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RNS Number : 7201N Character Group PLC 09 May 2024
LONDON, THURSDAY, 9 MAY 2024
The information contained within this announcement is deemed by the Company to
constitute inside information stipulated under the Market Abuse Regulation
(EU) No. 596/2014 as it forms part of UK domestic law by virtue of the
European Union (Withdrawal) Act 2018. Upon the publication of this
announcement via the Regulatory Information Service, this inside information
is now considered to be in the public domain.
The Character Group plc
(the "Company" or "Group" or Character")
Designers, developers and international distributor of toys, games and
giftware
HALF-YEAR FINANCIAL REPORT
for the six months ended 29 February 2024
KEY PERFORMANCE INDICATORS Six months Six months 12 months
CONTINUING OPERATIONS ended ended ended
29 February 28 February 31 August
2024 2023 2023
(unaudited) (unaudited) (audited)
Revenue £57.6m £57.9m £122.6m
Operating profit before highlighted items* £2.1m £0.6m £5.3m
Pre-tax profit before highlighted items* £2.1m £0.5m £5.2m
Underlying basic earnings per share before highlighted items* 8.72p 0.54p 20.15p
Diluted earnings per share before highlighted items* 8.71p 0.54p 20.00p
Profit before tax £2.2m £0.2m £4.7m
Basic profit/(loss) per share 9.31p (0.85p) 18.08p
Diluted profit/(loss) per share 9.30p (0.85p) 17.95p
Dividend per share (declared) 8.0p 8.0p 19.0p
EBITDA £3.7m £2.7m £8.9m
Cash and cash equivalents £12.9m £10.7m £9.6m
Net assets £38.7m £37.1m £39.4m
*Excludes
Mark to market profit/(loss) adjustments on FX derivative positions £0.2m £(0.3m) £(0.5m)
"We have been encouraged by the enthusiasm with which our product portfolio
has been received by our customers. The industry buzz around some of our new
releases, such as Terror Fried, and new additions to our established lines,
like Goo Jit Zu, is very encouraging too."
"The Group has a strong portfolio of products, underpinned by a strong balance
sheet, and has a net cash position with substantial unutilised working capital
facilities in place. On the back of our first half-year's performance and
these signs of the Group's robust health, we anticipate profit before tax and
highlighted items in respect of the full year to 31 August 2024 will exceed
current market expectations. The Board is comfortable that the Group is on
course to meet its targets."
FTSE sector: leisure: FTSE AIM All-share: symbol: CCT: Market cap: £52.16m
Copies of this statement can be viewed at www.thecharacter.com
(http://www.thecharacter.com) .
Product ranges can also be viewed at www.character-online.co.uk
(https://www.character-online.com/) .
ENQUIRIES:
The Character Group plc
Jon Diver, Joint Managing Director
Kiran Shah, Joint Managing Director
Office: +44 (0) 208 329 3377
Mobile: +44 (0) 7831 802219 (JD)
Mobile: +44 (0) 7956 278522 (KS)
Email: info@charactergroup.plc.uk (mailto:info@charactergroup.plc.uk)
Panmure Gordon
(Nominated Adviser and Joint Broker)
Atholl Tweedie, Investment Banking
Rupert Dearden, Corporate Broking
Tel: +44 (0) 20 7886 2500
Allenby Capital Limited
(Joint Broker)
Nick Athanas, Corporate Finance
Amrit Nahal / Tony Quirke, 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 (mailto:fiona@tooleystreet.com)
The Character Group plc
(the "Company" or "Group" or "Character")
Designers, developers and international distributor of toys, games and
giftware
HALF-YEAR FINANCIAL REPORT
for the six months ended 29 February 2024
INTRODUCTION
As indicated in our trading update in January 2024, we are pleased to report
that the pre-tax profit (excluding highlighted items) for the six months ended
29 February 2024 has increased to £2.1m compared to the previous half year of
£0.5m. This increase in profit is despite the turnover remaining constant
at £57.6m.
During the half-year, we have also managed to reduce the inventory levels by
£6.4m to £11.7m (HY 2023: £18.1m). Cash generated from operations
amounted to £10.1m (HY 2023: cash utilisation £2.8m). The cash balance at
29 February 2024, after paying dividends of £2.1m and financing share
buy-backs during the period of £0.7m, totalled £12.9m (2023: £10.7m).
The Group continues to have a robust balance sheet with substantial unutilised
working capital facilities.
GROUP TRADING
Revenue in the period at £57.6m was consistent with the comparable period
last year (HY 2023: £57.9m; FY 2023: £122.6m).
The Group reported profit before tax and highlighted items of £2.1m (HY 2023:
£0.5m; FY 2023: £5.2m), the increase in profit being mainly due to reduced
selling and distribution costs. This primarily related to the logistics
costs associated with the Group's Scandinavian business being lower, as
inventory was significantly reduced from last year, and increased influencer
sales in our UK domestic market producing a lower advertising to sales ratio.
Earnings before interest, tax, depreciation and amortisation (EBITDA) were
£3.7m (HY 2023 £2.7m; FY 2023: £8.9m).
Gross profit margin in the period improved slightly to 27.2%, compared to
26.9% in the same six month period in 2023 and 26.7% for the August 2023
financial year.
Underlying basic earnings per share before highlighted items improved to 8.72p
(HY 2023: 0.54p; FY 2023: 20.15p). Diluted earnings per share, on the same
basis, were 8.71p (HY 2023: 0.54p; FY 2023: 20.00p).
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 profit of
£0.2m. This compares to a loss of £0.3m shown in the corresponding period
in 2023 and a loss of £0.5m reported in the year ended 31 August 2023.
These 'mark to market' adjustments are non-cash items, calculated by reference
to unpredictable and sometimes volatile currency spot rates at the respective
balance sheet dates. To present the results on a 'normal' basis, these 'mark
to market' adjustments on FX derivative positions are excluded, although shown
separately as 'highlighted items' to demonstrate the 'underlying' position.
FINANCIAL POSITION, WORKING CAPITAL & CASH FLOW
The Group's net assets at 29 February 2024 were £38.7m (HY 2023: £37.1m; FY
2023: £39.4m). During the period, the Group generated cash from operations
of £10.1m (HY 2023: £2.8m cash utilisation; FY 2023: £0.1m cash
generated). The Group's inventory stood at £11.7m (HY 2023: 18.1m; FY 2023;
£18.0m).
The Group has no long-term debt. Net interest charges on the use of working
capital facilities during the period were negligible (HY 2023: £0.1m; FY
2023: £0.1m). After dividend payments and financing of share buybacks, the
Group had cash and cash equivalents of £12.9m (HY 2023: £10.7m; FY 2023:
£9.6m) at the end of the half-year period. In addition, the Group has
unutilised headroom of over £50.0m under its banking and other finance
facilities.
DIVIDEND
The Board remains committed to maintaining the dividend. The Directors are,
therefore, declaring an interim dividend of 8.0p per share (HY 2023: 8.0p;
final dividend 2023: 11.0p).
The interim dividend will be paid on 26 July 2024 to shareholders on the
register as at the close of business on 12 July 2024. The shares will be
marked ex-dividend on 11 July 2024.
SHARE BUYBACK PROGRAMME
Shareholders passed a resolution at the 2024 Annual General Meeting
authorising the Company to effect share buybacks (including by way of tender
offers) of up to 2,890,000 issued ordinary shares of 5p each in the Company
("Ordinary Shares").
On 6 February 2024, the Company announced a £1.0 million share buyback
programme as part of its strategy to reduce the Company's share capital.
Given the success in buying back 365,770 Ordinary Shares in just six weeks,
the Board resolved to extend the buyback by up to a further £1.0 million on 3
April 2024. The Company has successfully bought back a total of 500,888
Ordinary Shares at a total cost (excluding dealing costs) of £1.34 million,
leaving an unutilised capacity under the authority granted at the 2024 AGM of
2,389,112 Ordinary Shares. The weighted average price paid per share is
£2.67.
The Company will continue to make regulatory announcements in respect of its
repurchases of Ordinary Shares, as required by UK MAR and the AIM Rules.
TOTAL VOTING RIGHTS (TVR)
As at today's date, the Company's issued share capital consists of 20,965,041
Ordinary Shares. The Company holds 2,100,159 Ordinary Shares in treasury
which do not carry voting rights and, accordingly, the total number of voting
rights in Character is 18,864,882. The figure of 18,864,882 may be used by
shareholders as the denominator for the calculations by which they will
determine, under the FCA's Disclosure Guidance and Transparency Rules, if they
are required to notify their interest, or change to their interest in the
Company.
OUR PEOPLE
We can never say enough about the unwavering commitment and dedication from
our personnel around the globe. Through both good and challenging times,
they have maintained their enthusiasm, focus and 'can do' attitude in tackling
all obstacles encountered in recent years. Their single-minded determination
is shared from the warehouse floor through to the boardroom, with each taking
inspiration from the selfless example of others in the quest to restore the
business to profitable growth. We thank each and every one of them for their
support and belief in the Group's strategy and their diligence in implementing
it.
OUTLOOK
Following the launch of the Group's spring/summer catalogue, we have been
encouraged by the enthusiasm with which our product portfolio has been
received by our customers. The industry buzz around some of our new
releases, such as Terror Fried, and new additions to our established lines,
like Goo Jit Zu, is very encouraging too. We anticipate that the strength of
our offering will allow us to at least maintain our market share in our
domestic territories and increase international sales, particularly in the US.
The Group has a strong portfolio of products, underpinned by a strong balance
sheet, and has a net cash position with substantial unutilised working capital
facilities in place. On the back of our first half-year's performance and
these signs of the Group's robust health, we anticipate profit before tax and
highlighted items in respect of the full year to 31 August 2024 will exceed
current market expectations. The Board is comfortable that the Group is on
course to meet its targets.
The Company looks forward to updating shareholders on its progress in due
course.
9 May 2024
The Character Group plc
Consolidated Income Statement
six months ended 29 February 2024
six months ended six months ended six months ended six months ended six months ended six months ended 12 months ended 12 months ended 12 months ended
29 February 2024 29 February 2024 29 February 2024 28 February 2023 28 February 2023 28 February 2023 31 August 2023 31 August 2023 31 August 2023
Result before *highlighted items *highlighted items Result Result before *highlighted items *highlighted items Result Result before *highlighted items *highlighted items Statutory
(unaudited) (unaudited) (audited) Result
£'000 (unaudited) £'000 (unaudited) £'000 (audited)
£'000 (unaudited) £'000 (unaudited) £'000 (audited)
£'000 £'000 £'000
Revenue 57,615 - 57,615 57,887 - 57,887 122,591 - 122,591
Cost of sales (41,926) - (41,926) (42,335) - (42,335) (89,805) - (89,805)
Gross profit 15,689 - 15,689 15,552 - 15,552 32,786 - 32,786
Other income 121 - 121 334 - 334 473 - 473
Selling and distribution expenses (3,821) - (3,821) (5,825) - (5,825) (8,534) - (8,534)
Administrative expenses (9,913) - (9,913) (9,429) - (9,429) (19,425) - (19,425)
Operating profit 2,076 - 2,076 632 - 632 5,300 - 5,300
Finance income 58 - 58 75 - 75 173 - 173
Finance costs (60) - (60) (164) - (164) (269) - (269)
Changes in fair value of financial instruments - 154 154 - (342) (342) - (510) (510)
Profit/(loss) before tax 2,074 154 2,228 543 (342) 201 5,204 (510) 4,694
Income tax (387) (39) (426) (438) 73 (365) (1,305) 110 (1,195)
Profit/(loss) for the period 1,687 115 1,802 105 (269) (164) 3,899 (400) 3,499
*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 29 February 2024
Notes six months ended six months ended 12 months ended
29 February 2024 28 February 2023 31 August 2023
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Attributable to:
Owners of the parent
Profit/(loss) for the period 1,802 (164) 3,499
Earnings per share before highlighted items (pence) 4
Basic earnings per share 8.72p 0.54p 20.15p
Diluted earnings per share 8.71p 0.54p 20.00p
Earnings per share after highlighted items (pence) 4
Basic earnings/(loss) per share 9.31p (0.85p) 18.08p
Diluted Earnings/(loss) per share 9.30p (0.85p) 17.95p
Dividend per share (pence) 3 11.00p 10.00p 18.0p
EBITDA 3,748 2,694 8,888
(earnings before interest, tax, depreciation and amortisation)
The Character Group plc
Consolidated Statement of Comprehensive Income
six months ended 29 February 2024
six months ended six months ended 12 months ended
29 February 2024 28 February 2023 31 August 2023
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Profit/(loss) for the period after tax 1,802 (164) 3,499
Items that may be reclassified subsequently to profit and loss 323 98 120
Net exchange differences on translation of foreign operations
Total comprehensive Income/(loss) for the period 2,125 (66) 3,619
Total comprehensive income for the period attributable to:
Equity holders of the parent 2,125 (66) 3,619
The Character Group plc
Consolidated Balance Sheet
at 29 February 2024
29 February 2024 28 February 31 August
(unaudited) 2023 2023
£'000 (unaudited) (audited)
£'000 £'000
Non-current assets
Intangible assets 1,947 1,955 2,338
Investment property 1,355 1,420 1,388
Property, plant and equipment 9,943 9,915 10,009
Right of use assets 440 1,098 747
Deferred tax assets 405 450 525
14,090 14,838 15,007
Current assets
Inventories 11,735 18,133 17,955
Trade and other receivables 13,445 12,141 26,696
Current income tax receivable 1,395 498 717
Derivative financial instruments 157 77 57
Cash and cash equivalents 13,424 10,779 10,894
40,156 41,628 56,319
Current liabilities
Short term borrowings (482) (121) (1,284)
Trade and other payables (13,820) (15,886) (26,945)
Lease liabilities (351) (658) (486)
Income tax payable - (1,367) (2,117)
Derivative financial instruments (443) (350) (498)
(15,096) (18,382) (31,330)
Net current assets 25,060 23,246 24,989
Non - current liabilities
Deferred tax (345) (492) (367)
Lease liabilities (82) (456) (264)
(427) (948) (631)
Net assets 38,723 37,136 39,365
Equity
Called up share capital 1,061 1,074 1,074
Shares held in treasury (1,762) (1,762) (1,762)
Capital redemption reserve 1,896 1,883 1,883
Share based payment reserve 4,216 4,060 4,161
Share premium account 17,751 17,751 17,751
Merger reserve 651 651 651
Translation reserve 1,046 1,433 971
Profit and loss account 13,864 12,046 14,636
Total equity attributable to equity holders of the parent 38,723 37,136 39,365
The Character Group plc
Consolidated Statement of Cash Flows
six months ended 29 February 2024
six months ended six months 12 months
29 February ended ended
2024 28 February 31 August
(unaudited) 2023 2023
£'000 (unaudited) (audited)
£'000 £'000
Cash flow from operating activities
Profit before taxation for the period 2,228 201 4,694
Adjustments for:
Depreciation of property, plant and equipment 402 341 791
Depreciation of investment property 33 33 65
Depreciation of right of use assets 261 321 609
Amortisation of intangible assets 982 1,383 2,175
(Profit) on disposal of property, plant and equipment (3) (16) (52)
(Profit) on derecognition of right of use assets (3) - -
Interest expense 2 89 96
Financial instruments fair value adjustments (154) 342 510
Share based payments 55 103 204
Decrease in inventories 6,220 8,040 8,218
Decrease/(increase) in trade and other receivables 13,251 12,587 (1,968)
(Decrease) in trade and other creditors (13,125) (26,265) (15,206)
Cash generated/(utilised) from operations 10,149 (2,841) 136
Interest paid (2) (89) (96)
Income tax paid (3,118) (2,206) (3,014)
Net cash inflow/(outflow) from operating activities 7,029 (5,136) (2,974)
Cash flows from investing activities
Payments for intangible assets (592) (1,376) (2,550)
Payments for property, plant and equipment (336) (953) (1,611)
Proceeds from disposal of property, plant and equipment 3 16 164
Net cash outflow from investing activities (925) (2,313) (3,997)
Cash flows from financing activities
Payment of leasing liabilities (268) (332) (671)
Proceeds from issue of share capital - 236 236
Purchase of own shares for cancellation (692) - -
Dividends paid (2,130) (1,937) (3,486)
Net cash used in financing activities (3,090) (2,033) (3,921)
Net increase/(decrease) in cash and cash equivalents 3,014 (9,482) (10,892)
Cash, cash equivalents and borrowings at the beginning of the period 9,610 20,019 20,019
Effects of exchange rate movements 318 121 483
Cash, cash equivalents and borrowings at the end of the period 12,942 10,658 9,610
Cash, cash equivalents and borrowings consist of:
Cash, cash equivalents 13,424 10,779 10,894
Short term borrowings (482) (121) (1,284)
Cash, cash equivalents and borrowings at the end of the period 12,942 10,658 9,610
The Character Group plc
Consolidated Statement of Changes in Equity
six months ended 29 February 2024
Called up share capital Shares held in treasury Capital redemption reserve Share premium account Share based payment Profit
£'000 £'000 £'000 £'000 Merger reserve £'000 Translation reserve and loss
£'000 £'000 account Total
£'000 £'000
Balance as at 1,074 (1,813) 1,883 17,566 651 3,957 1,950 13,630 38,898
31 August 2022
(audited)
(Loss) for the period - - - - - - - (164) (164)
Exchange differences on translation of foreign operations - - - - - - (517) 615 98
Total comprehensive income/(expense) for the period - - - - - - (517) 451 (66)
Transactions with owners
Share based payment - - - - - 103 - - 103
Deferred tax relating to share options - - - - - - - (98) (98)
Dividend paid - - - - - - - (1,937) (1,937)
Shares issued - 51 - 185 - - - - 236
Six months ended 1,074 (1,762) 1,883 17,751 651 4,060 1,433 12,046 37,136
28 February 2023
Balance as at 1,074 (1,813) 1,883 17,566 651 3,957 1,950 13,630 38,898
1 September 2022
(audited)
Profit for the year after tax - - - - - - - 3,499 3,499
Net exchange differences on translation of foreign operations - - - - - - (979) 1,099 120
Total comprehensive income/(expense) for the year - - - - - - (979) 4,598 3,619
Transactions with owners
Share based payment - - - - - 204 - - 204
Deferred tax relating to share options - - - - - - - (106) (106)
Dividends - - - - - - - (3,486) (3,486)
Shares issued - 51 - 185 - - - - 236
At 31 August 2023 1,074 (1,762) 1,883 17,751 651 4,161 971 14,636 39,365
(unaudited)
Profit for the period - - - - - - - 1,802 1,802
Exchange differences on translation of foreign operations - - - - - - 75 248 323
Total comprehensive income/(expense) for the period - - - - - - 75 2,050 2,125
Transactions with owners
Share based payment - - - - - 55 - - 55
Dividend paid - - - - - - - (2,130) (2,130)
Shares cancelled (13) - 13 - - - - (692) (692)
Six months ended 1,061 (1,762) 1,896 17,751 651 4,216 1,046 13,864 38,723
29 February 2024
The Character Group plc
Notes to the Financial Statements
1. Basis of Preparation
The financial information set out in this Half-Year Financial Report for the
six months ended 29 February 2024 has been prepared under International
Financial Reporting Standards (IFRS) as adopted by the European Union 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 2024. These are consistent with the accounting policies used in the
financial statements for the year ended 31 August 2023 as described in those
annual financial statements.
As permitted, this Half-Year 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-Year Financial Statements and the financial information do not
constitute full statutory accounts within the meaning of section 434 of the
Companies Act 2006 and are unaudited. These unaudited Half-Year Financial
statements were approved by the Board of Directors on 8 May 2024.
The information for the year ended 31 August 2023 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 on the
going concern basis of accounting and reporting on solvency and liquidity
risks' issued in April 2016.
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
indicate that the Group will be able to operate within the level of its
committed borrowing facilities for the foreseeable future. The banks remain
supportive of the Group. 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
six months six months 12 months
ended ended ended
29 February 2024 28 February 2023 31 August 2023
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
On equity shares:
Final dividend paid for the year ended 31 August 2023
- 11.00p (2022: 10.00p) per share 2,130 1,937 1,937
Interim dividend for the year ended 31 August 2023
- 8.00p per share - - 1,549
2,130 1,937 3,486
4. Earnings per share
Basic earnings/(loss) 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/(loss) 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 (2023: 1) 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 12 months
ended ended ended
29 February 2024 28 February 2023 31 August 2023
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Profit/(loss) attributable to equity shareholders of the parent 1,802 (164) 3,499
Financial instruments fair value adjustments net of tax (115) 269 400
Profit for adjusted earnings per share 1,687 105 3,899
Weighted average number of shares
In issue during the year - basic 19,349,512 19,331,081 19,348,548
Weighted average number of ordinary shares for basic and diluted loss per - 19,331,081 -
share *(1)
Dilutive potential ordinary shares 25,359 221,744 148,497
Weighted average number of ordinary for diluted earnings per share
19,374,871 19,552,825 19,497,045
*(1) The potential ordinary shares on exercise of share options are excluded
from the number of weighted average shares due to their anti-dilutive effect.
Earnings/(loss) per share
Basic earnings/(loss) per share (pence) 9.31 (0.85) 18.08
Diluted earnings/(loss) per share (pence) 9.30 (0.85) 17.95
Adjusted earnings per share
Basic earnings per share (pence) 8.72 0.54 20.15
Diluted earnings per share (pence) 8.71 0.54 20.00
5. Electronic Communications
The Half-Year Financial Report for the six months ended 29 February 2024 will
shortly be available for viewing and download on the Group's website:
www.thecharacter.com (http://www.thecharacter.com) .
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