Final Results - Replacement

Character Group PLC 30 November 1999 The issuer has advised that the following alteration should be made to the Character Group PLC 'Final Results' announcement released today at 07:02 under RNS No 6445B. The title at the top of the text should read 'Preliminary Results' and not 'Interim Results' as previously shown. All other details remain unchanged. The full corrected version is shown below. The Character Group PLC Preliminary Results 9.30am - Analysts' Presentation 10.30am - 12.00 noon - Press Briefings @ Citigate Dewe Rogerson Ltd 3 London Wall Buildings London Wall London EC2M 5SY Tel: 0171-638 9571 Record Results for The Character Group PLC leading marketeer and distributor of character related licensed products on an international basis Preliminary Results 1999 1999 1998 Turnover £99.0m £68.7m + 44% Profit before Tax £9.4m £7.3m +29% Earnings per Share 30.12p 25.79p +17% EBITDA £11.6m £8.7m +33% Final Dividend 4.75p 3.95p Total Dividend for the Year6.5p 5.4p + 20% The Group remains cash generative New products provide exciting trading opportunities 'The Board believes that the Group strategy of expanding both the product base and the Group's distribution profile, particularly on the international front, will continue to provide a strong platform for maintained growth. The Board is also working closely with customers so as to be able to meet the needs for, and to take advantage of the opportunities for, the development of e-commerce and electronic trading. 'The Group has achieved sustained growth, year on year, for the last six consecutive years and the Board is confident that we have in place the products, licences, personnel and the management team, to ensure that the Group is well placed to maintain this track record into the Millennium.' Richard King, Chairman FULL STATEMENT ATTACHED Enquiries: Richard King, Chairman Fiona Tooley, Director Kiran Shah, Finance Director Citigate Dewe Rogerson Ltd The Character Group PLC Today: 0171-638 9571 Today: 0171-638 9571 (up to 12.30pm) Thereafter: 0121-631 2299 Thereafter: 0181-949 5898 Mobile: 0385 703523 Mobile: 0836 250150 The Character Group PLC Preliminary Results for the year ended 31 August 1999 STATEMENT BY THE CHAIRMAN, RICHARD KING Set against a general background of extremely difficult domestic and international trading conditions, it is especially pleasing for me to be able to report record results for the Group for the sixth consecutive year, with sales approaching £100 million, operating profits exceeding £10 million for the first time, and additionally, that the Group is well positioned to continue this growth. RESULTS Sales for the year ended 31 August 1999 increased by 44% from £68.7 million to £99.0 million. Profit before tax rose by 29% to £9.4 million (1998: £7.3 million). Earnings per share improved by 17% to 30.12 pence (1998: 25.79 pence). EBITDA increased from £8.7 million to £11.6 million, a rise of 33%. The Group remains cash generative. DIVIDEND In line with the Group's progressive dividend policy it is recommended that a final dividend of 4.75 pence per share be paid on 28 January 2000 to shareholders on the register at the close of business on 10 January 2000. Subject to shareholder approval, the total dividend for the full year will be 6.5 pence per share, an increase of 20% over the previous year. GROUP STRUCTURE The Group now comprises of three divisions. Toy Options, the original core company, which together with WWL (UK), form The Toy Division. Downpace, Q-Stat and Prelude form The Gift, Stationery and Toiletry Division. (Q-Stat and Prelude have since the year end been amalgamated to form Universal Concepts (UK)). Both Downpace and Universal Concepts (UK) design and develop product, which is sold internationally through World Wide Licenses in Hong Kong. These two divisions are based in the UK. The Overseas Division is made up of World Wide Licenses and Delta Millennium Far East, both of which are based in Hong Kong; the latter distributes WWL's computer accessories in the USA through its subsidiary Delta Millennium Inc.. TRADING REPORT The Group trading is still reliant to a significant, albeit decreasing, degree upon the UK market, which has been widely reported as being difficult both in the year under review and the current year. It is therefore very gratifying that, despite disappointing results from certain Group companies, we have again traded through a difficult period at record levels. The Toy Division Toy Options As predicted in the interim report, Toy Options has continued its uninterrupted growth for the year as a whole. WWL (UK) This company has concentrated on the sale of computer accessories and watches, has traded profitably for the year, and is poised for growth in the current year. Yet again, this division has put in an excellent performance and is well set for continued growth in the current year. The Gift, Stationery and Toiletry Division Downpace Trading was above expectation for the year as a result of having the benefit of good licences and strong growth in the distribution base. This company, which at the time of its acquisition had a mature, experienced and effective management team, has been able to maximise the benefits of being part of the Group. Universal Concepts (UK) (Q-Stat and Prelude in the year under review) Trading for both Q-Stat and Prelude was very disappointing. In order to ensure that the opportunities for growth can be exploited to the full, these companies have been amalgamated to form Universal Concepts (UK), and a new management team and infrastructure have been put in place. This company is now budgeted for profitable growth in the current year. The division as a whole has become an important part of the Group and will form a solid base for future expansion. Overseas Division World Wide Licenses WWL's performance was disappointing, and it is now clear that we underestimated the degree of and the timescale necessary for the reorganisation that was required to ensure that this company could fulfil its potential as the key overseas group company. Whilst it would be too early to say that this process is now complete, a great deal has been accomplished and a strong base has been developed. Delta Millennium Many of the logistical problems associated with the early sales have now been addressed and a sound customer base has been built, albeit at the expense of addressing stock problems caused by late delivery last year. Provided that new product ranges can now be delivered in a timely manner, this company should make up some ground in the current year. To date, the trading of this division has been disappointing but we are confident that we are taking the necessary action to ensure that it will become profitable in the near future. PERSONNEL The Group is very fortunate to have so many dedicated and hardworking employees, without whom we would not have been able to have come through a difficult year with such a strong trading result. The Board would like to thank all concerned and ensure that everyone is aware that their efforts are truly appreciated. It remains our policy to continue to incentivise our key personnel and the Board is currently investigating how this can be effectively achieved given the restrictive regulatory guidelines under which we have to operate. OUTLOOK Each division increased its sales during the year under review in the face of difficult trading conditions in virtually all our markets, and I think it is important to emphasise that despite the difficulties and setbacks, our management team has successfully led the company through to another year of record profits and earnings per share. The Board recognises that there are further improvements to our current infrastructure still to be completed before we can realise our goal of profitability in all areas of the Group's trading but we are moving in the right direction and as losses in certain subsidiaries are eliminated, we should benefit strongly in terms of future performance. The Board believes that the Group strategy of expanding both the product base and the Group's distribution profile, particularly on the international front, will continue to provide a strong platform for maintained growth. The Board is also working closely with customers so as to be able to meet the needs for, and to take advantage of the opportunities for, the development of e-commerce and electronic trading. As a result of the expansion of our product ranges and licences throughout the Group, no single product or licence represents a significant percentage of Group business and, accordingly, our future success is not dependant to any material extent on any one product range or licence. The following list sets out some of the important trading opportunities for the Group both in the current year and the months ahead: Toy Options (toys) Wuvvies, Toy Story 2, Cartoon Network, Super Soaker, Chicken Run and Britney Spears dolls. WWL (UK) (watches and computer accessories) Barbie, Pokemon, South Park, W.C.W., Toy Story 2 and Cartoon Network. Downpace (giftware) South Park, Buffy The Vampire, Cartoon Network, Rex The Runt and Mr. Men. Universal Concepts (stationery and toiletries) Pokemon, Cartoon Network, Dick's House, Walk with Dinosaurs and Scooby Doo. World Wide Licenses (all product areas) Noddy, Pokemon, Warners, Disney and Mr. Men. Delta Millennium (computer accessories) Barbie, Hot Wheels, Snoopy and Disney. All Divisions Euro 2000 joint venture. I would like to conclude by saying that the Group has achieved sustained growth, year on year, for the last six consecutive years and the Board is confident that we have in place the products, licences, personnel and the management team, to ensure that the Group is well placed to maintain this track record into the Millennium. The Character Group PLC Preliminary Results CONSOLIDATED PROFIT AND LOSS ACCOUNT for the year ended 31 August 1999 12 months 12 months to 31 August to 31 Note 1999 August 1998 £'000 £'000 Turnover 1 99,002 68,672 Cost of sales (55,240) (41,022) Gross profit 43,762 27,650 Net operating expenses Selling and distribution costs (17,229) (11,026) Administrative expenses (16,281) (9,218) Other operating income 356 553 Operating profit 2 10,608 7,959 Interest receivable 51 62 Interest payable (1,295) (704) Profit on ordinary activities before 9,364 7,317 taxation Taxation (2,925) (2,105) Profit on ordinary activities after 6,439 5,212 taxation Equity minority interest (115) 153 Profit for the financial period 6,324 5,365 Dividends 3 (1,350) (1,131) Profit retained 4,974 4,234 Earnings per share - basic 4 30.12p 25.79p Earnings per share - fully diluted 29.14p 24.85p Dividends per share 6.5p 5.4p EBITDA 11,619 8,715 (Earnings before interest, tax, depreciation and amortisation) All activities during the year were continuing. There were no material recognised gains or losses other than items dealt with in the profit and loss account above. The Character Group PLC Preliminary Results CONSOLIDATED BALANCE SHEET for the year ended 31 August 1999 31 August 31 August 1999 1998 £'000 £'000 Fixed assets Tangible assets 3,070 2,853 Investments 433 2 Joint ventures - gross assets 126 - - gross liabilities (125) - - net investment 1 - 3,504 2,855 Current assets Stocks 16,663 11,613 Trade debtors subject to factoring 18,989 12,765 arrangements Factor advances (17,324) (10,834) 1,665 1,931 Trade and other debtors 8,595 5,651 Cash at bank and in hand 9,544 5,783 36,467 24,978 Creditors: amounts falling due within one (27,327) (19,699) year Net current assets 9,140 5,279 Total assets less current liabilities 12,644 8,134 Creditors: amounts falling due after more (55) (130) than one year Net assets 12,589 8,004 Capital and reserves Called up share capital 1,052 1,049 Shares to be issued 2,320 4,143 Capital redemption reserve 15 15 Share premium 3,617 3,568 Merger reserve 651 651 Profit and loss account 4,934 (1,307) Equity shareholders' funds 12,589 8,119 Equity minority interest - (115) 12,589 8,004 The Character Group PLC Preliminary Results CONSOLIDATED CASH FLOW STATEMENT for the year ended 31 August 1999 12 months 12 months to 31 August to 31 Note 1999 August 1998 £'000 £'000 Cash flow from operating activities 5 9,535 12,200 Returns on investment and servicing of finance Interest received 51 62 Interest paid (1,280) (697) Interest element of finance lease (15) (7) rental payments Net cash outflow for returns on investments and (1,244) (642) servicing of finance Taxation (1,667) (2,926) Capital expenditure and financial investment Payments to acquire tangible fixed (1,161) (2,020) assets Sale of tangible fixed assets 141 110 Purchase of shares for Employees (431) - Share Ownership Trust Investment in joint venture (1) - Net cash outflow for capital expenditure & financial (1,452) (1,910) investment Acquisitions and disposals Purchase of subsidiary undertakings (678) (3,295) Net overdraft acquired with - 271 subsidiary Net cash outflow for acquisitions (678) (3,024) Equity dividends paid (1,195) (991) Cash inflow before use of liquid 3,299 2,707 resources and financing Financing Issue of ordinary share capital 52 98 Repurchase of ordinary share capital - (285) Capital element of finance lease (122) (12) rentals Other advances - (938) Short term bank loan 532 761 Net cash inflow/(outflow) from 462 (376) financing Increase of cash in the year 3,761 2,331 Decrease in net debt in the year 3,351 2,520 The Character Group PLC Preliminary Results NOTES for the year ended 31 August 1999 1. Turnover and segmental analysis Turnover represents the amount derived from the provision of goods and services which arise from the Group's ordinary activities, stated net of value added tax. An analysis of turnover by geographical market is given below: 12 months 12 months to to 31 August 31 August 1999 1998 £'000 £'000 United Kingdom 87,487 58,888 Rest of the world 11,515 9,784 99,002 68,672 2. Operating profit 12 months 12 months to to 31 August 31 August 1999 1998 £'000 £'000 Operating profit is stated after charging: Staff costs 6,711 5,588 Auditors' remuneration - Audit 60 40 services 34 25 - Non audit services Operating leases - land and 643 287 buildings - 14 13 plant - 1 10 motor vehicle Depreciation of tangible fixed assets - owned assets 927 710 - assets held under finance 84 47 leases and HP contracts 1,011 757 3. Dividends On equity shares: 12 months 12 months to to 31 August 31 August 1999 1998 £'000 £'000 Interim dividends paid - 1.75p 366 302 (1998: 1.45p) per share Final dividends proposed - 4.75p 984 829 (1998: 3.95p) per share 1,350 1,131 4. Earnings per share - pence 12 months to August 12 months to August 1999 1998 Profit Weighted Pence Profit Weighted Pence after average Per taxation number share after average per of Taxation number share ordinary of shares ordinary shares Basic earnings 6,324,000 20,994,615 30.12 5,365,000 20,806,591 25.70 per share Impact of share - 708,202 (0.98) - 785,702 (0.94) options Diluted 6,324,000 21,702,817 29.14 5,365,000 21,592,293 24.85 earnings per share 5. Reconciliation of operating profit to net cash inflow from operating activities 12 months 12 months to to 31 August 31 August 1999 1998 £'000 £'000 Operating profit 10,608 7,959 Depreciation 1,011 756 Loss on disposal of fixed assets (20) (7) (Increase) in stocks (5,051) (4,218) (Increase) in debtors (2,679) (288) Increase in creditors 5,563 8,033 Exchange movement 103 (35) Net cash inflow from operating 9,535 12,200 activities Reconciliation of net cash flow to movement in net debt £'000 £'000 Increase in cash in the period 3,761 2,331 Cash inflow from movement in debt and lease (410) 189 financing Movement in net debt resulting 3,351 2,520 from cash flows Loans and finance leases - (298) acquired with subsidiaries Other non-cash movements (168) (55) Movement in net debt in the 3,183 2,167 period Net debt at 1 September 1998 4,870 2,703 Net debt at 31 August 1999 8,053 4,870 Analysis of net debt Cash at Short Lease Other Total bank term finance advances & in Bank £'000 £'000 £'000 hand loan £'000 £'000 1 September 3,723 - (82) (938) 2,703 1997 Cash flow 2,331 (761) 12 938 2,520 Non cash flow - - (55) - (55) Acquisitions (271) - (27) - (298) 31 August 1998 5,783 (761) (152) - 4,870 Cash flow 3,761 (532) 122 - 3,351 Non cash flow - - (168) - (168) 31 August 1999 9,544 (1,293) (198) - 8,053 6. The Annual General Meeting will be held at the offices of Citigate Dewe Rogerson, 3 London Wall Buildings, London Wall, London, EC2M 5SY on Tuesday, 18 January 2000 at 11.00am. 7. The Report & Accounts will be posted to shareholders today. Further copies will be available from the Company's Office: 2nd Floor, 86-88 Coombe Road, New Malden, Surrey, KT3 4QS.

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