25th Jan 2005 07:00
Games Workshop Group PLC25 January 2005 INTERIM RESULTS Games Workshop Group PLC ("Games Workshop" or the "Group") announces its interimresults 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 inbetter 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 376Michael Sherwin, Finance Director Thereafter: 0115 900 4001 Wade Pryce, Assistant PR Manager 0115 900 4010 Investor relations website http://investor.games-workshop.comGeneral website http://www.games-workshop.com RAWLINGS FINANCIAL PR LIMITED Tel: 01756 770 376Catriona Valentine FIRST HALF HIGHLIGHTS Six months to Six months to 28 November 30 November 2004 2003 Turnover £71.0m £72.0mOperating profit £7.9m £7.4mProfit before tax £7.7m £7.3mBasic earnings per share 15.8p 14.8pInterim dividend per share 4.950p 4.725p CHAIRMAN'S STATEMENT Results In the first half of this financial year several chickens have come home toroost for Games Workshop, some welcome, some not so welcome. The net impact is that we have continued to grow our profits and earnings pershare in spite of a sales performance which was not what we have been used toover recent years. In our UK business there has been, as predicted, a slowdown in sales growth. Forsome 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 inthe future"*. Well, sure enough, the bubble has begun to deflate and our UKsales business has seen a small decline in sales during the first half of thisyear. We had predicted and planned for this; nevertheless fighting against abackground of very strong prior year sales has required a lot of hard work ofour UK management team. Our American business has been investing in new stores and in our new Memphisfactory for the last two years. Meanwhile, the small independent retailers, whomwe have been relying on to get products to our Hobbyists in the Americas, havebeen struggling. In the first half of this year we have begun to see some earlyevidence that our strategy of focusing our Hobby development efforts around ourown stores in key metropolitan areas is beginning to bear fruit. The evidencecan be seen in Games Workshop's improving profitability in the Americas. Continental Europe continues to enjoy healthy growth. We are investing in newstores to develop our opportunities here. Germany, France and Italy continue toperform well while Spain is still catching its breath after several years ofvery strong growth. In Asia Pacific, we refocused our activities back onto Australia and New Zealandlast year. The effects of this have been very positive as demonstrated by theturnaround 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 constantcurrency terms so that readers can better understand the underlying trends. I would encourage shareholders to take heart, because none of these eventssurprised our management team; our profitability and cash flow remain robust andthe 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 4.95pence per share. This will be paid on 22 April 2005 to shareholders on theregister at 29 March 2005. Prospects The directors firmly believe the prospects for the business remain very good. T H F KirbyChairman and Chief Executive25 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 €41.0mUnited Kingdom £21.0m £22.3mThe Americas US$27.1m US$28.6mAsia 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 71,977 151,775Cost of sales (20,871) (24,248) (50,099) ---------- ---------- ---------- Gross profit 50,101 47,729 101,676Net operating expenses (42,237) (40,343) (81,821) ---------- ---------- ----------Operating profit 2 7,864 7,386 19,855Interest receivable 71 52 145Interest payable andsimilar charges (266) (160) (427) ---------- ---------- ----------Profit on ordinaryactivities before taxation 7,669 7,278 19,573Taxation on profit onordinary activities 3 (2,837) (2,814) (7,245) ---------- ---------- ----------Profit on ordinaryactivities after taxation 4,832 4,464 12,328Equity minority interests - - 1 ---------- ---------- ----------Profit for the period 4,832 4,464 12,329Dividends 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 perordinary 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 beforetaxation 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 12,329Currency translation differences onforeign currency net investments 465 (514) (2,012)Other recognised gains and losses 215 - - ---------- ---------- ----------Total recognised gains and lossesrelating 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 assetsGoodwill 2,245 2,961 2,463Tangible assets 28,131 20,534 25,627 ---------- ---------- ---------- 30,376 23,495 28,090 ---------- ---------- ----------Current assetsStocks 14,965 14,442 12,102Debtors 18,985 20,654 13,612Cash at bank and in hand 8,799 8,408 8,570 ---------- ---------- ---------- 42,749 43,504 34,284Creditors: amounts falling duewithin one year (24,460) (24,224) (26,558) ---------- ---------- ----------Net current assets 18,289 19,280 7,726 ---------- ---------- ----------Total assets less currentliabilities 48,665 42,775 35,816 Creditors: amounts falling dueafter more than one year (9,532) (10,215) (788) Provisions for liabilities andcharges (458) (708) (924) ---------- ---------- ----------Net assets 38,675 31,852 34,104 ========== ========== ========== Capital and reservesCalled up share capital 7 1,550 1,537 1,542Capital redemption reserve 7 101 101 101Share premium 7 6,272 4,792 5,251Profit and loss account 7 30,752 25,421 27,210 ---------- ---------- ----------Equity shareholders' funds 6 38,675 31,851 34,104Equity 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 andservicing of financeInterest received 70 56 147Interest paid (205) (137) (408)Interest paid on financeleases and hire purchase contracts (7) (1) (9) ---------- ---------- ----------Net cash outflow fromreturns on investments and servicing of finance (142) (82) (270) ---------- ---------- ----------Taxation paid (2,884) (4,230) (8,178) ---------- ---------- ----------Capital expenditure andfinancial investmentPurchase of tangible fixed assets (5,865) (6,022) (13,968)Sale of tangible fixed assets 3 76 117 ---------- ---------- ----------Net cash outflow fromcapital expenditureand 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) ---------- ---------- ----------FinancingIssue of ordinary share capital 587 1,202 1,363Repayment of principalunder finance leases/hire purchase contracts (81) (7) (124)Draw-down of medium-termrevolving 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 19,855Loss/(profit) on disposal oftangible fixed assets 33 (42) (35)Depreciation of tangible fixedassets 3,483 2,864 6,080Amortisation of goodwill 192 229 366(Increase)/decrease in stocks (2,879) (1,945) 263Increase 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) fromoperating 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 policiesset out in the Group's statutory financial statements for the year ended 30 May2004 with the exception of the provision for the long-term incentive plan whichhas been reclassified in accordance with UITF38. The impact of this is notmaterial. Copies of the interim results will be sent to shareholders and are available tomembers of the public at the Company's registered office. The informationpresented in respect of the year to 30 May 2004 does not reflect the fullfinancial statements within the meaning of section 240 of the Companies Act1985. Full financial statements for that year, incorporating an unqualifiedaudit report, have been delivered to the Registrar of Companies. The interimresults for 2003 and 2004 are unaudited and have not been subject to a review bythe 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 61,290United Kingdom 21,006 22,291 48,241The Americas 14,853 17,138 33,110Asia 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 19,948United Kingdom 4,188 5,144 11,370The Americas 110 (614) (829)Asia Pacific 433 (274) 756 ---------- ---------- ---------- 13,448 13,375 31,245Design 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 19,669Royalty income 156 75 186 ---------- ---------- ----------Operating profit 7,864 7,386 19,855 ========== ========== ========== The prior period allocation of operating profit by geographical area has beenrestated to better reflect the allocation of the manufacturing costs between theUK 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 4,410Overseas taxation 1,104 695 2,193Origination and reversal of timingdifferences (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 1,444Final ordinary dividend - - 4,290Under provision in respect of prioryears 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 forthe period and the weighted average number of ordinary shares in issuethroughout the relevant period. The calculation of diluted earnings per ordinary share has been based on theprofit for the period and the weighted average number of shares in issue duringthe relevant period, adjusted for the dilution effect of share optionsoutstanding 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 perordinary share 30,620,058 30,069,247 30,223,087Dilution effect of shareoptions 467,107 571,011 495,036 ----------- ----------- -----------For diluted earnings perordinary 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 12,329Dividends (1,528) (1,473) (5,749) ---------- ---------- ---------- 3,304 2,991 6,580Issue of new share capital 587 1,202 1,364Other 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 - - - - - 147Other 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 8,799Debt 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) ========== ========== ========== =========== ========== This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Games Workshop