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Character Group – lower interims, but confidence remains

By Tom Winnifrith & Steve Moore | Wednesday 10 May 2017

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

Character Group (CCT) has announced results for its half year ended 28th February 2017 and that “we remain on target to achieve current market expectations for the full financial year”

The results show an adjusted pre-tax profit of £7.1 million on revenue 5.7% lower than in the corresponding prior year period, at £61.5 million, as the company noted “a number of macro-economic factors, particularly the weakness of sterling have worked against us” and “an exceptional period of growth experienced in the comparative period last year”. Earnings per share reduced by just over 14% to 27.86p.

However, after particularly a net £7.9 million working capital inflow, partially offset by £1.7 million of dividends paid and £1.3 million net of share buybacks, net cash was increased by £11.7 million to £18.6 million. Current assets over total liabilities were £2.8 million higher at £18.9 million.

The statement noted “material cost savings” are now coming through following several measures taken to improve operational efficiency, that “the second half has started in line with budget” and that “a number of new products are currently in development for launch this calendar year across our core ranges… this gives us confidence on our ability to meet current market forecasts”.

This confidence looks reflected in a 28.6% increased interim dividend per share to 9p – this to be paid on 28th July, with an ex-dividend date of 6th July.

We thus continue to look for full-year earnings per share to increase to circa 50p (last year: 47.63p) and it now looks like the total dividend per share for the year may exceed 17p. Comparing to a current 512.5p share price, we continue to consider the fundamental and income value here attractive and to rate the shares a buy.

This article first appeared on the Nifty Fifty website which Tom Winnifrith runs with Steve Moore & Lucian Miers. To access the website ahead of the next share tips from Tom & Steve and a new shorting piece from Lucian later this week click HERE


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