Interim Results
Character Group PLC
24 April 2002
Issued by Citigate Dewe Rogerson, Birmingham
Date: Wednesday, 24 April 2002 Embargoed: 7.00am
The Character Group plc
Interim Results for the six months ended 28 February 2002
• Restructuring programme and stronger product portfolio sees
the Group returned to profitability and on track to maintain
this positive trend
• Substantial improvement in Group's product offering sees
listings with major customers in UK much stronger
• Successful products in the range include Starcastles, Buzz
Lightyear, Stretch Armstrong and gifts and games relating to
Harry Potter and Lord of the Rings.
• New products being introduced include:
• 'Clifford the Big Red Dog'
• Range of cookware under BBCs 'Ready Steady Cook' brand
• Pre-school toys based on the 'Wheels on The Bus' licensed
animated series
• Rumble Robots and associated ranges
'We have managed the business through the downsizing process and the Group is
now in a much better position than in the corresponding period last year.
'We now have the opportunity to concentrate on a more focused range of business
activities and to achieve further operational efficiencies from each business
unit whilst at the same time looking to return to the historic patterns of sales
growth. In order to achieve this, we have concentrated on introducing new ranges
that will develop into brands that have longevity and the Directors believe that
Clifford the Big Red Dog, Ready Steady Cook, Disney Princesses, Taiyo Radio
Control and Scooby Doo are good examples in the Toy area, whilst Pin the Tail on
the Donkey should prove to be an enduring Game. Cool-iCam, our own-developed
brand for digital imaging is a further example of this strategy.
'Given the improvement in the Group's product ranges and strong customer
listings combined with the benefit of reduced operational costs and improved
margins, the Board remains optimistic that further positive progress will be
made in this financial year and the 2002 calendar year as a whole.'
Richard King, Chairman
FULL STATEMENT ATTACHED
Enquiries:
Richard King, Chairman
Kiran Shah, Finance Director Fiona Tooley, Director
The Character Group plc Keith Gabriel, Account Executive
Tel: 020 8949 5898 Citigate Dewe Rogerson Ltd
Mobile: 07836 250150 (RK) Tel: 0121 455 8370
Mobile: 07956 278522 (KS) Mobile: 07785 703523 (FT)
Mobile: 07958 985395 (KG)
-2-
The Character Group plc
Interim Results for the six months ended 28 February 2002
STATEMENT BY THE CHAIRMAN, RICHARD KING
On the 18th of January, I announced that Christmas trading was in general as per
our expectations and that we were optimistic that we should show substantial
improvements throughout the financial year.
I am therefore very pleased to announce that the Group has returned to
profitability and is on track to maintain this positive trend for the year as a
whole.
Results
For the six months ended 28 February 2002, the Group made a profit before tax of
£121,000 on sales of £29.6 million compared to a loss before tax of £1.94
million on sales of £36.6 million for the corresponding period last year.
Earnings per share were 0.29 pence against a loss per share of 9.32 pence at the
2001 interim stage. It is not proposed to pay an interim dividend.
In the 2001 Annual Report, I indicated that the full benefits from the cost
savings implemented following last year's substantial restructuring programme
had not yet been received. Therefore, I am pleased to report that in the first
six months of this financial year, fixed costs have been cut by 13%, and stocks
have been reduced by 34% from £7.1 million to £4.7 million. Interest has also
been substantially reduced by 36%, to £364,000 and cash at bank at 28 February
2002 was approximately £2.3 million. In addition, the gross margin has been
increased by 4 percentage points.
Each of these factors has contributed to the turnaround in the Group's
performance.
Trading
As a result of a substantial improvement in our product offering, our product
listings with our major customers in the UK are much stronger this year. We are
also making steady progress internationally by increasing both our product
portfolio and customer base.
We have a number of products within our portfolio which continue to be
successful. These include gifts and games relating to the much-acclaimed Harry
Potter and Lord of the Rings licenses and within our toy range, Starcastles,
Buzz Lightyear and Stretch Armstrong are worthy of mention, with the latter now
entering its 8th year in our range and for which we now have the rights for the
first time to distribute this product to both the UK and Europe.
The Group's ranges of toys and games were well received at this year's
International Toy & Hobby Fair. Over the next few months we will be bringing to
market a range of new and exciting toys which were reviewed at the Fair
favourably and include 'Clifford the Big Red Dog' - based on the highly rated
animated BBC TV series; a range of children's cookware under BBC's 'Ready Steady
Cook' brand which features a popcorn maker, as well as a mini oven, ice cream
maker and other kitchen products; a range of pre-school toys based on the '
Wheels on the Bus' licensed animated series which is to be televised later this
year; the successful Rumble Robots introduced last year has been developed into
three associated ranges (Rumble Wars, Rumble Invasions and Rumble Cars); a range
of Disney Pop Dolls, and interactive accessories for the Disney Princess Dolls;
Norton the Bear which walks, talks and interacts, and Baby Amore lifelike dolls.
In addition, we are shortly introducing a range of boys toys relating to Cubix
which is featured in a cartoon series currently being aired on Cartoon Network
and scheduled to be introduced by the BBC later in the year. Lastly, Scooby Doo
is starring in a Warner Bros feature film to be released this year.
Notable new games for which we have high hopes include Pin the Tail on the
Donkey, an electro-mechanical action game, and Harry Potter's Wizard Class,
which allows the child to perform amazing wizardry feats.
continued...
-3-
Cool-iCam, our own-branded and developed digital camera now has 20 models in the
range from low-end mass market to megapixel cameras and audio products which
include a truly mobile karaoke machine. We believe that further improvement from
this business can be achieved as the Cool-iCam brand is further established
internationally.
Outlook
We have managed the business through the downsizing process and the Group is now
in a much better position than in the corresponding period last year.
We now have the opportunity to concentrate on a more focused range of business
activities and to achieve further operational efficiencies from each business
unit whilst at the same time looking to return to the historic patterns of sales
growth. In order to achieve this, we have concentrated on introducing new ranges
that will develop into brands that have longevity and the Directors believe that
Clifford the Big Red Dog, Ready Steady Cook, Disney Princesses, Taiyo Radio
Control and Scooby Doo are good examples in the Toy area, whilst Pin the Tail on
the Donkey should prove to be an enduring Game. Cool-iCam, our own-developed
brand for digital imaging is a further example of this strategy.
Given the improvement in the Group's product ranges and strong customer listings
combined with the benefit of reduced operational costs and improved margins, the
Board remains optimistic that further positive progress will be made in this
financial year and the 2002 calendar year as a whole.
Richard King
Chairman
23 April 2002
-4-
The Character Group plc
Interim Results
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Note 6 months to 6 months to 12 months to
28 February 2002 28 February 2001 31 August 2001
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Turnover 29,632 36,648 58,887
Cost of sales (19,915) (26,152) (42,809)
Gross profit 9,717 10,496 16,078
Net operating expenses
Selling and distribution costs (3,773) (5,597) (7,356)
Administration expenses (5,626) (6,462) (13,171)
Other operating income 167 200 440
Operating profit/(loss) 485 (1,363) (4,009)
Interest receivable 13 32 70
Interest payable (377) (604) (936)
Profit/(loss) on ordinary activities before taxation 121 (1,935) (4,875)
Taxation 2 - (194) (878)
Profit/(loss) on ordinary activities after taxation 121 (2,129) (5,753)
Earnings/(loss) per share - basic 3 0.29p (9.32p) (23.89p)
Earnings/(loss) per share - fully diluted 3 0.29p (9.32p) (23.89p)
-5-
The Character Group plc
Interim Results
CONSOLIDATED BALANCE SHEET
Note Group as at Group as at Group as at
28 February 2002 28 February 2001 31 August 2001
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Fixed assets
Intangible assets 798 1,703 818
Tangible assets 1,879 2,268 2,012
Investments 53 153 53
2,730 4,124 2,883
Current assets
Stocks 4,657 7,052 7,785
Trade debtors subject to finance arrangements 3,703 5,017 5,957
Factor advances (2,965) (3,890) (4,432)
738 1,127 1,525
Trade and other debtors 5,297 4,959 5,894
Cash at bank and in hand 2,321 475 1,638
13,013 13,613 16,842
Creditors: amounts falling due within one year (9,667) (15,146) (13,953)
Net current assets/(liabilities) 3,346 (1,533) 2,889
Total assets less current liabilities 6,076 2,591 5,772
Creditors: amounts falling due after more than one year
Convertible loan note (4,600) - (4,600)
Other creditors - (27) (5)
(4,600) (27) (4,605)
Provision for liabilities and charges Investment in Joint Venture:
Share of gross assets - 91 -
Share of gross liabilities (10) (282) (13)
Net assets 1,466 2,373 1,154
Capital and reserves
Called up share capital 2,064 1,156 2,064
Shares to be issued 908 1,808 908
Capital redemption reserve 15 15 15
Share premium 7,843 5,473 7,843
Merger reserve 651 651 651
Profit and loss account 4 (10,015) (6,730) (10,327)
Equity shareholders' funds 1,466 2,373 1,154
-6-
The Character Group plc
Interim Results
CONSOLIDATED CASH FLOW STATEMENT
Note 6 months to 6 months to 12 months to
28 February 2002 28 February 2001 31 August 2001
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Cash flow from operating activities 5 1,806 (1,832) (6,488)
Returns on investment and servicing of finance
Interest paid (net) (363) (569) (858)
Interest element of finance lease rental payments (1) (3) (8)
Net cash outflow for returns on investments and
servicing of finance (364) (572) (866)
Taxation (413) (146) 474
Capital expenditure and financial investment
Payments to acquire tangible fixed assets (234) (147) (355)
Sale of tangible fixed assets 23 31 45
Net cash outflow for capital expenditure and
financial investment (211) (116) (310)
Cash inflow/(outflow) before use of liquid resources
and financing 818 (2,666) (7,190)
Management of liquid resources:
Financing
Issue of ordinary share capital - - 3,278
Issue of convertible loan note - - 4,600
Capital element of finance lease rentals (41) (27) (49)
Short term bank loan (94) (353) (259)
Net cash (outflow)/inflow from financing (135) (380) 7,570
Increase/(decrease) in cash in the period 7 683 (3,046) 380
Decrease/(increase) in net debt in the period 7 818 (2,666) 688
-7-
The Character Group plc
Interim Results
NOTES TO THE ACCOUNTS
1. Basis of Preparation
The financial information for the six months ended 28 February 2002 has
not been audited, nor has the financial information for the six months
ended 28 February 2001. However, the interim report includes a review
report signed by the auditors. The comparative figures for the year
ended 31 August 2001 do not constitute the company's statutory accounts
for that year, but have been extracted from the statutory accounts filed
with the Registrar of Companies, and which carried an unqualified audit
report. The report has been prepared in accordance with the applicable
accounting standards on a consistent basis using the accounting policies
set out in the 2001 annual report.
2. Taxation
The tax charge for the half year is estimated on the basis of the
anticipated tax rates applying for the full year.
3. Earnings per Share
Earnings per share have been calculated in accordance with FRS14
earnings per share. The calculations are based on the following:
6 months to 6 months to 12 months to
28 February 2002 28 February 2001 31 August 2001
Profit/(loss) for the period after taxation £121,000 (£2,129,000) (£5,753,000)
Basic weighted average share capital
(number of shares) 41,287,909 22,834,663 24,079,063
Dilutive shares - share options - - -
Diluted weighted average share capital 41,287,909 22,834,663 24,079,063
4. Profit and Loss Account
£'000
At 1 September 2001 (10,327)
Profit retained for the six months 121
Exchange difference 191
At 28 February 2002 (10,015)
continued...
-8-
5. Reconciliation of operating loss to net cash inflow/(outflow) from
operating activities
6 months to 6 months to 12 months to
28 February 2002 28 February 2001 31 August 2001
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Operating profit/(loss) 485 (1,363) (4,009)
Depreciation, impairment and amortisation 366 364 766
Provision in respect of own shares - - 100
Loss on disposal of tangible fixed assets 2 20 52
Decrease in stocks 3,128 4,478 3,745
Decrease/(increase) in debtors 1,385 3,820 (1,398)
Decrease in creditors (3,751) (9,328) (5,948)
Exchange differences 191 177 204
Net cash inflow/(outflow) from operating
activities 1,806 (1,832) (6,488)
6. Reconciliation of net cash flow to movement in net debt
6 months to 6 months to 12 months to
28 February 2002 28 February 2001 31 August 2001
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Increase/(decrease) in cash in the period 683 (3,046) 380
Cash inflow from movement in debt and 135 380 308
lease financing
Movement in net debt resulting from cash
flows 818 (2,666) 688
Net debt at 1 September 2001 1,503 815 815
Net debt at 28 February 2002 2,321 (1,851) 1,503
continued...
-9-
7. Analysis of net debt
Cash at bank Bank Short term Lease Total
and in hand overdraft bank loan finance £'000
£'000 £'000 £'000 £'000
1 September 2000 1,258 - (353) (90) 815
Cash flow (782) (2,264) 353 27 (2,666)
28 February 2001 476 (2,264) - (63) (1,851)
Cash flow 1,162 2,264 (94) 22 3,354
31 August 2001 1,638 - (94) (41) 1,503
Cash flow 683 - 94 41 818
28 February 2002 2,321 - - - 2,321
-10-
Independent Review Report to the Character Group PLC
Introduction
We have been instructed by the Company to review the financial information for
the six months ended 28 February 2002 which comprises the consolidated profit
and loss account, the consolidated balance sheet, the consolidated cash flow
statement and the notes to the accounts. We have read the other information
contained in the Interim Report and considered whether it contains any apparent
misstatements or material inconsistencies with the financial information.
Directors' Responsibilities
The Interim Report, including the financial information contained herein, is the
responsibility of, and has been approved by, the Directors. The Directors are
responsible for preparing the Interim Report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review Work Performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board for use in the United Kingdom. A review
consists principally of making enquiries of group management and applying
analytical procedures to the financial information and underlying financial data
and based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with United Kingdom Auditing Standards and therefore
provides a lower level of assurance than an audit. Accordingly, we do not
express an audit opinion on the financial information.
Review Conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 28 February 2002.
Baker Tilly
Chartered Accountants
Chelmsford
23 April 2002
This information is provided by RNS
The company news service from the London Stock Exchange