Character Regulatory News (CCT)

20 Jan 2010 07:00



Issued by Citigate Dewe Rogerson Ltd, Birmingham

Date: Wednesday, 20 January 2010

Embargoed: 7.00am

The Character Group plc

('Character' or 'Group')

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

The Board of The Character Group plc provides the following update to the market ahead of its Annual General Meeting, due to be held at 11:00 am this morning.

Trading Update

We are pleased to announce that, despite the estimated 8.5% decline in the toy market as a whole in 2009, the Group was able to increase its sales in the first four months of this financial year by 1.2%, against the comparable period.

Normal margin UK sales during this period increased by approximately 18%, whilst loss making or low margin clearance sales decreased by over 40%. These figures reflect the improvement in the strength of our product line up, with exciting performances in particular from our own in-house developed branded products such as Peppa Pig, Postman Pat, HM Armed Forces and Scooby Doo (which we shall be selling in the USA for the first time this year). In addition, Go Go Pets, which are to be renamed Zhu Zhu Pets from this month, were our star performers from our distributed range. Sales outperformed market expectations creating a huge shortage at Christmas. This range will be joined by Kung Zhu, a boy's product range from the same stable, later this year. We expect these ranges to continue to build on their success, whilst at the same time we are confident that enhancements to all our product ranges, coupled with additional new ranges which are being launched at this year's Toy Fair at the Olympia, (26 - 28 January) such as Doctor Who and Hero 108, will do well for us in the months ahead.

Following several years of difficult trading, and a tough retail environment, Character, in line with our peers and most major retailers, took a conservative view on its sales and stock levels and, as a direct result, ended the period with a low stockholding which has benefitted the Group's cash flow.

The Group has maintained a strong and healthy balance sheet; remains cash positive; and currently has no bank borrowings and substantial unused working capital facilities available to it. We therefore continue to be optimistic that, by not being financially constrained, the business is in a strong position to grow its sales, both in the UK and overseas, and build on its market share.

In summary, and as we also reported last year at this time, the Group has and will continue to:

successfully develop its own product lines, leaving it well positioned within the market-place to build on its current position;

maintain 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 Directors believe that the Group will see a significant turnaround in profit before tax for the first half ending 28 February 2010, and growth in revenues and profits is expected to continue for both the 2010 financial and calendar years.