Interim Results
Games Workshop Group PLC
30 January 2001
INTERIM RESULTS &
LORD OF THE RINGS WARGAMING LICENCE AGREEMENT
Games Workshop Group PLC ('Games Workshop' or the 'Group') announces its
interim results for the six months ended 26 November 2000.
Key points:
* Turnover up 9% to £42.7 million
* Operating profit up 9% to £4.2 million
* Sales in the Americas up 23% - now largest single market
* Ten new stores opened - all outside the UK
* Restructuring programme on track and on budget to deliver:
- more effective control of logistics and support functions
- sales businesses firmly focused on marketing the Hobby
* Exclusive worldwide wargaming licence secured for Lord of the Rings films
Tom Kirby, Chairman and Chief Executive of Games Workshop, said: 'I am
delighted to report a further period of growth with our sales in the key
American market now outgrowing the UK. Our continuing success in the Americas
with their huge potential customer base demonstrates the sustainability of our
sales growth into the future.
'In addition, we have signed a worldwide exclusive agreement with New Line
Productions, Inc to design and market the definitive table top wargames based
on the forthcoming Lord of the Rings film trilogy. A complete range of games,
models and other associated hobby products will be created by our design
studio.
'With improving supply efficiencies, the refocusing of our UK business and the
ongoing success in the Americas, the directors firmly believe the prospects
for the business are very good.'
For further information, please contact:
http://www.games-workshop.com
Games Workshop Group PLC Today only: 07771 725 186
Tom Kirby, Chairman and Chief Executive Thereafter: 0115 916 8100
Michael Sherwin, Finance Director
Rawlings Financial PR Limited Tel: 01756 770 376
John Rawlings
Catriona Valentine
FIRST HALF HIGHLIGHTS
Six months to Six months to
26 November 28 November
2000 1999
Turnover £42.7m £39.1m +9%
Operating profit £4.2m £3.9m +9%
Pre-exceptional operating profit £4.9m £5.7m -14%
Profit before tax £4.1m £3.8m +8%
Basic earnings per share 8.0p 7.1p +13%
Pre-exceptional earnings per share 9.7p 11.5p -16%
Interim dividend per share 3.77p 3.77p
CHAIRMAN'S STATEMENT
Overview
I am delighted to report a further period of growth with our sales in the key
American market now outgrowing the UK. Our continuing success in the Americas
with their huge potential customer base demonstrates the sustainability of our
sales growth into the future.
The development of the Hobby is, and always has been, the engine for the
future success of the Company. I am confident that we are now working
positively to develop our existing market opportunities with a great armoury
of product and a unique army of people.
In addition, we have signed a worldwide exclusive agreement with New Line
Productions, Inc to design and market the definitive table top wargames based
on the forthcoming Lord of the Rings film trilogy. A complete range of games,
models and other associated hobby products will be created by our design
studio.
We are exploring new market opportunities such as online gaming through the
exciting Warhammer Online project.
I am also pleased to report that the important restructuring programme
introduced last year is well on course and within our estimates of cost. As a
result, our business is now beginning to operate more effectively with many of
the manufacturing and supply problems consigned to the past.
Results
As I indicated in August, the pre-exceptional operating profit for the first
six months of this year is below last year due to the difficult trading
conditions in the UK and our Continental European markets. I am pleased to
report, however, that the UK conditions began to ease in the second quarter.
The release of our new Warhammer Fantasy Battle game in October also helped
the Continental European businesses to regain ground. We enjoyed single digit
growth in our sales to independent retailers and through our own stores, but
our direct sales (through traditional mail order and the Internet) grew by
30%.
The weakening of sterling against the dollar flattered our results in the
Americas, however this was offset by the strengthening of sterling against the
Euro leaving a neutral net effect on our results. The constant currency sales
figures are set out in the table below to allow a like-for-like comparison to
be made.
Dividend
The interim dividend will be held at 3.77 pence per share. This will be paid
on 27 April 2001 to shareholders on the register at 30 March 2001.
Operations
Core activities
Our UK business focused its efforts, during the period under review, on hobby
development activities in our retail stores. This marketing activity includes
a renewed emphasis on strengthening the appeal of the Hobby to existing and
older gamers both through store events and links with gaming clubs. The
lessons learnt by the UK business are being used in our other markets,
spreading best practice through the international operational management
meetings.
Our American business grew significantly with the opening of three new stores
and strong sales to the independent retailers. We also opened five new stores
in Continental Europe and a further two in Australia.
Lord of the Rings
We are announcing today an exciting new initiative that sees Games Workshop
become the exclusive designer, manufacturer and retailer of table top wargames
based on the eagerly awaited Lord of the Rings film trilogy. We believe there
is great potential to create premium products that will not only appeal to
existing gamers everywhere but will also introduce wargaming to a new, broader
audience worldwide.
Restructuring
The restructuring programme to simplify our manufacturing and supply chain and
to refocus the sales operations on marketing the Hobby, continues in line with
our plans. The benefits of the programme were apparent during the period with
on-time supply from our factories showing a significant improvement on the
previous year.
Prospects
With improving supply efficiencies, the refocusing of our UK business and the
ongoing success in the Americas, the directors firmly believe the prospects
for the business are very good.
T H F Kirby
Chairman
30 January 2001
TURNOVER BY GEOGRAPHICAL AREA OF SALES OPERATION IN
LOCAL CURRENCY
United Kingdom £15.0m -2%
Continental Europe Euro15.9m +6%
The Americas US$23.0m +23%
Asia Pacific Aus$6.6m +2%
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Restated
Six months Six months Year
to to to
26 November 28 November 28 May
2000 1999 2000
Note £000 £000 £000
Turnover 2 42,748 39,145 77,993
Cost of sales 3 (14,761) (13,655) (27,261)
------ ------ ------
Gross profit 27,987 25,490 50,732
Net operating expenses 3 (23,807) (21,638) (44,069)
------ ------ ------
Operating profit 4,180 3,852 6,663
___________ ___________ ___________
Continuing operations -
pre-exceptional 3 4,884 5,712 10,037
Continuing operations -
exceptional items 3 (704) (1,860) (3,374)
___________ ___________ ___________
Interest receivable 140 52 390
Interest payable and similar
charges (232) (105) (508)
------ ------ ------
Profit on ordinary activities
before taxation 4,088 3,799 6,545
Taxation on profit on ordinary
activities 4 (1,574) (1,581) (2,983)
------ ------ ------
Profit for the period 2,514 2,218 3,562
Dividends 5 (1,179) (1,173) (3,100)
------ ------ ------
Profit retained for the period 1,335 1,045 462
====== ====== ======
Pre-exceptional earnings per
ordinary share 6 9.7p 11.5p 20.2p
Basic earnings per ordinary
share 6 8.0p 7.1p 11.4p
Diluted earnings per ordinary
share 6 8.0p 7.0p 11.2p
Dividend per ordinary share 5 3.77p 3.77p 9.9p
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 Six months Year
to to to
26 November 28 November 28 May
2000 1999 2000
£000 £000 £000
Profit for the period 2,514 2,218 3,562
Currency translation differences on
foreign currency net investments 365 (175) 448
------ ------ ------
Total recognised gains and losses
relating to the period 2,879 2,043 4,010
====== ====== ======
CONSOLIDATED BALANCE SHEET
As at As at As at
26 November 28 November 28 May
2000 1999 2000
Note £000 £000 £000
Fixed assets
Goodwill 1,838 1,943 1,891
Tangible assets 15,211 15,181 15,365
Own shares 122 122 122
------ ------ ------
17,171 17,246 17,378
------ ------ ------
Current assets
Stocks 10,743 10,583 9,022
Debtors 10,589 9,649 6,538
Cash at bank and in hand 4,519 3,599 5,865
------ ------ ------
25,851 23,831 21,425
------ ------ ------
Creditors: amounts falling due
within one year (15,046) (15,719) (12,491)
------ ------ ------
Net current assets 10,805 8,112 8,934
------ ------ ------
Total assets less current
liabilities 27,976 25,358 26,312
Creditors: amounts falling due
after more than one year (3,109) (3,182) (3,145)
Provisions for liabilities and
charges (500) - (500)
------ ------ ------
Net assets 24,367 22,176 22,667
====== ====== ======
Capital and reserves
Called up share capital 1,565 1,558 1,565
Other reserve (495) (939) (495)
Profit and loss account 23,297 21,557 21,597
------ ------ ------
Equity shareholders' funds 7 24,367 22,176 22,667
====== ====== ======
CONSOLIDATED CASH FLOW STATEMENT
Six months Six months Year
to to to
26 November 28 November 28 May
2000 1999 2000
Note £000 £000 £000
Net cash inflow from operating
activities 8 3,343 3,236 12,606
------ ------ ------
Returns on investments and
servicing of finance
Interest received 144 49 411
Interest paid (227) (78) (493)
Interest paid on hire purchase
contracts (4) (9) (17)
------ ------ ------
Net cash outflow from returns
on investments and servicing
of finance (87) (38) (99)
------ ------ ------
Taxation paid (368) (176) (4,621)
------ ------ ------
Capital expenditure and
financial investment
Purchase of tangible fixed
assets (1,850) (2,644) (4,822)
Sale of tangible fixed assets 18 21 54
Purchase of own shares - - (122)
------ ------ ------
Net cash outflow from capital
expenditure and financial
investment (1,832) (2,623) (4,890)
------ ------ ------
Equity dividends paid (1,920) (1,914) (3,094)
------ ------ ------
Net cash outflow before
financing (864) (1,515) (98)
------ ------ ------
Financing
Issue of ordinary share capital - 3 454
Repayment of principal under
hire purchase contracts (36) (36) (73)
------ ------ ------
Net cash (outflow)/inflow from
financing (36) (33) 381
------ ------ ------
(Decrease)/increase in cash in
the period 9 (900) (1,548) 283
====== ====== ======
NOTES TO THE INTERIM FINANCIAL STATEMENTS
1. Interim financial statements
The interim financial statements have been prepared on the basis of the
accounting policies set out in the Group's statutory financial statements for
the year ended 28 May 2000.
Copies of the interim financial statements will be sent to shareholders and
are available to members of the public at the Company's registered office.
The financial statements for the year to 28 May 2000 are not 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 financial
statements for 1999 and 2000 are unaudited.
2. Turnover by geographical area of sales operation
Six months Six months Year
to to to
26 November 28 November 28 May
2000 1999 2000
£000 £000 £000
United Kingdom 14,961 15,350 28,937
Continental Europe 9,627 9,685 18,963
The Americas 15,674 11,521 24,763
Asia Pacific 2,486 2,589 5,330
------ ------ ------
42,748 39,145 77,993
====== ====== ======
3. Cost of sales, gross profit and net operating expenses
Restated
Six months Six months Year
to to to
26 November 28 November 28 May
2000 1999 2000
£000 £000 £000
Cost of sales - continuing
pre-exceptional 14,334 12,980 26,061
Continuing exceptional items 427 675 1,200
------ ------ ------
Cost of sales 14,761 13,655 27,261
====== ====== ======
Net operating expenses - continuing
pre-exceptional 23,530 20,453 41,895
Continuing exceptional items 277 1,185 2,174
------ ------ ------
Net operating expenses 23,807 21,638 44,069
====== ====== ======
Operating profit - continuing
pre-exceptional 4,884 5,712 10,037
Continuing exceptional items (704) (1,860) (3,374)
------ ------ ------
Operating profit 4,180 3,852 6,663
====== ====== ======
Net operating expenses include royalty income of £45,000 (November 1999: £
98,000; May 2000: £170,000). The results for the six months to 28 November
1999 have been restated to show a consistent presentation of cost of sales and
net operating expenses with the full year accounts.
4. Taxation on profit on ordinary activities
Six months Six months Year
to to to
26 November 28 November 28 May
2000 1999 2000
£000 £000 £000
UK corporation tax 867 633 1,641
Overseas taxation 707 948 1,342
------ ------ ------
1,574 1,581 2,983
====== ====== ======
Taxation credits on exceptional items
included above:
Restructuring costs (200) (485) (644)
------ ------ ------
5. Dividends
Six months Six months Year
to to to
26 November 28 November 28 May
2000 1999 2000
£000 £000 £000
Interim ordinary dividend 1,179 1,173 1,180
Final ordinary dividend - - 1,920
------ ------ ------
1,179 1,173 3,100
====== ====== ======
6. Earnings per ordinary share
The calculation of pre-exceptional earnings per ordinary share has been based
on the profit for the period before the effect of the exceptional
restructuring costs. This calculation has been included to enable a like for
like comparison with other periods where no exceptional costs are charged.
The calculation of basic earnings per ordinary share is based on the profit
for the period and the weighted average number of ordinary shares. 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 effect of share options
outstanding at the end of the period.
Six months Six months Year
to to to
26 November 28 November 28 May
2000 1999 2000
Weighted average number of shares:
For basic earnings per ordinary share 31,272,287 31,122,465 31,177,439
Share options outstanding 223,052 694,342 547,776
---------- ---------- ----------
For diluted earnings per ordinary
share 31,495,339 31,816,807 31,725,215
========== ========== ==========
7. Reconciliation of movements in shareholders' funds
Six months Six months Year
to to to
26 November 28 November 28 May
2000 1999 2000
£000 £000 £000
Profit for the period 2,514 2,218 3,562
Dividends (1,179) (1,173) (3,100)
------ ------ ------
1,335 1,045 462
Issue of new share capital - 3 454
Other recognised gains and losses 365 (175) 448
Opening shareholders' funds 22,667 21,303 21,303
------ ------ ------
Closing shareholders' funds 24,367 22,176 22,667
====== ====== ======
8. Reconciliation of operating profit to operating cash flow
Six months Six months Year
to to to
26 November 28 November 28 May
2000 1999 2000
£000 £000 £000
Operating profit 4,180 3,852 6,663
(Profit)/loss on disposal of tangible
fixed assets (9) 18 42
Depreciation of tangible fixed assets 2,024 1,916 4,041
Amortisation of goodwill 53 52 105
Exchange movements 358 (144) 363
(Increase)/decrease in stocks (1,721) (1,322) 239
Increase in debtors (4,073) (3,075) (17)
Increase in creditors 2,531 1,939 670
Increase in provisions - - 500
------ ------ ------
Net cash inflow from operating
activities 3,343 3,236 12,606
====== ====== ======
The cash flow resulting from exceptional items amounts to £0.6m (November
1999: £nil; May 2000: £1.1m).
9. Analysis of net funds
As at As at
28 May 26 November
2000 Cash flow 2000
£000 £000 £000
Cash at bank and in hand 5,865 (1,346) 4,519
Bank overdrafts (446) 446 -
------ ------ ------
Net cash 5,419 (900) 4,519
Debt due after one year (3,000) - (3,000)
Hire purchase contracts (218) 36 (182)
------ ------ ------
Net funds 2,201 (864) 1,337
====== ====== ======
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