Games Workshop Share Discussion Threads

[nod] 08/6/2018 20:03

Peel Hunt is not just an analyst covering GAW. Peel Hunt is GAW's paid "Financial Advisers and Stockbroker" according to the Annual Reports.You would expect PH to present more logical forecasts than it does and with far better accuracy.

[nod] 08/6/2018 19:53

31days there was considerable confusion on this board about Peel Hunt's latest revision given at the same time as the GAW trading update in May. I wrote this reminder about PH forecasts: "Peel Hunt gave us a forecast PBT of 50m this time last year. Around September, PH increased PBT to 55m. Today, PH has 74m PBT. Peel Hunt has long forecast some large negative that will reduce PBT. Without having their full analysis I cannot understand what they have been predicting. It seems to be more than currency exchange rates."

[simso] 08/6/2018 18:20

Peel Hunt forecast to May 2019 is for PBT of £58m, a reduction of 22% on the £74m just achieved to May 18. The basis for this, as we know, is a belief that WK40 caused a huge spike, particularly in the first three months of Yr to May 18, which cannot be matched to May 19. In order to kick the tyres on this theory, I go through the following steps:

1. Assume the second half to May 18 is a "normalised" period of trading, without the "spike" and is therefore a base level of underlying performance which could roll through at that level in full year to May 19.

2. Before rolling the £35.2m PBT achieved in 2H18 forward, I add back the £5m Bonus, but deduct £1.5m for the 53rd week. (Note the results are for 53 weeks, which means 27 weeks in second half). My adjusted base for 2H18 is therefore £38.5m.

3. If performance continues at this underlying level through the first half of May 19, then in order to derive a "normal" first half/second half split to apply. The second half is usually higher as we know, but the key is to distinguish how much of this is due to Seasonality, and how much is due to the fact that growth has been so spectacular over last 2-3 years that second half will be higher than first because of this growth. I only want the seasonality impact for this exercise. I have looked back 7 years, but excluded Yr to May 17 due to the distortion of spectacular growth...so use the six years May 11 - May 16. The average first half second half profit split is 47 / 53.

4. If I Take my Rebased £38.5m from point 3 above, and apply 47/53, it would project first half to May 19 of £34.4m

5. If Second Half to May 19 is the same as rebased to May 18 (ie reduced back to 26 weeks, and no special bonus) then £38.5m again. No growth, just a repeat of H218.

6. Full year to May 19 on this basis = £34.4m + £38.5 = £73.9m. Identical to what we have just achieved in May 18...and certainly not the decline to £58m expected by Peel.

[cockerhoop] 08/6/2018 14:36

The £1.8m paid last year was in effect a 20% sales commission on sales above store targets, store managers also received the £1,750 & £250 discretionary bonuses (£3.4m).

This year store managers will receive sales commissions above the £5m bonus announced today.

[trident5] 08/6/2018 13:48

DD: from last year's accounts:

"We also incurred performance related costs of £1.8 million in payments to our retail staff for delivering growth, paid £0.4 million in profit share and £3.0 million in a discretionary payment, paid equally to all staff".

[santr0] 08/6/2018 13:07

A nice little article that summarises what happened with GW over last few years. hxxps://moneyweek.com/games-workshop-the-gaming-giant-makes-a-comeback/

[trident5] 08/6/2018 12:49

Big7 - it should be in the profit figure - but not in the Revenue figure - licence income is shown separately.

[robinnicolson] 08/6/2018 12:34

I'm still surprised that a company with a market cap close to a billion pounds is only covered by one analyst.

[big7ime] 08/6/2018 12:10

Is the £10m royalties included in that revenue and profit figure?

[robinnicolson] 08/6/2018 12:09

Peel Hunt:

“The positive momentum has continued through the second half, however the comparators over the next three months are very tough given the strength of the Warhammer 40k launch last summer."

"The shares have had a strong run, probably helped by the entry into the MSCI. We continue to like the long-term prospects, but the shares feel toppy given that first-quarter sales are likely to be lower than last year.”

[santr0] 08/6/2018 11:53

Nod, I was talking about the revised prediction that was published not so long ago:''Peel Hunt analyst Charles Hall increases his year to May 2018 sales forecast by £6m to £217m and his adjusted profit before tax estimate rises by £4m to £74m''. And the pretax profit is correct. But you are correct that his long-term forecasts were really off so should not be trusted.

[nod] 08/6/2018 11:37

And just around the corner we have the second edition of Sigmar. I would guess this was timed to fall into next FY."Soul Wars is, without a doubt, Warhammer Age of Sigmar's best boxed set ever. Hell, it's maybe the best Warhammer boxed set ever – jam-packed with brand new content for every kind of player, from two armies of never-before-seen models to the new edition's magnificent core book, and even more besides.And it can all be yours, available to pre-order on June 16th and in stores June 30th.Let's take a look inside, shall we? ...https://www.warhammer-community.com/2018/06/05/soul-wars-announced/

[cockerhoop] 08/6/2018 11:30

The company rewarded staff to the tune of a £3.4m bonus (higher % of profits than this year) for the excellent performance last year so not really an exceptional though it does skew the H1/H2 underlying performance somewhat.

I'd certainly much prefer the staff to be rewarded en masse for great work rather than it being squirreled away in a LTIP for the execs.

[nod] 08/6/2018 11:24

As I mentioned yesterday, the shorters did have their fingers hovering over the sell button and this was aided and abetted by Alliance (fake) News. I have seen this often with Alliance and it doesn't look like a series of unfortunate events.

[nod] 08/6/2018 11:12

Royalties 33% up on last year.Over 600% up on three years ago.I feel there is a lot more to come from royalties with this massively expanded customer base.

[nod] 08/6/2018 10:42

Shanks/Martin, that's an excellent point about the GBP 5 million is an exceptional item taken out of the abundant profit.
I think it's a great idea to incentivise all staff and not only store managers. It may have been even better to reward them all in shares and issue new shares to cover this. The impact on shares would be minuscule and the staff would have an ongoing stake in "their" company. Call it Thatcherism.

[cockerhoop] 08/6/2018 10:40

Worth repeating and updating to show the extended trend of royalty income!

Royalty Income
2001 - £0.08m
2002 - £0.12m
2003 - £0.21m
2004 - £0.20m
2005 - £0.37m
2006 - £1.2m
2007 - £1.4m
2008 - £1.7m
2009 - £3.5m
2010 - £3.0m
2011 - £2.5m
2012 - £3.5m
2013 - £1.0m
2014 - £1.4m
2015 - £1.5m
2016 - £5.9m
2017 - £7.5m
2018 - £10.0m

[nod] 08/6/2018 10:34

Santr0, you said "PH seems to be correct about this year, ..."PH was miles off on predictions for this year. He forecast a significant fall before the year started and has been revising ever since. How is that a "correct" prediction?

[cfro] 08/6/2018 10:29

That is a good post love2 and sums it all up very well.

[love2] 08/6/2018 10:18

That is some atrocious journalism! Should be illegal making such fraudulent and inaccurate claims like that. Dividends have been rising along with the share price Buying opportunity...particularly in run up to actual results.Am confident for the future. I've popped into a couple of stores and been impressed. Both by staff and the feedback of how the new games are being received.Have a new starter at work, she doesn't play the games (yet) but buys the figures and paints purely to paint them. She buys from the website. It's one of her main hobbies, albeit a relatively new one.I've also been noticing that there have been a few new 40k games on steam over the last year, one of which had a most purchased type tag.I've also been notified of quite a few 40k books on audible that have several hundred nearly 5* reviews.So...in my limited research/experience I can surmise...1) traditional stores /games seem to be doing well2)figures and paints are bought irrespective of games as a hobby3) it is reaching a young female audience4)people are buying online5)the perceived threat to board gaming by computer games is easily mitigated by the presence of some very well received online games6)there is a whole world of books and audio books doing well, keeping people interested, exposing new audiences to GAW products and possibly even generating some tiny revenue This has been an amazing performer over the last couple of years. While I don't expect the 500% plus capital growth, I do fully expect them to continue to be profitable and pay decent dividends. The point is, this is well managed, low risk, dividend paying stock, with some potential for growth. With so many well known high street retail names going into administration, and many others struggling, it makes GAW performance all the more impressive. My money is staying firmly where it is, including the dividend reinvestment...

[robinnicolson] 08/6/2018 09:42

The bots on twitter quickly picked up her error:

e.g. "Games Workshop stumbles as it cuts its annual dividend"

[shanklin] 08/6/2018 09:38

FYI, I e-mailed Evelina Grecenko at Alliance News who apologised for her mistake and Alliance News have very quickly issued a correction.

[trident5] 08/6/2018 09:32

1teepee - it's not a dividend cut.

The company is capital lite - and distributes all excess cash to its shareholders.