Interim Results

Games Workshop Group PLC 25 January 2005 INTERIM RESULTS Games Workshop Group PLC ('Games Workshop' or the 'Group') announces its interim results 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 in better 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 770 376 Michael Sherwin, Finance Director Thereafter: 0115 900 4001 Wade Pryce, Assistant PR Manager 0115 900 4010 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 28 November 30 November 2004 2003 Turnover £71.0m £72.0m Operating profit £7.9m £7.4m Profit before tax £7.7m £7.3m Basic earnings per share 15.8p 14.8p Interim dividend per share 4.950p 4.725p CHAIRMAN'S STATEMENT Results In the first half of this financial year several chickens have come home to roost for Games Workshop, some welcome, some not so welcome. The net impact is that we have continued to grow our profits and earnings per share in spite of a sales performance which was not what we have been used to over recent years. In our UK business there has been, as predicted, a slowdown in sales growth. For some 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 in the future'*. Well, sure enough, the bubble has begun to deflate and our UK sales business has seen a small decline in sales during the first half of this year. We had predicted and planned for this; nevertheless fighting against a background of very strong prior year sales has required a lot of hard work of our UK management team. Our American business has been investing in new stores and in our new Memphis factory for the last two years. Meanwhile, the small independent retailers, whom we have been relying on to get products to our Hobbyists in the Americas, have been struggling. In the first half of this year we have begun to see some early evidence that our strategy of focusing our Hobby development efforts around our own stores in key metropolitan areas is beginning to bear fruit. The evidence can be seen in Games Workshop's improving profitability in the Americas. Continental Europe continues to enjoy healthy growth. We are investing in new stores to develop our opportunities here. Germany, France and Italy continue to perform well while Spain is still catching its breath after several years of very strong growth. In Asia Pacific, we refocused our activities back onto Australia and New Zealand last year. The effects of this have been very positive as demonstrated by the turnaround 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 constant currency terms so that readers can better understand the underlying trends. I would encourage shareholders to take heart, because none of these events surprised our management team; our profitability and cash flow remain robust and the 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 4.95 pence per share. This will be paid on 22 April 2005 to shareholders on the register at 29 March 2005. Prospects The directors firmly believe the prospects for the business remain very good. T H F Kirby Chairman and Chief Executive 25 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 €41.0m United Kingdom £21.0m £22.3m The Americas US$27.1m US$28.6m Asia 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 71,977 151,775 Cost of sales (20,871) (24,248) (50,099) ---------- ---------- ---------- Gross profit 50,101 47,729 101,676 Net operating expenses (42,237) (40,343) (81,821) ---------- ---------- ---------- Operating profit 2 7,864 7,386 19,855 Interest receivable 71 52 145 Interest payable and similar charges (266) (160) (427) ---------- ---------- ---------- Profit on ordinary activities before taxation 7,669 7,278 19,573 Taxation on profit on ordinary activities 3 (2,837) (2,814) (7,245) ---------- ---------- ---------- Profit on ordinary activities after taxation 4,832 4,464 12,328 Equity minority interests - - 1 ---------- ---------- ---------- Profit for the period 4,832 4,464 12,329 Dividends 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 per ordinary 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 before taxation 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 12,329 Currency translation differences on foreign currency net investments 465 (514) (2,012) Other recognised gains and losses 215 - - ---------- ---------- ---------- Total recognised gains and losses relating 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 assets Goodwill 2,245 2,961 2,463 Tangible assets 28,131 20,534 25,627 ---------- ---------- ---------- 30,376 23,495 28,090 ---------- ---------- ---------- Current assets Stocks 14,965 14,442 12,102 Debtors 18,985 20,654 13,612 Cash at bank and in hand 8,799 8,408 8,570 ---------- ---------- ---------- 42,749 43,504 34,284 Creditors: amounts falling due within one year (24,460) (24,224) (26,558) ---------- ---------- ---------- Net current assets 18,289 19,280 7,726 ---------- ---------- ---------- Total assets less current liabilities 48,665 42,775 35,816 Creditors: amounts falling due after more than one year (9,532) (10,215) (788) Provisions for liabilities and charges (458) (708) (924) ---------- ---------- ---------- Net assets 38,675 31,852 34,104 ========== ========== ========== Capital and reserves Called up share capital 7 1,550 1,537 1,542 Capital redemption reserve 7 101 101 101 Share premium 7 6,272 4,792 5,251 Profit and loss account 7 30,752 25,421 27,210 ---------- ---------- ---------- Equity shareholders' funds 6 38,675 31,851 34,104 Equity 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 and servicing of finance Interest received 70 56 147 Interest paid (205) (137) (408) Interest paid on finance leases and hire purchase contracts (7) (1) (9) ---------- ---------- ---------- Net cash outflow from returns on investments and servicing of finance (142) (82) (270) ---------- ---------- ---------- Taxation paid (2,884) (4,230) (8,178) ---------- ---------- ---------- Capital expenditure and financial investment Purchase of tangible fixed assets (5,865) (6,022) (13,968) Sale of tangible fixed assets 3 76 117 ---------- ---------- ---------- Net cash outflow from capital expenditure and 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) ---------- ---------- ---------- Financing Issue of ordinary share capital 587 1,202 1,363 Repayment of principal under finance leases/hire purchase contracts (81) (7) (124) Draw-down of medium-term revolving 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 19,855 Loss/(profit) on disposal of tangible fixed assets 33 (42) (35) Depreciation of tangible fixed assets 3,483 2,864 6,080 Amortisation of goodwill 192 229 366 (Increase)/decrease in stocks (2,879) (1,945) 263 Increase 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) from operating 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 policies set out in the Group's statutory financial statements for the year ended 30 May 2004 with the exception of the provision for the long-term incentive plan which has been reclassified in accordance with UITF38. The impact of this is not material. 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 30 May 2004 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 2003 and 2004 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 28 November 30 November 30 May 2004 2003 2004 £000 £000 £000 Continental Europe 30,918 28,518 61,290 United Kingdom 21,006 22,291 48,241 The Americas 14,853 17,138 33,110 Asia 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 19,948 United Kingdom 4,188 5,144 11,370 The Americas 110 (614) (829) Asia Pacific 433 (274) 756 ---------- ---------- ---------- 13,448 13,375 31,245 Design 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 19,669 Royalty income 156 75 186 ---------- ---------- ---------- Operating profit 7,864 7,386 19,855 ========== ========== ========== The prior period allocation of operating profit by geographical area has been restated to better reflect the allocation of the manufacturing costs between the UK 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 4,410 Overseas taxation 1,104 695 2,193 Origination and reversal of timing differences (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 1,444 Final ordinary dividend - - 4,290 Under provision in respect of prior years 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 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 28 November 30 November 30 May 2004 2003 2004 Weighted average number of shares: For basic earnings per ordinary share 30,620,058 30,069,247 30,223,087 Dilution effect of share options 467,107 571,011 495,036 ----------- ----------- ----------- For diluted earnings per ordinary 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 12,329 Dividends (1,528) (1,473) (5,749) ---------- ---------- ---------- 3,304 2,991 6,580 Issue of new share capital 587 1,202 1,364 Other 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 - - - - - 147 Other 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 8,799 Debt 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 Exchange

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