified Guangdong, Anhui and Shanghai as good opportunities to expand the Group's distribution network. The Group is currently in discussions with some potentially interested distribution partners in Guangdong and Shanghai which the Board hopes will lead to further stores being established by end of 2013. Since the year end, Camkids was pleased to appoint a new distributor for the Anhui province to further strengthen our presence in that territory. The Board plans to roll out 20 stores in that region starting from March 2013. With the restructuring of the Chinese economy and continued expansion of the urban population throughout China, the Board is also planning expansion into tier three cities at the appropriate time.

Camkids will continue to increase its marketing and promotion activities through media advertising, sponsorship of sports events, local promotion activities and distributor sales fairs.

The Group's sales fair for the Autumn/Winter collection for 2013 was held on the week starting 25 March 2013 in Jinjiang City, and a fashion show was held to showcase the Group's new products.

Outlook

The Board is encouraged by current trading and is pleased to announce that the Group's order book for the 2013 spring / summer collection has increased by 22.5% over the same period last year. Camkids is extremely well positioned in the Chinese children's outdoor wear market as an established and trusted brand that has won numerous awards.

Camkids is one of the few companies focusing on the children and teenage segment of the outdoor clothing and footwear market and in 2012 the Group sold more teenage outdoor footwear than any other brand of company in China. With a strong R&D team that designs highly technical and innovative products, Camkids aims to capitalise on the growth in the children's sportswear market that is being driven by the one child policy as well as the increase in disposable income of Chinese families.

Whilst the Board recognises the importance of dividend income to Shareholders and intends to adopt a progressive dividend policy subject to the availability of distributable reserves and the retention of funds required to finance future growth of the Group, the Board is not recommending the payment of a dividend at this time. However, the Board is optimistic about the future prospects of the Group and remains committed to delivering shareholder value and anticipates declaring an interim dividend for the period ended 30 June 2013, subject to the Group's financial performance at that time.

Zhang Congming

Executive Chairman

8 April 2013

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 for use in the EU, together with the associated International Financial Reporting Interpretation Council ("IFRIC") interpretations and those parts of the Companies Act 1985 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 increased by 23.0% to RMB912.5 million (2011: RMB741.6 million) with gross profit up by 27.4% at RMB338.9 million (2011: RMB266.1 million) and operating profit before tax up 25.2% to RMB267.6 million (2011: RMB213.8 million).

The increase in revenue is as a result of the Group's ability to design new innovative and high technical products which allows Camkids to increase its unit selling price and also reflects the increase in the number of retail stores in China. As at 31 December 2012, we operated over 1,100 stores through authorised distributors. Camkids also operates two stores in Jinjiang City, one of which is the Group's flagship store adjacent to Camkids head office and manufacturing facility.

Breakdown of proportion of the Group's revenue and gross profit margin by products group for FY2012 and FY2011:

The Group's top five distributors contributed 50.9% of total revenue for FY2012 (2011: 50.0%).

Expenses

Selling and distribution expenses increased by 17.2% to RMB33.2 million (2011: RMB28.3 million), approximately 3.6% of the Group's total annual revenue (2011: 3.8%). This is mainly attributable to increased advertising and renovation subsidy fees for the new retail shops and renovation of existing shops. Camkids sponsored Quanzhou City's 4th Youth Arts and Entertainment TV programme, an inter school competition that was broadcast live on local Quanzhou television for three months. In FY2012, the Group opened 252 new retail shops and renovated 278 existing stores.

Administrative expenses have increased to RMB38.2 million from RMB23.9 million, mainly caused by the expenditure of RMB7.1 million surrounding the AIM listing and increased local taxes of RMB2.1 million. The Group incurred a total of approximately RMB11.3 million of expenses of which Camkids capitalised RMB4.2 million in accordance to the Group's accounting policy. Administrative salaries have increased from RMB4.3 million to RMB5.7 million as a result of an increase in the number of administrative staff from 96 to 98, together with some salary increment required for staff retention.

Despite these expenses, the Group's operating profit before tax increased by 25.2% to RMB267.6 million resulting in an operating profit before tax margin of 29.3% (2011: 28.8%). Camkids will continue to design and develop more innovative and high quality products to ensure the Group maintains its profit margins.

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 increased by RMB38.0 million to RMB198.3 million resulting in a net profit margin of 21.7% (2011: 21.6%) which is in line with the Group's increased revenue and gross profit.

Balance sheet

Camkids has a strong balance sheet with a net cash position of RMB130.8 million (2011: RMB73.9 million). The Group raised GBP6.4 million (approximately RMB65.7 million, gross) from the IPO placing and subscription in December 2012 and the associated costs of the placing and subscription were approximately RMB11.3 million. Camkids received the proceeds of the placing in January 2013.

Net assets at 31 December 2012 were RMB504.9 million, increased from RMB245.0 million last year. This is mainly attributable to the net profit recorded in the year. Trade receivables increased by RMB199.2 million which is in line with the increase in Camkids revenues. The Group has also revised the standard payment terms from 90 days to an industry average of 120 days due to requests from the Group's distributors. The average turnover days is approximately 111 days up from 74 days in FY2011.

Earnings per share

The earnings per share (basic and diluted) for FY2012 based on the weighted average number of ordinaryshares outstanding for the year ended 31 December 2012 of 63.9 million is approximately 32.6 pence.

IFRS makes an assumption that the Company has been operating for a full 12 month period in order to calculate the earnings per share for the year ended 31 December 2012. However, as the Company only acquired the Group at Admission on 24 December 2012, the management believes that using the total (non-weighted) number of ordinary shares at 31 December 2012 of 75.4 million, provides a more appropriate measure of performance. This would translate to adjusted profit per share of approximately 27.7 pence although this is a non IFRS measure.

Dividend policy

The Group will not pay a dividend for the year to 31 December 2012 as cash resources will be focused on growing the business. However, the Board is optimistic about the future prospects of the Group and remains committed to delivering shareholder value and anticipates declaring an interim dividend for the period ended 30 June 2013 (subject to the Group's financial performance at that time).

Ng Pei Eng

Chief Finance Officer

8 April 2013

Consolidated statement of comprehensive income

Year ended 31 December 2012

Consolidated statement of financial position

for the year ended 31 December 2012

Consolidated statement of changes in equity

for the year ended 31 December 2012

Consolidated statement of cash flows

for the year ended 31 December 2012

Notes to the financial statements

1. Accounting policies

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.

These financial statements are 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").

The functional currency of the key trading entity based in the PRC is the Chinese Renminbi and presentational currency of the Company and Group is also the Chinese Renminbi ("RMB").

The principal accounting policies are summarised below:

a) 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.

b) Standards, amendments and interpretations to published standards not yet effective

At the date of authorisation of these financial statements, the IASB and IFRIC have issued the following standards and interpretations which are effective for annual accounting periods beginning on or after the stated effective date.

c) Basis of consolidation

The consolidated financial statements incorporate the financial information of Camkids Group plc and its subsidiaries. A subsidiary is an entity (including special purposes entities) over which the group has the power to govern the financial operating policies, generally accompanied by a shareholding giving rise to the majority of the voting rights, as to obtain benefits from their activities.

A subsidiary is consolidated from the date on which control is transferred to the Group up to the effective date on which control ceases, as appropriate.

The consolidated financial statements present the results of the Camkids Group plc and its subsidiaries (the "Group") as if they formed a single entity.

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.

d) Business combinations outside the scope of IFRS 3

The Company was incorporated on 10 August 2012. A share sales and purchase agreement was entered into on 10 December 2012 between the Company and Zhang Congming. Upon completion of the above restructuring, the Company is the sole shareholder of Camkids HK.

Camkids HK was incorporated on 26 July 2010 and entered into an agreement to acquire the entire issued share capital of Ming Wei on 22 January 2011. Ming Wei, the Group's principal trading subsidiary, was incorporated on 20 April 1994.

In determining the appropriate accounting treatment for both of these transactions, the directors considered IFRS 3 "Business Combinations" (Revised 2008). However, they concluded that this transaction fell outside the scope of IFRS 3 (revised 2008) since the transactions described above represent a combination of entities under common control.

In accordance with IAS 8 "Accounting Policies, changes in accounting estimates and errors", in developing an appropriate accounting policy, the directors have considered the pronouncements of other standard setting bodies and specifically looked to accounting principles generally accepted in the United Kingdom ("UK GAAP") for guidance (FRS 6 - Acquisitions and mergers) which does not conflict with IFRS and reflects the economic substance of the transaction.

Under UK GAAP, the assets and liabilities of both entities are recorded at book value, not fair value (although adjustments are made to achieve uniform accounting policies). Intangible assets and contingent liabilities are recognised only to the extent that they were recognised by the legal acquirer in accordance within applicable IFRS. No goodwill is recognised, any expenses of the combination are written off immediately to the income statement and comparative amounts, if applicable, are restated as if the combination had taken place at the beginning of the earliest accounting period presented.

Therefore, although the Group reconstruction did not become unconditional until 10 December 2012, the consolidated financial statements are presented as if the Group structure has always been in place, including the activity from incorporation of the Group's trading subsidiary. All three entities had the same management as well as majority shareholders. Furthermore, as the Company was incorporated on 10 August 2012, the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated cash flow statements for the years ended 31 December 2012 and 31 December 2011 are pro forma while the consolidated statement of financial position as at 31 December 2011 was pro forma.

A statutory consolidated statement of comprehensive income and consolidated cash flow statements for the period ended 31 December 2012 would require the results to be pro-rated on a straight line basis to approximate the statutory results.

On this basis, the directors have decided that it is appropriate to reflect the combinations using merger accounting principles as a group reconstruction under FRS 6 - Acquisitions and mergers in order to give a true and fair view. No fair value adjustments have been made as a result of the combination.

e) Land use rights

The term of land use right is 50 years, it was initially capitalised at cost. The risk and reward are passed onto the lessee as if they own the land and it is treated as a fixed asset and amortised using the straight line method over their estimated useful lives.

f) Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses. The cost of property, plant and equipment includes its purchase price and any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Dismantlement, removal or restoration costs are included as part of the cost of property, plant and equipment if the obligation for dismantlement, removal or restoration is incurred as a consequence of acquiring or using the property, plant and equipment. Depreciation of property, plant and equipment is calculated using the straight-line method to allocate their depreciable amounts over their estimated useful lives as follows:

The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.

The estimated useful lives, residual values and depreciation methods are reviewed, and adjusted as appropriate, at the end of each financial year.

The gain or loss arising on disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in comprehensive income statement.

Fully depreciated plant and equipment are retained in the financial statements until they are no longer in use.

g) Impairment of tangible and intangible assets excluding goodwill

At the end of each financial year, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually, and whenever there is an indication that the asset may be impaired.

The recoverable amount of an asset or cash-generating unit is the higher of its fair value less costs to sell and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in comprehensive income statement, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in comprehensive income statement, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

h) Income tax

Income tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported comprehensive income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are not taxable or tax deductible. The Group's liability for current tax is calculated using tax rates (and tax laws) that have been enacted or substantively enacted in countries where the Company and its subsidiaries operate by the end of the financial period.

Deferred tax is recognised on the differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and are accounted for using the balance sheet liability method.

Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised on taxable temporary differences arising on investment in subsidiaries, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each financial year and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised based on the tax rates (and tax laws) that have been enacted or substantively enacted by the end of the financial year. Deferred tax is charged or credited to comprehensive income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity, or where they arise from the initial accounting for a business combination. In the case of a business combination, the tax effect is taken into account in calculating goodwill or determining the excess of the acquirer's interest in the net fair value of the acquire's identifiable assets, liabilities and contingent liabilities over cost.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

I) Financial instruments

Financial assets and financial liabilities are recognised on the Group's consolidated statement of financial position when the Group becomes a party to the contractual provisions of the instrument.

Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial instrument and allocating the interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts or payments (including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial instrument, or where appropriate, a shorter period, to the net carrying amount of the financial instrument. Income and expense are recognised on an effective interest basis for debt instruments other than those financial instruments at fair value through comprehensive income statement.

Financial assets

Financial assets within the scope of IAS 39 are classified as either:

(i) financial assets at fair value through profit or loss

(ii) loans and receivables

(iii) held-to-maturity investments

(iv) available-for-sale financial assets

The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition and re-evaluates this classification at every reporting date. As at the balance sheet date, the Group did not have any financial assets at fair value through profit or loss, and in the categories of held-to-maturity investments and available-for-sale financial assets.

All regular way purchases and sales of financial assets are recognised on the trade date, i.e. the date that the Group commits to purchase the asset. Regular way purchases and sales are purchases or sales of financial assets that require delivery of the financial assets within the period generally established by regulation or convention of the market place concerned.

Financial assets are derecognised when the rights to receive cash flow from the financial assets have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership.

Financial assets at fair value through profit or loss (FVTPL)

Financial assets are classified in this category if they are acquired for the purpose of selling in the short term. Gains or losses on investments held for trading are recognised in the comprehensive income statement.

Loans and receivables

Trade receivables, loans and other receivables that have fixed or determinable payments that are not quoted in active market are classified as loans and receivables. Loans and receivables are measured at amortised cost, using the effective interest method less impairment. Interest is recognised by applying the effective interest method, except for short-term receivables when the recognition of interest would be immaterial.

Impairment of financial assets

Financial assets, other than FVTPL, are assessed for indicators of impairment at the end of each financial year. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted.

For financial assets carried, at amortised cost, the amount of the impairment is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate.

The carrying amounts of all financial assets are reduced by the impairment loss directly with the exception of trade receivables where the carrying amount is reduced through the use of an allowance account. Changes in the carrying amount of the allowance account are recognised in comprehensive income statement.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognised, the previously recognised impairment loss is reversed through comprehensive income statement to the extent the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

In respect of available-for-sale equity instruments, any subsequent increase in fair value after an impairment loss is recognised directly in equity.

Derecognition of financial assets

The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds receivables.

Financial liabilities and equity instruments

Classification as debt or equity

Financial liabilities and equity instruments issued by the Group are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs.

Financial liabilities

Financial liabilities are classified as either financial liabilities at fair value through comprehensive income statement or other financial liabilities.

Financial liabilities are classified as at fair value through comprehensive income statement if the financial liability is either held for trading or it is designated as such upon initial recognition.

Other financial liabilities

Trade and other payables

Trade and other payables are initially measured at fair value, net of transaction costs, and are subsequently measured at amortised cost, where applicable, using the effective interest method, with interest expense recognised on an effective yield basis.

Derecognition of financial liabilities

The Group derecognises financial liabilities when, and only when, the Group's obligations are discharged, cancelled or they expire.

j) Inventories

Inventories are stated at the lower of cost and net realisable value. Costs comprise direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing inventories to their present location and condition. Cost is calculated using the weighted average method. Net realisable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.

k) Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid investments which are readily convertible to known amounts of cash and are subject to insignificant risk of changes in value.

l) Leases

Rentals payable under operating leases are charged to comprehensive income statement on a straight-line basis over the term of the relevant lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.

In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

m) Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of a past event, it is probable that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the financial year, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

Changes in the estimated timing or amount of the expenditure or discount rate are recognised in comprehensive income statement when the changes arise.

n) Retirement benefit costs

Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into separate entities such as the social security plan in PRC on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid.

Contributions to defined contribution plans are recognised as an expense in the statement of comprehensive income in the same financial year as the employment that gives rise to the contributions.

o) Revenue recognition

Revenue

Revenue is recognised upon the transfer of significant risks and rewards of ownership of the goods to customers, which generally coincides with delivery and acceptance of the goods sold.

Interest income

Interest income is accrued on a time basis, by reference to the principal outstanding and at the applicable effective interest rate.

p) Foreign currency transactions and translation

In preparing the consolidated financial statements, transactions in currencies other than the entity's functional currency are recorded at the rate of exchange prevailing on the date of the transaction. At the end of each financial year, monetary items denominated in foreign currencies are retranslated at the rates prevailing as of the end of the financial year. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences arising on the settlement of monetary items, and on retranslation of monetary items are included in comprehensive income statement for the period. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in comprehensive income statement for the period except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised directly in equity. For such non-monetary items, any exchange component of that gain or loss is also recognised directly in equity.

Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate.

q) Dividend distribution

Dividend distribution to the Company's shareholders is recognised as a liability in the Group's financial statements in the period in which the dividends are approved by the Company's shareholders.

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.

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 2011 and 2012 were RMB178.2 million and RMB457.7 million, respectively. No provisions to any of these debts have been provided for during any of these periods.

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. No impairment loss was recognised during the financial year as operations have not commenced. The carrying amount of the land use rights as at 31 December 2011 and 2012 were RMB 10.2 million and RMB 10.0 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 2011 and 2012 were RMB 14.5 million and RMB 20.5 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) 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 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 year ended 31 December 2011 is as follows:

Year ended 31 December 2011

Revenue from the Group's top three distributors represent approximately RMB230.9 million (or 31.1 per cent) of the total revenue for the year ended 31 December 2011, comprising RMB80.3 million (10.8 per cent), RMB77.7 million (10.5 per cent) and RMB72.9 million (9.8 per cent), respectively.

4. Expenses and auditor's remuneration

The Group's profit before taxation is arrived at:

5. Aggregated directors' remuneration

The total amounts for directors' remuneration were as follows:

The Group reimburses the directors for expenses incurred by them or their service companies in the performance of their duties for the Group.

Hong Qinming's and Ng Pei Eng's remuneration is disclosed as directors' remuneration from 1 July 2012 and 1 August respectively. Ng Pei Eng's remuneration includes a listing bonus of RMB500,000.

The Directors have entered into a service agreement with the Company effective from the date of Admission their annual remunerations are as follows:

6. Staff costs and numbers

The average number of persons employed by the Group during the year including executive directors is analysed below:

Group employment costs - all employees including executive directors

7. Financial income

8. Finance costs

9. Taxation

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:

10. Earnings per share

The calculation of basic and diluted earnings per share at 31 December 2012 was based on the profit attributable to ordinary shareholders of RMB198,318,000 (2011: RMB160,312,000). The weighted average number of ordinary shares outstanding during the years ended 31 December 2012 and 2011 and the effect of the potentially dilutive ordinary shares to be issued (of which there are none) are shown below.

11. Dividend

The directors do not propose a dividend in respect of the year ended 31 December 2012.

12. Land use rights

The land use right is a plot of land where the Group's factory/office are located, at Jinjiang City, Qing Yang Town, San GuangTian Village for commercial use.

As at 31 December 2012 and 2011, the land use right was mortgaged to secure a short term loan of RMB 6 million as set out in Note 21.

13. Property, plant and equipment (Group)

15. Investments in subsidiary undertakings

Details of the subsidiaries, all of which have a 31 December year end, are as follows:

16. Inventories

17. Trade and other receivables

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:

18. Cash and cash equivalents

A charge over bank balances has been registered, for securing all monies due or becoming due from the Company to its bankers.

19. 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 2011 and 2012, the Group's financial instruments mainly consisted of cash and bank balances, trade and other receivables, trade payables, other payables and accruals and amount due to a shareholder.

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:

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 fixed 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:

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 2011 and 31 December 2012, substantially all the cash and bank balances as detailed in Notes 18 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:

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:

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 21. 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 2011 and 2012.

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 2011 and 2012, were as follows:

Trade payables

Camkids Group plc's trade payables that are not impaired are as follows:

20. Trade and other payables

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.

The aging of trade payables is as follows:

21. Short term borrowings

Short term bank borrowings are secured by pledge of the Group's fixed assets and land use rights.

22. Stated capital