City round-up: Character Group; musicMagpie; OTAQ; PRS REIT
Oldham-based toys retailer Character Group enjoyed a bumper year for revenues and profits, and has rewarded shareholders with an enhanced dividend payment.
Revenues for the year to August 31, were £139.9m, compared with £108.867m a year previously. Pre-tax profits of £15.29m were an improvement on £3.92m the year before, and shareholders will receive a total dividend of 15p per share, up from 5p in 2020.
The group has continued to be cash generative, delivering £27.3m of cash from operations (2020: £19.6m) and finishing the year with a net cash balance of £35.9m (2020: £19.1m).
Character Group said the buoyant demand for its products has been sustained throughout the year and has continued to rise in recent months, despite the global supply-side and logistics challenges, which have been relentless for many businesses.
Against this backdrop, it said it acknowledges the loyalty and dedication of all its 209 staff in the UK, Europe and the Far East, adding: “They have been tested once again and, exhibiting the superhero qualities that many of our toys products depict, came through for the business and delivered a very creditable performance.”
Brands stocked by the group include Goo Jit Zu, Peppa Pig ,Pokémon , Little Live Pets , Shimmer ‘n SparkleInstaglam, Stretch Armstrong, Fireman Sam, and Scooby Doo.
In an outlook statement, it said both domestic and international demand for its products remains strong and the reception received so far by the new introductions planned for its ranges in the coming months has been a “very pleasing endorsement of our team’s designs, plans and execution”.
While it is not possible to predict when the global logistics issues will be fully resolved, the group said it is well placed to satisfy anticipated demand in its markets.
The board believes that margins will be under pressure due to high freight rates and increased materials and labour costs, however, it is satisfied that the group remains on target to meet current market expectations.
A further update on the outcome of the 2021 Christmas trading period and prospects will be provided at the group’s AGM on January 21, 2022.
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musicMagpie chief executive Steve Oliver
Stockport’s musicMagpie, the e-commerce business in the UK and US specialising in refurbished consumer technology, said results for the year to November 30, are in line with management’s expectations.
In a trading update today, it said revenues were £145.2m and adjusted EBITDA £12.2m, in its first annual results since floating.
Revenue in the group’s core consumer technology business in the UK was up 5.4% on the year. This culminated in a record Black Friday, when consumers bought, rented or sold products such as smartphones, tablets, consoles and wearables.
As set out in our interim results in July, revenues from the disc media (35% of total group revenue) and books (six per cent of total group revenue) divisions reverted to pre-pandemic levels in the second half of the year.
The smart phone rental subscription service, which provides customers with a more affordable and flexible option than an outright purchase or a pay-monthly contract with a mobile network, has made strong progress since its launch in October 2020.
Its growing popularity with consumers means that, as at November 30, 2021, the service now has circa 13,500 active paying subscribers, including the first cohort of subscription renewals. This has already made a positive contribution to group margins in financial year 2021 and, as noted in the half-year results, creates the potential to earn higher recurring revenues and EBITDA over the life of a device as opposed to a one-off sale.
The SMARTDrop kiosk offering, which launched in November 2020, is being successfully rolled out across the Asda network and will be in nearly 300 stores in 2022. So far, approximately 5,300 smartphones have been traded in through the kiosks, paying out more than £1.5m to customers. The kiosks also form a key component of the wider sustainability partnership that the group has recently launched with Asda, as announced in September 2021.
Chief executive, Steve Oliver, said: “We are pleased to have delivered a good performance in our first year as a listed company, in line with our expectations at the time of the IPO in April.
“The strong progress being made by our SMARTDrop Kiosks and our corporate recycling programme is enabling our strategic priority to ‘buy more, sell more, rent more’, and we are also especially pleased by the consumer reaction to our phone rental subscription offer which is gaining good momentum. As a result, we are confident in our prospects for the new financial year.”
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OTAQ, the Lancaster-based marine technology products and solutions group for the global aquaculture and offshore oil and gas industries, revealed a fall in interim revenues and widened losses in the six months to September 30. It also announced plans to raise £1.38m through a share placing.
Turnover of £1.821m compared with £2.031m in 2020. The previous year’s pre-tax loss of £115,000 increased to £881,000 this time round.
During the interim period it completed the restructuring of its senior management team to increase focus on a sales-led strategy, including the appointment of a new chief commercial officer. It said it is positioned to enter new markets with new products and technologies.
It also completed an investment in Blue Lion Labs, a Canadian plankton detection business, to license its technology and develop plankton detection systems for use in the salmon market and other finfish sectors.
Chief executive, Phil Newby, said: “This was an extremely busy period for the group – with the focus on commercialisation, product development and securing orders with a view to underpinning revenue visibility on the back of an increased product suite and routes to market.
“We have an exceptional technology set and are seeing increased demand in a growing number of geographies.
“The team has secured a number of new contracts and we believe that the momentum expected in the second half of the financial year will provide the basis for a step change as we move into the next financial period and beyond.”
OTAQ said its proposed share placing is required to address its near-term working capital needs, strengthen the company’s balance sheet and to take advantage of the significant accessible opportunities which the board believes are available in its addressable markets.
The net proceeds of the placing are estimated to be approximately £1.23m.
Phil Newby said: “This is an exciting time for the business. Having established a portfolio of internally-developed technologies, we have a number of growth opportunities that we are looking to maximise in 2022.
“Continued development and investment will underpin expected growth in existing and new markets, enabling the company to establish new revenue streams that will afford increased visibility. We very much look forward to the next stage of our development and believe we are well placed to deliver against our ambitions.”
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Manchester-based PRS REIT, the closed-ended real estate investment trust that invests in high quality, new build family homes in the private rented sector, has acquired three of five targeted sites.
This follows its fundraising, announced on September 29, which raised gross proceeds of £55.6m.
The three sites have been secured at a combined gross development cost of approximately £60.3m and are expected to deliver 383 new homes with an estimated rental value of a £3.6m per annum, once built and let.
All three sites are already under construction, and the first homes are due to be available for rental from the end of February 2022.
The two remaining target sites will be funded from debt facilities, which are to be arranged, and are scheduled for acquisition during the first half of 2022. As with the company’s other sites, these opportunities will be developed under fixed-price design and build contracts.
A trading update covering the quarter ending December 31, 2021, is expected to be published in mid-January 2022.
