Maker of miniature figures Games Workshop (GAW) has stumbled into 2014 by canning its half-year dividend and casting doubt over the viability of the final payout. Pre-tax profits and revenues for the six months to 1 December 2013 were hit by changes to the structure of its retail chain and declining sales among independent stockists. The group admitted the disruption was not unexpected, but said the issues were short term.
The shares, which hit a post-recession peak last summer, plummeted 25 per cent on the morning these results were made public. Changes to Games Workshop's operating structure is putting more pressure on the business than expected. Management stresses the company's strong balance sheet, with £9.3m of cash and no debt. But chief operating officer Kevin Rowntree also says the high costs associated with converting multi-man stores into single-man stores makes a final dividend unlikely - although the final decision won't be made until May.
Chairman and acting chief executive Tom Kirby insisted the group will benefit once the reorganisation of the retail division is complete at the end of 2014. Meanwhile, the pre-tax profit margin of 13 per cent remains reasonably healthy.
Broker Peel Hunt reacted by downgrading its recommendation to hold and reducing its forecast for adjusted full-year pre-tax profit from £22.5m to £17m.
| GAMES WORKSHOP | ||||
|---|---|---|---|---|
| ORD PRICE: | 550p | MARKET VALUE: | £175m | |
| TOUCH: | 549-551p | 12-MONTH HIGH: | 830p | LOW: 546p |
| DIVIDEND YIELD: | 7.3% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 166p | NET CASH: | £9.3m | |
| Half-year to 1 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 67.5 | 11.1 | 25.6 | 18.0 |
| 2013 | 60.5 | 7.70 | 17.7 | nil |
| % change | -10 | -31 | -31 | -100 |
