CCT The Character Group Plc

The information contained within this announcement is deemed by the Company to constitute inside information stipulated under the Market Abuse Regulation (EU) No. 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018. Upon the publication of this announcement via the Regulatory Information Service, this inside information is now considered to be in the public domain.

Wednesday, 18 December 2024

THE CHARACTER GROUP PLC

("Character," the "Company")

Designers, developers and international distributor of toys, games, and giftware

Annual results for the year ended 31 August 2024

"Results in line with market expectations"

EXECUTIVE REVIEW

INTRODUCTION

We are delighted to report that, for the year under review, the Group has delivered a profit before tax and highlighted items of £6.6m (FY 2023: £5.2m).  This is in line with market expectations, which were increased from £6.0m at the time of the publication of our interim results in May 2024.

This performance was achieved in a harsh trading environment and against a constant flow of negative headlines and data concerning the cost of living and a lack of consumer confidence combining to produce a reduction in sales at retail.  The ongoing conflicts in key regions in the Middle East continued to severely disrupt the global supply chain and shipping from the Far East.  Viewed against this backdrop, the Group's results are creditable and a testament to the strength of the Group's product portfolio and the energy, talent and resourcefulness of our teams around the world. 

We have been able to achieve significant savings through the successful implementation of operational cost efficiencies, including reductions in storage costs in Scandinavia and efficient marketing.  Particularly pleasing has been the turnaround in the year under review in cash generated from operations, which increased substantially to £14.9m (FY 2023: £136,000).  This resulted in cash as at the year-end of £13.2m, (FY 2023: £9.6m), after the successful conclusion of the £2.0m share buyback programme announced in February 2024.

OPERATIONAL PERFORMANCE

Group revenue for the year ended 31 August 2024 was £123.4m, against £122.6m in the comparable 2023 period.

The gross profit margin was 26.5% (FY 2023: 26.7%). On an absolute basis, gross profit reported has been maintained at £32.8m (FY 2023: £32.8m).  The profit before tax and highlighted items was £6.6m (FY 2023: £5.2m).

A significant proportion of the Group's purchases are made in US dollars; therefore, the business is exposed to foreign currency fluctuations.  It manages the associated risk through the purchase of forward exchange contracts and derivative financial instruments.  Under International Financial Reporting Standards (IFRS), at the end of each reporting period the Group is required to make an adjustment in its financial statements to incorporate a "mark to market" valuation of such financial instruments.  The "mark to market" adjustment for this financial period results in a notional loss of £0.97m.  This compares to a corresponding notional loss of £0.51m reported in the year to 31 August 2023.  These "mark to market" adjustments are non-cash items calculated by reference to unpredictable and sometimes volatile currency spot rates at the relevant balance sheet dates.  To present the results on a "normal" basis, these "mark to market" profit adjustments on foreign exchange derivative positions are excluded, although shown separately as "highlighted items" to demonstrate the "underlying" position.

The Group is reporting a profit before tax in the period, after highlighted items, of £5.7m (FY 2023: £4.7m).  Underlying earnings before interest, tax, depreciation, and amortisation were £10.1m (FY 2023: £8.9m).

Underlying basic earnings per share before highlighted items amounted to 29.76p (FY 2023: 20.15p).  Diluted earnings per share, on the same basis, were 29.72p (FY 2023: 20.0p).

Basic earnings per share after highlighted items were 25.96p (FY 2023: 18.08p).  Diluted earnings per share, on the same basis, were 25.92p (FY 2023: 17.95p).

FINANCIAL POSITION, WORKING CAPITAL & CASH FLOW

The Group's net assets at 31 August 2024 totalled £38.6m (FY 2023: £39.4m).

Inventories stood at £20.1m at the end of the financial period (FY 2023: £18.0m).  Although the actual inventory held at the warehouses was down, the goods-in-transit were substantially higher due to the longer shipping times from the Far East.

During the financial year, the Group generated cash from operations of £14.9m (FY 2023: £136,000).  Net interest received in the year amounted to £0.1m (FY 2023: charge £0.1m).

At the end of the financial year, the Group had a net cash position of £13.2m, compared to £9.6m at the end of the 2023 comparative period.

DIVIDEND

The Directors will be recommending a maintained final dividend of 11.0p per share (H2 2023: 11.0p per share). This, together with the interim dividend of 8.0p per share paid in July 2024, will bring the total dividend for the year to 19.0p per share (FY 2023: 19.0p). The total dividend is covered approximately 1.56 times by underlying annual earnings (2023: 1.1 times).

Subject to approval by shareholders at the Company's 2025 Annual General Meeting on 17 January 2025 (the "AGM") the following timetable will apply:

OUR PRODUCT PORTFOLIO

Our portfolio of brands and products performed well across the full range during the financial year, and this has left the Group well poised at the beginning of the current year.  Goo Jit Zu continues to be our leading brand both at home and abroad and the plans for expanding the range during 2025 and beyond are well developed and very encouraging. 

We are proud that once again this year, one of our products, Sticki Rolls Sticki Book, featured in the official 2024 Toy Retailers Association "Dream Toy" listing.  Selected by an independent panel of toy retailers and toy experts, the annual Dream Toys bills itself as the most authoritative prediction of what are expected to be the hottest new toys on the high street this festive season.

Planning the expansion and development of our successful portfolio is the Group's way of maximising the longevity of each brand's shelf life.  To ensure the novelty and relevance of all its lines, Character  reassesses, refreshes, and develops its products on a regular, ongoing basis.  Peppa Pig continues as an "evergreen brand" in the Company's offering,  which is to be further invigorated by the addition of an exciting new range: Peppa Pig Whizz Around.  This is an innovative, Character in-house developed toy category featuring a brightly coloured range of electronic vehicles, tracks and playsets aimed at the pre-school market. This range will be launched in summer 2025 and we are delighted that this new concept has presented exceptionally well at all customer previews to date.  

We are also looking forward to the London Toy Fair next month where we shall showcase all our  exciting new developments for Goo Jit Zu and Peppa Pig  ranges as well as our new line of Stuntman Stu products and the other features of our 2025 catalogue.

The Group's current portfolio of products and brands can be viewed at www.character-online.com.

SHARE BUYBACK PROGRAMME

During the 2024 financial year, the Company acquired a total of 708,472 ordinary shares in the Company at an aggregate cost of c.£2.0m (including associated dealing costs), with the average cost being approximately £2.81 per ordinary share (FY 2023: nil).  On 29 October 2024, the Company commenced a further buyback programme to purchase ordinary shares with a maximum aggregate consideration (including associated dealing costs) of c.£2.0m.  At the date of this report, the Company has, under this new programme, acquired for cancellation a further 66,757 ordinary shares in the Company at an aggregate cost of approximately £182,156 (excluding associated costs), with the average cost being approximately £2.73 per ordinary share.

The Company currently has an unutilised authority to buyback up to a further 2,114,771 ordinary shares.  It remains part of our overall strategy to continue to repurchase the Company's own shares when appropriate.  The Board believes that it is in the Company's and shareholders' interests to provide an opportunity to access liquidity that is not otherwise available in the market and enable shareholders to realise part or all their investment in the Company and subsequently to return excess capital to members.

It is the Board's intention at the 2025 AGM, to seek a new authority to buyback up to 2,815,000 ordinary shares (representing approximately 15% of the total voting rights in the Company).  If granted, this authority will enable the current buyback programme to continue until 30 May 2025 or such earlier date as the maximum aggregate gross purchases effected under the programme reach the limit of £2.0 million.  It will also allow the Company to implement further buybacks until the AGM in 2026 either by way of an announced buyback programme or by way of tenders for its issued ordinary shares.

TOTAL VOTING RIGHTS

As at today's date, the Company has 18,707,641 ordinary shares in issue, excluding shares held in treasury.  The Company holds 1,983,059 ordinary shares in treasury, representing approximately 9.58 per cent. of the issued share capital. These treasury shares do not carry voting or dividend rights. Therefore, the total number of voting rights in the Company is 18,707,641. This figure of 18,707,641 may be used by shareholders as the denominator for the calculations by which they may determine if they are required to notify their interest, or change to their notified interest, in the Company under the Financial Conduct Authority's Disclosure Guidance and Transparency Rules.

OUR PEOPLE

As in previous years, on behalf of the Board and all stakeholders, we wish to pay tribute and thank every member of the Character team from the warehouse floor to the boardroom for their extraordinary efforts and unstinting dedication to serving the Group. These efforts have contributed to the Group's robust performance despite turbulent trading conditions.

THE BOARD

Two of our Non-executive Directors will be retiring and will not be offering themselves for re-election at the forthcoming 2025 AGM.  These are:

The Board has already begun a search for a suitable replacement Non-executive Director.  The Nominations Committee, which is to be Chaired by Jonathan Shearman in succession to Clive from the AGM, has been tasked with the responsibility of sourcing a shortlist of potential candidates to be considered by the Board.  We will update shareholders on progress of this search at the AGM.

THE 2025 ANNUAL GENERAL MEETING (AGM)

The Company's 2025 AGM will take place as a combined in-person and virtual meeting and will be held at the Group's head office in New Malden, Surrey at 11.00 a.m. on Friday, 17 January 2025.

The formal Notice of the Meeting and an associated explanatory summary of the special business to be transacted at the Meeting is set out in the Audited Annual Report and Accounts published today.  Attendance can be in person or by proxy or, in the case of a company or organisation, by appointment of a corporate representative.

Shareholders who wish to join the Meeting remotely should register for access by no later than 11:00am. on Wednesday, 15 January 2025.  This can be done by emailing info@charactergroup.plc.uk (stating in the subject line of the email "Character Group: 2025 AGM virtual attendance").  Invitations enabling remote attendance will be issued by 5:00 pm on Thursday, 16 January 2025.

Please note, however, that joining remotely will not constitute attendance at the Meeting for the purposes of being counted in the quorum for the AGM and that virtual attendees will not be able to vote at the AGM.  Shareholders wishing to attend the meeting virtually in this fashion are, therefore, requested to exercise their votes by submitting their forms of proxy appointing the Chair of the AGM as their proxy, in accordance with the instructions set out in the notes to the Notice of Meeting, by no later than Wednesday, 11.00 am on 15 January 2025.  If the Chair of the AGM is appointed as proxy to a shareholder, he/she will vote in accordance with any instructions given to him/her.  If the Chair of the meeting is given discretion as to how to vote, he/she will vote in favour of each of the resolutions to be proposed at the AGM.

Any shareholder that wishes to put questions to the Board is invited to submit those questions in writing in advance of the Meeting by sending them to info@charactergroup.plc.uk (stating "Character Group: 2025 AGM Questions" in the subject line of the email) by no later than Wednesday, 11.00 am on 15 January 2025.  The Board will seek to respond to questions asked in person or submitted online either during the AGM and/or by publishing written responses on the Company's website post the event together with results of resolution voting.

OUTLOOK

The reception that our retail customers and distributors have given to our current portfolio together with the brands and product lines that we will be introducing in our Autumn/Winter 2025 product launches has been very gratifying.  However, the challenging and unpredictable conditions that persisted throughout much of the last financial year have continued into the current fiscal year.  With buffeting from political and macroeconomic developments, consumer confidence remains low, and this has adversely affected footfall in the high street and click-through from online marketplaces in the lead up to the key Christmas 2024 trading period.  Despite this, we are encouraged by the resilience of our market share in our domestic markets and the prospects growth in our international markets expected in Q4 of the current financial year.  Accordingly, the Board expect sales and profit before tax and highlighted items for the full year ending 31 August 2025 to remain at similar levels to those reported in the year under review.

The Group continues to have a strong cash position and balance sheet. The Board has maintained the dividend and continued with its share buyback programme, both of which are considered by the Board to be for the benefit of all shareholders.

The Board looks forward to welcoming shareholders to the Company's Annual General Meeting in January 2025 and updating shareholders at that time.

THE CHARACTER GROUP PLC

17 December 2024

GROUP INCOME STATEMENT

for the year ended 31 August 2024

GROUP STATEMENT OF COMPREHENSIVE INCOME

for the year ended 31 August 2024

GROUP BALANCE SHEET

As at 31 August 2024

GROUP CASH FLOW

for the year ended 31 August 2024

Cash, cash equivalents and borrowings consist of:

GROUP STATEMENT OF CHANGES IN EQUITY

for the year ended 31 August 2024

THE CHARACTER GROUP PLC

NOTES TO THE STATEMENT

1.  GEOGRAPHICAL DESTINATION OF REVENUE

2.  EXPENSES BY NATURE - Group

3.  Earnings per share - group

The earnings used in the calculation of basic and diluted earnings per share are as follows:

4.  DIVIDEND - GROUP

The Directors recommend a final dividend of 11.00 pence per share (2023: 11.00 pence) amounting to £2,057,841 (2023: £2,130,235).  If approved by shareholders, the final dividend will be paid on 31 January 2025 to shareholders on the register on 17 January 2025.

5.  ANNUAL REPORT AND ACCOUNTS

The financial information set out in the announcement does not constitute the Company's statutory accounts for the years ended 31 August 2024 and 2023.  The financial information for the year ended 31 August 2023 is derived from the statutory accounts for that year which have been delivered to the Registrar of Companies.  The financial information for the year ended 31 August 2024 is derived from the statutory accounts for that year and those accounts have today been published and may be viewed and/or downloaded from the Company's website at www.thecharacter.com.  The auditors reported on each of those accounts: their report was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under s498(2) or (3) of the Companies Act 2006. The audited statutory accounts for the year ended 31 August 2024 will be delivered to the Registrar of Companies following the Company's Annual General Meeting.

6.  ANNUAL GENERAL MEETING

The Annual General Meeting will be held at 2nd Floor, 86-88 Coombe Road, New Malden, Surrey KT3 4QS on Friday, 17 January 2025 at 11.00am.

7.  ELECTRONIC COMMUNICATIONS

The full Financial Statements for the year ended 31 August 2024, incorporating the Notice of Meeting convening the Company's 2025 Annual General Meeting, is available for viewing on and download from the Group's website: www.character.com.

The Character Group plc

FTSE sector:  leisure goods:

FTSE AIM All-share: symbol: CCT

Market cap: £50m

Email:  info@charactergroup.plc.uk

Group website: www.thecharacter.com

Product ranges can also be viewed at www.character-online.co.uk

CHARACTER GROUP PLC CCT Stock | London Stock Exchange