Character Group EBITDA dropped on 15.2% and EBITDA Margin decreased slightly on 1.1 pp from 13.9% to 12.8%
29 Nov 2018 • About Character Group (
$CCT) • By InTwits
Character Group reported FY2018 financial results today. Here are the key drivers of the company's long term financial model:
- Character Group has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.3%.
- In the last 5 years the company invested considerably less than D&A: £2m vs. £2m. In FY2018 this situation was still the same: CAPEX was 0 while D&A was 2
- The company has highly profitable business model: ROIC is 23.5%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue decreased on 7.9%. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased slightly on 1.1 pp from 13.9% to 12.8% in FY2018.
Gross Margin increased slightly on 1.6 pp from 32.6% to 34.2% in FY2018. SG&A as a % of Revenue increased on 2.4 pp from 21.3% to 23.7% in FY2018.
Net Income margin showed almost no change in FY2018. The efficient tax rate was 18.0% in FY2018.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 0.31% in FY2018. The company's CAPEX/Revenue showed almost no change from FY2015 to FY2018. Average CAPEX/Revenue for the last three years was 0.24%. During the last 5 years CAPEX as a % of Revenue bottomed in FY2016 at 0.20% and was growing since that time.
Return on investment
The company operates at high and attractive ROIC (23.5%) and ROE (32.8%). ROIC decreased on 6.4 pp from 29.9% to 23.5% in FY2018. ROE decreased on 7.6 pp from 40.4% to 32.8% in FY2018. During FY2014-FY2018 ROIC topped in FY2015 at 37.3% and was declining since that time. During FY2014-FY2018 ROE topped in FY2015 at 81.3% and was declining since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is -1.1x and Debt / EBITDA is 1.4x. Debt jumped on 10.7% while cash jumped on 20.4%.
Character Group has good short term financial stability: Interest coverage ratio (ICR) is 172.1x. Character Group has no short term refinancing risk: cash is higher than short term debt (181.8%).
Average interest expence paid by the company was 0.36% in FY2018.
Valuation and dividends
Character Group's trades at EV/EBITDA 6.9x and P/E 11.3x.
The company paid 41.6% of Net Income as dividends in FY2018.
Management team
23.4% of the company is owned by insiders.
At the end of financial year the company had 186 employees. Average revenue per employee in FY2018 was £571,124.
Financial and operational results
FY ended 31 Aug 2018
Character Group ($CCT) key annual financial indicators| mln. £ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 97.9 | 99.1 | 121.0 | 115.3 | 106.2 | -7.9% |
| Gross Profit | 29.1 | 36.7 | 38.3 | 37.5 | 36.3 | -3.2% |
| SG&A | 22.7 | 25.1 | 25.6 | 24.6 | 25.2 | 2.5% |
| EBITDA | 9.8 | 14.0 | 15.9 | 16.1 | 13.6 | -15.2% |
| EBIT | | | | | 11.7 | |
| Interest expence | | | | | 0.1 | |
| Tax | | | | | 2.1 | |
| Net Income | 5.9 | 10.2 | 10.8 | 10.1 | 9.6 | -4.4% |
| Stock Based Compensation | | | | | 0.1 | |
Balance Sheet
|
|---|
| Cash | 17.7 | 25.8 | 28.6 | 28.8 | 34.6 | 20.4% |
| Inventory | | | | | 10.9 | |
| Short Term Debt | 22.2 | 21.2 | 21.6 | 17.2 | 19.1 | 10.7% |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
Cash flow
|
|---|
| Capex | 0.4 | 0.3 | 0.2 | 0.2 | 0.3 | 30.9% |
| Dividends | | | | | 4.0 | |
Ratios
|
|---|
| Revenue growth | 45.7% | 1.2% | 22.1% | -4.7% | -7.9% | |
| EBITDA growth | 175.1% | 42.7% | 13.5% | 1.1% | -15.2% | |
|
|---|
| Gross Margin | 29.8% | 37.0% | 31.6% | 32.6% | 34.2% | 1.6% |
| EBITDA Margin | 10.0% | 14.1% | 13.1% | 13.9% | 12.8% | -1.1% |
| EBIT Margin | | | | | 11.0% |
| SG&A, % of revenue | 23.2% | 25.3% | 21.1% | 21.3% | 23.7% | 2.4% |
| SBC, % of revenue | | | | | 0.1% |
| Net Income Margin | 6.1% | 10.3% | 8.9% | 8.7% | 9.0% | 0.3% |
| CAPEX, % of revenue | 0.4% | 0.4% | 0.2% | 0.2% | 0.3% | 0.1% |
|
|---|
| ROIC | 26.8% | 37.3% | 33.7% | 29.9% | 23.5% | -6.4% |
| ROE | 62.9% | 81.3% | 56.5% | 40.4% | 32.8% | -7.6% |
| Net Debt/EBITDA | 0.5x | -0.3x | -0.4x | -0.7x | -1.1x | -0.4x |
| Interest expence / Average debt | | | | | 0.4% | |
People
|
|---|
| Insider ownership | | | | | 23.4% | |
| Employees | | | | | 186 | |
| Revenue/Employee, th. £ | | | | | 571 | |
Peers in Leisure Goods
Below we provide Character Group benchmarking against other companies in Leisure Goods industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Lightwaverf ($LWRF) | 188.5% | -30.9% | -31.3% | 110.1% | |
| Lg Electronics Inc ($39IB) | 1.5% | -4.3% | -2.0% | 10.9% | |
| Tandem Group ($TND) | 10.5% | 9.8% | 11.7% | -4.1% | |
| Konami Corp ($KNM) | | 0.3% | 14.6% | -8.0% | 4.2% |
| Vmoto Ltd ($VMT) | 70.6% | 10.9% | -63.7% | -12.7% | |
| |
|---|
| Median (6 companies) | 40.5% | 5.0% | -3.1% | -6.1% | -10.3% |
|---|
| Character Group ($CCT) | | 1.2% | 22.1% | -4.7% | -7.9% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Konami Corp ($KNM) | 31.3% | 32.8% | 35.0% | 38.6% | 40.6% |
| Hornby ($HRN) | 45.2% | 46.7% | 39.0% | 38.3% | 38.6% |
| Lightwaverf ($LWRF) | 33.9% | | 32.5% | 35.5% | |
| Tandem Group ($TND) | 30.5% | 29.4% | 26.0% | 29.6% | |
| Lg Electronics Inc ($39IB) | 23.3% | 22.8% | 24.8% | 23.9% | |
| |
|---|
| Median (6 companies) | 30.9% | 29.4% | 29.3% | 32.5% | 39.6% |
|---|
| Character Group ($CCT) | 29.8% | 37.0% | 31.6% | 32.6% | 34.2% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Konami Corp ($KNM) | 13.3% | 16.5% | 21.5% | 22.9% | 24.1% |
| Tandem Group ($TND) | 5.3% | 4.7% | 4.2% | 7.0% | |
| Lg Electronics Inc ($39IB) | 6.4% | 5.5% | 5.6% | 6.9% | |
| Hornby ($HRN) | 1.8% | 7.4% | -17.3% | -11.9% | -16.4% |
| Lightwaverf ($LWRF) | -7.5% | | -43.8% | -15.2% | |
| |
|---|
| Median (6 companies) | 3.6% | 7.4% | -6.6% | -2.5% | 3.9% |
|---|
| Character Group ($CCT) | 10.0% | 14.1% | 13.1% | 13.9% | 12.8% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Konami Corp ($KNM) | 21.7% | 11.8% | 7.6% | 6.5% | 7.4% |
| Lg Electronics Inc ($39IB) | 3.7% | 3.1% | 3.6% | 4.2% | |
| Vmoto Ltd ($VMT) | 2.6% | 1.8% | 3.0% | 3.9% | |
| Hornby ($HRN) | 7.9% | 7.0% | 5.8% | 3.7% | 4.6% |
| Lightwaverf ($LWRF) | 2.0% | | 0.3% | 0.9% | |
| |
|---|
| Median (6 companies) | 3.1% | 3.1% | 3.3% | 3.8% | 6.0% |
|---|
| Character Group ($CCT) | 0.4% | 0.4% | 0.2% | 0.2% | 0.3% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Tandem Group ($TND) | 37.6% | 16.6% | 13.2% | 24.9% | |
| Konami Corp ($KNM) | 3.2% | 6.6% | 10.4% | 15.0% | 17.5% |
| Lg Electronics Inc ($39IB) | 8.9% | 5.8% | 6.5% | 11.3% | |
| Hornby ($HRN) | -7.7% | 0.5% | -36.6% | -28.0% | -32.5% |
| Vmoto Ltd ($VMT) | 1.4% | 24.2% | -34.5% | -33.0% | |
| |
|---|
| Median (6 companies) | 2.3% | 6.6% | -14.0% | -8.3% | -7.5% |
|---|
| Character Group ($CCT) | 26.8% | 37.3% | 33.7% | 29.9% | 23.5% |
Top companies by Net Debt / EBITDA
| Top | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Lg Electronics Inc ($39IB) | 1.8x | 2.0x | 1.8x | 1.4x | |
| Tandem Group ($TND) | -1.1x | 3.5x | 0.6x | -0.9x | |
| Konami Corp ($KNM) | -0.2x | -0.6x | -1.4x | -2.0x | -2.2x |
| |
|---|
| Median (3 companies) | 1.0x | 1.7x | 0.6x | -0.9x | -2.2x |
|---|
| Character Group ($CCT) | 0.5x | -0.3x | -0.4x | -0.7x | -1.1x |
