Shares in Character Group PLC (LON:CCT) jumped in early trading Thursday as the firm hiked its final dividend 20% following a strong second half that offset difficulties in the first which was marred by the closure of toy store chain Toy R Us.
The toy-maker and distributor reported underlying earnings (EBITDA) for the year to 31 August of £13.7mln, down from £14.8mln last year, while revenues fell to £106.2mln from £115.3mln.
READ: Character Group jumps as UK business racks up record sales
However, the firm said the results were “comfortably achieving market expectations” following a difficult first half period as the failure of Toy R Us forced it to adapt its business.
In April, first-half pre-tax profits fell 50% compared to 2017, although in a September trading update Character said growth would return in the second half.
The group seemed to have made good on its expectations, racking up record second-half sales in the UK boosted by its in-house Peppa Pig and Teletubbies brands.
As a result of the rejuvenated performance, the firm increased its final dividend by 20% to 12p per share in order to reflect its confidence in the ability to “generate and develop further sustainable cash flow”.
The group’s gross margins had also risen during the year to 34.2% from 32.6%, while its net cash balance climbed to £15.6mln from £11.5mln.
Danish acquisition offers Nordic reach
Looking ahead, Character said post-period it had acquired a 55% stake in Danish toy distributor PROXY, for around 2.5mln Danish krona (£300,000) with a further “earn out” consideration of 25mln krona (£3mln).
The company said PROXY “sources and secures exclusive rights to toy products and then markets and sells them to retailers in the Nordic region”, adding that the purchase would allow it to expand its European reach and offer a more compelling marketing and distribution offering to toy companies and brands.
In its outlook, the firm said it had started the current fiscal year in line with expectations and was confident of its performance for the important Christmas trading period.
However, it added that it was not immune from various macroeconomic factors such as Brexit and the performance of the UK economy, although its control of PROXY would enable it to potentially increase its market share in 2019.
Shares were up 2.6% at 508p.