TIDMGAW
RNS Number : 5266G
Games Workshop Group PLC
27 July 2021
PRESS ANNOUNCEMENT
GAMES WORKSHOP GROUP PLC
27 July 2021
ANNUAL REPORT
Games Workshop Group PLC ("Games Workshop" or the "Group")
announces its annual report for the year to 30 May 2021.
Highlights
Year to Year to
30 May 2021 31 May 2020
GBPm GBPm
---------------------------------------- ------------- -------------
Revenue 353.2 269.7
Revenue at constant currency* 361.0 269.7
Operating profit - pre-royalties
receivable 135.4 73.2
Royalties receivable 16.3 16.8
Operating profit 151.7 90.0
Operating profit at constant
currency* 155.7 90.0
Profit before taxation 150.9 89.4
Net increase in cash - pre-dividends
paid 93.4 70.5
Earnings per share 372.7p 218.7p
Dividends per share declared
in the year 235p 145p
Dividends per share paid in
the year 185p 145p
Kevin Rountree, CEO of Games Workshop said:
"After a tough year we are delighted that the Warhammer hobby
and Games Workshop are in great shape; thanks to everyone involved
and thanks to everyone that continues to keep us safe and
well."
For further information, please
contact:
Games Workshop Group PLC investorrelations@gwplc.com
Kevin Rountree, CEO
Rachel Tongue, CFO
Investor relations website investor.games-workshop.com
General website www.games-workshop.com
The full 2021 annual report can be downloaded from the investor
relations website at investor.games-workshop.com
*Constant currency revenue is calculated by comparing results in
the underlying currencies for 2021 and 2020, both converted at the
2020 average exchange rates.
STRATEGIC REPORT
Strategy and objectives
Games Workshop is committed to making the Warhammer hobby and
our business ever better.
Our ambitions remain clear: to make the best fantasy miniatures
in the world, to engage and inspire our customers, and to sell our
products globally at a profit. We intend to do this forever. Our
decisions are focused on long-term success, not short-term
gains.
Let me go through our strategy part-by-part:
The first element is that we make high quality miniatures. We
understand that what we make may not appeal to everyone, so to
recruit and retain customers we are absolutely focused on making
our models the best in the world. In order to continue to do that
forever and to deliver a decent return to our owners, we sell our
miniatures for a price that we believe represents the investment in
their quality.
The second element is that we make fantasy miniatures based in
our endless, imaginary worlds. This gives us control over the
imagery and styles we use, and ownership of the intellectual
property (IP). Aside from our core business, we are constantly
looking to grow our licensing income from opportunities to use our
IP in other markets.
The third element is that we are customer focused. We aim to
communicate in an open, fun way. Whoever and wherever our customers
are, and in whichever way they want to engage with Warhammer, we
will do our utmost to support them.
The fourth element is the global nature of our business. Our
customers can be found anywhere, and we seek them out all over the
world. They're a passionate bunch with an interest in science
fiction and fantasy. They're collectors, painters, model builders,
gamers, book lovers and much more. And while no two engage with
Warhammer in exactly the same way, they're all deeply invested in
the rich characters and settings of our IP.
To reach them, we have two key tools: our retail chain and our
digital content. In retail, we showcase the Warhammer hobby and
offer a fantastic customer experience. Our digital offering has
never been richer. Through warhammer-community.com and social media
we reach thousands of people every day, showing them the very best
aspects of the Warhammer hobby and inviting them to join our global
community of enthusiastic fans.
Our retail channel is supported by our own online store (it has
the full range of our products) and our independent stockist and
trade accounts across the world. These independent accounts do a
great job supporting our customers in parts of the world where we
either have not yet opened one of our stores or where it is not
commercially viable for us to have one. Our long-term goal is to
have all three channels (retail, trade and online) growing in
harmony. We will always have more independent accounts than our own
stores. Our strategy is to grow our business through geographic
spread, growing all of the three complementary channels.
The fifth element is being focused on cash. By delivering a good
cash return every year we can continue to innovate, surprise and
delight our loyal existing customers and new customers with great
product. To be around forever we also need to invest in both
long-term capital and short-term maintenance projects every year,
pay our staff what they have earned for the value they contribute
and deliver surplus cash to our shareholders. Our dedication and
focus should ensure we deliver on time and within our agreed cash
limits.
We measure our long-term success by seeking a high return on
investment. In the short term, we measure our success on our
ability to grow sales whilst maintaining our core business
operating profit margin at current levels. The way we go about
implementing this strategy is to recruit the best staff we can. We
look for those with the appropriate attitude and behaviour a given
job requires and for those who are moral, ethical and quality
obsessed. It is also important that everyone we employ has a real
desire to learn the skills needed to do their job and has a great
attitude towards change (there's never a dull moment here!). To
support them, we offer all of our staff both personal development
and skills training.
We continue to believe there are great opportunities for our
business to grow, particularly in North America and Asia.
Our brands
We have originated and are in control of a number of strong,
globally recognised brands with their own identities, associations
and logos.
Our key consumer facing brand is 'Warhammer'.
We design, make and sell products under a number of brands and
sub brands, which denote setting, tone and product type, the key
ones being:
- Warhammer: Age of Sigmar - our unique fantasy setting.
- Warhammer 40,000 - our most popular and recognisable brand is
a space fantasy setting.
- Horus Heresy - an offshoot of Warhammer 40,000, the Horus
Heresy brand is presented as 'fictional history' of that
universe.
We believe our IP to be among the best in the world.
The Warhammer settings are incredibly rich and evocative
backdrops. They're populated by more than three decades of
fantastical characters and comprise thousands of exciting
narratives. We are committed to making it easier than ever for
people to discover, engage with and immerse themselves in our IP.
Aided by a small, senior team we have already begun to find new
partners, and new ways to help us bring the worlds of Warhammer to
life like never before. Together, we'll continue to explore
animation, live action and more. We'll present the very best
aspects of our rich IP, delighting audiences while always ensuring
we do no harm to our core miniatures business.
Business model and structure
We design, manufacture, distribute and sell our fantasy
miniatures and related products. These are fantasy miniatures from
our own Warhammer 40,000 and Warhammer: Age of Sigmar universes.
Our two factories, two warehouse facilities and back office support
functions are all based in or near Nottingham. We are an
international business centrally run from our HQ in Nottingham,
with 77% of our sales coming from outside the UK.
Design
We design all of our products at our HQ in Nottingham. Employing
262 people, the design studio creates all the IP and all the
associated miniatures, artwork, games and publications that we
sell. Annually, these specialist staff produce hundreds of new
sculpts, illustrations, rules, stories etc. enabling us to deliver
new products every week and continue to keep our customers engaged
and excited. In 2020/21 we invested GBP12.7 million in the studio
(including software costs) with a further GBP4.4 million spent on
tooling for new plastic miniatures. We are committed to investing
in these areas at an appropriate level every year.
All of our plastic miniatures are branded as Citadel Miniatures,
a mark with an unparalleled reputation for quality. It denotes both
a style and level of detail that we apply to both our own worlds
(Warhammer 40,000, Warhammer: Age of Sigmar, etc.) and those of
others, e.g. Lord of the Rings.
Our resin miniatures, designed for more experienced customers,
are branded as Forge World and are less widely available than their
plastic counterparts.
Many customers love personalising their miniatures and our
Citadel Colour paint range, brushes and accompanying painting
system are designed to help everyone from the complete beginner to
the most experienced painters in the world achieve great results.
In the pursuit of ever better, we continually develop new types of
paint and ways of using them. The result - our paints are used the
world over. And for painting more than just our miniatures!
When not interacting with our miniatures, many customers enjoy
reading stories set in our rich and immersive worlds. Under our
Black Library imprint we publish hundreds of titles a year, from
short stories and audio dramas through to full length novels and
audio books. These we make available in physical bookstores, third
party digital platforms and through our own retail and other
specialist stores.
Manufacture
We are proud to manufacture our product in Nottingham. It's
where we started and where we intend to stay. During the year we
completed the work on Factory 2 of increasing our production
facilities in Nottingham, with the expansion of our tooling
facility and further office space. We also purchased a further two
pieces of land next to our main site in Nottingham which will allow
for future expansion.
Logistics
Our product is distributed from our main warehouse at the
Nottingham HQ or our new rented warehouse facility approximately 25
minutes from the main HQ. These facilities supply our two hubs; one
in Memphis, Tennessee and one in Sydney, Australia. Between these
four facilities we are able to then directly supply our independent
retailers, our own retail stores and fulfil our online orders. The
upgrade of the Memphis facility as well as moving into this new
rented warehouse near Nottingham, are now both nearing operational
completion.
Sell
We sell via three channels, our own stores 'Retail', third party
independent retailers 'Trade' and our online store 'Online'. We
also 'sell', or rather generate income, via our licensing partners.
We support these channels and activities via our digital and
marketing team.
Retail - our stores provide the focus for the Warhammer hobby in
their geographical areas. Our stores only stock Games Workshop
product. They are where we recruit the majority of our new
customers. To do so, the stores don't offer the full range of our
product, only starter sets, new release product and the appropriate
extended range. At the year end, we had 523 of our own retail
stores in 23 countries. Our stores contributed 20% of the year's
sales. We have 406 single staff stores: small sites, each one
operated by only one store manager. We also have 117 multi-staff
stores, which, like our single staff stores, are constantly
reviewed to ensure they remain profitable. If not, they will
probably be converted to single staff stores.
Trade - we sell to third party retailers under closely
controlled terms and conditions. Independent retailers are an
integral part of our business model helping us to sell our products
around the world and importantly in areas where we don't have our
own stores. Games Workshop strives to support those outlets which
help to build the Warhammer hobby community in their local areas.
The bulk of our sales to independent retailers are made via our
telesales teams based in Memphis and Nottingham. We also have small
telesales teams in Sydney, Tokyo, Shanghai, Singapore, Hong Kong
and Kuala Lumpur. In 2020/21 we had 5,400 independent retailers
(2020: 4,900) in 73 countries. We strive to deliver excellent
service, operating in 23 languages covering all time zones. 55% of
our sales came from sales to independent retailers in the year
reported. These sales are from their physical stores as well as
their own online web stores.
Online - sales via our own web stores accounted for 25% of total
sales in 2020/21. All of our retail stores also have a web store
terminal that allows our customers to access the full range from
within the store. Our web stores are run centrally from our
Nottingham HQ.
Licensing - we grant licences to a number of carefully chosen
partners. This allows us to leverage our IP to broaden the presence
and brand exposure of Warhammer around the world, often entering
new markets such as board games, apparel or accessories and media
and entertainment. It also allows us to generate additional income.
Currently, the majority of this income is generated by computer
games sales in North America, the UK and Continental Europe.
Marketing - keeps us customer focused. This team acts as the
bridge between our other business areas, ensuring we have a joined
up approach between product (design to manufacture) and sales.
Marketing spends a lot of time listening and developing a two way
dialogue with our customers to make sure we keep their needs at the
forefront, championing the Warhammer hobby around the globe and
injecting our content and communications with a real sense of
passion and fun.
Structure
We control the business centrally from our HQ in Nottingham; it
is where the majority of people with experience and knowledge of
running our business work. I have put in place a flat structure:
the people with senior responsibility that make all of the big
decisions report directly to me. To bring extra focus and ambition,
my team is now split into six parts: product design and IP
creation, manufacturing and supply chain, sales, digital and
marketing, operations and support, and IP exploitation.
We have a global IP and product design director who is
responsible for our design studios (miniatures, books and box
games, specialist systems, Warhammer hobby product and our
publishing business, Black Library).
The responsibility for our retail chain is split between two
retail territory heads, one for North America and Asia and one for
the rest of the world. Our trade sales are the responsibility of a
single head of trade sales. All of our online and digital sales are
the responsibility of a global marketing and digital director.
These sales channels are supported by a merchandising team,
managed by the global manufacturing and supply chain director and
by the marketing team that sits under the global marketing and
digital director. The global manufacturing and supply chain
director also manages the factories and our four main warehouse
facilities in Nottingham, Memphis and Sydney.
Our operations and support structure includes a chief financial
officer for Games Workshop who is responsible for accounts, HR,
legal and compliance, and licensing as well as ensuring we invest
in our core IT systems to help us deliver our long-term goals.
Key performance indicators
The board and management team use a number of key performance
indicators to provide a consistent method of analysing performance,
in addition to allowing the board to benchmark performance against
our forecast. The key performance indicators utilised by the board
can be split into key financial performance indicators and key
non-financial performance indicators.
Our key financial performance indicators are:
Monthly and year-to-date sales growth by channel
This measures the sales growth achieved in each of our channels
on a monthly and year to date basis.
Monthly and year to date Group gross margin
This measures the gross margin achieved on sales after taking
account of the direct costs and depreciation of manufacturing
equipment and shipping our product to customers/stores on a monthly
and year to date basis.
Year to date core business operating profit percentage
The ratio of core business operating profit before royalty
income against revenue, as a percentage. This is considered to be a
measure which reflects sales under our direct control.
Monthly and year to date core business profit
This measures gross profit less operating expenses on a monthly
and year to date basis, before royalty income. This is considered
to be a measure which reflects sales under our direct control.
Our key non-financial performance indicators are:
Number of own stores by territory
This measures the number of our own stores which is an indicator
of our global reach.
Number of ordering stockist accounts by territory
This measures the number of trade outlets that have ordered from
us in the last six months. It is an indicator of our global reach
and the health of our trade account base.
Customer engagement
We measure this through our owned content channel
warhammer-community.com and reach delivered through our social
platform.
Staff engagement
We have a monthly Games Workshop Group Communications Forum
which is attended by staff representatives and senior managers.
This is to ensure regular staff engagement across the Group.
Information on topics discussed at these meetings is circulated to
all staff and to the board.
Shareholder value
We believe shareholder value is created, primarily, by not
destroying it. We have no intention to acquire other companies, nor
to dispose of any of those we own.
We return our surplus cash to our owners and try to do so in
ever increasing amounts. A 'working cash buffer' of three months'
worth of working capital requirement has been set aside along with
six months' worth of future capital spend and tax payments before
deciding how much cash is truly surplus for the purpose of
declaring dividends.
Review of the year
Core business
COVID-19
As ever, our global team has been focused on delivering a better
performance, and making the Warhammer hobby ever more fun and
engaging. With a challenging backdrop we have been able to deliver
on our core strategy and our customers have continued to enjoy
Warhammer as best they can. We look forward to the easing of
restrictions, healthy and happy staff and customers, all able to
engage in our full Warhammer hobby experience.
Our priorities during the year have not changed - to protect the
health and safety of our staff and to do our utmost to balance the
needs of all stakeholders. We have done well; supporting
governments fully with their health and safety guidelines keeping
people safe, our staff with job security, wellbeing support and
full pay. Our customers have had considerably more free, engaging
digital content and the best new miniatures we have ever made! To
our disappointment, we have also had more customers' service
issues, chiefly delays on deliveries. These were primarily driven
by our internal issues with capacity constraints at our warehouse
facilities, rather than by external factors. To support affected
customers we upscaled our customer service resource. We have
continued to support our suppliers, staying loyal whenever possible
and paying their invoices on time. Our shareholders have had record
dividends too. Our focus on spending cash wisely has proven the
right approach, we have had good cash balances throughout the year
in line with our short term forecasts. We will continue to focus on
improving our relationships with all stakeholders and make
decisions with all in mind.
Where possible our office based staff (global services, studios,
trade sales teams etc.) have worked from home. We have now been
clear with all of our staff what their new working arrangements
will be going forward. In summary, our office based support and
operations staff will have some flexibility, working from home for
some or all of the week. All other staff will operate full-time
from one of our business locations. We are currently working on
making the HQ office space in Nottingham more flexible to meet our
new requirements. This should be completed by September 2021.
Office based staff are being phased back as we complete the work on
their areas. I hope everyone settles into their new areas well, and
I look forward to playing musical chairs with everyone, including
the senior team, who will be making use of our new hot desk
areas!
Our manufacturing, warehousing and support teams at our main HQ
in Nottingham and warehouse hubs in Memphis, Tennessee and Sydney,
Australia, not only worked well within our health and safety
procedures but they have also made, picked and packed a significant
increase in volume compared to the same period last year. All our
staff in these areas are still working to local social distancing
guidelines, these will be amended as government guidelines
change.
The majority of our 523 retail stores have been restricted or
closed during the period, following local government guidelines. It
was great to see, during the periods our stores were allowed to
open, our store managers doing a fantastic job of delivering their
normal outrageous service for our loyal customers during such a
challenging time. Our retail offer is one of our unique services.
You'll find no better place to immerse yourself in the Warhammer
hobby. Many trade accounts have been able to access government
assistance, and many have the flexibility to sell outside of their
physical location (online via 'click and collect', 'curbside
pickup' and delivery). It is still early days to predict what
2021/22 is going to look like. We continue to invest in all of our
sales channels.
In line with our earlier announcement regarding repayment of
furlough support and other government subsidies, we have cancelled
the UK expanded business rates retail discount scheme for 2020/21.
We made no claims for financial support or subsidies from
governments during the period.
There still remains the potential for further disruption, so we
will continue to monitor the impact and do what is necessary to
ensure our staff, their families and our customers are safe. This
is, and will remain, at the forefront of our minds.
Year to May 2021
This has been a tough and challenging year operationally for
everyone. As a global, vertically integrated business it has taken
a considerable effort to keep our operational plans on track. I'd
like to take the opportunity to acknowledge everyone that has
helped us during these challenging times. Thanks to you all, you
have been amazing.
Our core strategy is unchanged and we have delivered on all of
the key elements. They have again driven our growth in sales and
profits.
The key elements are:
- Make the best fantasy miniatures
- Engage and inspire our customers
- Sell our product profitably, globally
- Make decisions with long term success in mind
More Warhammer. More Often - core business
At our 2019 AGM we shared a new phrase 'More Warhammer. More
Often'. We believe Warhammer is immense fun, and we wanted to be
clear that there are many more ways to take part than ever before
and that all of them should be embraced and supported equally.
To help more people enjoy Warhammer in more ways, we a core
business which focuses on realising our IP as miniatures and
supporting products - the core Warhammer hobby. A licensing team
which is there to enrich and expand the ways in which Warhammer
fans can interact with the IP. As ever we want to make sure
Warhammer is around forever and so we pick partners carefully, ones
with respect for the IP and the creative vision to help strengthen
and enrich it. To bridge these areas, we aim to bring everything to
My Warhammer, a single source of truth for all things Warhammer. We
continue to develop this platform.
The main highlight of the year for the core business was a
confident global launch of our updated Warhammer 40,000 system
which, given the increased volumes, tested our legacy IT systems to
their maximum. They mostly passed the tests. Our relentless focus
on producing the highest quality miniatures continues to deliver
results. That combined with a customer focused approach helped us
sell more miniatures than any year before.
The low point - at times we looked under considerable pressure,
but the shared understanding of our beliefs amongst my senior team,
and many others, pulled us through. Our understanding that there
are no silver bullets and our attitude to hard work, and our
compassion and camaraderie have never been more essential. The
global team has documented and delivered an ever changing
operational plan again, and it continues (I actively encourage) to
be a little flexible around the edges leaving us the freedom to
make changes to and explore unproven new initiatives.
The results: another solid year building on the great progress
and profitable growth we have been consistently delivering over the
last six years. I will continue to set the bar higher; it is worth
noting that historically the launch year of a new Warhammer 40,000
edition is normally the financial high point... until the next
edition of Warhammer 40,000. The goal is to ensure we help more and
more people share our love for Warhammer. Our immediate operational
plans look encouraging.
Given the backdrop I am delighted to report an exceptional
financial performance; record constant currency sales, profit and
cash generation in the period. In line with our Group Profit Share
scheme and previous years, we have paid in total GBP2.6 million
(2020: GBP2.4 million) to staff. To further reward their
exceptional performance in helping to increase our profitability
significantly in the period reported, we have also paid in cash a
discretionary bonus equally to all employees a total of GBP10.6
million (2020: GBPnil). Total dividends declared in the period
reported were 235 pence per share (2020: 145 pence per share).
Update on priorities for 2020/21
We have made some reasonable progress with our key priorities.
Each of these is designed to ensure we deliver our exciting
operational plan and continue to engage and inspire our loyal
customers.
Some have been delayed by COVID-19 and Brexit, others by our
inability at times to implement large scale projects on time. I
accept full responsibility for the delays, clearly the plan wasn't
good enough. We are working to address any issues. Most are under
our control.
Business recovery
Our factory sites and logistics hubs have adopted COVID-19
social distancing measures and practices, above and beyond basic
government minimum requirements. Whilst these measures have
constrained capacity a little, they have ensured that staff remain
safe. As a minimum, we will continue to adhere to government
guidelines.
Design
The new edition of the Warhammer 40,000 range, set in our unique
science fiction IP, was released in July 2020 and has, by a
considerable margin, been our most successful launch to date. Along
with fantastic new models, the new edition introduced a step change
in narrative gaming for those Warhammer hobbyists whose primary
passion is bringing our worlds to life on the tabletop. Sales of
subsequent new releases and existing lines have all enjoyed good
levels of success since the launch.
Releases for Age of Sigmar, our primary fantasy IP, included
three new factions, and the Cursed City game which, dramatically
exceeding expectations, sold out very quickly. We do our best to
guess the right number to make, sometimes we are wrong. The second
half of the year has seen releases focused around a series of
dramatic in-world events leading up to the launch of a new edition
of the game in the first quarter of next financial year - we can't
wait!
To improve the quality and accessibility of our offer we are
expanding our translation teams. In-house Chinese and Russian
translation teams will be in place in Q1 and Q2 respectively next
financial year.
There were four magazine partworks based on our Warhammer
miniatures hobby running throughout the year and tests were
successfully conducted in the UK, Spain, Germany and (for the first
time) the US for launches in 2021/22.
Our other intellectual properties - Necromunda, Adeptus
Titanicus, Aeronautica and Lord of the Rings, are all in good
health receiving a steady stream of new product in the year while
Blood Bowl, our irreverent game of fantasy football, had a new
edition which was enthusiastically received by both new and
existing customers alike. We will continue to develop and
periodically bring to market new IPs and game systems, giving both
existing and new customers more reasons to collect our wonderful
miniatures. We have plenty of exciting plans in the pipeline.
Paint sales were flat in the year following a significant new
release launch in the summer of 2019. We are committed to
continuing to develop new and innovative paint, enabling customers
to get ever better results from this popular aspect of the
Warhammer hobby.
Black Library, our novel publishing division, also had its best
year so far publishing over 150 new titles. It was no surprise that
digital sales of these titles were popular on the large digital
platforms, more than offsetting the lower sales from third party
physical bookstores that were closed during the period.
The strategy of keeping customers engaged by broadening and
deepening our offer sees us continue to invest in IP and design
with studio payroll costs increasing by GBP1.1 million to GBP10.0
million; as a percentage of Group revenue they have fallen by 0.5%
to 2.8%. Studio payroll costs as a percentage of Group revenue are
forecast to be higher in the next financial year, which will allow
us to bring additional product lines to the market and also provide
additional intellectual property for exploitation through our
licensing team.
Manufacturing
Another busy year and step change in output versus last year
against a backdrop of significant disruption in the global supply
chain. Our two factories are up and running and are now fully
operational. In line with our aim of maximising output from our two
current factories, permanent night shifts have been established in
key areas with additional weekend shifts used to respond to spikes
in demand.
Our phased increase in plastic production capacity will continue
with an additional five injection moulding machines scheduled to be
operational by August 2021 and a further eight by January 2022. New
paint filling equipment will be installed in the second quarter of
2021/22 delivering both capacity and cost efficiencies. Additional
land adjacent to our new Factory 2 has been secured to ensure that
space does not become a constraint to output in the future.
Having received CCC product safety registration for China last
year we now have c. 750 products that have successfully been
registered. Due to some cross border delays with customs clearance
they have not all been on sale in the country just yet. We hope to
have them all on sale soon.
Production payroll costs rose in the year in line with costs
increasing by GBP2.5 million to GBP10.0 million; being maintained
at 2.8% of Group revenue despite COVID disruption and pay
rises.
Warehousing
UK
A very busy year, with multiple issues initially beyond our
control thrown at us. I'm keeping my fingers crossed when I say
we're starting to see some good progress addressing delays
delivering product to our very patient and understanding
customers.
A wide array of activities have been supported through the new
East Midlands Gateway (EMG) facility following its partial opening
in summer 2020. Reliance upon third party warehousing services has
dramatically reduced, and our interim warehouse management
solutions, whilst far from optimal, have delivered record component
volumes, in turn supporting unparalleled factory output.
The warehousing operation development works at our EMG facility
are now well progressed with the installation of racking, conveyor,
robotics solutions and our strategic warehouse management system
(mirroring the facility in Memphis). These are all progressing at
pace and should be completed during the summer of 2021, soon!
Consultation with staff moving between the old and new facilities
is well advanced with the main body of staff transitioning from
September 2021. Works to reconfigure and repurpose the original
Eurohub facility in Nottingham to become our primary component
facility will commence in late 2021.
North America
Development and testing of our much needed warehouse equipment
and systems upgrade in Memphis continued throughout the year. The
phased implementation of new solutions, which commenced at the end
of May 2021, dramatically increased our capacity, though in recent
months even this has not been able to keep pace with customer
demand. We are confident that once fully operational, our new
solutions will enable us to provide the levels of service we and
our customers expect going forward.
Australia
During much of the year global shipping and container
constraints heavily restricted our ability to flow product into
Australia, with customer demand regularly outstripping available
supply before gradually improving in the last six months. We have
again extended the lease on our current Sydney facility for a two
year period.
Total warehousing costs have increased by GBP5.1 million to
GBP16.8 million; as a percentage of sales they have increased from
4.3% to 4.8%. We would expect this percentage to rise to 5.2% and
then remain at similar sales levels following the investments
described above.
Services
We continue to invest in the core support functions of the
business.
During the past year we have restructured our people team to
place clear emphasis on the key functions of business support and
advice, and resourcing and development. Our support and advisory
function gives managers and staff the support they need with
day-to-day employment matters. In recent months it has (and
continues to) manage the transition of staff to new ways of working
in the future, whether office based or flexible, and in the year
ahead is focussed on ensuring that all managers across the business
have the tools they need to manage their teams effectively. Set
goals, keep score, take appropriate action remains our overriding
management principle. Our resourcing and development function has
had a busy year. They have successfully launched our new learning
management system (LMS) across the business, giving us an effective
way of managing training across the Group and a platform through
which we can give staff access to the training and development
material they need, whenever they need it. The team have also
launched a new induction programme for new starters in the UK which
we will be replicating globally in the year ahead. We continue to
strive to make sure that everyone feels welcome and supported at
Games Workshop, both on arrival and throughout what we hope will be
long and successful careers.
We have recently merged our health and safety and wellbeing
functions into a combined team and we are very excited to be
planning for the launch of a new Group wide wellbeing programme
later in the year. This programme will include a range of new
initiatives for Games Workshop, across the key subjects of health,
mental wellbeing, engagement and personal and professional
development. Now more than ever, we recognise the importance of
wellbeing, and this is a priority for us in the year ahead.
Our IT team has provided solutions for a successful transition
for staff in the office to be able to do their jobs from home.
These included a new VPN solution, upgrading of internet
connectivity to our data centres, providing laptops and hardware
for all home workers and ensuring we all work in a safe and secure
manner, protecting our IP and data. IT has played a significant
part in working closely with all key business areas in continuing
to deliver key projects including ERP, new warehouse solutions and
new offices and factory sites. Along with all the projects the IT
team has done a sterling job in managing the pressure on our IT
systems with the increased growth in sales, manufacturing and
warehousing operations.
Brexit
Since the UK referendum result on membership of the EU in June
2016, we have been working to assess and mitigate the likely
impacts of Brexit on our customers and suppliers. Our fundamental
objective was to ensure that we offer continuity of service and
supply to our customers, wherever they are. We identified a number
of key areas of focus for a potential Brexit impact,
specifically:
-- The movement of goods from the UK to the EU across all sales
channels has faced significant disruption. We again acknowledge
that unfortunately delivery service to our Continental European
customers was well below expectations during the opening months of
2021. We have offered full refunds and if needed, extended credit
to trade accounts whenever it was needed. Total refunds were GBP1.2
million in the period. We continue to monitor the impact on our
trade account base as it is too early to see the impact of this
disruption. It is still early days, but we now have a reliable
cross border service up and running which was implemented in April
2021. We are strengthening our logistics team further with
in-country resources to better support our international growth;
the world seems to be getting smaller but crossing borders much
harder.
-- The recruitment and retention of EU nationals working in the
UK has, as you would expect, not been plain sailing this year
either. Our EU trade team is based in Nottingham and during the
year we never really had a full team. The team we did have though
are an engaging, international bunch who tackled the year with
their usual lively style.
Diversity
Our behaviour led culture governs how we work and our shared
beliefs guide our interactions with each other. We will continue to
performance manage and recruit for the personal qualities you need
to do a particular job as well as the necessary skills. We do not
select based on any other criteria. I will continue to do my best
to ensure this is the case and that we are fair and free from any
bias and/or prejudice.
Sustainability
Climate change has enormous implications for society. We
acknowledge that fully. We are committed to doing our bit. We won't
make any long term promises - we never do on any topic . We will
guarantee to take it seriously and make progress every year. By
continuing to do the right thing we will deliver change.
More recently we have created a new 'Sustainability action list'
which aligns our approach of just doing the right thing with better
external reporting. The action list will focus our efforts on where
we can make the biggest difference. We believe that we create
long-term value for our stakeholders through delivering on each of
these elements: growth, good cash returns and by having a positive
impact on others.
Customer focus
This year, perhaps more than ever before, we focused on
supporting our global community through engaging and inspiring
content. With the world in lockdown, our digital spaces became the
core way in which people could engage with the Warhammer hobby.
This posed some unique challenges and allowed us to highlight one
of the greatest things about Warhammer - it is far more than just a
game.
Over the year we put out over 10,000 pieces of digital content,
giving our fans constant encouragement, inspiration and support as
they enjoyed building and painting their collections, sharing their
efforts digitally and immersing themselves in Warhammer lore. To
take the place of physical events and Warhammer gatherings, we
hosted special online events and streamed live seminars, each of
which saw over a million interactions. The result - the best year
for engagement and online sales we've ever had.
Warhammer-community.com, the cornerstone of our online presence,
saw visits increase by 16% compared to the prior year. We saw
strong growth across our social media channels too, with
engagements up 25% on the prior year. Our email lists also
performed well with 21.2 million opens in the period, up 18% on
prior year and subscribers are now approaching 600,000.
More Warhammer. More Often - media and entertainment
We're now very close to launching our bespoke subscription
service, Warhammer +. This service will provide our loyal fans with
a new way to experience the worlds of Warhammer and is how we will
distribute the animated shows our internal Warhammer animations
team have been working on. Launching with a host of animation
shows, as well as all-new gaming, painting and lore shows,
Warhammer + will also give subscribers access to free exclusive
miniatures and more.
When we previewed Warhammer + and some of its exciting shows, it
quickly became some of our most viewed content of all time. Our
fans were thrilled at the opportunity to see their favourite
characters and settings on screen and enjoying these new media
ventures is fast becoming a core part of what it means to be a
Warhammer hobbyist.
Licensing
Our strategy is to exploit the value in our huge and extensive
(nearly 40 years) library of IP across multiple markets globally
and in multiple categories for both direct income and increased
brand awareness and engagement. We intend to ensure Warhammer's
place as one of the top fantasy IPs globally through a number of
key goals. These are:
-- Increasing our video game activity and revenues
-- Establishing our IPs use in widely distributed entertainment projects
We only intend to work with high calibre expert companies in
each one. We focus the majority of our efforts on key franchises,
specific interpretations of parts of our IPs, typically driven by
video game or media projects, for example the Vermintide and the
Total War series of games.
Video games
In the year we launched nine new games (five PC/console, four
mobile) and continued to see successful sales of top titles
supported by ongoing releases of extra content and expansions. The
majority of video game income came from the ongoing success of
existing titles this year, highlighting the long term revenue
stream generated by the franchise strategy and the lack of exposure
to any one new release's performance. Several large franchise games
were announced as launching in the next 12 months including
Warhammer 40,000: Darktide, Total War: Warhammer 3 and Total War
Battles: Warhammer. There are currently 15 video games in
development across all platforms ranging from AAA PC/console titles
to mobile projects, which will be released over the next few years.
Further out, more large scale projects are in the early stages as
well.
Entertainment
A number of projects are in development with various partners
around the world, using well known established writers across the
entertainment spectrum from Hollywood to the Japanese animation
industry. We have recruited an industry veteran who is overseeing
our development in this area.
We have further invested in our licensing business with the
recruitment of more senior staff to the team including marketing
expertise from the entertainment industry. We are also engaging
with various marketing agencies to ensure we maximise the return on
our key franchises by reaching the largest possible market.
Total number of licenses signed in the year was 14, with 13
expiring as they ran their course, leaving us with a total of 125
current contracts.
Whilst recognised income is down due to lower levels of deals
with high minimum guarantees compared to the prior year, actual
sales of licensed products at retail value was the highest ever
this year. In other words more customers bought more Warhammer
licensed products than ever - in excess of GBP133 million worth. In
the recent 'Top 150 Global Licensors 2020' list we placed at 66(th)
.
Priorities for 2021/22
Core business
As part of our overall strategy, six key initiatives will be
prioritised in 2021/22. These are designed to deliver further sales
growth whilst maintaining our operating profit margin and
continuing to surprise and delight our customers. They are in
addition to our investment in new product quality and ensuring our
new factories and warehouses deliver the appropriate cash
payback.
Firstly, staff training and development:
We will recruit only essential new jobs or where we need to
back-fill positions. Many of these recruits will be in order to
scale - in our factories and warehouse facilities as well as in our
support functions, mainly IT. Health, safety and wellbeing is a
strategic priority, not because we have any major concerns, rather
that the last 18 months has taught us that we can do much more;
it's the right thing to do. We are still getting to grips with
ensuring our new management processes allow everyone to succeed at
Games Workshop; some of our staff need the freedom to explore new
ways of doing things (innovation not continuous improvement) others
need to focus on delivering our proven methods. Management training
remains a key area of focus.
Secondly, growth:
Although the backdrop is still uncertain I see no reason to
pause our growth plans. We aim to grow in every major country in
the world, and via all of our three sales channels with all of our
core IP. The only real obstacles are lack of ambition and focus-
and these are not things I will allow us to be held back by . We
will continue to search for customers everywhere.
China and Japan - not significant contributors to our
performance yet, but we remain focused on sharing our passion for
Warhammer to more people in these countries as well as the rest of
Asia. We would like to show new people the Warhammer hobby, it's
great fun and a great way to hang out with like minded enthusiasts.
It's a shame not everyone can visit the Warhammer World visitor
centre at our HQ. The closest experience to that is our Warhammer
cafes in Dallas and LA. They offer a wonderful glimpse of what our
Warhammer hobby is really like. All being well, we plan to open one
in Shanghai and one in Tokyo in 2021/22. They are too expensive to
run as a profitable format everywhere but sparingly they work.
These will be supported by a new third party online store and more
community and marketing support. We remain focused on growing
profitably, in a way that is sustainable. It will be interesting to
see if the brand awareness from some of our licensee mobile/PC game
launches help market Warhammer to more people.
We will continue to open more independent retailer accounts.
Selling via physical outlets remains an important sales channel for
us. Some have their own online store, some not. We have seen sales
grow healthily in both. This will be based on our well established
terms and conditions, selling independent retailers our best
selling products and, where appropriate, the extended range. The
goal is to make sure our products are available where our customers
want to shop. We will also continue with our plan to open another
10 Warhammer stores per year in North America.
Thirdly, we will continue to be customer focused, better
engaging our existing ones and reaching whole new audiences with
the Warhammer hobby. We are investing in our digital offer. Work
has started on another strategic priority: our new online store,
subject to our ERP project going live, it will be our major IT
project for the next few years. It will integrate with a customer's
My Warhammer account which was successfully launched this year. A
reminder for some - a My Warhammer account serves as a dashboard
into our incredible Warhammer Community experience. Given the year
we have had, customer service improvements will be a key
deliverable.
Finally, we have added social responsibility as a key area of
focus. We have been making some good progress quietly in the
background. However, with the evolving expectations of our
different stakeholders and authorities we will examine our existing
and potential social and environmental risks in greater depth. Some
of the findings may be translated into us tracking new key
performance indicators. We are looking for significant ways we can
support global initiatives including climate change, diversity and
equality. A huge area so we will be documenting a realistic plan to
make some progress, forever. We will of course comply with any
future reporting requirements, no small task in itself, needs must.
One of the biggest challenges for us will be finding a plastic
alternative. We will be working closer with the industry to see if
we can help in any way. One of the biggest opportunities is to
continue to make Games Workshop and the Warhammer hobby even more
inclusive.
This will be an investment we commit to every year. Often
long-term commitments like these are paused when financial KPIs
need to be maintained. To deliver a long term change we really need
to commit for the long term.
Media and entertainment
The priority remains the same - to successfully launch our IP to
live action or animation shows.
Inhouse projects
As I write our new Warhammer + offer is getting its final tests.
An exciting new way to interact with the worlds of Warhammer. This
is not just a place to see content, it will be much more. It will
launch this summer.
Licensed projects
The small team continues to search for the right deals. They
have been busy during the year, separating our IP into some
exciting franchises. A fancy term for us splitting our IP up into
significant distinctive brands. We are always looking to assign
rights to deliver value whilst appropriately protecting our IP. We
are pursuing many interesting projects; some directly profit
enhancing, some great for brand awareness which I'm sure will help
us show more people that Warhammer is one of the best fantasy IPs.
There are many opportunities, none are guaranteed successes. With
the team adding some industry experience, I'm sure we will get more
projects right than we get wrong.
Sales
Reported sales grew by 31% to GBP353.2 million for the period.
On a constant currency basis, sales were up by 34% from GBP269.7
million to GBP361.0 million; split by channel this comprised: Trade
GBP200.6 million (2020: GBP140.0 million), Retail GBP72.0 million
(2020: GBP78.0 million) and Online GBP88.4 million (2020: GBP51.7
million).
Sales by segment
Year to Year to Year to Year to
30 May 31 May 30 May 31 May
2021 2020 2021 2020
Constant Constant Actual Actual 2021 2020
currency currency
GBPm GBPm rates rates % of total % of total
GBPm GBPm sales sales
---------------------- ---------- ---------- -------- -------- ------------ --------------
Trade 200.6 140.0 194.8 140.0 55% 52%
Retail 72.0 78.0 70.7 78.0 20% 29%
Online 88.4 51.7 87.7 51.7 25% 19%
---------------------- ---------- ---------- -------- --------
Total sales 361.0 269.7 353.2 269.7
---------------------- ---------- ---------- -------- --------
Sales by channel
55% (2020: 52%) of sales were to independent retailers, 20%
(2020: 29%) of sales were made through our own stores and 25%
(2020: 19%) were online.
Trade
Trade achieved significant growth of 39% with growth in all key
countries. In the period, our net number of trade outlets increased
by c.500 accounts to 5,400 which helped drive forward sales in this
channel. It's worth noting that a large number of independent
retailers now also sell our products online, meaning our customers
have more choice than ever about where to buy Warhammer.
Retail
Store openings and closures during the year:
Number Number
Number Number of single of single
of stores of stores staff staff
at Opened Closed at stores stores
31 May 30 May at at
2020 2021 30 May 31 May
2021 2020
-------------------- ------------ --------- --------- ------------ ----------- -----------
UK 140 2 4 138 96 98
North America 160 3 2 161 142 141
Continental Europe 157 2 6 153 113 113
Australia 49 2 2 49 37 37
Asia 25 - 3 22 18 22
-------------------- ------------ --------- --------- ------------ ----------- -----------
531 9 17 523 406 411
-------------------- ------------ --------- --------- ------------ ----------- -----------
We believe our stores are the best place to start your Warhammer
hobby journey with us. It is not a surprise that our +500 own
stores have never sold the highest volume of our specific getting
started product ranges, that has always been +5,000 independent
outlets, but, they have always had a dedicated team with extensive
Warhammer knowledge building local communities and offering
Warhammer hobby guidance and support. It is an essential and unique
customer service offer that we are proud of.
In the period, we opened, including relocations, 9 stores. After
closing 17 stores, our net total number of stores at the end of the
period is 523. Retail remains a challenging environment. We
finished the year surprisingly well after what seemed an endless
period of closure in most countries broadly in line with government
restrictions. As the retail stores re-open, the performance of each
store will be kept under review and any stores that do not meet our
financial model will be closed. Of the 90 stores that did not break
even in the year, the value of the assets related to these stores
is not material.
Our relatively new Warhammer cafe store in Dallas, Texas is a
great example of a new format that we have piloted that is
profitable. It, like most of our North American stores, could offer
'phone and collect' throughout the period. We opened our second
cafe store in California in June 2021 and are planning a further 10
new stores in North America in the new year too. The majority of
new store openings will continue to follow our low cost single
staff model. These were previously known as 'one-man stores'. On
reflection this was a poor choice of term, and doesn't accurately
reflect the diverse group of individuals running our stores. W e
have never meant any offence ever to anyone. We will continue to
review the format of our stores pragmatically. Ensuring we always
recruit great store managers and offer our customers an exceptional
in-store experience, remains a priority for us.
Online
Online sales continue to grow by 70% compared to the same period
last year. It more than made up for the sales volume shortfall when
physical stores were closed. As noted above, our customers have a
lot of options when it comes to shopping for Warhammer online, and
are able to buy our products both through our own web stores
(reported in Online) and through those of independent retailers
(reported in Trade).
Our online store is, however, looking a little dated and the
back-end systems at times cannot cope with current volumes, clearly
not a long term solution or as customer focussed as we would like
it to be. The complexity of our ERP upgrade has pushed back the
start of a project to upgrade our digital offer, which includes
personalising content and improving navigation, by about a year. We
are currently in the scoping phase. The early concepts look
amazing. It will be another major IT supported project so we will
be resourcing it appropriately with third party expertise.
Gross margin
Gross margin improved in the year (2021: 72.7%; 2020: 67.0%).
This was due to a combination of the disruption in production and
inventory provisions booked in the prior year due to COVID-19, as
well as being positively impacted in the current year by the sales
mix of new and existing product (38% of sales from new releases and
62% of sales from existing product) and channel mix changes.
Costs
Costs have increased by GBP14.1 million in the year (2021: 34.4%
of sales; 2020: 39.8% of sales): GBP4.1 million additional spend on
our operations, support and marketing teams including staff costs
in support functions of GBP1.5 million, IT related costs of GBP1.0
million, brand marketing costs of GBP1.1 million and administrative
cost increases of GBP0.5 million. Web store running costs have
increased by GBP1.9 million, whilst retail costs have decreased by
GBP5.1 million due to reduced travel, retail workshops and variable
staffing costs during store closures. We have invested an
additional GBP0.4 million in the licensing team. As a direct result
of our performance we rewarded all our staff with a GBP1,000 profit
share payment each (2021: GBP2.6 million; 2020: GBP2.4 million) as
well as a discretionary payment of GBP4,000 each (total cost
GBP10.6 million; 2020 GBPnil). Bonuses to the senior management
team were GBP1.1 million (2020: GBP0.3 million).
Operating profit
Operating profit/(loss)
by segment Year to Year to Year to Year to
30 May 2021 31 May 2020 30 May 2021 31 May 2020
Constant Constant Actual rates Actual rates
currency currency GBPm GBPm
GBPm GBPm
---------------------------------- -------------- ------------- -------------- ---------------
Trade 6.6 4.6 6.4 4.6
Retail 2.9 2.9 2.8 2.9
Online 2.9 1.7 2.6 1.7
Design to manufacture 226.0 134.3 222.6 134.3
Merchandising and logistics (47.5) (36.2) (47.3) (36.2)
Other costs (50.8) (33.1) (50.4) (33.1)
Licensing (net of costs) 15.6 15.8 15.0 15.8
Total operating profit 155.7 90.0 151.7 90.0
---------------------------------- -------------- ------------- -------------- ---------------
Core business operating profit (operating profit before royalty
income)
Core business operating profit grew by GBP62.2 million to
GBP135.4 million (2020: GBP73.2 million). On a constant currency
basis, core business operating profit increased by GBP65.7 million
to GBP138.9 million. As a percentage of sales core business
operating profit was 38.3% (2020: 27.1%).
Royalty income
Royalty income decreased in the year by GBP0.5 million to
GBP16.3 million. This was largely due to a high level of guarantee
income on multi year contracts signed in the prior year; this
income is recognised in full at the inception of the contract in
line with IFRS 15 'Revenue from contracts with customers'. Reported
income is split as follows: 73% PC and console games, 13% mobile
and 14% other.
Cash generation
During the year, the Group's core operating activities generated
GBP131.7 million of cash after tax payments (2020: GBP94.4 million.
The Group received cash of GBP14.2 million in respect of royalties
in the year (2020: GBP12.5 million). After purchases of tangible
and intangible assets and product development costs of GBP30.0
million (2020: GBP24.6 million), dividends of GBP60.5 million
(2020: GBP47.3 million), group profit share to employees of GBP13.2
million (2020: GBP2.4 million), proceeds from the issue of ordinary
share capital relating to the sharesave scheme of GBP1.4 million
(2020: GBP0.8 million) and net interest and foreign exchange losses
of GBP0.4 million (2020: gains of GBP0.4 million), there was cash
at the year end of GBP85.2 million (2020: GBP52.9 million).
Dividends
We followed our principle of returning truly surplus cash to
shareholders. Dividends of GBP76.9 million (2020: GBP47.3 million)
were declared during the year. A 'working cash buffer' of three
months' worth of working capital requirement alongside six months'
worth of tax payments and capital expenditure has been set aside
before deciding how much cash is truly surplus for the purpose of
declaring dividends.
Return on capital
A long-term measure of our performance has been return on
capital. During the year our return on capital improved from 94% to
184%. This is an exceptional result, driven by the growth in
operating profit before royalties on a reduced average capital
base, a result of the volume growth in the year and the impact of
COVID-19 in the prior year.
For this calculation, we use average capital employed averaged
over a 12 month period to take account of the significant
fluctuation in working capital which occurs as the business builds
both inventories and trade receivables in the pre-Christmas trading
period. Return is defined as operating profit before royalty
income, and the average capital employed is adjusted by deducting
assets and adding back liabilities in respect of cash, borrowings,
exceptional provisions, taxation, royalties receivable and
dividends. If return on capital employed was calculated using the
year end values, it would be 155% (2020: 114%).
Capital employed
Average capital employed decreased by GBP4.4 million to GBP73.8
million. The average book value of tangible and intangible assets
increased by GBP21.9 million. Average inventories decreased by
GBP0.8 million and trade and other receivables decreased by GBP2.8
million. Average liabilities increased by GBP22.7 million. Average
balances are calculated over the 12 month period.
Investments in assets
This is what we have been spending your money on:
2021 2020
GBPm GBPm
------------------------- ------ ------
Shop fits for new and
existing stores 0.6 1.1
Production equipment
and tooling 7.5 6.7
Computer equipment
and software 5.2 3.4
Site 7.3 6.8
--------------------------
Total capital additions 20.6 18.0
-------------------------- ------ ------
In 2020/21, we invested GBP2.8 million in tooling, milling and
injection moulding and paint machines and a further GBP4.7 million
on moulding tools. The investment in computer equipment and
software includes GBP2.3 million on the new warehousing facility in
Nottingham and work on the new ERP system of GBP1.1 million. The
investment in site includes GBP2.6 million to expand our
production, warehousing and office capacity in Nottingham and
GBP2.7 million of land at the Nottingham site for future expansion.
GBP0.7 million on the North America warehouse upgrade is included
within site and software above. Capital investment is expected to
be higher than depreciation and amortisation over the next few
years as we upgrade our core back office systems and the web
store.
Inventories
Inventories have increased by GBP6.8 million; mainly due to our
factory being closed for a period in the prior year and higher
levels of inventory provisions being booked in 2019/20. Inventory
provision reduced by 2.1% to 0.3% of sales. We continue to offer a
broad range of price points. The average increase in the price of
product sales varies by product category and ranges from 2% to
7%.
Trade and other receivables
Trade and other receivables increased by GBP9.8 million, which
includes a GBP5.4 million VAT receivable, GBP0.3 million increase
in trade debt, GBP2.1 million in respect of royalty income
receivable, GBP0.5 million increase in accrued digital income,
GBP0.8 million in rent and rates prepayments and GBP1.5 million
increase in inventory deposits, partially offset by other
reductions.
Trade and other payables
Trade and other payables increased by GBP5.1 million, including
a GBP5.8 million increase in trade payables and an increase of
GBP3.5 million in accruals. This was, partially offset by a GBP1.6
million decrease in deferred income, payment of other payables for
COVID-19 support and deferrals held at the prior year end.
Taxation
The effective tax rate for the year was 19.2% (2020: 20.2%).
While we continue to expect a rate above that for a business with
activities solely in the UK due to higher overseas rates, this has
been largely offset by increased profit in inventory provisions at
those same rates.
Treasury
The objective of our treasury operation is the cost effective
management of financial risk. The relationship with the Group's
bank is managed centrally. It operates within a range of board
approved policies. No transactions of a speculative nature are
permitted. A six month overdraft facility of GBP25 million was
agreed in May 2020 with Santander to cover cash flow during the
COVID-19 pandemic. It was not utilised and has now been
cancelled.
Funding and liquidity risk
The Group pays for its operations entirely from our cash
flow.
Interest rate risk
Net interest receivable for the year was GBP0.2 million (2020:
GBP0.1 million).
Foreign exchange
Our big currency exposures are the euro and US dollar:
euro US dollar
2021 2020 2021 2020
Year end rate used for the balance
sheet 1.16 1.11 1.42 1.23
Average rate used for earnings 1.13 1.14 1.34 1.26
The net impact in the year of exchange rate fluctuations on our
operating profit was a decrease of GBP4.0 million (2020: increase
of GBP0.4 million).
Risks and uncertainties
The board has overall responsibility for ensuring risk is
appropriately managed across the Group and has carried out a robust
assessment of the principal risks to the business. The top four
strategic risks to the Group are regularly reviewed by the board.
The principal strategic risks identified in 2020/21 are discussed
below. These risks are not intended to be an extensive analysis of
all risks that may arise but more importantly are the ones which we
believe could cause business interruption in the period ahead.
-- Digital selling strategy - as sales through our online
channel continue to grow, it is now more important than ever that
we have a robust plan in place which ensures we are making product
available to our customers in a manner consistent with modern
consumer expectations/behaviour. We are reviewing our digital
selling strategy and the people resources and technology required
to deliver it.
-- IT strategy and delivery - with a number of significant
business projects in play, all of which are dependent on IT
support, there is a requirement for a robust IT strategy which
enables us to deliver key strategic projects as well as supporting
day to day activities. We are keeping the structure of our global
IT team under review to ensure the IT support needs of the business
can be delivered.
-- Media - whilst this remains an area for future growth, it is
imperative that exploitation of our IP through media channels does
no harm to our core business. Our IP steering team meets every
month to discuss ongoing and future exploitation, to ensure that
all use of our IP, through all channels, is approved, correct and
consistent. They are fully supported by our in-house legal team who
will act when needed.
-- Social responsibility - we don't intend to 'greenwash' or to
be 'politically correct'. We believe we are already good corporate
citizens and we have been making some good progress quietly in the
background. We are looking for ways we can support global
initiatives including climate change, diversity and equality and we
are documenting a realistic plan to make some progress,
forever.
We consider that COVID-19 is not a specific risk that we can
mitigate against but we are managing our response to it alongside
our operational risks. We also do not consider that we have
material solvency or liquidity risks.
Outlook
I'll repeat the words from the half year, not because I'm lazy,
they are still very relevant...'I'm really proud to say that I have
seen Games Workshop at its very best during these uncertain times:
our staff have 'walked the walk' with a can-do attitude offering
wonderful support to their work-mates and friends. Our senior team
has been on the front foot, not watching but actively managing the
constant changes.
We will continue to do what is right for Games Workshop and our
customers. We will focus on what is in our control; delivering on
our operational plan rather than worrying about, for example, any
short term share price volatility or the weather. Most days that's
making sure management is doing the right thing for Games Workshop.
Ensuring that we have the right person in the right job helps
enormously and this is even more important as we continue to grow
and we recruit additional senior people. Our biggest risk is senior
management becoming complacent. I will continue to do my best to
ensure that does not happen.
I'm mindful of the uncertainty caused by COVID-19 and Brexit.
Like every other company we have our internal plans as to our
future performance, which show a range of outcomes which are not
shared with the stock market: predicting the future is always a
risky business. To help inform shareholders and followers of Games
Workshop as best we can, we will continue to provide regular
updates of our trading in each current year (much as we do
already).'
Finally, after a tough year we are delighted that the Warhammer
hobby and Games Workshop are in great shape; thanks to everyone
involved and thanks to everyone that continues to keep us safe and
well.
Kevin Rountree
CEO
26 July 2021
Statement of directors' responsibilities
The directors confirm that this condensed consolidated financial
information has been prepared in accordance with international
accounting standards in conformity with the requirements of the
Companies Act 2006 and international financial reporting standards
adopted pursuant to Regulation (EC) No 1606/2002 as it applies in
the European Union and that the management report herein includes a
true and fair review of the information required by DTR 4.2.7 and
DTR 4.2.8, namely:
-- an indication of important events that have occurred during
the year and their impact on the condensed set of financial
statements, and a description of the principal risks and
uncertainties; and
-- material related-party transactions in the year and any
material changes in the related-party transactions described in the
last annual report.
A list of all current directors is maintained on the investor
relations website at investor.games-workshop.com .
By order of the board
Kevin Rountree Rachel Tongue
CEO CFO
26 July 2021
CONSOLIDATED INCOME STATEMENT
Year ended Year ended
30 May 2021 31 May 2020
Notes GBPm GBPm
------------------------------------ ----------- ------- ----- -------------- --------------
Revenue 3 353.2 269.7
Cost of sales (96.3) (89.1)
------------------------------------ ----------- ------- ----- -------------- --------------
Gross profit 256.9 180.6
Operating expenses 3 (121.5) (107.4)
Other operating income - royalties
receivable 16.3 16.8
------------------------------------ ----------- ------- ----- -------------- --------------
Operating profit 151.7 90.0
Finance income 0.2 0.1
Finance costs (1.0) (0.7)
------------------------------------ ----------- ------- ----- -------------- --------------
Profit before taxation 150.9 89.4
Income tax expense 5 (28.9) (18.1)
------------------------------------ ----------- ------- ----- -------------- --------------
Profit attributable to owners
of the parent 122.0 71.3
------------------------------------ ----------- ------- ----- -------------- --------------
Earnings per share for profit attributable to the owners of the parent
during the year (expressed in pence per share):
Notes
Year ended Year ended
30 May 2021 31 May 2020
Basic earnings per ordinary
share 6 372.7p 218.7p
Diluted earnings per ordinary
share 6 370.5p 217.8p
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended Year ended
30 May 2021 31 May 2020
GBPm GBPm
----------------------------------------- -------------- --------------
Profit attributable to owners
of the parent 122.0 71.3
Other comprehensive (expense)/income
Items that may be subsequently
reclassified to profit or loss
Exchange differences on translation
of foreign operations (3.1) 0.5
-------------------------------------------- -------------- --------------
Other comprehensive (expense)/income
for the year (3.1) 0.5
-------------------------------------------- -------------- --------------
Total comprehensive income attributable
to owners of the parent 118.9 71.8
------------------------------------------ -------------- --------------
The following notes form an integral part of this condensed
consolidated financial information.
CONSOLIDATED BALANCE SHEET
Restated
30 May 31 May
2021 2020
Notes GBPm GBPm
---------------------------------- -------- --------- ---------
Non-current assets
Goodwill 1.4 1.4
Other intangible assets 9 23.7 17.6
Property, plant and equipment 10 49.8 42.0
Right-of-use assets 11 46.0 36.8
Deferred tax assets 10.1 8.9
Trade and other receivables 6.3 7.5
---------------------------------- -------- --------- ---------
137.3 114.2
---------------------------------- -------- --------- ---------
Current assets
Inventories 27.5 20.7
Trade and other receivables 30.6 19.6
Current tax assets 1.1 0.2
Cash and cash equivalents 8 85.2 52.9
---------------------------------- -------- --------- ---------
144.4 93.4
---------------------------------- -------- --------- ---------
Total assets 281.7 207.6
---------------------------------- -------- --------- ---------
Current liabilities
Lease liabilities (8.6) (8.5)
Trade and other payables (35.4) (30.3)
Current tax liabilities (0.1) (2.8)
Provisions for other liabilities
and charges 12 (0.6) (1.7)
---------------------------------- -------- --------- ---------
(44.7) (43.3)
---------------------------------- -------- --------- ---------
Net current assets 99.7 50.1
---------------------------------- -------- --------- ---------
Non-current liabilities
Lease liabilities (38.4) (28.5)
Other non-current liabilities (0.6) (0.5)
Provisions for other liabilities
and charges 12 (1.7) (1.6)
---------------------------------- -------- --------- ---------
(40.7) (30.6)
---------------------------------- -------- --------- ---------
Net assets 196.3 133.7
---------------------------------- -------- --------- ---------
Capital and reserves
Called up share capital 1.6 1.6
Share premium account 14.5 13.1
Other reserves 2.1 5.2
Retained earnings 178.1 113.8
---------------------------------- -------- --------- ---------
Total equity 196.3 133.7
---------------------------------- -------- --------- ---------
Comparative financial information for right-of-use assets,
non-current lease liabilities and current lease liabilities has
been restated. See note 11 for further information.
The following notes form an integral part of this condensed
consolidated financial information.
CONSOLIDATED STATEMENT OF CHANGES IN TOTAL EQUITY
Called
up Share
share premium Other Retained Total
capital account reserves earnings equity
GBPm GBPm GBPm GBPm GBPm
------------------------------------- --------- --------- ---------- ---------- --------
At 2 June 2019 and 3 June 2019 1.6 12.3 4.7 87.9 106.5
Profit for the year to 31 May
2020 - - - 71.3 71.3
Exchange differences on translation
of foreign operations - - 0.5 - 0.5
Total comprehensive income for
the year - - 0.5 71.3 71.8
Transactions with owners:
Share-based payments - - - 0.5 0.5
Shares issued under employee
sharesave scheme - 0.8 - - 0.8
Deferred tax credit relating
to share options - - - 0.1 0.1
Current tax credit relating to
exercised share options - - - 1.3 1.3
Dividends declared and paid to
Company shareholders - - - (47.3) (47.3)
------------------------------------- --------- --------- ---------- ---------- --------
Total transactions with owners - 0.8 - (45.4) (44.6)
At 31 May 2020 and 1 June 2020 1.6 13.1 5.2 113.8 133.7
Profit for the year to 30 May
2021 - - - 122.0 122.0
Exchange differences on translation
of foreign operations - - (3.1) - (3.1)
Total comprehensive income for
the year - - (3.1) 122.0 118.9
Transactions with owners:
Share-based payments - - - 1.2 1.2
Shares issued under employee
sharesave scheme - 1.4 - - 1.4
Deferred tax credit relating
to share options - - - 0.1 0.1
Current tax credit relating to
exercised share options - - - 1.5 1.5
Dividends declared and paid to
Company shareholders - - - (60.5) (60.5)
Total transactions with owners - 1.4 - (57.7) (56.3)
At 30 May 2021 1.6 14.5 2.1 178.1 196.3
------------------------------------- --------- --------- ---------- ---------- --------
The following notes form an integral part of this condensed
consolidated financial information.
CONSOLIDATED CASH FLOW STATEMENT
Year ended Year
30 May ended
2021 31 May
GBPm 2020
Notes GBPm
------------------------------------------- -------- ------------- ---------
Cash flows from operating activities
Cash generated from operations 7 164.8 127.2
UK corporation tax paid (28.8) (20.8)
Overseas tax paid (3.3) (1.9)
------------------------------------------- -------- ------------- ---------
Net cash generated from operating
activities 132.7 104.5
------------------------------------------- -------- ------------- ---------
Cash flows from investing activities
Purchases of property, plant and
equipment (17.4) (16.3)
Purchases of other intangible assets (2.9) (2.3)
Expenditure on product development (9.7) (6.0)
Interest received 0.2 0.1
------------------------------------------- -------- ------------- ---------
Net cash used in from investing
activities (29.8) (24.5)
------------------------------------------- -------- ------------- ---------
Cash flows from financing activities
Proceeds from issue of ordinary
share capital 1.4 0.8
Repayment of principal under leases (10.9) (10.3)
Dividends declared and paid to
Company shareholders (60.5) (47.3)
------------------------------------------- -------- ------------- ---------
Net cash used in financing activities (70.0) (56.8)
------------------------------------------- -------- ------------- ---------
Net increase in cash and cash equivalents 32.9 23.2
Opening cash and cash equivalents 52.9 29.4
Effects of foreign exchange rates
on cash and cash equivalents (0.6) 0.3
------------------------------------------- -------- ------------- ---------
Closing cash and cash equivalents 85.2 52.9
------------------------------------------- -------- ------------- ---------
The following notes form an integral part of this condensed
consolidated financial information.
NOTES TO THE FINANCIAL STATEMENTS
1. General information
The consolidated financial statements of Games Workshop Group
PLC are prepared under the going concern basis and in accordance
with both international accounting standards in conformity with the
requirements of the Companies Act 2006 and international financial
reporting standards adopted pursuant to Regulation (EC) No
1606/2002 as it applies in the European Union.
These results for the year ended 30 May 2021 together with the
corresponding amounts for the year ended 31 May 2020 are extracts
from the 2021 annual report and do not constitute statutory
accounts within the meaning of section 434 of the Companies Act
2006.
The annual report for the year ended 30 May 2021, on which the
auditors have issued a report that does not contain a statement
under either section 498(2) or 498(3) of the Companies Act 2006,
will be posted to shareholders on 28 July 2021 and will be
delivered to the Registrar of Companies in due course. Copies will
also be available from Ross Matthews, Games Workshop Group PLC,
Willow Road, Lenton, Nottingham, NG7 2WS. This information is also
available on the Company's website at
http://investor.games-workshop.com.
The annual general meeting will be held at Willow Road, Lenton,
Nottingham, NG7 2WS at 10am on 15 September 2021.
The annual financial report is prepared in accordance with the
Listing Rules and Disclosure and Transparency Rules of the
Financial Conduct Authority and accounting policies consistent with
those used in the 2020 annual report.
The preparation of the consolidated financial statements
requires management to make estimates and assumptions that affect
the reported amounts of revenues, expenses, assets and liabilities,
and disclosure of contingencies at the balance sheet date. If in
future such estimates and assumptions, which are based on
management's best judgement at the date of the consolidated
financial statements, deviate from actual circumstances, the
original estimates and assumptions will be modified, as
appropriate, in the year in which the circumstances change.
Management do not consider there to be any critical accounting
estimates or judgements that have a significant risk of causing a
material adjustment to the carrying amounts of assets and
liabilities within the next financial year.
2. Change in accounting policy
The Group has applied amendments to IAS 1 and IAS 8 ('Definition
of Material') for the first time in the financial statements. The
application of these new standards and amendments did not have a
material impact on the financial statements. The Group considers
that there are no new accounting standards, amendments or
interpretations issued by the IASB, but not yet applicable, which
have had, or are expected to have a significant effect on the
financial statements. The Group have considered the IFRIC agenda
decision on configuration or customisation costs in a cloud
computing arrangement and the application of this agenda decision
did not have a material impact on the financial statements.
3. Segment information
The chief operating decision-maker has been identified as the
executive directors. They review the Group's internal reporting in
order to assess performance and allocate resources. Management has
determined the segments based on these reports.
As Games Workshop is a vertically integrated business,
management assesses the performance of sales channels and
manufacturing and distribution channels separately. At 30 May 2021,
the Group is organised as follows:
- Sales channels: these channels sell product to external
customers, through the Group's network of retail stores,
independent retailers and online via the global web stores. The
sales channels have been aggregated into segments where they sell
products of a similar nature, have similar production processes,
similar customers, similar distribution methods, and if they are
affected by similar economic factors. The segments are as
follows:
- Trade: this sales channel sells globally to independent
retailers, agents and distributors. It also includes the Group's
magazine newsstand business and the distributor sales from the
Group's publishing business (Black Library).
- Retail: this includes sales through the Group's retail stores,
the Group's visitor centre in Nottingham and global
exhibitions.
- Online: this includes sales through the Group's global web
stores and digital sales through external affiliates.
- Design to manufacture: this includes manufacture of the
products and incorporates the production facility and the design
studios. This includes adjustments for the profit in stock arising
from inter-segment sales.
- Merchandising and logistics: this includes the warehouses,
logistics costs and charges for inventory provisions.
- Group: this includes the Company overheads.
- Operations and support: this provides support services
(marketing, IT, accounting, payroll, personnel, procurement, legal,
health and safety, customer services and credit control) to
activities across the Group and undertakes strategic projects,
including animation costs for brand marketing.
- Licensing: this is royalty income earned from third party
licensees after deducting associated licensing costs, including the
development of digital content for animation and TV.
The chief operating decision-maker assesses the performance of
each segment based on operating profit, excluding share option
charges recognised under IFRS 2, 'Share-based payment' and charges
in respect of the Group's profit share scheme and the discretionary
payment to employees for the prior year. This has been reconciled
to the Group's total profit before taxation below.
3. Segment information
The segment information reported to the executive directors for
the year ended 30 May 2021 is as follows:
Year ended Year ended
30 May 31 May 2020
2021 GBPm
GBPm
---------------------------------- ----------- --------- ------------- --------------
Trade 194.8 140.0
Retail 70.7 78.0
Online 87.7 51.7
---------------------------------- ----------- ------------ -------------- --------------
Total external revenue 353.2 269.7
---------------------------------- ----------- ------------ -------------- --------------
Segment revenue and segment profit include transactions between
business segments; these transactions are eliminated on
consolidation. Sales between segments are carried out at arm's
length. The revenue from external parties reported to the executive
directors is measured in a manner consistent with that in the
income statement. For information, external revenue is analysed
further below:
Year ended Year ended
30 May 31 May 2020
2021 GBPm
GBPm
------------------------------- -------- ---------- -------------- -----------------
Trade
UK and Continental Europe 82.3 61.9
North America 85.4 59.4
Australia and New Zealand 10.2 5.7
Asia 9.0 6.5
Rest of world 5.6 4.1
Black Library 2.3 2.4
----------------------------------------------------- -------------- -----------------
Total Trade 194.8 140.0
----------------------------------------------------- -------------- -----------------
Retail
UK 13.3 23.0
Continental Europe 16.4 19.5
North America 28.2 25.2
Australia and New Zealand 10.3 7.6
Asia 2.5 2.7
----------------------------------------------------- -------------- -----------------
Total Retail 70.7 78.0
----------------------------------------------------- -------------- -----------------
Online
UK 22.2 12.4
Continental Europe 18.0 11.2
North America 30.6 16.7
Australia and New Zealand 5.5 2.6
Asia 0.5 0.5
Rest of world 1.3 0.9
Digital 9.6 7.4
----------------------------------------------------- -------------- -----------------
Total Online 87.7 51.7
----------------------------------------------------- -------------- -----------------
Total external revenue 353.2 269.7
----------------------------------------------------- -------------- -----------------
Operating expenses by segment are regularly reviewed by the
executive directors and are provided below:
Year ended Year ended
30 May 31 May 2020
2021 GBPm
GBPm
--- -------------------------------------- ----------- --------- ----------- -------------
Trade 9.1 9.3
Retail 50.2 55.6
Online 7.5 5.5
Design to manufacture 1.8 1.7
Merchandising and logistics 2.2 2.1
Operations and support 31.5 26.5
Group 3.5 2.7
Licensing 1.3 1.1
--------------------------------------- ----------- ------------ ------------ -------------
Total segment operating expenses 107.1 104.5
Share-based payment charge 1.2 0.5
Profit share scheme charge 2.6 2.4
Discretionary payment to employees 10.6 -
--------------------------------------- ----------- ------------ ------------ -------------
Total group operating expenses 121.5 107.4
--------------------------------------- ----------- ------------ ------------ -------------
Total segment operating profit is as follows and is reconciled
to profit before taxation below:
Year ended Year ended
30 May 31 May 2020
2021 GBPm
GBPm
--- -------------------------------------- ----------- --------- ------------- --------------
Trade 6.4 4.6
Retail 2.8 2.9
Online 2.6 1.7
Design to manufacture 222.6 134.3
Merchandising and logistics (47.3) (36.2)
Operations and support (32.5) (27.4)
Group (3.5) (2.7)
Licensing 15.0 15.7
--------------------------------------- ----------- ------------ -------------- --------------
Total segment operating profit 166.1 92.9
Share-based payment charge (1.2) (0.5)
Profit share scheme charge (2.6) (2.4)
Discretionary payment to employees (10.6) -
--------------------------------------- ----------- ------------ -------------- --------------
Total group operating profit 151.7 90.0
Finance income 0.2 0.1
Finance costs (1.0) (0.7)
--------------------------------------- ----------- ------------ -------------- --------------
Profit before taxation 150.9 89.4
--------------------------------------- ----------- ------------ -------------- --------------
4. Dividends per share
Dividends of GBP9.8m (30 pence per share), GBP16.3m (50 pence
per share), GBP19.7m (60 pence per share) and GBP14.7m (45 pence
per share) were declared and paid during the current year. A
dividend of GBP16.4m (50 pence per share) was declared during the
year and paid after the year end.
Dividends of GBP9.8m (30 pence per share), GBP11.4m (35 pence
per share), GBP11.4m (35 pence per share) and GBP14.7m (45 pence
per share) were declared and paid during the prior year.
5. Taxation
Year ended Year ended
30 May 31 May
2021 2020
GBPm GBPm
----- --------------------------------------------------------- --------- --- ------------- -------------
Current UK taxation:
* UK corporation tax on profits for the year 28.1 15.3
Adjustments to tax charge in respect
of prior years (0.6) 0.3
----------------------------------------------------------------------- --- --- ------------ ----------------
27.5 15.6
Current overseas taxation:
* Overseas corporation tax on profits for the year 2.9 2.5
Adjustments to tax charge in respect
of prior years (0.3) 0.2
----------------------------------------------------------------------- --- --- ------------ ----------------
Total current taxation 30.1 18.3
----------------------------------------------------------------------- --- --- ------------ ----------------
Deferred taxation:
Origination and reversal of timing
differences (2.0) 0.1
Adjustments to tax charge in respect
of prior years 0.8 (0.3)
----------------------------------------------------------------------- --- --- ------------ ----------------
Tax expense recognised in the
income statement 28.9 18.1
----------------------------------------------------------------------- --- --- ------------ ----------------
Current tax credit relating to
sharesave scheme (1.5) (1.3)
Deferred tax credit relating to
sharesave scheme (0.1) (0.1)
----------------------------------------------------------------------- --- --- ------------ ----------------
Credit taken directly to equity (1.6) (1.4)
----------------------------------------------------------------------- --- --- ------------ ----------------
The tax on the Group's profit before taxation differs in both
years presented from the standard rate of corporation tax in the UK
as follows:
Year ended Year ended
30 May 2021 31 May 2020
GBPm GBPm
------------------------------------------------------------ -------------- --------------
Profit before taxation 150.9 89.4
-------------------------------------------------------------- -------------- --------------
Profit before taxation multiplied by the standard
rate of corporation tax in the UK of 19% (2020:
19%) 28.7 17.0
Effects of:
Items not assessable for tax
purposes (0.3) (0.1)
Higher tax rates on overseas
earnings 0.5 0.9
Tax rate changes 0.1 0.1
Adjustments to tax charge in
respect of prior years (0.1) 0.2
-------------------------------------------------------------- -------------- --------------
Total tax charge for the year 28.9 18.1
-------------------------------------------------------------- -------------- --------------
On 3 March 2021, the Chancellor announced that the main UK
corporation tax rate will be increased from 19% to 25% from April
2023. This change had been substantively enacted at the balance
sheet date and its impact has therefore been included in these
financial statements.
Items not assessable for tax purposes include the release of
provisions no longer considered a risk to the Group as well as tax
relief for other taxes paid.
6. Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit
attributable to owners of the parent by the weighted average number
of ordinary shares in issue during the year.
Year ended Year ended
30 May 2021 31 May 2020
--- ----------------------------------- --------- --------- --------------- ---------------
Profit attributable to owners
of the parent (GBPm) 122.0 71.3
------------------------------------ ------------- --------- --------------- ------------------
Weighted average number of ordinary
shares in issue (thousands) 32,733 32,438
--------------------------------------------------- --------- --------------- ------------------
Basic earnings per share (pence
per share) 372.7 218.7
------------------------------------ ------------- --------- --------------- ------------------
Diluted earnings per share
The calculation of diluted earnings per share has been based on
the profit attributable to owners of the parent and the weighted
average number of shares in issue throughout the year, adjusted for
the dilutive effect of share options outstanding at the year
end.
Year ended Year ended
30 May 2021 31 May 2020
------------------------------------------------ ------------------- -------------------
Profit attributable to owners
of the parent (GBPm) 122.0 71.3
-------------------------------------------------- ------------------- -------------------
Weighted average number of ordinary shares
in issue (thousands) 32,733 32,602
Adjustment for share options (thousands) 194 134
------------------------------------------------- ------------------- -------------------
Weighted average number of ordinary shares for
diluted earnings per share (thousands) 32,927 32,736
-------------------------------------------------- ------------------- -------------------
Diluted earnings per share (pence
per share) 370.5 217.8
-------------------------------------------------- ------------------- -------------------
7. Reconciliation of profit to net cash from operating activities
2021 2020
GBPm GBPm
--- ------------------------------------------- ------- ----------- ----------- -------
Operating profit 151.7 90.0
Depreciation of property, plant and
equipment 9.2 8.8
Depreciation of right-of-use assets 11.0 10.1
Net impairment charge of property, plant and
equipment - 0.1
Net impairment charge of right-of-use
assets - 0.2
Net impairment charge of intangible
assets 0.4 0.3
Loss on disposal of intangible
assets 0.1 0.3
Amortisation of capitalised development
costs 4.8 4.9
Amortisation of other intangibles 1.2 1.2
Share-based payments 1.2 0.5
Changes in working capital:
- (Increase)/decrease in inventories (6.2) 3.7
- Increase in trade and other
receivables (10.8) (5.1)
- Increase in trade and other
payables 3.1 10.7
- (Decrease)/increase in provisions (0.9) 1.5
Net cash from operating activities 164.8 127.2
-------------------------------------------- ----------- ----------- ----------- -------
8. Cash and cash equivalents
Cash and cash equivalents include the following for the purposes
of the cash flow statement:
2021 2020
GBPm GBPm
--- -------------------------------------- ----------- --------- ------- -----------
Cash at bank and in hand 85.2 52.9
Cash and cash equivalents 85.2 52.9
--------------------------------------- ----------- ------------ -------- -----------
9. Other intangible assets
2021 2020
GBPm GBPm
------------------------------------------ ------ ------
Net book value at the beginning
of the year 17.6 16.0
Additions 12.6 8.3
Disposals (0.1) (0.3)
Amortisation charge (6.0) (6.1)
Impairment (0.4) (0.3)
-------------------------------------------- ------ ------
Net book value at the end of
the year 23.7 17.6
-------------------------------------------- ------ ------
10. Property, plant and equipment
2021 2020
GBPm GBPm
--------------------------------- ------- -------
Net book value at the beginning
of the year 42.0 35.3
Exchange differences (0.6) 0.1
Additions 17.7 15.5
Disposals (0.1) -
Depreciation charge (9.2) (8.8)
Impairment - (0.1)
Net book value at the end of
the year 49.8 42.0
----------------------------------- ------- -------
11. Right-of-use assets
Restated
2021 2020
GBPm GBPm
------------------------------------------ ------- ---------
Net book value at the beginning 36.8 -
of the year
Exchange differences (2.5) 0.3
Additions 23.0 46.8
Disposals (0.3) -
Depreciation charge (11.0) (10.1)
Impairment - (0.2)
Net book value at the end of
the year 46.0 36.8
-------------------------------------------- ------- ---------
Additions to the right-of-use assets during the financial year
were GBP23.0m (2020: GBP46.8m including GBP33.6m of assets
recognised on transition to IFRS 16, restated from prior year as
described below).
The comparative right-of-use assets and corresponding lease
liabilities have been restated to reflect the extension of the
lease on our warehouse in Memphis, US. The lease renewal was signed
in the year ending 31 May 2020 but was not recognised as an
addition under IFRS 16. Accordingly, a prior year adjustment has
been made to restate the 2020 balances to their correct amounts.
The impact of the adjustment was to increase right-of-use assets by
GBP4.9m and increase current lease liabilities by GBP0.2m and
non-current lease liabilities by GBP4.7m. The impact to the income
statement and cash flow statement is below GBP0.1m and has
therefore not been adjusted. There was no impact on any period
prior to 2020.
12. Provisions for other liabilities and charges
Analysis of total provisions:
2021 2020
GBPm GBPm
--- ------------------------------------------ ----------- ----------- --------- ---------
Current 0.6 1.7
Non-current 1.7 1.6
------------------------------------------- ----------- -------------- --------- ------------
Total provisions for other liabilities
and charges 2.3 3.3
------------------------------------------- ----------- -------------- --------- ------------
Employee
benefits Other Total
GBPm GBPm GBPm
--- ------------------------------------------ ----------- ----------- --------- ---------
At 1 June 2020 2.1 1.2 3.3
Charged/(credited) to the income
statement:
* Additional provisions 0.4 - 0.4
* Unused amounts reversed (0.1) (1.2) (1.3)
Utilised (0.1) - (0.1)
----------------------------------------------- ----------- ----------- --------- ---------
At 30 May 2021 2.3 - 2.3
----------------------------------------------- ----------- ----------- --------- ---------
13. Commitments
Capital expenditure contracted for at the balance sheet date but
not yet incurred is GBP3.5m (2020: GBP2.8m). Inventory purchase
commitments contracted for at the balance sheet date are GBP4.5m
(2020: GBP3.9m). Lease commitments at the balance sheet date were
GBP0.2m (2020: GBP11.0m).
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