Interim Results

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) =========== =========== =========== =========== ========== This information is provided by RNS The company news service from the London Stock Exchange

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