Last close As at 05/08/2026
GBP190.10
▲ −20.00 (−0.11%)
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GBP6,282m
Research: Consumer
Games Workshop Group’s (GAW’s) H125 trading update suggests the company enjoyed a strong Q225 in both its core business (due to the launch of the fourth edition of Age of Sigmar midway through Q125) and licensing (due to the success of the Space Marine 2 video game). These are impressive in the context of the tough comparative from the prior year’s launch of the new edition of Warhammer 40K (40K) and the currency headwinds in the early part of H125. We upgrade our profit estimates for FY25 (by 7%) and FY26 (by 3%) to reflect the outperformance versus our prior expectations.
Games Workshop Group |
A notable acceleration in Q225 |
H125 trading update |
Consumer goods |
22 November 2024 |
Share price performance
Business description
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Analyst
Games Workshop Group is a research client of Edison Investment Research Limited. Opinions and forecasts represent the Edison Research department’s view. |
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Games Workshop Group’s (GAW’s) H125 trading update suggests the company enjoyed a strong Q225 in both its core business (due to the launch of the fourth edition of Age of Sigmar midway through Q125) and licensing (due to the success of the Space Marine 2 video game). These are impressive in the context of the tough comparative from the prior year’s launch of the new edition of Warhammer 40K (40K) and the currency headwinds in the early part of H125. We upgrade our profit estimates for FY25 (by 7%) and FY26 (by 3%) to reflect the outperformance versus our prior expectations.
Year end |
Revenue (£m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
05/23 |
470.8 |
171.6 |
411.8 |
415.0 |
33.1 |
3.0 |
05/24 |
525.7 |
204.2 |
460.9 |
420.0 |
29.6 |
3.1 |
05/25e |
560.0 |
212.4 |
482.5 |
420.0 |
28.3 |
3.1 |
05/26e |
572.2 |
212.7 |
482.7 |
420.0 |
28.3 |
3.1 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
A strong Q225 following an in-line Q125
GAW has reported H125 core revenue is not less than £260m, licensing revenue of not less than £30m and PBT of not less than £120m. These correspond to year-on-year growth rates of not less than 10%, 148% and 41%, respectively. The core business’s revenue growth is consistent with trends seen throughout FY24, which is impressive given the success of 40K last year and the currency headwinds. Licensing revenue is higher than in any prior six-month period. This implies a much better Q225, following Q125 when management indicated trading was in line with its expectations. With a relatively fixed cost base, licensing revenue is likely to be the main driver to the growth in H125’s profit margin.
Upgrades to FY25 and FY25 estimates
We increase our FY25 PBT estimate by 7%, reflecting that GAW has already exceeded our prior FY25 licensing revenue estimate in H125 and that the core business has exceeded management’s expectations in H125. For FY26, we keep our prior year-on-year growth estimate for core revenue, which leads to an upgrade due to the higher FY25 base, while retaining our prior absolute licensing revenue estimate. These adjustments lead to a 3% increase in our FY26 PBT estimate. The projected limited year-on-year growth in FY26’s PBT reflects our c £9m expected year-on-year drop in licensing revenue, while core revenue continues to grow. FY26 will also not benefit from any major releases of new editions of GAW’s two main intellectual properties, 40K and Age of Sigmar.
Valuation: P/E multiple above recent peaks
The strong positive share price reaction to the trading update moves the prospective FY25 P/E multiple to 28.3x, which is above its highest multiple in FY24 (25.4x) but below multiples over 30x in FY20–22 when valuations and trading were influenced by the outbreak of and recovery following COVID-19.
Exhibit 1: Financial summary
Year-end 31 May |
£m |
2022 |
2023 |
2024 |
2025e |
2026e |
|
|
|
|
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
INCOME STATEMENT |
|
|
|
|
|
|
|
Revenue |
|
|
414.8 |
470.8 |
525.7 |
560.0 |
572.2 |
- Core revenue |
|
|
386.8 |
445.4 |
494.7 |
525.0 |
546.0 |
- Licensing revenue |
|
|
28.0 |
25.4 |
31.0 |
35.0 |
26.2 |
Cost of sales |
|
|
(127.4) |
(149.2) |
(151.2) |
(168.0) |
(174.7) |
Gross profit |
|
|
287.4 |
321.6 |
374.5 |
392.0 |
397.5 |
Operating expenses |
|
|
(94.2) |
(108.3) |
(131.1) |
(141.9) |
(143.3) |
EBITDA |
|
|
193.2 |
213.3 |
243.4 |
250.1 |
254.2 |
Depreciation and amortisation |
|
|
(36.1) |
(43.1) |
(41.6) |
(39.4) |
(43.4) |
Reported operating profit |
|
|
157.1 |
170.2 |
201.8 |
210.7 |
210.9 |
- Core operating profit |
|
|
131.7 |
148.2 |
174.8 |
178.5 |
186.7 |
- Licensing operating profit |
|
|
25.4 |
22.0 |
27.0 |
32.2 |
24.1 |
Finance income/(expense) |
|
|
(0.6) |
0.4 |
1.2 |
0.4 |
0.5 |
Reported PBT |
|
|
156.5 |
170.6 |
203.0 |
211.1 |
211.4 |
Profit Before Tax (norm) |
|
|
158.1 |
171.6 |
204.2 |
212.4 |
212.7 |
Income tax expense (includes exceptionals) |
|
|
(28.1) |
(35.9) |
(51.9) |
(52.8) |
(52.8) |
Reported net income |
|
|
128.4 |
134.7 |
151.1 |
158.4 |
158.5 |
Adjusted net income (before share-based payments) |
|
|
129.7 |
135.5 |
152.0 |
159.3 |
159.5 |
WASC (m) |
|
|
32.813 |
32.881 |
32.935 |
32.971 |
33.009 |
Average Number of Shares Outstanding (m) |
|
|
32.873 |
32.898 |
32.977 |
33.013 |
33.051 |
Reported EPS (p) |
|
|
391.3 |
409.7 |
458.8 |
480.3 |
480.3 |
Reported diluted EPS (p) |
|
|
390.6 |
409.4 |
458.2 |
479.7 |
479.7 |
EPS - normalised fully diluted (p) |
|
|
394.6 |
411.8 |
460.9 |
482.5 |
482.7 |
DPS (p) |
|
|
235.0 |
415.0 |
420.0 |
420.0 |
420.0 |
Gross margin |
|
|
69.3% |
68.3% |
71.2% |
70.0% |
69.5% |
EBITDA margin (including licensing income) |
|
|
46.6% |
45.3% |
46.3% |
44.7% |
44.4% |
Operating margin |
|
|
37.9% |
36.2% |
38.4% |
37.6% |
36.9% |
BALANCE SHEET |
|
|
|
|
|
|
|
Property, plant and equipment |
|
|
55.0 |
55.7 |
56.5 |
66.5 |
66.2 |
Right-of-use assets |
|
|
48.1 |
48.9 |
46.1 |
44.2 |
42.3 |
Goodwill |
|
|
1.4 |
1.4 |
1.4 |
1.4 |
1.4 |
Intangible assets |
|
|
25.6 |
21.2 |
22.8 |
25.8 |
28.7 |
Other non-current assets |
|
|
37.2 |
25.6 |
32.6 |
32.6 |
32.6 |
Total non-current assets |
|
|
167.3 |
152.8 |
159.4 |
170.5 |
171.2 |
Cash and equivalents |
|
|
71.4 |
90.2 |
107.6 |
118.8 |
138.5 |
Inventories |
|
|
38.4 |
33.0 |
42.2 |
47.0 |
46.5 |
Trade and other receivables |
|
|
39.6 |
36.3 |
37.8 |
42.8 |
43.7 |
Other current assets |
|
|
4.4 |
14.5 |
4.3 |
4.3 |
4.3 |
Total current assets |
|
|
153.8 |
174.0 |
191.9 |
212.9 |
233.0 |
Trade and other payables |
|
|
(33.5) |
(37.0) |
(46.3) |
(56.9) |
(56.9) |
Borrowings |
|
|
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Leases |
|
|
(9.2) |
(9.9) |
(10.0) |
(10.0) |
(10.0) |
Other current liabilities |
|
|
(1.9) |
(1.3) |
(2.1) |
(2.1) |
(2.1) |
Total current liabilities |
|
|
(44.6) |
(48.2) |
(58.4) |
(69.0) |
(69.0) |
Borrowings |
|
|
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Leases |
|
|
(39.7) |
(40.0) |
(37.2) |
(34.8) |
(31.8) |
Other non-current liabilities |
|
|
(2.1) |
(3.0) |
(2.6) |
(2.6) |
(2.6) |
Total non-current liabilities |
|
|
(41.8) |
(43.0) |
(39.8) |
(37.4) |
(34.4) |
Net assets |
|
|
234.7 |
235.6 |
253.1 |
276.9 |
300.9 |
CASH FLOW STATEMENT |
|
|
|
|
|
|
|
Operating Cash Flow |
|
|
157.1 |
170.2 |
201.8 |
210.7 |
210.9 |
Depreciation and amortisation |
|
|
34.8 |
39.5 |
39.0 |
39.4 |
43.4 |
Impairments |
|
|
1.3 |
3.6 |
2.6 |
0.0 |
0.0 |
Share-based payments |
|
|
1.6 |
1.0 |
1.2 |
1.3 |
1.3 |
Other adjustments |
|
|
0.3 |
(1.2) |
1.2 |
0.0 |
0.0 |
Movements in working capital |
|
|
(35.9) |
18.6 |
(7.9) |
0.8 |
(0.5) |
Income taxes paid |
|
|
(37.7) |
(39.0) |
(41.7) |
(52.8) |
(52.8) |
Operating cash flow 2 |
|
|
121.5 |
192.7 |
196.2 |
199.4 |
202.3 |
Net capex and intangibles |
|
|
(32.3) |
(28.3) |
(32.6) |
(40.4) |
(34.1) |
Net interest |
|
|
0.2 |
0.3 |
1.4 |
0.4 |
0.5 |
Net proceeds from issue of shares |
|
|
1.8 |
2.6 |
2.7 |
2.7 |
2.7 |
Dividends paid |
|
|
(93.5) |
(136.5) |
(138.3) |
(138.5) |
(138.6) |
Other financing activities |
|
|
(11.9) |
(11.8) |
(11.8) |
(12.4) |
(13.0) |
Net cash flow |
|
|
(14.2) |
19.0 |
17.6 |
11.2 |
19.7 |
Opening cash and cash equivalents |
|
|
85.2 |
71.4 |
90.2 |
107.6 |
118.8 |
Currency translation differences and other |
|
|
0.4 |
(0.2) |
(0.2) |
0.0 |
0.0 |
Closing net (debt)/cash |
|
|
71.4 |
90.2 |
107.6 |
118.8 |
138.5 |
Closing net cash including leases |
|
|
22.5 |
40.3 |
60.4 |
74.0 |
96.7 |
Source: Games Workshop Group accounts, Edison Investment Research
|
|
Research: TMT
Altron reported a 105% y-o-y increase in operating profit before capital items in H125, with margin expansion of 5.1pp to 9.8%. The Platforms businesses were particularly strong, with Netstar and FinTech achieving material revenue and profit growth. Altron Digital Business, still in the integration phase, saw some non-recurring costs and the shift of several project starts into H225, but has seen indications that performance should improve in FY26. Management raised its FY26 operating profit target, partly to reflect the inclusion of Altron Document Solutions (ADS) in continuing operations. We have upgraded our forecasts for continuing operations and the group, partly reflecting better performance in the Platforms business and partly factoring in reduced losses from discontinued operations.