Interim Results

Games Workshop Group PLC 28 January 2003 INTERIM RESULTS Games Workshop Group PLC ('Games Workshop' or the 'Group') announces its interim results for the six months to 1 December 2002. Key points: * Turnover up £6.5m to £58.1m * Operating profit up £0.5m to £6.6m * Pre-tax profit at £6.6m * Earnings per share of 14.0p * Interim dividend up 0.35p to 4.50p * Strong portfolio result * 23 new Hobby stores opened - 12 in the Americas, bringing the total to 274 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. We continue to see consistent evidence of the good health of the Games Workshop Hobby in all our geographical areas. 'Our progress has been most impressive in Continental Europe where all our sales businesses have shown very strong growth. In the UK, our sales growth has continued to outstrip inflation significantly, which provides more evidence that we can further develop this, the market where our brands and products are best known. We have continued to find sales to our independent retail customers in the Americas challenging, however the continued strong performance of our own stores demonstrates the health of the Hobby in this very promising territory.' For further information, please contact: Games Workshop Group PLC Today only: 07771 725 186 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 1 December 2 December 2002 2001 Turnover £58.1m £51.6m Operating profit £6.6m £6.1m Profit before tax £6.6m £6.0m Basic earnings per share 14.0p 12.5p Interim dividend per share 4.50p 4.15p CHAIRMAN'S STATEMENT Overview I am pleased to report on another period of growth in sales and profits from Games Workshop. We continue to see consistent evidence of the good health of the Games Workshop Hobby in all our geographical areas. We have continued to add depth and excitement to the worlds of Warhammer and Warhammer 40,000 with a constant flow of new releases, including the development of the Necron race and the launch of a new set of Chaos Daemons. November saw the launch of our second game based on The Lord of the Rings film trilogy and this looks like another useful addition to our vast range of tabletop wargaming products. Armed with these and many other great products, our sales teams around the world have continued to develop and build the Games Workshop Hobby in each territory. Results Our progress has been most impressive in Continental Europe where all of our sales businesses have shown very strong growth. In the UK, our sales growth has continued to outstrip inflation significantly, which provides more evidence that we can further develop this, the market where our brands and products are best known. We have continued to find sales to our independent retail customers in the Americas challenging, however the continued strong performance of our own stores demonstrates the health of the Hobby in this very promising territory. We have invested heavily to grow this key sales channel, opening 12 new stores in the Americas in the period, out of a total of 23 new stores around the world. The result is we now have 274 stores dedicated solely to the development of the Games Workshop Hobby. The strong cash generation of the business, which we see as a key element of our performance, has enabled us to make these investments and we expect it to continue to fund our growth plans going forward. During the period sterling has strengthened against the dollar by 7% and weakened against the euro by 2%. While the net impact of currency movements on our profits has not been significant, 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 4.5 pence per share. This will be paid on 25 April 2003 to shareholders on the register at 28 March 2003. Share buy-back In September 2002 we purchased 100,000 shares in the open market for cancellation. This is part of our ongoing programme of buy-backs. The board will continue to keep the use of our cash resources under review. Dividend re-investment plan In November, for the first time, we gave our shareholders the opportunity to re-invest their dividend in shares in the Company. This plan was taken up by more than a tenth of our shareholders and 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 28 January 2003 TURNOVER BY GEOGRAPHICAL AREA OF SALES OPERATION IN LOCAL CURRENCY Six months to Six months to 1 December 2 December 2002 2001 United Kingdom £16.4m £15.3m Continental Europe Euro 35.4m Euro 26.9m The Americas US$24.7m US$24.2m Asia Pacific Aus$9.3m Aus$8.1m CONSOLIDATED PROFIT AND LOSS ACCOUNT Six months to Six months to Year to 1 December 2 December 2 June 2002 2001 2002 Notes £000 £000 £000 Turnover 2 58,102 51,562 108,557 Cost of sales (18,933) (17,209) (36,550) ------- ------- ------- Gross profit 39,169 34,353 72,007 Net operating expenses (32,571) (28,303) (58,502) ------- ------- ------- Operating profit 2 6,598 6,050 13,505 Interest receivable 69 128 253 Interest payable and similar charges (113) (140) (235) ------- ------- ------- Profit on ordinary activities before taxation 6,554 6,038 13,523 Taxation on profit on ordinary activities 3 (2,389) (2,204) (4,935) ------- ------- ------- Profit on ordinary activities after taxation 4,165 3,834 8,588 Equity minority interests - - - ------- ------- ------- Profit for the period 4,165 3,834 8,588 Dividends 4 (1,334) (1,256) (3,816) ------- ------- ------- Profit retained for the period 2,831 2,578 4,772 ======= ======= ======= Basic earnings per ordinary share 5 14.0p 12.5p 28.2p Diluted earnings per ordinary share 5 13.7p 12.2p 27.5p Dividend per ordinary share 4 4.50p 4.15p 13.00p 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 1 December 2 December 2 June 2002 2001 2002 £000 £000 £000 Profit for the period 4,165 3,834 8,588 Currency translation differences on foreign currency net investments (503) 48 86 ------- ------- ------- Total recognised gains and losses relating to the period 3,662 3,882 8,674 ======= ======= ======= CONSOLIDATED BALANCE SHEET As at As at As at 1 December 2 December 2 June 2002 2001 2002 Notes £000 £000 £000 Fixed assets Goodwill 3,419 1,733 3,647 Tangible assets 16,995 15,184 15,211 Investments 61 343 121 ------- ------- ------- 20,475 17,260 18,979 ------- ------- ------- Current assets Stocks 11,114 11,227 9,260 Debtors 16,688 15,469 10,213 Cash at bank and in hand 4,004 4,398 9,132 ------- ------- ------- 31,806 31,094 28,605 Creditors: amounts falling due within one year (23,207) (19,961) (23,352) ------- ------- ------- Net current assets 8,599 11,133 5,253 ------- ------- ------- Total assets less current liabilities 29,074 28,393 24,232 Creditors: amounts falling due after more than one year (3,000) (3,000) - Provisions for liabilities and charges (1,946) (1,663) (2,006) ------- ------- ------- Net assets 24,128 23,730 22,226 ======= ======= ======= Capital and reserves Called up share capital 7 1,495 1,523 1,499 Capital redemption reserve 7 101 61 96 Share premium 7 445 12 417 Profit and loss account 7 22,086 22,131 20,213 ------- ------- ------- Equity shareholders' funds 6 24,127 23,727 22,225 Equity minority interests 7 1 3 1 ------- ------- ------- Total capital employed - all equity 24,128 23,730 22,226 ======= ======= ======= CONSOLIDATED CASH FLOW STATEMENT Six months to Six months to Year to 1 December 2 December 2 June 2002 2001 2002 Notes £000 £000 £000 Net cash inflow from operating activities 3,339 3,422 22,010 ------- ------- ------- Returns on investments and servicing of finance Interest received 68 128 254 Interest paid (90) (127) (240) Interest paid on hire purchase contracts (4) (5) (11) ------- ------- ------- Net cash (outflow)/inflow from returns on investments and servicing of finance (26) (4) 3 ------- ------- ------- Taxation paid (1,511) (1,333) (4,517) ------- ------- ------- Capital expenditure and financial investment Purchase of tangible fixed assets (4,363) (2,947) (5,416) Sale of tangible fixed assets 2 455 413 Purchase of own shares - (2) (328) ------- ------- ------- Net cash outflow from capital expenditure and financial investment (4,361) (2,494) (5,331) ------- ------- ------- Acquisitions Purchase of subsidiary undertaking - - (2,103) Net overdraft acquired with subsidiary - - (97) Shares issued to equity minority interests - 3 3 ------- ------- ------- Net cash inflow/(outflow) from acquisitions - 3 (2,197) ------- ------- ------- Equity dividends paid (2,623) (2,032) (3,294) ------- ------- ------- Net cash (outflow)/inflow before financing (5,182) (2,438) 6,674 ------- ------- ------- Financing Issue of ordinary share capital 16 447 863 Repayment of principal under hire purchase contracts (20) (92) (42) Draw-down of medium-term revolving credit facility 500 3,000 2,500 Repayment of other loans - - (194) Own shares purchased/cancelled (442) (5,609) (9,759) ------- ------- ------- Net cash inflow/(outflow) from financing 54 (2,254) (6,632) ------- ------- ------- (Decrease)/increase in cash in the period 8 (5,128) (4,692) 42 ======= ======= ======= RECONCILIATION OF OPERATING PROFIT TO OPERATING CASH FLOW Six months to Six months to Year to 1 December 2 December 2 June 2002 2001 2002 £000 £000 £000 Operating profit 6,598 6,050 13,505 Loss on disposal of tangible fixed assets 38 23 151 Depreciation of tangible fixed assets 2,282 2,082 4,847 Amortisation of goodwill 228 52 252 Amortisation of own shares 60 114 662 Exchange movements (313) 13 11 (Increase)/decrease in stocks (1,854) (1,994) 54 Increase in debtors (6,552) (6,792) (434) Increase in creditors 2,912 3,612 2,356 (Decrease)/increase in provisions (60) 262 606 ------- ------- ------- Net cash inflow from operating activities 3,339 3,422 22,010 ======= ======= ======= 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 2 June 2002. 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 2 June 2002 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 2001 and 2002 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 1 December 2 December 2 June 2002 2001 2002 £000 £000 £000 United Kingdom 16,441 15,258 32,369 Continental Europe 22,468 16,648 36,518 The Americas 15,907 16,763 32,791 Asia Pacific 3,286 2,893 6,879 ------- ------- ------- Turnover 58,102 51,562 108,557 ======= ======= ======= Operating profit by geographical area of sales operation Six months to Six months to Year to 1 December 2 December 2 June 2002 2001 2002 £000 £000 £000 United Kingdom 3,163 2,820 6,424 Continental Europe 6,149 3,584 8,551 The Americas 1,425 3,809 6,132 Asia Pacific 762 440 955 ---------- ---------- ---------- 11,499 10,653 22,062 Design and development costs (1,689) (1,190) (2,605) New business development costs (1,195) (1,190) (2,125) Central costs (2,178) (2,280) (3,949) ---------- ---------- ---------- Operating profit before royalties 6,437 5,993 13,383 Royalty income 161 57 122 ---------- ---------- ---------- Operating profit 6,598 6,050 13,505 ======= ======= ======= 3. Taxation on profit on ordinary activities Six months to Six months to Year to 1 December 2 December 2 June 2002 2001 2002 £000 £000 £000 UK corporation tax 1,711 1,607 4,432 Overseas taxation 646 647 1,116 Origination and reversal of timing differences 32 (50) (613) ------- ------- ------- 2,389 2,204 4,935 ======= ======= ======= 4. Dividends Six months to Six months to Year to 1 December 2 December 2 June 2002 2001 2002 £000 £000 £000 Interim ordinary dividend 1,334 1,256 1,262 Final ordinary dividend - - 2,631 Over provision in respect of prior years - - (77) ------- ------- ------- 1,334 1,256 3,816 ======= ======= ======= 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 effect of share options outstanding at the end of the period. Six months to Six months to Year to 1 December 2 December 2 June 2002 2001 2002 Weighted average number of shares: For basic earnings per ordinary share 29,698,626 30,720,163 30,485,802 Dilution effect of share options 686,880 748,964 708,818 ---------- ---------- ---------- For diluted earnings per ordinary share 30,385,506 31,469,127 31,194,620 ========== ========== ========== 6. Reconciliation of movements in equity shareholders' funds Six months to Six months to Year to 1 December 2 December 2 June 2002 2001 2002 £000 £000 £000 Profit for the period 4,165 3,834 8,588 Dividends (1,334) (1,256) (3,816) ------- ------- ------- 2,831 2,578 4,772 Issue of new share capital 16 447 863 Own shares purchased/cancelled (442) (5,609) (9,759) Other recognised gains and losses (503) 48 86 Opening shareholders' funds 22,225 26,263 26,263 ------- ------- ------- Closing shareholders' funds 24,127 23,727 22,225 ======= ======= ======= 7. Capital, reserves and equity minority interests Called up Capital Profit Equity Equity share redemption Share and loss shareholders' minority capital reserve premium account funds interests £000 £000 £000 £000 £000 £000 As at 3 June 2002 1,499 96 417 20,213 22,225 1 Exchange adjustments - - - (503) (503) - Profit retained for the period - - - 2,831 2,831 - Share of minority loss for the period - - - - - (258) Provision against minority loss - - - - - 258 Issue of ordinary share capital 1 - 28 (13) 16 - Own shares purchased/ cancelled (5) 5 - (442) (442) - ------- ------- ------- ------- ------- ------- As at 1 December 2002 1,495 101 445 22,086 24,127 1 ======= ======= ======= ======= ======= ======= 8. Analysis of net funds As at Other As at 2 June non-cash 1 December 2002 Cash flow changes 2002 £000 £000 £000 £000 Cash at bank and in hand 9,132 (5,128) - 4,004 Debt due within one year (2,500) - 2,500 - Debt due after one year - (500) (2,500) (3,000) Hire purchase contracts (20) 20 - - ------- ------- ------- ------- Net funds 6,612 (5,608) - 1,004 ======= ======= ======= ======= This information is provided by RNS The company news service from the London Stock Exchange

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