Character Regulatory News (CCT)

19 Jan 2005 10:48

Character Group PLC19 January 2005 Issued by Citigate Dewe Rogerson, BirminghamDate: Wednesday 19 January 2005 Immediate Release The Character Group plc Annual General Meeting At today's Annual General Meeting, Richard King, Chairman, The Character Groupupdated shareholders on trading saying: "The prospects for the financial year remain encouraging although the marketsremain tough. Our focus on operational efficiencies and the on-going expansionof our own product range coupled with the development in value of ourIntellectual Property Rights provides a solid foundation from which to buildupon during 2005 calendar year. "Taking into account the difficulties we have encountered and the marketconditions, we believe that the trading results for the first half will prove tobe disappointing, however, we believe that trading for the second half willmaterially improve over the corresponding period for last year which will resultin a satisfactory outcome for the year as a whole." All Resolutions were duly passed. The full text of the Chairman's script for the AGM follows: "In general terms, I am pleased to report that toys and games have performedwell whilst giftware has underperformed. Our digital business is once againmaking progress and slowly overcoming the difficulties that plagued it in the USlast year. "There has been no shortage of recent press comment describing the difficultretail market both in the UK and international arena, and our progress should bemeasured against this background. "Overall, the Group has produced a slightly disappointing performance for thestart of the current financial year, however, there are firm plans in place toensure that progress can and will be made by each of our businesses. "As shareholders will be aware, the Group trades in very competitive areas andto ensure that we remain competitive, efficient and offer the right product mixwe have to continually improve our performance in all areas to ensure that wecan produce sustained growth in both sales and profitability. "We have no doubt that as the retailers fight to improve their businesses, theywill look to suppliers like ourselves to work with them so that the end consumerwill be able to purchase quality products at keener prices. To implement thesenecessary improvements there will be an initial cost to us as suppliers,however, we are committed to improving our performance at every level to ensurethat we have a solid future in the marketplace. "I am already encouraged by the recognition that our customers give us - theservice we give to our customers and suppliers has recently been the subject ofseveral complimentary comments and it is our desire to strive for continuousimprovement across all our businesses." continued... -2- Toys Games and Gifts Division"I am sure that shareholders are all aware that we are the UK distributor for"Robosapien" which has proved to be a star at retail. Although the product wasin short supply and we were unable to fulfil the demand in the run up toChristmas, I am delighted to report that pre-Christmas orders have now been metand that post Christmas sales of "Robosapien" continue to be strong. "The Robosapien range is being expanded this year and we shall be previewing thenew and exciting range to our customers at The Toy Fair being held at ExCel inLondon at the end of January. "The new Robosapien products were introduced in the USA at the ConsumerElectronics Show earlier this month where they received no less than 3 out of 5awards. There has already been an enormous amount of interest in the newproducts and to date some 80,000 hits have been recorded on the Robosapien's USweb-site. "The Group is expecting another exciting year for Robosapien as these productsare introduced to the UK market. Already development is underway on furtheradditions to the range for 2006 and we believe that this category shouldcontinue to grow for us for some time. "Whilst overall, retail trading has been difficult and remains so, wenevertheless ended the 2004 calendar year with many product winners some ofwhich have been successfully developed in-house and clearly supports ourstrategic decision to produce more of our own developed products. "Our Girls activity range, GR8 Gear, has sold well both in the UK, andinternationally in the limited territories where it was placed. We will beintroducing new and exciting lines to this range. The success of this productcoupled with a substantially expanded distribution base in 2005 lead us toexpect strong growth, both domestically and internationally. The GR8 Kit forboys has also started well and will be developed further this year. Otherpotentially successful ranges developed by us include Strawberry Shortcake,Peppa Pig, as well as toys and games relating to new Batman and Star Wars moviesto be released this year. "Our games offering has continued to improve and we had several successful itemsat Christmas which will continue into 2005. Again, the strategy of developingmore of our own products is working well for us. We have entered the 2005calendar year with exciting new products and we should experience our best yearyet as our international sales increase in line with our domestic sales. "Any company wishing to be successful in the current environment has to seekimprovements in its operational base on an on-going basis. "From 1 January the Toys and Games operations were fully integrated and I amconfident that the benefits of this action will be seen by both our customersand suppliers in due course. In addition, to both improve efficiencies andbenefit from Group functions such as sales & marketing, it is proposed that theoperations of Downpace, our gift business will be moved from Kingsbury, WestLondon to Oldham, Lancashire where its logistics will be fully integrated intothe Toys and Games operations, whilst, it is proposed that product developmentand some sales will relocate to the Group's Head Office in New Malden, Surrey. "It is with regret that through this action we are likely to lose many of theloyal, dedicated and long serving Directors and staff within this business -with the demands of the industry increasing each year and if we are to remaincompetitive we believe that we have no alternative other than to protect ourposition by partnering our customers and focussing on continuous efficienciesand cost savings across the Group. continued... -3- "Whilst we are aiming to consolidate the gift business we do not anticipate anycost benefits in the current financial year although we believe that theimprovement in operational efficiencies that we anticipate from this proposalwill result in an improved trading performance from this business in thefinancial year to August 2006 from when, we also expect to make overall savingsof approximately £500k per annum." Digital Division"The problems we encountered in America in 2004 distribution and which haspreviously been reported on were resolved in November 2004. As this resulted ina number of repercussions across the business as a whole, I am now pleased tosay that this disruptive period is now behind us. "The digital market is an ever-changing and very competitive environment - ourcompetitors include some of the largest consumer brands in the world such asSony, Canon, Kodak and Olympus. Therefore, it is crucial that we remain in touchwith the latest trends. "Despite the intense market competition coupled with the severe trading problemsrelating to our US distribution we have continued to improve our productoffering by introducing new exciting hi-spec digital cameras. "Petters, our new distributor in the US is already starting to make greatin-roads into the US market. As a result of this relationship, we have recentlycommenced the supply of our cameras to one of the largest US retailers as wellas one of the largest drug store chains and we are expecting other retailers toplace orders over the coming weeks. We are confident that as these sales fallinto place, the benefits will be fed-through to a number of aspects of thebusiness. "It was recently announced that Polaroid is the subject of an agreed merger. Itis interesting to note that the purchaser is Petters Worldwide, the holdingcompany of our US distributor. "We are already working well with Petters and believe that our digital programmeis fundamental to their plans for Polaroid. This change for Polaroid should bebeneficial to us as it provides a number of expansion opportunities both in theUS and other international markets. "As a direct result of the merger discussions between Petters and Polaroid, theGroup has suspended discussions with Polaroid regarding the extension of theGroup's current contracts and will resume discussions with the new management oncompletion of the merger. "The prospects for the financial year remain encouraging although the marketsremain tough. Our focus on operational efficiencies and the on-going expansionof our own product range coupled with the development in value of ourIntellectual Property Rights provides a solid foundation from which to buildupon during 2005 calendar year. "Taking into account the difficulties we have encountered and the marketconditions, we believe that the trading results for the first half will prove tobe disappointing, however, we believe that trading for the second half willmaterially improve over the corresponding period for last year which will resultin a satisfactory outcome for the year as a whole." Enquiries: Richard King, ChairmanKiran Shah, Group Finance Director Fiona Tooley, DirectorThe Character Group plc Citigate Dewe RogersonToday: 020 7282 8000 (up to 12.00 noon) Today: 0207 282 8000Thereafter: 020 8949 5898 Thereafter: 0121 455 8370Mobile: 07836 250150 (RK) Mobile: 07785 703523 (FMT)Mobile: 07956 278522 (KS)www.charactergroup.plc.uk This information is provided by RNS The company news service from the London Stock Exchange