Character (CCT) had already warned on full-year profits in October, after Toys R Us entered bankruptcy protection across the pond, rendering Character's international customers cautious about placing repeat orders. Indeed, the overall top-line decline was driven entirely by a 16 per cent fall in international sales to £28.6m. UK revenue was flat at £86.7m. But, even after dividend payments and share buybacks, net cash rose by two-thirds. Management is confident about resuming positive trading momentum in the second half of 2018, despite an expected first-half slowdown.
Currency movements were also responsible for reduced earnings. Excluding adjustments for foreign exchange derivative contracts, pre-tax profit actually rose 7 per cent to £13.4m, with basic EPS up 9 per cent at 52p.
Combining the current portfolio with products to be introduced next calendar year, Character thinks it could end up with “its strongest ever product line up”. This is key to management’s optimism about second-half trading in 2018 and FY2019. The group was also appointed as the main UK and Ireland distributor for Pokémon ahead of a summer 2018 launch.
Analysts at Panmure Gordon forecast adjusted pre-tax profit of £12.5m and EPS of 37.3p for the year to August 2018, down from £15.4m and 50.5p in FY2017.
| CHARACTER (CCT) | ||||
| ORD PRICE: | 415p | MARKET VALUE: | £87m | |
| TOUCH: | 410-420p | 12-MONTH HIGH: | 550p | LOW: 357p |
| DIVIDEND YIELD: | 4.6% | PE RATIO: | 9 | |
| NET ASSET VALUE: | 128p | NET CASH: | £11.5m | |
| Year to 31 Aug | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2013 | 67 | 0.2 | 0.7 | 6.6 |
| 2014 | 98 | 7.1 | 27.7 | 6.6 |
| 2015 | 99 | 12.3 | 48.6 | 11.0 |
| 2016 | 121 | 13.1 | 50.3 | 15.0 |
| 2017 | 115 | 12.2 | 47.5 | 19.0 |
| % change | -5 | -7 | -6 | +27 |
| Ex-div: | 11 Jan | |||
| Payment: | 29 Jan |
