CAMK.L Regulatory News (CAMK)

Camkids Group plc

("Camkids" or the "Group")

Final 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 final results for the year ended 31 December 2013.

Highlights

* 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 23 April 2014 is 1 GBP : 10.46577 RMB.

Commenting on the final results, Zhang Congming, Executive Chairman of Camkids, said: "The Board is pleased to report that the Group has continued to perform well during 2013, with growth achieved across the Group's various product lines. Whilst the trading environment remains challenging, Camkids continues to place great emphasis on its R&D capabilities and overall infrastructure in order to maintain its market leading position. To that end, the Group plans to take steps to ensure its market position by investing in new headquarters and industrial facilities and increasing its marketing spend which result in increased capex and operating expenses in the short-term. The Board is confident that these initiatives, coupled with our store opening programme in tier 3 and tier 4 cities in China, will enable us to look at the medium-term with renewed confidence ."

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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 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 1,285 franchised retail outlets, and is in the early stages of developing an online e-commerce platform to target online retail.

Camkids has received a number of prestigious awards. In January 2014, the Group was recognised by Asia Brand Association as the Top Brand in China for 2013 and one of the top ten Industry Customer Satisfaction Brand's. The Group's Chairman also received one of Brand China's 'People of the Year' awards.

For more information please visit www.camkids-ir.com.

Executive Chairman's statement

On behalf of Camkids Group, I am pleased to present the Group's results for the year ended 31 December 2013.

Overview

Camkids is pleased to report 2013 sales and profit figures in line with market expectations. The Group is continuing to gain market share in an environment which, as previously described, remains challenging.  This has been achieved through expansion into tier 3 and tier 4 cities, which represent some of the fastest growing regions in China. The number of Camkids branded stores continues to grow steadily, rising to 1,285 by the end of the period, a 16.8% increase on the same period last year. Further, 273 of the Group's existing stores were renovated during the period, maintaining Camkids' high brand standards from product to store. With the addition of two most recently appointed distribution partners in Shanghai and Anhui, the Group's position in the market continues to expand.

The Group continues to place strong emphasis on its branding and marketing activities and, as announced in February 2014, the Board was pleased to hold the Autumn / Winter 2014 sales fair in Beijing. The fair in Beijing was extremely well-attended and, following on from the initial positive feedback that was received at the time of the Group's trading update in February, the Board expects orders for this collection to be broadly in line with the previous year. This has been somewhat affected by outstanding inventory at distributors and certain retailers caused, in part, by exceptionally mild weather during the last winter season.

The Group is continuing its strategy to secure its market leading position by further supporting its brand through an increase in marketing expenditure. Camkids is launching a television advertising campaign to enhance its brand franchise and desirability. Whilst the Group's brand enhancing initiatives will result in rising expenditures in the short-term, the Board believes that this strategy will enable Camkids to achieve further brand profile enhancement and gain market share.

In December 2013, the Group was pleased to announce that it had received one of Brand China's 'People of the Year' Awards, reaffirming the Group's strong position as a leading outdoor sportswear and footwear brand. Furthermore in January 2014, the Group was pleased to be recognised by Asia Brand Association as the Top Brand in China for 2013.

Financial results

The Board is pleased to report that revenue for the year increased by 18.7% to RMB1,083 million (2012: RMB:912.5 million), with gross profit up by 18.5% to RMB401.6 million (2012: RMB338.9 million). The Group's gross profit margin remained stable during the period at 37% and Camkids continues to be highly cash generative with a cash position at the year end of RMB313.4 million (2012: RMB130.8 million).

As announced at the Interim Results in September 2013, there has been some pricing pressure as a result of larger competitors reducing their prices in order to sell excess stock. Despite this, the childrenswear divisions of these competitors have continued to perform well and Camkids has also seen consistent growth in sales during the period.

Clothing business

The Group's clothing business offers a wide range of outdoor clothing such as waterproof jackets and trousers, ski jackets, shirts and t-shirts. Revenue in this division has increased to RMB625.1 million (2012: RMB517.3 million), accounting for approximately 57.7% of the Group's total revenue (2012: 56.7%). The Group continued to achieve good gross profit margins in this division, despite outsourcing the manufacturing of its clothing to third party OEMs, due to its robust position in the market and strong pricing power. Margins remained largely steady at 36.3% (2012: 36.9%).

Footwear business

During the period the Group's fifth production line became operational and the Board is pleased to report that this is running at over a 90% utilisation rate.   As announced in September 2013, the Group has ceased manufacturing OEM orders as part of its strategy to focus on the higher margin Camkids' branded products and expects to see the impact of this in the results to 31 December 2014 since the manufacture of the Group's own products commands a higher margin.

Revenue in this division has increased to RMB366.3 million (2012: RMB283.1 million), which represents 31.1% of Group revenue. Average gross profit margins improved slightly in this division to 37.8% from 36.8% in 2012.

Equipment & accessories business

Camkids sub-contracts all of the manufacturing of its equipment and accessories, which include caps, torches, socks and sleeping bags, to third parties. This business contributed only 8.5% of Group revenue during the period, but sustains a higher average gross profit margin at 44.1% (2012: 46.0%).

Marketing and branding

As announced on 26 February 2014, the Group held its Autumn / Winter 2014 sales fair during 20 - 24 February 2014 in Beijing, the first time that it had been held outside of Camkids' manufacturing facility in Fujian province. The event in Beijing was organised to coincide with ISPO Beijing 2014 China Kids Outdoor Development Forum, a key industry trade event at which Mr Hong Qinming, Camkids' Sales and Marketing Director, gave a presentation on the positioning of a local children's brand in the Chinese market. The sales fair, which was attended by the Group's nominated adviser, Allenby Capital Limited, was also an opportunity to showcase the Group's new logo and branding, which has received positive feedback from the distributors.

Marketing spend has increased during the period, largely as a result of the number of events that the Group has sponsored in order to raise the profile of the Camkids brand. These events include the Jinjiang City Marathon, children's fashion shows in Hunan Province and Shangxi Province and the Jinjiang Cycling Championship in October 2013. These, along with other events in various provinces, have helped to secure the position of the Camkids brand in the market and the Board anticipates that marketing spend will continue to grow steadily for the current financial year, particularly as the Group launches its first television advertising campaign.

Manufacturing facility

In addition to increasing marketing expenditure, the Group has also decided to further increase its corporate profile by investing in new headquarters. Whilst the Board has been considering an enhancement of the Group's facilities for some time, the decision to embark on this investment has been accelerated as the Group has now been informed by the Jinjiang municipality that plans to expand the road adjacent to the Group's existing premises are underway, which would reduce the size of Camkids' facilities.

The Group has therefore decided to purchase an additional piece of land not far away from the existing premises in order to develop the Group's new facilities. Already from 2015 onwards, this will boast state of the art facilities for the Group's R&D operations, as well as for the infrastructure to support the recent e-commerce initiative, and logistics operations. This move will also allow the Group to offer prime accommodation to staff, which the Board believes will enable the Group to attract and retain highly skilled staff. Starting from 2016, other Group operations will also migrate to the new headquarters. The Board expects that this investment will total RMB200 million, which will be phased over 2014, 2015 and 2016. The Group's net cash position, which reached RMB381 million at the end of February 2014, will comfortably cover the financing requirements for the new facility.

E-commerce

The Group has indicated that it sees e-commerce as an important part of the Group's future growth as it becomes increasingly prolific in the Chinese retail sector, and during the period secured strategic partnerships with Taobao and JD.com. These platforms are starting to produce results and make a modest contribution to Group sales. The Board is also pleased that online customer reviews are positive and raising the profile and positive perception of the brand.

Research and development

Camkids' focus on innovation continues to be an important part of the Group's strategy. The clothing R&D centre, which was established in Q1 2013, is a strong addition to the Group's capabilities in this area and provides the Group with an innovative pipeline of ideas to translate into product sales. The Group invested heavily in R&D from the proceeds of its IPO. There are a total of 104 staff in the R&D centre and this is expected to remain steady over the coming months as the Group continues to differentiate itself in the market through its investment in R&D.

Outlook

The Board remains very confident about the Group's future and notes that, despite the trading conditions for a number of its larger competitors overall businesses remaining challenging, the children's wear divisions of those competitors remain extremely robust.

The Group anticipates that the order book for its Autumn / Winter 2014/2015 collection, following the sales fair held in February 2014, will be party affected by inventory leftovers in the trade following the recent particularly mild winter, hence will be broadly in line with the Autumn/Winter 2013/2014 level.

The Board is pleased to announce a final dividend of 2.0 pence per share, subject to shareholder approval, with a scrip dividend alternative. This, combined with the interim dividend of 2.3 pence per share, gives a total dividend for the year of 4.3 pence per share. Further announcements will be made in the coming weeks giving the record date and payment date for the final dividend. In reaching its decision about the final dividend, the Board, whilst remaining confident on the Group's prospects, has taken into account the meaningful investment programme discussed above.

Zhang Congming

Executive Chairman

24 April 2014

Financial Review

Basis of reporting

The Group financial statements in this report have been prepared in accordance with International Financial Reporting Standards ("IFRS"), as adopted by the the EU, together with the associated International Financial Reporting Interpretation Council ("IFRIC") interpretations and those parts of the Companies (Jersey) Law 1991 applicable to entities reporting under IFRS.

Accounting policies

The Group has reviewed its accounting policies in accordance with IAS 8 and determined that they are appropriate for the Group. These have been consistently applied.

Results overview

Operating results

Revenue has increased by 18.7% to RMB1,083 million (2012: RMB912.5 million) with a gross profit up by 18.5% at RMB401.6 million (2012: RMB338.9 million) and operating profit before tax up 13.9% to RMB304.7 million (2012: RMB267.6 million).

The increase in revenue is as a result of Group's ability to design new innovative and high technical products. During the year, the Group utilised some of the IPO proceeds to set up a R&D centre for clothing and a fifth production line has been in operation to meet the orders demand. To focus on its own Camkids brand products which generated higher profit margins, the Group has ceased its OEM business and has started its e-commerce business with strategic partners Taobao and JD.com. The Group's distributors have increased from 15 to 17 and together they operated 1,285 Camkids stores in China as at 31 December 2013.

Breakdown by products group for FY2013 and FY2012

The Group's top five distributors contributed 49.5% of total revenue for FY2012 (2012: 50.9%).

Expenses

Selling and distribution expenses increased by 53.5% to RMB51.0 million (2012: RMB33.2 million), approximately 4.7% of the Group's total annual revenue (2012: 3.6%). This is mainly attributable to increased advertising and renovation subsidy fees for the new retail shops and renovation of existing shops. During the period, the Group opened 243 new retail shops and renovated 273 existing stores. Camkids sponsored the Jinjiang Cycling Championship and the Mingwei Camkids Summer Camp in Taiwan, as well as a Children's Day fashion show in Hunan and Shangxi and undertook online advertising on Taobao and JD.com. Salaries and related costs for sales staff have increased as a result of the start up of e-commerce department.

Administrative expenses have increased to RMB46.6 million from RMB38.2 million, mainly caused by R&D expenses driven by the new R&D centre for clothing and exchange difference arising from the conversion of IPO proceeds (which were received in 2013) in GBP to RMB. Administrative salaries have increased from RMB7.2 million to RMB11.0 million which includes directors' fees and salary increment required for staff retention.

The Group's operating profit before tax increased by 13.9% to RMB304.7 million, the increase in expenses resulting in an operating profit before tax margin of 28.1% (2012: 29.3%). 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 RMB27.8 million to RMB226.1 million resulting in a net profit margin of 20.9% (2012: 21.7%) which is in line with the Group's increased revenue and gross profit.

Balance sheet

Camkids maintained its strong balance sheet with a net cash position of RMB313.4 million (2012: RMB130.7 million).

Net assets at 31 December 2013 were RMB711.9 million, increased from RMB504.9 million last year. This is mainly attributable to the net profit recorded in the year. Trade receivables increased by RMB75.2 million which is in line with the increase in Camkids revenues. The Group's current payment terms are 120 days and all the debts are within the credit terms and there were no bad debts during the period. The average turnover days is approximately 140 days, up from 111 days in FY2012 caused by the previously announced revision of standard payment terms from 90 days to 120 days in the second half of 2012.

Earnings per share

The earnings per share (basic and diluted) for FY2013 based on the weighted average number of ordinary shares outstanding for the year ended 31 December 2013 of 75.4 million is approximately 28.6 pence, based on the exchange rate of 1 GBP: 10.46577 RMB as at 23 April 2014.

Dividend policy

The Group declared an interim dividend of 2.3 pence per share for the financial period 30 June 2013. This dividend was paid on 22 November 2013. The Board is pleased to announce a final dividend of 2.0 pence per share, subject to shareholder approval. This, combined with the interim dividend of 2.3 pence per share, gives a total dividend for the year of 4.3 pence per share. Further announcements will be made in the coming weeks giving the record date and payment dates for the final dividend.

Ng Pei Eng

Chief Finance Officer

24 April 2014

Consolidated statement of comprehensive income

Year ended 31 December 2013

Consolidated statement of financial position

for the year ended 31 December 2013

Consolidated statement of changes in equity

for the year ended 31 December 2013

Consolidated statement of cash flows

for the year ended 31 December 2013

Notes to the financial information

1. General information and basis of preparation

The financial information has been prepared in accordance with International Financial Reporting Standards as adopted by the European Union and using accounting policies which are consistent with those adopted in the financial statements.

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 is presented in Chinese Renminbi ("RMB"). All financial information presented in RMB has been recorded to the nearest thousand.

The financial information set out in this announcement does not constitute the Group's statutory financial statements for the year ended 31 December 2013, but was derived from those financial statements. The auditors have reported on the statutory financial statements for the year ended 31 December 2013; this report was unqualified.

The financial information set out in this announcement was approved by the board on 24 April 2014.

The directors have paid an interim dividend of 2.3 pence per share in respect of the year ended 31 December 2013.

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 2012 and 2013 were RMB457.7 million and RMB 475.6 million, respectively. No provisions to any of these debts have been provided for during any of these periods and none are past due

Impairment of intangible assets and land use rights

Determining whether intangible assets or land use rights are impaired requires an estimation of the value in use of the cash-generating units (CGU) to which intangible assets have been allocated. The value-in-use calculation requires the entity to estimate the future cash flows expected to arise from the CGU and a suitable discount rate in order to calculate present value. 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 2012 and 2013 were RMB 10.0 million and RMB 9.7 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 2012 and 2013 were RMB 20.5 million and RMB 23.9 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 2013 is as follows:

Year ended 31 December 2013

Revenue from the Group's top three distributors represent approximately RMB345.7 million (or 31.9 per cent) of the total revenue for the year ended 31 December 2013, comprising RMB120.2 million (11.1 per cent), RMB119.4 million (11.0 per cent) and RMB106.1 million (9.8 per cent), respectively.

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.

4. Profit for the year 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.

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 2013 was based on the profit attributable to ordinary shareholders of RMB226,138,000 (2012: RMB198,318,000). The weighted average number of ordinary shares outstanding during the year ended 31 December 2013 and 2012 and the effect of the potentially dilutive ordinary shares to be issued (of which there are none) are shown below.

11. Dividend

The directors have declared and paid a interim dividend of £0.023 per share in respect of the year ended 31 December 2013.

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 Guang Tian Village for commercial use.

As at 31 December 2013 and 2012, the land use right was mortgaged to secure a short term loan of RMB 6 million as set out in Note 20.

13. Property, plant and equipment (Group)

14. Investments in subsidiary undertakings

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

15. Inventories

16. 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:

17. 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.

18. Financial risk management

The Group's overall financial risk management programme seeks to minimise potential adverse effects of financial performance of the Group. Management has in place processes and procedures to monitor the Group's risks exposures whilst balancing the costs associated with such monitoring and management against the costs of risk occurrence. The Group's risk management policies are reviewed periodically for changes in market conditions and the Group's operations.

The Group are exposed to financial risks arising from its operations and the use of financial instruments. The key financial risks include credit risk, liquidity risk, interest rate risk, foreign currency risk and market price risk.

As at 31 December 2012 and 2013, 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.

Notes to the financial statements (continued)

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 2012 and 31 December 2013, substantially all the cash and bank balances as detailed in Notes 17 to the consolidated financial statements are held in major financial institutions which are regulated and located in the PRC, which management believes are of high credit quality. The management does not expect any losses arising from non-performance by these counterparties.

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date of the Group is as follows:

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 20. Except for the term loans, the Group has no recognised or undisclosed financial instruments as at balance sheet date.

Liquidity risk

Liquidity risk arises from the Group's management of working capital. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due.

The Group's policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due. The principal liabilities of the Group arise in respect of the on-going research and development programs, trade and other payables. Trade and other payables are all payable within 12 months.

The Board receives cash flow projections on a regular basis as well as information on cash balances.

Derivatives, financial instruments and risk management

The Group does not use derivative instruments or other financial instruments to manage its exposure to fluctuations in foreign currency exchange rates, interest rates and commodity prices.

Capital risk management

The primary objective of the Group's capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholder value.

The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during each of the years ended 31 December 2012 and 2013.

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 2012 and 2013, were as follows:

Trade payables

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

19. Trade and other payables