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Games Workshop Group Plc (GAW) is a miniature wargaming product manufacturing company. The company designs, manufactures and distributes fantasy miniatures, metal soldiers and rulebooks. Its products include Warhammer age of Sigmar, Warhammer 40,000, the hobbit, scenery, painting and modelling products, and books and digital products. The company offers its products through its chain of hobby centres, independent toy and hobby shops; independent retailers; and through Internet and mail orders.
Trading Update (as on 7th June 2019)
Sales growth has remained strong across all channels in FY19 with group revenue surged to £254 million and the pre-tax profit expected to be not less than £80 million. Royalties receivable from licensing were £11 million. As in the prior year, profit share bonuses totalling £5 million were paid on an equivalent basis to every member of the staff during the year.
A dividend per share of 35 pence was paid on 31 May 2019, taking the total dividend per share paid in the year to £1.55. No update has been provided on the year-end cash position. The company will publish FY19 results on 30 July 2019.
Financial Highlights (H1 FY19, £ million)
(Source: Interim Reports, Company Website)
The company's reported revenue surged by 14 per cent to £125.2 million as compared to £109.6 million in H1 FY18. On a constant currency basis, sales rose by 13% from £109.6 million to £124.2 million; split by channel this comprises of retail £42.3 million, trade £60.7 million and online £21.2 million.
Operating profit before royalty income surged by £0.8 million to £35.3 million as compared with the last year same period data. Operating profit before royalty income (constant currency basis) climbed by £0.5 million to £35 million. The companyâs total operating profit and pre-tax profit climbed by £2.7 million to £40.8 million against the £38.1 million, due to the impact of exchange rate fluctuations.
Cash generated from operations decreased from £41.2 million in H1 FY18 to £36 million in H1 FY19. Basic earnings per share surged by 4.8 pence to 100.8 pence as compared to 96 pence in H1 FY18.
In the period, the group paid dividends per share of 30 pence and 35 pence amounting to £21.0 million. The company has declared a dividend per share of 30 pence on 7th December 2018, amounting to £9.7 million and announced dividend per share of 25 pence.
During the period, the return on capital (ROC) declined from 119 per cent in November 2017 to 96 per cent in November 2018, due to the surge in the investment in capacity and working capital.
Share Price Performance
Daily Chart as at June-10-19, before the market closed (Source: Thomson Reuters)
At the time of writing (as on June 10, 2019, at 10:27 AM GMT), shares of GAW were quoting at GBX 4,695.535/share and added 0.43 per cent against the yesterday's closing price level. The outstanding market capitalisation of the company stood at around £1.52 billion with a dividend yield of 3.42%.
In the last 52-wks, shares of GAW have registered a high of GBX 4,774 (as on Jun 07, 2019) and a low of GBX 2,760 (as on Nov 21, 2018). At the current trading level, as quoted in the price chart, its shares are trading 1.64% below the 52wk high price level and 70.13% above the 52wk low price level.
Today's volume in the stock (before the market close, at the time of writing) stood at 26,121. However, the 5-day average daily volume traded in the stock was at 131,490.60, which was 44.17% above the 30-day average daily volume of 91,208.20 traded on the London Stock Exchange.
From the SMA standpoint, at the time of writing, its shares were trading marginally above the 30-days and 60-days SMA, however, they were trading considerably above the 200-days SMA, which indicates a positive trend in the stock price and carrying the potential to move up further from the current trading levels.
In the past 1 year, shares of the GAW have delivered a positive price return of 53.18%. However, on a year-to-date basis, the stock was up by approximately 53.68% and surged by 51.69% in the past three months.
Conclusion
The risks are rated as to their business impact and their likelihood of occurring. Also, the company has a disaster recovery strategy to ensure ongoing operations are kept in all circumstances.
The UK's exit from the EU is not expected to impact on the number of employees materially and therefore is less likely to influence the group's performance directly. However, any sustained economic downturn that may follow Brexit could increase the risk to the strategic plans and reduce the Group's income from investments.
