And here is the latest GW Financial Update:
Games Workshop Group PLC announces its preliminary results for the year ended 29 May 2005.
Highlights
• Underlying business healthy notwithstanding sales decline with the Lord of the Rings downturn
• Turnover at £136.6m (2004: £151.8m)
• Operating profit at £13.9m (2004: £19.9m)
• Earnings per share of 28.2p (2004: 40.8p)
• Maintained final dividend per share of 14.025p (2004: 14.025p)
• 21 new Hobby stores opened bringing the total to 327
Tom Kirby, Chairman and Chief Executive of Games Workshop, said: “Despite our short-term difficulties, the Hobby is in good health.
“The directors believe the long-term prospects for the business remain very good.”
Risks facing the business
Managing the risks which face our business is what we do every day. The divisional management structure referred to above is how we make this process transparent and accountable. The Games Workshop Tabletop Wargaming division is responsible for keeping the Hobby fresh and exciting and for managing market facing risks, the Manufacturing and Supply division is responsible for managing product delivery risks, the Other Activities division is responsible for using our intellectual property appropriately while not distracting our tabletop wargaming activities, and Group is responsible for managing corporate risks. We have a formal risk reporting process as part of our annual budgeting and planning cycle, which is linked into the internal and external audit process, but the management of these risks is an integral part of the daily management process.
Foremost amongst the market facing risks is our ability to forecast sales and factory demand. As I have indicated elsewhere, we failed this year accurately to forecast the extent of the sales downturn after the last of the Lord of the Rings movies, although our supply business was able to react very swiftly once the decline was upon us. We are currently looking at ways in which we might better predict future sales by using trend analysis and statistical tools – however, we believe it is unlikely that we will again find ourselves with such a significant sales ‘bubble’ caused by third party advertising and movie marketing, neither of which forms part of our normal business model.
Amongst the product delivery risks are those relating to input prices. The cost of core raw materials (metal and plastic) represents no more than 3% of our sales. While the prices of these commodities have shown significant volatility during the last 18 months, we do not believe that this volatility represents a significant threat to our long-term profitability. In the short term our buying team continues to work hard to minimise these risks and the Manufacturing and Supply division continues to seek process efficiencies to offset any cost impact.
Many of our risks are mitigated by the significant portfolio effect which we usually enjoy with different geographies, different routes to market and different currencies. This leads me to conclude that the main source of risk for us remains management error. This is why management recruitment, development and succession planning are so important.
Full report can be found at the link below
http://investor.games-workshop.com/press/260705%20Approved%20Preliminary%20Results%202005.doc
