DGAP-News: VanCamel AG / Key word(s): Half Year Results/Change in Forecast VanCamel AG: Earnings forecast raised after strong first half 26.08.2014 / 16:09 --------------------------------------------------------------------- VanCamel AG: Earnings forecast raised after strong first half - Adjusted Group revenue grew by 7.6% - EBT margin of 25.5% - Operating cash flow constantly high at EUR 28.9 million - Equity ratio improved to 81.5% - Forecast for the EBT margin raised Hamburg, 26 August 2014 - VanCamel AG (Prime Standard, ISIN DE000A1RFMM9, VC8) today publishes its financial figures for the first six months of 2014. As a fashion label that targets Chinese customers, VanCamel benefited from rising consumption in China in the reporting period: After adjustment for higher rebates, VanCamel raised sales 7.6% in renminbi compared with the same period of last year. The pre-tax margin remained high at 25.5% and the operating cash flow was also high at nearly EUR 29 million. As a result, cash and cash equivalents increased to just over EUR 94 million and the equity ratio improved to 81.5%. "Due to this positive development we expect steady profits in the second half of 2014 despite of the rise in rebates. Accordingly, we have raised our EBT margin forecast for 2014 from about 21% to about 25%. By concentrating on product design and brand development, we have successfully positioned VanCamel as a fashion label for "the successful man" and become a trendsetter for the rapidly changing fashion preferences of young Chinese consumers. That provides a good basis for the ongoing development of the company", commented Xiaming Ke, CEO of VanCamel AG. Sales and earnings The VanCamel Group's revenue slipped 0.5% to EUR 77.3 million in the first six months of 2014 (6M 2013: EUR 77.7 million). This slight decline was mainly due to higher rebates and the 4.7% devaluation of the renminbi versus the euro and reflected the development of the two product lines. Revenue from apparel declined slightly from EUR 54.7 million to EUR 54.4 million in the reporting period and revenue from shoes slipped from EUR 23.0 million to EUR 22.9 million. The company's gross profit was EUR 24.0 million at the end of the first half of 2014 (6M 2013: EUR 25.8 million), giving a gross profit margin of 31.1% (6M 2013: 33.2%). Analogously to revenue, the gross profit margin declined slightly as a result of higher rebates. Costs stayed roughly stable in the first half of 2014: while marketing expenses decreased slightly to EUR 1.6 million, down from EUR 1.7 million in the first six months of 2013, total selling and distribution expenses remained at EUR 3.3 million. As a result of the stock exchange listing in October 2013, administrative expenses increased slightly from EUR 0.9 million in the first half of 2013 to EUR 1.1 million in the reporting period. The operating result (EBIT) was EUR 19.6 million in the reporting period (6M 2013: EUR 21.6 million). As in the comparable prior-year period, VanCamel did not have any interest expense; interest income rose to EUR 133 thousand due to the increase in cash and cash equivalents (6M 2013: EUR 77 thousand). The financial result therefore was slightly positive, so EBT was EUR 19.7 million (6M 2013: EUR 21.7 million). Tax expense increased from EUR 6.7 million in the first six months of 2013 to EUR 6.9 million in the reporting period because of additional tax provisions as the rebates granted to distributors may not be tax-deductible. The profit for the first half of 2014 was therefore EUR 12.8 million (6M 2013: EUR 14.9 million). This corresponds to earnings per share of EUR 0.85 (6M 2013: EUR 1.00 (adjusted)). With a net cash flow from operating activities of EUR 28.9 million, VanCamel was still well-financed in the first half of 2014 (6M 2013: EUR 14.1 million). The net rise in cash and cash equivalents in the reporting period was EUR 29.0 million (6M 2013: EUR 13.8 million). Cash and cash equivalents therefore increased to EUR 94.0 million as of 30 June 2014 (31 December 2013: EUR 66.2 million). VanCamel has neither current nor non-current liabilities to banks. The carrying amount of equity was EUR 92.9 million as of 30 June 2014 (31 December 2013: EUR 81.6 million). The equity ratio improved to 81.5% in the reporting period (31 December 2013: 77.1%). Outlook Building on the successful nationwide introduction of the VanCamel brand, the Management Board intends to further increase store density in fiscal 2014. Therefore, in collaboration with distributors, 44 new shops were opened in the first six months of 2014. To accompany this, spending on marketing is to be increased to 2.8% of revenue to raise visibility of the brand among consumers still further. The marketing strategy focuses on opening more flagship stores and advertising aimed at the target group, using billboards, printed media and the internet. In addition, VanCamel is continuing to invest in its in-house design and development team and is currently exploring the possibility of collaboration with fashion and design schools and universities to gain constant access to new talent and ideas in the fashion sector. The management has not budgeted for any investment in property, plant and equipment in 2014. The half year results were somewhat above management expectations. Assuming that China's domestic market continues to grow, the target group's fashion affinity increases further, and the number of authorized retail outlets increases as planned, the company expects volume sales to increase steadily in the coming years. Based on the present order situation, the Management Board still assumes that on a euro basis (excluding currency effects), the Group will grow revenue by around 4.0% in 2014. Despite the rebate rise from 4.5% in FY 2013 to 7.5% in FY 2014, profits remained stable in the reporting period. The Management Board therefore raised its forecast of the EBT margin in 2014 from a level of about 21% to a level of about 25%. The full interim report for the first six months of FY 2014 will be published on August 29 and made available at Investor Relations/Downloads on the company's website at www.vancamel.de/en. Notes on comparisons with the 2013 figures The following effect should be borne in mind when comparing the revenue and earnings figures for the present year and the prior year: Before the transition to IFRS, VanCamel made shop fittings available to its distributors free of charge, capitalized the associated costs and depreciated the shop fittings over three years. Because of problems with evidence and evaluation, all shop fittings have been recognized retrospectively in profit and loss in the year of investment. Since 2012, the shop fittings have no longer been provided by VanCamel. To continue to support distributors in the ongoing modernization of their stores, VanCamel introduced sales rebates. The rebate has been increased to 7.5% from 2014 with preceding stepwise increases. It was 1.2% in 2012 and increased to 4.5% in 2013. Sales revenue decreases by the same amount as the increase, but the impact on operating income is lower because depreciation is no longer recognized for shop fittings. About VanCamel VanCamel AG is the German holding company of an established Chinese fashion label, which employs more than 200 workers in the design, marketing and distribution of own branded apparel, footwear and accessories. VanCamel products address the young, well-funded urban middle-class, particularly targeting male consumers aged between 25 and 40 primarily residing in tier 2 and tier 3 cities, aspiring after upper middle class fashion styles. The prizewinning design of VanCamel's apparel is made in-house whereas the design of the footwear is outsourced based on the conceptual ideas of VanCamel. The production of both apparel and footwear is completely outsourced to local contract manufacturers. VanCamel is an established national brand with a PRC-wide reach. More than 40 regional distributors supply VanCamel's products to more than 2,300 authorized retail outlets in 26 provinces throughout China. For further information about the company visit: www.vancamel.de/en For enquiries: VanCamel AG Eng Ann Soh Member of the Management Board and CFO E-Mail: [email protected] Phone: +86 155 5911 7996 Disclaimer: This document is no offer for the purchase of securities in the United States of America. Securities may only be sold or offered for sale with the previous registration under the U.S. Securities Act of 1933 in the actual valid version or without previous registration only pursuant to an exemption. The shares of VanCamel AG (the 'Shares') have not been registered under the U.S. Securities Act of 1933 in the actual valid version and may not be sold or offered in the United States. This document is only being distributed to and is only directed at (i) persons who are outside the United Kingdom or (ii) to investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the 'Order') or (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as 'relevant persons'). The Shares, which are referred to, are only available to relevant persons and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such securities will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents. --------------------------------------------------------------------- 26.08.2014 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG. The issuer is solely responsible for the content of this announcement. The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Media archive at www.dgap-medientreff.de and www.dgap.de --------------------------------------------------------------------- Language: English Company: VanCamel AG Ferdinandstraße 25 20095 Hamburg Germany Phone: 040 689999-0 Fax: 040 689999-10 E-mail: [email protected] Internet: www.vancamel.de ISIN: DE000A1RFMM9 WKN: A1RFMM Listed: Regulierter Markt in Frankfurt (Prime Standard) End of News DGAP News-Service --------------------------------------------------------------------- 283978 26.08.2014