Character Group ups dividend after 'pleasing' recovery from Toys R Us closure

Character Group raised its final dividend by 20% on Thursday after a strong second half of the year made up for the closure of Toys R Us in the spring.

Toys, games and giftware developer and distributor Character said its revenue dropped to £106.2m, down by 7.9% from the prior year, while profit before tax fell by 13.4% to £11.6m, which “comfortably” met market expectations.

Despite the drops, the results constitute something of a turnaround as first-half pre-tax profits fell 50% compared to the same period last year.

Consequently, Character increased its final dividend by 20% to 12p per share.

"This is a particularly pleasing outcome as it endorses the optimism that we expressed at the time of the HY1 results announcement in April, when we projected that we would see a return to profitable growth progression during the second half of the year," said a statement from Character.

UK sales generated 82% of total revenue and increased from £86.7m to £87.1m as key product ranges such as Peppa Pig, Little Live Pets, Teletubbies and Stretch remained in high demand, though international sales were lower at £19.1m, down 33.2%.

Post-period end, the AIM traded company acquired a 55% stake in Danish toymaker PROXY for £0.3m with a further earn out consideration of £3m.

Character said the acquisition will allow for the expansion of its continental reach as PROXY "sources and secures exclusive rights to toy products and then markets and sells them to retailers in the Nordic region".

"The new financial year has started well and in line with management expectations; we are confident in the prospects for the current autumn/winter trading period, which includes the all-important Christmas season. In addition, we are delighted to be working closely with the team at PROXY," said Character’s statement.

Character Group’s shares were up 2.63% at 508.00p at 1109 GMT.