These half-year results from Games Workshop (GAW) mask the long-term potential of a business that has only just emerged from a disruptive period of restructuring. Management has overhauled both the store model and the retail sales structure. The changes, which have been delivered on time and on budget, have transformed the group into a leaner and, hopefully, more profitable company. A return to sales growth should result in higher profits.
In the half year, group like-for-like sales fell 1.7 per cent as growth in the UK was offset by declines in North America and Europe. However, management attributed the decline primarily to the upheaval caused by restructuring.
Encouragingly, operating expenses fell by £3.2m, thanks in part to £1m of savings from changes to European operations. But that didn't stop pre-tax profit plummeting 19 per cent, driven by adverse currency movements. Strip these out and profit dipped just 3 per cent.
A key focus for the rest of the year will be the recruitment of more store managers. Peel Hunt expects pre-tax profit of £17m for the full year, up from £16.9m in 2014, giving EPS of 39p.
| GAMES WORKSHOP (GAW) | ||||
|---|---|---|---|---|
| ORD PRICE: | 505p | MARKET VALUE: | £162m | |
| TOUCH: | 500-510p | 12-MONTH HIGH: | 725p | LOW:471 |
| DIVIDEND YIELD: | 12.1% | PE RATIO: | 23 | |
| NET ASSET VALUE: | 155p* | NET CASH: | £8.4m | |
| Half-year to 30 Nov | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p)* |
|---|---|---|---|---|
| 2013 | 60.5 | 7.7 | 17.7 | nil |
| 2014 | 56.5 | 6.3 | 14.5 | 36 |
| % change | -7 | -19 | -18 | - |
Ex-div:na Payment:na *Two special interim dividends paid in period of 20p and 16p *Includes intangible assets of £9.4m or 29p a share | ||||
