Don’t call it a come back, Games Workshop has been here for years. Things are turning around for GW as they just reported higher profits for their first half of 2016!
The manufacturer from Nottingham, just released their Half Year Report this morning, showing gains of nearly 50% in key areas and addressing investors in a very optimistic and upbeat tone:
Source Games Workshop Half-Year Report 2016:
Our business and our Hobby are in good shape.
We are pleased to report sales and profit growth in the period across all channels. This improvement was built on a considerable team effort across the business.
In the period we focused and delivered on our operational plan and are making good progress on our strategic initiatives. I’m delighted that our new approach to marketing and merchandising has been received well. It’s early days, we’re having fun, and the feedback we’ve had is that our customers are enjoying the changes too. I intend to build on these improvements in the second half
One of our key measures of our performance is return on capital. During the period our return on capital grew from 36% at November 2015 to 40% at November 2016. This was driven by the increase in operating profit before royalties receivable, offset slightly by an increase in average capital employed**.
Key Points From the Half-Year Report:
- This report is for actual calendar year of June to December 2016, which is the first half of Games Workshop’s fiscal year. They do not follow a traditional Jan-Dec business year.
- Operating profit is up £4.7 million over same period in 2015.
- Royalty income increased £1.8 million over same period as well.
- Overall Total operating profit increased by £6.8 million with gains of £3.5 million due to “currency fluctuations”.
Highlights:
Sales
Reported sales grew by 28% to £70.9 million for the period. On a constant currency basis, sales were up by 13% from £55.3 million to £62.7 million; split by channel this comprised: retail £25.8 million (2015: £21.5 million), trade £24.9 million (2015: £22.4 million) and mail order £12.0 million (2015: £11.4 million).
Trade
All key territories achieved growth. In the period, our net number of trade outlets increased by 60 accounts.
Mail order
Sales in our online shops were up 8%. Our ‘Made to Order’ and ‘Last Chance to Buy’ web store initiatives, aimed at ensuring our customers have access to our broader range, have performed well.
Operating profit
Operating profit before royalty income increased by £5.0 million to £9.7 million (2015: £4.7 million) before the change in accounting estimates described below. On a constant currency basis, operating profit before the change in accounting estimates increased by £2.0 million to £6.7 million.
Total operating profit increased by £7.6 million to £13.8 million (2015: £6.2 million). The net impact in the six months to 27 November 2016 of exchange rate fluctuations was a gain of £3.5 million. It is not the Group’s policy to hedge against foreign exchange rate exposure. Operating expenses increased by £5.3 million due to an investment in sales facing activities relating to new retail store costs. Costs remain a key area of focus.
Dividends
In the period we paid a dividend of 25 pence per share (2015: 20 pence) amounting to £8.0 million (2015: £6.4 million).
In closing Kevin Roundtree had the following to say which, mirrors his 2015 report very closely:
The greatest risk is the same one that we repeat each year, namely, management. So long as we have great people we will be fine. Problems will arise if the board allows egos and private agendas to rule. I will do my utmost to ensure that this does not happen.
Now I am not a financial analyst but I can spot a trend or two, and it is no surprise to me to see royalties income will be up even though they are splitting with FFG. With games like Total War: Warhammer, Deathwing, BFG: Armada and more there has been no slowdown to properties bearing GW’s IP in 2016.
As far as profits being up over the previous year I think we can all agree the middle to ladder part of 2015 was a dark time for the hobby, but the company as a whole has started to rise like the proverbial Phoenix, hopefully to take flight again in 2017!
I for well welcome our new hobby over lords in 2017, and I hope you do as well!
GW’s 2015 Financial Report
Stock Price is up over 200£ from this time last year
Previous Financial Articles & Updates
#bringinghobbyback
About the Author: Rob Baer
Rob Baer
Job Title: Managing Editor
Founded Spikey Bits in 2009
Socials: Rob Baer on Facebook and @catdaddymbg on X
About Rob Baer: Founder, Publisher, & Managing Editor of Spikey Bits, the leading tabletop gaming news website focused on the hobby side of wargaming and miniatures.
Rob also co-founded and currently hosts the Long War Podcast, which has over 350 episodes and focuses on tabletop miniatures gaming, specializing in Warhammer 40k. and spent six years writing for Bell of Lost Souls.
Every year, along with his co-hosts, he helps host the Long War 40k Doubles Tournament at Adepticon and the Long War 40k Doubles at the Las Vegas Open, each of which attracts thousands of players from around the world.
Rob has won many Warhammer 40k Tournaments over the years, including multiple first-place finishes in Warhammer 40k Grand Tournaments over the years and even winning 1st place at the 2011 Adepticon 40k Team Tournament. He was even featured for his painting in issue #304 of Games Workshop’s White Dwarf Magazine.
With over 30 years of experience in retail and distribution, Rob knows all the products and exactly which ones are the best. As a member of GAMA (Game Manufacturers Association), he advocates for gaming stores and manufacturers in these difficult times, always looking for the next big thing to feature for the miniatures hobby, helping everyone to provide the value consumers want.
While he’s played every edition of Warhammer 40k and Warhammer Fantasy (since 5th Edition) and has been hobbying on miniatures since the 1980s, Titans of all sizes will always be his favorite! It’s even rumored that his hobby vault rivals the Solemnance Galleries, containing rulebooks filled with lore from editions long past, ancient packs of black-bordered Magic Cards, and models made of both pewter and resin.
