Games Workshop (GAW LN) announced their 1H results yesterday and here are some notes.
Income statement
Balance Sheet
Cashflow
Revenue and Profit
Core Revenue (revenue from sales of tabletop products) up 10.8% to £212.3m from £191.5m in 1H2021.
Licensing revenue dipped to £14.3m from £20.1m. Overall revenue was up to £226.6m from £211.6m in 1H2021. An important point to note is the benefit from favorable forex rates. Revenue at constant currency was flat (1H2022: £211.7m vs 1H2021 £211.6m).
Operating profit is down 5% (1H2022: £83.6m vs 1H2021: £88.5m). Operating profit at constant currency is down 14.4% (1H2022: £75.7m vs 1H2021: £88.5m)
Earnings Per Share for 1H2022 is 202.4p vs 1H 2021 217.2p. Dividends declared was 165p, an increase from 2021's 100p
Business developments
The company opened 119 trade outlets in North America and are trying to adjust to this higher level of global sales. I think this suggests they are trying to manage (and maybe struggling with?) the expansion overseas.
Some retail outlets in countries such as China and Japan are coming out of restrictions in the period reported (remember this is for 6 months to Nov 2022), and the lost sales of £1 million from China was not as bad as expected.
Brexit has imposed extra costs and a staff recruitment gap, especially those with language skills in the UK based European Trade team. They have opened a new sales office in Barcelona and is expecting £12 million of VAT receivable from the French tax authorities. Looks like they are still in the process of adjusting to Brexit, like other small UK business.
The Ukraine war caused £2 million lost in net revenue from trade sales in Russia
Costs
In their own words on the cost side:
Core gross margin - down 4.5% to 64.1% in the period with increasing volumes, offset by materials increases (+£2.5 million, 1.9% of core sales) and carriage cost increases (+£2.8 million, 1.2% of core sales) both due to external pressures. There were increased staff costs of £1.0 million, 0.2% of core sales in the design studio (investment in pay grades and increased headcount, +20 new jobs in the period) and the incremental cost of our new facilities (+£1.0 million, 0.5% of core sales). Investment in inventory, to ensure we meet customer demand, has also resulted in additional inventory provisioning of £1.2 million, 0.4% of core sales. Our average RRP increase during the period was broadly the same as last year
It looks like profit was hurt by rising costs as well as investment for expansion. The rising costs look unavoidable as the UK is struggling with a cost of living crisis and Brexit effects, and given their strong financial position and business, they can afford to continue their efforts to grow the business.
Warhammer+
In their own words:
Warhammer+ Launched in August 2021, it continues to delight and entertain a growing subscriber base. Warhammer+ shows and animations have now been viewed over 5 million times. Revenue is £3.0 million in the period and associated development costs of £2.4 million. Our subscriber numbers are 115,000.
I think it is notable that this is a profitable endeavor (at the very least). Given that Warhammer is a very niche hobby, there is a risk that this would never breakeven. As the company continues to grow the IP, this part of the business will be very interesting in the years ahead.
Income statement
Balance Sheet
Cashflow
Revenue and Profit
Core Revenue (revenue from sales of tabletop products) up 10.8% to £212.3m from £191.5m in 1H2021.
Licensing revenue dipped to £14.3m from £20.1m. Overall revenue was up to £226.6m from £211.6m in 1H2021. An important point to note is the benefit from favorable forex rates. Revenue at constant currency was flat (1H2022: £211.7m vs 1H2021 £211.6m).
Operating profit is down 5% (1H2022: £83.6m vs 1H2021: £88.5m). Operating profit at constant currency is down 14.4% (1H2022: £75.7m vs 1H2021: £88.5m)
Earnings Per Share for 1H2022 is 202.4p vs 1H 2021 217.2p. Dividends declared was 165p, an increase from 2021's 100p
Business developments
The company opened 119 trade outlets in North America and are trying to adjust to this higher level of global sales. I think this suggests they are trying to manage (and maybe struggling with?) the expansion overseas.
Some retail outlets in countries such as China and Japan are coming out of restrictions in the period reported (remember this is for 6 months to Nov 2022), and the lost sales of £1 million from China was not as bad as expected.
Brexit has imposed extra costs and a staff recruitment gap, especially those with language skills in the UK based European Trade team. They have opened a new sales office in Barcelona and is expecting £12 million of VAT receivable from the French tax authorities. Looks like they are still in the process of adjusting to Brexit, like other small UK business.
The Ukraine war caused £2 million lost in net revenue from trade sales in Russia
Costs
In their own words on the cost side:
Core gross margin - down 4.5% to 64.1% in the period with increasing volumes, offset by materials increases (+£2.5 million, 1.9% of core sales) and carriage cost increases (+£2.8 million, 1.2% of core sales) both due to external pressures. There were increased staff costs of £1.0 million, 0.2% of core sales in the design studio (investment in pay grades and increased headcount, +20 new jobs in the period) and the incremental cost of our new facilities (+£1.0 million, 0.5% of core sales). Investment in inventory, to ensure we meet customer demand, has also resulted in additional inventory provisioning of £1.2 million, 0.4% of core sales. Our average RRP increase during the period was broadly the same as last year
It looks like profit was hurt by rising costs as well as investment for expansion. The rising costs look unavoidable as the UK is struggling with a cost of living crisis and Brexit effects, and given their strong financial position and business, they can afford to continue their efforts to grow the business.
Warhammer+
In their own words:
Warhammer+ Launched in August 2021, it continues to delight and entertain a growing subscriber base. Warhammer+ shows and animations have now been viewed over 5 million times. Revenue is £3.0 million in the period and associated development costs of £2.4 million. Our subscriber numbers are 115,000.
I think it is notable that this is a profitable endeavor (at the very least). Given that Warhammer is a very niche hobby, there is a risk that this would never breakeven. As the company continues to grow the IP, this part of the business will be very interesting in the years ahead.
Vested
None of the above should be construed as financial or investment advice. Do your own due diligence as I will not be responsible for any loss/risk.
Hi, I'm contacting you with regards to Boustead.
ReplyDeleteI saw you are a valuebuddies contributor (as opposed to me), and currently new accounts are blocked.
Wrong information is being posted regarding the "risk" of getting your shares delisted as a NO voter.
The SGX listing code explicitly foresees a "sell-out right" during 3 months after vote results are in. Hence, no voters can always sell at a price at par with Yes voters.
Can you share this clearly on the forum, together with the links below?
https://resourcehub.bakermckenzie.com/en/resources/global-public-ma-guide/asia-pacific/singapore/topics/squeeze-out-of-minority-shareholders-after-completion-of-the-takeover
Or (acrobat, not document) page 496 (time-table of this type of offer) and page 504 https://www.bakermckenzie.com/-/media/files/insight/guides/2022/baker_mckenzie_global_public_ma_guide_2022.pdf
A .com website will be launched soon to coordinate a large (and risk-free) NO vote to get much closer to a fair price. Rest assured, there will be a lot of NO.
Thanks a lot !
Hello,
DeleteThanks for sharing. I just saw your comment and I see that you managed to get this out in Valuebuddies.