Source - LSE Regulatory
RNS Number : 1988L
Character Group PLC
12 May 2022
 

 

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.

 

 

LONDON, THURSDAY 12 MAY 2022

 

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 2022

 

KEY PERFORMANCE INDICATORS

CONTINUING OPERATIONS

Six months

ended

28 February

2022

Six months

ended

28 February

2021

Full-year

ended

31 August

2021

Revenue

£90.9m

£74.5m

£140.0m


 



Operating profit before highlighted items*

£6.5m

£6.1m

£11.2m

Pre-tax profit before highlighted items*

£6.5m

£6.1m

£11.1m

Basic earnings per share before highlighted items*

25.15p

23.00p

40.92p

Diluted earnings per share before highlighted items*

24.62p

22.93p

40.37p


 



Profit before tax

£6.5m

£7.6m

£15.3m

Basic earnings per share

25.21p

28.76p

56.86p

Diluted earnings per share

24.68p

28.67p

56.09p


 



Dividend per share

7.0p

6.0p

15.0p

EBITDA

£8.4m

£7.9m

£14.0m

Cash and cash equivalents (after a share buy-back of £13.6m)

£21.5m

£34.9m

£35.9m

Net assets (after a share buy-back of £13.6m)

£35.2m

£39.6m

£44.9m

 

*Excludes

 

 


Mark to market (loss)/profit adjustments on FX derivative positions

-

£(0.48)m

£2.1m

Profit on sale of property

-

£2.02m

£2.0m


 



 

 

·      Against a backdrop of challenging operational conditions, the Group has delivered a very solid result first half result

·    Goo Jit Zu, our number 1 brand continues to sell well in UK and internationally in over 30 countries.  We are also seeing consistent growth in other brands - Fireman Sam, Mashems, Jiggly Pets and Stretch Armstrong

·      New exciting products launched at the London Toy Fair in January 2022 and being well received by our customers

·    The Group's strategy is to increasingly develop its own products, either under its own brands or under well-known marques licenced from global brand owners.  This strategy has enabled the Group to expand its global sales. 

 

"The momentum seen in sales in the first half is continuing, particularly in the strong performance from our international FOB business.  We remain mindful, however, of the current difficult macro-economic conditions and the recent weakness of Sterling.  Like many others across the industry, we also continue to experience inbound shipping delays and other operational adversities due to continuing COVID-19 concerns, particularly in China.  Despite these challenges, we expect the profit before tax and highlighted items for the full financial year ending 31 August 2022 to be in line with market expectations."

 


FTSE sector:  leisure: FTSE AIM All-share: symbol: CCT.L: Market cap: £112.3m

Copies of this statement can be viewed at www.thecharacter.com.  Product ranges can be viewed at www.character-online.co.uk

 

 

 

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

 

 

Panmure Gordon (Nominated Adviser and Joint Broker)

Atholl Tweedie, Investment Banking

Charles Leigh-Pemberton / Rupert Dearden, Corporate Broking

Tel:  +44 (0) 20 7886 2500

 

 

Allenby Capital Limited (Joint Broker)

Nick Athanas, Corporate Finance

Amrit Nahal, Sales & Corporate Broking

Tel:  +44 (0) 20 3328 5656

 

 

TooleyStreet Communications Limited (Investor and media relations)

Fiona Tooley

Tel:  +44 (0) 7785 703523

Email:  fiona@tooleystreet.com  

 

 

 

 

The Character Group plc

(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 2022

 

INTRODUCTION

Against a backdrop of challenging operational conditions, the Group has delivered a very solid result for the period under review.

 

The Group's income in the period was £90.9m, an increase of 22% over the same six months in 2021 (HY 2021: £74.5m).  This is a great achievement given the global logistics challenges encountered in the first half, particularly in the lead up to Christmas 2021. The profit before tax and highlighted items was £6.5m, an increase of 7.7% over the same period in the previous year (HY 2021: £6.1m).  The Group also generated cash of £3.4m from operations.  At the end of the period, cash at bank was £21.5m after a share buyback of c.£13.6m.

 

COVID-19 concerns and effects remained at the core of the global supply chain difficulties.  Although the majority of countries where we sell or distribute our products relaxed or even eliminated COVID-19 restrictions, the strict controls applied in China, where almost all of the Group's manufacturing takes place, resulted in delays in production at factories and shipping exports to our global markets.   Consequently, this led to extended lead times, uncertainty over delivery dates and significant cost increases.  In the UK, the shortage of HGV driver capacity and delays at ports added to the convolutions that all these factors have presented to the business. 

 

Despite such difficulties, the business has traded well in the first six months of the current financial year, as the Group's reported revenue reflects,  and the sales momentum is continuing into the second half.

 

GROUP TRADING

As stated, revenue in the period at £90.9m was up 22% on the comparable period last year (HY 2021 £74.5m; FY 2021: £140.0m). 

 

The Group is reporting a profit before tax and highlighted items for the period of £6.5m (HY 2021: £6.1m; FY 2021: £11.1m).  Earnings before interest, tax, depreciation and amortisation (EBITDA) were £8.4m (HY 2021 £7.9m; FY 2021: £14.0m).

Gross profit margin in the period came in at 24.8%, compared to 29.2% in the same 2021 period and 28.9% for the August 2021 financial year.  The reduction in margin reflects the growth in international FOB sales, particularly in the competitive USA market, which attracts a lower margin than the Group's domestic sales.  The increases in costs of production in the Far East and the continuing high freight costs  also affected the margin.

Basic earnings per share before highlighted items amounted to 25.15p (HY 2021: 23.0p; FY 2021: 40.92p).  Diluted earnings per share, on the same basis, were 24.62p (HY 2021: 22.93p; FY 2021: 40.37p).

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 £16,000.  This compares to a charge of £0.48m shown in the corresponding period in 2021 and a profit of £2.1m reported in the year to 31 August 2021.  These 'mark to market' adjustments are non-cash items, calculated by reference to unpredictable and sometimes volatile currency spot rates at the respective balance sheet dates. 

FINANCIAL POSITION, WORKING CAPITAL & CASH FLOW

The Group's capital base remained solid, with net assets at 28 February 2022 of £35.2m, after a share buyback of £13.6m (HY 2021: £39.6m; FY 2021: £44.9m).  During the period, the Group generated cash from operations of £3.4m (HY 2021: £21.3m; FY 2021: £27.3m).  The reduction in cash generation is mainly due to the increase in the inventory position.

 

The Group has no long-term debt.  Net interest charges on the use of working capital facilities during the period were £23,000

(HY 2021: £0.1m; FY 2021: £0.1m).  After implementing the £13.6m tender offer in February 2022 and making dividend payments, the Group had cash and cash equivalents of £21.5m (HY 2021: £34.9m; FY 2021: £35.9m) at the end of the first-half period.  In addition, the Group had unutilised headroom of over £50m under its banking and other finance facilities.

 

One of the difficulties experienced in the lead up to Christmas 2021 was the Group's inability to satisfy all customer demand due to the shortage of stock.  Inventory at 28 February 2022 of £17.9m was materially up against the comparative period last year

(HY 2021: £9.1m). These remain high, due in part to late arrivals of stock but increasingly to a conscious decision to bring stock in early to ensure the ability of the Group to satisfy demand and maintain sales in the second half.

 

DIVIDEND

The Board remains committed to maintaining a progressive dividend policy.  Reflecting its confidence in the Company's ability to continue to grow profits and generate and develop further sustainable cash flow, the Board is declaring an interim dividend of 7.0p per share (HY 2021: 6.0p; final dividend 2021: 9.0p).  This interim dividend, which is covered 3.6 times by the earnings before highlighted items (HY 2021: 3.8 times), will be paid on 29 July 2022 to shareholders on the register as at the close of business on 15 July 2022.  The shares will be marked ex-dividend on 14 July 2022.

 

SHARE BUYBACK PROGRAMME

Shareholders passed a resolution at the Annual General Meeting held in January 2022 authorising the Company to effect share buybacks (including by way of tender offers) of up to 3,200,000 issued ordinary shares of 5p each in the Company ("Ordinary Shares").

 

The Company announced a Tender Offer to buyback up to 10% of the Company's total voting rights on 28 January 2022.  The exercise was successfully completed in February 2022 and the Company bought back a total of 2,142,572 Ordinary Shares at a price of £6.30 per Ordinary Share pursuant to the Tender Offer.  The Company has a remaining unutilised capacity to buyback up to a further 1,057,428 ordinary shares under the authority granted at the 2022 AGM.

 

The Board continues to believe 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. The Board will consider further buyback initiatives in the future, reflecting its confidence in the Group's ability to maintain strong, ongoing cash generation in excess of the current and projected requirements of the business.

 

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 2,165,577 Ordinary Shares in treasury which do not carry voting rights and, accordingly, the total number of voting rights in Character is 19,300,352.  The figure of 19,300,352 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 PRODUCT PORTFOLIO

Goo Jit Zu, our number 1 brand continues to sell well in the UK and internationally in over 30 countries.  We are also seeing consistent growth in other brands - Fireman Sam, Mashems, Jiggly Pets and Stretch Armstrong.

We introduced some exciting new products at the London Toy Fair in January 2022:

Ø Weebles, including licenced ranges featuring Peppa Pig, Cocomelon and Bluey;

Ø Chill Factor (the brand we acquired last year), with a number of new brand extensions;

Ø Mouse in the House, a new concept and brand that we have wholly developed in-house; and

Ø Shimmer and Sparkle, including the Instaglam make up-range.

 

The Group's strategy is to increasingly develop its own products, either under its own brands or under well-known marques licenced from global brand owners.  This approach has enabled the Group to expand its global sales in recent years.  Whilst opportunities to capture distribution rights for third-party products in our domestic markets in the UK and Scandinavia continue to be sought and taken, the increase in investment in our own product development demonstrates that we remain committed to developing this successful strategy further and enhancing our global toy company credentials.

To view our full current portfolio of products and brands, go to www.character-online.co.uk.

OUR PEOPLE

The teams at Character in the UK, Scandinavia and the Far East have consistently demonstrated an ability to anticipate and adapt to the conditions in our markets.

 

The onset of COVID-19 could not have been anticipated.  However, the Board believes that the manner in which the Group initially preserved and subsequently grew the business, and has continued to do so, is a testament to the enterprising spirit, consummate skills, irrepressible optimism and uncompromising dedication of every member of the Group's global teams.  Collaboration is in our DNA and sees its expression in the seamless coordination of our teams' responses to market intelligence and data from our business.  This, combined with our close working relationships with our customers and suppliers, underpins our proven ability to identify and profitably exploit brand and product development opportunities in the market. 

 

As always, on behalf of all stakeholders in the business, the Board wishes to express thanks to all our colleagues for their efforts and commitment.

OUTLOOK

As we indicated earlier in this report, the momentum seen in sales in the first half is continuing, particularly in the strong performance from our international FOB business.  We remain mindful, however, of the current difficult macro-economic conditions and the recent weakness of Sterling.  Like many others across the industry, we also continue to experience inbound shipping delays and other operational adversities due to continuing COVID-19 concerns, particularly in China. 

 

Despite these challenges, we expect the profit before tax and highlighted items for the full financial year ending 31 August 2022 to be in line with market expectations.

 

The Board will keep shareholders updated as we progress through the year.

12 May 2022


The Character Group plc

Consolidated Income Statement

six months ended 28 February 2022

 

 

 

 


six months ended

 28 February 2022

Result before   *highlighted items

(unaudited)

£'000

 six months ended

 28 February 2022

*highlighted items

 

(unaudited)

£'000

six months ended

28 February 2022

Statutory

Result

 

(unaudited)

£'000


six months ended

 28 February 2021

Result before   *highlighted items

(unaudited)

£'000

 six months ended

 28 February 2021

*highlighted items

 

(unaudited)

£'000

six months ended

28 February 2021

Statutory

Result

 

(unaudited)

£'000

 

12 months ended

 31 August 2021

Result before *highlighted items

(audited)

£'000

12 months ended

31 August 2021

*highlighted items

 

(audited)

£'000

12 months ended

31 August 2021

Statutory

Result

 

(audited)

£'000

Revenue

90,947

-

90,947


74,543

-

74,543

 

139,997

-

139,997

Cost of sales

(68,347)

-

(68,347)


(52,751)

-

(52,751)

 

(99,553)

-

(99,553)

Gross profit

22,600

-

22,600


21,792

-

21,792

 

40,444

-

40,444

Other income

339

-

339


256

-

256

 

332

-

332

Selling and distribution expenses

(5,140)

-

(5,140)


(5,469)

-

(5,469)

 

(8,248)

-

(8,248)

Administrative expenses

(11,251)

-

(11,251)


(10,468)

-

(10,468)

 

(21,301)

-

(21,301)

Profit on sale of property

-

-

-


-

2,016

2,016

 

-

2,016

2,016

Operating profit

6,548

-

6,548


6,111

2,016

8,127

 

11,227

2,016

13,243

Finance income

17

-

17


15

-

15

 

36

-

36

Finance costs

(40)

-

(40)


(66)

-

(66)

 

(113)

-

(113)

Changes in fair value of financial instruments

-

16

16


-

(482)

(482)

 

-

2,128

2,128

Profit before tax

6,525

16

6,541


6,060

1,534

7,594

 

11,150

4,144

15,294

Income tax

(1,188)

(3)

(1,191)


(1,095)

(303)

(1,398)

 

(2,353)

(737)

(3,090)

Profit for the period

5,337

13

5,350


4,965

1,231

6,196

 

8,797

3,407

12,204

 


 *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 2022

 


Notes

 six months ended

28 February 2022

(unaudited)

£'000

 six months ended

 28 February 2021

(unaudited)

£'000

12 months ended

31 August 2021

(audited)

£'000

Attributable to:


 



Owners of the parent


5,350

6,148

12,156

Non- controlling interest


-

48

48

Profit for the period


5,350

6,196

12,204

Earnings per share before highlighted items (pence)

4

 



Basic earnings per share 


25.15p

23.00p

40.92p

Diluted earnings per share


24.62p

22.93p

40.37p

Earnings per share after highlighted items (pence)

4

 



Basic earnings per share 


25.21p

28.76p

56.86p

Diluted earnings per share


24.68p

28.67p

56.09p



 



Dividend per share (pence)

3

9.00p

3.00p

15.0p



 



EBITDA

(earnings before interest, tax, depreciation and amortisation)


8,407

7,889

14,036

 

The Character Group plc

Consolidated Statement of Comprehensive Income

six months ended 28 February 2022

 



six  months ended

28 February 2022

(unaudited)

£'000

 six months ended

 28 February 2021

(unaudited)

£'000

12 months ended

 31 August 2021

(audited)

£'000

Profit for the period after tax


5,350

6,196

12,204

Items that may be reclassified subsequently to profit and loss

Net exchange differences on translation of foreign operations


201

(247)

7

Total comprehensive income for the period

5,551

5,949

12,211


 


 

Total comprehensive income for the period attributable to:

 


 

Equity holders of the parent

5,551

5,906

12,163

Non-controlling interest

-

43

48


5,551

5,949

12,211

 

The Character Group plc

Consolidated Balance Sheet

at 28 February 2022

 

 


28 February 2022

(unaudited)

£'000

28 February

2021

(unaudited)

£'000

31 August

 2021

(audited)

£'000

Non-current assets

 



 

Intangible assets

 

1,567

446

1,806

Investment property

 

1,485

1,551

1,519

Property, plant and equipment


8,471

7,422

8,230

Right of use assets


1,162

1,718

1,454

Deferred tax assets


432

658

243

 


13,117

11,795

13,252

Current assets


 



Inventories


17,946

9,145

10,893

Trade and other receivables


14,827

11,651

26,019

Current income tax receivable


596

244

766

Derivative financial instruments


44

206

75

Cash and cash equivalents


21,550

35,037

35,920



54,963

56,283

73,673

Current liabilities


 



Short term borrowings


(3)

(140)

-

Trade and other payables


(29,133)

(22,589)

(38,390)

Lease liabilities


(545)

(538)

(557)

Income tax payable


(1,936)

(951)

(1,610)

Derivative financial instruments


(118)

(2,906)

(165)

 


(31,735)

(27,124)

(40,722)

Net current assets


23,228

29,159

32,951

Non --current liabilities


 



Deferred tax


(430)

(90)

(405)

Lease liabilities


(676)

(1,221)

(946)



(1,106)

(1,311)

(1,351)

Net assets


35,239

39,643

44,852

Equity


 



Called up share capital


1,074

1,181

1,181

Shares held in treasury


(1,826)

(1,870)

(1,870)

Capital redemption reserve


1,883

1,776

1,776

Share based payment reserve


3,857

3,640

3,749

Share premium account


17,540

17,324

17,324

Merger reserve


651

651

651

Translation reserve


887

590

767

Profit and loss account


11,173

16,351

21,274

Total equity attributable to equity holders of the parent


35,239

39,643

44,852

 

The Character Group plc

Consolidated Statement of Cash Flows

six months ended 28 February 2022

 


six months ended

28 February 2022

(unaudited)

£'000

six months

ended

 28 February 2021

(unaudited)

£'000

12 months

ended

 31 August

2021

(audited)

£'000

Cash flow from operating activities

 

 

 

Profit before taxation for the period

6,541

7,594

15,294

Adjustments for:

 



Depreciation of property, plant and equipment

304

284

567

Depreciation of investment property

33

33

65

Depreciation of right of use assets

276

278

556

Amortisation of intangible assets

1,246

1,187

1,621

Write off plant and equipment

-

-

132

(Profit)/loss on disposal of property, plant and equipment

-

(2,020)

(2,028)

Interest expense

23

51

77

Financial instruments fair value adjustments

(16)

482

(2,128)

Share based payments

108

271

380

(Increase)/decrease in inventories

(7,053)

5,591

3,853

Decrease/(increase) in trade and other receivables

11,192

11,362

(3,006)

(Decrease)/increase in trade and other creditors

(9,257)

(3,843)

11,957

Cash generated from operations

3,397

21,270

27,340

Interest paid

(23)

(51)

(77)

Income tax paid

(841)

(1,065)

(1,788)

Net cash inflow from operating activities

2,533

20,154

25,475

Cash flows from investing activities

 



Purchase of business

-

-

(945)

Payments for intangible assets

(1,007)

(742)

(1,615)

Payments for property, plant and equipment

(547)

(5,918)

(7,128)

Proceeds from disposal of property, plant and equipment

-

3,450

3,458

Net cash outflow from investing activities

(1,554)

(3,210)

(6,230)

Cash flows from financing activities

 



Payment of leasing liabilities

(268)

(338)

(606)

Proceeds from issue of share capital

260

-

-

Purchase of own shares for cancellation

(13,640)

-

-

Dividends paid

(1,929)

(642)

(1,924)

Net cash used in financing activities

(15,577)

(980)

(2,530)

Net (decrease)/increase in cash and cash equivalents

(14,598)

15,964

16,715

Cash, cash equivalents and borrowings at the beginning of the period

35,920

19,124

19,124

Effects of exchange rate movements

225

(191)

81

Cash, cash equivalents and borrowings at the end of the period

21,547

34,897

35,920

 

Cash, cash equivalents and borrowings consist of:

 

 

 

Cash, cash equivalents

21,550

35,037

35,920

Short term borrowings

(3)

(140)

-

Cash, cash equivalents and borrowings at the end of the period

21,547

34,897

35,920

 

 

 

Called up share capital

£'000

Shares held in treasury

£'000

Capital redemption reserve

 £'000

Share premium account

£'000

 

Merger reserve

£'000

Share based payment

£'000

 

Translation reserve

£'000

Profit

and loss

account

£'000

Non- controlling interest

£'000

 

 

Total

£'000

Balance as at

31 August 2020

(unaudited)

1,181

(1,870)

1,776

17,324

651

3,369

727

11,231

(343)

34,046

Profit for the period

-

-

-

-

-

-

-

6,148

48

6,196

Exchange differences on translation of foreign operations

-

-

-

-

-

-

(137)

(105)

(5)

(247)

Total comprehensive income/(expense) for the period

-

-

-

-

-

-

(137)

6,043

43

5,949

Transactions with owners











Change in non-controlling interest

-

-

-

-

-

-

-

(300)

 

300

-

Dividend paid

-

-

-

-

-

-

-

(642)

-

(642)

Deferred tax relating to share options

-

-

-

-

-

-

-

19

-

19

Share based payment

-

-

-

-

-

271

-

-

-

271

Six months ended

28 February 2021

1,181

(1,870)

1,776

17,324

651

3,640

590

16,351

-

39,643

 

Balance as at

1 September 2020

(audited)

1,181

(1,870)

1,776

17,324

651

3,369

727

11,231

(343)

34,046

Profit for the year after tax

-

-

-

-

-

-

-

12,156

48

12,204

Net exchange differences on translation of foreign operations

-

-

-

-

-

-

40

(28)

(5)

7

Total comprehensive income for the year

-

-

-

-

-

-

40

12,128

43

12,211

Transactions with owners









 

 

Change in non-controlling interest

-

-

-

-

-

-

-

(300)

300

-

Share based payment

-

-

-

-

-

380

-

-

-

380

Deferred tax relating to share options

-

-

-

-

-

-

-

139

-

139

Dividends

-

-

-

-

-

-

-

(1,924)

-

(1,924)

At 31 August 2021

1,181

(1,870)

1,776

17,324

651

3,749

767

21,274

-

44,852

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

28 February 2022

1,074

(1,826)

1,883

17,540

651

3,857

887

11,173

-

35,239

 

The Character Group plc

Notes to the Financial Statements

six months ended 28 February 2022

 

1.

BASIS OF PREPARATION

The financial information set out in this Half Yearly Financial Report 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 2022.  These are consistent with the accounting policies used in the financial statements for the year ended 31 August 2021 as described in those annual financial statements.

As permitted, this Half Yearly Financial Report has been prepared in accordance with the AIM rules and not in accordance with

IAS 34 'Interim Financial Reporting'.

 

The consolidated financial statements are prepared under the historical cost convention, as modified by the revaluation of certain financial instruments and share based payments at fair value.

These Half Yearly Financial Statements and the financial information for the six months ended 28 February 2021 do not constitute full statutory accounts within the meaning of section 434 of the Companies Act 2006 and are unaudited.  These unaudited Half Yearly Financial statements were approved by the Board of Directors on 11 May 2022.

The information for the year ended 31 August 2021 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 including the potential impact of COVID-19, indicate that the Group will be able to operate within the level of its committed borrowing facilities for the foreseeable future.  The banks remain supportive of the Group and  has an ongoing invoice discount facility of £20m, together with overdraft and trade finance facilities of £38m.  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 Half Yearly Report.

 

3.

DIVIDENDS



six months ended

28 February 2022

(unaudited)

£'000

six months ended

28 February 2021

(unaudited)

£'000

12 months ended

31 August 2021

(audited)

£'000

On equity shares:




Final dividend paid for the year ended 31 August 2021




-       9.00p (2020: 3.00p) per share

1,929

642

642

Interim dividend paid for the year ended 31 August 2021

 



-       6.00p per share

-

-

1,282


1,929

642

1,924

 

The Character Group plc

Notes to the Financial Statements

six months ended 28 February 2022

 

4.

EARNINGS PER SHARE

Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares during the period.

 

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares in issue on the assumption of conversion of all dilutive potential ordinary shares.  The Group has one (2021: 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

28 February 2022

(unaudited)

£'000

six months ended

29 February 2021

(unaudited)

£'000

12 months ended

31 August 2021

(audited)

£'000

Profit attributable to equity shareholders of the parent

5,350

6,148

12,156

Financial instruments fair value adjustments net of tax

(13)

391

(1,724)

Gain on sale of property net of tax

-

(1,622)

(1,683)

Profit for adjusted earnings per share

5,337

4,917

8,749

Weighted average number of shares

In issue during the year - basic

21,217,582

21,379,781

21,379,781

Dilutive potential ordinary shares

457,318

66,078

291,974

Weighted average number of ordinary for diluted earnings per share

21,674,900

21,445,859

21,671,755

 

Earnings per share after highlighted items

 



Basic earnings per share (pence)

25.21

28.76

56.86

Diluted earnings per share (pence)

24.68

28.67

56.09

 

Earnings per share before highlighted items

 



Basic earnings per share (pence)

25.15

23.00

40.92

Diluted earnings per share (pence)

24.62

22.93

40.37

 

5.

ELECTRONIC COMMUNICATIONS


The Half Yearly Financial Report for the six months ended 28 February 2022 will shortly be available for viewing and download on the Group's website, www.thecharacter.com.

 

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