Last close As at 05/08/2026
GBP190.10
▲ −20.00 (−0.11%)
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GBP6,282m
Research: Consumer
Games Workshop’s (GAW) update highlights that trading remains ahead of the board’s expectations and that PBT in H121 will be not less than £80m, with growth of at least 37% on H120, and just 10% below the COVID-19-affected FY20. Demand continues to be driven, predominantly, by the recent new Warhammer 40,000 release and through the Trade and Online channels, while Retail is still recovering from the COVID-19 closures. Retail outlets are closed where required by governments but, unlike during the previous lockdown, the factory and warehouses are still operating following investment to make the locations compliant with social distancing requirements. We upgrade our FY21 PBT forecasts by 14%.
Games Workshop Group |
Strong trading continues |
H1 trading update |
Consumer goods |
10 November 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’s (GAW) update highlights that trading remains ahead of the board’s expectations and that PBT in H121 will be not less than £80m, with growth of at least 37% on H120, and just 10% below the COVID-19-affected FY20. Demand continues to be driven, predominantly, by the recent new Warhammer 40,000 release and through the Trade and Online channels, while Retail is still recovering from the COVID-19 closures. Retail outlets are closed where required by governments but, unlike during the previous lockdown, the factory and warehouses are still operating following investment to make the locations compliant with social distancing requirements. We upgrade our FY21 PBT forecasts by 14%.
Year end |
Revenue (£m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
05/19 |
256.6 |
81.3 |
200.8 |
155 |
52.7 |
1.5 |
05/20 |
269.7 |
89.4 |
217.8 |
145 |
48.6 |
1.4 |
05/21e |
333.1 |
132.4 |
322.7 |
200 |
32.8 |
1.9 |
05/22e |
375.0 |
155.9 |
379.9 |
220 |
27.9 |
2.1 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles and exceptional items.
H121: Strong demand continues
With no quantitative commentary on trading beyond the indication that PBT in H121 will be not less than £80m, we estimate the key drivers to the better than expected profit outturn. If we assume GAW will report PBT of £81m in H121, and accrue half (£5.5m) of our FY21 royalty income estimate (£11m), the implied operating profit of £75.5m would be a y-o-y increase of c 56%. Further, if the gross margin at the interim stage is consistent with our full year assumption (c 73%), revenue in H121 would have to be at least £180m if we assume a low single-digit increase in operating costs in the first half. This would represent revenue growth of c 28% in the most recent quarter, an acceleration from the 15% reported for Q121 against a smaller comparative (Q120 £78m, Q220 £70.4m). The implied lower margin ie c 34% in Q221 versus 50% in Q121 (giving 40%+ for H121), highlights its volatility on a quarterly basis due to the phasing of releases and associated expenses.
FY21: PBT estimate increased by 14%
We upgrade our PBT estimates for FY21 by 14% to £132.4m and FY22 by 25% to £155.9m. We increase our FY21 revenue growth assumptions for all channels (Online to 37%, Trade to 34%, Retail to -5%). Our revised revenue forecast for FY21 of £333.1m is equivalent to annual growth of 12% on H120’s (the last period not affected by COVID-19) revenue of £148.4m, when annualised (ie £296.7m). The forecast operating margin (pre-royalties) for FY21 increases to 36.6% from 34.8%, implying a margin in H221 of c 29% versus 40%+ in H121.
Valuation: Further earning upgrades expected
On our updated forecast the P/E multiple for FY21 is 32.8x. The EV/sales multiple for FY21 is 10.2x, a premium to the previous high achieved in FY20 of 9.5x, which suggests the current share price is discounting further earnings upgrades.
Exhibit 1: Financial summary
Year-end 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 |
333.1 |
375.0 |
Cost of sales |
|
|
(37.0) |
(37.4) |
(43.7) |
(64.2) |
(83.3) |
(89.1) |
(89.5) |
(98.6) |
Gross profit |
|
|
82.1 |
80.6 |
114.4 |
157.1 |
173.3 |
180.6 |
243.6 |
276.4 |
SG&A (expenses) |
|
|
(67.2) |
(69.7) |
(83.6) |
(92.4) |
(103.4) |
(107.4) |
(121.6) |
(132.2) |
Other operating income/(expense) |
|
|
1.5 |
5.9 |
7.5 |
9.6 |
11.4 |
16.8 |
11.0 |
12.1 |
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 |
149.3 |
173.4 |
EBITDA |
|
|
27.5 |
27.3 |
49.3 |
86.5 |
97.1 |
115.6 |
160.3 |
185.5 |
Depreciation and amortisation |
|
|
(11.1) |
(10.4) |
(11.0) |
(12.1) |
(15.9) |
(25.6) |
(27.4) |
(29.2) |
Operating profit (before royalties and exceptionals) |
|
14.9 |
10.9 |
30.8 |
64.7 |
69.8 |
73.2 |
121.9 |
144.2 |
|
Reported operating profit |
|
|
16.5 |
16.9 |
38.3 |
74.3 |
81.2 |
90.0 |
132.9 |
156.3 |
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 |
132.4 |
155.9 |
Income tax expense (includes exceptionals) |
|
|
(4.3) |
(3.5) |
(7.9) |
(14.8) |
(15.5) |
(18.1) |
(26.8) |
(31.6) |
Adjusted net income |
|
|
12.2 |
13.5 |
30.5 |
59.5 |
65.8 |
71.3 |
105.6 |
124.4 |
Reported net income |
|
|
12.3 |
13.5 |
30.5 |
59.5 |
65.8 |
71.3 |
105.6 |
124.4 |
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 |
324.0 |
381.4 |
Reported diluted EPS (p) |
|
|
38.3 |
42.0 |
94.5 |
181.6 |
200.8 |
217.8 |
322.7 |
379.9 |
Adjusted diluted EPS (p) |
|
|
38.1 |
42.0 |
94.5 |
181.6 |
200.8 |
217.8 |
322.7 |
379.9 |
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% |
73.1% |
73.7% |
EBITDA margin (excl royalties) |
|
|
21.8% |
18.1% |
26.5% |
34.7% |
33.4% |
36.6% |
44.8% |
46.2% |
EBITDA margin (incl royalties) |
|
|
23.1% |
23.1% |
31.2% |
39.1% |
37.8% |
42.9% |
48.1% |
49.5% |
Operating margin (before royalties and exceptionals) |
|
|
12.5% |
9.2% |
19.5% |
29.2% |
27.2% |
27.1% |
36.6% |
38.5% |
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 |
20.2 |
23.0 |
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 |
104.7 |
99.6 |
Cash and equivalents |
|
|
12.6 |
11.8 |
17.9 |
28.5 |
29.4 |
52.9 |
83.4 |
138.6 |
Inventories |
|
|
7.6 |
8.5 |
12.4 |
20.2 |
24.2 |
20.7 |
20.8 |
22.9 |
Trade and other receivables |
|
|
9.4 |
10.1 |
13.0 |
15.5 |
18.8 |
19.6 |
24.2 |
27.3 |
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 |
128.6 |
188.9 |
Trade and other payables |
|
|
(13.1) |
(12.8) |
(16.5) |
(20.3) |
(19.2) |
(30.3) |
(20.0) |
(22.0) |
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) |
(34.8) |
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 |
174.9 |
228.0 |
CASH FLOW STATEMENT |
|
|
|
|
|
|
|
|
|
|
EBIT |
|
|
16.5 |
16.9 |
38.3 |
74.3 |
81.2 |
90.0 |
132.9 |
156.3 |
Depreciation and amortisation |
|
|
11.1 |
10.4 |
10.2 |
12.2 |
15.9 |
25.0 |
27.4 |
29.2 |
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 |
(15.0) |
(3.1) |
Income taxes paid |
|
|
(2.3) |
(2.6) |
(5.5) |
(12.2) |
(16.3) |
(22.7) |
(26.8) |
(31.6) |
Operating cash flow |
|
|
23.3 |
24.2 |
43.9 |
70.1 |
72.5 |
104.5 |
119.0 |
151.3 |
Net capex and intangibles |
|
|
(12.3) |
(12.7) |
(12.8) |
(21.6) |
(22.5) |
(24.6) |
(22.8) |
(24.0) |
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 |
30.5 |
55.2 |
Opening cash and cash equivalents |
|
|
17.6 |
12.6 |
11.8 |
17.9 |
28.5 |
29.4 |
52.9 |
83.4 |
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 |
83.4 |
138.6 |
Closing net cash (including leases) |
|
|
12.6 |
11.8 |
17.9 |
28.5 |
29.4 |
20.8 |
51.5 |
106.7 |
Source: Games Workshop, Edison Investment Research
|
|
Global Dominion is a global company providing services and end-to-end (design to completion) project solutions, where increasing complexity is driving the requirement for external expertise. It has a strong track record reflecting operational excellence and stringent financial controls (EBIT CAGR 23% in 2015–19). COVID-19 has primarily affected operational/project delivery. End markets remain robust, reflecting the critical nature and payback of such investment, suggesting profit recovery should be swift, potentially enabling a return to the targeted growth plan of doubling 2018 net income by 2023. Uncertainties remain over the timing of recovery. The balance sheet is strong in a net cash position.