Games Workshop Group PLC
25 January 2005
INTERIM RESULTS
Games Workshop Group PLC ('Games Workshop' or the 'Group') announces its interim
results for the six months to 28 November 2004.
Key points:
* Turnover ahead in constant currency (+£1m)
* Operating profit up £0.5m to £7.9m
* 9 new Hobby stores opened - bringing the total to 319
* Interim dividend up 0.225p to 4.95p
* EPS up 1.0p to 15.8p per share
Tom Kirby, Chairman and Chief Executive of Games Workshop, said: 'We're in
better shape now to benefit from our future growth than we have been for years.'
FOR FURTHER INFORMATION, PLEASE CONTACT:
GAMES WORKSHOP GROUP PLC
Tom Kirby, Chairman and Chief Executive Today only: 01756 770 376
Michael Sherwin, Finance Director Thereafter: 0115 900 4001
Wade Pryce, Assistant PR Manager 0115 900 4010
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
28 November 30 November
2004 2003
Turnover £71.0m £72.0m
Operating profit £7.9m £7.4m
Profit before tax £7.7m £7.3m
Basic earnings per share 15.8p 14.8p
Interim dividend per share 4.950p 4.725p
CHAIRMAN'S STATEMENT
Results
In the first half of this financial year several chickens have come home to
roost for Games Workshop, some welcome, some not so welcome.
The net impact is that we have continued to grow our profits and earnings per
share in spite of a sales performance which was not what we have been used to
over recent years.
In our UK business there has been, as predicted, a slowdown in sales growth. For
some time we have been enjoying a period of very strong growth in this market,
and we have described this as a ' bubble effect, which may not be sustainable in
the future'*. Well, sure enough, the bubble has begun to deflate and our UK
sales business has seen a small decline in sales during the first half of this
year. We had predicted and planned for this; nevertheless fighting against a
background of very strong prior year sales has required a lot of hard work of
our UK management team.
Our American business has been investing in new stores and in our new Memphis
factory for the last two years. Meanwhile, the small independent retailers, whom
we have been relying on to get products to our Hobbyists in the Americas, have
been struggling. In the first half of this year we have begun to see some early
evidence that our strategy of focusing our Hobby development efforts around our
own stores in key metropolitan areas is beginning to bear fruit. The evidence
can be seen in Games Workshop's improving profitability in the Americas.
Continental Europe continues to enjoy healthy growth. We are investing in new
stores to develop our opportunities here. Germany, France and Italy continue to
perform well while Spain is still catching its breath after several years of
very strong growth.
In Asia Pacific, we refocused our activities back onto Australia and New Zealand
last year. The effects of this have been very positive as demonstrated by the
turnaround in profits we have seen.
We opened nine new stores in the period, taking our total to 319.
Compared to November 2003, sterling has strengthened against both the dollar
(+9%) and the euro (+2%). We have shown below our sales progression in constant
currency terms so that readers can better understand the underlying trends.
I would encourage shareholders to take heart, because none of these events
surprised our management team; our profitability and cash flow remain robust and
the health of the Games Workshop Hobby is as strong as ever.
*Extract from Games Workshop Group PLC annual report 2003 (page 6).
Dividend
We have increased our interim dividend in line with our profit growth, to 4.95
pence per share. This will be paid on 22 April 2005 to shareholders on the
register at 29 March 2005.
Prospects
The directors firmly believe the prospects for the business remain very good.
T H F Kirby
Chairman and Chief Executive
25 January 2005
TURNOVER BY GEOGRAPHICAL AREA OF SALES OPERATION IN
LOCAL CURRENCY
Six months to Six months to
28 November 30 November
2004 2003
Continental Europe €45.4m €41.0m
United Kingdom £21.0m £22.3m
The Americas US$27.1m US$28.6m
Asia Pacific Aus$10.5m Aus$9.8m
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Six months to Six months to Year to
28 November 30 November 30 May
2004 2003 2004
Notes £000 £000 £000
Turnover 2 70,972 71,977 151,775
Cost of sales (20,871) (24,248) (50,099)
---------- ---------- ----------
Gross profit 50,101 47,729 101,676
Net operating expenses (42,237) (40,343) (81,821)
---------- ---------- ----------
Operating profit 2 7,864 7,386 19,855
Interest receivable 71 52 145
Interest payable and
similar charges (266) (160) (427)
---------- ---------- ----------
Profit on ordinary
activities before taxation 7,669 7,278 19,573
Taxation on profit on
ordinary activities 3 (2,837) (2,814) (7,245)
---------- ---------- ----------
Profit on ordinary
activities after taxation 4,832 4,464 12,328
Equity minority interests - - 1
---------- ---------- ----------
Profit for the period 4,832 4,464 12,329
Dividends 4 (1,528) (1,473) (5,749)
---------- ---------- ----------
Profit retained for the period 3,304 2,991 6,580
========== ========== ==========
Basic earnings per ordinary
share 5 15.8p 14.8p 40.8p
Diluted earnings per
ordinary share 5 15.5p 14.6p 40.1p
Dividend per ordinary share 4 4.950p 4.725p 18.750p
All items dealt with in arriving at the profit on ordinary activities before
taxation relate to continuing activities.
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
Six months to Six months to Year to
28 November 30 November 30 May
2004 2003 2004
£000 £000 £000
Profit for the period 4,832 4,464 12,329
Currency translation differences on
foreign currency net investments 465 (514) (2,012)
Other recognised gains and losses 215 - -
---------- ---------- ----------
Total recognised gains and losses
relating to the period 5,512 3,950 10,317
========== ========== ==========
CONSOLIDATED BALANCE SHEET
As at As at As at
28 November 30 November 30 May
2004 2003 2004
Notes £000 £000 £000
Fixed assets
Goodwill 2,245 2,961 2,463
Tangible assets 28,131 20,534 25,627
---------- ---------- ----------
30,376 23,495 28,090
---------- ---------- ----------
Current assets
Stocks 14,965 14,442 12,102
Debtors 18,985 20,654 13,612
Cash at bank and in hand 8,799 8,408 8,570
---------- ---------- ----------
42,749 43,504 34,284
Creditors: amounts falling due
within one year (24,460) (24,224) (26,558)
---------- ---------- ----------
Net current assets 18,289 19,280 7,726
---------- ---------- ----------
Total assets less current
liabilities 48,665 42,775 35,816
Creditors: amounts falling due
after more than one year (9,532) (10,215) (788)
Provisions for liabilities and
charges (458) (708) (924)
---------- ---------- ----------
Net assets 38,675 31,852 34,104
========== ========== ==========
Capital and reserves
Called up share capital 7 1,550 1,537 1,542
Capital redemption reserve 7 101 101 101
Share premium 7 6,272 4,792 5,251
Profit and loss account 7 30,752 25,421 27,210
---------- ---------- ----------
Equity shareholders' funds 6 38,675 31,851 34,104
Equity minority interests 7 - 1 -
---------- ---------- ----------
Total capital employed - all
equity 38,675 31,852 34,104
========== ========== ==========
CONSOLIDATED CASH FLOW STATEMENT
Six months to Six months to Year to
28 November 30 November 30 May
2004 2003 2004
Notes £000 £000 £000
Net cash inflow/(outflow)
from operating activities 3,665 (1,931) 23,490
---------- ---------- ----------
Returns on investments and
servicing of finance
Interest received 70 56 147
Interest paid (205) (137) (408)
Interest paid on finance
leases and hire purchase
contracts (7) (1) (9)
---------- ---------- ----------
Net cash outflow from
returns on investments and
servicing of finance (142) (82) (270)
---------- ---------- ----------
Taxation paid (2,884) (4,230) (8,178)
---------- ---------- ----------
Capital expenditure and
financial investment
Purchase of tangible fixed
assets (5,865) (6,022) (13,968)
Sale of tangible fixed assets 3 76 117
---------- ---------- ----------
Net cash outflow from
capital expenditure
and financial investment (5,862) (5,946) (13,851)
---------- ---------- ----------
Equity dividends paid (4,295) (3,778) (5,218)
---------- ---------- ----------
Net cash outflow before
financing (9,518) (15,967) (4,027)
---------- ---------- ----------
Financing
Issue of ordinary share
capital 587 1,202 1,363
Repayment of principal
under finance leases/hire
purchase contracts (81) (7) (124)
Draw-down of medium-term
revolving credit facility 9,000 10,000 -
---------- ---------- ----------
Net cash inflow from financing 9,506 11,195 1,239
---------- ---------- ----------
Decrease in cash in the period 8 (12) (4,772) (2,788)
========== ========== ==========
Reconciliation of operating profit to operating cash flow
Six months to Six months to Year to
28 November 30 November 30 May
2004 2003 2004
£000 £000 £000
Operating profit 7,864 7,386 19,855
Loss/(profit) on disposal of
tangible fixed assets 33 (42) (35)
Depreciation of tangible fixed
assets 3,483 2,864 6,080
Amortisation of goodwill 192 229 366
(Increase)/decrease in stocks (2,879) (1,945) 263
Increase in debtors (4,837) (8,200) (1,754)
Increase/(decrease) in creditors 60 (1,206) (484)
Decrease in provisions (251) (1,017) (801)
---------- ---------- ----------
Net cash inflow/(outflow) from
operating activities 3,665 (1,931) 23,490
========== ========== ==========
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 30 May
2004 with the exception of the provision for the long-term incentive plan which
has been reclassified in accordance with UITF38. The impact of this is not
material.
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 30 May 2004 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 2003 and 2004 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
28 November 30 November 30 May
2004 2003 2004
£000 £000 £000
Continental Europe 30,918 28,518 61,290
United Kingdom 21,006 22,291 48,241
The Americas 14,853 17,138 33,110
Asia Pacific 4,195 4,030 9,134
---------- ---------- ----------
Turnover 70,972 71,977 151,775
========== ========== ==========
Operating profit by geographical area of sales operation
Restated
Six months to Six months to Year to
28 November 30 November 30 May
2004 2003 2004
£000 £000 £000
Continental Europe 8,717 9,119 19,948
United Kingdom 4,188 5,144 11,370
The Americas 110 (614) (829)
Asia Pacific 433 (274) 756
---------- ---------- ----------
13,448 13,375 31,245
Design and development costs (2,668) (3,304) (6,634)
Central costs (3,072) (2,760) (4,942)
---------- ---------- ----------
Operating profit before royalties 7,708 7,311 19,669
Royalty income 156 75 186
---------- ---------- ----------
Operating profit 7,864 7,386 19,855
========== ========== ==========
The prior period allocation of operating profit by geographical area has been
restated to better reflect the allocation of the manufacturing costs between the
UK and US based production activities.
3. Taxation on profit on ordinary activities
Six months to Six months to Year to
28 November 30 November 30 May
2004 2003 2004
£000 £000 £000
UK corporation tax 1,967 1,251 4,410
Overseas taxation 1,104 695 2,193
Origination and reversal of timing
differences (234) 868 642
---------- ---------- ----------
2,837 2,814 7,245
========== ========== ==========
4. Dividends
Six months to Six months to Year to
28 November 30 November 30 May
2004 2003 2004
£000 £000 £000
Interim ordinary dividend 1,522 1,454 1,444
Final ordinary dividend - - 4,290
Under provision in respect of prior
years 6 19 15
---------- ---------- ----------
1,528 1,473 5,749
========== ========== ==========
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
28 November 30 November 30 May
2004 2003 2004
Weighted average number of shares:
For basic earnings per
ordinary share 30,620,058 30,069,247 30,223,087
Dilution effect of share
options 467,107 571,011 495,036
----------- ----------- -----------
For diluted earnings per
ordinary share 31,087,165 30,640,258 30,718,123
=========== =========== ===========
6. Reconciliation of movements in equity shareholders' funds
Six months to Six months to Year to
28 November 30 November 30 May
2004 2003 2004
£000 £000 £000
Profit for the period 4,832 4,464 12,329
Dividends (1,528) (1,473) (5,749)
---------- ---------- ----------
3,304 2,991 6,580
Issue of new share capital 587 1,202 1,364
Other recognised gains and losses 680 (514) (2,012)
Opening equity shareholders' funds 34,104 28,172 28,172
---------- ---------- ----------
Closing equity shareholders' funds 38,675 31,851 34,104
========== ========== ==========
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 1 June 2004 1,542 101 5,251 27,210 34,104 -
Exchange adjustments - - - 465 465 -
Profit retained for the period - - - 3,304 3,304 -
Share of minority loss for the period - - - - - (147)
Provision against minority loss - - - - - 147
Other recognised gains and losses - - - 215 215 -
Issue of ordinary share capital 8 - 1,021 (442) 587 -
---------- ---------- ---------- ---------- ---------- ----------
As at 28 November 2004 1,550 101 6,272 30,752 38,675 -
========== ========== ========== ========== ========== ==========
8. Analysis of net funds/(debt)
As at Other non- As at
30 May cash Exchange 28 November
2004 Cash flow changes movement 2004
£000 £000 £000 £000 £000
Cash at bank and in hand 8,570 (12) - 241 8,799
Debt due after one year - (9,000) - - (9,000)
Finance leases (364) 81 (10) 1 (292)
---------- ---------- ---------- ----------- ----------
Net funds/(debt) 8,206 (8,931) (10) 242 (493)
========== ========== ========== =========== ==========
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