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Games Workshop Group (GAW)

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Tuesday 01 August, 2000

Games Workshop Group

Final Results

Games Workshop Group PLC
1 August 2000


                              PRELIMINARY RESULTS

Games  Workshop  Group  PLC ('Games Workshop' or the  'Group')  announces  its
preliminary results for the year ended 28 May 2000.

Key points:

*  Turnover at £78.0m (1999:  £72.6m) - up 7.5%

*  Pre-exceptional operating profit at £10.0m (1999:  £12.8m)

*  Pre-exceptional earnings per share of 20.2p (1999:  26.0p)

*  Dividend per share of 9.9p (1999:  9.7p) - up 2.1%

*  Sales in the Americas up 30% - now the largest contributor to profits

*  Internet sales double to £0.9m

*  Restructuring programme on track to deliver:
       -  more effective control of logistics and support functions
       -  sales businesses more focused on marketing the Hobby

*  Further strengthening of the senior management team

*  New Warhammer game system developed for autumn re-launch


Chairman,  Tom  Kirby, said:  'Sales of £78.0 million, up  7.5%,  demonstrates
further sustainable growth. Our businesses in the Americas, which represent  a
tremendous commercial opportunity for the Group, performed strongly  in  terms
of  both profit and cash generation. Our Group profits have been held back  by
our  decision,  previously announced, to address some of our long-term  growth
issues  by  restructuring our supply chain and by some local market issues  in
the  UK  and  Continental  Europe.  By our  own  standards  this  has  been  a
disappointing  year,  but we are resilient and are taking  radical  action  to
address the position.

'In  April 2000, we announced that although the Americas were buoyant, trading
conditions  remained  difficult  in both the UK  and  Continental  Europe.  In
particular, UK like for like growth was negative and the initiatives  underway
to  revitalise sales to independent retailers in the UK and Continental Europe
had  yet  to  deliver any improvement. The position in the UK and  Continental
Europe  has  not  yet  changed significantly in the  current  financial  year.
However,  the Americas and other global markets, continue to show evidence  of
further  sustainable growth. The supply chain improvements will begin to  bear
fruit as the volumes increase. This will take time, and whilst trading in  the
opening months is in line with our budget, the first half results are unlikely
to  match  the equivalent period last year.  We expect that the recovery  will
begin to emerge in the second half.'


For further information, please contact:
                                                                
Games Workshop Group PLC                                 Tel:    0115 916 8100
Chris Prentice, Chief Executive
Michael Sherwin, Finance Director
                                                                
Rawlings Financial PR Limited                            Tel:    01756 770 376
John Rawlings                                                   
Catriona Valentine                                              



FINANCIAL HIGHLIGHTS
                                        2000        1999
                                          £m          £m
                              
Turnover                                78.0        72.6
Pre-exceptional operating profit        10.0        12.8
Operating profit                         6.7        12.8
Pre-tax profit                           6.5        12.5
Pre-exceptional earnings per share      20.2p       26.0p
Earnings per share                      11.4p       26.0p
Dividend per share                       9.9p        9.7p



                              CHAIRMAN'S STATEMENT
                                       
Results

Sales of £78.0 million, up 7.5%, demonstrates further sustainable growth.  Our
businesses   in   the  Americas,  which  represent  a  tremendous   commercial
opportunity for the Group, performed strongly in terms of both profit and cash
generation.  Our Group profits have been held back by our decision, previously
announced, to address some of our long-term growth issues by restructuring our
supply chain and by some local market issues in the UK and Continental Europe.
By  our own standards this has been a disappointing year, but we are resilient
and are taking radical action to address the position.

Restructuring

At the half year, a programme was announced to restructure the business.  This
was  designed to simplify the supply chain and enable the sales operations  to
focus  on developing the Hobby in their markets.  It will take a further 12-18
months  to  complete.   I  am  able to report  that  significant  progress  in
actioning  this  plan  has  been made.  Already, we have  reorganised  our  UK
factories,  introduced multi-lingual packaging, brought down stocks,  improved
our order-fill rates and closed peripheral operations.  The executive team  is
driving  hard  to ensure that the plans and actions behind the  programme  are
delivered and the main elements of the programme are on track both in terms of
cost and timing.

Board and management

In  June 1999, the board was restructured and now comprises a majority of non-
executive  directors.  At the same time Michael Sherwin joined  the  board  as
finance  director  from Courtaulds Textiles plc where he was  group  financial
controller.   Senior  management is now organised into two  key  groups  -  an
executive  team  and  an operating team.  During the  year  a  number  of  key
appointments  have been filled by external candidates bringing  in  particular
specialist skills and expertise needed by the Group.  This is a vital part  of
the  programme  to  enable  the  executive  team  to  provide  more  effective
leadership and control.

Current trading and prospects

In  April 2000, we announced that although the Americas were buoyant,  trading
conditions  remained  difficult in both the UK  and  Continental  Europe.   In
particular, UK like for like growth was negative and the initiatives  underway
to  revitalise sales to independent retailers in the UK and Continental Europe
had  yet  to  deliver any improvement.  The position in the UK and Continental
Europe  has  not  yet  changed significantly in the  current  financial  year.
However,  the Americas and other global markets, continue to show evidence  of
further sustainable growth.  The supply chain improvements will begin to  bear
fruit as the volumes increase.  This will take time, and whilst trading in the
opening months is in line with our budget, the first half results are unlikely
to  match  the equivalent period last year.  We expect that the recovery  will
begin to emerge in the second half.

There  has  been some loose talk recently questioning the health of the  Games
Workshop  Hobby.   The  Hobby is in rude health and is  continuing  to  spread
profitably around the world.

T H F Kirby
Chairman


                                       
                           CHIEF EXECUTIVE'S REPORT

A transition period

The year under review has been a challenging one.

At  the  same time as we have been reorganising the business and strengthening
our  senior management, our UK sales fell substantially.  Considerable  effort
is  being  made  to  turn  this  around.  I am convinced  that  the  strategic
positioning of the Group is excellent, that we have a stronger senior team  in
place  and that we are working towards the structures which will enable us  to
fully exploit the many opportunities that we have created.

Sales development

The  intention  is  to build markets for Games Workshop in every  one  of  the
world's  major economies.  The UK is our most developed territory and  we  use
this  to judge just how far we have got to go in all the others.  Against this
measure  the US operation is currently operating at one fifth of its potential
and the German operation at one quarter.  Historically we have been developing
these  markets  by  replicating the structures we have in  place  in  the  UK.
During  the current year we intend to explore alternative business development
models which might allow us to accelerate the rate of profitable growth.

New media

We  have  been  exploring the ways in which we can extend the  appeal  of  our
imagery and generate revenue and profits in areas outside model soldiers.   We
intend  to do this by finding suitable experienced partners to complement  our
excellent intellectual property (content) and game design.  During the year we
announced  two  small deals - a multi-user dungeon (or MUD - an Internet  only
game  with a monthly user charge) that will go live before Christmas 2000  and
an  option  for  an animated for TV movie.  Signs are positive that  there  is
further  substantial  value  to  be  added  in  these  areas  through   equity
arrangements  and  we  expect to announce further deals as  the  current  year
progresses.  In exploring these possibilities, we are finding that there is no
shortage of high calibre potential partners who recognise the power and  depth
of  our intellectual property.  We are progressing carefully to ensure that we
choose the right relationships which will maximise our shareholder value.

Investing in people

Reflecting the fact that our management and staff are the key to our  success,
we  have  been investing in people in a number of ways.  In January  2000,  we
appointed  an  experienced human resources director, which has enabled  us  to
improve our recruitment procedures across the Group and will help us to have a
consistent  approach to succession planning and senior management development.
Our  first  intake of six management trainees began in November 1999  and  the
various  modules  designed for their use are also being used  to  improve  our
existing management teams.  We have also developed a procedures manual for our
sales to independent retailers which is supported by training modules.

Operational summary

We  now  have direct operations split in four geographic territories - the  UK
(servicing  the  UK,  Ireland, Northern and Eastern  Europe  and  Japan);  the
Americas  (USA, Canada and South America); Continental Europe (France,  Spain,
Germany and Italy) and Asia Pacific (Australia, New Zealand, Hong Kong and the
'tiger'  countries).  In April 2000 we closed the Hong Kong  head  office  and
consolidated   the  profitable  core  sales  business  into   the   Australian
operations.

Marketing the Games Workshop Hobby - an integrated approach

In  each  of  our direct operations there is a backbone of revenue  formed  by
sales  to  independent retailers (48% of total sales) augmented by a gradually
developing  chain  of  Games Workshop hobby centres ('own  stores';  43%)  and
supported by direct sales (9%).

Independent retailers

Overall our sales through independent retailers showed growth of 7% - up  from
2%  last  year.  The Americas continue to expand rapidly with sales growth  of
23%  in  the  year.  We also experienced great success in both the Danish  and
Swedish markets through our 'elite' store programme.  This takes many  of  the
aspects  which  make  Games  Workshop stores effective  and  applies  them  to
selected independent stores resulting in comparable sales performance and much
improved  profitability.   We  are  in  the  process  of  transferring   these
techniques  to our other markets and both the rest of Continental  Europe  and
the UK have yet to see the full benefits of these new initiatives.

Direct sales

Total  sales increased by 7% to £6.8 million.  The sales are primarily through
two channels - telesales and the Web.  We can now accept electronic orders  in
the UK, France, Australia and Germany adding to the US sales site that was the
only  one  in  operation at the start of the year.  Our telesales  teams  also
provide customer service helplines for rules enquiries.

Own stores

Total sales increased by 8% with a small overall like for like decline of  1%.
The  North  American chain however showed strong like for like growth  and  we
continued  our  opening programme with 11 further stores in  the  period.   17
other stores were opened with the majority of these in Continental Europe (8).
During  the  year  we have been working on our stores to become  the  activity
centres for local gaming communities.  Following a drop in UK sales levels, we
have  bolstered  our  management through external recruitment  and  removed  a
management tier to enable us to enact these changes more quickly.

The Internet

During the year our internet sales grew by 95% and are currently running at an
annual  rate of £1.2 million. However, the Internet is far more than simply  a
sales  channel for us.  Our sites are tailored to each of the markets in which
we  operate with customer information on the latest news, the stores  activity
programmes  (both Games Workshop and selected independent stores),  clubs  and
tournaments.  This allows us to direct customers to the stores for events that
are  likely to appeal to them.  Increasingly we will be seeking ways to better
integrate these channels using our web sites as the glue - turning the 'bricks
and  clicks' philosophy into a reality.  From our strong base of over  300,000
unique  monthly  visitors,  we intend to invest  further  in  this  area.   In
particular  we plan to place more emphasis on the 'community' aspects  of  our
site, to extend the reach of our site to better control the use of our imagery
on the Web, to develop pay areas and to create links to internet gaming.

Supply chain management

As  a  result  of the rapid growth seen over the past 10 years  we  identified
structural  weaknesses  in our supply chain.  This was  exhibiting  itself  in
increasing stock levels and low order-fill rates. Recognising this weakness, a
programme  of  reorganisation was launched in January 2000.   Senior  external
recruitment into our supply chain management has enabled rapid progress to  be
made.   In  June  2000 all our packaging became multi-lingual  -  a  key  step
towards  consolidation of our 9 distribution centres into regional  hubs.   In
the  Americas  we  have  taken this one step further and  have  negotiated  to
outsource  our  West Coast distribution - this took effect in  July  2000  and
improves our service whilst reducing costs.  By the year end, order-fill rates
had  risen  to above 95% with core stocks marginally lower than the same  time
last year.  We remain confident that the programmes underway will improve both
these key indicators and lower our operating costs significantly.

In  addition  we will be re-launching our best-selling Warhammer  game  system
with  a  completely revised range of products in autumn 2000.   This  revision
will  improve  the quality of the whole range whilst simplifying manufacturing
processes,   increasing  supply  flexibility  and  reducing  our  stockholding
commitments.

The Americas (+26% in constant currency, +30% in sterling)

This  is both the market with the most potential and also the one which, I  am
pleased to report, grew most rapidly in the year.  Sales in all channels  were
strong  with  the  double  digit like for like  growth  in  the  retail  chain
demonstrating  that we still have some way to go before they  are  trading  to
their  full potential.  The web sales continue to underpin their direct  sales
and increasingly to support their own stores by allowing them to sell the full
range  of miniatures without the need to carry full inventories.  The Americas
are  leading the way in exploring new ways of enhancing our marketing formula.
We  are committed to allocating the resources necessary to allow this exciting
business  to  grow to its full potential, which we see as a  multiple  of  the
current size of the operation.

UK (-1%)

The  first half of the year saw good like for like growth in the retail  chain
with only a small decline in our sales to the independent retailers.  For some
time  now  we believe that an element of our UK like for like growth has  been
achieved  by  increasing the appeal of our stores at  the  lower  end  of  the
customer  age  range.   We do not believe that many of  these  youngsters  are
capable  of  truly  participating in all aspects of  a  complex  hobby,  which
involves  reading,  painting  and strategic thinking.   Consequently,  we  had
allowed our customer base to become vulnerable to toy fads.  Last year we  saw
a  sharp  decline in sales to this age group.  Since January we have been  re-
focusing  our  stores as activity centres for our traditional  core  audience,
with the aim of increasing the average age of our UK consumers.

We  have launched a national clubs programme which now boasts over 200  active
registered clubs.  We have also re-launched a number of our stores as flagship
stores  throughout  the  country which are piloting new  approaches  including
extended  product ranges, preview nights and more expert staff.   We  will  be
following  this up with more direct marketing approaches to increase awareness
of  our  offer to our target audience.  This more targeted marketing  approach
will  also include the development of new introductory games, which  are  more
appropriate for the younger customers, who are the hobbyists of tomorrow.

Continental Europe (+2% in constant currency, -5% in sterling)

During the year we moved the German sales operations from the UK into Germany,
where  under  the newly appointed German general manager we now expect  to  be
able  to  recruit and retain a higher calibre work force.  The disruptions  of
the  move and management changes resulted in sales being 6% lower in the year.
Elsewhere  we  saw  sales increases in our other major European  markets  with
France  up 8% and Spain 11%.  Italy declined by 4%.  8 new stores were  opened
in the period taking the total in Continental Europe to 51.

Asia Pacific (+15% in constant currency, +19% in sterling)

The  Hong  Kong  operation was consolidated into the Australian  operation  in
April 2000.  Our sales within Australia and New Zealand were 18% higher in the
year with the sales to the 'tiger' economies down 8%.  3 stores were opened in
Asia Pacific, all of which were in Australia.

Conclusion

Whilst  the year has been challenging, the underlying business and  the  Hobby
which  supports it remains strong, and we remain confident that the issues  we
face  are ones of management and structure and are eminently solvable.  During
the year we have made great strides towards getting the business into a better
shape,  better equipped to handle the long-term growth which we see in all  of
our  major markets.  Our growth in the Americas, the progress on managing  the
supply  chain, our web sales development, and the introduction of several  new
senior  managers  are  all significant achievements to  guarantee  the  future
success of the Group.

C J Prentice
Chief Executive


GROUP PROFIT AND LOSS ACCOUNT

                                            Year to       Year to
                                        28 May 2000   30 May 1999
                                               £000          £000
                                                                 
Turnover                                     77,993        72,565
Cost of sales                               (27,261)      (23,624)
                                            -------       -------
Gross profit                                 50,732        48,941
Net operating expenses                      (44,069)      (36,141)
                                            -------       -------
Operating profit                              6,663        12,800
                                                                 
                                                                 
Continuing operations - pre-                 10,037        12,800
exceptional
Continuing operations - exceptional          (3,374)            -
items
                                                                 
                                                                 
Interest receivable                             390           117
Interest payable and similar charges           (508)         (453)
                                            -------       -------
Profit on ordinary activities                                    
before taxation                               6,545        12,464
Taxation on profit on ordinary                                   
activities                                   (2,983)       (4,378)
                                            -------       -------
Profit for the financial year                 3,562         8,086
                                            -------       -------
Dividend                                     (3,100)       (3,022)
                                            -------       -------
Profit retained for the financial                                
year                                            462         5,064
                                            =======       =======
                                                                 
Pre-exceptional earnings per                                     
ordinary share                                20.2p         26.0p
Basic earnings per ordinary share             11.4p         26.0p
Diluted earnings per ordinary share           11.2p         25.4p
Net dividend per ordinary share                9.9p          9.7p



STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES

                                            Year to       Year to
                                        28 May 2000   30 May 1999
                                               £000          £000
                                                                 
Profit for the financial year                 3,562         8,086
Currency translation differences on                              
foreign currency net investments                448            39
                                            -------       -------
Total recognised gains and losses                                
relating to the year                          4,010         8,125
                                            =======       =======

GROUP BALANCE SHEET

                                              As at         As at
                                        28 May 2000   30 May 1999
                                               £000          £000
                                                                 
Fixed assets                                                     
Goodwill                                      1,891         1,996
Tangible assets                              15,365        14,755
Investments                                     122             -
                                            -------       -------
                                             17,378        16,751
                                            -------       -------
Current assets                                                   
Stocks                                        9,022         9,261
Debtors                                       6,538         6,501
Cash at bank and in hand                      5,865         5,172
                                            -------       -------
                                             21,425        20,934
                                            -------       -------
Creditors: amounts falling due within                            
one year                                    (12,491)      (13,143)
                                            -------       -------
Net current assets                            8,934         7,791
                                            -------       -------
Total assets less current liabilities        26,312        24,542
                                                                 
Creditors: amounts falling due after                             
more than one year                           (3,145)       (3,239)
                                                                 
Provisions for liabilities and charges         (500)            -
                                            -------       -------
Net assets                                   22,667        21,303
                                            =======       =======
                                                                 
Capital and reserves                                             
Called up share capital                       1,565         1,558
Other reserve                                  (495)         (942)
Profit and loss account                      21,597        20,687
                                            -------       -------
Equity shareholders' funds                   22,667        21,303
                                            =======       =======


GROUP CASH FLOW STATEMENT

                                            Year to       Year to
                                        28 May 2000   30 May 1999
                                               £000          £000
                                                                    
Net cash inflow from operating                                      
activities                                   12,606        16,261
                                            -------       -------
Returns on investments and servicing                                
of finance                                                          
Interest received                               411           117
Interest paid                                 (493)          (451)
Interest paid on hire purchase                 (17)           (13)
contracts
                                            -------       -------
Net cash outflow from returns on                                    
investments and servicing of finance           (99)          (347)
                                            -------       -------
Taxation                                                            
UK corporation tax paid                     (3,388)        (2,855)
Overseas taxation paid                      (1,233)        (1,423)
                                            -------       -------
Net cash outflow from taxation              (4,621)        (4,278)
                                            -------       -------
Capital expenditure and financial                                   
investment
Purchase of tangible fixed assets           (4,822)        (4,108)
Sale of tangible fixed assets                    54           258
Purchase of own shares                        (122)             -
                                            -------       -------
Net cash outflow from capital                                       
expenditure
and financial investment                    (4,890)        (3,850)
                                            -------       -------
Acquisitions                                                        
Purchase of subsidiary undertakings              -         (3,058)
Net cash acquired with subsidiary                                   
undertakings                                     -             89
                                            -------       -------
Net cash outflow from acquisitions               -         (2,969)
                                            -------       -------
Equity dividends paid                        (3,094)       (2,881)
                                            -------       -------
Net cash (outflow)/inflow before                                    
financing                                       (98)        1,936
                                            -------       -------
                                                                    
Financing                                                           
Issue of ordinary share capital                 454            67
Repayment of principal under hire                                   
purchase contracts                              (73)         (111)
Cash inflow from medium term revolving                              
credit facility                                   -         5,000
Repayment of medium term revolving                                  
credit facility                                   -        (2,000)
Loan repayments                                   -          (235)
                                            -------       -------
Net cash inflow from financing                  381         2,721
                                            -------       -------
Increase in cash in the year                    283         4,657
                                            =======       =======


NOTES TO THE GROUP CASH FLOW STATEMENT

Reconciliation of operating profit to operating cash flow

                                               2000          1999
                                               £000          £000
                                                                 
Operating profit                              6,663        12,800
Loss on disposal of tangible fixed assets        42             7
Depreciation of tangible fixed assets         4,041         3,408
Amortisation of goodwill                        105           107
Exchange movements                              363            77
Decrease/(increase) in stocks                   239          (927)
(Increase)/decrease in debtors                  (17)          650
Increase in creditors                           670           139
Increase in provisions                          500             -
                                            -------       -------
Net cash inflow from operating activities    12,606        16,261
                                            =======       =======

Analysis of net funds                                            
                                      As at                 As at
                                     31 May                28 May
                                       1999  Cashflow        2000
                                       £000      £000        £000
                                                                 
Cash at bank and in hand              5,172       693       5,865
Bank overdrafts                         (36)     (410)       (446)
Debt due after one year              (3,000)        -      (3,000)
Hire purchase agreements               (291)       73        (218)
                                    -------   -------     -------
Net funds                             1,845       356       2,201
                                    =======   =======     =======

Reconciliation of net cash flow to movement in net funds

                                            Year to       Year to
                                        28 May 2000   30 May 1999
                                               £000          £000
                                                                 
Increase in cash in the year                    283         4,657
Cash outflow/(inflow) from                                       
decrease/(increase)
in debt and lease financing                      73        (2,654)
                                            -------       -------
Change in net funds resulting from              356         2,003
cashflows
New hire purchase agreements                      -          (376)
                                            -------       -------
Increase in net funds in the year               356         1,627
Net funds at 31 May 1999                      1,845           218
                                            -------       -------
Net funds at 28 May 2000                      2,201         1,845
                                            =======       =======



NOTES TO THE ACCOUNTS

1.  The  calculation of pre-exceptional earnings per ordinary share  has  been
  based  on profit for the year before the effect of exceptional restructuring
  costs.   The basic  earnings per ordinary share has been based on profit for
  the  year.   Both  calculations are  based on 31,177,439  (1999: 31,113,927)
  ordinary  shares  being  the  weighted  average  number of  shares  in issue
  throughout the year.

  The  calculation of diluted earnings per ordinary share has  been  based  on
  the  profit  for the year and 31,725,215 (1999: 31,861,781) ordinary  shares
  being  the weighted average number of shares in issue  throughout  the  year
  adjusted for the effect of share options outstanding at the year end.

2.  The  financial  information given above does not  constitute  the  Group's
  statutory accounts.   Statutory accounts for the years ended 28 May 2000 and
  30 May 1999  have been reported  on without qualification by Arthur Andersen
  and  PricewaterhouseCoopers  respectively,  the  Company's  auditors in each
  year.  Statutory accounts for the year ended 30 May 1999 have been delivered
  to the  Registrar of Companies and the statutory accounts for the year ended
  28 May 2000 will be delivered to the Registrar of Companies in due course.

3.  The Annual Report will be mailed to shareholders on 4 August 2000.  Copies
  of  the  Annual  Report will also be available from Michael  Sherwin,  Games
  Workshop Group PLC, Willow Road, Lenton, Nottingham NG7 2WS.

4.  The  proposed final dividend of 6.14p will be paid on 3 November  2000  to
  shareholders on the register at the close of business on 13 October 2000.




                                       

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