REG - Character Group PLC - Preliminary results - year ended 31 August 2015 <Origin Href="QuoteRef">CCT.L</Origin>

CharacterAnnouncement

01/12/2015 07:12

RNS Number : 4766H
Character Group PLC
01 December 2015
Tuesday, 1 December 2015
Designers, developers and international distributor of toys, games and giftware
The Character Group plc
("Company" "Group" or "Character")
Preliminary results for the year ended 31 August 2015
"Character continues to reinforce its position as one of the UK's leading toy companies"
Key highlights:
 Iconic and stable ranges continue to sell-through well and more importantly are adored by the consumer
 Cornerstone brands in the portfolio include:Peppa Pig, Minecraft, Fireman Sam, Teksta, Little Live Pets, Scooby Doo, Doctor Who, and our Activity ranges
 These will be joined in 2016 by Teletubbies
Key financials:
Year ended 31 August
% change

2015
2014

 Group revenue
99.05m
97.89m
+1.2%
 Group profit before income tax
12.27m
7.11m
+72.6%
 EBITDA 
13.93m
9.78m
+42.4%
 Basic earnings per share 
48.56p
27.66p
+75.6%
 Proposed dividend
- proposed final 
- total for the year 
6.00p
11.00p
3.95p
7.25p
+51.9%
+51.7%
 Cash generated from operations
18.25m
8.46m
+115.7%
 Net cash 
4.53m
(4.51)m

"The profit before tax in 2015 is ahead of results previously anticipated and we are pleased to report thatcurrent trading remains encouraging and in line with management expectations."
"Our new ranges coming to market over the next calendar year are very exciting and already receiving great reviews from both our customers and the trade media. On this basis, we are confident that the cornerstone brands and the new season's ranges will deliver in terms of demand and sales at consumer level across both our UK and international markets. At this stage we believe that our underlying performance should be able to deliver another year of solid progress."
"Our strong balance sheet and cash flow help us maintain our ability to continue leveraging our broad and, for the most part, proven product portfolio, which will enable us to remain one of the UK's leading toy companies."
Richard King, Executive Chairman
Full statement attached
FTSE sector: leisure: 
FTSE AIM All-share:symbol: CCT.L: 
Market cap: 108m
Copies of this statement can be viewed at www.thecharacter.com. 
Product ranges can be viewed at www.character-online.co.uk. 
Product names in this financial report shown in italics represent copyright or registered trademarks.
Enquiries:


The Character Group plc
Richard King, Executive Chairman
Kiran Shah, Group Finance Director & Joint MD
Mark Dowding, CFO
Office: +44 (0) 208 329 3377
Mobile: +44 (0) 7836 250150 (RK) 
Mobile: +44 (0) 7956 278522 (KS)
Email: info@charactergroup.plc.uk



Panmure Gordon (Nominated Adviser and Joint Broker)
Russell Cook, Investment Banking
Tom Salvesen, Corporate Broking
Tel: +44 (0) 20 7886 2500



Allenby Capital Limited (Joint Broker]
Nick Athanas
Katrina Perez
Tel: +44 (0) 20 3328 5656
TooleyStreet Communications Limited
(investor and media relations)
Fiona Tooley
Tel: +44 (0) 7785 703523
Email: fiona@tooleystreet.com
Designers, developers and international distributor of toys, games and giftware
The Character Group plc
(the "Company" or "Group" or "Character")
Preliminary results for the year ended 31 August 2015
INTRODUCTION
It is exceptionally pleasing to be able to report a record profit before tax of 12.27 million, up 73%, compared to 7.11m for the previous year on revenues of 99.05 million (2014: 97.89m). Our domestic market has traded ahead of expectations whilst international sales were hampered by currency and the generally difficult economic climate. Going forward with a strengthened offering, we expect our international trade to return to its recent pattern of growth. Our strong balance sheet and cash flow help us maintain our ability to continue leveraging our broad and, for the most part, proven product portfolio, which will enable us to remain one of the UK's leading toy companies.
OUR BRANDS AND NEW ADDITIONS
Our product line-up includes well established and longstanding ranges which are refreshed each year and enhanced by the introduction of new and innovative products as they become available. Our most important brands during the year included Peppa Pig, Minecraft, Fireman Sam, Teksta, Little Live Pets, Scooby Doo, Doctor Who and our Activity ranges.
As previously stated, Character Options Limited ('Character Options'), our UK trading subsidiary, has been appointed the global master toy partner for Teletubbies, a former firm favourite with children and parents alike. Our new line of toy products featuring these characters will be launched and marketed in early 2016. The launch of the new Teletubbies TV series on CBBC last month has generated great interest to date in the UK which is expected to continue to grow. We are also especially excited by the reaction from overseas customers and the potential growth opportunities that this licence, together with our other evergreen product line-up, affords us. 
KEY PERFORMANCE INDICATORS FOR THE YEAR ENDED 31 AUGUST 2015
As stated above, net profit before tax on continuing operations was 12.27 million (2014: 7.11m). Group revenue in the year was 99.05 million compared to 97.89m for the last financial year. 
Gross profit increased from 29.14m in 2014 to 36.66 million in the 2015 financial year, with gross profit margins increasing to 37% (2014: 29.8%). 
A significant proportion of the Group's purchases are made in US dollars. The Group 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. This has resulted in a related credit to the income statement of 2.05 million (2014: charge of 1.93 m). The profit before tax of 12.27 million is stated after crediting 2.05 million in relation to this 'mark to market' valuation and is a contributory factor behind the increase in gross profit margin in the current financial year. This credit is a non-cash item in these financial statements. 
Inventories remained broadly constant at 8.97 million compared to 8.85m at the end of the previous financial year. Cash and cash equivalents at 31 August 2015 were 25.78 million (2014: 17.70m). At the same date, short-term borrowings were reduced to 21.25 million (2014: 22.22m). The Company has no long term borrowings. Net current assets increased to 8.05 million (2014: 3.58m). The Group maintains substantial headroom within its working capital facilities.
Basic earnings per share for the year under review were 48.56 pence compared to 27.66p in the year ended 31 August 2014.
DIVIDEND
Following on from the very good result for the year,the Board is recommending an increased final dividend of 6.00 pence per share. Payment of the final dividend is subject to approval by shareholders at the Annual General Meeting ("AGM") on 22 January 2016.
This, together with the interim dividend of 5.00 pence per share paid on 26 June 2015, would make a total of 11.00 pence per share, an increase of 51.72%. This is covered 4.4 times by annual earnings.
The final dividend will be paid on 29 January 2016 to shareholders on the Register as at the close of business on8 January 2016; the shares will be marked ex-dividend on 7 January 2016.
SHARE BUY-BACK PROGRAMME
It remains part of the Group's overall strategy to continue to repurchase the Company's own shares when appropriate. As previously indicated, the Directors could also be prepared to participate in any future share buy-back programme the Company proposes.
It is recognised however that the conditions of the authority granted at the last AGM do not follow current 'Best Practice'. As a consequence, the Board has decided that the proposal regarding the renewal to be put forward this year will follow best practice for smaller companies in that the total authority will be for a maximum of 15% of the issued capital and the price at which purchases may be made will be limited to a maximum of 10% above market price. The Directors would apply this best practice on pricing should they decide to make any share buy-backs prior to the 2016 AGM.
In the period under review, the Company acquired a total of 2,336,330 ordinary shares in the Company at an aggregate cost of 6.07 million (excluding stamp duty and dealing costs), with the average cost being 2.60 per ordinary share (2014: 2,148,002 ordinary shares at an aggregate cost of 3,928,336 and an average cost of 1.83 per ordinary share). 
As at today's date, the Company has 21,608,490 ordinary shares in issue (excluding shares held in treasury). The Company holds 3,269,456 ordinary shares in treasury, representing approximately 15.14% of the issued voting share capital; these treasury shares do not carry voting or dividend rights. 
PEOPLE
The Board takes this opportunity to thank colleagues around the business for their continuous hard work, dedication and loyalty, which underpins both the high level customer relationships and the Group's overall performance. 
It was with great sadness that, in July 2015 we announced the untimely passing of our longstanding Non-Executive Director, Lord (Mark) Birdwood. He joined us in 1995 and he was regarded a friend and a respected and valuable member of the Character Board. Over the last 20 years we have been able to access his knowledge and commercial skills which assisted in Character's overall development. 
AWARDS
It is highly gratifying for everyone at Character to once again be recognised by those we respect and also compete within our market sector. We also acknowledge that a considerable part of our success is down to the partnerships which the Character team have forged with our suppliers over many years. 
Character Options, was recognised by the industry and its peers, scooping the coveted "Toy Supplier of the Year" at the Toy Industry Awards last January. Added to this was a triple celebration as it also received product awards for ranges in three categories: Gaming Toy-Minecraftdeveloped by Jazzwares: Interactive Toy-Little Live Pets developed by Moose Enterprise and a joint winner in the "Craze of the Year"category for the Cra-Z-loom Bracelet Maker, (loom bands)developed by CRA-Z-ART (from the Shimmer 'n Sparklecollection). Additionally, we received prestigious supplier serviceability awards from both Argos and Tesco - all memorable achievements.
CURRENT TRADING & OUTLOOK
Our strategic focus remains unchanged, that is "to seek out and develop exciting products which meet domestic and international market demand". Our portfolio will continue to be derived from both our own-developed in-house ranges, including those produced 'under licence', and others sourced through exclusive distribution agreements. 
The Character Group is very fortunate at this time to have both strength and depth across its brands. Our diverse product portfolio which we market at "great price points" and "value for money" is expected to continue providing a solid platform for ongoing growth. Our management teams remain optimistic about the prospects of the Group as a whole and we are looking forward to unveiling our ranges for the new season at the London Toy Fair at Olympia in January 2016. 
The profit before tax in 2015 is ahead of results previously anticipated and we are pleased to report that current trading remains encouraging and in line with management expectations. 
Our new ranges coming to market over the next calendar year are very exciting and already receiving great reviews from both our customers and the trade media. On this basis, we are confident that the cornerstone brands and the new season's ranges will deliver in terms of demand and sales at consumer level across both our UK and international markets. 
At this stage we believe that our underlying performance should be able to deliver another year of solid progress. We look forward to updating shareholders further on our progress at the time of our AGM in January.
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 AUGUST 2015
Note
Total
2015

000's
Total
2014

000's
Continuing operations




Revenue

99,054
97,889
Cost of sales

(62,399)
(68,752)
Gross profit

36,655
29,137
Net operating expenses



Selling and distribution costs

(7,310)
(7,389)
Administration expenses

(17,753)
(15,273)
Other operating income

892
984
Operating profit
1
12,484
7,459
Finance income

14
8
Finance costs

(230)
(360)
Profit before income tax

12,268
7,107
Taxation 

(2,029)
(1,162)
Profit for the year attributable to equity holders of the parent

10,239
5,945




Earnings per share 



Basic
3
48.56p
27.66p
Fully diluted
3
45.73p
25.18p




Dividend per share (pence)
2
8.95p
6.60p




EBITDA (earnings before interest, tax, depreciation and amortisation)

13,934
9,784




CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 AUGUST 2015

Total
2015

000's
Total
2014

000's
Profit for the year after tax


10,239
5,945
Items that will not be reclassified subsequently to profit and loss
Income tax relating to items that will not be reclassified subsequently to profit and loss

1,256
-


1,256
-
Items that may be reclassified subsequently to profit and loss



Exchange differences on translation of foreign operations

(251)
(80)
Income tax on exchange differences

24
17


(227)
(63)
Total comprehensive income for the year attributable to the equity holders of the parent

11,268
5,882
CONSOLIDATED BALANCE SHEET
AS AT 31 AUGUST 2015

2015
000's
2014
000's
Non - current assets


Intangible assets - product development
837
238
Investment property
1,911
1,976
Property, plant and equipment
3,551
3,623
Deferred tax assets
1,058
571

7,357
6,408
Current assets


Inventories
8,965
8,854
Trade and other receivables
15,535
23,417
Current income tax receivable 
22
16
Derivative financial instruments
234
144
Cash and cash equivalents
25,781
17,702

50,537
50,133
Current liabilities


Short term borrowings 
(21,246)
(22,217)
Trade and other payables
(19,015)
(20,545)
Income tax
(1,862)
(1,463)
Derivative financial instruments
(363)
(2,324)

(42,486)
(46,549)
Net current assets
8,051
3,584
Non-current liabilities


Deferred tax
(167)
(48)
Net assets
15,241
9,944
Equity


Called up share capital
1,244
1,266
Shares held in treasury
(3,373)
(3,373)
Investment in own shares
-
(908)
Capital redemption reserve
1,704
1,587
Share-based payment reserve
2,631
2,487
Share premium account
14,642
13,808
Merger reserve
651
651
Translation reserve
1,374
1,508
Profit and loss account
(3,632)
(7,082)
Total equity attributable to equity holders of the parent
15,241
9,944
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 AUGUST 2015

12 months ended
31 August 2015
000's
12 months ended
31 August 2014
000's
Cash flow from operating activities
Profit before taxation for the year
12,268
7,107
Adjustments for:


Depreciation of property, plant and equipment
425
413
Depreciation of investment property
65
66
Amortisation of intangible assets
960
1,846
(Profit) on disposal of property, plant and equipment
(14)
(16)
Interest expense
216
352
Financial instruments fair value adjustments
(2,051)
1,932
Share-based payments
144
126
(Increase) in inventories
(111)
(2,676)
Decrease / (Increase) in trade and other receivables
7,882
(4,695)
(Decrease) / Increase in trade and other creditors
(1,530)
4,004
Cash generated from operations
18,254
8,459
Interest paid
(216)
(352)
Income tax (paid)/received 
(725)
185
Net cash inflow from operating activities
17,313
8,292
Cash flows from investing activities


Payments for intangible assets
(1,559)
(1,336)
Payments for property, plant and equipment
(349)
(361)
Proceeds from disposal of property, plant and equipment
14
17
Net cash outflow from investing activities
(1,894)
(1,680)
Cash flows from financing activities


Proceeds from disposal of investment in own shares
908
-
Proceeds from the issue of share capital
929
153
Purchase of own shares for cancellation
(6,088)
(3,955)
Dividends paid
(1,864)
(1,392)
Net cash used in financing activities
(6,115)
(5,194)
Net increase in cash and cash equivalents
9,304
1,418
Cash, cash equivalents and borrowings at the beginning of the year
(4,515)
(6,018)
Effects of exchange rate movements
(254)
85
Cash, cash equivalents and borrowings at the end of the year
4,535
(4,515)
Cash, cash equivalents and borrowings consist of:
Cash and cash equivalents

25,781
17,702
Short term borrowings

(21,246)
(22,217)
Cash, cash equivalents and borrowings at the end of the year

4,535
(4,515)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 AUGUST 2015
Called up share capital
000's
Investment in own shares
000's
Shares held in treasury
000's
Capital
redemption
reserve
000's
Share premium account
000's
Merger reserve
000's
Share based payment reserve
000's
Translation reserve
000's
Profit
and loss account
000's
Total
000's
The Group










At 1 September 2013
1,353
(908)
(3,373)
1,480
13,675
651
2,361
1,346
(7,617)
8,968
Profit for the year after tax
-
-
-
-
-
-
-
-
5,945
5,945
Net exchange differences on translation of foreign operations
-
-
-
-
-
-
-
162
(63)
99
Total comprehensive income for the year
-
-
-
-
-
-
-
162
5,882
6,044
Share-based payment
-
-
-
-
-
-
126
-
-
126
Dividends
-
-
-
-
-
-
-
-
(1,392)
(1,392)
Shares issued
20
-
-
-
133
-
-
-
-
153
Shares cancelled
(107)
-

107
-
-
-
-
(3,955)
(3,955)
At 1 September 2014
1,266
(908)
(3,373)
1,587
13,808
651
2,487
1,508
(7,082)
9,944
Profit for the year after tax
-
-
-
-
-
-
-

10,239
10,239
Net exchange differences on translation of foreign operations
-
-
-
-
-
-
-
(134)
(93)
(227)
Income tax relating to items that will not be reclassified subsequently to profit and loss
-
-
-
-
-
-
-
-
1,256
1,256
Total comprehensive income for the year
-
-
-
-
-
-
-
(134)
11,402
11,268
Disposal of Investment in own shares
-
908
-
-
-
-
-
-
-
908
Share-based payment
-
-
-
-
-
-
144
-
-
144
Dividends
-
-
-
-
-
-
-
-
(1,864)
(1,864)
Shares issued
95
-
-
-
834
-
-
-
-
929
Shares cancelled
(117)
-
-
117
-
-
-
-
(6,088)
(6,088)
At 31 August 2015
1,244
-
(3,373)
1,704
14,642
651
2,631
1,374
(3,632)
15,241
Capital and Reserves
 Called up share capital represents the nominal value of equity shares allotted, called up and fully paid
 Share premium represents the excess of the fair value of consideration received for the equity shares, net of expenses of the share issue over the nominal value of the equity shares
 Capital redemption reserve represents the buyback and cancellation of shares at nominal value
 Merger reserve represents the premium arising on shares issued as consideration for the acquisition of subsidiaries and which qualified for merger relief
 Share-based payment reserve represents the amounts recognised in profit and loss in respect of share based payments
 Translation reserve represents the cumulative foreign exchange differences on the translation of the net assets of the Group's foreign operations to the presentation currency of the parent
 Profit and loss account represents retained profit and losses

tHE CHARACTER GROUP PLC
NOTEs TO THE PRELIMINARY RESULTS
1.
EXPENSES BY NATURE




12 months ended
31 August 2015
000's
12 months ended
31 August 2014
000's
Operating profit is stated after charging/(crediting):


Cost of sales


Changes in inventories of finished goods and works in progress
58,666
59,824
Amortisation of capitalised product development costs
960
1,846
(Credit)/charge financial instruments fair value adjustments
(2,051)
1,932
Inventories write down charge/(credit)
449
(273)
Net operating expenses


Exchange losses
77
41
Staff costs
11,208
8,716
Depreciation of tangible fixed assets


- owned assets
425
413
Depreciation of investment property
65
66
(Profit) on disposal of property, plant and equipment
(14)
(16)
Operating leases - land and buildings
272
253
Auditor remuneration
74
78
2.
DIVIDEND

12 months ended
31 August 2015
000's
12 months ended
31 August 2014
000's
On equity shares:


Final dividend paid for the year ended 31 August 2014


- 3.95 pence (2013: 3.3 pence) per share
838
693
Interim dividend paid for the year ended 31 August 2015


- 5.00 pence (2014: 3.3 pence) per share
1,026
699

1,864
1,392
 The Directors recommend a final dividend of 6.00 pence per share (2014: 3.95 pence) amounting to 1,297,000 (2014:
838,000).If approved by shareholders, the final dividend will be paid on 29 January 2016 to shareholders on the Register on
 8 January 2016.
3
Earnings per share
The earnings used in the calculation of basic and diluted earnings per share are as follows: 

Year ended 
31 August 2015
Profit after taxation
Year ended 
31 August 2014
Profit after taxation
Profit for the year used in the calculation of basic and diluted earnings per share 
10,239,000
5,945,000
The weighted average number of ordinary shares used for the calculation of basic and diluted earnings per share are as follows:

Year ended 
31 August 2015
Year ended 
31 August 2014
Weighted average number of ordinary shares used in the calculation of basic earnings per share
21,085,023
21,492,265
Weighted average number of share options
1,305,141
2,116,022
Weighted average number of ordinary shares used in the calculation of diluted earnings per share
22,390,164
23,608,287
4.
ANNUAL GENERAL MEETING

The Annual General Meeting will be held at the offices of Duane Morris LLP, 2nd Floor, 10 Chiswell Street, London EC1Y 4UQ on Friday, 22 January 2016 at 11.00 am.


5.
ANNUAL REPORT AND ACCOUNTS

The Preliminary announcement does not constitute statutory accounts within the meaning of Section 435 of the Companies Act 2006. The Annual Report and accounts for the year ended 31 August 2015 and the comparatives under IFRS have yet to be reported on by the auditors and have not yet been filed with the Registrar of Companies.


6.
ELECTRONIC COMMUNICATIONS

The full Financial Statements for the year ended 31 August 2015, together with the Notice convening the Company's 2016 Annual General Meeting, will be available for viewing and download on the Group's website, www.character.com by 18 December 2015.

This information is provided by RNS
The company news service from the London Stock Exchange
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