Interim Results

Games Workshop Group PLC 29 January 2002 GAMES WORKSHOP GROUP PLC INTERIM RESULTS Games Workshop Group PLC ('Games Workshop' or the 'Group'), the world's largest and most successful tabletop wargames company, announces its interim results for the six months to 2 December 2001. Key points: * Turnover at £51.6 million (2000: £42.7 million) - up 21% * Pre-exceptional operating profit at £6.1 million (2000: £4.9 million) - up 24% * Pre-tax profit at £6.0 million (2000: £4.1 million) - up 48% * Pre-exceptional earnings per share of 12.5p (2000: 9.7p) - up 29% * Interim dividend per share of 4.15p (2000: 3.77p) - up 10% * Sales growth in all territories * Restructuring completed on time and on budget * Still cash positive after £5.6 million share buy-back Tom Kirby, Chairman and Chief Executive of Games Workshop, said: 'I am pleased to report on a period of continued sales growth in all of our businesses around the world. We are seeing consistent evidence that the Games Workshop Hobby is healthy in all of our geographic areas. 'Our United Kingdom and Continental European businesses showed remarkable improvements in sales completing the bounce-back from the slower growth in the first half of last year. Growth in the Americas was more modest with sales to our independent customers proving harder work, although a strong performance from our own stores and direct sales demonstrated the robustness of the Hobby. 'With all of our key markets moving ahead positively, the directors firmly believe the prospects for the business are very good.' For further information, please contact: Games Workshop Group PLC Today only: 07771 725 177 Tom Kirby, Chairman and Chief Executive Thereafter: 0115 916 8100 Michael Sherwin, Finance Director Julia Woodall, PR Manager Tel: 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 2 December 26 November 2001 2000 Turnover £51.6m £42.7m +21% Pre-exceptional operating profit £6.1m £4.9m +24% Operating profit £6.1m £4.2m +45% Profit before tax £6.0m £4.1m +48% Basic earnings per share 12.5p 8.0p +56% Pre-exceptional earnings per share 12.5p 9.7p +29% Interim dividend per share 4.15p 3.77p +10% CHAIRMAN'S STATEMENT Overview I am pleased to report on a period of continued sales growth in all of our businesses around the world. We are seeing consistent evidence that the Games Workshop Hobby is healthy in all of our geographic areas. Our main product ranges, Warhammer and Warhammer 40,000, are keeping gamers around the world excited as we continue to develop new races and characters. The new Lord of the Rings range was launched in November ahead of the first instalment of the film trilogy which premiered in December. This range, which will be developed each year as the films are released, looks like being another useful addition to our impressive portfolio of games and miniatures. It has the depth and variety to excite both experienced and novice gamers alike. Backed by this strong base of products, our sales teams around the world have continued to focus on the development of the Hobby, which remains the engine for the future success of the Company. In addition to our tabletop wargames, we have continued to explore new market opportunities. The Warhammer Online venture proceeds in line with its planned milestones, and we have recently announced our acquisition of Sabertooth Games Inc, a collectible card games company. These activities will add incremental revenue and profit streams in future years. The strong cash generation of the business has remained a key element of our performance, and we see this continuing into the future. Results Our United Kingdom and Continental European businesses showed remarkable improvements in sales completing the bounce-back from the slower growth in the first half of last year. Growth in the Americas was more modest with sales to our independent customers proving harder work, although a strong performance from our own stores and direct sales demonstrated the robustness of the Hobby. Overall, the growth in turnover through our own stores and through direct sales was 20%, and the growth in sales to independent retailers was 22%. The impact of currency fluctuations on our results was not significant. Operations The restructuring programme to simplify our manufacturing and supply activities was completed during the period. The supply of product to our stores and our customers ran smoothly throughout the Autumn, and we have therefore drawn a line under this programme, which has been completed on time and within the expected costs. Dividend We have increased the interim dividend by 10% to 4.15 pence per share. This will be paid on 26 April 2002 to shareholders on the register at 2 April 2002. Share buy-back In September 2001, we purchased 1.2 million shares in the open market for cancellation. We see this as part of a medium term programme and not a one-off exercise, as our continued cash generation has rendered our capital structure inefficient. The board will continue to keep the use of our cash resources under review. Communications with shareholders Following the launch of our investor relations website we are now offering shareholders the opportunity to receive all communications from the Company electronically. Prospects With all of our key markets moving ahead positively, the directors firmly believe the prospects for the business are very good. T H F Kirby Chairman and Chief Executive 29 January 2002 TURNOVER BY GEOGRAPHICAL AREA OF SALES OPERATION IN LOCAL CURRENCY United Kingdom £15.3m +28% Continental Europe Euro 26.9m +30% The Americas US$24.2m +6% Asia Pacific Aus$8.1m +23% CONSOLIDATED PROFIT AND LOSS ACCOUNT Notes Six months to Six months to Year to 1 2 December 26 November 3 June 2001 2000 2001 £000 £000 £000 Turnover 2 51,562 42,748 92,634 Cost of sales 3 (17,209) (14,761) (31,879) ------- ------- ------- Gross profit 34,353 27,987 60,755 Net operating expenses 3 (28,303) (23,807) (51,377) ------- ------- ------- Operating profit 6,050 4,180 9,378 Continuing operations - pre-exceptional 3 6,050 4,884 11,235 Continuing operations - exceptional items 3 - (704) (1,857) Interest receivable 128 140 483 Interest payable and similar charges (140) (232) (496) ------- ------- ------- Profit on ordinary activities before taxation 6,038 4,088 9,365 Taxation on profit on ordinary activities 4 (2,204) (1,574) (3,609) ------- ------- ------- Profit on ordinary activities after taxation 3,834 2,514 5,756 Minority interests - - - ------- ------- ------- Profit for the period 3,834 2,514 5,756 Dividends 5 (1,256) (1,179) (3,288) ------- ------- ------- Profit retained for the period 2,578 1,335 2,468 ======= ======= ======= Pre-exceptional earnings per ordinary share 6 12.5p 9.7p 22.8p Basic earnings per ordinary share 6 12.5p 8.0p 18.4p Diluted earnings per ordinary share 6 12.2p 8.0p 18.2p Dividend per ordinary share 5 4.15p 3.77p 10.54p 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 2 December 26 November 3 June 2001 2000 2001 £000 £000 £000 Profit for the period 3,834 2,514 5,756 Currency translation differences on foreign currency net investments 48 365 238 ------- ------- ------- Total recognised gains and losses relating to the period 3,882 2,879 5,994 ======= ======= ======= CONSOLIDATED BALANCE SHEET Notes Restated 1 As at As at As at 2 December 26 November 3 June 2001 2000 2001 £000 £000 £000 Fixed assets Goodwill 1,733 1,838 1,785 Tangible assets 15,184 15,211 14,897 Investments 343 122 455 ------- ------- ------- 17,260 17,171 17,137 ------- ------- ------- Current assets Stocks 11,227 10,743 9,233 Debtors 15,469 11,400 8,626 Cash at bank and in hand 4,398 4,519 9,090 ------- ------- ------- 31,094 26,662 26,949 Creditors: amounts falling due within one year (19,961) (15,046) (16,402) ------- ------- ------- Net current assets 11,133 11,616 10,547 ------- ------- ------- Total assets less current liabilities 28,393 28,787 27,684 Creditors: amounts falling due after more than one year (3,000) (3,109) (20) Provisions for liabilities and charges (1,663) (500) (1,401) ------- ------- ------- Net assets 23,730 25,178 26,263 ======= ======= ======= Capital and reserves Called up share capital 8 1,523 1,565 1,567 Capital redemption reserve 8 61 - - Other reserve 8 12 (495) (418) Profit and loss account 8 22,131 24,108 25,114 ------- ------- ------- Equity shareholders' funds 7 23,727 25,178 26,263 Equity minority interests 8 3 - - ------- ------- ------- Total capital employed - all equity 23,730 25,178 26,263 ======= ======= ======= CONSOLIDATED CASH FLOW STATEMENT Notes Six months to Six months to Year to 2 December 26 November 28 May 2001 2000 2001 £000 £000 £000 Net cash inflow from operating activities 3,422 3,343 17,061 ------- ------- ------- Returns on investments and servicing of finance Interest received 128 144 486 Interest paid (127) (227) (495) Interest paid on hire purchase contracts (5) (4) (18) ------- ------- ------- Net cash outflow from returns on investments and servicing of finance (4) (87) (27) ------- ------- ------- Taxation paid (1,333) (368) (3,226) ------- ------- ------- Capital expenditure and financial investment Purchase of tangible fixed assets (2,947) (1,850) (3,515) Sale of tangible fixed assets 455 18 45 Purchase of own shares (2) - (561) ------- ------- ------- Net cash outflow from capital expenditure and financial investment (2,494) (1,832) (4,031) ------- ------- ------- Acquisitions Shares issued to minority interests 3 - - ------- ------- ------- Net cash inflow from acquisitions 3 - - ------- ------- ------- Equity dividends paid (2,032) (1,920) (3,099) ------- ------- ------- Net cash (outflow)/inflow before financing (2,438) (864) 6,678 ------- ------- ------- Financing Issue of ordinary share capital 447 - 79 Repayment of principal under hire purchase contracts (92) (36) (86) Increase in/(repayment of) medium term revolving credit facility 3,000 - (3,000) Own shares purchased/cancelled (5,609) - - ------- -------- ------- Net cash outflow from financing (2,254) (36) (3,007) ------- -------- ------- (Decrease)/increase in cash in the period 9 (4,692) (900) 3,671 ======= ======= ======= Reconciliation of operating profit to operating cash flow Six months to Six months to Year to 2 December 26 November 3 June 2001 2000 2001 £000 £000 £000 Operating profit 6,050 4,180 9,378 Loss/(profit) on disposal of tangible fixed assets 23 (9) 21 Depreciation of tangible fixed assets 2,082 2,024 4,134 Amortisation of goodwill 52 53 106 Amortisation of own shares 114 - 228 Exchange movements 13 358 231 Increase in stocks (1,994) (1,721) (211) Increase in debtors (6,792) (4,073) (847) Increase in creditors 3,612 2,531 3,120 Increase in provisions 262 - 901 ------- ------- ------- Net cash inflow from operating activities 3,422 3,343 17,061 ======= ======= ======= NOTES TO THE INTERIM FINANCIAL STATEMENTS 1. Interim financial statements The interim financial statements have been prepared on the basis of the accounting policies set out in the Group's statutory financial statements for the 53 weeks ended 3 June 2001. Copies of the interim financial statements will be sent to shareholders and are available to members of the public at the Company's registered office. The financial statements for the 53 weeks to 3 June 2001 are not 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 financial statements for 2000 and 2001 are unaudited. The balance sheet as at 26 November 2000 has been restated to reflect the prior year adjustment made in the financial statements for the 53 weeks ended 3 June 2001. This was to reflect the adoption of Financial Reporting Standard 19, Deferred Tax. 2. Turnover by geographical area of sales operation Restated Restated Six months to Six months to Year to 2 December 26 November 3 June 2001 2000 2001 £000 £000 £000 United Kingdom 15,258 11,959 27,405 Continental Europe 16,648 12,629 28,242 The Americas 16,763 15,674 31,539 Asia Pacific 2,893 2,486 5,448 ------- ------- ------- 51,562 42,748 92,634 ======= ======= ======= As a result of a reorganisation within the United Kingdom sales operation, the prior period numbers have been restated to include the Northern European operation within Continental Europe. 3. Cost of sales, net operating expenses and operating profit Six months to Six months to Year to 2 December 26 November 3 June 2001 2000 2001 £000 £000 £000 Cost of sales - continuing pre-exceptional 17,209 14,334 31,346 Continuing exceptional items - 427 533 ------- ------- ------- Cost of sales 17,209 14,761 31,879 ======= ======= ======= Net operating expenses - continuing pre-exceptional 28,303 23,530 50,053 Continuing exceptional items - 277 1,324 ------- ------- ------- Net operating expenses 28,303 23,807 51,377 ======= ======= ======= Operating profit - continuing pre-exceptional 6,050 4,884 11,235 Continuing exceptional items - (704) (1,857) ------- ------- ------- Operating profit 6,050 4,180 9,378 ======= ======= ======= 4. Taxation on profit on ordinary activities Restated Six months to Six months to Year to 2 December 26 November 3 June 2001 2000 2001 £000 £000 £000 UK corporation tax 1,607 963 2,769 Overseas taxation 647 747 1,151 Origination and reversal of timing differences (50) (136) (311) ------- ------- ------- 2,204 1,574 3,609 ======= ======= ======= Taxation credits on exceptional items included above: Restructuring costs - (200) (495) ------- ------- ------- 5. Dividends Six months to Six months to Year to 2 December 26 November 3 June 2001 2000 2001 £000 £000 £000 Interim ordinary dividend 1,256 1,179 1,179 Final ordinary dividend - - 2,109 ------- ------- ------- 1,256 1,179 3,288 ======= ======= ======= 6. Earnings per ordinary share The calculation of pre-exceptional earnings per ordinary share for the previous periods has been based on the profit for the period before the effect of the exceptional restructuring costs and tax credit thereon. This calculation has been included to enable a like for like comparison with other periods where no exceptional costs are charged. 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 2 December 26 November 3 June 2001 2000 2001 Weighted average number of shares: For basic earnings per ordinary share 30,720,163 31,272,287 31,276,803 Dilution effect of share options 748,964 223,052 384,302 ---------- ---------- ---------- For diluted earnings per ordinary share 31,469,127 31,495,339 31,661,105 ========== ========== ========== 7. Reconciliation of movements in shareholders' funds Restated Six months to Six months to Year to 2 December 26 November 3 June 2001 2000 2001 £000 £000 £000 Profit for the period 3,834 2,514 5,756 Dividends (1,256) (1,179) (3,288) ------- ------- ------- 2,578 1,335 2,468 Issue of new share capital 447 - 79 Own shares purchased/cancelled (5,609) - - Other recognised gains and losses 48 365 238 Opening shareholders' funds 26,263 23,478 23,478 ------- ------- ------- Closing shareholders' funds 23,727 25,178 26,263 ======= ======= ======= 8. Capital, reserves and equity minority interests Equity Called Capital Equity minor- up redemp- Profit share ity share tion Other and loss holders' Inter- capital reserve reserve account funds ests £000 £000 £000 £000 £000 £000 As at 4 June 2001 1,567 - (418) 25,114 26,263 - Exchange adjustments - - - 48 48 - Profit retained for the period - - - 2,578 2,578 - Shares issued to minority interests - - - - - 3 Share of minority loss for the period - - - - - (334) Provision against minority loss - - - - - 334 Issue of ordinary share capital 17 - 430 - 447 - Own shares purchased/cancelled (61) 61 - (5,609) (5,609) - ------ ------ ------ ------ ------ ------ As at 2 December 2001 1,523 61 12 22,131 23,727 3 ====== ====== ====== ====== ====== ====== 9. Analysis of net funds As at As at 2 December 3 June 2001 Cash flow 2001 £000 £000 £000 Cash at bank and in hand 9,090 (4,692) 4,398 Debt due after one year - (3000) (3,000) Hire purchase agreements (132) 92 (40) ---------- ---------- ---------- Net funds 8,958 (7,600) 1,358 ====== ====== ====== This information is provided by RNS The company news service from the London Stock Exchange

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