REG - Games Workshop Group - Annual Financial Report <Origin Href="QuoteRef">GAW.L</Origin> - Part 2
28/07/2015 07:02
- Part 2: For the preceding part double click ID:nRSb2376Ua
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 period in which the
circumstances change. The following areas are considered of greater complexity
and/or particularly subject to the exercise of judgement:
· Management estimates and judgements are required in assessing the
impairment of assets, including capitalised development costs and fixtures and
fittings within loss making retail stores, particularly in relation to the
forecasting of future cash flows and the discount rate applied to the cash
flows.
· Judgement is involved in assessing the exposures in the provisions
(including inventory, loss making retail stores, other property, bad debt and
returns) and hence in setting the level of the required provisions.
2. 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 31 May 2015, 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
directly via the global web store. 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 and
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.
- Mail order. This includes sales through the Group's global web stores
and digital sales through external affiliates.
- Product and supply. This includes the design and manufacture of the
products and incorporates the production facility in the UK and the Group
logistics and stock management costs.
- Central costs. These include the Company overheads, head office site
costs, and the costs of running the Games Workshop Academy. This also includes
adjustments for the profit in stock arising from inter-segment sales.
- Service centre costs. Provides support services (IT, accounting,
payroll, personnel, procurement, legal and customer services) to activities
across the Group and undertakes strategic projects.
- Royalties. This is royalty income earned from third party licensees
after deducting associated licensing costs.
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 payments'. This has been reconciled to the Group's total
profit before taxation below.
The segment information reported to the executive directors for the year ended
31 May 2015 is as follows:
External revenue
Restated
Year ended 31 May 2015£000 Year ended 1 June 2014£000
Trade 43,940 46,903
Retail 49,597 51,974
Mail order 25,595 24,624
------------ ------------
Total revenue 119,132 123,501
====== ======
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, we analyse external revenue further below:
Year ended31 May 2015£000 Year ended 1 June 2014£000
Trade
UK and Continental Europe 15,420 17,475
North America 17,740 16,498
Australia and New Zealand 2,000 1,971
Non-core trade 8,780 10,959
---------- -----------
Total Trade 43,940 46,903
Retail
UK 17,496 16,631
Continental Europe 13,879 16,349
North America 9,806 9,981
Australia and New Zealand 5,619 5,555
Non-core retail 2,797 3,458
---------- ----------
Total Retail 49,597 51,974
Total Mail order 25,595 24,624
----------- ------------
Total external revenue 119,132 123,501
====== =====
Operating expenses by segment are regularly reviewed by the executive
directors and are provided below:
Year ended 31 May 2015£000 RestatedYear ended 1 June 2014£000
Trade (7,946) (9,627)
Retail (33,974) (37,288)
Mail order (4,326) (4,125)
Product and supply (3,111) (3,841)
Central costs (6,206) (4,968)
Service centre costs (11,215) (11,157)
Royalties (429) (374)
------------ -----------
Total group operating expenses (67,207) (71,380)
======= ======
Total segment operating profit is as follows and is reconciled to profit
before taxation below:
Restated
Year ended 31 May 2015£000 Year ended 1 June 2014£000
Operating profit
Trade 10,970 14,838
Retail (1,050) (1,636)
Mail order 14,241 14,142
Product and supply 8,643 206
Central costs (6,179) (5,240)
Service centre costs (11,217) (11,081)
Royalties 1,069 1,068
---------- ---------
Total group operating profit 16,477 12,297
Finance income 109 106
Finance costs (1) (7)
---------- ----------
Profit before taxation 16,585 12,396
====== =====
3. Exceptional items
The exceptional credit of £42,000 reported in the current year relates to the
release of amounts previously provided for the continental european
restructure. The exceptional items reported in the prior period relate to the
continental european reorganisation announced in January 2014. As part of this
reorganisation £2,987,000 was incurred in redundancy and severance costs,
£608,000 in closing local country head offices and £905,000 in professional
fees and other costs.
4. Dividends per share
A dividend of 16 pence per share, amounting to a total dividend of £5,077,000,
was paid during the year ended 1 June 2014 and was declared in the prior
period. A dividend of 20 pence per share, amounting to a total dividend of
£6,373,000, a dividend of 16 pence per share, amounting to a total dividend of
£5,099,000, and a further dividend of 16 pence per share, amounting to a total
dividend of £5,129,000, were declared and paid during the current period.
5. Tax
Pre-exceptional Exceptional
Year ended itemsYear ended itemsYear ended TotalYear ended
31 May 2015£000 1 June 2014£000 1 June 2014£000 1 June 2014£000
Current UK taxation:- UK corporation tax on profits for the period- Under/(over) provision in respect of prior periods 3,165253 2,956(54) -- 2,956(54)
UK corporation tax on exceptional items for the period 9 - (1,051) (1,051)
-------- -------- ---------- --------
Current overseas taxation:- Overseas corporation tax on profits for the period- Over provision in respect of prior periods 3,427 347(539) 2,902 908(360) (1,051) -- 1,851 908(360)
--------- --------- ---------- -----------
Total current taxation 3,235 3,450 (1,051) 2,399
-------- -------- --------- -----------
Deferred taxation:- Origination and reversal of timing differences- Under provision in respect of prior periods 893200 1,645314 31- 1,676314
-------- -------- -------- -----------
Tax expense/(income) recognised in the income statement 4,328 5,409 (1,020) 4,389
===== ====== ===== =====
Current tax credit relating to sharesave scheme (49) (74) - (74)
Deferred tax charge relating to sharesave scheme 71 34 - 34
------- ------ ------- -------
Charge/(credit) taken directly to equity 22 (40) - (40)
==== === ==== =====
The tax on the Group's profit before taxation differs from the standard rate
of corporation tax in the UK as follows:
Year ended Year ended
31 May 2015£000 1 June 2014£000
Profit before taxation 16,585 12,396
Profit before taxation multiplied by the standard rate of corporation tax in the UK of 20.83% (2014: 22.67%)Effects of:Items not deductible for tax purposesMovement in deferred tax not recognisedHigher tax rates on overseas earningsAdjustments to tax charge in respect of prior periods 3,455 481(4)482(86) 2,810 662(10)1,027(100)
-------- --------
Total tax charge for the period 4,328 4,389
===== =====
Included within the £4,328,000 disclosed above, £11,000 relates to changes in
rates of UK corporation tax in the year from 21% to 20% from 1 April 2015.
Further reductions were included in the Summer Budget 2015 announced on 8 July
2015, which has not been substantively enacted, to reduce the rate to 19% from
1 April 2017 and 18% from 1 April 2020. The overall effect of these further
changes, if applied to the deferred tax balance at the balance sheet date,
would be to reduce the deferred tax asset by an additional £9,000.
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 period.
Year ended 31 May 2015 Year ended 1 June 2014
Profit attributable to owners of the parent (£000) 12,257 8,007
Weighted average number of ordinary shares in issue (thousands) 31,975 31,805
Basic earnings per share (pence per share) 38.3 25.2
===== ====
Basic earnings per share - pre-exceptional items
Basic earnings per share - pre-exceptional items is calculated by dividing the
profit attributable to owners of the parent, before exceptional items, by the
weighted average number of ordinary shares in issue during the period.
Year ended 31 May 2015 Year ended 1 June 2014
Pre-exceptional profit attributable to owners of the parent (£000) 12,215 11,487
Weighted average number of ordinary shares in issue (thousands) 31,975 31,805
Basic earnings per share - pre-exceptional items (pence per share) 38.2 36.1
==== ====
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 period, adjusted for the dilutive effect of share
options outstanding at the period end.
Year ended 31 May 2015 Year ended 1 June 2014
Profit attributable to owners of the parent (£000) 12,257 8,007
Weighted average number of ordinary shares in issue (thousands) 31,975 31,805
Adjustment for share options (thousands) 50 129
---------- ----------
Weighted average number of ordinary shares for diluted earnings per share (thousands) 32,025 31,934
Diluted earnings per share (pence per share) 38.3 25.1
==== ====
Diluted earnings per share - pre-exceptional items
The calculation of diluted earnings per share - pre-exceptional items has been
based on the profit attributable to owners of the parent, before exceptional
items, and the weighted average number of shares in issue throughout the
period, adjusted for the dilutive effect of share options outstanding at the
period end.
Year ended 31 May 2015 Year ended 1 June 2014
Pre-exceptional profit attributable to owners of the parent (£000) 12,215 11,487
Weighted average number of ordinary shares in issue (thousands) 31,975 31,805
Adjustment for share options (thousands) 50 129
--------- ---------
Weighted average number of ordinary shares for diluted earnings per share (thousands) 32,025 31,934
Diluted earnings per share - pre-exceptional items (pence per share) 38.1 36.0
==== ====
7. Reconciliation of profit to net cash from operating activities
2015£000 2014£000
Operating profit 16,477 12,297
Depreciation of property, plant and equipment 4,991 4,907
Net impairment /(reversal) on property, plant and equipment 9 (204)
Loss on disposal of property, plant and equipment 33 370
Loss on disposal of intangible assets 24 333
Amortisation of capitalised development costs 4,728 4,121
Amortisation of other intangibles 1,362 849
Share-based payments 232 288
Changes in working capital:
- Decrease/(increase) in inventories 882 (468)
- (Increase)/decrease in trade and other receivables (242) 1,545
- Decrease in trade and other payables (395) (952)
- - (Decrease)/increase in provisions (2,522) 1,911
--------- ---------
Net cash from operating activities 25,579 24,997
===== =====
8. Cash and cash equivalents
Cash and cash equivalents include the following for the purposes of the cash
flow statement:
2015£000 2014£000
Cash at bank and in hand 11,942 16,432
Short-term bank deposits 619 1,118
---------- ----------
Cash and cash equivalents 12,561 17,550
===== =====
9. Other intangible assets
2015 2014
£000 £000
Net book value at beginning of the year 8,683 8,033
Additions 5,695 5,968
Exchange differences (2) (15)
Disposals (24) (333)
Amortisation charge (6,090) (4,970)
---------- ----------
Net book value at end of the year 8,262 8,683
====== ======
10. Property, plant and equipment
2015 2014
£000 £000
Net book value at beginning of the year 21,027 20,604
Additions 6,753 5,739
Exchange differences (2) (189)
Disposals (59) (424)
Charge for the period (4,991) (4,907)
Impairment (9) 204
---------- ----------
Net book value at end of the year 22,719 21,027
====== ======
11. Provisions
Analysis of total provisions:
2015 2014
£000 £000
Current 529 3,009
Non-current 458 517
---------- ----------
Total provisions 987 3,526
====== ======
Exceptional Employee
items benefits Property Total
£000 £000 £000 £000
At 1 June 2014 2,470 568 488 3,526
Charged/(credited) to the income statement (42) (3) 236 191
Exchange differences 44 (26) 8 26
Utilised (2,446) (47) (263) (2,756)
--------- -------- -------- ----------
At 31 May 2015 26 492 469 987
===== ==== ==== ======
12. Commitments
Capital expenditure contracted for at the balance sheet date but not yet
incurred is £447,000 (2014: £478,000). Inventory purchase commitments
contracted for at the balance sheet date are £1,898,000 (2014: £365,000).
13. Related-party transactions
There were no material related-party transactions during the current or prior
period.
This information is provided by RNS
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