The information contained within this announcement is deemed by the Company to constitute inside information stipulated under the Market Abuse Regulation (EU) No. 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018. Upon the publication of this announcement via the Regulatory Information Service, this inside information is now considered to be in the public domain.

LONDON, WEDNESDAY, 17 DECEMBER 2025

THE CHARACTER GROUP PLC

(the "Company" or "Group" or Character")

Designers, developers and international distributor of toys, games and giftware

ANNUAL FINANCIAL RESULTS FOR THE YEAR ENDED 31 AUGUST 2025

INTRODUCTION

This has been a difficult year for the Group.  As we announced earlier in the year, the imposition of tariffs on imports to the USA severely impacted the Group's second half performance.  The US accounted for approximately 20% of the Group's turnover in the prior financial year and, with most of the Group's production sourced from China, our sales to the USA immediately stalled and remained weak for the rest of the financial year.  In addition, lingering economic uncertainty and political instability in many regions has also had a dampening effect in all our markets and has left the industry subdued globally.

Despite these conditions and the impact on sales, the Group has delivered a profit before highlighted items and continued to generate cash from operations, ending the year with a strong cash balance at £12.6m, even after spending £1.96m in executing its share buyback programme.  There is no doubt that the strength and breadth of our product portfolio and the determination and ingenuity of our personnel were the main contributors to this result.

OPERATIONAL PERFORMANCE

Group revenue in the year ended 31 August 2025 was £100.5m, against £123.4m in the comparable 2024 period.

The gross profit margin was 26.2% (FY 2024: 26.5%).  On an absolute basis, gross profit reported is £26.4 million compared to £32.8m for the previous year.  The profit before tax and highlighted items was £1.2m (FY 2024: £6.6m).

A significant proportion of the Group's purchases are made in US dollars; therefore, the business is exposed to foreign currency fluctuations.  The Group manages the associated risk through the purchase of forward exchange contracts and derivative financial instruments.  Under International Financial Reporting Standards (IFRS), at the end of each reporting period the Group is required to make an adjustment in its financial statements to incorporate a "fair value" valuation of such financial instruments.  The "fair value" adjustment for this financial period results in a notional loss of £3.0m.  This compares to a corresponding notional loss of £0.97m reported in the year to 31 August 2024.  These "fair value" adjustments are non-cash items calculated by reference to unpredictable and sometimes volatile currency spot rates at the relevant balance sheet dates.  To present the results on a "normal" basis, these "fair value" profit adjustments on FX derivative positions are excluded, although shown separately as "fair value" to demonstrate the "underlying" position.

The Group is reporting a statutory loss before tax in the period, after highlighted items, of £1.8m (FY 2024: a profit of £5.7m).

Underlying earnings before interest, tax, depreciation and amortisation were £3.9m (FY 2024: £10.1m).

Underlying basic earnings per share before highlighted items amounted to 5.59p (FY 2024: 29.76p).  Diluted earnings per share, on the same basis, were 5.59p (FY 2024: 29.72p).

Basic loss per share after highlighted items was 6.74p (FY 2024: earnings 25.96p).  Diluted loss per share, on the same basis, was 6.74p (FY 2024: earnings 25.92p).

FINANCIAL POSITION, WORKING CAPITAL & CASH FLOW

The Group's net assets at 31 August 2025 totalled £33.1m (31 August 2024: £38.6m), after completing share buybacks in the year of £1.96m and paying dividends totalling £2.6m.

Inventories were c.£3.8m lower at the end of the financial period at £16.3m (31 August 2024: £20.1m).

During the period, the Group generated cash from operations of £7.0m (FY 2024: £14.9m).  Net interest received during the year amounted to £0.16m (FY 2024: £0.1m).

At the end of the financial year, the Group had a net cash position of £12.6m, compared to £13.2m at the end of the 2024.

DIVIDEND

The Directors will be recommending to shareholders a final dividend of 3.0p (H2 2024: 11.0p per share).  This, together with the interim dividend of 3.0p per share paid in July 2025, will bring the total dividend for the year to 6.0p per share (FY 2024: 19.0p).  The total dividend is covered approximately 0.9 times by underlying annual earnings (2024: 1.56 times).

Subject to approval by shareholders at the Annual General Meeting ("AGM") which is scheduled to be held at 11am on Friday, 16 January 2026, the following distribution timetable will apply:

OUR PRODUCT PORTFOLIO

Character continues to have a strong innovative portfolio of brands and products.  We are encouraged also by additions to our basket that will be marketed over the coming 2026 season.

A summary of the key ranges is below:

The Group's current portfolio of products and brands can be viewed at www.character-online.com.

SHARE BUY-BACK PROGRAMME

The Company announced a share buyback programme on 29 October 2024 to purchase ordinary shares with a maximum aggregate consideration (including associated dealing costs) of two million pounds (£2.0m) and a longstop expiry date of 30 May 2025 (the "Share Buyback Programme").  On 30 May 2025, the Company announced that it had extended the longstop expiry date for the Share Buyback Programme to 15 January 2026 and increased maximum aggregate consideration to £3.0m.  During the financial year to 31 August 2025, the Company acquired for cancellation a total of 757,499 ordinary shares in the Company at an aggregate cost of approximately £1.96m (including associated dealing costs), with the average cost being approximately £2.58 per ordinary share (FY 2024: £2.82).  In the period following the year end to the date of this report, the Company has, under the Share Buyback Programme, acquired for cancellation a further 301,900 ordinary shares in the Company at an aggregate cost of approximately £843,000 (excluding associated costs) with the average cost being approximately £2.79 per ordinary share.

The Company currently has an unutilised authority to buy-back up to a further 1,879,308 ordinary shares.  It remains part of our overall strategy to continue to repurchase the Company's own shares when appropriate.  The Board believes that it is in the Company's and investors' interests to provide shareholders who wish to realise part or all of their investment in the Company with an opportunity to access liquidity which may not otherwise be available in the market and to return excess capital to shareholders.  Therefore, the Board will be seeking a new authority to buy back up to 2,650,000 ordinary shares (representing approximately 15% of the total voting rights in the Company) at the 2026 AGM.  This authority will also allow the Company to implement buybacks either by way of an announced share buyback programme or by way of tenders for its issued shares.  

TOTAL VOTING RIGHTS

As at today's date, the Company has 19,698,058 ordinary shares in issue, excluding shares held in treasury.  The Company holds 1,983,059 ordinary shares in treasury, representing approximately 10 per cent. of the issued share capital.  These treasury shares do not carry voting or dividend rights.  Therefore, the total number of voting rights in the Company is 17,714,999.  This figure of 17,714,999 may be used by shareholders as the denominator for the calculations by which they may determine if they are required to notify their interest, or change to their notified interest, in the Company under the Financial Conduct Authority's Disclosure Guidance and Transparency Rules.

OUR PEOPLE

The Character teams in all our offices have learned over the years to adapt in an ever-changing and dynamic environment.  The US tariffs introduced in February 2025 created an immense challenge (which still continues) for the Group, but our team has adeptly managed the market volatility and achieved what the Board considers to be a commendable result.

We continue to be blessed with a loyal, dedicated and hard-working team and, on behalf of all our shareholders, we would like to thank them all for their valiant efforts and in achieving the outcome for the year reported in these accounts.

THE BOARD

The year has witnessed several changes to the composition of the Company's Board:

The newly constituted Board looks forward to meeting the opportunities and challenges that lie ahead and reporting its progress to shareholders over the coming years.

THE 2026 ANNUAL GENERAL MEETING (THE MEETING OR AGM)

The Company's 2026 AGM will take place as an in-person meeting at 11:00 a.m. on Friday, 16 January 2026.  The Meeting is to be held at the Group's head office in New Malden, Surrey.  Attendance can be in person, by proxy or, in the case of a company or organisation, by appointment of a corporate representative.

The formal Notice of the Meeting and an associated explanatory summary of the special business to be transacted at the Meeting are set out in the full 2025 Annual Report and Financial Statements, which is being uploaded to view on and download from the Company's website today.  

Shareholders who wish to join the Meeting remotely should register for access by no later than 11:00am. on Wednesday, 14 January 2026.  This can be done by emailing info@charactergroup.plc.uk  (stating in the subject line of the email "Character Group: 2026 AGM virtual attendance"). Invitations enabling remote attendance will be issued by 5:00 pm on Thursday, 15 January 2026.

Please note, however, that joining remotely will not constitute attendance at the Meeting for the purposes of being counted in the quorum for the AGM and that virtual attendees will not be able to vote at the AGM.  Shareholders wishing to attend the Meeting virtually in this fashion are, therefore, requested to exercise their votes by submitting their forms of proxy appointing the Chair of the AGM as their proxy, in accordance with the instructions set out in the notes to the Notice of Meeting, by no later than Wednesday, 11.00 am on 14 January 2026.  If the Chair of the AGM is appointed as proxy to a shareholder, he/she will vote in accordance with any instructions given to him/her.  If the Chair of the Meeting is given discretion as to how to vote, he/she will vote in favour of each of the resolutions to be proposed at the AGM.

Any shareholder that wishes to put questions to the Board is invited to submit those questions in writing in advance of the Meeting by sending them to info@charactergroup.plc.uk  (stating "Character Group: 2026 AGM Questions" in the subject line of the email) by no later than Wednesday, 11.00 am on 14 January 2026.  The Board will seek to respond to questions asked in person or submitted online either during the AGM and/or by written responses post the event.

OUTLOOK

Sales in the lead up to Christmas 2025 have been slow and have declined from the comparable period in 2024.  The landscape in all the Group's markets is still looking unsettled, and we expect that conditions are likely to remain challenging for the rest of the first half of this financial year.  Whilst these predictions for the current financial year may seem somewhat downbeat, the launch of new product ranges together with enhancements to the ongoing ones should support an improvement in the Group's performance in the second half of the year.  Although revenue derived from USA is likely to decline further, we expect increases in other territories to balance this.  However, whilst the overall annual turnover is likely to remain flat for the current financial year, the Board expects the Group's FY26 profit (before tax and highlighted items) to more than double.  

The Group emerges from this difficult year with a strong balance sheet, cash reserves, and substantial unutilised finance facilities.  As an expression of that confidence in the Group's prospects for the year ahead, the Board has made its recommendation regarding the final dividend for the year under review and confirms its commitment to continue with a new share buyback programme if the authority is granted at the forthcoming AGM.

The Board looks forward to welcoming shareholders to the Company's Annual General Meeting in January 2026 and updating shareholders at that time.

GROUP INCOME STATEMENT

FOR THE YEAR ENDED 31 AUGUST 2025

E

GROUP STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 AUGUST 2025

GROUP BALANCE SHEET

AS AT 31 AUGUST 2025

GROUP CASH FLOW

FOR THE YEAR ENDED 31 AUGUST 2025

Cash, cash equivalents and borrowings consist of:

GROUP STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 AUGUST 2025

THE CHARACTER GROUP PLC

NOTES TO THE STATEMENT

1.GEOGRAPHICAL DESTINATION OF REVENUE

2.EXPENSES BY NATURE - Group

3.EARNINGS per share - Group

The earnings used in the calculation of basic and diluted earnings per share are as follows:

* The potential ordinary shares on exercise of share options are excluded from the number of weighted average shares due to their anti-dilutive effect.

4.DIVIDEND - group

The Directors recommend a final dividend of 3.00 pence per share (2024: 11.00 pence) amounting to £531,500 (2024: £2,057,841). If approved by shareholders, the final dividend will be paid on 30 January 2026 to shareholders on the register on 16 January 2026.

5.ANNUAL REPORT AND ACCOUNTS

The financial information set out in this announcement does not constitute the Company's statutory accounts for the years ended 31 August 2025 and 2024.  The financial information for the year ended 31 August 2024 is derived from the statutory accounts for that year which have been delivered to the Registrar of Companies.  The financial information for the year ended 31 August 2025 is derived from the statutory accounts for that year and those accounts have today been published and may be viewed and/or downloaded from the Company's website at www.thecharacter.com.  The auditor's reported on each of those accounts: their report was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under s498(2) or (3) of the Companies Act 2006.  The audited statutory accounts for the year ended 31 August 2025 will be delivered to the Registrar of Companies following the Company's Annual General Meeting.

6.ANNUAL GENERAL MEETING

The Annual General Meeting will be held at 1st Floor, 86-88 Coombe Road, New Malden, Surrey KT3 4QS on Friday, 16 January 2026 at 11.00am.

7.ELECTRONIC COMMUNICATIONS

The full Financial Statements for the year ended 31 August 2025, incorporating the Notice of Meeting convening the Company's 2026 Annual General Meeting, is available for viewing on and download from the Group's website: www.character.com.