3rd Nov 2005 07:01
Character Group PLC03 November 2005 Issued by Citigate Dewe Rogerson Ltd, BirminghamDate: Thursday, 3 November 2005 Embargoed: 7.00am The Character Group plc ("the Group") Preliminary Results for the year ended 31 August 2005 • Solid Improvement in H2 performance - H2 sales + 57% to £55.4 million- Full year + 30% to £98.8 million- H1 operating loss reversed producing operating profit for year of £864,000- Dividend for the year + 11% • 50% of Toys, Gifts and Games together with 90% of digital products designed and developed in-house. • Strong line up of products including Robosapien; Roboraptor, Robopet, Dr Who, Little Britain and Electronic Sudoku. • Strategic review of business to include Transfer to AIM and possible de-merger of Digital Division. "Within our Toys, Games and Gifts Division, we have achieved a very strongimprovement in our ability to develop our own good quality and saleable productlines, both under our own brands as well as under licences. "Our enhanced ability to design and develop a more advanced product base withinour Digital Division should present opportunities for further expansion in bothproduct and customer base. "I am pleased to report that the new financial year has started with both ourDivisions trading above our internal forecasts and with a higher level of salesand orders than at the corresponding point last year." Richard King, Chairman Enquiries:Richard King, ChairmanKiran Shah, Group Finance Director Fiona Tooley, DirectorThe Character Group plc Citigate Dewe RogersonTel: +44 (0) 20 8949 5898 Tel: +44 (0) 121 455 8370Mobile: +44 (0) 7836 250150 (RK) Mobile: +44 (0) 7785 703523 (FMT)Mobile: +44 (0) 7956 278522 (KS)www.thecharacter.com -2- The Character Group plc ("the Group") Preliminary Results for the year ended 31 August 2005 STATEMENT BY THE EXECUTIVE CHAIRMAN, RICHARD KING IntroductionIt comes as no surprise to any of us that the markets within which the Group isoperating have been, and continue to be, very competitive, with retailing in theUK, the main market for our Toys, Games and Gifts products, being hit especiallyhard. We started the 2005 financial year faced with this poor trading environment,certain operating problems to be overcome and, with a few exceptions, alacklustre product range. I reported in my interim statement a disappointing loss of £1.9 million for thefirst half but stated that we expected the second half would witness animprovement and that this trend would continue into the new financial yearending 31 August 2006. I am therefore pleased to report that the second half did indeed show a solidimprovement. We managed to more than reverse the first half loss and remain onstream for the trading performance to continue along this trend. Not only didtrading significantly improve over the first half but, even more significantly,our second half performance improved substantially against the 2004 comparableperiod, with pre-exceptional profit in 2005 of £2.7 million and £2.1 millionpost-exceptional (2004 pre-exceptional profit of £717,000, and £1.2 millionpost-exceptional). These financial results clearly demonstrate that, despite difficult marketconditions, the Group has produced a positive turnaround. Financial ResultsSales in the year ended 31 August 2005 were £98.8 million, 29.9% higher than inthe previous year (2004: £76.0 million). First half sales were £43.4 million compared to £40.9 million for the sameperiod in 2004, with second half sales £55.4 million, 57.7% higher than the sameperiod in 2004 (£35.1 million). In the first half, the Group produced an operating loss of £1.5 million againsta £2.2 million operating profit in 2004. Following the strong second halfperformance, the Group produced a pre-exceptional operating profit of £3.0million for the second half compared to £994,000 in 2004. As you will recall, the 2004 results were enhanced by the inclusion of anexceptional item resulting in a credit to the profit and loss account of some£492,000 before tax in respect of the settlement of our dispute with a formerdistributor. The 2005 results have also been affected by an exceptional item,resulting in a charge to the profit and loss account of some £643,000 beforetax, which arises from the costs associated with the integration of our giftsbusiness into the enlarged Toys, Games and Gifts Division. Profit before tax for the year was £161,000 (2004: £3.2 million). The first half basic loss per share amounted to 3.8 pence against earnings pershare of 4.22 pence for the first half in 2004. The recovery in the second halfproduced earnings per share of 3.41 pence for the second half (2004: 3.26pence), giving an overall loss per share of 0.39p. On-going administration expenses were 13% of sales (2004: 14.6%). continued... -3- Stocks at the end of the first half stood at £8.9 million and by the end of thefinancial year they totalled £9.8 million (2004: £12.2 million).The increaseover the first half reflects the higher stock levels required to service theincreased level of sales in the current year. The decrease in stock at theyear-end when compared to 2004 was achieved through both higher sales in Augustas well as improved efficiencies due to the restructuring of the Toys, Games andGifts Division during the year under review. Cash at bank, as at 31 August 2005, stood at £3.7 million, compared to £3.9million at the interim stage and £4.2 million at 31 August 2004. At 28 February 2005, the Group had unused bank and trade finance facilitiestotalling £11.0 million. By the year-end, unused bank and trade financefacilities were £4.1 million, again a reflection of the higher level of tradingand seasonality. On our normal business, excluding exceptional items, our gross margin was 24%(2004: 30.8%). This lower gross margin is mainly due to the higher percentage ofGroup sales of Digital Products, which are at a lower margin than the Toys,Games and Gifts products. Net assets at the end of the period were £10.5 million against £11.8 million in2004. The decrease in net assets resulted from an overseas tax charge as well asthe payment of the dividends. DividendThe Directors are proposing a final dividend of 0.9 pence per share. This,together with the interim dividend of 1.1 pence already paid, makes the totaldividend for the year of 2.0 pence, an increase of 11.1% on the previous year. The final dividend, which is subject to shareholder approval at the EGM on 29November 2005, will be paid on 27 January 2006 to shareholders on the Registeras at 6 January 2006. The shares go ex-dividend on 4 January 2006. Business Overview Toys, Games and GiftsDuring the financial year, we have accomplished our strategic plans ofintegrating firstly, Games and then Gifts within this Division, with the formerbeing completed in the first half and the latter in the second half. Although we have received a limited benefit from these changes in the latterpart of the financial year being reported upon, we expect that there will be amore positive impact during the new financial year in terms of both efficienciesand costs. We stated in our interim report, that the outlook for the remainder of the yearand for the new financial year remained encouraging. I am pleased to be able toreport that during the second half of the financial year, we introduced a numberof new products which were very well received by both the trade and theconsumer. As these new products did not come on stream until late in thefinancial year, they have had a limited effect on the results being reported.However, we expect our sales to increase significantly in the period leading upto Christmas and for the current financial year as a whole. The results for the first two months of this new financial year, together withthe management team's expectations for the financial year as a whole, are veryencouraging, especially when they are measured against the retail marketenvironment in both the UK and international markets. We have improved our offering throughout the Division over the past year and, aspreviously, indicated, the benefits started to come through in the second halfof the financial year. We have witnessed a positive sales improvement since theyear-end, which is above our internal budgets and leaves us optimistic for theprospects for the current financial year as a whole. continued... -4- For the first time, we have enclosed with this report a DVD which shows some ofthe television commercials that we are airing in the run up to Christmas andwhich the Directors hope shareholders will find informative. Within this business, we are very fortunate to have a great line up of productswhich includes: •our range of Robosapien, Roboraptor, Robopet •Dr Who for both the toy and gift markets •Little Britain gift line •Scooby Doo range •Gr8 Gear range for Girls •Cinderella range of dolls and accessories •a new game Boney Head to add to our already successful line-up of games, which includes our new electronic Sudoku (endorsed by Carol Vorderman) and Peppa Pig, our successful pre-school range •Witch - a new girls range produced under Disney License We are also pleased to have several new items for launch in 2006 includingTrolls, which are destined for the gift trade and which were very successfulwhen last marketed, together with toys from Biker Mice from Mars, which are tobe featured in a new TV series next year, and Superman, which is to be based ona new feature film due for release in 2006. It is interesting to note that Roboraptor is the first second generation remotecontrolled robot from the same family as last year's Toy of the Year,Robosapien, which sold in excess of 1 million units worldwide. Invented byex-NASA scientist, Dr Mark Tilden, the 32-inch robotic raptor beast has alreadywon Toy of the Year in Australia and Norway and was voted top toy in the 8-10year-old category by the Duracell European Toy Survey. At Dream Toy 2005, The Toy Retailers Association ("TRA") included Character'sRoboraptor in its 'Hot Dozen' for Christmas 2005 listing. This follows on from Dream Toy 2004 where Robosapien first came to prominenceand went on to become "2004 Toy of the Year". Also within the individualcategory listings at Dream Toy 2005, Character's ranges tipped for success forChristmas 2005 were: •Pre-School - Peppa Pig Playhouse •Boys - Stretch Homer •Big Kidz - Dr Who's Dalek •Games - Electronic Sudoku It is also very gratifying to report that approximately 50% of our Toys, Gamesand Gifts product line up is made up of products that we have designed anddeveloped in-house. This alone has opened up further opportunities forinternational sales, which have grown by over 250% in the period under review. Through this stronger and improved product offering, we anticipate that we willincur a lower percentage of credits and marketing spend in the current newfinancial year, with stock write-downs also expected to remain within the levelsbudgeted. The Directors believe that the strategic changes made over the past year and theimproved quality of products will greatly benefit the Group's performance inboth this and the following financial years. continued... -5- Digital Division World Wide Licenses ("WWL")Despite the fact that this Division faces an extremely competitive environment,with downward pressure on pricing being an every day event and with strongcompetition from some leading retail brands, I am delighted to report that,following the major problem experienced last year with our previous USdistributor, WWL has significantly grown its sales and profits during the year.In August, the last month of the financial year, WWL shipped over US$20 millionof cameras, a record level of monthly sales for WWL. We have continued to increase our capacity to design, develop, manufacture andsupply ever increasingly complex products. At the interim stage of the year, I informed shareholders that the Polaroid(R)brand had been purchased by the Petters Group and that the Group would benegotiating with Petters on how best to develop the business. Followingdiscussions, we have jointly decided that the original distribution and licencemodel was not appropriate for the future and, accordingly, the originallicensing agreements will not be renewed. In their place, we have entered into asupply arrangement whereby WWL has first rights of supply and, although thebasic commercial terms have been agreed and currently form the basis of ourdealings with Petters in North America, the final form of the legal agreement iscurrently in the final stages of negotiation. We will update shareholders onthis status in due course. We are also working very closely with Petters in designing the new Polaroid(R)product line-up and have no reason to believe that our sales to Petters will notcontinue to increase. In essence, we see no changes in our prospects other thanthe fact that we shall not be acting as a distributor of the Polaroid(R) digitalcamera products in the UK, which will have limited effect on the Group's overallprofitability. Sales and orders for WWL for the period to Christmas are above our originalinternal budgets. The Digital Division has reached critical mass and theDirectors will, through exploiting WWL's technical base which has been developedover the past years, now be able to look at further opportunities for growth. Strategic ReviewThe Directors are mindful that the Board has a duty to improve shareholder valueand to prepare the Group for long term growth. Accordingly, the Board hasundertaken a strategic review of the business and has agreed a strategy toaccomplish the goals that it has set. •Transfer to AIM At the time of the Group's interim results statement issued in April, theCompany highlighted its intention to seek a cancellation of its listing and anadmission to trading of its shares on AIM as it provides, in the Board's view, amore flexible environment in which to achieve the Group's objectives and toreduce costs and formalities relating to maintaining a market in its shares andundertaking future transactions. The process of transferring from the Official List to AIM has commenced anddetails will be included in a Circular to be posted to shareholders togetherwith the Annual Report on 4 November 2005. Subject to shareholder approval at asecond Extraordinary General Meeting to be held on 29 November, we expecttrading in the Group's shares on AIM to commence on 2 December 2005. •Possible de-merger of WWL The Board is, as already announced, considering the possible de-merger of theDigital Division, a distribution of the shares in WWL (or the shares of acompany formed for the purpose of the de-merger) to shareholders andsimultaneously seeking admission of those shares to trading on AIM in their ownright. Whilst there are no immediate plans to make this move, the Board believesthat this could better promote shareholder value. Shareholders will be updatedwith news of any developments in this regard as soon as practicable andappropriate. continued... -6- •Executive Changes We also announced in April that we had begun the process of recruiting a newChief Executive Officer and a Group Finance Director. Having taken into accountthe progress being made in the trading position of the Group and the need tomanage each of the Group's businesses, the Board decided that whilst theseproposed changes to the Group structure are being completed, it would in theinterests of both the business and its shareholders that Kiran Shah and I shouldbe appointed interim joint managing directors to oversee the changes. Mr Enrico Preziosi resigned from the Board and from his Executive position asManaging Director and CEO in September 2005. The Directors would like to put onrecord their gratitude to him for his service to the Company since assuming hisBoard position in August 2000 and thank him for his considerable contribution tothe Group. Enrico Preziosi played a pivotal role in developing the close workingrelationship between Giochi Preziosi S.p.A. ("Giochi Preziosi") and the Group,which will manifest itself in a substantially increased level of inter-companybusiness in this new financial year. Giochi Preziosi remains a 22.5% shareholder in the Character Group. Management, People and Development TrainingThe year under review has seen many changes within the Group and the Directorswould like to acknowledge and thank all the Group's employees for their hardwork and determination to return the Group to profitability. At the year-end,the Group employed 231 people. Looking ForwardI am pleased to report that the new financial year has started with both ourDivisions trading above our internal forecasts and with a higher level of salesand orders than at the corresponding point last year. Our focus continues to be to improve our operational efficiencies and furtherdevelop our product portfolio. Within our Toys, Games and Gifts Division, we have achieved a very strongimprovement in our ability to develop our own good quality and saleable productlines, both under our own brands as well as under licences. Our enhanced ability to design and develop a more advanced product base withinour Digital Division should present opportunities for further expansion in bothproduct and customer base. By the end of 2005 calendar year, over 50% of our products within the Toys,Games and Gifts Division and over 90% of our digital products will have beendeveloped in-house. This in-house expertise in developing licensed propertiesand also bringing new products to market quickly is becoming generallyrecognised in the Group's markets. It is also proving to be a major benefit tothe Group in attracting and winning both strong new licences and finishedproducts for distribution. As a Board, we believe that by refocusing the efforts of the Executive team, theGroup can leverage its market position and ultimately this will be reflected inour commercial performance and improved shareholder value. -7- The Character Group plc Preliminary Results Consolidated Profit and Loss Accountfor the year ended 31 August 2005 Note 2005 Total Other Exceptional £'000 2004 2004 2004 £'000 £'000 (note 2) £'000--------------------------------------------------------------------------------Turnover 1 98,791 76,046 74,653 1,393Cost of sales (75,110) (54,332) (51,675) (2,657)--------------------------------------------------------------------------------Gross profit 23,681 21,714 22,978 (1,264) Net operating expensesSelling and distribution (9,750) (9,409) (9,131) (278)costs Administration expenses (12,867) (11,389) (10,919) (470) Administration expenses -Exceptional 2 (643) - - - Other operating income 443 2,761 257 2,504--------------------------------------------------------------------------------Operating profit 2 864 3,677 3,185 492Interest 3 (703) (453) (453) ---------------------------------------------------------------------------------Profit on ordinary activitiesbefore taxation 161 3,224 2,732 492 Taxation 4 (365) 503 589 (86)--------------------------------------------------------------------------------(Loss)/profit on ordinaryactivities after taxation (204) 3,727 3,321 406 Dividend 5 (1,051) (1,093)--------------------------------------------------------------------------------Retained (loss)/profit forthe year (1,255) 2,634--------------------------------------------------------------------------------(Loss)/Earnings per share 6- basic (0.39)p 7.48p- fully diluted (0.39)p 7.31pDividend per share 5 2.0p 1.80p--------------------------------------------------------------------------------EBITDA (earnings beforeinterest, 1,492 4,444tax, depreciationand amortisation)-------------------------------------------------------------------------------- All activity has arisen from continuing operations. STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES 12 months to 12 months to 31 August 2005 31 August 2004 £'000 £'000--------------------------------------------------------------------------------(Loss)/profit for the financial period (1,255) 2,634Foreign exchange differences (64) (541)--------------------------------------------------------------------------------Total recognised gains and losses relatingto the financial period (1,319) 2,093-------------------------------------------------------------------------------- -8- The Character Group plc Preliminary Results Consolidated Balance Sheetas at 31 August 2005 2005 2004 £'000 £'000--------------------------------------------------------------------------------Fixed assetsIntangible assets 646 692Tangible assets 1,849 1,599Investments 2 2-------------------------------------------------------------------------------- 2,497 2,293Current assetsStocks 9,810 12,227 ------------------------Trade debtors subject to finance arrangements 9,053 8,319Factor advances (6,937) (6,785) ------------------------ 2,116 1,534 Debtors - including non-factored trade debtors 21,803 16,024Cash at bank and in hand 3,748 4,183-------------------------------------------------------------------------------- 37,477 33,968 Creditors: amounts falling due within one year:Other creditors (29,482) (24,484)--------------------------------------------------------------------------------Net current assets 7,995 9,484--------------------------------------------------------------------------------Total assets less current liabilities 10,492 11,777--------------------------------------------------------------------------------Net assets 10,492 11,777================================================================================Capital and reservesCalled up share capital 2,641 2,634Investment in own shares (908) (908)Capital redemption reserve 40 40Share premium 11,821 11,794Merger reserve 651 651Profit and loss account (3,753) (2,434)--------------------------------------------------------------------------------Equity shareholders' funds 10,492 11,777================================================================================ -9- The Character Group plc Preliminary Results Consolidated Cash Flow Statementfor the year ended 31 August 2005 Note 2005 2004 £'000 £'000--------------------------------------------------------------------------------Cash inflow from operating activities 7 2,870 3,326--------------------------------------------------------------------------------Returns on investment and servicing of financeInterest received 18 7Interest paid (721) (460)--------------------------------------------------------------------------------Net cash outflow for returns on investment andservicing of finance (703) (453)--------------------------------------------------------------------------------Taxation (844) (315)--------------------------------------------------------------------------------Capital expenditure and financial investmentPayments to acquire tangible fixed assets (868) (510)Sale of tangible fixed assets 25 9--------------------------------------------------------------------------------Net cash outflow for capital expenditure andfinancial investment (843) (501)--------------------------------------------------------------------------------Equity dividends paid (945) (1,626)--------------------------------------------------------------------------------Cash inflow before financing (465) 431--------------------------------------------------------------------------------Issue of new shares 34 6Purchase of own shares - (121)Capital element of finance lease rentals (4) (5)Expenses in relation to the conversion of loan - (60)note--------------------------------------------------------------------------------Net cash inflow/(outflow) from financing 30 (180) (Decrease)/Increase in cash in the year (435) 251================================================================================(Increase)/Decrease in net debt in the year 8 (431) 256-------------------------------------------------------------------------------- -10- The Character Group plc Preliminary Results Notes to the Accounts 1. TurnoverTurnover represents the amount derived from the provision of goods and serviceswhich arise from the Group's ordinary activities, stated net of value added tax. Analysis of turnover by geographical market by 12 months 12 monthsdestination to to 31 August 31 August 2005 2004 £'000 £'000-------------------------------------------------------------------------------United Kingdom 45,893 52,347Rest of the world 52,898 23,699-------------------------------------------------------------------------------Total 98,791 76,046------------------------------------------------------------------------------- Analysis of turnover by division 12 months 12 months to to 31 August 31 August 2005 2004 £'000 £'000-------------------------------------------------------------------------------Toys, Games and Gifts 48,669 44,989Digital 50,122 31,057-------------------------------------------------------------------------------Total 98,791 76,046------------------------------------------------------------------------------- All the Group's activities during the 12 months ended 31 August 2005 are classedas continuing. The Directors consider that the disclosure of furtherdisaggregated information would be seriously prejudicial to the commercialinterests of the Group. 2. Operating Profit 12 months to 12 months to 31 August 2005 31 August 2004 £'000 £'000--------------------------------------------------------------------------------Operating profit is stated after charging:Staff costs 6,717 6,185Principal auditors' remuneration- Statutory audit services 48 69- Financial reporting advisory services 16 60- Tax compliance services 20 8- Tax advisory services 3 8- Further assurance services 12 9Other auditors' remuneration- Statutory audit services 32 28---------------------------------------------------------------------------------Total fees payable to auditors 131 182--------------------------------------------------------------------------------Operating leases - land and buildings 349 343--------------------------------------------------------------------------------Research and development costs 1,143 1,971--------------------------------------------------------------------------------Depreciation of tangible fixed assets- owned assets 579 718- assets held under finance leases and HP contracts 3 4-------------------------------------------------------------------------------- 582 722--------------------------------------------------------------------------------Goodwill amortisation 46 45-------------------------------------------------------------------------------- -11- The Character Group plc Preliminary Results Notes to the Accounts (continued) 2. Operating Profit (continued) Exceptional ItemThe 2005 exceptional item of £643,000 relates to relocation and restructuringcosts of Character Gifts Limited which now operates from the Group's centralfacility at Oldham, Lancashire. 2004 Exceptional ItemIn November 2004, World Wide Licenses Limited ("WWL") settled its dispute withUniden America Corporation ("Uniden") which commenced when Uniden terminated itsdistribution agreement with WWL. Under the settlement, Uniden paid to WWL thesum of US$4.5 million by two equal instalments. WWL has incurred substantial costs since Uniden terminated its distributionagreement. The settlement as well as the associated costs incurred have beenclassified as an exceptional item. The exceptional income and costs, as set out on the face of the consolidatedprofit and loss account, are explained below. Turnover is the sale of products which had to be sold elsewhere at lower prices. Cost of sales are the costs of those products, as well as a write-off ofroyalties paid which are unlikely to be recoverable. Selling and distribution costs represent an additional amount of commissionpayable under the terms of WWL's contract with a USA company as a consequence ofthe settlement. Administration expenses comprise the legal costs incurred. Other operating income is the settlement from Uniden. 3. Interest 12 months to 12 months to 31 August 2005 31 August 2004 £'000 £'000--------------------------------------------------------------------------------Total interest receivable 18 7 Total interest payable:On bank overdraft and similar charges (444) (296)Convertible loan note interest - (56)Finance leases and hire purchase contracts (1) (1)Factor advances (276) (107)-------------------------------------------------------------------------------- (703) (453)-------------------------------------------------------------------------------- -12- The Character Group plc Preliminary Results Notes to the Accounts (continued) 4. Taxation 12 months to 12 months to 31 August 2005 31 August 2004 £'000 £'000--------------------------------------------------------------------------------UK Corporation TaxTax on profit for the period - -Adjustments to tax charge in respect ofprevious periods - (241)--------------------------------------------------------------------------------Total UK corporation tax - (241)--------------------------------------------------------------------------------Foreign TaxTax on profit for the period 355 444Adjustments to tax charge in respect ofprevious periods 24 17--------------------------------------------------------------------------------Total foreign tax 379 461--------------------------------------------------------------------------------Total current tax 379 220--------------------------------------------------------------------------------Deferred TaxTax losses - (764)Origination and reversal of timingdifferences (14) 41--------------------------------------------------------------------------------Total deferred tax (14) (723)--------------------------------------------------------------------------------Tax on profit on ordinary activities 365 (503)-------------------------------------------------------------------------------- Factors affecting tax charge for the period Profit on ordinary activities beforetaxation 161 3,224--------------------------------------------------------------------------------Profit on ordinary activities multiplied bystandard rate of corporation 48 967tax in the UK of 30% (2004: 30%) Effects of:Expenses not deductible for tax purposes 182 301 Capital allowances less than/(in excess of)depreciation (178) 16 Other temporary differences between taxableand accounting profit 93 162 Lower tax rate on overseas earnings (198) (252) Utilisation of tax losses - (1,003) Tax losses not utilised - 253 Adjustments to tax charge in respect ofprevious periods 24 (224) Remitted earnings of overseas subsidiaries 408 ---------------------------------------------------------------------------------Current tax charge for the year 379 220-------------------------------------------------------------------------------- 5. Dividend 12 months to 12 months to 31 August 2005 31 August 2004 £'000 £'000--------------------------------------------------------------------------------On equity shares: Interim dividend paid - 1.1 pence (2004: 1.1pence) per share 578 726 Final dividend proposed - 0.9 pence (2004:0.7 pence) per share 473 367--------------------------------------------------------------------------------Total - 2.0 pence (2004: 1.8 pence) pershare 1,051 1,093-------------------------------------------------------------------------------- -13- The Character Group plc Preliminary Results Notes to the Accounts (continued) 6. Earnings per Share 12 months to 31 August 2005 12 months to 31 August 2004 Loss Pence Profit Pence after Weighted per after Weighted per taxation average share taxation average share number of number of ordinary ordinary shares shares----------------------------------------------------------------------------------Basic earningsper share (204,000) 52,475,156 (0.39) 3,727,000 49,811,576 7.48 Impact ofshare optionschemes - - - 1,190,106 (0.17)----------------------------------------------------------------------------------Dilutedearnings pershare (204,000) 53,740,156 (0.39) 3,727,000 51,001,682 7.31---------------------------------------------------------------------------------- 7. Reconciliation of Operating Profit to Net Cash Inflow from OperatingActivities 12 months to 12 months to 31 August 2005 31 August 2004 £'000 £'000----------------------------------------------------------------------------------Operating profit 864 3,677Depreciation, impairment and amortisation 628 767Loss/(Profit) on disposal of fixed assets 11 (7)Decrease/(Increase) in stocks 2,417 (4,084)Decrease/(increase) in debtors (6,347) 1,843Increase in creditors 5,361 1,671Exchange movement (64) (541)----------------------------------------------------------------------------------Net cash inflow from operating activities 2,870 3,326---------------------------------------------------------------------------------- Reconciliation of Exceptional Profit to Net Cash Outflow from ExceptionalActivities 12 months to 12 months to 31 August 2005 31 August 2004 £'000 £'000----------------------------------------------------------------------------------Exceptional (loss)/profit (643) 492Decrease/(increase) in debtor 2,504 (2,504)(Decrease)/increase in creditors (551) 926----------------------------------------------------------------------------------Net cash inflow/(outflow) from operatingactivities 1,310 (1,086)---------------------------------------------------------------------------------- There was no cash flow relating to taxation in respect of the exceptional items. 8. Reconciliation of Net Cash Flow to Movement in Net Debt 12 months to 12 months to 31 August 2005 31 August 2004 £'000 £'000----------------------------------------------------------------------------------(Decrease)/Increase in cash in the period (435) 251 Cash inflow from movement in debt and leasefinancing 4 5----------------------------------------------------------------------------------Movement in net debt resulting from cashflows (431) 256Net debt at 1 September 2004 4,179 3,923----------------------------------------------------------------------------------Net debt at 31 August 2005 3,748 4,179---------------------------------------------------------------------------------- -14- The Character Group plc Preliminary Results Notes to the Accounts (continued) 9. Analysis of Net Debt Cash at bank Lease Total and in hand finance £'000 £'000 £'000----------------------------------------------------------------------------------1 September 2003 3,932 (9) 3,923Cash flow 251 5 256----------------------------------------------------------------------------------31 August 2004 4,183 (4) 4,179Cash flow (435) 4 (431)----------------------------------------------------------------------------------31 August 2005 3,748 - 3,748---------------------------------------------------------------------------------- 10. The Extraordinary General Meeting will be held at the offices of CitigateDewe Rogerson Ltd, 26 Finsbury Square, London, EC2A 1DS on Tuesday, 29 November2005. 11. The Report & Accounts will be posted to shareholders. Furthercopies will be available from the Company's Office: 2nd Floor, 86-88 CoombeRoad, New Malden, Surrey, KT3 4QS or [email protected] [email protected] and will be posted on the Company's website atwww.thecharacter.com. 12. The preliminary announcement does not constitute statutory accounts. Theannual report and accounts for the year ended 31 August 2005 have yet to bereported on by the auditors and have not yet been filed with the registrar ofcompanies. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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