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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