Games Workshop Group PLC
27 January 2004
INTERIM RESULTS
Games Workshop Group PLC ('Games Workshop' or the 'Group') announces its interim
results for the six months to 30 November 2003.
Key points:
* Turnover up £13.9m to £72.0m
* Operating profit up £0.8m to £7.4m
* 25 new Hobby stores opened - 19 in the Americas, bringing the total to 303
* Interim dividend up 0.225p to 4.725p
Tom Kirby, Chairman and Chief Executive of Games Workshop, said: 'I am pleased
to report on another period of growth in sales and profits from Games Workshop.
The consistent evidence of the strength and health of the Games Workshop Hobby
in all of our geographical areas shows through our results.
'In July we reported on the strong growth which our UK business had experienced
during the final quarter of last financial year. This growth has carried through
into the first half of the current year. Our progress has been satisfactory in
Continental Europe where we continue to see growth in all of our sales
businesses. We have continued to pursue our strategy of investment in the
Americas, where we believe the growth opportunities to be exciting.'
For further information, please contact:
Games Workshop Group PLC Today only: 01756 770 376
Tom Kirby, Chairman and Chief Executive Thereafter: 0115 916 8100
Michael Sherwin, Finance Director
Julia Woodall, PR Manager 0115 916 8026
Investor relations website http://investor.games-workshop.com
General website http://www.games-workshop.com
Rawlings Financial PR Limited Tel: 01756 770 376
Catriona Valentine
FIRST HALF HIGHLIGHTS
Six months to Six months to
30 November 1 December
2003 2002
Turnover £72.0m £58.1m
Operating profit £7.4m £6.6m
Profit before tax £7.3m £6.6m
Basic earnings per share 14.8p 14.0p
Interim dividend per share 4.725p 4.500p
CHAIRMAN'S STATEMENT
Overview
I am pleased to report on another period of growth in sales and profits from
Games Workshop. The consistent evidence of the strength and health of the Games
Workshop Hobby in all of our geographical areas shows through our results.
We have continued to add depth and excitement to the world of Warhammer 40,000
with the Eye of Terror campaign which ran across all of our territories during
the summer, and our Warhammer fans are eagerly awaiting the launch of our new
Brettonian army. Our third game based upon The Lord of the Rings trilogy was
also launched in November. Armed with these and many other great products, our
sales teams around the world have continued to develop their markets and to
build the Games Workshop Hobby in each territory.
Results
In July we reported on the strong growth which our UK business had experienced
during the final quarter of last financial year. This growth has carried through
into the first half of the current year.
Our progress has been satisfactory in Continental Europe where we continue to
see growth in all of our sales businesses.
We have continued to pursue our strategy of investment in the Americas, where we
believe the growth opportunities to be exciting. During the last six months in
the Americas we have:
* Opened 19 new Games Workshop Hobby stores (total now 73)
* Restructured our sales infrastructure on a regional basis, with sales
offices established in Los Angeles, Chicago, Baltimore and Memphis
* Established a new warehousing and distribution centre in Memphis
We believe that these investments will provide a strong base from which we can
develop and grow the Games Workshop Hobby in the Americas.
The 19 new Hobby stores in the Americas, out of a total of 25 new stores around
the world, takes our overall total to 303 stores dedicated solely to the
development of the Games Workshop Hobby. During the six months to 30 November
2003 these stores made up 42% of total sales (sales to independent retailers
51%, direct sales 7%).
During the period sterling has strengthened against the dollar by 6% and
weakened against the euro by 5%. We have shown below our sales progression by
territory in constant currency terms so that readers can better appreciate the
underlying trends.
Dividend
We have increased our interim dividend in line with our profit growth, to 4.725
pence per share. This will be paid on 23 April 2004 to shareholders on the
register at 26 March 2004.
Dividend re-investment plan
In 2002 we offered for the first time to our shareholders the opportunity to
re-invest their dividends in shares in the Company. We intend to continue to
operate this plan in the future.
Prospects
The directors firmly believe the prospects for the business are very good.
T H F Kirby
Chairman and Chief Executive
27 January 2004
TURNOVER BY GEOGRAPHICAL AREA OF SALES OPERATION IN
LOCAL CURRENCY
Six months to Six months to
30 November 2003 1 December 2002
Continental Europe €41.0m €35.4m
United Kingdom £22.4m £16.4m
The Americas US$28.6m US$24.7m
Asia Pacific Aus$9.8m Aus$9.3m
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Restated
Six months to Six months to Year to
30 November 1 December 1 June
2003 2002 2003
Notes £000 £000 £000
Turnover 2 71,977 58,102 129,109
Cost of sales (24,248) (19,075) (42,592)
---------- ---------- ----------
Gross profit 47,729 39,027 86,517
Net operating expenses (40,343) (32,429) (69,056)
---------- ---------- ----------
Operating profit 2 7,386 6,598 17,461
Interest receivable 52 69 265
Interest payable and
similar charges (160) (113) (274)
---------- ---------- ----------
Profit on ordinary activities
before taxation 7,278 6,554 17,452
Taxation on profit on
ordinary activities 3 (2,814) (2,389) (6,470)
---------- ---------- ----------
Profit on ordinary
activities after taxation 4,464 4,165 10,982
Equity minority interests - - -
---------- ---------- ----------
Profit for the period 4,464 4,165 8,588
Dividends 4 (1,473) (1,334) (5,086)
---------- ---------- ----------
Profit retained for the period 2,991 2,831 5,896
========== ========== ======
Basic earnings per ordinary
share 5 14.8p 14.0p 37.0p
Diluted earnings per ordinary
share 5 14.6p 13.7p 36.3p
Dividend per ordinary share 4 4.725p 4.500p 17.000p
All items dealt with in arriving at the profit on ordinary activities before
taxation relate to continuing activities.
The numbers for the previous half year have been restated for a reclassification
of direct sales despatch costs from overheads to cost of sales, to be consistent
with the full year reported figures.
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
Six months to Six months to Year to
30 November 1 December 1 June
2003 2002 2003
£000 £000 £000
Profit for the period 4,464 4,165 10,982
Currency translation differences on
foreign currency net investments (514) (503) 95
---------- ---------- ----------
Total recognised gains and losses
relating to the period 3,950 3,662 11,077
========== ========== ==========
CONSOLIDATED BALANCE SHEET
As at As at As at
30 November 1 December 1 June
2003 2002 2003
Notes £000 £000 £000
Fixed assets
Goodwill 2,961 3,419 3,190
Tangible assets 20,534 16,995 17,623
Investments - 61 -
---------- ---------- ----------
23,495 20,475 20,813
---------- ---------- ----------
Current assets
Stocks 14,442 11,114 12,496
Debtors 20,654 16,688 13,212
Cash at bank and in hand 8,408 4,004 11,728
---------- ---------- ----------
43,504 31,806 37,436
Creditors: amounts falling due
within one year (24,224) (23,207) (28,335)
---------- ---------- ----------
Net current assets 19,280 8,599 9,101
---------- ---------- ----------
Total assets less current
liabilities 42,775 29,074 29,914
Creditors: amounts falling due
after more than one year (10,215) (3,000) (16)
Provisions for liabilities and
charges (708) (1,946) (1,725)
---------- ---------- ----------
Net assets 31,852 24,128 28,173
========== ========== ==========
Capital and reserves
Called up share capital 7 1,537 1,495 1,503
Capital redemption reserve 7 101 101 101
Share premium 7 4,792 445 1,267
Profit and loss account 7 25,421 22,086 25,301
---------- ---------- ----------
Equity shareholders' funds 6 31,851 24,127 28,172
Equity minority interests 7 1 1 1
---------- ---------- ----------
Total capital employed - all equity 31,852 24,128 28,173
========== ========== ==========
CONSOLIDATED CASH FLOW STATEMENT
Six months to Six months to Year to
30 November 1 December 1 June
2003 2002 2003
Notes £000 £000 £000
Net cash (outflow)/inflow
from operating activities (2,247) 3,339 23,180
---------- ---------- ----------
Returns on investments and
servicing of finance
Interest received 56 68 260
Interest paid (137) (90) (269)
Interest element of finance
lease rentals/hire purchase
contracts (1) (4) -
---------- ---------- ----------
Net cash outflow from
returns on investments and
servicing of finance (82) (26) (9)
---------- ---------- ----------
Taxation paid (4,230) (1,511) (5,873)
---------- ---------- ----------
Capital expenditure and
financial investment
Purchase of tangible fixed
assets (6,022) (4,363) (8,202)
Sale of tangible fixed
assets 76 2 22
---------- ---------- ----------
Net cash outflow from
capital expenditure
and financial investment (5,946) (4,361) (8,180)
---------- ---------- ----------
Equity dividends paid (3,778) (2,623) (3,958)
---------- ---------- ----------
Net cash (outflow)/inflow
before financing (16,283) (5,182) 5,160
---------- ---------- ----------
Financing
Issue of ordinary share
capital 1,202 16 399
Capital element of finance
lease rental payments/hire
purchase contracts (7) (20) (20)
Draw-down/(repayment) of
medium-term revolving credit
facility 10,000 500 (2,500)
Own shares purchased/
cancelled - (442) (443)
---------- ---------- ----------
Net cash inflow/(outflow)
from 11,195 54 (2,564)
financing
---------- ---------- ----------
(Decrease)/increase in cash
in the period 8 (5,088) (5,128) 2,596
====== ====== ======
Reconciliation of operating profit to operating cash flow
Six months to Six months to Year to
30 November 1 December 1 June
2003 2002 2003
£000 £000 £000
Operating profit 7,386 6,598 17,461
(Profit)/loss on disposal of
tangible fixed assets (42) 38 130
Depreciation of tangible fixed
assets 2,864 2,282 5,709
Amortisation of goodwill 229 228 457
Amortisation of own shares - 60 121
Exchange movements (316) (313) 135
Increase in stocks (1,945) (1,854) (3,236)
Increase in debtors (8,200) (6,552) (2,414)
(Decrease)/increase in creditors (1,206) 2,912 5,098
Decrease in provisions (1,017) (60) (281)
---------- ---------- ----------
Net cash (outflow)/inflow from
operating activities (2,247) 3,339 23,180
========== ========== ==========
NOTES TO THE INTERIM RESULTS
1. Interim results
The interim results have been prepared on the basis of the accounting policies
set out in the Group's statutory financial statements for the year ended 1 June
2003.
Copies of the interim results will be sent to shareholders and are available to
members of the public at the Company's registered office.
The information presented in respect of the year to 1 June 2003 does not reflect
the full financial statements within the meaning of section 240 of the Companies
Act 1985. Full financial statements for that year, incorporating an unqualified
audit report, have been delivered to the Registrar of Companies. The interim
results for 2002 and 2003 are unaudited and have not been subject to a review by
the Group's auditors.
2. Geographical analysis
Turnover by geographical area of sales operation
Six months to Six months to Year to
30 November 1 December 1 June
2003 2002 2003
£000 £000 £000
Continental Europe 28,518 22,468 50,030
United Kingdom 22,291 16,441 39,353
The Americas 17,138 15,907 32,218
Asia Pacific 4,030 3,286 7,508
---------- ---------- ----------
Turnover 71,977 58,102 129,109
========== ========== ======
Operating profit by geographical area of sales operation
Six months to Six months to Year to
30 November 1 December 1 June
2003 2002 2003
£000 £000 £000
Continental Europe 8,839 6,149 13,550
United Kingdom 5,011 3,163 11,343
The Americas (438) 1,425 2,430
Asia Pacific (36) 762 1,098
---------- ---------- ----------
13,376 11,499 28,421
Design and development costs (1,936) (1,689) (3,725)
New business development costs (1,369) (1,195) (2,531)
Central costs (2,760) (2,178) (4,901)
---------- ---------- ----------
Operating profit before royalties 7,311 6,437 17,264
Royalty income 75 161 197
---------- ---------- ----------
Operating profit 7,386 6,598 17,461
========== ========== ==========
3. Taxation on profit on ordinary activities
Six months to Six months to Year to
30 November 1 December 1 June
2003 2002 2003
£000 £000 £000
UK corporation tax 1,251 1,711 5,204
Overseas taxation 695 646 1,844
Origination and reversal of timing
differences 868 32 (578)
---------- ---------- ----------
2,814 2,389 6,470
========== ========== ==========
4. Dividends
Six months to Six months to Year to
30 November 1 December 1 June
2003 2002 2003
£000 £000 £000
Interim ordinary dividend 1,454 1,334 1,335
Final ordinary dividend - - 3,759
Under/(over) provision in respect
of prior years 19 - (8)
---------- ---------- ----------
1,473 1,334 5,086
========== ========== ==========
5. Earnings per ordinary share
The calculation of basic earnings per ordinary share is based on the profit for
the period and the weighted average number of ordinary shares in issue
throughout the relevant period.
The calculation of diluted earnings per ordinary share has been based on the
profit for the period and the weighted average number of shares in issue during
the relevant period, adjusted for the dilution effect of share options
outstanding at the end of the period.
Six months to Six months to Year to
30 November 1 December 1 June
2003 2002 2003
Weighted average number of
shares:
For basic earnings per
ordinary share 30,069,247 29,698,626 29,689,168
Dilution effect of share
options 571,011 686,880 600,302
----------- ----------- -----------
For diluted earnings per
ordinary share 30,640,258 30,385,506 30,289,470
=========== =========== ===========
6. Reconciliation of movements in equity shareholders' funds
Six months to Six months to Year to
30 November 1 December 1 June
2003 2002 2003
£000 £000 £000
Profit for the period 4,464 4,165 10,982
Dividends (1,473) (1,334) (5,086)
---------- ---------- ----------
2,991 2,831 5,896
Issue of new share capital 1,202 16 399
Own shares purchased/cancelled - (442) (443)
Other recognised gains and losses (514) (503) 95
Opening equity shareholders' funds 28,172 22,225 22,225
---------- ---------- ----------
Closing equity shareholders' funds 31,851 24,127 28,172
========== ========== ==========
7. Capital, reserves and equity minority interests
Capital Equity Equity
Called up redemption Share Profit and shareholders' minority
share capital reserve premium loss account funds interests
£000 £000 £000 £000 £000 £000
As at 2 June 2003 1,503 101 1,267 25,301 28,172 1
Exchange adjustments - - - (514) (514) -
Profit retained for the period - - - 2,991 2,991 -
Share of minority loss for the
period - - - - - (360)
Provision against minority loss - - - - - 360
Issue of ordinary share capital 34 - 3,525 (2,357) 1,202 -
---------- ---------- ---------- ---------- ---------- ----------
As at 30 November 2003 1,537 101 4,792 25,421 31,851 1
========== ========== ========== ========== ========== ==========
8. Analysis of net funds/(debt)
As at Other As at
1 June non-cash Exchange 30 November
2003 Cash flow changes movement 2003
£000 £000 £000 £000 £000
Cash at bank and in hand 11,728 (3,320) - - 8,408
Overdrafts - (1,768) - - (1,768)
----------- ----------- ----------- ----------- -----------
11,728 (5,088) - - 6,640
Debt due after one year - (10,000) - - (10,000)
Finance leases - 7 (55) 2 (46)
----------- ----------- ----------- ----------- ----------
Net funds/(debt) 11,728 (15,081) (55) 2 (3,406)
=========== =========== =========== =========== ==========
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