Character Regulatory News (CCT)

24 Nov 2008 07:00



Issued by Citigate Dewe Rogerson Ltd, Birmingham

Monday, 24 November 2008

Immediate Release 7.00am

The Character Group plc

designers, developers and international distributors of toys, games and giftware

Trading Update

The Board of The Character Group ('Character' or 'Group') announces that whilst the results for the financial year ended 31 August 2008 (scheduled to be announced on 2 December 2008) are likely to show a profit before tax of £5.0million which is in-line with current market expectations, a review of current trading and future trading conditions indicates a more uncertain outcome for the financial year ending 31 August 2009.

The financial year ending 31 August 2009 commenced at the same time as world economies went into unprecedented freefall which has directly impacted negatively on an already difficult retail environment and consumer confidence. For the Group, this has in turn led to a period of substantially lower than expected sales, and margin erosion due to customer pressure, cost inflation and adverse foreign exchange movements.

At the current time, just ahead of the close of the 2008 Christmas trading period, and against severe and rapidly changing economic influences, it is too early to make meaningful forecasts for both the financial and calendar years 2009.

It is self evident however that, trading will be more difficult than previously anticipated and that current market expectations of Character's performance for these periods are too optimistic. In view of this, the Group has commenced a further review and where appropriate a realignment of its cost base to mitigate likely lower sales volumes.

Generally, commentary about the economic future has been predominantly negative across all sectors, and coupled with the comments above may not present a positive view of the Group's current and future trading performance. However, this being said, the Directors would like to highlight some positive aspects about the Group in these difficult times. Character:

is likely to either maintain or  increase its market share;

has maintained a strong and healthy balance sheet; and

is un-geared and has substantial unused working capital facilities.

The Board recognises that 2009 will provide many difficult challenges, but believes that the Group has continued the successful development of its own product line leaving it well positioned within the market-place to build on its market share and, that it has the financial strength and wherewithal to see the business through the current economic difficulties and be ready to take advantage of its market position as more normal times return.

The Company will provide a further update on 2 December 2008.