TIDMCCT
RNS Number : 9949W
Character Group PLC
29 April 2021
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it
forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 ("UK MAR"), and is disclosed in accordance
with the Company's obligations under Article 17 of UK MAR. Upon the
publication of this announcement via the Regulatory Information
Service, this inside information is now considered to be in the
public domain.
The Character Group plc
Designers, developers and international distributor of toys,
games, and giftware
HALF YEARLY FINANCIAL REPORT
for the six months ended 28 February 2021
KEY PERFORMANCE INDICATORS
CONTINUING OPERATIONS Half-year Half-year Year
ended ended ended
28 February 29 February 31 August
2021 2020 2020
------------------ ------------------
Revenue up 44% GBP74.5m GBP51.7m GBP108.9m
Underlying operating profit* GBP6.1m GBP2.7m GBP5.4m
Underlying pre-tax profit* GBP6.1m GBP2.5m GBP5.0m
Underlying basic earnings per share* 23.0p 9.60p 18.12p
Underlying diluted earnings per share* 22.93p 9.58p 18.08p
Profit before tax GBP7.6m GBP2.2m GBP3.9m
Basic earnings per share 28.76p 8.57p 14.76p
Diluted earnings per share 28.67p 8.55p 14.73p
Dividend per share 6.0p 2.0p 5.0p
EBITDA GBP7.9m GBP4.3m GBP8.2m
Cash and cash equivalents increased substantially GBP34.9m GBP16.8m GBP19.1m
Net assets GBP39.6m GBP32.8m GBP34.0m
--------------------------------------------------- ------------------ ------------------ ----------------
*Excludes
Mark to market (loss) adjustments on FX
derivative positions GBP(0.48)m GBP(0.27)m GBP(2.0)m
Profit on sale of property GBP2.02m - -
Gain on buy back on loan - - GBP0.90m
----------------------------------------- ----------- ----------- ----------
-- Following the successful alignment of its product offering with the
rest of the Group, Character's Scandinavian business returned a profit
-- Sale of freehold property, Vernon Mill in January 2021 returned a gain
of GBP2m
-- The Group has one of the strongest portfolios that it has ever taken
to both domestic and international markets and this performance is
expected to continue through the second half of the financial year
and beyond Christmas 2021
-- Character's top brands have all shown significant sales growth. Goo
Jit Zu is now the Group's Number One brand and is penetrating all major
international markets, with distribution so far achieved in over 40
countries. Other major brands ( Peppa Pig , Pok émon , Little
Live Pets , Shimmer 'n Sparkle Instaglam , Stretch Armstrong , Fireman
Sam , Scooby Doo ) are also all out-performing expectations
-- Character appointed Master Toy Partner by Moonbug Entertainment, the
creator of the My Magic Pet Morphle brand, to collaborate on the design
and roll out of a full and sustainable toy products programme for this
new brand
-- Focus on developing a sustainable, Eco-friendly range of products over
numerous brands as well as the Group's Eco-Plush multi-licenced ranges
(products manufactured from recycled materials)
-- New product and range launches to build on the Group's success are
scheduled to take place throughout the summer and into the autumn.
Crucial to maintaining a fresh and vibrant portfolio, the planning
and design of new concepts and developments for 2022 is now well advanced
and close to fruition
"The performance of our current portfolio of products, coupled
with our success in further building sales growth momentum in our
international and domestic markets, has resulted in a very strong
performance by the Group in the period under review."
"We have continued to see a strong performance in sales of our
product portfolio in all our territories from the commencement of
the second half of the year. This growth is forecast to continue
through to and beyond Christmas 2021 and we are on target to
deliver the best performance in any calendar year in the Group's
history. Accordingly, we expect the 2021 full financial year's
underlying profit before tax will be materially ahead of the
published market consensus of GBP10.5m."
"Regardless of market challenges, the resilience of the Group's
cash-generative business has been proved and its powerful
performance will be further enhanced with the reopening of
non-essential retail shops in the UK and will be further supported
beyond Christmas 2021 and into 2022 by the anticipated global
relaxation of restrictions in coming months."
Enquiries to:
The Character Group plc
Jon Diver, Joint Managing Director
Kiran Shah, Joint Managing Director & Group Finance Director
Office: +44 (0) 208 329 3377
Mobile: +44 (0) 7831 802219 (JD)
Mobile: +44 (0) 7956 278522 (KS)
Email: info@charactergroup.plc.uk
Panmure Gordon (Nominated Adviser and Joint Broker)
Atholl Tweedie, Investment Banking
Charles Leigh-Pemberton, Corporate Broking
Rupert Dearden, Corporate Broking
Tel: +44 (0) 20 7886 2500
Allenby Capital Limited (Joint Broker)
Nick Athanas, Corporate Finance
Amrit Nahal, Sales & Corporate Broking
Tel: +44 (0) 20 3328 5656
TooleyStreet Communications Limited (Investor and media relations)
Fiona Tooley
Tel: +44 (0) 7785 703523
Email: fiona@tooleystreet.com
The Character Group plc
FTSE sector : leisure goods:
FTSE AIM All-share: symbol: CCT
Market cap : GBP100.9m
Group website: www.thecharacter.com
Product ranges can also be viewed at www.character-online.co.uk
The Character Group plc
(the "Company" or "Group" or "Character")
Designers, developers and international distributor of toys,
games and giftware
HALF YEARLY FINANCIAL REPORT
for the six months ended 28 February 2021
INTRODUCTION
Character presents its results for the half-year ended 28
February 2021.
The sales achieved from our current portfolio of products,
coupled with our success in further building sales growth momentum
in our international and domestic markets, has resulted in a very
strong performance by the Group in the period under review.
Underlying profit before tax was GBP6.1m, substantially higher
than the previous period (HY 2020: GBP2.5m), and turnover for the
period was also increased by 44% to GBP74.5m (HY 2020: GBP51.7m).
Further, following the successful alignment of its product offering
with the rest of the Group, our Scandinavian business also posted
an operating profit for the period.
Cash and cash equivalents at 28 February 2021 increased
substantially to GBP34.9m (HY 2020: GBP16.8m).
During the period, the Group also made a gain of GBP2m on the
sale of one of its freehold properties (Vernon Mill).
The period under review has witnessed a combination of unique
events (the further global COVID-19 lockdowns and the end of the
Brexit transition period) which have resulted in seismic challenges
being faced by traditional retail customers and generally in the
global goods transportation sector. Whilst these factors have had
their effect, the Directors are delighted to report that the
Group's business has seen healthy growth in all its markets in the
period.
This has been an astounding achievement all round and the Board
is extremely proud of how effectively the individuals and teams
throughout the business have pulled together to achieve this
result.
OUR PORTFOLIO
As always, our portfolio of brands and products is key to our
prospects and we are delighted to report that the Group's
performance in the first six months demonstrates that we currently
have one of the strongest portfolios that we have ever taken to
both our domestic and international markets. This performance is
expected to continue through the second half of the financial year
and beyond Christmas 2021. Our top brands have all shown
significant sales growth. Goo Jit Zu is now our Number One brand
and is penetrating all major international markets, with
distribution so far achieved in over 40 countries. Our other major
brands ( Peppa Pig , Pok émon , Little Live Pets , Shimmer 'n
Sparkle Instaglam , Stretch Armstrong , Fireman Sam , Scooby Doo )
are also out-performing management's expectations.
Our move to focus on developing a sustainable, Eco-friendly
range of products over numerous brands with our World of Licensed
Wood range of figures, vehicles and playsets (which includes
products produced under the Peppa Pig , Disney Princess , Batman
and Fireman Sam brands) as well as our Eco-Plush multi-licenced
ranges (products manufactured from recycled materials) are being
enthusiastically embraced by the industry and consumers alike.
The Group's product portfolio also continues to be strengthened
through the development of new and exciting additions that will
further enhance its breadth and appeal. This momentum in evolving
the Group's product offering not only builds and supports the
existing and new brands it also reassures the Company that the
performance of the Group's portfolio is not overly dependent on any
one brand .
The Group continues successfully to source licences for brands
and characters that inspire and have substantial followings amongst
young children. Trends in the development of these brands and
characters have changed considerably in recent years. Whilst in the
past, many of these have emerged from films, television series,
books or comics, now YouTube, popular social media and dedicated
digital channels are fast emerging as platforms that children are
drawn to and engage with. The trends and characters originating
from these sources are now very much part of the focus for our
attention. An exciting example of this phenomenon is My Magic Pet
Morphle (an energetic little red creature who can transform into
anything). Over 300 episodes of his adventures have been released
to date on non-traditional, digital media and there has been a
growing international audience for this enchanting character. Based
on the Group's expertise and successes in toy brand management,
Moonbug Entertainment, the creator of My Magic Pet Morphle , has
selected Character as its Master Toy Partner to collaborate with it
to design and roll out a full and sustainable toy products
programme for this new brand. This is proving to be a great working
relationship and we look forward to launching this exciting new
range in the coming autumn.
New product and range launches to build on the Group's success
are scheduled to take place throughout the summer and into the
autumn. Crucial to maintaining a fresh and vibrant portfolio, the
planning and design of new concepts and developments for 2022 is
now well advanced and close to fruition.
To view our full current portfolio of products and brands, go to
www.character-online.co.uk .
GROUP TRADING
As anticipated, the first half of the current year was the
beneficiary of the deferral of the strong trading that, prior to
the onset of the pandemic, had been projected for the second half
of the last financial year.
Revenue in the period was up 44% on the same period last year at
GBP74.5m (HY 2020 GBP51.7m; FY 2020: GBP108.9m).
The Group is reporting an underlying profit before tax for the
period of GBP6.1m (HY 2020: GBP2.45m; FY 2020: GBP5.0m). In
addition, the Group made a gain of GBP2.0m from the sale of the
Vernon Mill freehold property in January 2021. Underlying earnings
before interest, tax, depreciation and amortisation (EBITDA) were
GBP 7.9 m (HY 2020 GBP4.3m; FY 2020: GBP8.2m) .
Gross profit margin in the period came in at 29.2%, compared to
33.2% in the same 2020 period and 27.7% for the August 2020
financial year. The reduction in margin reflects the increased
proportion of lower margin, international FOB sales in the first
half compared with the same period in 2020, with some measure of
pressure on the margin on domestic sales caused by container
shortages and reduced shipping capacity resulting in substantial
increases in freight rates on our domestic imports.
Underlying basic earnings per share amounted to 23.0p (HY 2020:
9.6p; FY 2020: 18.12p). Diluted earnings per share, on the same
basis, were 22.93p (HY 2020: 9.58p; FY 2020: 18.08p).
A significant proportion of the Group's purchases are made in US
dollars. The business is therefore exposed to foreign currency
fluctuations and 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 the financial period under review results in
a charge of GBP0.48m. This compares to a charge of GBP0.27m shown
in the corresponding period in 2020 and a charge of GBP2.0m
reported in the year to 31 August 2020. These 'mark to market'
adjustments are non-cash items, calculated by reference to
unpredictable and sometimes volatile currency spot rates at the
respective balance sheet dates.
FINANCIAL POSITION, WORKING CAPITAL & CASH FLOW
The Group's capital base remained solid, with net assets at 28
February 2021 of GBP39.6m (HY 2020: GBP32.8m; FY 2020: GBP34.0m).
Inventories at 28 February 2021 reduced to GBP9.1m (HY 2020:
GBP10.6m; FY 2020: GBP14.7m). During the period, the Group
generated cash from operations of GBP21.3m (HY 2020: GBP15.1m; FY
2020: GBP19.6m).
The Group has no long-term debt. Net interest charges on the use
of working capital facilities during the period were GBP0.1m (HY
2020: GBP0.2m; FY 2020: GBP0.34m). After making dividend payments,
the Group had cash and cash equivalents of GBP34.9m (HY 2020:
GBP16.8m; FY 2020: GBP19.1m) at the end of the first-half period.
In addition, the Group had unutilised headroom of over GBP50m under
its banking and other finance facilities.
DIVID
The Board remains committed to maintaining a progressive
dividend policy. Reflecting its confidence in the Company's ability
to continue to grow profits and generate and develop further
sustainable cash flow, t he Board is declaring an interim dividend
of 6.0p per share (HY 2020: 2.0p; final dividend 2020: 3.0p).This
interim dividend, which is covered 3.8 times by the underlying
earnings (HY 2020: 4.8 times), will be paid on 30 July 2021 to
shareholders on the Register as at the close of business on 16 July
2021. The shares will be marked ex-dividend on 15 July 2021.
SHARE BUYBACK PROGRAMME
Although no share buybacks were achieved in the period under
review, shareholders passed a resolution at the Company's Annual
General Meeting held in January 2021 authorising the Company to
effect buybacks (including by way of tender offers) of up to
3,200,000 issued ordinary shares of 5p each in the Company
("Ordinary Shares"). T he Board believes that it is in the
interests of all shareholders to provide investors who wish to
realise part or all their investment in the Group with an
opportunity to access liquidity that is not otherwise available in
the market and to return excess capital to shareholders.
The Board has therefore resolved to pursue a new buyback
initiative to purchase Ordinary Shares to a value of up to
GBP10.0m. This new share buyback initiative is consistent with the
Group's approach to capital allocation and reflects the Group's
strong, ongoing cash generation. Further details will be announced
in the coming weeks.
The Group continues to have considerable financial flexibility
to fund its growth strategy and is supported by its robust
financial position.
TOTAL VOTING RIGHTS (TVR)
As at today's date. the Company's issued share capital consists
of 23,608,501 Ordinary Shares. The Company holds 2,228,720 Ordinary
Shares in treasury which do not carry voting rights and,
accordingly, the total number of voting rights in Character is
21,379,781. The figure of 21,379,781 may be used by shareholders as
the denominator for the calculations by which they will determine
if they are required to notify their interest, or change to their
interest, in the Company under the FCA's Disclosure Guidance and
Transparency Rules.
OUR PEOPLE
The efforts of, and results delivered by, our experienced and
dedicated teams across our bases of operations in the UK,
Scandinavia and Asia to overcome the challenges posed by the
pandemic to our supply chain and fulfilment capabilities have been
truly inspiring. By working tirelessly and in close partnership
with our customers, suppliers and brand owners, our personnel have
delivered a seamless, efficient and safe transition from the old to
the new "normal". This experience has stress-tested our
collaborative culture, business processes and relationships,
however, the results achieved in the period under review have
delivered a ringing endorsement of their effectiveness. Every one
of our team members has played a significant role in this
achievement and the Directors wish to express their gratitude to
them on behalf of all the Group's stakeholders.
COVID-19
Whilst the current relaxation of restrictions in the UK and
those that have been implemented in other territories throughout
the world have been greatly welcomed, it is clear from the further
COVID-19 waves fast developing in India and which are already being
experienced in parts of the EU and elsewhere that it will be
necessary for all people and organisations to continue to be
vigilant and act responsibly with appropriate safety and distancing
measures. The COVID-19 procedures that have been in place at all
our sites for many months now (in line with government guidelines
and other good practice) will remain in place for the foreseeable
future to ensure the safety and wellbeing of our staff and visitors
to our premises. Although it is not possible to determine what, if
any significant, impact the threat of further COVID-19 "spikes"
will have in the coming months, the Board is reassured by the
Group's proven ability to continue to operate effectively in these
challenging conditions and confident that the business is well
positioned and robust in its stance to deal with future
developments with this virus.
OUTLOOK
Building further on the substantial increase in Group sales in
the first half, we have continued to see a strong performance in
sales of our product portfolio in all our territories from the
commencement of the second half of the year. This growth is
forecast to continue through to and beyond Christmas 2021 and we
are on target to deliver the best sales performance in any calendar
year in the Group's history. Accordingly, we expect the 2021 full
financial year's underlying profit before tax will be materially
ahead of the published market consensus of GBP10.5m.
In the short term, the Group will face challenges with the
ongoing delays at ports, shipping shortages and opportunistic
pricing on freight rates (all principally fall-out resulting from
the COVID-19 pandemic) together with mounting pressure on the costs
of production in China. Gross profit margins will also reduce with
the anticipated growth in FOB sales to our international
customers.
Regardless of these market challenges, the resilience of the
Group's cash-generative business has been proved and its powerful
performance in the first half and into the second of the financial
year will be further enhanced with the reopening of non-essential
retail shops in the UK and will be further supported beyond
Christmas 2021 and into 2022 by the anticipated global relaxation
of restrictions in coming months.
The Board looks forward to updating shareholders with further
news of these developments in due course.
29 April 2021
The Character Group plc
Consolidated Income Statement
Six months ended 28 February 2021
6 months 6 months 6 months 6 months 6 months 6 months 12 months 12 months 12 months
ended ended ended ended ended ended ended ended ended
28 February 28 February 28 February 29 February 29 February 29 February 31 August 31 August 31 August
2021 2021 2021 2020 2020 2020 2020 2020 2020
Result Result Result
before *highlighted before *highlighted before *highlighted
*highlighted items *highlighted items *highlighted items
items items items
(unaudited) (unaudited) (unaudited) (unaudited) (audited) (audited)
(unaudited) GBP'000 GBP'000 (unaudited) GBP'000 GBP'000 (audited) GBP'000 GBP'000
GBP'000 GBP'000 GBP'000
------------- -------------- ------------- -------------- ------------- -------------
Revenue 74,543 - 74,543 51,732 - 51,732 108,867 - 108,867
Cost of sales (52,751) - (52,751) (34,554) - (34,554) (78,704) - (78,704)
---------------- ------------- -------------- ------------ ------------- -------------- ------------ ------------- ------------- ----------
Gross profit 21,792 - 21,792 17,178 - 17,178 30,163 - 30,163
Other income 256 - 256 244 - 244 501 - 501
Selling and
distribution
expenses (5,469) - (5,469) (5,472) - (5,472) (7,355) - (7,355)
Administrative
expenses (10,468) - (10,468) (9,297) - (9,297) (17,949) - (17,949)
Profit on sale
of
property - 2,016 2,016 - - - - - -
---------------- ------------- -------------- ------------ ------------- -------------- ------------ ------------- ------------- ----------
Operating
profit 6,111 2,016 8,127 2,653 - 2,653 5,360 - 5,360
Finance income 15 - 15 9 - 9 47 - 47
Finance costs (66) - (66) (208) - (208) (388) - (388)
Changes in fair
value
of financial
instruments - (482) (482) - (265) (265) - (1,980) (1,980)
Gain on buy
back of
loan - - - - - - - 886 886
Profit before
tax 6,060 1,534 7,594 2,454 (265) 2,189 5,019 (1,094) 3,925
Income tax (1,095) (303) (1,398) (651) 45 (606) (1,312) 376 (936)
---------------- ------------- -------------- ------------ ------------- -------------- ------------ ------------- ------------- ----------
Profit for the
period 4,965 1,231 6,196 1,803 (220) 1,583 3,707 (718) 2,989
---------------- ------------- -------------- ------------ ------------- -------------- ------------ ------------- ------------- ----------
*highlighted items comprise material items that are disclosed
separately by virtue of their size or incidence and because they
are considered relevant to an understanding of the overall
performance of the company.
The Character Group plc
Consolidated Income Statement
Six months ended 28 February 2021
6 months 6 months 12 months
ended ended ended
28 February 29 February 31 August
2021 2020 2020
(unaudited) (unaudited) (audited)
Notes GBP'000 GBP'000 GBP'000
------- -------------- ---------------
Attributable to:
--------------------------------------- ------- -------------- --------------- -----------
Owners of the parent 6,148 1,831 3,154
Non- controlling interest 48 (248) (165)
--------------------------------------- ------- -------------- --------------- -----------
Profit for the period 6,196 1,583 2,989
--------------------------------------- ------- -------------- --------------- -----------
Earnings per share before significant
items (pence) 4
Basic earnings per share 23.00p 9.60 18.12p
Diluted earnings per share 22.93p 9.58 18.08p
--------------------------------------- ------- -------------- --------------- -----------
Earnings per share after significant
items (pence) 4
--------------------------------------- ------- -------------- --------------- -----------
Basic earnings per share 28.76p 8.57 14.76p
Diluted earnings per share 28.67p 8.55 14.73p
Dividend per share (pence) 3 3.00p 13.00p 15.00p
--------------------------------------- ------- -------------- --------------- -----------
EBITDA
(earnings before interest, tax,
depreciation and amortisation) 7,889 4,318 8,158
--------------------------------------- ------- -------------- --------------- -----------
The Character Group plc
Consolidated Statement of Comprehensive Income
Six months ended 28 February 2021
6 months 6 months 12 months
ended ended ended
28 February 29 February 31 August
2021 2020 2020
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
---- ------------- ---------------
Profit for the period after tax 6,196 1,583 2,989
--------------------------------------------------- ------------- --------------- ------------
Items that will not be reclassified
subsequently to profit and loss
Current tax credit relating to exercised
share options - - -
Deferred tax relating to share options 19 (15) (6)
--------------------------------------------------- ------------- --------------- ------------
19 (15) (6)
-------------------------------------------------- ------------- --------------- ------------
Items that may be reclassified subsequently
to profit and loss
Net exchange differences on translation
of foreign operations (247) (296) (98)
--------------------------------------------------- ------------- --------------- ------------
Total comprehensive income for the period 5,968 1,272 2,885
--------------------------------------------------- ------------- --------------- ------------
Total comprehensive income for the period
attributable to:
--------------------------------------------------- ------------- --------------- ------------
Equity holders of the parent 5,925 1,499 3,050
Non-controlling interest 43 (227) (165)
--------------------------------------------------- ------------- --------------- ------------
5,968 1,272 2,885
--------------------------------------------------- ------------- --------------- ------------
The Character Group plc
Consolidated Balance Sheet
at 28 February 2021
28 February 29 February 31 August
2021 2020 2020
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
---- ------------- -------------
Non-current assets
Intangible assets - product development 446 447 891
Investment property 1,551 1,616 1,584
Property, plant and equipment 7,422 3,351 3,226
Right of use assets 1,718 1,068 2,069
Deferred tax assets 658 502 704
----------------------------------------------- ------------- ------------- -----------
11,795 6,984 8,474
---------------------------------------------- ------------- ------------- -----------
Current assets
Inventories 9,145 10,563 14,736
Trade and other receivables 11,651 13,508 23,013
Current income tax receivable 244 - 244
Derivative financial instruments 206 66 75
Cash and cash equivalents 35,037 19,582 22,292
----------------------------------------------- ------------- ------------- -----------
56,283 43,719 60,360
---------------------------------------------- ------------- ------------- -----------
Current liabilities
Short term borrowings (140) (1,891) (3,168)
Trade and other payables (22,589) (12,142) (26,432)
Lease liabilities (538) (236) (550)
Income tax payable (951) (1,331) (777)
Derivative financial instruments (2,906) (570) (2,293)
----------------------------------------------- ------------- ------------- -----------
(27,124) (16,170) (33,220)
---------------------------------------------- ------------- ------------- -----------
Net current assets 29,159 27,549 27,140
----------------------------------------------- ------------- ------------- -----------
Non - current liabilities
Deferred tax (90) - (21)
Lease liabilities (1,221) (848) (1,547)
Long term borrowings - (921) -
----------------------------------------- ---- ------------- ------------- -----------
Net assets 39,643 32,764 34,046
----------------------------------------------- ------------- ------------- -----------
Equity
Called up share capital 1,181 1,181 1,181
Shares held in treasury (1,870) (1,870) (1870)
Capital redemption reserve 1,776 1,776 1,776
Share based payment reserve 3,640 3,276 3,369
Share premium account 17,324 17,324 17,324
Merger reserve 651 651 651
Translation reserve 590 855 727
Profit and loss account 16,351 10,215 11,231
----------------------------------------------- ------------- ------------- -----------
Attributable to equity holders of
the parent 39,643 33,408 34,389
Non-controlling interest - (644) (343)
----------------------------------------------- ------------- ------------- -----------
Total equity 39,643 32,764 34,046
----------------------------------------------- ------------- ------------- -----------
The Character Group plc
Consolidated Statement of Cash Flows
Six months ended 28 February 2021
6 months 6 months 12 months
ended ended ended
28 February 29 February 31 August
2021 2020 2020
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
------------- --------------
Cash flow from operating activities
Profit before taxation for the period 7,594 2,189 3,925
---------------------------------------------- ------------- -------------- ------------
Adjustments for:
Depreciation of property, plant and
equipment 284 347 544
Depreciation of investment property 33 33 65
Depreciation of right of use assets 278 - 412
Amortisation of intangible assets 1,187 1,285 1,783
Gain on buyback of loan - - (886)
(Profit)/loss on disposal of property,
plant and equipment (2,020) (2) (9)
Interest expense 51 199 341
Financial instruments fair value adjustments 482 265 1,980
Share based payments 271 96 189
Decrease in inventories 5,591 5,842 1,669
Decrease in trade and other receivables 11,362 21,465 11,960
Decrease in trade and other creditors (3,843) (16,624) (2,334)
---------------------------------------------- ------------- -------------- ------------
Cash generated from operations 21,270 15,095 19,639
---------------------------------------------- ------------- -------------- ------------
Interest paid (51) (199) (341)
Income tax paid (1,065) (347) (1,728)
---------------------------------------------- ------------- -------------- ------------
Net cash inflow from operating activities 20,154 14,549 17,570
---------------------------------------------- ------------- -------------- ------------
Cash flows from investing activities
Payments for intangible assets (742) (829) (1,771)
Payments for property, plant and equipment (5,918) (360) (528)
Proceeds from disposal of property,
plant and equipment 3,450 4 12
Net cash outflow from investing activities (3,210) (1,185) (2,287)
---------------------------------------------- ------------- -------------- ------------
Cash flows from financing activities
Reduction of borrowings - - 1,408
Buyback of loan - - (521)
Payment of leasing liabilities (338) (86) (378)
Proceeds from issue of share capital - 205 205
Purchase of own shares for cancellation - (163) (163)
Dividends paid (642) (2,779) (3,207)
Net cash used in financing activities (980) (2,823) (2,656)
---------------------------------------------- ------------- -------------- ------------
Net increase in cash and cash equivalents 15,964 10,541 12,627
Cash, cash equivalents and borrowings
at the beginning of the period 19,124 6,504 6,504
Effects of exchange rate movements (191) (275) (7)
---------------------------------------------- ------------- -------------- ------------
Cash, cash equivalents and borrowings
at the end of the period 34,897 16,770 19,124
---------------------------------------------- ------------- -------------- ------------
Cash, cash equivalents and borrowings
consist of:
Cash, cash equivalents 35,037 19,582 22,292
Short term borrowings (140) (2,812) (3,168)
--------------------------------------- ------- -------- --------
Cash, cash equivalents and borrowings
at the end of the period 34,897 16,770 19,124
--------------------------------------- ------- -------- --------
The Character Group plc
Consolidated Statement of Changes in Equity
Six months ended 28 February 2021
Called Capital Share Share Profit Non-
up Treasury redemption premium Merger based Translation and controlling
share shares reserve account reserve payment reserve loss interest Total
capital GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 account GBP'000 GBP'000
GBP'000 GBP'000
-------- ---------- ----------- -------- --------- -------- ------------- -------- ------------
Balance as
at
31 August 2019
(unaudited) 1,183 (1,912) 1,774 17,161 651 3,180 1,223 11,290 (417) 34,133
------------------ -------- ---------- ----------- -------- --------- -------- ------------- -------- ------------ ---------
Profit/(loss)
for the period - - - - - - - 1,831 (248) 1,583
Exchange
differences
on translation
of foreign
operations - - - - - - (368) 51 21 (296)
Deferred tax
relating to
share options - - - - - - - (15) - (15)
------------------ -------- ---------- ----------- -------- --------- -------- ------------- -------- ------------ ---------
Total
comprehensive
income/(expense)
for the period - - - - - - (368) 1,867 (227) 1,272
------------------ -------- ---------- ----------- -------- --------- -------- ------------- -------- ------------ ---------
Transactions
with owners
Dividend paid - - - - - - - (2,779) - (2,779)
Share based
payment - - - - - 96 - - - 96
Shares issued - 42 - 163 - - - - - 205
Shares cancelled (2) - 2 - - - - (163) - (163)
Six months
ended
29 February
2020 1,181 (1,870) 1,776 17,324 651 3,276 855 10,215 (644) 32,764
------------------ -------- ---------- ----------- -------- --------- -------- ------------- -------- ------------ ---------
Balance as
at
1 September
2019
(audited) 1,183 (1,912) 1,774 17,161 651 3,180 1,223 11,293 (416) 34,137
---------------------- ------ -------- ------ ------- ---- ------ ------ -------- ------ --------
Profit/(loss)
for the year
after tax - - - - - - - 3,154 (165) 2,989
Net exchange
differences
on translation
of foreign
operations - - - - - - (496) 398 - (98)
Deferred tax
debit relating
to share options - - - - - - - (6) - (6)
Total comprehensive
income/(expense)
for the year - - - - - - (496) 3,546 (165) 2,885
---------------------- ------ -------- ------ ------- ---- ------ ------ -------- ------ --------
Transactions
with owners
Change in non
controlling
interest - - - - - - - (238) 238 -
Share based
payment - - - - - 189 - - - 189
Dividends - - - - - - - (3,207) - (3,207)
Shares issued - 42 - 163 - - - - - 205
Shares cancelled (2) - 2 - - - - (163) - (163)
---------------------- ------ -------- ------ ------- ---- ------ ------ -------- ------ --------
At 31 August
2020 1,181 (1,870) 1,776 17,324 651 3,369 727 11,231 (343) 34,046
---------------------- ------ -------- ------ ------- ---- ------ ------ -------- ------ --------
Profit for
the period - - - - - - - 6,148 48 6,196
Exchange differences
on translation
of foreign
operations - - - - - - (137) (105) (5) (247)
Deferred tax
relating to
share options - - - - - - - 19 - 19
---------------------- ------ -------- ------ ------- ---- ------ ------ -------- ------ --------
Total comprehensive
income/(expense)
for the period - - - - - - (137) 6,062 43 5,968
---------------------- ------ -------- ------ ------- ---- ------ ------ -------- ------ --------
Transactions
with owners
Change in non
controlling
interest - - - - - - - (300) 300 -
Dividend paid - - - - - - - (642) - (642)
Share based
payment - - - - - 271 - - - 271
---------------------- ------ -------- ------ ------- ---- ------ ------ -------- ------ --------
Six months
ended
28 February
2021 1,181 (1,870) 1,776 17,324 651 3,640 590 16,351 - 39,643
---------------------- ------ -------- ------ ------- ---- ------ ------ -------- ------ --------
The Character Group plc
Notes to the Financial Statements
1. Basis of Preparation
The financial information set out in this Half Yearly Financial Report
has been prepared in accordance with the recognition and measurement principles
of International Financial Reporting Standards (IFRS) in conformity with
the Companies Act 2006 and in accordance with the accounting policies which
will be adopted in presenting the Group's Annual Report and Financial Statements
for the year ending 31 August 2021. These are consistent with the accounting
policies used in the financial statements for the year ended 31 August
2020 as described in those annual financial statements.
As permitted, this Half Yearly Financial Report has been prepared in accordance
with the AIM rules and not in accordance with IAS 34 'Interim Financial
Reporting'.
The consolidated financial statements are prepared under the historical
cost convention, as modified by the revaluation of certain financial instruments
and share based payments at fair value.
These Half Yearly Financial Statements and the financial information for
the six months ended 28 February 2021 do not constitute full statutory
accounts within the meaning of section 434 of the Companies Act 2006 and
are unaudited. These unaudited Half Yearly Financial statements were approved
by the Board of Directors on 28 April 2021.
The information for the year ended 31 August 2020 is based on the consolidated
financial statements for that year on which the Group's auditor's report
was unqualified and did not contain a statement under section 498 (2) or
(3) of the Companies Act 2006.
2. Going concern
The Directors acknowledge the Financial Reporting Council's 'Guidance for
companies on Corporate Governance Reporting' issued in December 2020.
In assessing the Group and Company's ability to continue as a going concern,
the Board reviews and approves the annual budget and updated forecasts,
including forecasts of cash flows, borrowing requirements and headroom.
The Board reviews the Group's sources of available funds and the level
of headroom available against its committed borrowing facilities. The Group's
financial forecasts, taking into account possible sensitivities in trading
performance including the potential impact of Covid-19, indicate that the
Group will be able to operate within the level of its committed borrowing
facilities for the foreseeable future. The banks remains supportive of
the Group and in the UK has an ongoing invoice discount facility of GBP20m,
together with overdraft and trade finance facilities of GBP21m which were
renewed in April 2020.The Directors have a reasonable expectation that
the Group and Company have adequate resources to continue their operational
existence for the foreseeable future. Accordingly, they continue to adopt
the going concern basis of accounting in preparing the Interim report.
3. Dividends
6 months ended 6 months ended 12 months ended
28 February 29 February 31 August
2021 2020 2020
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
--------------- ---------------
On equity shares:
Final dividend paid for the year
ended 31 August 2020
* 3.00p (2019: 13.00p) per share 642 2,779 2,777
* Interim - - 430
------------------------------------------------ --------------- --------------- ----------------
642 2,779 3,207
------------------------------------------------ --------------- --------------- ----------------
4. Earnings per share
Basic earnings per share is calculated by dividing the earnings attributable
to ordinary shareholders by the weighted average number of ordinary shares
during the period.
Diluted earnings per share is calculated by adjusting the weighted average
number of ordinary shares in issue on the assumption of conversion of all
dilutive potential ordinary shares. The Group has one category of dilutive
potential ordinary shares, being share options granted where the exercise
price is less than average price of the company's ordinary shares during
this period.
An adjusted earnings per share has also been calculated as, in the opinion
of the directors, this will allow shareholders to gain a clearer understanding
of the trading performance of the Group.
The calculations are based on the following:
six months six months ended 12 months ended
ended
28 February 29 February 31 August
2021 2020 2020
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
-------------------- ------------------- ------------- ----------------- ----------------
Profit attributable to equity
shareholders of the parent 6,148 1,831 3,154
----------------------------------------- ------------- ----------------- ----------------
Financial instruments fair value
adjustments net of tax 391 220 1,604
----------------------------------------- ------------- ----------------- ----------------
Gain on buyback of loan - - (886)
----------------------------------------- ------------- ----------------- ----------------
Gain on sale of property net of (1,622) - -
tax
----------------------------------------- ------------- ----------------- ----------------
Profit for adjusted earnings per
share 4,917 2,051 3,872
----------------------------------------- ------------- ----------------- ----------------
Weighted average number of shares
In issue during the year - basic 21,379,781 21,355,507 21,367,710
Dilutive potential ordinary shares 66,078 60,164 50,590
----------------------------------------- ------------- ----------------- ----------------
Weighted average number of ordinary
for diluted earnings per share 21,445,859 21,415,671 21,418,300
----------------------------------------- ------------- ----------------- ----------------
Earnings per share
Basic earnings per share (pence) 28.76 8.57 14.76
------------------------------------ ------ ----- ----------
Diluted earnings per share (pence) 28.67 8.55 14.73
------------------------------------ ------ ----- ----------
Adjusted earnings per share
Basic earnings per share (pence) 23.00 9.60 18.12
------------------------------------ ------ ----- ------
Diluted earnings per share (pence) 22.93 9.58 18.08
------------------------------------ ------ ----- ------
5. Electronic Communications
The Half Yearly Financial Report for the six months ended 28 February
2021 will shortly be available for viewing and download on the Group's
website , www.thecharacter.com .
--- ------------------------------------------------------------------------
Independent Review Report to The Character Group plc
-------------------------------------------------------------------------------------
Introduction
We have been engaged by The Character Group plc (the Company) to review
the condensed set of financial statements in the Half Yearly Financial
Report for the six months ended 28 February 2021 which comprises the Consolidated
Income Statement, the Consolidated Statement of Comprehensive Income, the
Consolidated Balance Sheet, the Consolidated Statements of Cash flows,
the Consolidated Statement of Changes in Equity, and related notes 1 to
4. We have read the other information contained in the Half Yearly Financial
Report and considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed set of financial
statements.
This report is made solely for the Company in accordance with guidance
contained in International Standard on Review Engagements 2410 (UK and
Ireland) "Review of Interim Financial Information Performed by the Independent
Auditor of the Entity" issued by the Auditing Practices Board. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone
other than the Company, for our work, for this report, or for the conclusions
we have formed.
Directors' responsibilities
The Half Yearly Financial Report is the responsibility of, and has been
approved by, the Directors. The Directors are responsible for preparing
the Half Yearly Financial Report in accordance with the AIM rules of the
London Stock Exchange which requires that the accounting policies and presentation
applied to the financial information in the Half Yearly Financial Report
are consistent with those which will be adopted in the annual accounts
having regard to the accounting standards applicable for such accounts.
Our Responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the Half Yearly Financial Report based on
our review.
Scope of Review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible
for financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would become
aware of all significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion .
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the Half Yearly
Financial Report for the six months ended 28 February 2021 is not prepared,
in all material respects, in accordance with the AIM rules of the London
Stock Exchange.
Other matter
As disclosed in note 1, the annual financial statements of the Group are
prepared using the recognition and measurement principles of International
Financial Reporting Standards in conformity with the Companies Act 2006.
In preparing these interim condensed financial statements the directors
have not applied the requirements of IAS 34 - Interim Financial Reporting.
The directors have instead applied the requirements of the AIM rules of
the London Stock Exchange.
Our conclusion is not modified in this respect.
MHA MacIntyre Hudson
Statutory Auditors and Chartered
Accountants
2 London Wall Place
London EC2Y 5AU
28 April 2021
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END
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