REG - Games Workshop Group - Annual Financial Report <Origin Href="QuoteRef">GAW.L</Origin> - Part 2
26/07/2016 07:06
- Part 2: For the preceding part double click ID:nRSZ1863Fa
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. This also includes adjustments for the
profit in stock arising from inter-segment sales and charges for inventory
provisions.
- Central costs. These include the Company overheads, head office site
costs, and the costs of running the Games Workshop Academy.
- Service centre costs. Provides support services (IT, accounting,
payroll, personnel, procurement, legal, customer services and credit control)
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 payment'. 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
29 May 2016 is as follows:
External revenue
Year ended 29 May 2016£000 Restated* Year ended 31 May 2015£000
Trade 44,522 44,477
Retail 48,414 49,060
Mail order 25,133 25,595
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Total revenue 118,069 119,132
======= =======
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:
Restated*
Year ended29 May 2016£000 Year ended31 May 2015£000
Trade
UK and Continental Europe 15,504 15,656
North America 17,944 17,740
Australia and New Zealand 1,658 2,000
Asia 741 584
Non-core trade 8,675 8,497
---------- ----------
Total Trade 44,522 44,477
Retail
UK 16,074 16,959
Continental Europe 12,878 13,879
North America 10,417 9,806
Australia and New Zealand 5,133 5,619
Asia 417 317
Non-core retail 3,495 2,480
---------- ----------
Total Retail 48,414 49,060
Mail order
Citadel and Forge World 21,018 21,120
Non-core mail order 4,115 4,475
---------- ----------
Total Mail order 25,133 25,595
----------- -----------
Total external revenue 118,069 119,132
====== ======
*Revenue of £301,000 relating to certain trade customers for the year ended 31
May 2015 has been reclassified from UK and Continental Europe trade into
non-core trade above to reflect the way in which the business is structured at
29 May 2016. In addition £537,000 of revenue has been reclassified from UK
retail to UK and Continental Europe trade in order to correct a classification
error relating to foreign exchange differences in the prior year.
Operating expenses by segment are regularly reviewed by the executive
directors and are provided below:
Year ended 29 May 2016£000 Restated**Year ended 31 May 2015£000
Trade (8,899) (7,945)
Retail (35,930) (33,934)
Mail order (5,002) (4,135)
Product and supply (2,767) (3,111)
Central costs (5,582) (6,206)
Service centre costs (10,907) (11,215)
Royalties (430) (429)
---------- ----------
Total segment operating expenses (69,517) (66,975)
Share-based payment charge (193) (232)
------------ ------------
Total group operating expenses (69,710) (67,207)
======= =======
Total segment operating profit is as follows and is reconciled to profit
before taxation below:
Restated**
Year ended 29 May 2016£000 Year ended 31 May 2015£000
Trade 10,625 11,508
Retail (3,410) (1,510)
Mail order 13,747 14,432
Product and supply 7,093 8,606
Central costs (5,424) (6,179)
Service centre costs (10,907) (11,217)
Royalties 5,329 1,069
---------- ----------
Total segment operating profit 17,053 16,709
Share-based payment charge (193) (232)
Finance income 93 109
Finance costs (5) (1)
---------- ----------
Profit before taxation 16,948 16,585
====== ======
**Segment operating expenses and segment operating profit for the year ended
31 May 2015 have been restated to exclude the share-based payment charge of
£232,000. This is now shown as a separate item above.
In addition charges relating to changes in inventory provisions are now all
shown within the product and supply segment. A charge of £37,000 for the year
ended 31 May 2015 has been reclassified from retail to product and supply to
reflect this.
An exceptional credit of £42,000 for the year ended 31 May 2015 has been
included within the product and supply segment, being the release of amounts
previously provided for the continental european reorganisation.
3. Exceptional items
The exceptional credit of £42,000 reported in the prior period relates to the
release of amounts previously provided for the continental european
restructure.
4. Dividends per share
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 prior period. A dividend of 20
pence per share, amounting to a total dividend of £6,413,000, and a further
dividend of 20 pence per share, amounting to a total dividend of £6,424,000,
were declared and paid during the current period.
5. Tax
Year ended Year ended
29 May 2016£000 31 May 2015£000
Current UK taxation:- UK corporation tax on profits for the period- Under provision in respect of prior periods 2,58840 3,165253
UK corporation tax on exceptional items for the period - 9
-------- --------
Current overseas taxation:- Overseas corporation tax on profits for the period- Over provision in respect of prior periods 2,628 349(32) 3,427 347(539)
--------- ---------
Total current taxation 2,945 3,235
-------- --------
Deferred taxation:- Origination and reversal of timing differences- (Over)/under provision in respect of prior periods 660(153) 893200
-------- --------
Tax expense recognised in the income statement 3,452 4,328
===== =====
Current tax charge/(credit) relating to sharesave scheme 3 (49)
Deferred tax charge relating to sharesave scheme - 71
------- -------
Charge taken directly to equity 3 22
==== ====
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
29 May 2016£000 31 May 2015£000
Profit before taxation 16,948 16,585
Profit before taxation multiplied by the standard rate of corporation tax in the UK of 20% (2015: 20.83%)Effects of:Items not (assessable)/deductible for tax purposesMovement in deferred tax not recognisedHigher tax rates on overseas earningsAdjustments to tax charge in respect of prior periods 3,390 (248)(2)457(145) 3,455 481(4)482(86)
-------- --------
Total tax charge for the period 3,452 4,328
===== =====
A change to the UK corporation tax rate was announced in the Chancellor's
Budget on 16 March 2016. The change announced is to reduce the main rate to
17% from 1 April 2020. Changes to reduce the UK corporation tax rate to 19%
from 1 April 2017 and to 18% from 1 April 2020 had already been substantively
enacted on 26 October 2015. The overall effect of these 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 29 May 2016 Year ended 31 May 2015
Profit attributable to owners of the parent (£000) 13,496 12,257
Weighted average number of ordinary shares in issue (thousands) 32,093 31,975
Basic earnings per share (pence per share) 42.1 38.3
===== =====
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 29 May 2016 Year ended 31 May 2015
Pre-exceptional profit attributable to owners of the parent (£000) 13,496 12,215
Weighted average number of ordinary shares in issue (thousands) 32,093 31,975
Basic earnings per share - pre-exceptional items (pence per share) 42.1 38.2
==== ====
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 29 May 2016 Year ended 31 May 2015
Profit attributable to owners of the parent (£000) 13,496 12,257
Weighted average number of ordinary shares in issue (thousands) 32,093 31,975
Adjustment for share options (thousands) 57 50
---------- ----------
Weighted average number of ordinary shares for diluted earnings per share (thousands) 32,150 32,025
Diluted earnings per share (pence per share) 42.0 38.3
==== ====
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 29 May 2016 Year ended 31 May 2015
Pre-exceptional profit attributable to owners of the parent (£000) 13,496 12,215
Weighted average number of ordinary shares in issue (thousands) 32,093 31,975
Adjustment for share options (thousands) 57 50
--------- ---------
Weighted average number of ordinary shares for diluted earnings per share (thousands) 32,150 32,025
Diluted earnings per share - pre-exceptional items (pence per share) 42.0 38.1
==== ====
7. Reconciliation of profit to net cash from operating activities
2016£000 2015£000
Operating profit 16,860 16,477
Depreciation of property, plant and equipment 5,305 4,991
Net impairment on property, plant and equipment 28 9
Loss on disposal of property, plant and equipment 28 33
Loss on disposal of intangible assets 39 24
Amortisation of capitalised development costs 3,853 4,728
Amortisation of other intangibles 1,232 1,362
Share-based payments 193 232
Changes in working capital:
- (Increase)/decrease in inventories (701) 882
- Increase in trade and other receivables (293) (242)
- Decrease in trade and other payables (198) (395)
- Increase/(decrease) in provisions 436 (2,522)
--------- ---------
Net cash from operating activities 26,782 25,579
===== =====
8. Cash and cash equivalents
Cash and cash equivalents include the following for the purposes of the cash
flow statement:
2016£000 2015£000
Cash at bank and in hand 10,998 11,942
Short term bank deposits 777 619
---------- ----------
Cash and cash equivalents 11,775 12,561
===== =====
9. Other intangible assets
2016 2015
£000 £000
Net book value at beginning of the year 8,262 8,683
Additions 7,362 5,695
Exchange differences 1 (2)
Disposals (39) (24)
Amortisation charge (5,085) (6,090)
---------- ----------
Net book value at end of the year 10,501 8,262
====== ======
10. Property, plant and equipment
2016 2015
£000 £000
Net book value at beginning of the year 22,719 21,027
Additions 5,193 6,753
Exchange differences 70 (2)
Disposals (28) (59)
Charge for the period (5,305) (4,991)
Impairment (28) (9)
---------- ----------
Net book value at end of the year 22,621 22,719
====== ======
11. Provisions
Analysis of total provisions:
2016 2015
£000 £000
Current 823 529
Non-current 621 458
---------- ----------
Total provisions 1,444 987
====== ======
Exceptional Employee
items benefits Property Total
£000 £000 £000 £000
At 31 May 2015 26 492 469 987
Charged to the income statement - 89 562 651
Exchange differences - 3 16 19
Utilised (26) (37) (150) (213)
--------- -------- -------- ----------
At 29 May 2016 - 547 897 1,444
===== ==== ==== ======
12. Commitments
Capital expenditure contracted for at the balance sheet date but not yet
incurred is £609,000 (2015: £447,000). Inventory purchase commitments
contracted for at the balance sheet date are £2,689,000 (2015: £1,898,000).
13. Related-party transactions
Mrs K Kirby (Lathbury) received £66,185 during the prior year from the Group
for her work as interim head of IT. Mrs Kirby ceased to work for the Group on
30 November 2014. T H F Kirby provided consultancy at a cost of £35,000 in the
year (2015: £25,000).
This information is provided by RNS
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