Last close As at 05/08/2026
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GBP6,282m
Research: Consumer
Games Workshop Group’s (GAW’s) H121 trading update highlights that it has enjoyed a stronger end to the period than expected by management: H121 PBT will be not less £90m (y-o-y growth of c 54%), £10m higher than indicated in the 7 November trading statement (see our recent update note). Therefore, GAW’s PBT in H121 is greater than that for the whole of FY20. The strong performance leads to a 40% increase in the year-to-date dividend, as the company continues to distribute truly surplus cash. We upgrade our PBT forecasts for FY21 by a further 6%. Following the relative weakness in the share price in recent weeks, and the upgrade to our forecasts, the P/E multiple of 28.9x for FY21e is back below recent highs.
Games Workshop Group |
Impressive momentum into H221 |
H121 trading update |
Consumer goods |
7 December 2020 |
Share price performance
Business description
Next events
Analysts
Games Workshop Group is a research client of Edison Investment Research Limited |
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Games Workshop Group’s (GAW’s) H121 trading update highlights that it has enjoyed a stronger end to the period than expected by management: H121 PBT will be not less £90m (y-o-y growth of c 54%), £10m higher than indicated in the 7 November trading statement (see our recent update note). Therefore, GAW’s PBT in H121 is greater than that for the whole of FY20. The strong performance leads to a 40% increase in the year-to-date dividend, as the company continues to distribute truly surplus cash. We upgrade our PBT forecasts for FY21 by a further 6%. Following the relative weakness in the share price in recent weeks, and the upgrade to our forecasts, the P/E multiple of 28.9x for FY21e is back below recent highs.
Year end |
Revenue (£m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
05/19 |
256.6 |
81.3 |
200.8 |
155 |
49.2 |
1.6 |
05/20 |
269.7 |
89.4 |
217.8 |
145 |
45.3 |
1.5 |
05/21e |
349.1 |
140.4 |
342.0 |
200 |
28.9 |
2.0 |
05/22e |
381.2 |
156.6 |
381.4 |
220 |
25.9 |
2.2 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles and exceptional items.
H121: A strong finish to the interim period
Management indicates H121 revenue is c £185m and PBT is not less than £90m, year-on-year growth of c 25% and 54% respectively. Revenue growth accelerated to 35% in Q221, driven by the Indomitus launch in July, from 15% growth in Q121. Given the improvement in PBT relative to revenue growth versus the prior trading statement, we believe that royalty income (reported below operating profit) is higher than expected. Therefore, if we accrue c £2m more royalty income to the interim period than half of our (prior) FY21 estimate (£11m) it implies operating profit pre-royalties for H121 of at least c £83m (margins of c 50% in Q1, c 40% in Q2 and c 45% in H1), and an extraordinary 90%+ drop through of incremental revenue to operating profit. The declared dividend of 60p takes the year-to-date total to 140p, a 40% increase on H120.
FY21: PBT estimate increased by 6%
We upgrade out PBT estimate for FY21 by 6% to £140.4m. We increase our assumption for revenue growth to 30% y-o-y (from 24%), driven by an increase in online revenue growth, to give a revenue forecast of £349.1m, and we increase our forecast for other operating income to £13m from £11m given the implied over-delivery in H121.
Valuation: Multiples at discount to recent highs
Following a very strong performance, in recent weeks the share price has been weak given some rotation into shares that performed poorly through COVID-19 and that the market expects to perform better given the recent news on vaccines. On our new forecasts for FY21, the EV/sales multiple is 9.1x and the P/E is 28.9x, below the prior all-time highs in FY20 of 9.5x and 36.5x respectively.
Exhibit 1: Financial summary
Year-end 31 May |
£m |
|
2015 |
2016 |
2017 |
2018 |
2019 |
2020 |
2021e |
2022e |
|
|
|
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
INCOME STATEMENT |
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
|
119.1 |
118.1 |
158.1 |
221.3 |
256.6 |
269.7 |
349.1 |
381.2 |
Cost of sales |
|
|
(37.0) |
(37.4) |
(43.7) |
(64.2) |
(83.3) |
(89.1) |
(96.0) |
(101.7) |
Gross profit |
|
|
82.1 |
80.6 |
114.4 |
157.1 |
173.3 |
180.6 |
253.1 |
279.5 |
SG&A (expenses) |
|
|
(67.2) |
(69.7) |
(83.6) |
(92.4) |
(103.4) |
(107.4) |
(125.2) |
(137.9) |
Other operating income/(expense) |
|
|
1.5 |
5.9 |
7.5 |
9.6 |
11.4 |
16.8 |
13.0 |
15.4 |
Exceptionals and adjustments |
|
|
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
EBITDA (excl royalties) |
|
|
26.0 |
21.3 |
41.8 |
76.8 |
85.7 |
98.8 |
155.3 |
170.8 |
EBITDA |
|
|
27.5 |
27.3 |
49.3 |
86.5 |
97.1 |
115.6 |
168.3 |
186.2 |
Depreciation and amortisation |
|
|
(11.1) |
(10.4) |
(11.0) |
(12.1) |
(15.9) |
(25.6) |
(27.4) |
(29.3) |
Operating profit (before royalties and exceptionals) |
|
14.9 |
10.9 |
30.8 |
64.7 |
69.8 |
73.2 |
127.9 |
141.6 |
|
Reported operating profit |
|
|
16.5 |
16.9 |
38.3 |
74.3 |
81.2 |
90.0 |
140.9 |
157.0 |
Finance income/(expense) |
|
|
0.1 |
0.1 |
0.1 |
(0.0) |
0.1 |
(0.6) |
(0.5) |
(0.4) |
Reported PBT |
|
|
16.6 |
16.9 |
38.4 |
74.3 |
81.3 |
89.4 |
140.4 |
156.6 |
Income tax expense (includes exceptionals) |
|
|
(4.3) |
(3.5) |
(7.9) |
(14.8) |
(15.5) |
(18.1) |
(28.4) |
(31.7) |
Adjusted net income |
|
|
12.2 |
13.5 |
30.5 |
59.5 |
65.8 |
71.3 |
112.0 |
124.9 |
Reported net income |
|
|
12.3 |
13.5 |
30.5 |
59.5 |
65.8 |
71.3 |
112.0 |
124.9 |
WASC (m) |
|
|
31.975 |
32.093 |
32.126 |
32.258 |
32.438 |
32.602 |
32.602 |
32.602 |
Diluted average number of shares (m) |
|
|
32.025 |
32.150 |
32.325 |
32.732 |
32.785 |
32.736 |
32.736 |
32.736 |
Reported EPS (p) |
|
|
38.3 |
42.1 |
95.1 |
184.3 |
202.9 |
218.7 |
343.5 |
383.0 |
Reported diluted EPS (p) |
|
|
38.3 |
42.0 |
94.5 |
181.6 |
200.8 |
217.8 |
342.0 |
381.4 |
Adjusted diluted EPS (p) |
|
|
38.1 |
42.0 |
94.5 |
181.6 |
200.8 |
217.8 |
342.0 |
381.4 |
DPS (p) |
|
|
52.0 |
40.0 |
74.0 |
126.0 |
155.0 |
145.0 |
200.0 |
220.0 |
|
|
|
|
|
|
|
|
|
|
|
Gross margin |
|
|
69.0% |
68.3% |
72.4% |
71.0% |
67.5% |
67.0% |
72.5% |
73.3% |
EBITDA margin (excl royalties) |
|
|
21.8% |
18.1% |
26.5% |
34.7% |
33.4% |
36.6% |
44.5% |
44.8% |
EBITDA margin (incl royalties) |
|
|
23.1% |
23.1% |
31.2% |
39.1% |
37.8% |
42.9% |
48.2% |
48.9% |
Operating margin (before royalties and exceptionals) |
|
|
12.5% |
9.2% |
19.5% |
29.2% |
27.2% |
27.1% |
36.6% |
37.1% |
|
|
|
|
|
|
|
|
|
|
|
BALANCE SHEET |
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment |
|
|
22.7 |
22.6 |
22.1 |
30.1 |
35.3 |
42.0 |
34.8 |
26.8 |
Right-of-use assets |
|
|
|
|
|
|
|
31.9 |
31.9 |
31.9 |
Goodwill |
|
|
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 |
20.7 |
23.6 |
Other non-current assets |
|
|
4.8 |
4.1 |
6.5 |
7.8 |
11.7 |
16.4 |
16.4 |
16.4 |
Total non-current assets |
|
|
37.2 |
38.7 |
43.0 |
53.5 |
64.4 |
109.3 |
105.2 |
100.1 |
Cash and equivalents |
|
|
12.6 |
11.8 |
17.9 |
28.5 |
29.4 |
52.9 |
87.4 |
143.6 |
Inventories |
|
|
7.6 |
8.5 |
12.4 |
20.2 |
24.2 |
20.7 |
21.6 |
23.6 |
Trade and other receivables |
|
|
9.4 |
10.1 |
13.0 |
15.5 |
18.8 |
19.6 |
25.4 |
27.7 |
Other current assets |
|
|
0.6 |
0.7 |
0.6 |
0.5 |
0.8 |
0.2 |
0.2 |
0.2 |
Total current assets |
|
|
30.2 |
31.2 |
43.9 |
64.7 |
73.2 |
93.4 |
134.5 |
195.1 |
Trade and other payables |
|
|
(13.1) |
(12.8) |
(16.5) |
(20.3) |
(19.2) |
(30.3) |
(20.0) |
(21.9) |
Borrowings |
|
|
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) |
(8.3) |
(8.3) |
Other current liabilities |
|
|
(2.0) |
(2.7) |
(6.5) |
(7.3) |
(10.1) |
(4.5) |
(4.5) |
(4.5) |
Total current liabilities |
|
|
(15.1) |
(15.6) |
(23.0) |
(27.6) |
(29.3) |
(43.1) |
(32.8) |
(34.7) |
Borrowings |
|
|
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) |
(23.6) |
(23.6) |
Other non-current liabilities |
|
|
(0.8) |
(1.1) |
(1.0) |
(1.2) |
(1.9) |
(2.1) |
(2.1) |
(2.1) |
Total non-current liabilities |
|
|
(0.8) |
(1.1) |
(1.0) |
(1.2) |
(1.9) |
(25.9) |
(25.7) |
(25.7) |
Net assets |
|
|
51.5 |
53.2 |
62.8 |
89.3 |
106.5 |
133.7 |
181.2 |
234.8 |
|
|
|
|
|
|
|
|
|
|
|
CASH FLOW STATEMENT |
|
|
|
|
|
|
|
|
|
|
EBIT |
|
|
16.5 |
16.9 |
38.3 |
74.3 |
81.2 |
90.0 |
140.9 |
157.0 |
Depreciation and amortisation |
|
|
11.1 |
10.4 |
10.2 |
12.2 |
15.9 |
25.0 |
27.4 |
29.3 |
Impairments |
|
|
0.0 |
0.0 |
0.8 |
(0.0) |
0.0 |
0.6 |
0.0 |
0.0 |
Share based payments |
|
|
0.2 |
0.2 |
0.2 |
0.2 |
0.3 |
0.5 |
0.5 |
0.5 |
Other adjustments |
|
|
0.1 |
0.1 |
0.1 |
0.1 |
0.3 |
0.3 |
0.0 |
0.0 |
Movements in working capital |
|
|
(2.3) |
(0.8) |
(0.2) |
(4.4) |
(9.0) |
10.8 |
(17.0) |
(2.5) |
Income taxes paid |
|
|
(2.3) |
(2.6) |
(5.5) |
(12.2) |
(16.3) |
(22.7) |
(28.4) |
(31.7) |
Operating cash flow |
|
|
23.3 |
24.2 |
43.9 |
70.1 |
72.5 |
104.5 |
123.4 |
152.6 |
Net capex and intangibles |
|
|
(12.3) |
(12.7) |
(12.8) |
(21.6) |
(22.5) |
(24.6) |
(23.2) |
(24.2) |
Net interest |
|
|
0.1 |
0.1 |
0.1 |
(0.0) |
0.1 |
0.1 |
(0.5) |
(0.4) |
Net proceeds from issue of shares |
|
|
0.7 |
0.3 |
0.1 |
0.9 |
0.7 |
0.8 |
0.0 |
0.0 |
Dividends paid |
|
|
(16.6) |
(12.8) |
(23.8) |
(38.7) |
(50.3) |
(47.3) |
(65.2) |
(71.7) |
Other financing activities |
|
|
0.0 |
0.0 |
(1.9) |
0.0 |
0.0 |
(10.3) |
0.0 |
0.0 |
Net cash flow |
|
|
(4.8) |
(0.9) |
5.5 |
10.7 |
0.5 |
23.2 |
34.5 |
56.2 |
Opening cash and cash equivalents |
|
|
17.6 |
12.6 |
11.8 |
17.9 |
28.5 |
29.4 |
52.9 |
87.4 |
Currency translation differences and other |
|
|
(0.2) |
0.1 |
0.6 |
(0.1) |
0.3 |
0.3 |
0.0 |
0.0 |
Closing cash and cash equivalents |
|
|
12.6 |
11.8 |
17.9 |
28.5 |
29.4 |
52.9 |
87.4 |
143.6 |
Closing net cash (including leases) |
|
|
12.6 |
11.8 |
17.9 |
28.5 |
29.4 |
20.8 |
55.5 |
111.7 |
Source: Company accounts, Edison Investment Research
|
|
Research: Healthcare
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