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REG - Character Group PLC - Half-year Report - six months to 28 February 2023

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RNS Number : 0435Z  Character Group PLC  11 May 2023

 

LONDON, THURSDAY, 11 MAY 2023

 

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 YEARLY FINANCIAL REPORT

for the six months ended 28 February 2023

 

 

 KEY PERFORMANCE INDICATORS                                     Six months    Six months    12 months

 CONTINUING OPERATIONS                                          ended         ended         ended

                                                                28 February   28 February   31 August

                                                                2023          2022          2022

                                                                (unaudited)   (unaudited)   (audited)
 Revenue                                                        £57.9m        £90.9m        £176.4m

 Operating profit before highlighted items*                     £0.6m         £6.5m         £11.4m
 Pre-tax profit before highlighted items*                       £0.5m         £6.5m         £11.3m
 Underlying basic earnings per share before highlighted items*  0.54p         25.15p        45.73p
 Diluted earnings per share before highlighted items*           0.54p         24.62p        44.77p

 Profit before tax                                              £0.2m         £6.5m         £11.4m
 Basic loss per share                                           (0.85p)       25.21p        46.37p
 Diluted loss per share                                         (0.85p)       24.68p        45.39p

 Dividend per share (declared)                                  8.0p          7.0p          17.0p
 EBITDA                                                         £2.7m         £8.4m         £14.2m
 Cash and cash equivalents                                      £10.7m        £21.5m*       £20.0m
 Net assets                                                     £37.1m        £35.2m*       £38.9m

 

 *Excludes
 Mark to market (loss)/profit adjustments on FX derivative positions  £(0.3m)   -   £0.2m

 

 

"The Board predicted at the start of the year that the Group's trading
performance would be very much one of two halves."

 

"Whilst the conditions remain challenging, the Board has a strong belief in
the current product line up.  The success of Heroes of Goo Jit Zu continues
and is supported by other lines, including the influencer inspired Lanky Box
and Aphmau products which are also featuring well in our sales numbers.  In
addition, the scheduled release of the new "Turtles" movie in August 2023
bodes well for the launch this summer of the Teenage Mutant Ninja Turtles line
of products that we are distributing in the UK and Ireland."

 

"Overall, the Board is, accordingly, confident of the prospects for the second
half and continues to expect that Character's profitability for FY2023 will be
in line with current market expectations*."

 

 

 

*Current market consensus compiled by the Company for the year ending 31
August 2023 is an underlying profit before tax of c.£5m.

 

 

 FTSE sector: leisure: FTSE AIM All-share: symbol: CCT: Market cap: £68m

 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
 (http://www.character-online.co.uk) .

 

 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, 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 YEARLY FINANCIAL REPORT

for the six months ended 28 February 2023

 

 

INTRODUCTION

Since the Group's trading updates issued in October 2022 and January 2023,
trading conditions have continued to be challenging across all the Group's
markets.  The business continues to have a solid product portfolio for both
its international and domestic markets.  A succession of exciting new
introductions to be made in the second half will, the Board believes, result
in a significant improvement in the Group's profitability in the second half
of the financial year.

 

GROUP TRADING

Revenue in the period at £57.9m was down 36.3% on the comparable period last
year (HY 2022 £90.9m; FY 2022: £176.4m).

 

The Group is reporting a profit before tax and highlighted items for the
period of £0.5m (HY 2022: £6.5m; FY 2022: £11.3m).

 

Earnings before interest, tax, depreciation and amortisation (EBITDA) were
£2.7m (HY 2022 £8.4m; FY 2022: £14.2m).

 

Gross profit margin in the period improved to 26.9%, compared to 24.8% in the
same 2022 period and 23.5% for the August 2022 financial year.  The increase
in margin reflects the significant reduction in sales to the USA market, which
attracts a lower margin than the Group's domestic and other international
sales.

 

Underlying basic earnings per share before highlighted items amounted to 0.54p
(HY 2022: 25.15p; FY 2022: 45.73p).  Diluted earnings per share, on the same
basis, were 0.54p (HY 2022: 24.62p; FY 2022: 44.77p).

 

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 loss of
£0.3m.  This compares to a profit of £16,000 shown in the corresponding
period in 2022 and a profit of £0.2m reported in the year to 31 August
2022.  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 28 February 2023 were £37.1m (HY 2022: £35.2m; FY
2022: £38.9m).  During the period, the Group utilised cash from operations
of £2.8m (HY 2022: £3.4m generated; FY 2022: £4.2m generated).  The
Group's inventory stood at an unseasonably high level of £26.2m at 31 August
2022, however, by 28 February 2023 this had been reduced by £8.0m to £18.1m
(HY 2022: £17.9m).

 

The Group has no long-term debt.  Net interest charges on the use of working
capital facilities during the period were £0.1m (HY 2022: £23,000; FY 2022:
£0.2m).  After making dividend payments, the Group had cash and cash
equivalents of £10.7m (HY 2022: £21.5m; FY 2022: £20.0m) at the end of the
first-half period.  In addition, the Group had unutilised headroom of over
£50.0m under its banking and other finance facilities.

 

DIVIDEND

The Board remains committed to maintaining a progressive dividend policy.
The Board is declaring an interim dividend of 8.0p per share (HY 2022: 7.0p;
final dividend 2022: 10.0p).  Although this is not supported by earnings
cover (HY 2022 3.6 times), it reflects the Board's confidence in the Group's
prospects for a second half  recovery and performance beyond the current
financial year.

The interim dividend will be paid on 28 July 2023 to shareholders on the
register as at the close of business on 14 July 2023.  The shares will be
marked ex-dividend on 13 July 2023.

SHARE BUYBACK PROGRAMME

No share buybacks were conducted in the period under review.  Shareholders
passed a resolution at the 2023 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").

 

The Board will consider further buyback initiatives in the future, including
by way of a tender offer as the Directors consider that it is in the interests
of all shareholders to provide investors who wish to realise part or all of
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.

 

TOTAL VOTING RIGHTS (TVR)

As at today's date, the Company's issued share capital consists of 21,465,929
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 19,365,770.  The figure of 19,365,770 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

As always, we are indebted to our teams that operate throughout our markets
globally.  Their gritty determination to face the ever changing, often
unexpected, challenges that have affected our markets in recent years is
humbling.  We have not encountered the level of sales slowdown experienced in
the first half for many years and it has, no doubt, been dispiriting for our
people but they have shown, once again, a hunger for delivering the
anticipated turnaround for the second half and the restoration of the previous
growth pattern and fortunes of the Group.  For this continuing service and
commitment, the Board thanks them on behalf of all of our stakeholders.

OUTLOOK

The Board predicted at the start of the year that the Group's trading
performance would be very much one of two halves.  Whilst the conditions
remain challenging, the Board has a strong belief in the current product line
up.  The success of Heroes of Goo Jit Zu continues and is supported by other
lines, including the influencer inspired Lanky Box and Aphmau products which
are also featuring well in our sales numbers.  In addition, the scheduled
release of the new "Turtles" movie in August 2023 bodes well for the launch
this summer of the Teenage Mutant Ninja Turtles line of products that we are
distributing in the UK and Ireland.

 

Overall, the Board is, accordingly, confident of the prospects for the second
half and continues to expect that Character's profitability for FY2023 will be
in line with current market expectation*. The Board will continue to update
shareholders as we progress through the year.

 

 

 

11 May 2023

 

 

*Current market consensus compiled by the Company for the year ending 31
August 2023 is an underlying profit before tax of c.£5m.

 

 

 The Character Group plc

 Consolidated Income Statement

 six months ended 28 February 2023

 

                                                 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

                                                  28 February 2023                       28 February 2023    28 February 2023      28 February 2022                       28 February 2022    28 February 2022        31 August 2022                    31 August 2022       31 August 2022

                                                 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                                         57,887                                 -                    57,887               90,947                                 -                    90,947                 176,402                            -                    176,402
 Cost of sales                                   (42,335)                               -                    (42,335)             (68,347)                               -                    (68,347)               (135,036)                          -                    (135,036)
 Gross profit                                    15,552                                 -                    15,552               22,600                                 -                    22,600                 41,366                             -                    41,366
 Other income                                    334                                    -                    334                  339                                    -                    339                    502                                -                    502
 Selling and distribution expenses               (5,825)                                -                    (5,825)              (5,140)                                -                    (5,140)                (8,260)                            -                    (8,260)
 Administrative expenses                         (9,429)                                -                    (9,429)              (11,251)                               -                    (11,251)               (22,173)                           -                    (22,173)
 Operating profit                                632                                    -                    632                  6,548                                  -                    6,548                  11,435                             -                    11,435
 Finance income                                  75                                     -                    75                   17                                     -                    17                     51                                 -                    51
 Finance costs                                   (164)                                  -                    (164)                (40)                                   -                    (40)                   (207)                              -                    (207)
 Changes in fair value of financial instruments  -                                      (342)                (342)                -                                      16                   16                     -                                  159                  159
 Profit/(loss) before tax                        543                                    (342)                201                  6,525                                  16                   6,541                  11,279                             159                  11,438
 Income tax                                      (438)                                  73                   (365)                (1,188)                                (3)                  (1,191)                (2,018)                            (30)                 (2,048)
 Profit/(loss) for the period                    105                                    (269)                (164)                5,337                                  13                   5,350                  9,261                              129                  9,390

 

 *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 2023

 

 

                                                                  Notes   six months ended    six months ended    12 months ended

                                                                         28 February 2023     28 February 2022    31 August 2022

                                                                         (unaudited)         (unaudited)          (audited)

                                                                         £'000               £'000                £'000
 Attributable to:
 Owners of the parent
 (Loss)/profit for the period                                            (164)               5,350                9,390
 Earnings per share before significant items (pence)              5
 Basic earnings per share                                                0.54p               25.15p               45.73p
 Diluted earnings per share                                              0.54p               24.62p               44.77p
 Earnings per share after significant items (pence)               5
 Basic (loss)/earnings per share                                         (0.85p)             25.21p               46.37p
 Diluted (loss)/earnings per share                                       (0.85p)             24.68p               45.39p

 Dividend per share (pence)                                       4      10.00p              9.00p                15.0p

 EBITDA                                                                  2,694               8,407                14,195

 (earnings before interest, tax, depreciation and amortisation)

 

 

 

The Character Group plc

Consolidated Statement of Comprehensive Income

six months ended 28 February 2023

 

                                                                                                 six months ended    six months ended    12 months ended

                                                                                                 28 February 2023    28 February 2022     31 August 2022

                                                                                                 (unaudited)        (unaudited)          (audited)

                                                                                                 £'000              £'000                £'000
 (Loss)/profit for the period after tax                                                          (164)              5,350                9,390
 Items that may be reclassified subsequently to profit and loss                                  98                 201                  1,091

 Net exchange differences on translation of foreign operations
 Total comprehensive (loss)/income for the period                                                (66)               5,551                10,481

 Total comprehensive income for the period attributable to:
 Equity holders of the parent                                                                    (66)               5,551                10,481

 

 

 

 The Character Group plc

 Consolidated Balance Sheet

 at 28 February 2023

 

                                                                28 February 2023  28 February   31 August

                                                                (unaudited)       2022           2022

                                                                £'000             (unaudited)   (audited)

                                                                                  £'000         £'000
 Non-current assets
 Intangible assets                                              1,955             1,567         1,963
 Investment property                                            1.420             1,485         1,453
 Property, plant and equipment                                  9,915             8,471         9,307
 Right of use assets                                            1,098             1,162         1,216
 Deferred tax assets                                            450               432           542
                                                                14,838            13,117        14,481
 Current assets
 Inventories                                                    18,133            17,946        26,173
 Trade and other receivables                                    12,141            14,827        24,728
 Current income tax receivable                                  498               596           576
 Derivative financial instruments                               77                44            412
 Cash and cash equivalents                                      10,779            21,550        26,646
                                                                41,628            54,963        78,535
 Current liabilities
 Short term borrowings                                          (121)             (3)           (6,627)
 Trade and other payables                                       (15,886)          (29,133)      (42,151)
 Lease liabilities                                              (658)             (545)         (577)
 Income tax payable                                             (1,367)           (1,936)       (3,345)
 Derivative financial instruments                               (350)             (118)         (343)
                                                                (18,382)          (31,735)      (53,043)
 Net current assets                                             23,246            23,228        25,492
 Non - current liabilities
 Deferred tax                                                   (492)             (430)         (427)
 Lease liabilities                                              (456)             (676)         (648)
                                                                (948)             (1,106)       (1,075)
 Net assets                                                     37,136            35,239        38,898
 Equity
 Called up share capital                                        1,074             1,074         1,074
 Shares held in treasury                                        (1,762)           (1,826)       (1,813)
 Capital redemption reserve                                     1,883             1,883         1,883
 Share based payment reserve                                    4,060             3,857         3,957
 Share premium account                                          17,751            17,540        17,566
 Merger reserve                                                 651               651           651
 Translation reserve                                            1,433             887           1,950
 Profit and loss account                                        12,046            11,173        13,630
 Total equity attributable to equity holders of the parent      37,136            35,239        38,898

 

 

 

 The Character Group plc

 Consolidated Statement of Cash Flows

 six months ended 28 February 2023

 

                                                                       six months ended  six months      12 months

                                                                       28 February       ended           ended

                                                                       2023               28 February     31 August

                                                                       (unaudited)       2022            2022

                                                                       £'000             (unaudited)     (audited)

                                                                                         £'000           £'000
 Cash flow from operating activities
 Profit before taxation for the period                                 201               6,541           11,438
 Adjustments for:
 Depreciation of property, plant and equipment                         341               304             556
 Depreciation of investment property                                   33                33              66
 Depreciation of right of use assets                                   321               276             632
 Amortisation of intangible assets                                     1,383             1,246           1,509
 (Profit) on disposal of property, plant and equipment                 (16)              -               (3)
 Interest expense                                                      89                23              156
 Financial instruments fair value adjustments                          342               (16)            (159)
 Share based payments                                                  103               108             208
 Decrease/(increase) in inventories                                    8,040             (7,053)         (15,280)
 Decrease in trade and other receivables                               12,587            11,192          1,291
 (Decrease)/increase in trade and other creditors                      (26,265)          (9,257)         3,761
 Cash (utilised)/generated from operations                             (2,841)           3,397           4,175
 Interest paid                                                         (89)              (23)            (156)
 Income tax paid                                                       (2,206)           (841)           (401)
 Net cash (outflow)/inflow from operating activities                   (5,136)           2,533           3,618
 Cash flows from investing activities
 Payments for intangible assets                                        (1,376)           (1,007)         (1,666)
 Payments for property, plant and equipment                            (953)             (547)           (1,845)
 Proceeds from disposal of property, plant and equipment               16                -               225
 Net cash outflow from investing activities                            (2,313)           (1,554)         (3,286)
 Cash flows from financing activities
 Payment of leasing liabilities                                        (332)             (268)           (538)
 Proceeds from issue of share capital                                  236               260             299
 Purchase of own shares for cancellation                               -                 (13,640)        (13,640)
 Dividends paid                                                        (1,937)           (1,929)         (3,280)
 Net cash used in financing activities                                 (2,033)           (15,577)        (17,159)
 Net (decrease) in cash and cash equivalents                           (9,482)           (14,598)        (16,827)
 Cash, cash equivalents and borrowings at the beginning of the period  20,019            35,920          35,920
 Effects of exchange rate movements                                    121               225             926
 Cash, cash equivalents and borrowings at the end of the period        10,658            21,547          20,019

 

 

 Cash, cash equivalents and borrowings consist of:
 Cash, cash equivalents                                          10,779  21,550  26,646
 Short term borrowings                                           (121)   (3)     (6,627)
 Cash, cash equivalents and borrowings at the end of the period  10,658  21,547  20,019

 

 

 

The Character Group plc

Consolidated Statement of Changes in Equity

six months ended 28 February 2023

 

                                                                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                                                  1,181                    (1,870)                  1,776                       17,324                 651              3,749                767                   21,274                                 44,852

 31 August 2021

 (audited)
 Profit for the period                                          -                        -                        -                           -                      -                -                    -                     5,350                                  5,350
 Net exchange differences on translation of foreign operations  -                        -                        -                           -                      -                -                    120                             81                           201
 Total comprehensive income/(expense) for the period            -                        -                        -                           -                      -                -                    120                   5,431                                  5,551
 Transactions with owners
 Share based payment                                            -                        -                        -                           -                      -                108                  -                     -                                      108
 Deferred tax relating to share options                         -                        -                        -                           -                      -                -                    -                     37                                     37
 Dividend paid                                                  -                        -                        -                           -                      -                -                    -                     (1,929)                                (1,929)
 Shares issued                                                  -                        44                       -                           216                    -                -                    -                     -                                      260
 Tender offer fees                                              -                        -                        -                           -                      -                -                    -                     (142)                                  (142)
 Cancellation on tender offer                                   (107)                    -                        107                         -                      -                -                    -                     (13,498)                               (13,498)
 Six months ended                                               1,074                    (1,826)                  1,883                       17,540                 651              3,857                887                   11,173                                 35,239

 28 February 2022

 

 Balance as at                                                  1,181  (1,870)  1,776  17,324  651  3,749  767    21,274    44,852

 1 September 2021

 (audited)
 Profit for the year after tax                                  -      -        -      -       -    -      -      9,390     9,390
 Net exchange differences on translation of foreign operations  -      -        -      -       -    -      1,183  (92)      1,091
 Total comprehensive income/(expense) for the year              -      -        -      -       -    -      1,183  9,298     10,481
 Transactions with owners
 Share based payment                                            -      -        -      -       -    208    -      -         208
 Current tax credit relating to exercised share options         -      -        -      -       -    -      -      18        18
 Deferred tax relating to share options                         -      -        -      -       -    -      -      (40)      (40)
 Dividends                                                      -      -        -      -       -    -      -      (3,280)   (3,280)
 Shares issued                                                  -      57       -      242     -    -      -      -         299
 Tender offer fees                                              -      -        -      -       -    -      -      (142)     (142)
 Shares cancelled on tender offer                               (107)  -        107    -       -    -      -      (13,498)  (13,498)
 At 31 August 2022                                              1,074  (1,813)  1,883  17,566  651  3,957  1,950  13,630    38,898

 (unaudited)
 (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

 

 

 

 The Character Group plc

 Notes to the Financial Statements

 

 1.  Basis of Preparation
 The financial information set out in this Half Yearly Financial Report for the
 six months ended 28 February 2023 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 2023.  These are consistent with the accounting policies used in the
 financial statements for the year ended 31 August 2022 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 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 10 May 2023.

 The information for the year ended 31 August 2022 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, and in the UK has an ongoing invoice discount
 facility of £20m, together with overdraft and trade finance facilities of
 £23m.  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 ended   six months ended   12 months ended

                                                             28 February 2023   28 February 2022   31 August 2022

                                                             (unaudited)        (unaudited)        (audited)

                                                             £'000              £'000              £'000
 On equity shares:
 Final dividend paid for the year ended 31 August 2022
 -       10.00p (2021: 9.00p) per share                      1,937              1,929              1,929
 -       Interim                                             -                  -                  1,351
                                                             1,937              1,929              3,280

 

 

 4.                         Earnings per share
 Basic (loss)/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 (loss)/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 (2022: 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 ended   six months ended   12 months ended

                                                                                  28 February 2023   29 February 2022   31 August 2022

                                                                                  (unaudited)        (unaudited)        (audited)

                                                                                  £'000              £'000              £'000
 (Loss)/profit attributable to equity shareholders of the parent                  (164)              5,350              9,390
 Financial instruments fair value adjustments net of tax                          269                (13)               (129)
 Profit for adjusted earnings per share                                           105                5,337              9,261
 Weighted average number of shares
 In issue during the year - basic                                                 19,331,081         21,217,582         20,251,532
 Weighted average number of ordinary shares for basic and diluted loss per        19,331,081         -                  -
 share *(1)
 Dilutive potential ordinary shares                                               221,744            457,318            436,409
 Weighted average number of ordinary for diluted earnings per share

                                                                                  19,552,825         21,674.900         20,687,941

 

*(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.

 

 (Loss)/earnings per share
 Basic (loss)/earnings per share (pence)    (0.85)  25.21  46.37
 Diluted (loss)/earnings per share (pence)  (0.85)  24.68  45.39

 

 Adjusted earnings per share
 Basic earnings per share (pence)    0.54  25.15  45.73
 Diluted earnings per share (pence)  0.54  24.62  44.77

 

 

 5.  Electronic Communications
 The Half Yearly Financial Report for the six months ended 28 February 2023
 will shortly be available for viewing and download on the Group's website:
 www.thecharacter.com (http://www.thecharacter.com) .

 

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.   END  IR GPUPPAUPWUUG

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