Currency in GBP
Last close As at 26/05/2023
GBP92.95
▲ 70.00 (0.76%)
Market capitalisation
GBP3,059m
Research: Consumer
Games Workshop Group’s (GAW’s) update highlights that Q323 trading to the end of February 2023 is in line with expectations. In addition, a further dividend of £1.20 per share has been declared, taking the year-to-date total to £4.15 per share, a very healthy current yield of 4.6%, well ahead of FY22’s £2.35 per share. Separately, this week the company announced that the tenth edition of Warhammer 40,000 will be released in the summer of 2023.
Games Workshop Group |
Merci, France |
Q223 trading update and dividend |
Consumer goods |
24 March 2023 |
Share price performance
Business description
Next events
Analysts
Games Workshop Group is a research client of Edison Investment Research Limited |
Games Workshop Group’s (GAW’s) update highlights that Q323 trading to the end of February 2023 is in line with expectations. In addition, a further dividend of £1.20 per share has been declared, taking the year-to-date total to £4.15 per share, a very healthy current yield of 4.6%, well ahead of FY22’s £2.35 per share. Separately, this week the company announced that the tenth edition of Warhammer 40,000 will be released in the summer of 2023.
Year end |
Revenue (£m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
05/21 |
369.6 |
150.9 |
370.5 |
235.0 |
24.3 |
2.6 |
05/22 |
414.8 |
156.5 |
390.6 |
235.0 |
23.1 |
2.6 |
05/23e |
447.0 |
160.4 |
389.6 |
415.0 |
23.2 |
4.6 |
05/24e |
461.1 |
169.2 |
384.5 |
320.0 |
23.5 |
3.5 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Higher dividend due to a VAT receipt
Following Brexit, GAW has been required to pay VAT on the entry of goods to Europe and submit a reclaim with the authorities, which led to the build of a debtor balance from the French authorities of £11.6m at the end of H123. The outstanding debtor has now been received by the company; the quoted £12m receipt is equivalent to c 36p/share. The declared dividend is the fifth dividend announced this financial year. GAW’s dividend policy is to distribute ‘truly surplus’ cash, which is the cash balance after allowing for a ‘working cash buffer’ of three months’ worth of working capital and six months’ worth of tax payments.
FY23: Higher dividend
We make no changes to our profit estimates but update our estimates to include the cash receipt for the VAT debtor and increase the dividend estimate for FY23 to be in line with the total declared to date, from £3.20/share previously.
Valuation: DCF valuation of £102 p/share unchanged
The share price has been broadly stable since the start of CY23, having performed well through the end of 2022. The prospective P/E multiples for FY23 and FY24 of 23.2x and 23.5x (higher corporate tax rate in both years) are at a premium to the post-FY17 average of 18.4x, but below the peak multiples of over 30x. Our DCF-based valuation of £102 per share is unchanged. This includes no potential benefits from GAW’s agreement in principle with Amazon to develop film and televisions content.
Exhibit 1: Financial summary
Year-end May |
£'m |
|
2019 |
2020 |
2021 |
2021R |
2022 |
2023e |
2024e |
|
|
|
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
INCOME STATEMENT |
|
|
|
|
|
|
|
|
|
Total revenues |
|
|
256.6 |
269.7 |
353.2 |
369.6 |
414.8 |
447.0 |
461.1 |
- Core revenue |
|
|
256.6 |
269.7 |
353.2 |
353.2 |
386.8 |
418.5 |
430.5 |
- Licensing revenue |
|
|
0.0 |
0.0 |
0.0 |
16.3 |
28.0 |
28.6 |
30.7 |
Cost of sales |
|
|
(83.3) |
(89.1) |
(96.3) |
(96.4) |
(127.4) |
(146.5) |
(139.9) |
Gross profit |
|
|
173.3 |
180.6 |
256.9 |
273.2 |
287.4 |
300.6 |
321.2 |
SG&A (expenses) |
|
|
(103.4) |
(107.4) |
(121.5) |
(121.5) |
(130.3) |
(136.7) |
(146.9) |
Other operating income/(expense) |
|
|
11.4 |
16.8 |
16.3 |
15.0 |
25.4 |
25.8 |
27.6 |
EBITDA (excl royalties) |
|
|
85.7 |
98.8 |
162.0 |
163.3 |
167.8 |
170.7 |
183.5 |
EBITDA |
|
|
97.1 |
115.6 |
178.3 |
178.3 |
193.2 |
196.5 |
211.1 |
Depreciation and amortisation |
|
|
(15.9) |
(25.6) |
(26.6) |
(26.6) |
(36.1) |
(35.4) |
(39.8) |
Operating profit (before royalties and exceptionals) |
|
|
69.8 |
73.2 |
135.4 |
136.7 |
131.7 |
135.3 |
143.7 |
Licensing |
|
|
11.4 |
16.8 |
16.3 |
15.0 |
25.4 |
25.8 |
27.6 |
Reported operating profit |
|
|
81.2 |
90.0 |
151.7 |
151.7 |
157.1 |
161.1 |
171.3 |
Finance income/(expense) |
|
|
0.1 |
(0.6) |
(0.8) |
(0.8) |
(0.6) |
(0.7) |
(2.0) |
Reported PBT |
|
|
81.3 |
89.4 |
150.9 |
150.9 |
156.5 |
160.4 |
169.2 |
Income tax expense (includes exceptionals) |
|
|
(15.5) |
(18.1) |
(28.9) |
(28.9) |
(28.1) |
(32.1) |
(42.3) |
Adjusted net income |
|
|
65.8 |
71.3 |
122.0 |
122.0 |
128.4 |
128.3 |
126.9 |
Reported net income |
|
|
65.8 |
71.3 |
122.0 |
122.0 |
128.4 |
128.3 |
126.9 |
WASC (m) |
|
|
32.438 |
32.602 |
32.733 |
32.733 |
32.813 |
32.875 |
32.944 |
Diluted average number of shares (m) |
|
|
32.785 |
32.736 |
32.927 |
32.927 |
32.873 |
32.935 |
33.004 |
Reported EPS (p) |
|
|
202.9 |
218.7 |
372.7 |
372.7 |
391.3 |
390.3 |
385.2 |
Reported diluted EPS (p) |
|
|
200.8 |
217.8 |
370.5 |
370.5 |
390.6 |
389.6 |
384.5 |
Adjusted diluted EPS (p) |
|
|
200.8 |
217.8 |
370.5 |
370.5 |
390.6 |
389.6 |
384.5 |
DPS (p) |
|
|
155.0 |
145.0 |
235.0 |
235.0 |
235.0 |
415.0 |
320.0 |
|
|
|
|
|
|
|
|
|
|
Gross margin |
|
|
67.5% |
67.0% |
72.7% |
73.9% |
69.3% |
67.2% |
69.7% |
EBITDA margin (excl royalties) |
|
|
33.4% |
36.6% |
45.9% |
44.2% |
40.5% |
38.2% |
39.8% |
EBITDA margin (incl royalties) |
|
|
37.8% |
42.9% |
50.5% |
48.2% |
46.6% |
43.9% |
45.8% |
Operating margin |
|
|
31.6% |
33.4% |
43.0% |
41.0% |
37.9% |
36.0% |
37.1% |
|
|
|
|
|
|
|
|
|
|
BALANCE SHEET |
|
|
|
|
|
|
|
|
|
Property, plant and equipment |
|
|
35.3 |
42.0 |
49.8 |
49.8 |
55.0 |
57.4 |
59.2 |
Right-of-use assets |
|
|
|
31.9 |
46.0 |
46.0 |
48.1 |
46.9 |
45.7 |
Goodwill |
|
|
1.4 |
1.4 |
1.4 |
1.4 |
1.4 |
1.4 |
1.4 |
Intangible assets |
|
|
16.0 |
17.6 |
23.7 |
23.7 |
25.6 |
30.8 |
33.8 |
Other non-current assets |
|
|
11.7 |
16.4 |
16.4 |
16.4 |
37.2 |
25.2 |
25.2 |
Total non-current assets |
|
|
64.4 |
109.3 |
137.3 |
137.3 |
167.3 |
161.7 |
165.2 |
Cash and equivalents |
|
|
29.4 |
52.9 |
85.2 |
85.2 |
71.4 |
56.4 |
73.3 |
Inventories |
|
|
24.2 |
20.7 |
27.5 |
27.5 |
38.4 |
52.8 |
51.4 |
Trade and other receivables |
|
|
18.8 |
19.6 |
30.6 |
30.6 |
39.6 |
45.8 |
47.2 |
Other current assets |
|
|
0.8 |
0.2 |
1.1 |
1.1 |
4.4 |
4.4 |
4.4 |
Total current assets |
|
|
73.2 |
93.4 |
144.4 |
144.4 |
153.8 |
159.3 |
176.3 |
Trade and other payables |
|
|
(19.2) |
(30.3) |
(35.4) |
(35.4) |
(33.5) |
(42.3) |
(42.5) |
Borrowings |
|
|
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Leases |
|
|
0.0 |
(8.3) |
(8.6) |
(8.6) |
(9.2) |
(9.2) |
(9.2) |
Other current liabilities |
|
|
(10.1) |
(4.5) |
(0.7) |
(0.7) |
(1.9) |
(1.9) |
(1.9) |
Total current liabilities |
|
|
(29.3) |
(43.1) |
(44.7) |
(44.7) |
(44.6) |
(53.4) |
(53.6) |
Borrowings |
|
|
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Leases |
|
|
0.0 |
(23.8) |
(38.4) |
(38.4) |
(39.7) |
(37.2) |
(34.1) |
Other non-current liabilities |
|
|
(1.9) |
(2.1) |
(2.3) |
(2.3) |
(2.1) |
(2.1) |
(2.1) |
Total non-current liabilities |
|
|
(1.9) |
(25.9) |
(40.7) |
(40.7) |
(41.8) |
(39.3) |
(36.2) |
Net assets |
|
|
106.5 |
133.7 |
196.3 |
196.3 |
234.7 |
228.3 |
251.8 |
|
|
|
|
|
|
|
|
|
|
CASH FLOW STATEMENT |
|
|
|
|
|
|
|
|
|
EBIT |
|
|
81.2 |
90.0 |
151.7 |
151.7 |
157.1 |
161.1 |
171.3 |
Depreciation and amortisation |
|
|
15.9 |
25.0 |
26.2 |
26.2 |
34.8 |
35.4 |
39.8 |
Impairments |
|
|
0.0 |
0.6 |
0.4 |
0.4 |
1.3 |
0.0 |
0.0 |
Share-based payments |
|
|
0.3 |
0.5 |
1.2 |
1.2 |
1.6 |
1.8 |
1.9 |
Other adjustments |
|
|
0.3 |
0.3 |
0.1 |
0.1 |
0.3 |
0.0 |
0.0 |
Movements in working capital |
|
|
(9.0) |
10.8 |
(14.8) |
(14.8) |
(35.9) |
0.2 |
0.1 |
Income taxes paid |
|
|
(16.3) |
(22.7) |
(32.1) |
(32.1) |
(37.7) |
(32.1) |
(42.3) |
Operating cash flow |
|
|
72.5 |
104.5 |
132.7 |
132.7 |
121.5 |
166.4 |
170.8 |
Net capex and intangibles |
|
|
(22.5) |
(24.6) |
(30.0) |
(30.0) |
(32.3) |
(31.8) |
(33.4) |
Net interest |
|
|
0.1 |
0.1 |
0.2 |
0.2 |
0.2 |
(0.7) |
(2.0) |
Net proceeds from issue of shares |
|
|
0.7 |
0.8 |
1.4 |
1.4 |
1.8 |
0.0 |
0.0 |
Dividends paid |
|
|
(50.3) |
(47.3) |
(60.5) |
(60.5) |
(93.5) |
(136.4) |
(105.4) |
Other financing activities |
|
|
0.0 |
(10.3) |
(10.9) |
(10.9) |
(11.9) |
(12.5) |
(13.1) |
Net cash flow |
|
|
0.5 |
23.2 |
32.9 |
32.9 |
(14.2) |
(15.0) |
16.9 |
Opening cash and cash equivalents |
|
|
28.5 |
29.4 |
52.9 |
85.2 |
85.2 |
71.4 |
56.4 |
Currency translation differences and other |
|
|
0.3 |
0.3 |
(0.6) |
(0.6) |
0.4 |
0.0 |
0.0 |
Closing cash and cash equivalents |
|
|
29.4 |
52.9 |
85.2 |
117.5 |
71.4 |
56.4 |
73.3 |
Closing net cash (including leases) |
|
|
29.4 |
20.8 |
38.2 |
38.2 |
22.5 |
10.0 |
30.0 |
Source: Company data, Games Workshop Group |
|
|
Research: Healthcare
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