Games Workshop; interim results – “exciting times!”

Games Workshop; (GAW.L, FTSE Mid 250, Market Cap £1023m, 3150p, 2.9% of JIC Portfolio and 0.0 of JIC Top 10)
Interim results for the six months ended 2ndDecember 2018.

Conclusion: A relatively new holding for the JIC Portfolio, bought earlier this month. A reassuring set of results. Last year it posted full year earnings per share of 182.3p; current expectations for this year are for 168.5p. In due course I would expect some upgrades to this year’s forecast. It continues to generate free cash and it’s good to see a 25p dividend at a time when it has also been investing in increasing capacity at its Nottingham factory to enable sales of £350m per annum. On 18.7x June 2019 earnings and a prospective 4.0% dividend yield I expect the shares to react positively and remain a Happy Holder! 

We had a trading update on 7thDecember. Today’s results show that actual revenue of £125.2m came in slightly ahead of that forecast of £124m and up 14.2% on last year. Operating profit was in line with prior guidance at £40.8m and up 7.0% on last year.

Earnings per share of 100.8p were up 5.0% on last year’s H1.

Growth was driven by Trade and Retail with Online down very slightly.

Having announced a 30p dividend in early December, which has already been paid and today announced an interim dividend of 25p, in line with its policy of distributing “truly surplus cash”.

Cash at period end was £25.3m down slightly on 2017’s £28.6m.

Margins were down a little as operating expenses increased by £4.1m as it invested in in its trade sales team as well as new store costs and “continued investment in marketing and other central costs”.

Kevin Rowntree, CEO struck a positive note: “Our business and the Warhammer Hobby continue to be in great shape.

We have remained true to our long-term strategy, and once again delivered on our promise to produce and sell the best fantasy miniatures in the world, while engaging and inspiring our fans. We continue to strive to make the Warhammer hobby ever better. Exciting times.

December trading continued in line with the sales performance in the first half.”

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