REG - Games Workshop Group - Half-year Report <Origin Href="QuoteRef">GAW.L</Origin> - Part 1

Games WorkshopAnnouncement

10/01/2017 07:05

RNS Number : 7247T
Games Workshop Group PLC
10 January 2017
PRESS ANNOUNCEMENT
GAMES WORKSHOP GROUP PLC
 10 January 2017
HALF-YEARLY REPORT 
Games Workshop Group PLC ("Games Workshop" or the "Group") announces its half-yearly results for the six months to 27 November 2016.
Highlights:

Six months to
Six months to

27 November
29 November

2016
2015



Revenue
70.9m
55.3m
Revenue at constant currency*
62.7m
55.3m
Operating profit pre-change in accounting estimates and royalties receivable
9.7m
4.7m
Impact of change in accounting estimates
0.8m
-
Operating profit pre-royalties receivable
10.5m
4.7m
Royalties receivable
3.3m
1.5m
Operating profit
13.8m
6.2m
Pre-tax profit
13.8m
6.3m
Cash generated from operations
19.6m
8.6m
Basic earnings per share
34.0p
14.9p
Dividend per share declared in the period
25p
20p
Kevin Rountree, CEO of Games Workshop, said:
"Our business and our Hobby are in good shape.
We are pleased to report sales and profit growth in the period across all channels. This improvement was built on a considerable team effort across the business."
Ends
For further information, please contact:





Games Workshop Group PLC

0115 900 4003
Kevin Rountree, CEO


Rachel Tongue, Group Finance Director





Investor relations website 
investor.games-workshop.com
General website
www.games-workshop.com











The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation.
*Constant currency revenue is calculated by comparing results in the underlying currencies for 2015 and 2016, both converted at the average exchange rates for the six months ended 29 November 2015.
FIRST HALF HIGHLIGHTS

Six months to
Six months to

27 November
29 November

2016
2015



Revenue
70.9m
55.3m
Revenue at constant currency*
62.7m
55.3m
Operating profit pre-change in accounting estimates and royalties receivable
9.7m
4.7m
Impact of change in accounting estimates
0.8m
-
Operating profit pre-royalties receivable
10.5m
4.7m
Royalties receivable
3.3m
1.5m
Operating profit
13.8m
6.2m
Pre-tax profit
13.8m
6.3m
Cash generated from operations
19.6m
8.6m
Basic earnings per share
34.0p
14.9p
Dividends per share declared in the period
25p
20p
Revenue by segment

Six months to
Six months to
Six months to
Six months to

27 November
29 November
27 November
29 November

2016
2015
2016
2015

Constant currency
Constant 
currency
Actual
rates
Actual
rates
Trade
24.9m
22.4m
29.3m
22.4m
Retail
25.8m
21.5m
29.2m
 21.5m
Mail order
12.0m
11.4m
12.4m
11.4m
Operating profit by segment

Six months to
Six months to
Six months to
Six months to

27 November
29 November
27 November
29 November

2016
2015
2016
2015

Constant currency
Constant 
currency
Actual
rates
Actual
rates
Trade
6.6m
5.8m
8.8m
5.8m
Retail
(2.2)m
 (3.1)m
(2.4)m
 (3.1)m
Mail order
6.4m
6.2m
6.7m
6.2m
Product and supply
5.0m
4.7m
6.1m
4.7m
Royalties
2.6m
1.2m
3.0m
1.2m
Other costs
(8.1)m
(8.6)m
(8.4)m
(8.6)m
INTERIM MANAGEMENT REPORT
Our business and our Hobby are in good shape.
We are pleased to report sales and profit growth in the period across all channels. This improvement was built on a considerable team effort across the business.
In the period we focused and delivered on our operational plan and are making good progress on our strategic initiatives. I'm delighted that our new approach to marketing and merchandising has been received well. It's early days, we're having fun, and the feedback we've had is that our customers are enjoying the changes too. I intend to build on these improvements in the second half.
One of our key measures of our performance is return on capital. During the period our return on capital grew from 36% at November 2015 to 40% at November 2016. This was driven by the increase in operating profit before royalties receivable, offset slightly by an increase in average capital employed**.
Sales 
Reported sales grew by 28% to 70.9 million for the period. On a constant currency basis, sales were up by 13% from 55.3 million to 62.7 million; split by channel this comprised: retail 25.8 million (2015: 21.5 million), trade 24.9 million (2015: 22.4 million) and mail order 12.0 million (2015: 11.4 million). 
Retail
This channel showed growth in all territories. We opened, including relocations, 17 stores including our first stores for some time in Singapore, Malaysia and Hong Kong. After closing 8 stores, our net total number of stores at the end of the period is 460.
The key priority in the period reported has been to give our store managers the appropriate product and sales support to help them recruit new customers, retain our existing customers and re-recruit lapsed customers. Recruiting new store managers remains a key area of focus.
Trade 
All key territories achieved growth. In the period, our net number of trade outlets increased by 60 accounts.
Mail order
Sales in our online shops were up 8%. Our 'Made to Order' and 'Last Chance to Buy' web store initiatives, aimed at ensuring our customers have access to our broader range, have performed well.
Non-core
This includes licensing, digital, export, non-strategic trade accounts, book trade, magazine and mass-market opportunities. Non-core sales were up from 7.6 million to 9.8 million with sales growth reported across all areas. In the period, royalties receivable from licensing increased from 1.5 million to 3.3 million. 
We launched in the period new editions of our White Dwarf magazine and Blood Bowl game, the first of many new products from our Specialist Design Studio. Both have sold through well. 
Operating profit
Operating profit before royalty income increased by 5.0 million to 9.7 million (2015: 4.7 million) before the change in accounting estimates described below. On a constant currency basis, operating profit before the change in accounting estimates increased by 2.0 million to 6.7 million.
With effect from 30 May 2016 the Group implemented a change in accounting estimates for the amortisation of development costs intangible assets and for the depreciation of moulding tools. The impact of the change for the six months to 27 November 2016 is an increase in operating profit of 0.8 million. The change in accounting estimates is described in note 2 to this half-yearly report.
On a constant currency basis, royalty income increased by 1.3 million to 2.8 million (2015: 1.5 million). 
Total operating profit increased by 7.6 million to 13.8 million (2015: 6.2 million). The net impact in the six months to 27 November 2016 of exchange rate fluctuations was a gain of 3.5 million. It is not the Group's policy to hedge against foreign exchange rate exposure. 
Operating expenses increased by 5.3 million due to an investment in sales facing activities relating to new retail store costs. Costs remain a key area of focus.
Capital employed
Average capital employed** increased by 2.7 million to 41.8 million. The book value of tangible and intangible assets increased by 2.4 million, mainly due to the ongoing investment in the implementation of a new ERP system and the change in accounting estimates for development costs and moulding tools whilst trade and other receivables increased by 0.8 million, inventory increased by 1.6 million due to the timing of product launches, provisions increased by 0.5 million and current liabilities increased by 1.6 million. 
Cash generation
During the period, the Group's core operating activities generated 14.5 million of cash after tax payments (2015: 6.6 million). The Group also received cash of 3.6 million in respect of royalties in the year (2015: 1.1 million). After purchases of tangible and intangible assets and product development costs of 6.8 million (2015: 6.3 million), dividends of 8.0 million (2015: 6.4 million) and foreign exchange gains of 0.8 million (2015: nil) there were net funds at the end of the period 15.9 million (2015: 7.8 million). 
Dividends
In the period we paid a dividend of 25 pence per share (2015: 20 pence) amounting to 8.0 million (2015: 6.4 million).
Risks and uncertainties
The board has overall responsibility for ensuring risk is appropriately managed across the Group. As discussed in the 2016 annual report, the top five risks to the Group are reviewed at each board meeting. The risks are rated as to their business impact and their likelihood of occurring. In addition, the Group has a disaster recovery plan to ensure ongoing operations are maintained in all circumstances. The principal risks for the balance of the year are the same as those identified in the 2016 annual report and are discussed below: 
ERP change. This is a complicated project with the risk of widespread business disruption if it is not implemented well.
Store manager recruitment. This comprises both recruitment of managers for new stores as well as replacing poor performing managers. Retail is our primary method of recruiting new customers and so we need great managers in all our stores.
Supply chain. We are changing our mail order warehouse system. This is part of an ongoing programme of continuous improvement for these warehouse systems. As with any system change there are risks associated with the transition.
Range management. We constantly review our range to ensure that we are exploring all opportunities. 
Distractions. Anything else that gets in the way of us delivering our goals.
The greatest risk is the same one that we repeat each year, namely, management. So long as we have great people we will be fine. Problems will arise if the board allows egos and private agendas to rule. I will do my utmost to ensure that this does not happen.
Going concern
After making appropriate enquiries, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason they have adopted the going concern basis in preparing this condensed consolidated interim financial information.
Statement of directors' responsibilities
The directors confirm that this condensed consolidated interim financial information has been prepared in accordance with IAS 34, 'Interim Financial Reporting', as adopted by the European Union, and that the interim management report herein includes a 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 first six months and their impact on the condensed set of financial statements, and a description of (i) the principal risks and uncertainties for the remaining six months of the financial year; (ii) material related-party transactions in the first six months and (iii) any material changes in the related-party transactions described in the last annual report.
There have been no other changes to the board since the annual report for the year to 29 May 2016. A list of all current directors is maintained on the investor relations website atinvestor.games-workshop.com.
By order of the board
K D Rountree
CEO
R F Tongue
Group Finance Director
10 January 2017
*Constant currency revenue is calculated by comparing results in the underlying currencies for 2015 and 2016, both converted at the average exchange rates for the six months ended 29 November 2015.
**We use average capital employed 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, taxation and dividends.
CONSOLIDATED INCOME STATEMENT 











Six months to
Six months to
Year to

27 November
29 November
29 May

2016
2015
2016
Notes
000
000
000




Revenue
3
70,935
55,259
118,069
Cost of sales pre-change in accounting estimates*

(22,171)
(16,802)
(37,438)
Cost of sales impact of change in accounting estimates*

798
-
-
Cost of sales

(21,373)
(16,802)
(37,438)


----------
----------
----------
Gross profit

49,562
38,457
80,631





Operating expenses

(39,065)
(33,753)
(69,710)
Other operating income - royalties receivable

3,261
1,536
5,939


----------
----------
----------
Operating profit pre-change in accounting estimates*

12,960
6,240
16,860
Operating profit impact of change in accounting estimates*

798
-
-
Operating profit
3
13,758
6,240
16,860





Finance income

29
47
93
Finance costs

-
-
(5)


----------
----------
----------
Profit before taxation
5
13,787
6,287
16,948





Income tax expense
6
(2,857)
(1,506)
(3,452)


----------
----------
----------
Profit attributable to owners of the parent

10,930
4,781
13,496


======
======
======





Basic earnings per ordinary share
7
34.0p
14.9p
42.1p
Diluted earnings per ordinary share
7
33.9p
14.9p
42.0p
Basic earnings per ordinary share pre-change in accounting estimates*
7
32.0p
14.9p
42.1p
Diluted earnings per ordinary share pre-change in accounting estimates*
7
31.9p
14.9p
42.0p
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME AND EXPENSE





Six months to
Six months to
Year to

27 November
29 November
29 May

2016
2015
2016

000
000
000




Profit attributable to owners of the parent
10,930
4,781
13,496




Other comprehensive income/(expense)



Items that may be subsequently reclassified to profit or loss



Exchange differences on translation of foreign operations
2,687
(140)
485

---------
----------
----------
Other comprehensive income/(expense) for the period
2,687
(140)
485

---------
----------
----------
Total comprehensive income attributable to owners of the parent
13,617
4,641
13,981
======
=======
=======
The following notes form an integral part of this condensed consolidated interim financial information.
*With effect from 30 May 2016 the Group implemented a change in accounting estimates for the amortisation of development costs intangible assets and for the depreciation of moulding tools. The change in accounting estimates is described in note 2 to this condensed consolidated interim financial information.
CONSOLIDATED BALANCE SHEET


As at
As at
As at


27 November
29 November
29 May


2016
2015
2016

Notes
000
000
000




Non-current assets









Goodwill

1,433
1,433
1,433
Other intangible assets
9
12,824
9,409
10,501
Property, plant and equipment
10
22,112
22,588
22,621
Trade and other receivables

1,413
1,220
929
Deferred tax assets

2,881
3,289
3,219


----------
----------
----------


40,663
37,939
38,703


----------
----------
----------
Current assets









Inventories

11,224
9,404
8,540
Trade and other receivables

11,507
10,195
10,120
Current tax assets

982
833
725
Cash and cash equivalents

15,877
7,781
11,775


----------
----------
----------


39,590
28,213
31,160


----------
----------
----------
Total assets

80,253
66,152
69,863


----------
----------
----------
Current liabilities









Trade and other payables

(16,761)
(12,555)
(12,844)
Current tax liabilities

(2,689)
(1,950)
(1,924)
Provisions
11
(838)
(674)
(823)


----------
----------
----------


(20,288)
(15,179)
(15,591)


----------
----------
----------
Net current assets

19,302
13,034
15,569


----------
----------
----------
Non-current liabilities









Other non-current liabilities

(416)
(308)
(488)
Provisions 
11
(662)
(577)
(621)


----------
----------
----------

(1,078)
(885)
(1,109)

----------
----------
----------
Net assets

58,887
50,088
53,163

======
======
======




Capital and reserves








Called up share capital

1,606
1,605
1,606
Share premium account

10,533
10,435
10,519
Other reserves

4,354
1,042
1,667
Retained earnings

42,394
37,006
39,371


----------
----------
----------
Total equity

58,887
50,088
53,163

======
======
======
The following notes form an integral part of this condensed consolidated interim financial information.
CONSOLIDATED STATEMENT OF CHANGES IN TOTAL EQUITY

Called up
Share




share
premium
Other
Retained
Total

capital
account
reserves
earnings
equity

000
000
000
000
000






At 29 May 2016 and 30 May 2016
1,606
10,519
1,667
39,371
53,163






Profit for the six months to 27 November 2016
-
-
-
10,930
10,930
Exchange differences on translation of foreign operations
-
-
2,687
-
2,687

----------
----------
----------
----------
----------
Total comprehensive income for the period
-
-
2,687
10,930
13,617





Transactions with owners:





Share-based payments
-
-
-
82
82
Shares issued under employee sharesave scheme
-
14
-
-
14
Deferred tax credit relating to share options
-
-
-
42
42
Dividends paid to Company shareholders 
-
-
-
(8,031)
(8,031)

----------
----------
----------
----------
----------
Total transactions with owners
-
14
-
(7,907)
(7,893)
----------
----------
----------
----------
----------
At 27 November 2016
1,606
10,533
4,354
42,394
58,887
======
======
======
======
======

Called up
Share




share
premium
Other
Retained
Total

capital
account
reserves
earnings
equity

000
000
000
000
000






At 31 May 2015 and 1 June 2015
1,603
10,218
1,182
38,522
51,525






Profit for the six months to 29 November 2015
-
-
-
4,781
4,781
Exchange differences on translation of foreign operations
-
-
(140)
-
(140)

----------
----------
----------
----------
----------
Total comprehensive (expense)/income for the period
-
-
(140)
4,781
4,641





Transactions with owners:





Share-based payments
-
-
-
77
77
Shares issued under employee sharesave scheme
2
217
-
-
219
Deferred tax credit relating to share options
-
-
-
30
30
Current tax credit relating to exercised share options
-
-
-
9
9
Dividends paid to Company shareholders 
-
-
-
(6,413)
(6,413)

----------
----------
----------
----------
----------
Total transactions with owners
2
217
-
(6,297)
(6,078)
----------
----------
----------
----------
----------
At 29 November 2015
1,605
10,435
1,042
37,006
50,088
======
======
======
======
======

Called up
Share




share
premium
Other
Retained
Total

capital
account
reserves
earnings
equity

000
000
000
000
000






At 31 May 2015 and 1 June 2015
1,603
10,218
1,182
38,522
51,525






Profit for the year to 29 May 2016
-
-
-
13,496
13,496
Exchange differences on translation of foreign operations
-
-
485
-
485

----------
----------
----------
----------
----------
Total comprehensive income for the period
-
-
485
13,496
13,981






Transactions with owners:





Share-based payments
-
-
-
193
193
Shares issued under employee sharesave scheme
3
301
-
-
304
Current tax charge relating to exercised share options
-
-
-
(3)
(3)
Dividends paid to Company shareholders 
-
-
-
(12,837)
(12,837)
----------
----------
----------
----------
----------
Total transactions with owners
3
301
-
(12,647)
(12,343)
----------
----------
----------
----------
----------
At 29 May 2016
1,606
10,519
1,667
39,371
53,163
======
======
======
======
======





The following notes form an integral part of this condensed consolidated interim financial information.
CONSOLIDATED CASH FLOW STATEMENT







Six months to
Six months to
Year to


27 November
29 November
29 May


2016
2015
2016

Notes
000
000
000
Cash flows from operating activities









Cash generated from operations
8
19,621
8,569
26,782
UK corporation tax paid

(1,313)
(747)
(2,236)
Overseas tax paid 

(155)
(121)
(316)


----------
----------
----------
Net cash from operating activities

18,153
7,701
24,230


----------
----------
----------
Cash flows from investing activities









Purchases of property, plant and equipment

(2,484)
(2,641)
(5,296)
Purchases of other intangible assets 

(1,187)
(1,485)
(2,789)
Expenditure on product development

(3,167)
(2,185)
(4,578)
Interest received

35
47
86


----------
----------
----------
Net cash from investing activities

(6,803)
(6,264)
(12,577)


----------
----------
----------
Cash flows from financing activities









Proceeds from issue of ordinary share capital

14
219
304
Interest paid

-
-
(3)
Dividends paid to Company shareholders

(8,031)
(6,413)
(12,837)


----------
----------
----------
Net cash from financing activities

(8,017)
(6,194)
(12,536)

----------
----------
----------
Net increase/(decrease) in cash and cash equivalents

3,333
(4,757)
(883)




Opening cash and cash equivalents

11,775
12,561
12,561




Effects of foreign exchange rates on cash and cash equivalents

769
(23)
97


----------
----------
----------
Closing cash and cash equivalents

15,877
7,781
11,775


======
======
======
The following notes form an integral part of this condensed consolidated interim financial information.
NOTES TO THE FINANCIAL INFORMATION
1. Basis of preparation
The Company is a limited liability company, incorporated and domiciled in the United Kingdom. The address of its registered office is Willow Road, Lenton, Nottingham, NG7 2WS.
The Company has its listing on the London Stock Exchange.
This condensed consolidated interim financial information does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year ended 29 May 2016 were approved by the board of directors on 25 July 2016 and have been delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under either section 498 (2) or section 498 (3) of the Companies Act 2006.
This condensed consolidated interim financial information has not been audited or reviewed pursuant to the Auditing Practices Board guidance on 'Review of Interim Financial Information' and does not include all of the information required for full annual financial statements.
This condensed consolidated interim financial information for the six months ended 27 November 2016 has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority and with IAS 34, 'Interim Financial Reporting' as adopted by the European Union. The condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended 29 May 2016 which have been prepared in accordance with IFRSs as adopted by the European Union. 
After making appropriate enquiries, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason they have adopted the going concern basis in preparing this condensed consolidated interim financial information.
This condensed consolidated interim financial information was approved for issue on 10 January 2017. 
This condensed consolidated interim financial information is available to shareholders and members of the public on the Company's website at investor.games-workshop.com.
The preparation of interim financial information requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, revenues and expenses. Actual results may differ from these estimates. 
In preparing this condensed consolidated interim financial information, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 29 May 2016.
The accounting policies applied are consistent with those of the annual financial statements for the year ended 29 May 2016, as described in those financial statements. With effect from 30 May 2016 the Group implemented a change in accounting estimate for the amortisation of development costs intangible assets and the accounting estimate for the depreciation of moulding tools. These are described in note 2 below along with the impact on the results for the six months to 27 November 2016.
Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.
There are no new accounting standards or interpretations effective in the current period which are relevant to the Group.

New standards, amendments to standards and interpretations which have been published but are not yet effective which are relevant to the Group are:
IFRS 16 'Leases' (effective for the year ending 31 May 2020). Under this new standard all leases will be required to be recognised on balance sheet. Currently under IAS 17 'Leases' only leases categorised as finance leases are recognised on balance sheet, with leases categorised as operating leases not recognised. In broad terms the impact will be to recognise a lease liability and corresponding asset for the Group's operating lease commitments. The Group is assessing the impact of the new standard. 
IFRS 15 'Revenue from contracts with customers' (effective for the year ending 2 June 2019). Under this new standard the royalty minimum guarantee income is expected to be taken as revenue up front. Currently the minimum guarantee income is deferred and released in line with licensee sales.
The Group does not consider that any other standards, amendments or interpretations issued by the IASB, but not yet applicable, will have a significant effect on the financial statements.
2. Change in accounting estimates
With effect from 30 May 2016 the Group implemented a change in accounting estimates for the amortisation of development costs intangible assets and the depreciation of moulding tools. Previously product development costs recognised as intangible assets were amortised on a straight line basis over periods ranging between 1 and 48 months. These development costs intangible assets are now amortised on a reducing balance basis with rates ranging from 50% to 80%. 
Previously moulding tools were depreciated on a straight line basis over a period of 48 months. Moulding tools relating to specific products are now amortised on a reducing balance basis at 50%.
The changes have been made in order to better match the expenditure incurred to the expected revenue generated from the subsequent product release. In accordance with IAS 8 'Accounting policies, changes in accounting estimates and errors' the changes are recognised prospectively and hence there is no impact on the results or financial position previously reported for the six months to 29 November 2015 or for the year ended 29 May 2016. 
The impact of the change on the results for the six months to 27 November 2016 is shown in the table below:


Impact of
Total

Pre-change in
change in 
Six months to

accounting
accounting
27 November

estimates
estimates
2016

000
000
000




Cost of sales
(22,171)
798
(21,373)
Gross profit
48,764
798
49,562
Operating profit
12,960
798
13,758
Income tax expense
(2,703)
(154)
(2,857)
Profit attributable to owners of the parent
10,286
644
10,930
Other intangible assets
11,184
1,640
12,824
Property, plant and equipment
22,487
(375)
22,112
Deferred tax assets
2,976
(95)
2,881
Current tax liabilities
(2,630)
(59)
(2,689)
Net assets
58,243
644
58,887
Basic earnings per share
32.0p
2.0p
34.0p
Diluted earnings per share
31.9p
2.0p
33.9p
The impact of the change in accounting estimates in future periods will depend on the release mix and nature of products being developed in those years. A benefit relating to the changes in accounting estimates is expected until the year ending 31 May 2020, when the change will no longer materially impact the financial statements.
3. Segment information
As Games Workshop is a vertically integrated business, management assesses the performance of sales channels and manufacturing and distribution channels separately. At 27 November 2016, 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. 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' and charges in respect of the Group's profit share scheme. This has been reconciled to the Group's total profit before taxation below.
The segment information reported to the executive directors for the periods included in this financial information is as follows:

Sixmonthsto
27 November
2016
Six months to
29 November
2015
Year to
29 May
2016

000
000
000




External revenue



Trade
29,341
22,418
44,522
Retail
29,168
21,457
48,414
Mail order 
12,426
11,384
25,133

-------------
-------------
------------
Total external revenue
70,935
55,259
118,069

========
========
=======
For information, we analyse external revenue further below:

Sixmonthsto
Six months to
Year to

27 November
29 November
29 May

2016
2015
2016

000
000
000




Trade



UK and Continental Europe
10,416
8,424
15,504
North America
11,131
8,716
17,944
Australia and New Zealand
1,133
871
1,658
Asia
746
323
741
Non-core trade
5,915
4,084
8,675

-------------
-------------
-------------
Total Trade
29,341
22,418
44,522

-------------
-------------
-------------




Retail



UK
8,627
7,776
16,074
Continental Europe
7,869
5,116
12,878
North America
7,044
4,438
10,417
Australia and New Zealand
3,338
2,350
5,133
Asia
538
165
417
Non-core retail 
1,752
1,612
3,495

-------------
-------------
-------------
Total Retail
29,168
21,457
48,414

-------------
-------------
-------------




Mail order



Citadel and Forge World
10,283
9,508
21,018
Non-core mail order
2,143
1,876
4,115

-------------
-------------
-------------
Total Mail order
12,426
11,384
25,133

-------------
-------------
-------------
Total external revenue
70,935
55,259
118,069

========
========
========
Operating expenses by segment are regularly reviewed by the executive directors and are provided below:

Six months to
Six months to
Year to

27 November
29 November
29 May

2016
2015
2016

000
000
000




Trade
(5,388)
(4,086)
(8,899)
Retail
(21,222)
(17,055)
(35,930)
Mail order
(2,595)
(2,207)
(5,002)
Product and supply
(1,279)
(1,583)
(2,767)
Central costs
(3,125)
(2,697)
(5,582)
Service centre costs
(4,738)
(5,822)
(10,907)
Royalties
(192)
(226)
(430)

-------------
-------------
-------------
Total segment operating expenses
(38,539)
(33,676)
(69,517)




Share-based payment charge
(82)
(77)
(193)
Profit share scheme charge
(444)
-
-

-------------
-------------
------------
Total group operating expenses
(39,065)
(33,753)
(69,710)

========
========
========
Total segment operating profit is as follows and is reconciled to profit before taxation below:

Six months to
Restated**
Six months to
Restated**
Year to

27 November
29 November
29 May

2016*
2015
2016

000
000
000








Trade
8,791
5,789
10,625
Retail
(2,369)
(3,052)
(3,927)
Mail order
6,651
6,231
13,747
Product and supply
6,075
4,646
7,610
Central costs
(3,125)
(2,697)
(5,424)
Service centre costs
(4,738)
(5,822)
(10,907)
Royalties
2,999
1,222
5,329

-------------
-------------
----------
Total segment operating profit 
14,284
6,317
17,053




Share-based payment charge
(82)
(77)
(193)
Profit share scheme charge
(444)
-
-
Finance income
29
47
93
Finance costs
-
-
(5)

-------------
-------------
-------------
Profit before taxation
13,787
6,287
16,948

========
========
========
*The implementation of the change in accounting estimates for the amortisation of development costs intangible assets and the depreciation of moulding tools, as described in note 2, has resulted in an increase in operating profit of 798,000 which is shown within the product and supply segment above. There is no impact on the results for the six months to 29 November 2015 or the year to 29 May 2016.
**Segment operating profit for the six months to 29 November 2015 and for the year to 29 May 2016 has been restated in this financial information to reclassify a stock valuation gain of 517,000 from the retail segment to the product and supply segment. This reflects the current management structure in place for the six months to 27 November 2016.
4. Dividends
A dividend of 8,031,000 (25 pence per share) was declared and paid in the six months to 27 November 2016.
A dividend of 6,413,000 (20 pence per share) was declared and paid in the six months to 29 November 2015. 
Dividends of 12,837,000 were declared and paid during the year ended 29 May 2016.
5. Profit before taxation
The following costs have been incurred in the reported periods in respect of ongoing redundancies, inventory provisions, impairments and loss-making retail stores:

Six months to
Six months to
Year to

27 November
29 November
29 May

2016
2015
2016

000
000
000




Redundancy costs and compensation for loss of office
345
275
536




Impairment of property, plant and equipment
16
46
28




Net charge to property provisions including closed or loss-making retail stores
197
377
562
Net inventory provision creation
235
286
1,805
6. Tax
The taxation charge for the six months to 27 November 2016 is based on an estimate of the full year effective rate of 20.7% reflecting overseas tax rates which are higher than the UK rate of 19.83% (2015: 24.0%, reflecting overseas tax rates which were higher than the UK rate of 20.0%).
7. 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 throughout the relevant period. 

Six months to
Six months to
Year to

27 November
29 November
29 May

2016
2015
2016




Profit attributable to owners of the parent (000)
10,930
4,781
13,496

-------------
-------------
-------------
Weighted average number of ordinary shares in issue (thousands)
32,121
32,070
32,093

-------------
-------------
-------------
Basic earnings per share (pence per share)
34.0
14.9
42.1
========
========
========
Basic earnings per share pre-change in accounting estimates
Basic earnings per share pre-change in accounting estimates is calculated by dividing the profit attributable to owners of the parent, before the impact of the change in accounting estimates, by the weighted average number of ordinary shares in issue throughout the relevant period. 

Six months to
Six months to
Year to

27 November
29 November
29 May

2016
2015
2016




Profit attributable to owners of the parent pre-change in accounting estimates (000)
10,286
4,781
13,496

-------------
-------------
-------------
Weighted average number of ordinary shares in issue (thousands)
32,121
32,070
32,093

-------------
-------------
-------------
Basic earnings per share pre-change in accounting estimates (pence per share)
32.0
14.9
42.1

========
========
========
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 relevant period, adjusted for the dilution effect of share options outstanding at the period end.

Six months to
Six months to
Year to

27 November
29 November
29 May

2016
2015
2016




Profit attributable to owners of the parent (000)
10,930
4,781
13,496

-------------
-------------
-------------
Weighted average number of ordinary shares in issue (thousands)
32,121
32,070
32,093




Adjustment for share options (thousands)
77
 74
57

-------------
-------------
-------------
Weighted average number of ordinary shares for diluted earnings per share (thousands)
32,198
32,144
32,150

-------------
-------------
-------------
Diluted earnings per share (pence per share)
33.9
14.9
42.0
========
========
========
Diluted earnings per share pre-change in accounting estimates
The calculation of diluted earnings per share has been based on the profit attributable to owners of the parent, before the impact of the change in accounting estimates, and the weighted average number of shares in issue throughout the relevant period, adjusted for the dilution effect of share options outstanding at the period end.

Six months to
Six months to
Year to

27 November
29 November
29 May

2016
2015
2016




Profit attributable to owners of the parent pre-change in accounting estimates (000)
10,286
4,781
13,496

-------------
-------------
-------------
Weighted average number of ordinary shares in issue (thousands)
32,121
32,070
32,093




Adjustment for share options (thousands)
77
 74
57

-------------
-------------
-------------
Weighted average number of ordinary shares for diluted earnings per share (thousands)
32,198
32,144
32,150

-------------
-------------
-------------
Diluted earnings per share pre-change in accounting estimates (pence per share)
31.9
14.9
42.0

========
========
========
8. Reconciliation of profit to net cash from operating activities

Six months to
Six months to
Year to

27 November
29 November
29 May

2016
2015
2016

000
000
000




Operating profit 
13,758
6,240
16,860
Depreciation of property, plant and equipment
3,156
2,611
5,305
Net impairment charge on property, plant and equipment
16
46
28
Loss on disposal of property, plant and equipment
23
8
28
Loss on disposal of intangible assets
-
-
39
Amortisation of capitalised development costs
1,557
1,831
3,853
Amortisation of other intangibles
604
595
1,232
Share-based payments
82
77
193
Changes in working capital:



-Increase in inventories
(1,805)
(1,697)
(701)
-Increase in trade and other receivables
(1,298)
(1,004)
(293)
-Increase/(decrease) in trade and other payables
3,585
(413)
(198)
-(Decrease)/increase in provisions
(57)
275
436

----------
----------
---------
Net cash from operating activities
19,621
8,569
26,782

======
======
======




9. Other intangible assets

27 November
29 November
29 May

2016*
2015
2016

000
000
000




Net book value at beginning of period
10,501
8,262
8,262
Additions
4,479
3,566
7,362
Exchange differences
5
7
1
Disposals
-
-
(39)
Amortisation charge
(2,161)
(2,426)
(5,085)

----------
----------
----------
Net book value at end of period
12,824
9,409
10,501
======
======
======
*The impact of the change in accounting estimate for the amortisation of development costs intangible assets is an increase in the net book value of intangible assets of 1,640,000 as at 27 November 2016. There is no impact on the net book value of intangible assets at 29 November 2015 or 29 May 2016.
10. Property, plant and equipment

27 November
29 November
29 May

2016*
2015
2016

000
000
000




Net book value at beginning of period
22,621
22,719
22,719
Additions
2,348
2,551
5,193
Exchange differences
338
(17)
70
Disposals
(23)
(8)
(28)
Charge for the period
(3,156)
(2,611)
(5,305)
Impairment 
(16)
(46)
(28)

----------
----------
----------
Net book value at end of period
22,112
22,588
22,621

======
======
======
*The impact of the change in accounting estimate for the depreciation of moulding tools is a decrease in the net book value of property, plant and equipment of 375,000 as at 27 November 2016. There is no impact on the net book value of property, plant and equipment at 29 November 2015 or 29 May 2016.
11. Provisions
Analysis of total provisions:

27 November
29 November
29 May

2016
2015
2016

000
000
000




Current
838
674
823
Non-current
662
577
621

----------
----------
----------

1,500
1,251
1,444

======
======
======

Exceptional
Employee



items
benefits
Property
Total

000
000
000
000





At 31 May 2015
26
492
469
987





Charged to the income statement
-
65
377
442
Exchange differences
-
(7)
(3)
(10)
Utilised
(26)
(1)
(141)
(168)

----------
----------
----------
----------
At 29 November 2015
-
549
702
1,251

======
======
======
======





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





Charged to the income statement
-
99
197
296
Exchange differences
-
53
60
113
Utilised
-
(47)
(306)
(353)

----------
----------
----------
----------
At 27 November 2016
-
652
848
1,500

======
======
======
======
12. Seasonality
The Group's monthly sales profile demonstrates an element of seasonality around the Christmas period which impacts sales in the month of December.
13. Commitments
Capital expenditure contracted for at the balance sheet date but not yet incurred is 996,000 (2015: 867,000). The committed spend includes the replacement of the local area network for our headquarters in Nottingham and tooling and machinery spend.
14. Related-party transactions
There were no material related-party transactions during the period. 

This information is provided by RNS
The company news service from the London Stock Exchange
  END
IR BRGDBRGGBGRC