Games Workshop Group — Forecasts maintained for FY22 and FY23

Games Workshop Group (LSE: GAW)

Last close As at 12/06/2024

GBP97.20

−15.00 (−0.15%)

Market capitalisation

GBP3,203m

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Research: Consumer

Games Workshop Group — Forecasts maintained for FY22 and FY23

Games Workshop Group’s (GAW’s) H122 results reflect lower year-on-year revenue growth after a very strong FY21, as expected, with positive comments on new launches, specifically the third edition of Age of Sigmar. Ongoing internal investment to support future growth and new external cost pressures led to a reduction in operating profit pre-royalties, which was more than offset by the notable increase in royalty income. As previously flagged, the shape of our FY22 forecasts has changed to reflect the above dynamics, but our FY22 and FY23 PBT forecasts are broadly unchanged. Our DCF-based valuation increases by c 3% to £134/share.

Russell Pointon

Written by

Russell Pointon

Director of Content, Consumer and Media

Consumer

Games Workshop Group

Forecasts maintained for FY22 and FY23

H122 results

Consumer goods

17 January 2022

Price

8,550p

Market cap

£2,808m

Net cash (£m) at 28 November 2021 (excluding lease liabilities)

88.6

Shares in issue

32.8m

Free float

100%

Code

GAW

Primary exchange

LSE

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(10.0)

(16.4)

(24.3)

Rel (local)

(13.3)

(19.3)

(31.8)

52-week high/low

12,220p

8,695p

Business description

Games Workshop Group 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

FY22 trading update

May/June 2022

FY22 results

August 2022

Analysts

Russell Pointon

+44 (0)20 3077 5700

Sara Welford

+44 (0)20 3077 5700

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

Games Workshop Group’s (GAW’s) H122 results reflect lower year-on-year revenue growth after a very strong FY21, as expected, with positive comments on new launches, specifically the third edition of Age of Sigmar. Ongoing internal investment to support future growth and new external cost pressures led to a reduction in operating profit pre-royalties, which was more than offset by the notable increase in royalty income. As previously flagged, the shape of our FY22 forecasts has changed to reflect the above dynamics, but our FY22 and FY23 PBT forecasts are broadly unchanged. Our DCF-based valuation increases by c 3% to £134/share.

Year end

Revenue (£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

05/20

269.7

89.4

217.8

145.0

39.3

1.7

05/21

353.2

150.9

370.5

235.0

23.1

2.7

05/22e

377.8

158.2

386.5

220.0

22.1

2.6

05/23e

403.7

163.5

398.3

275.0

21.5

3.2

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

H122 results: Supported by licensing income

On a constant currency basis, GAW’s revenue grew by c 6% to £191.5m, with a welcome return to growth for Retail, and operating profit post royalties grew by c 2% to £88.5m. Operating profit before royalties declined by c 11% as internal investment in staff and facilities and external pressures (raw materials and freight) increased. The lower profit was more than offset by a significant improvement in royalty income to £20.1m, higher than any prior full financial year, testimony to GAW’s ability to leverage its intellectual property. Foreign currency changes led to a reduction in reported operating profit post royalties of c 4%. Free cash flow generation deteriorated by c 39% to £45.2m due to the lower profitability and temporary delays to VAT refunds post Brexit. The period end net cash position increased to £88.6m. The declaration of a further dividend of 65p/share takes the year-to-date total to 165p/share versus 140p/share at the same stage in FY21.

Forecasts: FY22 and FY23 PBT unchanged

Our PBT estimates for FY22 and FY23 are broadly unchanged, but the drivers of our FY22 forecasts have changed. For FY22e, we now assume a lower gross margin 69% (from 70% previously) and higher growth in operating costs, leading to a downgrade to operating pre royalties of c 7%, offset by an increase in our estimate for royalty income to £27m (£17m previously). We reduce the FY22 dividend estimate to 220p/share (250p) to reflect potential delays in VAT refunds.

Valuation: DCF-based valuation £134/share

Our DCF based valuation increases to £134/share (£129 previously) to reflect GAW’s improved financial position and the time value of money on our unchanged forecasts. Following the recent underperformance, the P/E multiples for FY22e and FY23e have reduced to 22.1x and 21.5x, a discount to the more recent average multiples of 24.6x in FY20 and 26.6x in FY21.

H122 results: Lower ‘core’ profit, higher royalty income

On a constant currency basis, GAW’s revenue grew by c 6%, gross profit declined by c 2%, operating profit pre royalties declined by c 11%, and operating profit post royalties grew by c 2% in H122.

With c 78% of revenue earned overseas in FY21, the c 5% y-o-y appreciation of sterling versus the euro (from €1.11/£ to €1.17/£) and US dollar (from US$1.30/£ to US$1.37/£) in H122 negatively affected the translation of GAW’s underlying results. On a reported basis GAW’s H122 revenue grew by c 3% to £191.5m, gross profit declined by c 7% to £131.3m, operating profit pre royalties declined by c 18% to £68.4m, and profit post royalties declined by c 4% to £88.5m. With minimal interest expense (IFRS 16 interest and interest income on GAW’s net cash position) and a consistent tax charge (tax rate of 19.3%), the lower operating profit translated to a decline in fully diluted EPS of c 3% to 216.6p. We note the current exchange rates of US$1.37/£ and €1.20/£ imply less of a potential negative forex translational effect for the remainder of the financial year, specifically the US dollar.

Exhibit 1: Summary income statement

£m

H121

H221

FY21

H122

Revenue

186.8

166.4

353.2

191.5

Growth y-o-y

25.9%

37.1%

31.0%

2.5%

Forex

(0.9%)

(2.9%)

(3.9%)

Constant currency

26.8%

33.9%

6.4%

- Trade

104.0

90.8

194.8

108.1

Growth y-o-y

33.2%

46.7%

39.1%

3.9%

Forex

(1.1%)

(4.1%)

(4.5%)

Constant currency

34.3%

43.3%

8.5%

- Retail

36.9

33.8

70.7

41.9

Growth y-o-y

(19.4%)

5.0%

(9.4%)

13.6%

Forex

(0.9%)

(1.7%)

(3.8%)

Constant currency

(18.6%)

(7.7%)

17.3%

- Online

45.9

41.8

87.7

41.5

Growth y-o-y

87.7%

53.4%

69.6%

(9.6%)

Forex

(0.0%)

(1.4%)

(2.6%)

Constant currency

87.8%

71.0%

(7.0%)

Gross profit

141.1

115.8

256.9

131.3

Margin

75.5%

69.6%

72.7%

68.6%

Growth y-o-y

36.9%

49.3%

42.2%

(6.9%)

Forex

N/D

N/D

(4.9%)

Constant currency

N/D

N/D

(2.1%)

Operating costs

(57.8)

(63.7)

(121.5)

(62.9)

EBIT pre-royalties

83.3

52.1

135.4

68.4

Margin

44.6%

31.3%

38.3%

35.7%

Growth y-o-y

71.8%

110.8%

85.0%

(17.9%)

Forex

N/D

(4.8%)

(6.7%)

Constant currency

N/D

89.8%

(11.2%)

Royalties

8.7

7.6

16.3

20.1

EBIT post royalties

92.0

59.7

151.7

88.5

Margin

49.3%

35.9%

43.0%

46.2%

Growth y-o-y

55.5%

93.6%

68.6%

(3.8%)

Forex

(1.9%)

(4.4%)

(6.2%)

Constant currency

57.4%

73.0%

2.4%

EPS fully diluted (p)

224.0

146.5

370.5

216.6

Growth y-o-y

54.9%

100.2%

70.1%

(3.3%)

DPS (p)

80.0

155.0

235.0

100.0

Growth y-o-y

(20.0%)

244.4%

62.1%

25.0%

Source: Games Workshop

From a product perspective, the June 2021 launch of Dominium, the third edition of Age of Sigmar, is described by management as its ‘best fantasy launch to date by a considerable margin’, and H122 revenue benefited from new models for the ninth edition of 40k, in the second year following its launch in the prior financial year. However, shipping issues have led to a delay of some new product launches, which should reverse in H222. And with respect to GAW’s media and community, the subscription service Warhammer+ has ‘got off to a great start’.

With fewer COVID-19 related operating restrictions than the prior year there was a return to growth for Retail revenue (c 17% growth at constant currency), offset by a decline for Online (7% at constant currency) against a very tough comparative. Trade revenue continued with better than average growth (c 9% at constant currency) due to strong growth in the number of net new accounts, 500 in the period, which compares favourably with recent history when 500–600 net new accounts have been added in full financial years. With a net four fewer stores by the end of the period, Retail revenue of £41.9m is c 9% below pre-COVID-19 levels (£45.8m in H120), given differing rates of recovery by geography following, and ongoing disruption from, COVID-19 related restrictions, notably Australia where stores remained closed during the period but began to re-open in December 2021. At £41.5m in H122, Online revenue is c 70% higher than reported in H120, pre COVID-19.

The key features of GAW’s profitability in H122 are the decline in gross margin from 75.5% in H121 to 68.6%, which along with growth in operating costs fed through to a reduction in the EBIT pre-royalties margin of 890bps to 35.7%, offset by the significant increase in royalty income to £20.1m (H121: £8.7m).

With respect to cost of goods sold, the previously flagged cost pressures of freight (additional £2m) and input costs (we estimate additional £3.6m), a combined £5.6m, represented a drag of 2.9 gross margin points. In addition, management continued to invest for future growth with incremental staff costs (higher pay grades and headcount) of £3.0m (1.6 margin points), new facilities £0.7m (0.4 margin points) and a higher inventory provision £2.9m (1.5 margin points). Staff numbers increased in the factories (+9%) to increase capacity and in the United States (+11%). Our March 2021 note highlighted the historical effect of the inventory provision on GAW’s gross profit. From FY15 to FY21 the provision has represented 0.3% (FY21) to 2.4% (FY20) of sales, therefore the H122 provision appears within the range of prior years.

Operating costs increased by c 9% (c 11% at constant currency) to £62.9m including c 2% growth in headcount coupled with the annual 3% pay increase, as well as a c 10% increase in the profit share and discretionary payment (to £6.9m from £6.3m in H121) to staff in recognition of their performance.

The H122 royalty income of £20.1m is significantly higher than GAW has reported in any prior full financial year – the previous peak was £16.8m in FY20 – and is testimony to the attractiveness of the intellectual property and GAW’s ability to attract new licensing partners. As indicated, this income stream is difficult to predict as it depends on the timing of new contracts, and accounting standards require the recognition of the minimum guarantee of the contract on signing.

Cash flow and balance sheet

The lower operating profit, higher working capital outflow (£28.4m versus £5.2m) and higher capital investment led to a c 39% decline in GAW’s free cash flow pre-interest to £45.2m from £73.6m in H121. The period end debtors increased by £22.9m, of which £15m is due to temporary administrative delays by the local authorities in repaying the new import VAT that is paid post Brexit by GAW as goods enter the EU. Management hopes this will normalise by the end of the current financial year, but it is dependent on the expediency of those local authorities.

Exhibit 2: Summary cash flow

£m

H121

H221

FY21

H122

Operating profit

92.0

59.7

151.7

88.5

Depreciation and amortisation

12.7

14.0

26.7

15.8

Working capital

(5.2)

(9.6)

(14.8)

(28.4)

Tax paid

(15.7)

(16.4)

(32.1)

(15.8)

Operating cash flow

84.3

48.4

132.7

60.7

Capex and intangibles

(10.7)

(19.3)

(30.0)

(15.5)

Free cash flow pre-interest

73.6

29.1

102.7

45.2

Dividends paid

(26.1)

(34.4)

(60.5)

(37.7)

Net cash flow

43.7

(10.8)

32.9

3.7

Cash at end

96.5

85.2

85.2

88.6

Net debt/(cash) excluding leases

(96.5)

(85.2)

(85.2)

(88.6)

Net debt/(cash) including leases

(51.2)

(38.2)

(38.2)

(41.0)

Relative to sales:

Operating profit

49.3%

35.9%

43.0%

46.2%

Depreciation and amortisation

6.8%

8.4%

7.6%

8.3%

Working capital

(2.8%)

(5.8%)

(4.2%)

(14.8%)

Tax paid

(8.4%)

(9.9%)

(9.1%)

(8.3%)

Operating cash flow

45.1%

29.1%

37.6%

31.7%

Capex and intangibles

(5.7%)

(11.6%)

(8.5%)

(8.1%)

Free cash flow pre-interest

39.4%

17.5%

29.1%

23.6%

Source: Games Workshop

The period end net cash position pre IFRS 16 increased to £88.6m from £85.2m, following the payment of dividends of £37.7m during H122. Despite the lower free cash flow generation during the period, management declared three dividends totalling 100p/share versus two dividends totalling 80p/share in H121 following the outbreak of the COVID-19 pandemic. A further dividend of 65p/share has been declared with the results announcement, taking the total for the financial year to date to 165p/share versus 140p/share at this stage 12 months ago, and 235p/share for the whole of FY21. Our dividend forecast for FY22 reduces to 220p/share (250p/share previously) to allow for potential delays in the £15m VAT refunds from the EU, while we maintain our forecast of 275p/share for FY23. These are equivalent to our estimate of truly surplus cash, calculated as the estimated closing cash position less a buffer of £50m, the estimated cash tax payment and the estimated capex spend.

Including IFRS 16 liabilities of £47.6m, the net cash position reduced to £41m.

Forecasts: PBT for FY22 and FY23 unchanged

Our PBT forecasts for FY22 (c 5% y-o-y growth to £158.2m) and FY23 (c 3% y-o-y growth to £163.5m) are broadly unchanged. However, the drivers of the forecasts have changed given the dynamics of the H122 performance (ie lower profit pre royalties and significant growth in royalty income).

For FY22, we forecast a lower gross margin (69% versus 70% previously) and 6% growth in operating costs, leading to a downgrade to operating profit pre royalties of 7% to £131.9m (from £141.8m previously) taking the margin to 34.9% versus FY21’s 38.3%. We upgrade our forecast for royalty income to £27m (from £17m previously), which implies a further £6.9m of income in H222, consistent with levels achieved in the majority of more recent six-monthly results.

For FY23, our PBT forecast of £163.5m includes a stable gross margin versus FY22, lower operating cost growth of c 2%, leading to a higher operating margin pre royalties of 36.5%, and lower royalty income of £17m as per our previous forecast.

Valuation: DCF based valuation increases to £134/share

Our DCF-based valuation increases to £134/share (£129/share previously) to reflect the improved net debt position at the end of H122, and the time value of money of our unchanged forecasts, with the same discount rate (6.5%) and terminal growth rate (2%) assumptions as included in our March 2021 update note.

At a share price of £85.50 the EV/sales multiples for FY22e and FY23e of 7.2x and 6.8x are at a premium to the long run average (since FY17) of 4.7x under the current management team, which reflects the improved long-term outlook for revenue growth and profitability, but below more recent average annual multiples, for example 8.9x in FY21. Similarly, the P/E multiples for FY22e and FY23e of 22.1x and 21.5x are at a premium to the average of 17.2x since FY17, but below more recent average multiples of 24.6x in FY20 and 26.6x in FY21.

Exhibit 3: 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

377.8

403.7

Cost of sales

 

 

(37.0)

(37.4)

(43.7)

(64.2)

(83.3)

(89.1)

(96.3)

(117.1)

(125.1)

Gross profit

 

 

82.1

80.6

114.4

157.1

173.3

180.6

256.9

260.7

278.5

SG&A (expenses)

 

 

(67.2)

(69.7)

(83.6)

(92.4)

(103.4)

(107.4)

(121.5)

(128.8)

(131.4)

Other operating income/(expense)

 

 

1.5

5.9

7.5

9.6

11.4

16.8

16.3

27.0

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

159.0

175.6

EBITDA

 

 

27.5

27.3

49.3

86.5

97.1

115.6

178.3

186.0

192.6

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

131.9

147.1

Reported operating profit

 

 

16.5

16.9

38.3

74.3

81.2

90.0

151.7

158.9

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

158.2

163.5

Income tax expense (includes exceptionals)

 

 

(4.3)

(3.5)

(7.9)

(14.8)

(15.5)

(18.1)

(28.9)

(30.5)

(31.5)

Adjusted net income

 

 

12.2

13.5

30.5

59.5

65.8

71.3

122.0

127.6

131.9

Reported net income

 

 

12.3

13.5

30.5

59.5

65.8

71.3

122.0

127.6

131.9

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

388.8

400.6

Reported diluted EPS (p)

 

 

38.3

42.0

94.5

181.6

200.8

217.8

370.5

386.5

398.3

Adjusted diluted EPS (p)

 

 

38.1

42.0

94.5

181.6

200.8

217.8

370.5

386.5

398.3

DPS (p)

 

 

52.0

40.0

74.0

126.0

155.0

145.0

235.0

220.0

275.0

 

 

 

 

 

 

 

 

 

 

 

 

Gross margin

 

 

69.0%

68.3%

72.4%

71.0%

67.5%

67.0%

72.7%

69.0%

69.0%

EBITDA margin (excl royalties)

 

 

21.8%

18.1%

26.5%

34.7%

33.4%

36.6%

45.9%

42.1%

43.5%

EBITDA margin (incl royalties)

 

 

23.1%

23.1%

31.2%

39.1%

37.8%

42.9%

50.5%

49.2%

47.7%

Operating margin (before royalties and exceptionals)

 

 

12.5%

9.2%

19.5%

29.2%

27.2%

27.1%

38.3%

34.9%

36.5%

 

 

 

 

 

 

 

 

 

 

 

 

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

29.8

35.5

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

151.3

164.9

Cash and equivalents

 

 

12.6

11.8

17.9

28.5

29.4

52.9

85.2

123.7

148.5

Inventories

 

 

7.6

8.5

12.4

20.2

24.2

20.7

27.5

33.4

35.7

Trade and other receivables

 

 

9.4

10.1

13.0

15.5

18.8

19.6

30.6

32.7

35.0

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

191.0

220.3

Trade and other payables

 

 

(13.1)

(12.8)

(16.5)

(20.3)

(19.2)

(30.3)

(35.4)

(40.8)

(42.5)

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)

(50.1)

(51.8)

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)

(37.0)

(35.6)

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)

(39.3)

(37.9)

Net assets

 

 

51.5

53.2

62.8

89.3

106.5

133.7

196.3

252.9

295.5

 

 

 

 

 

 

 

 

 

 

 

 

CASH FLOW STATEMENT

 

 

 

 

 

 

 

 

 

 

 

EBIT

 

 

16.5

16.9

38.3

74.3

81.2

90.0

151.7

158.9

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)

(2.7)

(2.8)

Income taxes paid

 

 

(2.3)

(2.6)

(5.5)

(12.2)

(16.3)

(22.7)

(32.1)

(30.5)

(31.5)

Operating cash flow

 

 

23.3

24.2

43.9

70.1

72.5

104.5

132.7

154.0

159.4

Net capex and intangibles

 

 

(12.3)

(12.7)

(12.8)

(21.6)

(22.5)

(24.6)

(30.0)

(31.1)

(32.0)

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)

(72.2)

(90.6)

Other financing activities

 

 

0.0

0.0

(1.9)

0.0

0.0

(10.3)

(10.9)

(11.4)

(11.4)

Net cash flow

 

 

(4.8)

(0.9)

5.5

10.7

0.5

23.2

32.9

38.5

24.8

Opening cash and cash equivalents

 

 

17.6

12.6

11.8

17.9

28.5

29.4

52.9

85.2

123.7

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

123.7

148.5

Closing net cash (including leases)

 

 

12.6

11.8

17.9

28.5

29.4

20.8

38.2

78.1

104.3

Source: Company accounts, Edison Investment Research

General disclaimer and copyright

This report has been commissioned by Games Workshop Group and prepared and issued by Edison, in consideration of a fee payable by Games Workshop Group. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

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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Copyright: Copyright 2022 Edison Investment Research Limited (Edison).

Australia

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New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

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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.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

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United Kingdom

New York +1 646 653 7026

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United States of America

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Games Workshop Group and prepared and issued by Edison, in consideration of a fee payable by Games Workshop Group. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

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.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

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 2022 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

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.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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