Games Workshop Group — Indomitable

Games Workshop Group (LSE: GAW)

Last close As at 28/03/2024

GBP98.60

−110.00 (−1.10%)

Market capitalisation

GBP3,286m

More on this equity

Research: Consumer

Games Workshop Group — Indomitable

Games Workshop’s (GAW) FY21 results were at record levels from the perspective of revenue, profitability, cash flow generation and cash returns to shareholders, driven by the launch of the ninth edition of 40K as well as products from prior year releases. The phasing and scale of future new product releases in FY22 and FY23 may produce lower rates of growth than FY21. Management’s focus on product innovation, customer engagement and geographic expansion has tended to provide positive surprises. Our DCF-based valuation increases by c 8% to £129 per share.

Russell Pointon

Written by

Russell Pointon

Director, Consumer

Consumer

Games Workshop Group

Indomitable

FY21 results

Consumer goods

10 August 2021

Price

11,810p

Market cap

£3,871m

Net cash (£m) at 31 May 2021 (excluding lease liabilities)

85.2

Shares in issue

32.8m

Free float

97%

Code

GAW

Primary exchange

LSE

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

3.1

8.7

24.7

Rel (local)

2.6

7.9

2.6

52-week high/low

12,100p

8,505p

Business description

Games Workshop is a leading international specialist designer, manufacturer and multi-channel retailer of miniatures, scenery, artwork and fiction for tabletop miniature games set in its fantasy Warhammer worlds.

Next events

AGM

September 2021

H122 results

January 2022

Analysts

Russell Pointon

+44 (0)20 3077 5700

Sara Welford

+44 (0)20 3077 5700

Games Workshop Group is a research client of Edison Investment Research Limited

Games Workshop’s (GAW) FY21 results were at record levels from the perspective of revenue, profitability, cash flow generation and cash returns to shareholders, driven by the launch of the ninth edition of 40K as well as products from prior year releases. The phasing and scale of future new product releases in FY22 and FY23 may produce lower rates of growth than FY21. Management’s focus on product innovation, customer engagement and geographic expansion has tended to provide positive surprises. Our DCF-based valuation increases by c 8% to £129 per share.

Year end

Revenue (£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

05/20

269.7

89.4

217.8

145

54.2

1.2

05/21

353.2

150.9

370.5

235

31.9

2.0

05/22e

376.9

158.1

387.1

250

30.5

2.1

05/23e

395.3

163.4

398.8

275

29.6

2.3

Note: *PBT and diluted EPS are normalised, excluding amortisation of acquired intangibles and exceptional items.

FY21: An exceptional year

The extent of GAW’s FY21 success is highlighted by the fact that its FY21 operating profit pre-royalty income of £135.4m was greater than those of FY18 (£64.7m) and FY19 (£69.8m) combined, prior to the disruption caused by COVID-19 in FY20. Constant currency revenue growth of c 34% and limited underlying cost inflation produced significant operational gearing, operating profit pre-royalty income increased by 85% and the margin increased by over 11pp to 38.3%. The higher absolute profits and stable free cash generation, relative to revenue, enabled a strong improvement in cash returns to shareholders, up 62% y-o-y to 235p per share, and an improvement in the year-end net cash position to £85.2m (FY20 £52.9m).

Forecasts: Lower growth due to phasing of releases

Following the publication of FY21 results our forecasts for FY22 are broadly unchanged and we introduce estimates for FY23. In FY22, we forecast y-o-y revenue growth of c 7%, operating profit before royalties of c 5%, and a modest increase in royalty income to £17m from £16.3m. In FY23, we assume c 5% revenue growth to £395.3m and c 4% growth in operating profit before royalty income. With stable royalty income, this translates to growth in PBT of c 3% to £164.1m. Our DPS forecasts of 250p in FY22 and 275p in FY23 represent cash costs of £82.1m and £90.6m, versus our estimates of free cash flow post interest of £121.6m in FY22 and £127.9m in FY23.

Valuation: DCF-based valuation increased to £129

To reflect the rolling forward of results and our revised estimates, we have increased our DCF-based valuation by c 8% to c £129 per share (from £120 per share). The prospective P/E multiples for FY22 and FY23 of 30.5x and 29.6x respectively compare with the recent peak of 32.2x in FY21.

FY21 results: Exceptional growth and operational gearing

Games Workshop’s FY21 results demonstrated exceptional growth despite the disruption to offline channels due to the COVID-19 pandemic and operational challenges around Brexit. The July 2020 launch of the ninth edition of Warhammer 40K, Indomitus, was an important driver to revenue growth, as was ongoing demand for existing products of prior years’ editions. Limited underlying operating cost inflation led to significant operational gearing.

Revenue grew by 31% to £353.2m, c 34% on a constant currency basis, operating profit pre-royalties increased by 85% to £135.4m, and PBT by c 69% to £150.9m. These compare with the pre-close trading update in May 2021 for revenue of ‘not less than £350m’ and PBT of ‘not less than £150m’.

Exhibit 1: Financial results

£m

H120

H220

FY20

H121

H221

FY21

Total revenue

148.4

121.4

269.7

186.8

166.4

353.2

- Trade

78.1

61.9

140.0

104.0

90.8

194.8

- Retail

45.8

32.2

78.0

36.9

33.8

70.7

- Online

24.5

27.3

51.7

45.9

41.8

87.7

Growth y-o-y:

Total revenue

18.5%

(7.6%)

5.1%

25.9%

37.1%

31.0%

- Trade

27.1%

3.2%

15.3%

33.2%

46.7%

39.1%

- Retail

7.7%

(28.9%)

(11.2%)

(19.4%)

5.0%

(9.4%)

- Online

15.2%

4.4%

9.2%

87.7%

53.4%

69.6%

Constant currency growth y-o-y:

Total revenue

16.3%

N/D

4.6%

26.8%

N/D

33.9%

- Trade

23.9%

N/D

14.4%

34.3%

N/D

43.3%

- Retail

6.3%

N/D

(11.6%)

(18.6%)

N/D

(7.7%)

- Online

14.2%

N/D

9.3%

87.8%

N/D

71.0%

Gross profit

103.0

77.6

180.6

141.1

115.8

256.9

Gross margin

69.5%

63.9%

67.0%

75.5%

69.6%

72.7%

Gross margin gearing

83%

119%

56%

99%

85%

91%

Operating costs

(54.5)

(52.9)

(107.4)

(57.8)

(63.7)

(121.5)

Operating profit (pre-royalties)

48.5

24.7

73.2

83.3

52.1

135.4

Margin

32.7%

20.4%

27.1%

44.6%

31.3%

38.3%

Growth y-o-y

37.4%

(28.5%)

4.8%

71.8%

110.8%

85.0%

Operational gearing

57%

98%

26%

91%

61%

74%

Other operating income (royalties)

10.7

6.1

16.8

8.7

7.6

16.3

PBT

58.6

30.8

89.4

91.6

59.3

150.9

Growth y-o-y

43.6%

(23.9%)

10.0%

56.4%

92.4%

68.8%

EPS, diluted (p)

144.6

73.2

217.8

224.0

146.5

370.5

Growth y-o-y

44.4%

(27.3%)

8.5%

54.9%

100.2%

70.1%

DPS (p)

100.0

45.0

145.0

80.0

155.0

235.0

Growth y-o-y

53.8%

(50.0%)

(6.5%)

(20.0%)

244.4%

62.1%

Net cash excluding leases

33.0

52.9

52.9

96.5

85.2

85.2

Net cash including leases

4.5

20.8

20.8

51.2

38.2

38.2

Source: Games Workshop accounts, Edison Investment Research

Revenue: Driven by Online and Trade

As Retail continued to be affected by COVID-19 related store closures and social distancing restrictions through the year, with a constant currency revenue decline of c 9% y-o-y, customer demand was more than adequately sated by the Online and Trade channels, with y-o-y growth respective rates of 71% and 43% at constant currency.

The comparison of y-o-y six-monthly growth rates for the three channels in FY21 versus FY20 is complicated by the outbreak of COVID-19 (end of H220); however, the initial boost to total revenue in H121 from the Indomitus launch versus H221 is evident, reflecting the typical H1:H2 revenue split in the year of a major relaunch. In Exhibit 2 we highlight the impact of new and existing products on GAW’s revenue growth. Since FY18, the percentage of revenue from ‘new’ and ‘existing’ products has been consistent at 38% and 62% respectively, implying their respective annual growth rates have been comparable, and are testimony to the multi-year revenues earned following the launch of a new edition of the major games, 40K and Age of Sigmar. The impact on annual revenue of the phased new product launches that follow each new edition are difficult to track as new product revenue in any year is a combination of those from any new edition launched in that year and from prior years’ editions. Exhibit 2 provides some insight to the relative scale of 40K and Age of Sigmar in the launch year of a new edition. In FY21, when the ninth edition of 40K was released, revenue from new products was c £134m versus c £98m in FY19 when the second edition of Age of Sigmar was released.

Exhibit 2: Phasing of launches and revenue

£m

FY16

FY17

FY18

FY19

FY20

FY21

Revenue

118.1

158.1

221.3

256.6

269.7

353.2

Revenue from 'new' products

35.4

53.8

84.1

97.5

102.5

134.2

Revenue from 'old' products

82.6

104.4

137.2

159.1

167.2

219.0

Revenue from 'new' products (%)

30%

34%

38%

38%

38%

38%

Revenue from 'old' products (%)

70%

66%

62%

62%

62%

62%

Edition launch in FY

Age of Sigmar (1st)

40K (8th)

Age of Sigmar (2nd)

40K (9th)

Source: Games Workshop accounts, Edison Investment Research

There has been renewed momentum in the number of net new accounts in GAW’s Trade channel, 500 net new accounts in FY21 took the total to c 5,400. Prior to FY19, GAW was adding up to 200 net new accounts per annum, which accelerated to 600 in FY19 before a lower net 200 additions in FY20, likely influenced by COVID-19 disruption.

FY21’s Retail revenue of £70.7m compares with the peak of £87.8m in FY19. By the end of FY21 the net number of locations was modestly lower at 523 from 531 in the prior year, with one more location in North America (to 161), and fewer locations in the UK (by two to 138), continental Europe (by four to 153), and Asia (by three to 22). FY21 represented the first year that the net number of stores declined y-o-y since FY13 and reflects the typical churn of store locations but without the ability to open new stores due to COVID-19 disruption. In FY21, 90 stores did not break even. Management is committed to new store openings and the size and shape of the portfolio remains a focus. As the stores re-open the performance of each will be kept under review and will be closed if they do not meet management’s financial criteria.

In recent years currency translation has been relatively benign for GAW’s financials, but the 9% appreciation in the average exchange rate y-o-y of sterling versus the US dollar ($/£1.38 in H221 from $/£1.27 in H220) presented a modest currency headwind for reported numbers. Currency translation negatively affected FY21 revenue by c £8m and profit by £4m. 77% of Games Workshop’s revenue was generated overseas during FY21.

Profitability: High operational gearing

Management attributes the increase in gross margin to volume leverage, sales and channel mix (including price which is typically raised by a few percentage points on new releases), as well as the disruption to production in the prior year which required a higher inventory provision. The gross margin improved to 72.7% from 67.0% in FY20, equating to gross margin gearing (the proportion of incremental revenue that dropped through to gross profit) of 91%. We have deconstructed the constituent parts of costs of goods sold (COGS) using the company’s disclosure of costs (inventory, depreciation and amortisation), and our estimates for other costs to determine the sources of the changes in gross margin. We include long-term numbers to show how product cost ratios are influenced by new edition and product releases.

Exhibit 3: Constituents of cost of goods sold (relative to revenue)

FY15

FY16

FY17

FY18

FY19

FY20

FY21

Cost of inventory

15.4%

15.2%

15.8%

13.0%

15.4%

14.5%

15.8%

Net inventory provision

1.0%

1.5%

0.9%

1.8%

2.2%

2.4%

0.3%

Staff costs

3.2%

3.5%

3.5%

5.8%

6.3%

6.2%

6.7%

Depreciation

2.5%

2.7%

2.4%

1.8%

2.1%

2.3%

1.8%

Amortisation

4.2%

3.3%

1.9%

2.0%

2.2%

1.9%

1.4%

Other

4.7%

5.4%

3.1%

4.7%

4.2%

5.8%

1.3%

Total COGS

31.0%

31.7%

27.6%

29.0%

32.5%

33.0%

24.5%

Edition launch in FY

40K (7th)

Age of Sigmar (1st)

40K (8th)

Age of Sigmar (2nd)

40K (9th)

Source: Games Workshop accounts, Edison Investment Research

The y-o-y decrease in inventory costs and provision relative to revenue (16.1% in FY21 versus 16.9% in FY20) was further boosted by the leveraging of all other costs. Relative to FY18, when the prior edition of 40K was released, we can see higher inventory costs and provision in FY21 than the 14.8% in FY18, offset by lower other costs relative to revenue.

As can be seen in Exhibit 1, total operating costs increased to £121.5m from £107.4m, a y-o-y increase of c 13%. Excluding the staff bonus (cost of £10.6m in FY21 versus zero in FY20) there was limited total underlying cost inflation (c 3%) to support the higher sales growth. The bonus of £10.6m is significantly higher than in prior years, c £3m pa in FY17–19.

The higher gross margin and lower operating cost growth translated through to a significant increase in the operating margin pre-royalties, to 38.3% from 27.1% in FY20. The reported operating profit of £135.4m, was equivalent to more than the combined profits of FY18 and FY19 of £134.5m.

Royalty income from licensing declined modestly to £16.3m from £16.8m in FY20, representing the first annual y-o-y decline since FY13. The decline is attributed to the high level of guarantee income on multi-year contracts that was recognised on inception in the prior year.

With a persistent net cash position, the net financial expense of £0.8m is mainly the interest liability on its operating leases.

At 19.2% the effective tax rate for FY21 was modestly below FY20’s 20.2%.

Through FY21, shareholders have been handsomely rewarded with five dividends declared through the year, totalling 235p per share versus 145p in FY20. The dividend compares with the company’s free cash flow (FCF) per share post interest of 313p in FY21. A higher proportion of free cash flow was paid out as dividends in FY21 (cover 1.3x) than in FY20 (cover 1.7x), which reflects some likely caution one year ago due to the uncertainties presented by COVID-19 and management’s desire to build its operating cash buffer (see below). GAW’s dividend policy is to return ‘truly surplus cash’ to shareholders, rather than with reference to an earnings or cash payout ratio.

Exhibit 4: Dividend progression

FY15

FY16

FY17

FY18

FY19

FY20

FY21

CAGR

EPS (p)

38

42

94

182

201

218

371

46%

DPS (p)

52

40

74

126

155

145

235

29%

Earnings cover (x)

0.7

1.0

1.3

1.4

1.3

1.5

1.6

FCF per share (p)

34

36

96

148

153

244

313

44%

Dividend cash cover (x)

0.7

0.9

1.3

1.2

1.0

1.7

1.3

Source: Company accounts. Edison Investment Research

Cash flow and balance sheet: Net cash position increased

GAW’s free cash flow generation pre-interest and relative to revenue in FY21 was broadly consistent with FY20, as marginally lower operating cash generation was offset by lower investment in fixed and intangible assets. The change in operating cash generation reflects the higher operating margin (discussed above) offset by a reversion to a more normal working capital outflow versus the inflow in FY20. Working capital investment was lower in FY20 due to the factory being closed at the period end due to COVID-19, and the receipt of financial support from the government through the pandemic that was subsequently repaid, amongst other items. On an absolute basis FY21’s FCF pre-interest of £102.7m compares with FY20’s £79.9m.

Exhibit 5: Summary cash flow (relative to revenue)

FY15

FY16

FY17

FY18

FY19

FY20

FY21

Operating cash flow

19.5%

20.5%

27.8%

31.7%

28.2%

38.7%

37.6%

- Operating profit

13.8%

14.3%

24.2%

33.6%

31.6%

33.4%

43.0%

- Depreciation, amortisation and impairments

9.3%

8.8%

7.0%

5.5%

6.2%

9.5%

7.5%

- Working capital

(1.9%)

(0.6%)

(0.2%)

(2.0%)

(3.5%)

4.0%

(4.2%)

- Tax paid

(1.9%)

(2.2%)

(3.5%)

(5.5%)

(6.4%)

(8.4%)

(9.1%)

Investing cash flow

(10.3%)

(10.7%)

(8.1%)

(9.7%)

(8.7%)

(9.1%)

(8.4%)

- Capex

(5.7%)

(4.5%)

(3.4%)

(6.6%)

(5.3%)

(6.0%)

(4.9%)

- Intangibles

(0.8%)

(2.4%)

(1.1%)

(0.7%)

(0.7%)

(0.9%)

(0.8%)

- Capitalised development

(3.8%)

(3.9%)

(3.6%)

(2.4%)

(2.7%)

(2.2%)

(2.7%)

FCF pre-interest

9.3%

9.9%

19.7%

21.9%

19.5%

29.7%

29.1%

Source: Company accounts

At the end of FY21, the net cash position improved significantly to £85.2m from £52.9m. The FCF pre-interest of £102.7m funded dividend payments of £60.5m (FY20 £47.3m) and the repayment of lease liabilities of £10.9m. A ‘working cash buffer’ of three months’ worth of working capital requirement alongside six months’ worth of tax payments and capital expenditure has been set aside before deciding how much cash is truly surplus for the purpose of declaring dividends. Including lease liabilities of £47m, the net cash position at the end of FY21 was £38.2m.

Of note is the significant increase in GAW’s return on capital employed in FY21 to 184% from 94% in FY20 due to the higher profitability and its lower capital base.

Outlook: Long-term focus

Management has not provided financial guidance for FY22 but will update on progress through the year. There is consistent messaging of focusing on the long term, and what is in its control. The uncertainty caused by COVID-19 and Brexit are highlighted; the latter disrupted sales in H221, but management believes it now has reliable cross-border service up and running.

Management list six priorities for FY22: investment in new product quality; ensuring new factories and warehouses deliver the appropriate cash back, staff training and development; growth in every country in the world, by channel and of licensing income; engagement with customers; and social responsibility has been added as a key focus.

Following the release of 40k, Indomitus in FY21, FY22 will benefit from the recent (June 2021) release of the third edition of Age of Sigmar, Dominion. Historically, Age of Sigmar’s revenue is not as significant as that of 40K, as identified earlier, therefore when coupled with the tough comparative of FY21, it is unlikely that Games Workshop will be able to replicate FY21’s growth rates.

With respect to licensing, several large franchises for video games will launch in the next 12 months and there are currently 15 video games in development.

Forecasts: More muted growth likely in FY22 and FY23

Following the publication of FY21 results, our forecasts for FY22 are broadly unchanged and we introduce estimates for FY23.

As highlighted, the launch of the third edition of Age of Sigmar, Dominion in FY22 should contribute lower incremental revenue than the launch of the ninth edition of 40K, Indomitus in FY21. In addition, in FY19 when the second edition of Age of Sigmar was launched, GAW’s gross margin was 67.5% versus FY18’s 71%, when the eighth edition of 40K was released. As Retail re-opens post COVID-19, its lower gross margin versus Trade and Online may dampen gross margin on a like-for-like basis.

In FY22, we forecast revenue growth of c 7% to £376.9m, a reduction in gross margin to 70% from 72.7% in FY21 to reflect lower expected margins from mix of products and channels. With limited growth in operating costs, we forecast an increase in operating profit before royalties of c 5% to £141.8m, a margin of 37.6%. We assume a modest increase in royalty income to £17m from £16.3m, and re-iterate the difficulty in forecasting this income, which represents pure incremental profit.

FY23 will continue to benefit from second-year sales of Dominion and other products, therefore we assume c 5% revenue growth to £395.3m. We assume a further reduction in gross margin to 69% in FY23 (from 70% in FY22) to reflect mix of products and channels. We assume 3% operating cost inflation, leading to c 4% growth in operating profit before royalty income. With stable y-o-y royalty income of £17m, this translates to PBT growth of c 3% to £164.1m.

Our DPS forecasts of 250p in FY22 and 275p in FY23 represent cash costs of £82.1m and £90.6m, versus our estimates of free cash flow post interest of £121.6m in FY22 and £127.9m in FY23.

Valuation: DCF-based valuation increased by c 8%

The roll forward of results and changes to our estimates leads to an increase in our DCF-based valuation of 8% to c £129 per share (from £120 per share). Our DCF assumes a WACC of 6.5% and terminal growth rate of 2% after 2031. The sensitivity of the DCF to changes in assumptions for WACC and terminal growth are highlighted below.

Exhibit 6: DCF sensitivity (p per share)

Cost of capital

5.5%

6.0%

6.5%

7.0%

7.5%

Terminal growth

1.0%

13,929

12,443

11,229

10,221

9,370

1.5%

15,212

13,427

12,002

10,839

9,872

2.0%

16,861

14,658

12,947

11,580

10,465

2.5%

19,061

16,240

14,127

12,487

11,177

3.0%

22,139

18,349

15,645

13,620

12,047

Source: Edison Investment Research

In Exhibits 7 and 8 we show GAW’s prospective EV/ sales (current EV) and P/E for FY22 and FY23 versus historic high, average and low multiples (historic EV) in those years. We exclude IFRS 16 debt so that the EV is comparable across time.

The EV/sales multiples for FY22 and FY23 of 10.1x and 9.6x compare with the long-term average since FY08 of 2.4x, which reflects the significantly higher growth prospects and profitability versus historically given management’s focus on developing and growing the company’s key properties. The prospective multiples compare with a recent high EV/sales multiple of 10.9x in FY21. Similarly, the prospective P/E multiples for FY22 and FY23 of 30.5x and 29.6x compare with a recent peak of 32.2x in FY21, and the FY20 peak multiple of 36.5x reflects the negative effects of COVID-19 on GAW’s profitability.

Exhibit 7: GAW’s EV/sales multiple (x)

Exhibit 8: GAW’s P/E multiple (x)

Source: Games Workshop, Refinitiv, Edison Investment Research

Source: Games Workshop, Refinitiv, Edison Investment Research

Exhibit 7: GAW’s EV/sales multiple (x)

Source: Games Workshop, Refinitiv, Edison Investment Research

Exhibit 8: GAW’s P/E multiple (x)

Source: Games Workshop, Refinitiv, Edison Investment Research

Exhibit 9: Financial summary

Year-end May

£m

 

2015

2016

2017

2018

2019

2020

2021

2022e

2023e

 

 

 

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

 

119.1

118.1

158.1

221.3

256.6

269.7

353.2

376.9

395.3

Cost of sales

 

 

(37.0)

(37.4)

(43.7)

(64.2)

(83.3)

(89.1)

(96.3)

(113.1)

(122.5)

Gross profit

 

 

82.1

80.6

114.4

157.1

173.3

180.6

256.9

263.8

272.8

SG&A (expenses)

 

 

(67.2)

(69.7)

(83.6)

(92.4)

(103.4)

(107.4)

(121.5)

(122.0)

(125.7)

Other operating income/(expense)

 

 

1.5

5.9

7.5

9.6

11.4

16.8

16.3

17.0

17.0

Exceptionals and adjustments

 

 

0

0

0

0

0

0

0

0

0

EBITDA (excl royalties)

 

 

26.0

21.3

41.8

76.8

85.7

98.8

162.0

168.9

175.5

EBITDA

 

 

27.5

27.3

49.3

86.5

97.1

115.6

178.3

185.9

192.5

Depreciation and amortisation

 

 

(11.1)

(10.4)

(11.0)

(12.1)

(15.9)

(25.6)

(26.6)

(27.1)

(28.4)

Operating profit (before royalties and exceptionals)

 

14.9

10.9

30.8

64.7

69.8

73.2

135.4

141.8

147.1

Reported operating profit

 

 

16.5

16.9

38.3

74.3

81.2

90.0

151.7

158.8

164.1

Finance income/(expense)

 

 

0.1

0.1

0.1

(0.0)

0.1

(0.6)

(0.8)

(0.7)

(0.7)

Reported PBT

 

 

16.6

16.9

38.4

74.3

81.3

89.4

150.9

158.1

163.4

Income tax expense (includes exceptionals)

 

 

(4.3)

(3.5)

(7.9)

(14.8)

(15.5)

(18.1)

(28.9)

(30.3)

(31.3)

Adjusted net income

 

 

12.2

13.5

30.5

59.5

65.8

71.3

122.0

127.8

132.1

Reported net income

 

 

12.3

13.5

30.5

59.5

65.8

71.3

122.0

127.8

132.1

WASC (m)

 

 

31.975

32.093

32.126

32.258

32.438

32.602

32.733

32.827

32.928

Diluted average number of shares (m)

 

 

32.025

32.150

32.325

32.732

32.785

32.736

32.927

33.021

33.122

Reported EPS (p)

 

 

38.3

42.1

95.1

184.3

202.9

218.7

372.7

389.4

401.2

Reported diluted EPS (p)

 

 

38.3

42.0

94.5

181.6

200.8

217.8

370.5

387.1

398.8

Adjusted diluted EPS (p)

 

 

38.1

42.0

94.5

181.6

200.8

217.8

370.5

387.1

398.8

DPS (p)

 

 

52.0

40.0

74.0

126.0

155.0

145.0

235.0

250.0

275.0

 

 

 

 

 

 

 

 

 

 

 

 

Gross margin

 

 

69.0%

68.3%

72.4%

71.0%

67.5%

67.0%

72.7%

70.0%

69.0%

EBITDA margin (excl royalties)

 

 

21.8%

18.1%

26.5%

34.7%

33.4%

36.6%

45.9%

44.8%

44.4%

EBITDA margin (incl royalties)

 

 

23.1%

23.1%

31.2%

39.1%

37.8%

42.9%

50.5%

49.3%

48.7%

 

 

12.5%

9.2%

19.5%

29.2%

27.2%

27.1%

38.3%

37.6%

37.2%

BALANCE SHEET

 

 

 

 

 

 

 

 

 

 

 

Property, plant and equipment

 

 

22.7

22.6

22.1

30.1

35.3

42.0

49.8

58.7

67.6

Right-of-use assets

 

 

 

 

 

 

 

31.9

46.0

45.0

44.0

Goodwill

 

 

1.4

1.4

1.4

1.4

1.4

1.4

1.4

1.4

1.4

Intangible assets

 

 

8.3

10.5

12.9

14.2

16.0

17.6

23.7

29.7

35.2

Other non-current assets

 

 

4.8

4.1

6.5

7.8

11.7

16.4

16.4

16.4

16.4

Total non-current assets

 

 

37.2

38.7

43.0

53.5

64.4

109.3

137.3

151.2

164.6

Cash and equivalents

 

 

12.6

11.8

17.9

28.5

29.4

52.9

85.2

113.8

140.2

Inventories

 

 

7.6

8.5

12.4

20.2

24.2

20.7

27.5

32.3

35.0

Trade and other receivables

 

 

9.4

10.1

13.0

15.5

18.8

19.6

30.6

32.7

34.2

Other current assets

 

 

0.6

0.7

0.6

0.5

0.8

0.2

1.1

1.1

1.1

Total current assets

 

 

30.2

31.2

43.9

64.7

73.2

93.4

144.4

179.8

210.6

Trade and other payables

 

 

(13.1)

(12.8)

(16.5)

(20.3)

(19.2)

(30.3)

(35.4)

(38.7)

(40.9)

Borrowings

 

 

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Leases

 

 

0.0

0.0

0.0

0.0

0.0

(8.3)

(8.6)

(8.6)

(8.6)

Other current liabilities

 

 

(2.0)

(2.7)

(6.5)

(7.3)

(10.1)

(4.5)

(0.7)

(0.7)

(0.7)

Total current liabilities

 

 

(15.1)

(15.6)

(23.0)

(27.6)

(29.3)

(43.1)

(44.7)

(48.0)

(50.2)

Borrowings

 

 

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Leases

 

 

0.0

0.0

0.0

0.0

0.0

(23.8)

(38.4)

(37.5)

(36.6)

Other non-current liabilities

 

 

(0.8)

(1.1)

(1.0)

(1.2)

(1.9)

(2.1)

(2.3)

(2.3)

(2.3)

Total non-current liabilities

 

 

(0.8)

(1.1)

(1.0)

(1.2)

(1.9)

(25.9)

(40.7)

(39.8)

(38.9)

Net assets

 

 

51.5

53.2

62.8

89.3

106.5

133.7

196.3

243.2

286.0

CASH FLOW STATEMENT

 

 

 

 

 

 

 

 

 

 

 

EBIT

 

 

16.5

16.9

38.3

74.3

81.2

90.0

151.7

158.8

164.1

Depreciation and amortisation

 

 

11.1

10.4

10.2

12.2

15.9

25.0

26.2

27.1

28.4

Impairments

 

 

0.0

0.0

0.8

(0.0)

0.0

0.6

0.4

0.0

0.0

Share-based payments

 

 

0.2

0.2

0.2

0.2

0.3

0.5

1.2

1.2

1.2

Other adjustments

 

 

0.1

0.1

0.1

0.1

0.3

0.3

0.1

0.0

0.0

Movements in working capital

 

 

(2.3)

(0.8)

(0.2)

(4.4)

(9.0)

10.8

(14.8)

(3.5)

(2.1)

Income taxes paid

 

 

(2.3)

(2.6)

(5.5)

(12.2)

(16.3)

(22.7)

(32.1)

(30.3)

(31.3)

Operating cash flow

 

 

23.3

24.2

43.9

70.1

72.5

104.5

132.7

153.4

160.3

Net capex and intangibles

 

 

(12.3)

(12.7)

(12.8)

(21.6)

(22.5)

(24.6)

(30.0)

(31.1)

(31.7)

Net interest

 

 

0.1

0.1

0.1

(0.0)

0.1

0.1

0.2

(0.7)

(0.7)

Net proceeds from issue of shares

 

 

0.7

0.3

0.1

0.9

0.7

0.8

1.4

0.0

0.0

Dividends paid

 

 

(16.6)

(12.8)

(23.8)

(38.7)

(50.3)

(47.3)

(60.5)

(82.1)

(90.6)

Other financing activities

 

 

0.0

0.0

(1.9)

0.0

0.0

(10.3)

(10.9)

(10.9)

(10.9)

Net cash flow

 

 

(4.8)

(0.9)

5.5

10.7

0.5

23.2

32.9

28.6

26.4

Opening cash and cash equivalents

 

 

17.6

12.6

11.8

17.9

28.5

29.4

52.9

85.2

113.8

Currency translation differences and other

 

 

(0.2)

0.1

0.6

(0.1)

0.3

0.3

(0.6)

0.0

0.0

Closing cash and cash equivalents

 

 

12.6

11.8

17.9

28.5

29.4

52.9

85.2

113.8

140.2

Closing net cash (including leases)

 

 

12.6

11.8

17.9

28.5

29.4

20.8

38.2

67.7

95.0

Source: Games Workshop, Edison Investment Research

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Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

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Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

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This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

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