Annual Report • Jun 1, 2014
Annual Report
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Annual report 2014
| 2014 | 2013 | |
|---|---|---|
| Revenue | £123.5m | £134.6m |
| Revenue at constant currency* | £125.9m | £134.6m |
| Operating profit – pre-exceptional items and royalties receivable | £15.4m | £20.2m |
| Exceptional costs | £4.5m | - |
| Royalties receivable | £1.4m | £1.0m |
| Operating profit | £12.3m | £21.3m |
| Profit before taxation | £12.4m | £21.4m |
| Cash generated from operations | £25.0m | £31.9m |
| Earnings per share | 25.2p | 51.5p |
| Pre-exceptional earnings per share | 36.1p | 51.5p |
| Dividends per share declared in the year | - | 58p |
| Chairman's preamble | 2 |
|---|---|
| Strategic report | 4 |
| Directors' report | 10 |
| Corporate governance report | 14 |
| Remuneration report | 18 |
| Directors' responsibilities statement | 26 |
| Company directors and advisers | 27 |
| Independent auditors' report | 28 |
| Consolidated income statement | 32 |
| Statements of comprehensive income | 32 |
| Balance sheets | 33 |
| Consolidated and Company statements of changes in total equity | 34 |
| Consolidated and Company cash flow statements | 35 |
| Notes to the financial statements | 36 |
| Five year summary | 59 |
| Financial calendar | 59 |
| Notice of annual general meeting | 60 |
*Constant currency revenue is calculated by comparing results in the underlying currencies for 2014 and 2013, both converted at the 2013 average exchange rates as set out on page 8.
Games Workshop has had a really good year.
If your measure of 'good' is the current financial year's numbers, you may not agree. But if your measure is the long-term survivability of a great cash generating business that still has a lot of potential growth, then you will agree.
Having taken on the conversion of our stores to a one man format with all the concomitant complexity of staff changes and new sites and new lease negotiations – a long job not quite finished – we decided to re-arrange the management of our sales channels from a countrybased system to a central one. This meant removing four european headquarters, consolidating all trade (third party) sales personnel at our Nottingham base, creating a new continental european grouping of our retail stores, and recruiting new management for these divisions whilst flattening the structure by removing all middle management. At the same time we changed leadership of our retail chain in the north american area, and gave birth to our new web store after many months' labour.
All this has significantly de-risked the business. We have far fewer key personnel to replace if need be, and a much lower cost base (£2 million p.a. less). It has cost, in total, around £4.5 million to accomplish. The new web store allows us to sell online more efficiently. It cost around £4 million.
This augurs well for our long term health and cash flow.
What is really remarkable, however, is that it was all accomplished in five months. The levels of complexity handled by our 'back-office' staff – personnel, IT and accounts – are beyond my descriptive abilities. And yet it was co-operatively done with precision, efficiency and calmness at a ferocious speed.
We all owe these people a big vote of thanks. They have saved the company millions.
Working with people like this is why it is a pleasure to work here.
In the technological world we occupy there is constant debate over who 'innovates' and who merely copies. We have, this last year, spent an indecent amount of your money trying to stop someone stealing our ideas and images. It is a very difficult thing to do when it is done through a legal system designed to prevent people stealing hogs from one another. Our experience has probably been typical of most – far too much money spent on far too little gain. The argument is that we have to do this or we will, bit by bit, lose everything that we hold dear, everything that keeps the business going. Our crops will wither, our children will die piteous deaths and the sun will be swept from the sky. But is it true?
°
Last year I published the secret that I believe is at the heart of what makes this business great. Steve Jobs once did the same over at heavily litigating Apple. He said they ignored everything that did not lead to 'insanely great products' and that was what made them great. None of the people Apple are suing are trying to do that, so why sue?
I said, 'we recruit for attitude and not for skill'. It is what makes us great. It is those people who design the miniatures; those people who make them and those people who sell them; those people who transformed our business systems in five short months. I have been deluged with two comments about that statement, neither of which was: 'you fool, you just gave away the crown jewels'. Why doesn't everyone do it? Ask them.
Because no one seems able to grasp the essential simplicity of what we do there has always been the search for the Achilles heel, the one thing that Kirby and his cronies have overlooked. These are legion. I run through the list from time to time when someone says that computer games will be the death of us – they are so much more realistic now! – again. This year it is 3-D printing. Pretty soon everyone will be printing their own miniatures and where will we be then, eh?
°
We know quite a lot about 3-D printers, having been at the forefront of the technology for many years. We know of what we speak. One day 3-D printers will be affordable (agreed), they are now, they will be able to produce fantastic detail (the affordable ones won't) and they will do it faster than one miniature per day (no, they won't, look it up). So we may get to the time when someone can make a poorly detailed miniature at home and have enough for an army in less than a year. That pre-supposes that 3-D scanning technology will be affordable and good enough (don't bet the mortgage on that one) and that everyone will be happy to have nothing but copies of old miniatures.
All of our great new miniatures come from Citadel. It is possible that one day we will sell them direct via 3-D printers to grateful hobbyists around the world. That will not happen in the next few years (or, in City-speak, 'forever') but if and when it does it will just mean that we can cut yet more cost out of the supply chain and be making good margins selling Citadel 3-D printers.
At the heart of the delusion is the notion that designing and making miniatures is easy. It isn't.
On the first of January next year I will be stepping down as CEO of Games Workshop. I intend staying on as non-executive Chairman (if the board will have me), so those of you who want to see an end to these preambles (rhymes with rambles), don't get your hopes up just yet.
°
The board has prepared a job specification for CEO, and the consequential advertisement. The ad. will be published the day after our AGM (September 18th). If you apply, we require that you write a letter saying why you want the job. No letter, no interview. The interviews will take place on November 7th and will be at Nottingham. An announcement will be made the following week. We have not decided what will happen if no suitable candidate is found but I suspect my wife will be livid.
Let me dilate about this letter. Last year I wrote here about our recruitment process, and shortly afterwards we recruited a new nonexecutive director (NXD) using the method described. We got a great (not good, great) new board member. She is still surprised that I did not read her CV (exasperated would be a more accurate word) but there was no need. Her letter told us what kind of person she was: sincere, open-minded, a learner, excited at the opportunity. The interview told us she had all the qualities needed. It mattered not one jot what her CV said. Appointing NXDs because of their careers rather than who they are is at the heart of the rot in the corporate world.
Tom Kirby Chairman and acting CEO 28 July 2014
Games Workshop's strategy is to make the best fantasy miniatures in the world and sell them globally at a profit, and it intends doing so forever.
This statement includes all the key elements of what we do and why we do it that way.
The first element is the high quality. We consciously and deliberately pursue a niche market model. Not everyone wants to collect miniatures, but those that do demand high quality. All niche market customers are like that. It is what defines the niche — quality above price. Our strategy is to make the best miniatures in the world.
The second element is that we will only ever make fantasy miniatures, and by that we mean those that are in our imaginary worlds. This gives us complete control over the imagery and styles we use and complete ownership of the intellectual property.
The third element is the global nature of our business. Niche market customers are pretty thin on the ground and they need to be searched out all over the world. The main growth in our business will be as a result of this geographic spread.
The fourth element is our desire to make money doing it. We want to be efficiently profitable, partly because we enjoy paying ourselves and our owners well but even more because it allows us to keep going. We want to be in business for as long as possible and that means we need to be profitable in both good times and bad.
There is no fifth element which is a shame as it would have allowed me to indulge in a lot of movie jokes and references.
We measure our success by maintaining a high return on investments. (Efficiently profitable.)
The way we go about implementing this strategy is firstly to recruit the best staff we can by looking for the appropriate attitudes and behaviour each role requires, secondly by having flat, efficient management structures and thirdly by controlling costs tightly. There is no difference in our short-term, medium-term and long-term methods. All our strategic decision making is for the extreme long-term.
We are vertically integrated. We design, manufacture and distribute ourselves; we have our own stores and web store. With the sole, and rapidly declining, exception of products from Tolkien's books we use only our own imaginary worlds. They are rich enough and deep enough to accommodate anything we may want to make, and they remain our property.
We sell to third party retailers under closely controlled terms and conditions. Those terms and conditions mean that we are unlikely to be attractive to heavy discounters, chains or mass-marketers. In other words, I doubt you'll find our products in Toys 'R' Us or Walmart.
We publish two magazines. A weekly (White Dwarf) that announces new products and events and a monthly (Warhammer Visions) that glories in the aesthetics of our miniatures.
Our own stores attract a lot of attention, as they should, because they are the way we recruit the majority of new customers. Their modal style is small (cheap), off the beaten track (cheap), and with only one member of staff, the store manager (cheaper than five staff, but with our performance related pay scheme the managers are capable of earning far more than before). We require all our stores to be profitable. In bad times as well as good. Our growth comes from geographic spread, led by these stores, so it would make no sense to be growing less and less profitable as we went.
Our market is a niche market made up of people who want to collect our miniatures. They tend to be male, middle-class, discerning teenagers and adults. We do no demographic research, we have no focus groups, we do not ask the market what it wants. These things are otiose in a niche.
We control the business centrally. The big sales engines are: our own stores, split into three geographic areas (North America, Europe, Britain and Ireland), trade sales (sales to third parties) and our web store. Each store manager reports to the regional manager (Josh Wimberly in North America, Elmes Duo in Europe and Grant Peacey in Britain and Ireland) and each of them reports to me qua CEO. The trade sales manager (John Carter) reports to me, as does the web store manager (Erik Mogensen). Design, manufacturing and distribution is in Nottingham and the manager of that division (Max Bottrill) reports to me as well.
Back office functions are run largely from Nottingham. They are Accounts (Tim Wilson), IT (Karen Lathbury), Personnel (Vicki King), Lenton site (Dave Holmes), Legal and Compliance (Rachel Tongue), Projects (Helen Surgey) and they report to Kevin Rountree, qua COO.
Outliers are Australia and New Zealand (Ken Warton), Asia (Chris Harbor), and Forge World (Tony Cottrell) who all report to me, Licensing (Andy Jones) who reports to Kevin and Black Library (Rik Cooper) who reports to George Mann in the main Citadel studio.
We believe shareholder value is created, primarily, by not destroying it. We have no intention to acquire other companies, nor dispose of any of those we own.
We return all our surplus cash to our owners and try to do so in ever increasing amounts. As a consequence it is probable the share price will rise. But we have no control over that. You do.
Shareholder value for this graph is calculated as the price of the shares at year end plus the dividend per share paid in the year.
As part of our constant drive to improve efficiency and reduce costs as well as in response to the realities of trading conditions in southern Europe we reorganised our sales structures during the last five months. These changes will also enable us to focus on the performance of our continental european retail and trade sales channels.
Until January 2014 we had a country based system with management in local countries and all the associated costs. We have closed four european offices (Aix-en-Provence, Dusseldorf, Barcelona and Frascati), consolidating trade sales in Nottingham, and have one manager for all continental european stores based in a new, tiny, office in Dusseldorf (he's mostly on the road, of course). Back office functions take place in Nottingham as far as possible. North american local autonomy was removed and for that region trade sales now reports to Nottingham and a new retail manager was appointed at the same time. Back office functions in North America now report to the appropriate manager in Nottingham.
At the same time we flattened our retail structures completely by removing all middle management.
It is early days but results so far have been encouraging. Sales in the last quarter are up on their equivalent quarter and costs down. There is also a stronger sense of belonging and Games-Workshop-ness. As I said in the preamble with my other hat on, it has been a really good year.
We paid £4.5 million for these benefits and we have classified these as exceptional costs. The costs and benefits are analysed below:
| Annualised | ||
|---|---|---|
| Cost | benefit | |
| £million | £million | |
| Staff | 3.0 | 1.0 |
| Property | 0.6 | 0.6 |
| Other | 0.9 | 0.4 |
| 4.5 | 2.0 |
Our operations in Australia and New Zealand and Asia remain unchanged.
During the year our return on capital fell from 59% to 42%. This was driven by both a decline in operating profit and an increase in capital employed.
Reported sales fell by 8.2% to £123.5 million for the year. On a constant currency basis, sales were down by 6.5% from £134.6 million to £125.9 million; progress was achieved in Other sales businesses (+20.9%) and Export (+2.7%) while sales in UK (-7.1%), Continental Europe (-10.6%), North America (-7.5%), Australia (-9.4%) and Asia (-3.3%) were in decline.
Pre-exceptional core business operating profit (operating profit before royalty income) fell by £4.9 million to £15.4 million (2013: £20.2 million). On a constant currency basis, core business operating profit fell by £3.6 million to £16.7 million. This result was driven by an £8.7 million sales decline, on a constant currency basis, as a direct result of lower volumes and a decline in gross margin.
Operating expenses (excluding exceptional items) fell by £6.2 million; £3.1 million due to a reduction in retail store costs, £1.1 million employee profit share not incurred in the year and £0.3 million reduction in legal costs. Savings of £0.7 million from the continental european reorganisation have been realised. Costs remain a key area of focus.
Average capital employed* increased by £2.1 million to £36.6 million. The book value of tangible and intangible assets increased by £2.2 million whilst trade and other receivables fell by £1.7 million and current liabilities fell by £1.6 million.
During the year, the Group's core operating activities generated £17.9 million (2013: £25.5 million) of cash after tax payments. The Group also received cash of £2.4 million in respect of royalties in the year (2013: £1.1 million). After capital expenditure of £7.2 million there were net funds at the year end of £17.6 million (2013: £13.9 million).
The chart below shows a bridge of operating profit to cash generated.
*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 pre-exceptional operating profit before royalty income, and the average capital employed is adjusted by deducting assets and adding back liabilities in respect of cash, borrowings, exceptional provisions, taxation and dividends.
This is what we have been spending your money on:
| 2014 | 2013 | |
|---|---|---|
| £million | £million | |
| Shop fits for new and existing stores | 1.1 | 1.2 |
| Production equipment and tooling | 2.9 | 2.7 |
| Computer equipment and software | 2.7 | 4.5 |
| Lenton site (infrastructure) | 0.5 | 0.4 |
| Total capital additions | 7.2 | 8.8 |
We invested in shop fits: 44 new stores and 4 refurbishments. We invested an additional £0.9 million in the new web store (2013: £3.1 million) and £2.6 million in tooling, and milling and injection moulding machines. Capital investment is expected to be higher than depreciation and amortisation over the next few years as we upgrade our back office systems in Nottingham.
We followed our principle of returning truly surplus cash to shareholders. Dividends of 16 pence per share were paid during the year (£5.1 million).
Royalty income increased in the period by £0.4 million to £1.4 million.
The pre-exceptional tax rate for the year was 32.0% (2013: 23.7%). The post-exceptional tax rate was 35.4%. We would expect a preexceptional rate above that of business activities based solely in the UK, due to higher overseas tax rates.
42% (2013: 43%) of sales were made through our own stores. 36% (2013: 37%) of sales were to independent retailers and 13% (2013: 11%) mail order. We are moving to this method of counting sales but we are also publishing sales by region, as we have in the past. Next year it will be by channel only.
Store openings and closures during the year
| Number of stores | Number of stores | Number of one man | |||
|---|---|---|---|---|---|
| at May 13 | Opened | Closed | at May 14 | stores | |
| UK | 137 | 9 | (4) | 142 | 103 |
| North America | 100 | 10 | (23) | 87 | 63 |
| Europe | 135 | 15 | (9) | 141 | 99 |
| Australia | 37 | 9 | (6) | 40 | 29 |
| Asia | 3 | 1 | - | 4 | 3 |
| 412 | 44 | (42) | 414 | 297 |
Our ability to open new stores is still (and always will be) limited by our ability to find the right people to run them. Although we are getting better at it, it is still our number one priority.
Sales fell by 9% in the year, partially due to the continental european reorganisation and a disappointing year in North America.
Our new online shop was launched this year and our online sales are broadly in line with the prior year.
The objective of our treasury operation is the cost effective management of financial risk. The relationship with the Group's external credit facility provider is managed centrally. It operates within a range of board approved policies. No transactions of a speculative nature are permitted.
The Group pays for its operations entirely from our cash flow. As a precaution we sometimes have a small facility at the bank (just-in-case, belt-and-braces, rainy days etc.). This year we arranged a short term bank loan of £5 million in case the continental european reorganisation was more expensive than expected. It wasn't. The loan was not needed. It still cost us £38,000 though.
Net interest receivable for the year (excluding net foreign exchange gains and unwinding of discounts on provisions) was £106,000 (2013: £176,000). Normally this risk is couched in terms of how much further in debt sudden rate rises would drag us. In our case we say: bring it on.
Our big currency exposures are the euro and dollar:
| euro | US dollar | |||
|---|---|---|---|---|
| 2014 | 2013 | 2014 | 2013 | |
| Year end rate used for the balance sheet | 1.23 | 1.17 | 1.68 | 1.52 |
| Average rate used for earnings | 1.20 | 1.22 | 1.62 | 1.57 |
The net impact in the year of these exchange rate fluctuations on our operating profit was a reduction of £1.3 million (2013: £0.6 million).
If we were planning radical changes in our products I certainly wouldn't publish them here.
That we are ex-growth is a big risk seen by some. As I said above I do not believe it. But if it is true we have built a wonderfully efficient cash-generating machine.
The bigger risk is the same one I repeat each year, and that is 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.
We also need a constant flow of great managers for our stores. In the end that is still the most important thing of all.
Next year, internally, there will be some disruption remaining from the big reorganisation we have just made and from the one man store programme. Nevertheless I, and all the rest of Games Workshop, still believe we should be growing by opening new stores; particularly in North America and Germany.
External events that may affect us are only those things that bother everyone: interest rates, tax rates, exchange rates, directives from Brussels, war, pestilence and disease. What will not change is the eternal desire for some always to want yet more of the small, jewel-like objects of magic and wonder that we call Citadel miniatures.
Beyond next year, the business ought to be able to increase sales (single digit growth, not more) for many years and to provide owners with a steady flow of dividends. I say 'ought to' because no plan survives contact with the enemy and we will not promise what we cannot deliver — in particular our policy of only returning surplus cash as dividends will remain. We will not borrow (nor engage in fancy financial engineering) to pay a coupon.
Nevertheless, with or without growth, I expect to see dividends. I am not planning to sell any of my shares.
Tom Kirby Chairman and acting CEO 28 July 2014
The directors present their annual report together with the financial statements and independent auditors' report for the year ended 1 June 2014.
Games Workshop Group PLC (the 'Company') and its subsidiaries (together the 'Group') designs and manufactures miniature figures and games and distributes these through its own network of Hobby centres, independent retailers and direct via the internet and mail order. The Group has manufacturing activities in the UK and sells mainly in Continental Europe, North America and Asia Pacific.
The Company is a public listed company, incorporated and domiciled in the United Kingdom. The address of its registered office is Willow Road, Lenton, Nottingham, NG7 2WS, United Kingdom. The Company's ordinary share capital is listed on the London Stock Exchange.
The following interests in 3% or more of the issued share capital of the Company as at 25 July 2014 have been disclosed to the Company:
| No. of shares | % | |
|---|---|---|
| Investec Asset Management Limited | 3,087,765 | 9.7 |
| Ruffer LLP | 2,492,260 | 7.8 |
| Phoenix Asset Management Partners Limited | 1,865,218 | 5.9 |
| FIL Limited | 1,753,900 | 5.5 |
| Legal & General Group plc | 1,683,901 | 5.3 |
| Schroders plc | 1,677,861 | 5.3 |
| Aberforth Partners LLP | 1,636,300 | 5.1 |
| Artemis Investment Management LLP | 1,620,001 | 5.1 |
The Company has not been notified of any other substantial shareholdings other than those of the directors, which are disclosed in the remuneration report on page 24.
Dividends of 16 pence per share were paid during the year (£5.1 million). After the balance sheet date a dividend of 20 pence per share, amounting to a total dividend of £6,372,000 was declared and paid on 4 July 2014.
The present directors of the Company are listed on page 27. All of the directors were members of the board throughout the year and up to the date of signing the financial statements with the exception of E O'Donnell who was appointed on 28 November 2013.
Under the Company's articles of association one third of the directors are required to retire by rotation at each annual general meeting. Those who retire are the longest in office since their election or last re-election. Under this formula, at this year's annual general meeting, K D Rountree is seeking re-election. E O'Donnell will also be seeking her election since appointment to the board in November 2013. In addition, as a result of their long service, non-executive directors C J Myatt and N J Donaldson are required to retire and are seeking reelection. In relation to the non-executive directors, the chairman has confirmed that, following formal performance evaluation, the performance of C J Myatt and N J Donaldson continues to be effective and they continue to demonstrate commitment to their roles as non-executive directors, including commitment of the necessary time to board and committee meetings and other duties. C J Myatt and N J Donaldson are considered by the board to be independent of the Group, as set out in the corporate governance report.
The interests of the directors in the shares of the Company, together with details of share options granted to the directors, are disclosed in the remuneration report on page 24. None of the directors had a material interest in any contract of significance to which the Company, or any of its subsidiaries, was a party during the year.
The Company has made qualifying third party indemnity provisions for the benefit of its directors, as permitted by section 234 of the Companies Act 2006, which were in force during the year and up to 28 July 2014.
T H F Kirby (age 64), chairman and acting CEO. Tom Kirby joined Games Workshop in April 1986 as general manager and led the management buy-out in December 1991, becoming chief executive at that time. Between 1998 and 2000 he took on the role of nonexecutive chairman, returning to the role of chief executive in September 2000. He performed the role of chairman from December 2007 to January 2013 when he became chairman and acting CEO. Prior to joining Games Workshop, Tom worked for six years for a distributor of fantasy games in the UK and was previously an Inspector of Taxes.
K D Rountree (age 44), COO. Kevin Rountree joined Games Workshop in March 1998 as assistant group accountant. He then had various management roles within Games Workshop, including head of sales for the Other Activities division (including Black Library, licensing and Sabertooth Games). Kevin was appointed CFO in September 2009. During the year ended 29 May 2011, he took on the responsibility of managing the Group's service centres globally. To reflect this, his title was changed to chief operating officer from chief financial officer. He, however, still retains responsibility for all financial matters within Games Workshop. He qualified as a chartered management accountant in August 2001. Prior to joining Games Workshop, Kevin was the management accountant at J Barbour & Sons Limited and trained at Price Waterhouse.
C J Myatt (age 70). Chris Myatt is the senior independent director, joining the board on 18 April 1996. He was formerly managing director of a division of Tarmac PLC, chairman and non-executive director of a number of manufacturing companies and treasurer of Keele University.
N J Donaldson (age 60). Nick Donaldson was appointed to the board on 18 April 2002. A barrister by profession, Nick is a partner of London Bridge Capital Limited. Nick was, until 2003, head of corporate finance at Arbuthnot Securities Limited and previously held senior investment banking positions at Robert W Baird Limited and at Credit Lyonnais Securities. He is chairman of DP Poland PLC and a director of The Fulham Shore plc.
E O'Donnell (age 43). Elaine O'Donnell was appointed to the board on 28 November 2013. A chartered accountant by profession, until recently Elaine was a corporate finance partner with EY.
As at 28 July 2014, so far as each director is aware, there is no relevant audit information of which the auditors are unaware and each director has taken all steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the auditors are aware of that information.
As at 25 July 2014, the Company's authorised share capital was £2,100,000 divided into 42,000,000 ordinary shares of 5p each nominal value ('ordinary shares'). On 25 July 2014 there were 31,860,894 (2013: 31,732,576) ordinary shares in issue. These ordinary shares are listed on the London Stock Exchange. All ordinary shares rank equally with respect to voting rights and the right to receive dividends. Shares acquired through the Company's share schemes rank pari passu with the shares in issue and have no special rights. The holders of ordinary shares are entitled to receive the Company's annual report, to attend and speak at general meetings of the Company, to appoint proxies and to exercise voting rights. There are no restrictions on transfer or limitations on the holding of any class of share and no requirements for prior approval of any transfers. The directors may refuse to register a transfer of shares if there is a failure to comply with certain requirements of the Company's articles of association. None of the shares carries any special rights with regard to control of the Company.
In accordance with the Company's articles of associations, each share (other than those held in treasury) entitles the holder to one vote at general meetings of the Company on votes taken on a poll. On a show of hands at a meeting, every member present in person or by one or more proxies and entitled to vote has one vote. Unless the directors decide otherwise, if a shareholder is given notice that he has failed to provide information required in relation to any shares pursuant to a notice under section 793 of the Companies Act 2006, that member will be unable to vote on those shares both in a general meeting and at a meeting of the shareholders of that class. If such shareholder holds more than 0.25% of the issued shares of a class (excluding treasury shares) and is in default of a section 793 notice, the directors may also state in the notice that: (i) the payment of any dividend shall be withheld; and (ii) that there can be no transfer of the shares held by such shareholder.
Subject to the provision of law, the Company may by ordinary resolution declare a dividend to be paid to the members according to their respective rights and interest, but no dividend may exceed the amount recommended by the directors. The directors may also declare and pay interim dividends. Subject to shareholder approval, the directors may pay dividends by issuing shares credited as fully paid up in lieu of cash dividends. If dividends remain unclaimed for 12 years they are forfeited and revert to the Company.
A director appointed by the board holds office only until the next annual general meeting ('AGM'). At each AGM one third of the directors will retire by rotation and be eligible for re-election. The directors to retire will be those who wish to retire and those who have been longest in office since their last appointment or re-appointment.
The rules about the appointment and replacement of directors are contained in the Company's articles of association. The Company's articles of association state that a director may be appointed by an ordinary resolution of the shareholders or by the directors, either to fill a vacancy or as an addition to the existing board but so that the total number of directors does not exceed the maximum number of directors allowed pursuant to the Company's articles of association. The Company's articles of association do not currently specify a maximum number of directors. The Company may by ordinary resolution remove a director from the board of directors.
The Company's articles of association also state that the board of directors is responsible for the management of the business of the Company and in doing so may exercise all the powers of the Company subject to the provision of relevant legislation and the Company's constitutional documentation. The powers of the directors set out in the Company's articles of association include those in relation to the issue and buy-back of shares.
Changes to the articles of association must be approved by the shareholders in accordance with the legislation in force from time to time.
As at 1 June 2014, the Company had an unexpired authority to repurchase shares up to a maximum of 4,728,153 shares. During the year no shares were purchased in the market for cancellation.
The Company does not have agreements with any director or employee that would provide compensation for loss of office or employment resulting from a takeover, except that the provisions of the Company's sharesave scheme may cause options to be exercised on a takeover.
The chairmen of the audit, the City and the remuneration and nomination committees will be available to answer questions at the annual general meeting. Separate resolutions are proposed for substantially separate issues at the meeting and the chairman of the Company will declare the number of proxy votes received both for and against each resolution.
The Company's statement on corporate governance is included in the corporate governance report on pages 14 to 17.
The Company's articles of association take account of certain provisions of the Companies Act 2006 relating to directors' conflict of interest. These provisions permit the board to consider and, if thought fit, to authorise situations where a director has an interest that conflicts, or may possibly conflict, with the interest of the Company. The board has adopted procedures for the approval of such conflicts. The board's powers to authorise conflict are operating effectively and the procedures are being followed.
Games Workshop aims to make the best fantasy miniatures in the world without adversely affecting anyone's safety or health. Our health and safety policy commits us to the following objectives:
We require all staff to promote these objectives at all times and they apply worldwide.
The number of reported minor accidents at our Nottingham site decreased in the year (29 in 2013/14 versus 40 in 2012/13). There were two RIDDOR reportable accidents in the year (causing an absence of seven days or more). The IOSH Managing Safely course and the Working Safely course have been used extensively over the past two years to educate staff in best practice for health and safety at work.
Under the Greenhouse Gas Emissions (Directors' Reports) Regulations 2013, enforced under the Companies Act 2006, we have addressed our Greenhouse Gas (GHG) reporting requirements.
We have used the Environmental Reporting Guidelines from DEFRA to identify our GHG inventory of Scope 1 (direct) and Scope 2 (indirect) global CO2 emissions. We have considered the six main GHG's and report in CO2 equivalent. Our data includes all manufacturing, office and retail sites controlled globally by Games Workshop. All calculations have used the 2013 DEFRA conversion factors.
| 2014 | |
|---|---|
| Scope 1 – tonnes CO2e | 767 |
| Scope 2 – tonnes CO2e | 4,421 |
| Total tonnes CO2e | 5,188 |
| Tonnes CO2e per sq metre | 0.082 |
| Tonnes CO2e per £000 of revenue | 0.042 |
This is the first year of reporting, in accordance with the Regulations, so there is no comparable data from previous years. The intensity ratios will provide meaningful comparisons for future results.
In 2013/14 we sent 70% of our waste by weight from our Nottingham site for re-use or recycling (2013: 65%). 30% of our waste was sent for heat recovery at the Nottingham City Council incinerator (2013: 35%).
Games Workshop will continue its policy of not recharging employees the Workplace Parking Levy (which increased by 8% in April 2014 to £362 per year for each used workplace parking space). We continue to promote our cycle to work scheme and have a very high ratio of cyclists (over 10% of employees) at our Nottingham site.
The Group's policy is to consult and discuss with employees, at meetings, matters likely to affect employees' interests. Information on matters of concern to employees is given through information bulletins and reports which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the Group's performance.
The Group operates an employee sharesave scheme as a means of further encouraging the involvement of employees in the Group's performance.
The Group's policy is to consider, for recruitment, disabled workers for those vacancies that they are able to fill. All necessary assistance with training courses is given. Once employed, a career plan is developed so as to ensure suitable opportunities for each disabled person. Arrangements are made, wherever possible, for retraining employees who become disabled, to enable them to perform work identified as appropriate to their aptitudes and abilities.
The board has noted the changes to the UK Corporate Governance Code (the 'Code') announced by the FRC in October 2011 to strengthen the principle of boardroom diversity, which was first introduced into the Code in June 2010. The Company supports the provision that boards should consider the benefits of diversity, including gender, when making appointments and is committed to ensuring diversity not just at board level, but also throughout the workforce. The board believes that business benefits from the widest range of perspectives and backgrounds. The Company's aim as regards composition of the board is that it should have a balance of attitudes and knowledge to enable each director and the board as a whole to discharge their duties effectively. The Company does not consider that diversity can be best achieved by establishing specific quotas and targets and appointments will continue to be made based on merit.
As at 1 June 2014 the workforce is comprised as follows:
| Male | Female | Total | |
|---|---|---|---|
| The board | 4 | 1 | 5 |
| Senior management | 7 | 1 | 8 |
| Total workforce | 1,482 | 271 | 1,753 |
The Group has policies that encompass a set of global sourcing principles covering fair terms of employment, human rights, health and safety, equal opportunities and good environmental practice. We seek to work with suppliers who adopt an ethical approach to human rights, working conditions and the environment in line with our own values. Our buyers are required to review supplier compliance with these policies, identify any areas of non-conformance and take action where appropriate. The Group monitors the quality and availability of all sourced components, to ensure high standards are maintained.
Employees continue to carry out fund raising events for their chosen charities. Although we have decided that we will no longer make cash donations to charities, we are fully supportive of the work our employees do.
The Group does not undertake research activities. Development activities relate to the development of new product lines. The charge to the income statement for the year in respect of development activities is detailed in note 9 to the financial statements.
The future developments for the Group are discussed in the strategic report on page 9.
After making appropriate enquiries, the directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. For this reason they continue to adopt the going concern basis in preparing the Group's and Company's financial statements.
R F Tongue Company secretary 28 July 2014
The Listing Rules of the Financial Conduct Authority require listed companies to disclose, in relation to section 1 of the UK Corporate Governance Code 2012 (the 'Code'), how they have applied its principles and whether they have complied with its provisions throughout the accounting period. The UK Corporate Governance Code can be found at www.frc.org.uk.
This statement, together with the remuneration report on pages 18 to 25, explains how the Company has applied the principles and complied with the provisions set out in the Code.
The board operates through monthly meetings which senior executives attend on a regular basis. Major strategic decisions and the approval of any significant capital expenditure are reserved for decision by the board. The board is updated about operational decisions through the monthly meetings. Terms of reference for the board committees (as set out below) are available on the Company's website.
A review of the performance of the Group's main business activities are included in the strategic review. The board presents these reviews, together with the directors' report on pages 10 to 13, to give a fair, balanced and understandable assessment of the Group's position and prospects.
The board comprises the chairman and acting CEO, the COO and three non-executive directors following the appointment of E O'Donnell during the year. It is chaired by the chairman and acting CEO, T H F Kirby. This arrangement does not comply with provision A.2.1 of the Code, which states that the roles of chairman and chief executive should not be exercised by the same person.
On 18 January 2013, the Company announced that M N Wells, the Company's CEO for five years, was stepping down from that role and that, pending the appointment of a new CEO, the chairman, T H F Kirby, would be chairman and acting CEO.
Before concluding that this interim arrangement was in the best interests of the Company and the shareholders as a whole, the board considered carefully the existing division of responsibilities between the chairman and the CEO and the likely requirements of the Company in the future, in terms of leadership, to underpin and promote its successful development. The Company's remuneration and nomination committee discussed the matter and came to the unanimous conclusion that the interim arrangement described above was appropriate.
The senior independent director is C J Myatt. The senior independent director is the lead non-executive director. His principal responsibilities include:
The three non-executive directors have a breadth of successful commercial and professional experience and are considered by the board to be independent of the Group. The Code states that the board should identify each non-executive director it considers to be independent, and the Code then lists various circumstances which may appear relevant to its determination. This includes (amongst others) if the director has served on the board for more than nine years.
At Games Workshop the board has had to confront one of these circumstances as two of the non-executive directors, C J Myatt and N J Donaldson, have served for more than nine years.
In making this assessment as to independence, the board has taken into account the personal attributes of each director in relation to the current and future needs of the board. In the opinion of the board, independence (like judgement and wisdom) is not an attribute which can be measured by reference to a checklist. It is rather an attribute which the members of the board can observe being demonstrated by a director in his actions and interactions with other members of the board as it faces the various issues which are placed before it. Independence is the absence of complacency, lazy thinking and acceptance of the status quo.
Regarding the specific Code circumstance of service of over nine years, the board's position is as follows:
The 'nine year rule' is a helpful guide to the risk of directors becoming 'stale'. The board considers this risk periodically, but has not yet found it to be an issue at Games Workshop. If it did, it would react accordingly. At present the board feels that the requirement for members of the board to have a real understanding of, and empathy with, the Games Workshop Hobby to be a point in favour of retaining the experience which the board currently has.
Based upon its assessment, which focuses on each director's attitude towards making his best contribution to the progress of the Company, the board considers that both of these non-executive directors are independent.
During the year E O'Donnell, a third non-executive director, was appointed to the board.
The board operates primarily through its monthly meetings and is responsible for leading and controlling the Group and monitoring executive management. It meets at least nine times a year. In 2013/14 the board had 10 scheduled meetings, each of which was attended by all members of the board.
All directors bring an independent judgement to bear on issues of strategy, performance, resources (including key appointments) and standards of conduct. The board considers that it has been supplied with sufficient timely and accurate information to enable it to discharge its duties.
All members of the board have access to the services and advice of the Company secretary. There is a procedure for directors to take independent professional advice at the Company's expense where relevant to the execution of their duties. The executive directors attach great importance to ensuring that the non-executive directors are provided with accurate, timely and clear information on the Group. In addition, the non-executive directors are actively encouraged to update continually their knowledge of and familiarity with the Group and the issues affecting it, so as to enable them to fulfil effectively their roles on both the board and its committees.
The board has established a process for the ongoing assessment of its own performance and that of its committees. The board is currently undergoing an internal review process to determine and define the role that the board performs. An internal assessment will then be undertaken to review the board's performance against those objectives in 2014/15. This will be an iterative process which will inform the board's development agenda on a regular basis.
The board has three principal committees, all with written terms of reference which are published on the Company's website and which are available on application to the Company secretary at the Company's registered office. The Company secretary serves as secretary to all three committees. The chairmen of the audit, the City and the remuneration and nomination committees will be available to answer questions at the Company's annual general meeting.
The audit committee comprises the three non-executive directors under the chairmanship of C J Myatt, who is a chartered management accountant and has significant relevant financial and accounting knowledge and experience. The audit committee's terms of reference include monitoring the appropriateness of accounting policies, financial reporting, internal control and risk assessment and keeping under review the scope, results and effectiveness of the external and internal audits and the independence of the Company's external auditors.
The committee had three meetings during the year which were attended by all members of the committee. It has an agenda linked to the events in the Group's financial calendar. The external auditors met with the committee without management being present and the chairman and members of the committee have direct contact with the audit partner as required. During the year the committee:
The committee received, reviewed and challenged reports from management and the external auditors setting out the significant issues in relation to the 2014 annual report. These issues were discussed and challenged with management during the year. They were also discussed with the auditors at the time the committee reviewed and agreed the auditors' Group audit plan and at the conclusion of the audit of the financial statements. The issues that were discussed were:
The committee reviews the independence of the external auditors by assessing the arrangements for the day to day management of the audit relationship as well as reviewing the auditors' report which describes their procedures for identifying and reporting conflicts of interest. To maintain the auditors' independence, the committee has also established the policy that the primary role of the external auditors is to perform services directly related to their audit responsibilities. The Group uses other advisers for taxation advice and other services. The audit fees are disclosed in note 9.
The committee calls upon the external auditors, the internal auditors and the executive directors to attend formal meetings as required. These meetings are held at least three times a year. The external and internal auditors are given the opportunity to raise any matters or concerns they may have in the absence of the executive directors at separate meetings with the audit committee or its chairman.
The audit committee considers the reappointment of the external auditors each year, as well as remuneration and other terms of engagement. PricewaterhouseCoopers LLP have acted as external auditors of the Group since the 2005 year end, which was the last time the external audit process was put out to tender. There are no contractual obligations which restrict the choice of external auditors. The committee will next tender the position for external auditors in the Autumn of 2014.
The City committee comprises the non-executive directors and is chaired by N J Donaldson. It normally meets at least twice a year and is responsible for corporate governance, investor relations, City presentations and liaison with City advisers. The City committee held two meetings during the year, each of which was attended by all members of the committee.
The remuneration and nomination committee comprises the non-executive directors and is chaired by N J Donaldson. It normally meets at least twice a year and is responsible for making recommendations to the board on remuneration policy for all executive directors (including determining specific remuneration packages, terms of employment and performance incentive arrangements). It is also responsible for nominating, for approval by the board, candidates for appointment to the board. The procedures and guidelines used by the remuneration and nomination committee in determining remuneration are outlined in the separate remuneration report. The remuneration and nomination committee held three meetings in the year, which were attended by all members of the committee. The committee meets without the executive directors at least annually to appraise the executive directors' performance.
On 28 November 2013, E O'Donnell was appointed to the board as a non-executive director, effective from that date. Following the Company's recruitment procedures, discussed elsewhere in this document, the board determined that E O'Donnell would be a suitable and valuable addition to the board. Open advertising was used in respect of this appointment but an external search consultancy was not considered appropriate.
Newly appointed directors are given training appropriate to the level of their previous experience. Non-executive directors meet regularly with members of the executive and other staff within the Group. In addition, site visits ensure that the non-executive directors gain first hand experience of developments within the Group.
Any director appointed during the year is required, under the provisions of the Company's articles of association, to retire and seek election by the shareholders at the next annual general meeting.
The directors recognise that they have overall responsibility for ensuring that the Group maintains a sound system of internal control to safeguard shareholders' investment and the Group's assets, and for reviewing its effectiveness. The system is designed to manage risks that may prevent the Group from achieving its business objectives, rather than to eliminate these risks. However, even the most effective system can provide only reasonable, and not absolute, assurance against material misstatement or loss.
The directors have established an ongoing process for identifying, evaluating and managing the significant risks faced by the Group, which has been in place from the start of the year until the date of approval of this report. This process is regularly reviewed by the board throughout the period in accordance with the document 'Internal Control: Revised Guidance for Directors on the Combined Code' (the revised Turnbull guidance).
The effectiveness of the Group's system of internal control is continuously reviewed by the board. The review covers all material controls, including financial, operational and compliance controls and risk management. The monitoring of control procedures is achieved through regular review by the COO, reporting to the board. This review process considers whether significant risks have been identified, evaluated and controlled and whether any significant weaknesses are promptly remedied and indicate a need for more extensive monitoring. Regular reporting by senior management ensures that, as far as possible, the controls and safeguards are being operated appropriately. This process is considered by the audit committee, alongside the external auditors' reports.
The Group has continued its programme of internal audit reviews during the year. The audit committee agrees an annual internal audit plan, focusing on business specific issues. Actions agreed by management, in response to recommendations made, are followed up.
The board, with advice from the audit committee, has completed its annual review of the system of internal control in accordance with the guidance as set out in the revised Turnbull guidance, and is satisfied that it has acted appropriately and in accordance with that guidance. During the course of its review of the system of internal control, the board has not identified nor been advised of any failings or weaknesses which it has determined to be significant. Therefore a confirmation in respect of necessary actions is not considered appropriate.
The Company attaches great importance to its annual general meeting, which it considers to be the primary platform of communication between the Company and its shareholders. On a continuing basis the Company encourages two way communication with its institutional and private shareholders and responds promptly to queries received verbally, in writing or directly through its investor relations website investor.games-workshop.com.
The chairman and acting CEO and the COO are available to meet with shareholders in Nottingham to discuss any issues which shareholders may have. Any issues arising at such meetings are reported to and considered by the board.
The Company's policy on executive remuneration and details of the executive directors' salaries, profit share and pensions, and fees for the non-executive directors are set out in the board report on remuneration on pages 18 to 25.
With the exception of provision A.2.1, the Company has complied with all of the provisions set out in section 1 of the Code.
By order of the board
R F Tongue Company secretary 28 July 2014
The remuneration report for the year ended 1 June 2014 has been prepared on behalf of the board by the remuneration committee in accordance with the requirements of the Companies Act 2006 and Schedule 8 of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, as amended, and meets the relevant requirements of the Listing Rules of the Financial Conduct Authority and the UK Corporate Governance Code.
The remuneration report is split into two parts:
As described by the chairman and acting CEO earlier in this annual report, the 2013/14 financial year has been a year of significant change for the Company.
The committee undertook a review of the executive directors' base salaries at the start of the 2013/14 financial year, taking into account general economic and market conditions. At that time the base annual salary of T H F Kirby was increased from £350,000 to £450,000 for so long as he maintained the joint roles of chairman and acting CEO; the base annual salary of T H F Kirby of £350,000 had remained unchanged since 2005. The base annual salary of K D Rountree was increased at the start of the 2013/14 financial year from £210,000 to £240,000 (before salary sacrifice arrangements for pension contributions) in view of his increased responsibilities.
The proposal for base salaries payable to the executive directors in the year ahead is for T H F Kirby, whilst he maintains his joint roles of chairman and acting CEO, to continue to be remunerated at the rate of £450,000 per annum, and for K D Rountree to continue to be remunerated at the rate of £240,000 per annum.
The committee also undertook a review of the consistency of remuneration policy across the Group and is satisfied that an appropriate reward structure exists below board level to recognise and retain the Group's top talent, particularly while the Group goes through a period of change management with the implementation of new business systems to support future growth.
N J Donaldson Chairman Remuneration and nomination committee 28 July 2014
This part of the report sets out the directors' remuneration policy to apply from the AGM to be held on 17 September 2014 and which will be subject to a binding vote by shareholders during that meeting. The policy, once approved, will apply until the AGM in 2017, unless revised by a vote of shareholders before that time.
Games Workshop is a most individual business. We have a simple strategy: we make the best fantasy miniatures in the world and sell them globally at a profit and we intend to do this forever. We embrace long-term thinking, and hence we do not operate bonus schemes of the usual kind or incentive schemes as we believe they can sow the seeds of short-termism. We seek to pay the right remuneration for the job – our real 'bonus' is the opportunity to work at Games Workshop and grow the business.
In terms of senior management, Games Workshop is in a phase of transition. T H F Kirby, our chairman for 16 years, has been chairman and acting CEO since M N Wells left the business in January 2013. We believe he is being compensated appropriately for his additional responsibilities.
The aim of the Group's remuneration policy is to reward fairly, attract, motivate and retain high quality management. The total size of the remuneration package for executive directors is judged by comparison with the remuneration packages of similar companies, having regard to:
Non-executive directors are remunerated with fees in line with market rates. They do not receive any pension or other benefits, other than the reimbursement of reasonable expenses, and they do not participate in any bonus or share schemes.
| Purpose and link to | ||||
|---|---|---|---|---|
| Component | strategy | Operation | Maximum potential value | Performance metrics |
| Salary | Core element of fixed remuneration, reflecting the size and scope of the role. |
Reviewed annually and usually fixed for 12 months from 1 June. There is no entitlement to an annual |
There is no prescribed maximum annual increase in salary. |
Not applicable, although the individual's contribution and overall performance is one of the |
| Purpose is to recruit and | increase. | Salaries are reviewed taking into consideration |
considerations in determining the level of |
|
| retain directors of the calibre required for the business. |
Takes into consideration the director's role and attitudes. |
salary increases across the Group. |
any salary increase. | |
| Takes into account prevailing market conditions and is aligned with staff pay reviews. |
Increases out of line with the workforce are carefully considered but may be awarded taking all relevant factors into account, for |
|||
| Externally benchmarked by independent remuneration consultants from time to time against companies of a similar size and complexity. |
example, increases in scope and responsibility or salary falling significantly below market positioning. |
| Purpose and link to | ||||
|---|---|---|---|---|
| Component | strategy | Operation | Maximum potential value | Performance metrics |
| Benefits | Ensures the overall package is competitive. |
T H F Kirby receives fuel and private medical insurance. The executive directors |
Set at a level which the committee considers appropriate against the |
Not applicable. |
| Purpose is to recruit and retain directors of the calibre required for the |
both receive life assurance cover. |
market and provides a sufficient level of benefit based on individual |
||
| business. | The sharesave scheme is a HMRC approved monthly |
circumstances. | ||
| Participation in the | savings scheme facilitating | Sharesave contributions | ||
| sharesave scheme creates | the purchase of shares at a | are as permitted in | ||
| staff alignment with the | discount. | accordance with the | ||
| Group and promotes a | relevant tax legislation. | |||
| sense of ownership. | Where appropriate other benefits may be offered including allowances for relocation and other expatriate benefits. |
|||
| Pension | To provide cost effective retirement benefits. |
Participation in a group personal pension scheme (or other such plan as may be deemed appropriate). |
Up to 10% of salary. | Not applicable. |
| Profit share | Rewards performance | Targets are set annually and | Maximum potential value | The financial target is |
| against annual targets linked to the achievement of sustainable profit growth. |
any pay out is determined by the committee after the period end, based on performance against those |
is £1,000 per person per year. |
based on growth in core business operating profit from the prior year. |
|
| targets. | Payments range from nil to £1,000 dependent on the |
|||
| All staff participate equally in the scheme. Awards are payable in cash. |
level of increase in operating profit from the prior year. |
|||
| Non-executive directors' fees |
Sole element of non executive director remuneration set at a level that reflects market conditions. |
Fees are reviewed annually taking into account time commitment, responsibilities and fees paid by comparable companies. |
Fees are based on the level of fees paid to non executive directors serving on boards of listed companies of a similar size and complexity. |
Not applicable. |
| Additional fees are paid to the senior independent director to reflect additional responsibilities. |
||||
| Non-executive directors are entitled to claim reasonable out of pocket expenses in connection with the performance of their duties. |
The performance measures selected are aligned with the Company's strategy and business objectives. For the profit share, this is based on growth in core business operating profit.
The charts below show the relative split of remuneration between fixed pay (base salary, benefits and pension) and variable pay (profit share) for each executive director on the basis of minimum remuneration, remuneration receivable for performance in line with the Company's expectations and maximum remuneration.
The Company aims to provide a remuneration package that is market competitive, complies with any statutory requirements and is applied fairly and equitably across the wider employee population. Where remuneration is not determined by statutory regulation, the Company operates the same core principles as it does for the executive directors, namely;
When setting the remuneration package for a new executive director, the committee would seek to apply the same principles and implement the policy framework as set out above.
Base salary will be set at a level appropriate to the role and the experience of the director being appointed. Benefits, pension and profit share will be in line with the stated policy.
Non-executive director fees will be set at a competitive market level, reflecting the skills, knowledge, experience, responsibilities and time commitment.
| Executive | Date of contract | Unexpired term of contract | Notice period |
|---|---|---|---|
| T H F Kirby | 4 June 2009 | Rolling contract | 12 months |
| K D Rountree | 25 February 2009 | Rolling contract | 12 months |
| Non-executive | Date of appointment | Date of last re-election at an AGM | Notice period |
| C J Myatt | 18 April 1996 | 18 September 2013 | 6 months |
| N J Donaldson | 18 April 2002 | 18 September 2013 | 6 months |
| E O'Donnell* | 28 November 2013 | n/a | 6 months |
| * Elaine O'Donnell will stand for election at the 2014 AGM |
In accordance with best practice and as set out in the Code, notice periods in new service contracts for executive directors are set at one year.
Non-executive director appointments are made through letters of appointment for a one year term, subject to election and re-election by the Company's shareholders in accordance with the Company's articles and the Code.
If an executive director's employment is to be terminated, the committee's policy in respect of the service agreement (in the absence of a breach of the service agreement by the director) is to agree a termination payment based on the value of base salary and contractual pension and other benefits that would have accrued to the director during the contractual notice period. Depending on the particular circumstances, a director may work the notice period, be placed on garden leave for some or all of the notice period or receive a payment in lieu of notice in accordance with the service agreement. The committee will consider mitigation to reduce the termination payment to a leaving director when appropriate to do so, having regard to the specific circumstances.
Non-executive directors' letters of appointment may be terminated without compensation but with six months' notice.
The executive directors may accept one external appointment with the prior approval of the board from which any fees may be retained. At present, neither of the executive directors holds any outside directorships.
The Group aims to provide a remuneration package to all employees that is market competitive, complies with any statutory requirements and is applied fairly and equitably across the employee population, taking into account local employment market conditions.
All employees receive a base salary, may join a pension scheme, when eligible, or have equivalent state provided pension benefits. Employees are also eligible to participate in the sharesave scheme when an invitation is made to do so.
The committee takes into account the general basic salary increase being offered to employees elsewhere in the Group when annually reviewing the salary increase and remuneration of the executive directors. Employees are not consulted in respect of board remuneration.
The committee takes into account shareholder feedback received on remuneration matters, including comments in relation to the AGM plus any additional comments in correspondence direct with the Company. The committee would seek to engage directly with major shareholders should any material changes be made to the policy.
The tables below set out in a single figure the total remuneration, including each element, for each person who served as a director of the Company during the financial years ended 2 June 2013 and 1 June 2014.
| Pension related | ||||||
|---|---|---|---|---|---|---|
| Salary/fees | Taxable benefits | Profit share | Sharesave | benefits | Total | |
| £000 | £000 | £000 | £000 | £000 | £000 | |
| T H F Kirby | 450 | 4 | - | 12 | 45 | 511 |
| K D Rountree | 229 | - | - | 2 | 28 | 259 |
| C J Myatt | 60 | - | - | - | - | 60 |
| N J Donaldson | 52 | - | - | - | - | 52 |
| E O'Donnell* | 21 | - | - | - | - | 21 |
| Total | 812 | 4 | - | 14 | 73 | 903 |
*appointed 28 November 2013
Year ended 2 June 2013
| Taxable | Compensation | Pension related | |||||
|---|---|---|---|---|---|---|---|
| Salary/fees | benefits | for loss of office | Profit share | Sharesave | benefits | Total | |
| £000 | £000 | £000 | £000 | £000 | £000 | £000 | |
| T H F Kirby | 352 | 5 | - | 1 | 2 | 35 | 395 |
| K D Rountree | 202 | 11 | - | 1 | 2 | 24 | 240 |
| M N Wells* | 177 | 2 | 569 | - | - | 26 | 774 |
| C J Myatt | 50 | - | - | - | - | - | 50 |
| N J Donaldson | 42 | - | - | - | - | - | 42 |
| Total | 823 | 18 | 569 | 2 | 4 | 85 | 1,501 |
* resigned 31 January 2013
The figures in the single figure tables above are derived as follows:
Salary/fees – the amount of salary/fees received in the year, after any salary sacrifice arrangements for pension contributions.
Taxable benefits – the taxable value of benefits received during the year. These include fuel and private medical insurance.
Profit share – the amount of profit share earned in the year.
Sharesave – the value of the sharesave options granted is based on the fair value of the options at grant. On exercise the value is based on the gain made between the option price and the market value of the shares on the date of exercise.
Pension related benefits – the cash value of pension contributions received by the executive directors. This includes the Company's contribution into the group personal pension scheme (in the case of K D Rountree) and into T H F Kirby's self invested personal pension plan.
In addition, Mrs K Kirby (Lathbury) received £117,461 (2013: £73,620) during the year from the Group for her work as interim head of IT.
During 2013/14 there were no payments made for loss of office. There were also no payments made to past directors (2013: £nil).
| M N Wells | T H F Kirby | ||||||
|---|---|---|---|---|---|---|---|
| 2010 | 2011 | 2012 | 2013* | 2013 | 2014 | ||
| £000 | £000 | £000 | £000 | £000 | £000 | ||
| Total remuneration | 282 | 309 | 319 | 774 | 132 | 511 | |
| % of maximum profit share paid | 100 | - | 48 | - | 54 | - |
*M N Wells resigned on 31 January 2013 and so all of his remuneration for 2012/13, including the payment for compensation for loss of office is included in this table.
The table below shows how the percentage change in the CEO's salary in 2013 and 2014 compares with the percentage change in the average salary of all employees within the Group. The committee has selected the Group entire staff population (excluding the CEO) as these represent the most appropriate comparator.
| CEO | Wider workforce | |
|---|---|---|
| Salary | +28.5% | +1.7% |
The following table sets out the percentage change in dividends, pre-exceptional profit attributable to owners and employee remuneration for the year 1 June 2014, compared to the year ended 2 June 2013.
| 2013 | 2014 | % change | |
|---|---|---|---|
| Total staff costs | 51,002 | 48,614 | -4.7 |
| Pre-exceptional profit attributable to owners | 16,318 | 11,487 | -29.6 |
| Dividends | 18,404 | - | n/a |
At the last AGM, votes on the remuneration report were cast as follows:
| Votes | |||||
|---|---|---|---|---|---|
| Votes for | % of vote | Votes against | % of vote | withheld | |
| To approve the remuneration report | 13,497,220 | 71.9% | 3,950,793 | 21.1% | 1,315,546 |
A summary of the remuneration arrangements in 2013/14 and how the policy will be applied during 2014/15 is set out below:
In May 2013 the committee undertook a benchmarking exercise performed by external remuneration advisers. This reviewed the salaries of the executive and non-executive directors in order to assess how they compared with prevailing market levels of remuneration. This review resulted in the increases in salary shown above as it was highlighted that executive and non-executive directors' salaries were below the market average for companies of a similar size and complexity as the Group.
The remuneration policy for the non-executive directors is determined by the board and is reviewed every year. Fees were externally benchmarked, as discussed above, taking account of the duties and responsibilities placed on the non-executive directors. The nonexecutive directors do not participate in the Group's sharesave scheme or profit share scheme nor do they receive any benefits or pension contributions.
The maximum profit share that is payable is £1,000 per person per year. The performance targets are based upon operating profit growth in the core business.
A further award of options will be made under the sharesave scheme during the year on the same basis as previous years.
The committee is appointed by the board and membership comprises N J Donaldson (chairman), C J Myatt and E O'Donnell (from 28 November 2013). The committee is responsible for setting the remuneration packages of the executive directors as well as approving their service contracts. The terms of reference are available on the investor relations website.
In May 2013 the committee was assisted in its work by Innecto, a remuneration consultancy which was appointed by the Company in consultation with the committee. The committee assessed whether Innecto was independent in the provision of its advice and concluded that it was independent. The amount paid to Innecto during the 2013/14 year for their advice was £5,000.
The directors' interests (including their families) in the shares of the Company were as follows:
| As at | As at | |||
|---|---|---|---|---|
| 1 June 2014 | 2 June 2013 | |||
| ordinary shares | ordinary shares | |||
| of 5p each | of 5p each | |||
| Non | Non | |||
| Beneficial | beneficial | Beneficial | beneficial | |
| T H F Kirby | 2,108,650 | 25,385 | 2,106,009 | 25,385 |
| K D Rountree | 12,274 | - | 12,028 | - |
| C J Myatt | 66,500 | - | 66,500 | - |
| N J Donaldson | 20,000 | - | 20,000 | - |
| E O'Donnell | - | - | - | - |
Share options granted to the directors under the sharesave scheme were as follows:
| Number as at | Exercise dates | Exercise | ||||
|---|---|---|---|---|---|---|
| At 2 June 2013 | Exercised | 1 June 2014 | Commencement | Expiry | price | |
| K D Rountree | 2,513 | - | 2,513 | Nov-14 | Apr-15 | 358p |
| T H F Kirby | 2,641 | (2,641) | - | Nov-13 | Apr-14 | 340.7p |
The options above were granted under the Games Workshop Group PLC 2005 Savings-Related Share Option Scheme which grants options at a 20% discount on the market price at grant. Participants save a fixed amount monthly for three years in order to fund the exercise of the option. At exercise an individual may choose to exercise their option or have their savings repaid to them. This scheme is open to all eligible employees and directors who satisfy a service qualification of at least three months. There are no performance targets associated with these options.
There were no other movements in directors' share options during the year. No other directors have been granted share options in the shares of the Company.
On 4 July 2014, K D Rountree acquired 396 of the Company's shares under the Company's dividend reinvestment plan. This is the only movement in directors' interests in shares of the Company between 1 June 2014 and the date of this report.
The graph below represents the comparative total shareholder return performance of the Company against that of the index of the FTSE small cap companies during the previous five years. The index of the FTSE small cap companies has been used because the constituents of this index most appropriately reflect the Company's size when compared to alternative indices.
On behalf of the board
N J Donaldson Chairman Remuneration and nomination committee 28 July 2014
The directors are responsible for preparing the annual report, the remuneration report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have prepared the Group and parent Company financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. Under company law, the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group for that period.
In preparing these financial statements, the directors are required to:
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group and Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and Group and enable them to ensure that the financial statements and the remuneration report comply with the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
The directors consider that the annual report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group's performance, business model and strategy.
Each of the directors, whose names and functions are listed on page 27, confirms that, to the best of his/her knowledge:
R F Tongue Company secretary 28 July 2014
T H F Kirby, chairman and acting chief executive officer K D Rountree, chief operating officer C J Myatt, senior non-executive director N J Donaldson, non-executive director E O'Donnell, non-executive director
R F Tongue
Registered office Willow Road, Lenton, Nottingham, NG7 2WS
2670969
Financial advisers and stockbrokers Peel Hunt LLP, Moor House, 120 London Wall, London, EC2Y 5ET
Principal bankers Bank of Scotland, 2 nd Floor, 125 Colmore Row, Birmingham, B3 3SF
PricewaterhouseCoopers LLP, Donington Court, Pegasus Business Park, Castle Donington, DE74 2UZ
Equiniti Limited, Aspect House, Spencer Road, Lancing, BN99 6DA
Browne Jacobson, Victoria Square House, Victoria Square, Birmingham, B2 4BU
In our opinion:
This opinion is to be read in the context of what we say in the remainder of this report.
The group financial statements and company financial statements (the 'financial statements'), which are prepared by Games Workshop Group PLC, comprise:
The financial reporting framework that has been applied in their preparation is applicable law and IFRSs as adopted by the European Union and, as regards the Company financial statements, as applied in accordance with the provisions of the Companies Act 2006.
Certain disclosures required by the financial reporting framework have been presented elsewhere in the Annual Report, rather than in the notes to the financial statements. These are cross-referenced from the financial statements and are identified as audited.
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) ('ISAs (UK & Ireland)'). An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of:
In addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.
We set certain thresholds for materiality. These helped us to determine the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the group financial statements as a whole to be £850,000. This represents approximately 5% of operating profit before exceptional items. We consider this to be the key financial benchmark of the Group.
We agreed with the audit committee that we would report to them misstatements identified during our audit above £50,000 as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.
The Group is a vertically integrated business and the group financial statements are a consolidation of 51 reporting units, comprising the Group's sales, manufacturing and distribution businesses and centralised functions.
In establishing the overall approach to the group audit, we determined the type of work that needed to be performed at the reporting units, and at the Group level, to give us the evidence we needed for our opinion on the consolidated financial statements as whole.
In preparing the financial statements, the directors made a number of subjective judgements, for example in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. We primarily focused our work in these areas by assessing the directors' judgements against available evidence, forming our own judgements, and evaluating the disclosures in the financial statements.
In our audit, we tested and examined information, using sampling and other auditing techniques, to the extent we considered necessary to provide a reasonable basis for us to draw conclusions. We obtained audit evidence through testing the effectiveness of controls, substantive procedures or a combination of both.
We considered the following areas to be those that required particular focus in the current year. This is not a complete list of all risks or areas of focus identified by our audit. We discussed these areas of focus with the audit committee. Their report on those matters that they considered to be significant issues in relation to the financial statements is set out on page 16.
| Area of focus | How the scope of our audit addressed the area of focus |
|---|---|
| Capitalisation of software and development costs | • We tested capitalised product development and software costs |
| We focused on this area due to the significant level of costs which | by agreeing them to source documentation, including invoices and |
| are capitalised in respect of both product development and | timesheets. |
| computer software. There is a risk that such costs should not have | • We obtained the latest forecasts in respect of projects to |
| been capitalised. | confirm recoverability of the capitalised costs. |
| Further, there is a risk that costs that have been capitalised are | • We evaluated management's assessment of useful economic |
| not supported by the future cash inflows expected to be | lives. |
| generated. | • We assessed future sales forecasts by evaluating historic |
| accuracy and applying that accuracy in sensitivity analysis. | |
| Classification of expenditure as exceptional | • We agreed items of expenditure classified as exceptional to |
| We focused on this area because the decision to classify items of | supporting documentation to confirm that they were incurred in |
| expenditure as exceptional is inherently judgemental and is | connection with the reorganisation. |
| considered material in the context of the Group's financial | • We considered the appropriate classification as either |
| statements due to the presentation of underlying and non | exceptional or non-exceptional based on the accounting policy set |
| underlying results on the face of the group income statement. | out in note 2 to the financial statements. |
| Tax implications of the continental european reorganisation | • We reviewed the underlying contracts to confirm the |
| We focused on this area as non-compete payments for trade | appropriateness of the payments made. |
| (third party) sales made between reporting units in the european | • We tested the recognition of the deferred tax position through |
| territory, result in a deferred tax position on consolidation. | agreement of the appropriate accounting treatment of payments |
| made in the underlying reporting units. | |
| • We agreed the rates used in the calculation of deferred tax to | |
| the underlying tax rates enacted in the relevant territories. | |
| Inventory valuation | • We tested that the provision for obsolete inventory held is |
| The Group holds significant inventory. We focused on this area | calculated in accordance with the Group policy. |
| because of the judgement in determining the inventory provision | • We tested the future stock sales forecasts, by understanding the |
| and the inherent complexity in the elimination of intergroup profit | process by which they were drawn up and how they were |
| held in inventory. | challenged and stress-tested by management. |
| • We tested the assumptions around future sales forecasts by | |
| assessing historic forecast accuracy and we tested the integrity of | |
| the underlying calculations. | |
| • We considered historic levels of inventory write downs and the | |
| actual utilisation of previous provisions. | |
| • We tested that the internally generated profit which results | |
| from movement of inventory within the group has been | |
| appropriately eliminated on consolidation. | |
| Fraud in revenue recognition | • We evaluated the relevant IT systems and internal controls |
| ISAs (UK & Ireland) presume there is a risk of fraud in revenue | surrounding the recognition of revenue. |
| recognition because of the pressure management may feel to | • We tested the reconciliations between the revenue systems |
| achieve planned results, as well as the significance of reported | used by the Group and its financial ledgers and journal entries |
| revenue in the context of the financial statements. | posted to revenue accounts to identify unusual or irregular items. |
| • We agreed revenue transactions to cash receipts or other | |
| supporting documentation and assessed that revenue was | |
| recognised in line with the revenue recognition policies detailed in | |
| note 2 of the financial statements. |
| Fraud due to management override of internal controls • We assessed the overall control environment of the Group, ISAs (UK & Ireland) require that we consider this risk as a result of including the arrangements for staff to highlight inappropriate management's ability to override the internal controls in place in actions. the Group. • We examined the significant accounting estimates and judgements relevant to the financial statements for evidence of bias by the directors that may represent a risk of material misstatement or fraud. • In addition, we tested manual journal entries based on certain risk criteria, including size and nature. |
|---|
Under the Listing Rules we are required to review the directors' statement, set out on page 13, in relation to going concern. We have nothing to report having performed our review.
As noted in the directors' statement, the directors have concluded that it is appropriate to prepare the financial statements using the going concern basis of accounting. The going concern basis presumes that the Group and Company have adequate resources to remain in operation, and that the directors intend them to do so, for at least one year from the date the financial statements were signed. As part of our audit we have concluded that the directors' use of the going concern basis is appropriate.
However, because not all future events or conditions can be predicted, these statements are not a guarantee as to the Group's and Company's ability to continue as a going concern.
In our opinion:
Adequacy of accounting records and information and explanations received
Under the Companies Act 2006 we are required to report to you if, in our opinion:
We have no exceptions to report arising from this responsibility.
Under the Companies Act 2006 we are required to report to you if, in our opinion, certain disclosures of directors' remuneration specified by law are not made. We have no exceptions to report arising from this responsibility.
Under the Companies Act 2006 we are required to report to you if, in our opinion, a corporate governance statement has not been prepared by the parent company. We have no exceptions to report arising from this responsibility. Under the Listing Rules we are required to review the part of the corporate governance report relating to the Company's compliance with nine provisions of the UK Corporate Governance Code (the 'Code'). We have nothing to report having performed our review.
On page 26 of the annual report, as required by the Code provision C.1.1, the directors state that they consider the annual report taken as a whole to be fair, balanced and understandable and provides the information necessary for members to assess the Group's and Company's performance, business model and strategy. On page 16, as required by C.3.8 of the Code, the audit committee has set out the significant issues that it considered in relation to the financial statements, and how they were addressed. Under ISAs (UK & Ireland) we are required to report to you if, in our opinion:
We have no exceptions to report arising from this responsibility.
Under ISAs (UK & Ireland) we are required to report to you if, in our opinion, information in the annual report is:
We have no exceptions to report arising from this responsibility.
Our responsibilities and those of the directors
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view.
Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and ISAs (UK & Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.
This report, including the opinions, has been prepared for and only for the Company's members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
for and on behalf of PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors East Midlands 28 July 2014
| Total | Restated** | ||||
|---|---|---|---|---|---|
| Pre-exceptional | Exceptional | Year ended | Year ended | ||
| items | items* | 1 June 2014 | 2 June 2013 | ||
| Notes | £000 | £000 | £000 | £000 | |
| Revenue | 3 | 123,501 | - | 123,501 | 134,597 |
| Cost of sales | (36,766) | - | (36,766) | (36,772) | |
| Gross profit | 86,735 | - | 86,735 | 97,825 | |
| Operating expenses | 4,5 | (71,380) | (4,500) | (75,880) | (77,596) |
| Other operating income - royalties receivable | 1,442 | - | 1,442 | 1,025 | |
| Operating profit | 3 | 16,797 | (4,500) | 12,297 | 21,254 |
| Finance income | 7 | 106 | - | 106 | 176 |
| Finance costs | 8 | (7) | - | (7) | (35) |
| Profit before taxation | 9 | 16,896 | (4,500) | 12,396 | 21,395 |
| Income tax expense | 10 | (5,409) | 1,020 | (4,389) | (5,077) |
| Profit attributable to owners of the parent | 28 | 11,487 | (3,480) | 8,007 | 16,318 |
Earnings per share for profit attributable to the owners of the parent during the period (expressed in pence per share):
| Notes | |||
|---|---|---|---|
| Basic earnings per ordinary share | 12 | 25.2p | 51.5p |
| Diluted earnings per ordinary share | 12 | 25.1p | 51.2p |
| Basic earnings per ordinary share – pre-exceptional items | 12 | 36.1p | 51.5p |
| Diluted earnings per ordinary share – pre-exceptional items | 12 | 36.0p | 51.2p |
| Group | Company | ||||
|---|---|---|---|---|---|
| Year ended | Year ended | Year ended | Year ended | ||
| 1 June 2014 | 2 June 2013 | 1 June 2014 | 2 June 2013 | ||
| £000 | £000 | £000 | £000 | ||
| Profit/(loss) attributable to owners of the parent | 8,007 | 16,318 | (1,798) | 17,050 | |
| Other comprehensive income | |||||
| Items that may be reclassified to profit or loss | |||||
| Exchange differences on translation of foreign operations | (1,233) | 445 | - | - | |
| Other comprehensive (expense)/income for the period | (1,233) | 445 | - | - | |
| Total comprehensive income/(expense) attributable to owners of | |||||
| the parent | 6,774 | 16,763 | (1,798) | 17,050 |
As permitted by section 408 of the Companies Act 2006, the Company's income statement has not been included in these financial statements.
The notes on pages 36 to 59 are an integral part of these financial statements.
* See note 5 for a description of the exceptional item. There were no exceptional items in the prior year.
**Prior periods have been restated to reflect a change in the classification of translator costs within the income statement with effect from 3 June 2012 (see note 11).
| Group | Company | ||||
|---|---|---|---|---|---|
| 1 June 2014 | 2 June 2013 | 1 June 2014 | 2 June 2013 | ||
| Notes | £000 | £000 | £000 | £000 | |
| Non-current assets | |||||
| Goodwill | 14 | 1,433 | 1,433 | - | - |
| Other intangible assets | 15 | 8,683 | 8,033 | - | - |
| Property, plant and equipment | 16 | 21,027 | 20,604 | - | - |
| Investments in subsidiaries | 17 | - | - | 30,584 | 30,584 |
| Trade and other receivables | 20 | 1,408 | 1,638 | 3,900 | 3,900 |
| Deferred tax assets | 18 | 4,715 | 7,221 | 6 | 5 |
| 37,266 | 38,929 | 34,490 | 34,489 | ||
| Current assets | |||||
| Inventories | 19 | 8,035 | 8,170 | - | - |
| Trade and other receivables | 20 | 9,145 | 10,864 | 313 | 1,142 |
| Current tax assets | 636 | 524 | - | - | |
| Cash and cash equivalents | 21 | 17,550 | 13,931 | 266 | 5,727 |
| 35,366 | 33,489 | 579 | 6,869 | ||
| Total assets | 72,632 | 72,418 | 35,069 | 41,358 | |
| Current liabilities | |||||
| Trade and other payables | 23 | (12,765) | (19,637) | (583) | (5,801) |
| Current tax liabilities | (587) | (2,863) | - | - | |
| Provisions | 25 | (3,009) | (946) | (10) | (9) |
| (16,361) | (23,446) | (593) | (5,810) | ||
| Net current assets/(liabilities) | 19,005 | 10,043 | (14) | 1,059 | |
| Non-current liabilities | |||||
| Other non-current liabilities | 24 | (360) | (360) | - | - |
| Provisions | 25 | (517) | (758) | - | - |
| (877) | (1,118) | - | - | ||
| Net assets | 55,394 | 47,854 | 34,476 | 35,548 | |
| Capital and reserves | |||||
| Called up share capital | 26 | 1,593 | 1,586 | 1,593 | 1,586 |
| Share premium account | 26 | 9,490 | 9,059 | 9,490 | 9,059 |
| Other reserves | 27 | 1,655 | 2,888 | 101 | 101 |
| Retained earnings | 28 | 42,656 | 34,321 | 23,292 | 24,802 |
| Total equity | 55,394 | 47,854 | 34,476 | 35,548 |
The notes on pages 36 to 59 are an integral part of these financial statements.
The financial statements on pages 32 to 59 were approved by the board of directors on 28 July 2014 and were signed on its behalf by:
T H F Kirby, Director
K D Rountree, Director
Registered number 2670969
| Share | Retained | ||||
|---|---|---|---|---|---|
| Called up | premium | Other reserves | earnings | Total | |
| share capital | account | (note 27) | (note 28) | equity | |
| £000 | £000 | £000 | £000 | £000 | |
| At 3 June 2012 and 4 June 2012 | 1,579 | 8,737 | 2,443 | 35,848 | 48,607 |
| Profit for the year to 2 June 2013 | - | - | - | 16,318 | 16,318 |
| Exchange differences on translation of foreign operations | - | - | 445 | - | 445 |
| Total comprehensive income for the period | - | - | 445 | 16,318 | 16,763 |
| Transactions with owners: | |||||
| Share-based payments | - | - | - | 286 | 286 |
| Shares issued under employee sharesave scheme | 7 | 322 | - | - | 329 |
| Deferred tax credit relating to share options | - | - | - | 41 | 41 |
| Current tax credit relating to exercised share options | - | - | - | 232 | 232 |
| Dividends to Company shareholders | - | - | - | (18,404) | (18,404) |
| Total transactions with owners | 7 | 322 | - | (17,845) | (17,516) |
| At 2 June 2013 and 3 June 2013 | 1,586 | 9,059 | 2,888 | 34,321 | 47,854 |
| Profit for the year to 1 June 2014 | - | - | - | 8,007 | 8,007 |
| Exchange differences on translation of foreign operations | - | - | (1,233) | - | (1,233) |
| Total comprehensive (expense)/income for the period | - | - | (1,233) | 8,007 | 6,774 |
| Transactions with owners: | |||||
| Share-based payments | - | - | - | 288 | 288 |
| Shares issued under employee sharesave scheme (note 26) | 7 | 431 | - | - | 438 |
| Deferred tax charge relating to share options | - | - | - | (34) | (34) |
| Current tax credit relating to exercised share options | - | - | - | 74 | 74 |
| Total transactions with owners | 7 | 431 | - | 328 | 766 |
| At 1 June 2014 | 1,593 | 9,490 | 1,655 | 42,656 | 55,394 |
| Share | Capital | ||||
|---|---|---|---|---|---|
| Called up | premium | redemption | Retained | Total | |
| share capital | account | reserve | earnings | equity | |
| £000 | £000 | £000 | £000 | £000 | |
| At 3 June 2012 and 4 June 2012 | 1,579 | 8,737 | 101 | 25,870 | 36,287 |
| Profit for the year to 2 June 2013 | - | - | - | 17,050 | 17,050 |
| Total comprehensive income for the period | - | - | - | 17,050 | 17,050 |
| Transactions with owners: | |||||
| Share-based payments | - | - | - | 286 | 286 |
| Shares issued under employee sharesave scheme | 7 | 322 | - | - | 329 |
| Dividends to Company shareholders | - | - | - | (18,404) | (18,404) |
| Total transactions with owners | 7 | 322 | - | (18,118) | (17,789) |
| At 2 June 2013 and 3 June 2013 | 1,586 | 9,059 | 101 | 24,802 | 35,548 |
| Profit for the year to 1 June 2014 | - | - | - | (1,798) | (1,798) |
| Total comprehensive income for the period | - | - | - | (1,798) | (1,798) |
| Transactions with owners: | |||||
| Share-based payments | - | - | - | 288 | 288 |
| Shares issued under employee sharesave scheme | 7 | 431 | - | - | 438 |
| Total transactions with owners | 7 | 431 | - | 288 | 726 |
| At 1 June 2014 | 1,593 | 9,490 | 101 | 23,292 | 34,476 |
The notes on pages 36 to 59 are an integral part of these financial statements.
| Group | Company | |||||
|---|---|---|---|---|---|---|
| Year ended | Year ended | Year ended | Year ended | |||
| 1 June 2014 | 2 June 2013 | 1 June 2014 | 2 June 2013 | |||
| Notes | £000 | £000 | £000 | £000 | ||
| Cash flows from operating activities | ||||||
| Cash generated from operations | 29 | 24,997 | 31,908 | (887) | 17,750 | |
| UK corporation tax paid | (4,492) | (4,291) | - | - | ||
| Overseas tax paid | (229) | (976) | - | - | ||
| Net cash from operating activities | 20,276 | 26,641 | (887) | 17,750 | ||
| Cash flows from investing activities | ||||||
| Purchases of property, plant and equipment | (5,673) | (5,361) | - | - | ||
| Proceeds on disposal of property, plant and equipment | 29 | 54 | 113 | - | - | |
| Purchases of other intangible assets | (1,522) | (3,398) | - | - | ||
| Expenditure on product development | (4,652) | (3,531) | - | - | ||
| Interest received | 104 | 176 | 79 | 90 | ||
| Net cash from investing activities | (11,689) | (12,001) | 79 | 90 | ||
| Cash flows from financing activities | ||||||
| Proceeds from issue of ordinary share capital | 438 | 329 | 438 | 329 | ||
| Interest paid | - | (13) | - | - | ||
| Dividends paid to Company shareholders | (5,077) | (18,381) | (5,077) | (18,381) | ||
| Net cash from financing activities | (4,639) | (18,065) | (4,639) | (18,052) | ||
| Net increase/(decrease) in cash and cash equivalents | 3,948 | (3,425) | (5,447) | (212) | ||
| Opening cash and cash equivalents | 13,931 | 17,358 | 5,727 | 5,932 | ||
| Effects of foreign exchange rates on cash and cash equivalents | (329) | (2) | (14) | 7 | ||
| Closing cash and cash equivalents | 21 | 17,550 | 13,931 | 266 | 5,727 |
The notes on pages 36 to 59 are an integral part of these financial statements.
Games Workshop Group PLC (the 'Company') and its subsidiaries (together the 'Group') designs and manufactures miniature figures and games and distributes these through its own network of Hobby centres, independent retailers and direct via the internet and mail order. The Group has manufacturing activities in the UK and sells mainly in Continental Europe, North America and Asia Pacific.
The Company is a public listed company, incorporated and domiciled in the United Kingdom. The address of its registered office is Willow Road, Lenton, Nottingham, NG7 2WS, United Kingdom.
The Company's ordinary share capital is listed on the London Stock Exchange.
The principal accounting policies applied in these financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.
These financial statements are prepared under the going concern basis and in accordance with International Financial Reporting Standards (IFRSs), International Financial Reporting Interpretations Committee (IFRIC) interpretations and Standing Interpretations Committee (SIC) interpretations as adopted by the European Union and with those parts of the Companies Act 2006 applicable to those companies reporting under IFRSs.
The consolidated financial statements are prepared in accordance with the historical cost convention, except for the measurement of certain financial instruments to their fair value.
The consolidated financial statements include the Company and its subsidiary undertakings drawn up for the years ended 1 June 2014 and 2 June 2013. Subsidiaries are entities over which the Group has the power to govern the financial and operating policies and are fully consolidated from the date on which control is transferred to the Group.
Inter-company transactions, balances and unrealised gains and losses on transactions between group companies are eliminated on consolidation. Accounting policies of subsidiaries are consistent with the policies adopted by the Group. The financial statements of all subsidiaries are prepared to the same reporting date as the parent Company with the exception of the financial statements of Games Workshop Good Hobby (Shanghai) Commercial Co. Ltd which are prepared to 31 December. The management accounts of Games Workshop Good Hobby (Shanghai) Commercial Co. Ltd, prepared to 1 June 2014 and 2 June 2013 have been used for consolidation purposes.
Goodwill arising on acquisition of subsidiaries represents the excess of the cost of an acquisition over the fair value of the Group's share of the net identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill is tested annually for impairment, or when an indicator of impairment arises, and is carried at cost less accumulated impairment losses. Provision is made for any impairment by comparing the value in use to the net carrying value. Goodwill is allocated to cash generating units for the purpose of impairment testing.
Goodwill arising on acquisitions prior to 31 May 1998 was written off to reserves in accordance with the accounting standard then in force. As permitted by the current accounting standard, the goodwill previously written off to reserves has not been reinstated in the balance sheet.
Costs incurred in respect of product design and development activities are recognised as intangible assets when they meet the criteria of IAS 38 'Intangible Assets' and are wholly attributable to specific projects. Product development costs recognised as intangible assets are amortised on a straight line basis over periods ranging between 1 and 48 months to match the expenditure incurred to the expected revenue generated from the subsequent product release.
Acquired computer software licences and related development expenditure are capitalised on the basis of the costs incurred to acquire and bring into use the specific software. Computer software licences are held at cost and amortised on a straight line basis over the expected useful lives of the assets. Costs associated with maintaining computer software programmes are recognised as an expense as incurred. Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the Group are recognised as intangible assets when they meet the criteria of IAS 38 'Intangible Assets'.
Other development expenditure that does not meet these criteria is recognised as an expense as incurred.
Development costs previously recognised as an expense are not recognised as an asset in a subsequent period. The principal annual amortisation rates are:
| % of cost | |
|---|---|
| Core business systems computer software | 15-33 |
| Web store computer software | 20 |
| Other computer software | 33-50 |
Property, plant and equipment are stated at cost, net of accumulated depreciation and any provision for impairment. The cost of property, plant and equipment is their purchase cost, together with any incidental costs of acquisition.
Depreciation is calculated on a straight line basis over the expected useful economic lives of the assets' concerned to write down to the assets residual value and commences from the date the asset is available for use. The principal annual depreciation rates are:
| % of cost | |
|---|---|
| Freehold buildings | 2-4 |
| Plant and equipment and vehicles | 15-33 |
| Fixtures and fittings | 20-25 |
| Moulding tools | 25 |
Leasehold improvements are depreciated over the shorter of the useful economic life of the asset or the period of the lease. These assets are included within fixtures and fittings. Freehold land is not depreciated.
Trade receivables are recognised initially at fair value, which is typically the original invoice amount, and carried at amortised cost thereafter. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivable. The amount of the provision is recognised in the income statement immediately.
Leases in which a significant proportion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. The Group's commitment in respect of its Hobby centres is included within this category. Payments in respect of operating leases and any benefits received as an incentive to sign a lease, are charged or credited to the income statement on a straight line basis over the period of the entire lease term.
Inventories are valued at the lower of cost and net realisable value. Cost is determined using a standard costing method taking into account variances. In respect of finished goods, cost includes raw materials, direct labour, other direct costs and related production overheads based on a normal level of production. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses. Where necessary, provisions are made for obsolete, slow moving and defective inventories.
The consolidated financial statements are presented in sterling, which is the Company's functional and presentation currency. Items included in the financial statements of each of the Group entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency). Monetary assets and liabilities expressed in currencies that are not the functional currency are translated into the functional currency at rates of exchange ruling at the balance sheet date. The financial statements of overseas subsidiary companies prepared in functional currencies other than sterling are translated into sterling as follows:
For the purposes of the cash flow statement, cash and cash equivalents comprise deposits with banks and bank and cash balances, net of overdrafts.
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
The Group operates defined contribution schemes and a group personal pension plan. Pension contributions are charged to the income statement as they accrue. There are no further obligations to the Group once payment has been made.
The costs of annual bonus schemes are charged to the income statement as they accrue.
The Group operates a long service incentive scheme under which employees receive a one off additional holiday entitlement of two weeks when they reach 10 years of employment (10 Year Veterans). The costs of these benefits are accrued over the period of employment based on expected staff retention rates and the anticipated future employment costs discounted to present value.
Shares and loans in subsidiary undertakings are stated at cost less provision for impairment.
Revenue, which excludes value added tax and sales between group companies, represents the invoiced value of goods supplied (net of trade discounts for sales to independent retailers). Revenue is recognised on dispatch of goods to the customer for sales via the global web store or mail order and for sales to independent retailers. This represents when the significant risks and rewards of ownership of the goods have transferred to the customer. For revenue earned through the Group's Hobby centres and for digital products, revenue is recognised at the point of sale. Revenue for magazine subscriptions is recognised on a straight line basis over the subscription period.
Revenue on goods sold to customers on a sale or return basis (which includes book sales) is recognised after making full provision for the level of expected returns, based on past experience. The level of returns is reviewed on a regular basis and the provision is amended accordingly. Revenue on a sale or return basis represents no more than 3% of consolidated revenue (2013: no more than 3%).
Royalty income is recognised in the income statement when it can be reliably measured by reference to the underlying licensee performance, after allowing for expected returns and price protection claims, as notified to the Group by the licensee and following validation of the amounts receivable by the Group. Cash received as guarantees and advances are deferred on balance sheet whilst it is considered probable that future royalty earnings will at least equal the amounts received. Such amounts are recognised in the income statement at the point at which they are earned as royalties. In the event that it is no longer considered probable that future royalty earnings will at least equal the guarantees and advances received, the guarantee and advance payments are taken to the income statement on a straight line basis over the remaining term of the licence agreement.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the executive directors.
The charge for current tax is based on the results for the period as adjusted for items which are non-assessable or disallowed. It is calculated using rates that have been enacted or substantively enacted by the balance sheet date.
Deferred taxation is accounted for using the balance sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax basis used in the computation of taxable profit. In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction which affects neither the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred tax is calculated at the rates that are expected to apply when the asset or liability is settled. Deferred tax is charged or credited in the income statement, except where it relates to items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.
Dividend distributions are recognised in the financial statements in the period in which they are declared.
Assets are tested for impairment in accordance with IAS 36 'Impairment Of Assets'. For the purposes of assessing impairment, assets are grouped together at the lowest levels for which there are separately identifiable cash flows (cash-generating units – equivalent to the reportable segments within note 3). Discount rates reflecting the asset specific risks and the time value of money are used for the value in use calculation.
Provisions are recognised in accordance with IAS 37 ' Provisions, Contingent Assets and Contingent Liabilities'.
Provisions are made for committed costs outstanding under onerous or vacant property leases and the estimated liability is discounted to its present value. Provisions are made for property dilapidations where a legal obligation exists and when the decision has been made to exit a property, or where the end of the lease commitment is imminent and a reliable estimate of the exit liability can be made. The estimated employee benefit liability arising from the 10 Year Veterans incentive scheme is classified within provisions. Amounts relating to employees who reach 10 years' service in more than one year are classified as non-current. Provisions are made for redundancy costs once the employees affected have a valid expectation that their roles will become redundant.
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
The 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:
Costs which are both material and non-recurring, whose significance is sufficient to warrant separate disclosure in the financial statements, are referred to as exceptional items. These items are costs that have been incurred in relation to the continental european reorganisation.
New accounting standards or interpretations effective in the current period which are relevant to the Group are a revision to IAS 1 'Presentation of financial statements', a revision to IAS 19 'Employee benefits', a new standard in IFRS 13 'fair value measurement' and an amendment to IFRS 7 on financial asset and liability offsetting. These have not had a material impact on the financial statements of the Group and Company and are unlikely to have a material impact in the future.
New standards, amendments to standards and interpretations which have been published but are not yet effective are not expected to have a significant impact on the Group or Company.
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 assess the performance of sales businesses and manufacturing and distribution businesses separately. The segment information reported to the executive directors is organised as follows:
The chief operating decision-maker assesses the performance of each business 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 year ended 1 June 2014 is as follows:
| External revenue | Internal revenue | Total | |||||
|---|---|---|---|---|---|---|---|
| Year ended | Year ended | Year ended | Year ended | Year ended | Year ended | ||
| 1 June 2014 | 2 June 2013 | 1 June 2014 | 2 June 2013 | 1 June 2014 | 2 June 2013 | ||
| £000 | £000 | £000 | £000 | £000 | £000 | ||
| Sales businesses | |||||||
| UK | 28,535 | 30,922 | - | - | 28,535 | 30,922 | |
| Continental Europe | 35,739 | 39,452 | - | - | 35,739 | 39,452 | |
| North America | 32,652 | 36,688 | - | - | 32,652 | 36,688 | |
| Australia | 8,633 | 10,943 | - | - | 8,633 | 10,943 | |
| Export | 1,785 | 1,741 | - | - | 1,785 | 1,741 | |
| Asia | 1,677 | 1,854 | - | - | 1,677 | 1,854 | |
| All other sales businesses | 14,480 | 12,997 | 1,316 | 1,719 | 15,796 | 14,716 | |
| Other segments | |||||||
| Product and Supply | - | - | 57,428 | 67,062 | 57,428 | 67,062 | |
| Total | 123,501 | 134,597 | 58,744 | 68,781 | 182,245 | 203,378 | |
| Intra-group sales eliminations | - | - | (58,744) | (68,781) | (58,744) | (68,781) | |
| Total revenue | 123,501 | 134,597 | - | - | 123,501 | 134,597 |
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.
Total segment operating profit is as follows and is reconciled to profit before taxation below:
| Restated* | ||
|---|---|---|
| Year ended | Year ended | |
| 1 June 2014 | 2 June 2013 | |
| £000 | £000 | |
| Operating profit | ||
| Sales businesses | ||
| UK | 2,244 | 5,227 |
| Continental Europe | 4,790 | 5,218 |
| North America | 3,720 | 3,336 |
| Australia | 557 | 756 |
| Export | 581 | 457 |
| Asia | 223 | 155 |
| All other sales businesses | 7,403 | 6,554 |
| Other segments | ||
| Product and Supply | 18,930 | 27,824 |
| Total segment core business operating profit | 38,448 | 49,527 |
| Logistics and stock management | (10,138) | (10,980) |
| Licensing costs | (372) | (321) |
| Service centre costs | (9,773) | (9,391) |
| Web costs | (2,324) | (1,673) |
| Central costs | (5,402) | (5,610) |
| Profit in stock | 704 | 51 |
| Share-based payment charge | (288) | (286) |
| Profit share scheme charge | - | (1,088) |
| Total group core business operating profit | 10,855 | 20,229 |
| Royalty income | 1,442 | 1,025 |
| Total group operating profit | 12,297 | 21,254 |
| Finance income | 106 | 176 |
| Finance costs | (7) | (35) |
| Profit before taxation | 12,396 | 21,395 |
Costs of £928,000 for the year ended 2 June 2013 relating to finance, IT and personnel teams based in Australia have been restated since the last annual report into Service centre costs rather than being shown in Product and Supply. This reflects the current management structure in place.
Costs of £529,000 for the year ended 2 June 2013 relating to european language translation costs have been restated since the last annual report into Product and Supply rather than being shown in Continental Europe, as well as being reclassified from operating expenses to cost of sales to reflect a change in the classification of translation costs with effect from 3 June 2012 (see note 11). This reflects the current management structure in place.
Exceptional costs of £4,500,000 for the year ended 1 June 2014 are included within Product and Supply (£4,060,000), Continental Europe (£115,000) and Central costs (£325,000).
Operating profit as reported above includes impairment, depreciation and amortisation charges as follows:
| Depreciation and | |||||
|---|---|---|---|---|---|
| Impairment | amortisation | ||||
| Year ended | Year ended | Year ended | Year ended 2 June 2013 |
||
| 1 June 2014 | 2 June 2013 | 1 June 2014 | |||
| £000 | £000 | £000 | £000 | ||
| Sales businesses | |||||
| UK | (12) | 3 | 332 | 331 | |
| Continental Europe | (9) | 10 | 407 | 477 | |
| North America | (8) | (77) | 404 | 468 | |
| Australia | - | (5) | 165 | 188 | |
| Asia | - | - | 21 | 35 | |
| All other sales businesses | - | - | 1,304 | 1,070 | |
| Other segments | |||||
| Product and Supply | (175) | - | 6,449 | 5,445 | |
| Total segment charges | (204) | (69) | 9,082 | 8,014 | |
| Logistics and stock management | - | - | 455 | 584 | |
| Web costs | - | - | 340 | 379 | |
| Total group (credit)/charge | (204) | (69) | 9,877 | 8,977 |
An impairment reversal of £29,000 (2013: £69,000) relates to fixtures and fittings within loss making retail stores previously written down to estimated value in use for which impairment is no longer required. An impairment reversal of £175,000 (2013: £nil) relates to the previous write down of the warehouse floor. All items have been credited in selling costs in the current period.
Operating expenses by segment are regularly reviewed by the executive directors and are provided below:
| Restated* | ||
|---|---|---|
| Year ended | Year ended | |
| 1 June 2014 | 2 June 2013 | |
| £000 | £000 | |
| Operating expenses | ||
| Sales businesses | ||
| UK | 13,651 | 13,767 |
| Continental Europe | 17,240 | 19,379 |
| North America | 12,507 | 13,792 |
| Australia | 4,057 | 5,449 |
| Export | 288 | 260 |
| Asia | 865 | 964 |
| All other sales businesses | 1,942 | 1,892 |
| Other segments | ||
| Product and Supply | 7,415 | 3,664 |
| Total segment operating expenses | 57,965 | 59,167 |
| Logistics and stock management | (9) | 131 |
| Licensing costs | 374 | 321 |
| Service centre costs | 9,775 | 9,391 |
| Web costs | 1,882 | 1,775 |
| Central costs | 5,605 | 5,437 |
| Share-based payment charge | 288 | 286 |
| Profit share scheme charge | - | 1,088 |
| Total group operating expenses | 75,880 | 77,596 |
*Prior periods have been restated to reflect a change in the classification of translator costs within the income statement with effect from 3 June 2012 (see note 11).
External revenue analysed by customer geographical location is as follows:
| Year ended | Year ended | |
|---|---|---|
| 1 June 2014 | 2 June 2013 | |
| £000 | £000 | |
| UK | 34,406 | 34,316 |
| Continental Europe | 39,673 | 43,519 |
| North America | 36,776 | 40,693 |
| Asia Pacific | 11,229 | 13,979 |
| Rest of the World | 1,417 | 2,090 |
| 123,501 | 134,597 |
The Group is not reliant on any one individual customer.
Non-current assets (excluding deferred tax assets) are located in the following countries:
| 2014 | 2013 | |
|---|---|---|
| £000 | £000 | |
| UK | 28,930 | 27,896 |
| All other countries | 3,621 | 3,812 |
| Total non-current assets (excluding deferred tax assets) | 32,551 | 31,708 |
Tangible and intangible asset additions included within the UK were £10,155,000 (2013: £11,292,000) and all other countries were £1,552,000 (2013: £970,000).
Other non-cash charges and significant costs included in operating profit are as follows:
| Redundancy costs and | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Net charge/(credit) to | Impairment/(reversal of compensation for loss of |
Net charge/(credit) to | |||||||
| inventory provisions | impairment) of receivables | office | property provisions | ||||||
| Year ended | Year ended | Year ended | Year ended | Year ended | Year ended | Year ended | Year ended | ||
| 1 June 2014 | 2 June 2013 | 1 June 2014 | 2 June 2013 | 1 June 2014 | 2 June 2013 | 1 June 2014 | 2 June 2013 | ||
| £000 | £000 | £000 | £000 | £000 | £000 | £000 | £000 | ||
| Sales businesses | |||||||||
| UK | 4 | 99 | (90) | 88 | 49 | 134 | 3 | 50 | |
| Continental Europe | - | - | 70 | 89 | 443 | 453 | 7 | 44 | |
| North America | 63 | 65 | 32 | 16 | 390 | 57 | 106 | 38 | |
| Australia | - | (1) | 15 | 7 | 71 | 75 | (7) | (37) | |
| Asia | (2) | (5) | - | - | 38 | - | - | - | |
| All other sales businesses | - | - | 110 | 79 | 55 | 5 | - | - | |
| Other segments | |||||||||
| Product and Supply | 646 | 1,124 | - | - | 3,006 | 346 | - | (58) | |
| Total segment expense | 711 | 1,282 | 137 | 279 | 4,052 | 1,070 | 109 | 37 | |
| Logistics and stock management | - | - | - | - | 25 | 18 | - | - | |
| Licensing costs | - | - | - | - | 14 | - | - | ||
| Service centre costs | - | - | - | - | 51 | 72 | - | - | |
| Web costs | - | - | 38 | 59 | 6 | - | - | - | |
| Central costs | - | - | - | - | 47 | 865 | - | - | |
| Total group expense | 711 | 1,282 | 175 | 338 | 4,195 | 2,025 | 109 | 37 |
Asset and liability information is not reported to the chief operating decision-maker on a segment basis and therefore has not been disclosed.
| Restated* | ||
|---|---|---|
| Year ended | Year ended | |
| 1 June 2014 | 2 June 2013 | |
| £000 | £000 | |
| Selling costs | 43,193 | 47,725 |
| Administrative expenses | 28,187 | 29,871 |
| 71,380 | 77,596 |
*Prior periods have been restated to reflect a change in the classification of translator costs within the income statement with effect from 3 June 2012 (see note 11).
The exceptional items relate to the continental european reorganisation announced in January 2014. As part of this reorganisation, £2,987,000 has been incurred in redundancy and severance costs, £608,000 in closing local country head offices and £905,000 in professional fees and other costs.
| Group | Company | |||
|---|---|---|---|---|
| Year ended | Year ended | Year ended | Year ended | |
| 1 June 2014 | 2 June 2013 | 1 June 2014 | 2 June 2013 | |
| £000 | £000 | £000 | £000 | |
| Total directors' and employees' costs: | ||||
| Wages and salaries | 41,809 | 43,888 | 1,487 | 1,522 |
| Social security costs | 4,867 | 5,272 | 190 | 183 |
| Other pension costs | 1,650 | 1,556 | 115 | 109 |
| Share-based payment | 288 | 286 | - | - |
| 48,614 | 51,002 | 1,792 | 1,814 |
Details of capitalised salary costs, included in the above, are provided in note 15. Redundancy costs and compensation for loss of office, not included in the above, are provided in note 9.
The remuneration of the directors and other key management personnel of the Group is set out below in aggregate for each of the categories specified in IAS 24 'Related Party Disclosures'.
| Year ended | Year ended | |
|---|---|---|
| 1 June 2014 | 2 June 2013 | |
| £000 | £000 | |
| Short-term employee benefits | 972 | 1,157 |
| Post-employment benefits | 98 | 148 |
| Share-based payment | 2 | 4 |
| Other long term employee benefits | 4 | 17 |
| Termination benefits | - | 569 |
| 1,076 | 1,895 |
Further information relating to directors' emoluments, shareholdings and share options is disclosed in the remuneration report on pages 22 to 24. Key management are the directors of the Company and the head of Product and Supply. In the prior year key management also included the head of sales.
| Employee numbers | Group | |
|---|---|---|
| Year ended | Year ended | |
| Monthly average number of employees | 1 June 2014 | 2 June 2013 |
| (including executive directors) by activity: | Number | Number |
| Design and development | 203 | 145 |
| Production | 150 | 168 |
| Selling: | ||
| - Full time | 844 | 916 |
| - Part time | 191 | 232 |
| Administration | 365 | 414 |
| 1,753 | 1,875 |
The monthly average number of employees for the Company was 11 (2013: 13).
| Year ended | Year ended | |
|---|---|---|
| 1 June 2014 | 2 June 2013 | |
| £000 | £000 | |
| Interest income: | ||
| - On cash and cash equivalents | 105 | 175 |
| - Other interest income receivable | 1 | 1 |
| 106 | 176 | |
| 8. Finance costs |
||
| Year ended | Year ended | |
| 1 June 2014 | 2 June 2013 | |
| £000 | £000 | |
| Interest expense: | ||
| - Unwinding of discount on provisions | 3 | 12 |
| - Other interest payable | - | 14 |
| - Net foreign exchange losses on financing activities | 4 | 9 |
| 7 | 35 |
| Year ended | Year ended | |
|---|---|---|
| 1 June 2014 | 2 June 2013 | |
| £000 | £000 | |
| Profit before taxation is stated after charging/(crediting): | ||
| Depreciation: | ||
| - Owned property, plant and equipment | 4,907 | 5,099 |
| - Reversal of impairment of property, plant and equipment | (204) | (69) |
| Amortisation: | ||
| - Owned computer software | 849 | 1,178 |
| - Development costs | 4,121 | 2,700 |
| Non-capitalised development costs | 1,831 | 2,087 |
| Staff costs (excluding capitalised salary costs shown in note 15 and non-capitalised development costs above) | 43,585 | 45,997 |
| Impairment of trade receivables | 175 | 338 |
| Operating leases: | ||
| - Hobby centres | 8,474 | 9,945 |
| - Other property | 860 | 920 |
| - Plant and equipment | 140 | 105 |
| - Other | 149 | 210 |
| Cost of inventories included in cost of sales | 19,417 | 21,381 |
| Net inventory provision creation (note 19) | 711 | 1,282 |
| Loss/(profit) on disposal of property, plant and equipment | 370 | (7) |
| Loss on disposal of intangible assets | 333 | 403 |
| Redundancy costs and compensation for loss of office | 4,195 | 2,025 |
| Net charge to property provisions including closed or loss making Hobby centres (note 25) | 109 | 37 |
| Auditors' remuneration and services provided | ||
| Services provided by the Group's auditors and network firms are analysed as follows: | ||
| Year ended 1 June 2014 |
Year ended 2 June 2013 |
|
| £000 | £000 | |
| Audit services | ||
| Audit of the Group and Company's financial statements | 61 | 61 |
| Other services | ||
| The audit of the Company's subsidiaries pursuant to legislation | 141 | 143 |
| All other services | 10 | 10 |
| Total services provided | 212 | 214 |
| Total | ||||
|---|---|---|---|---|
| Pre-exceptional | Exceptional | Year ended | Year ended | |
| items | items | 1 June 2014 | 2 June 2013 | |
| £000 | £000 | £000 | £000 | |
| Current UK taxation: | ||||
| UK corporation tax on profits for the period | 2,956 | (1,051) | 1,905 | 4,200 |
| Over provision in respect of prior periods | (54) | - | (54) | (104) |
| 2,902 | (1,051) | 1,851 | 4,096 | |
| Current overseas taxation: | ||||
| Overseas corporation tax on profits for the period | 908 | - | 908 | 802 |
| Over provision in respect of prior periods | (360) | - | (360) | (107) |
| Total current taxation | 3,450 | (1,051) | 2,399 | 4,791 |
| Deferred taxation: | ||||
| Origination and reversal of timing differences | 1,645 | 31 | 1,676 | 192 |
| Under provision in respect of prior periods | 314 | - | 314 | 94 |
| Tax expense recognised in the income statement | 5,409 | (1,020) | 4,389 | 5,077 |
| Current tax credit relating to sharesave scheme | (74) | - | (74) | (232) |
| Deferred tax charge/(credit) relating to sharesave scheme | 34 | - | 34 | (41) |
| Credit taken directly to equity | (40) | - | (40) | (273) |
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 | |
|---|---|---|
| 1 June 2014 | 2 June 2013 | |
| £000 | £000 | |
| Profit before taxation | 12,396 | 21,395 |
| Profit before taxation multiplied by the standard rate of corporation tax in the UK of 22.67% (2013: 23.83%) | 2,810 | 5,098 |
| Effects of: | ||
| Items not deductible/(assessable) for tax purposes | 662 | (384) |
| Movement in deferred tax not recognised | (10) | - |
| Higher tax rates on overseas earnings | 1,027 | 480 |
| Adjustments to tax charge in respect of prior periods | (100) | (117) |
| Total tax charge for the period | 4,389 | 5,077 |
Included within the £4,389,000 disclosed above, £3,000 relates to changes in rates of UK corporation tax in the year. The Finance Act 2012 included legislation to reduce the main rate of corporation tax from 24% to 23% from 1 April 2013. Further reductions were included in the Finance Act 2013, which have been substantively enacted, to reduce the rate to 21% from 1 April 2014 and 20% from 1 April 2015. The overall effect of these further changes, if applied to the deferred tax balance at the balance sheet date, would be to further reduce the deferred tax asset by an additional £16,000.
Since the last annual report the Group has changed the application of its accounting policy for the classification of translator costs within the income statement. Previously translator costs were recognised in the income statement within operating expenses. Under the new policy, translator costs are recognised in the income statement within cost of sales. Comparative amounts have been restated for the prior period as if the application of the new accounting policy had always been applied in accordance with IAS 1 (revised), 'Presentation of financial statements'. The Group believes that the new policy results in a fairer reflection of the nature of translator costs in the Group income statement.
There is no impact on assets or liabilities reported at either 2 June 2013 or 3 June 2012, hence no balance sheet has been presented as at 3 June 2012.
The change in accounting policy has resulted in an increase in cost of sales and a decrease in operating expenses of £529,000 in the income statement for the year to 2 June 2013.
The impact of the change in policy for the current financial period is an increase in cost of sales and a decrease in operating expenses of £717,000 in the income statement.
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 | ||
|---|---|---|
| 1 June 2014 | 2 June 2013 | |
| Profit attributable to owners of the parent (£000) | 8,007 | 16,318 |
| Weighted average number of ordinary shares in issue (thousands) | 31,805 | 31,671 |
| Basic earnings per share (pence per share) | 25.2 | 51.5 |
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 | Year ended | ||
|---|---|---|---|
| 1 June 2014 | 2 June 2013 | ||
| Pre-exceptional profit attributable to owners of the parent (£000) | 11,487 | 16,318 | |
| Weighted average number of ordinary shares in issue (thousands) | 31,805 | 31,671 | |
| Basic earnings per share – pre-exceptional items (pence per share) | 36.1 | 51.5 |
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 | Year ended |
|---|---|
| 1 June 2014 | 2 June 2013 |
| Profit attributable to owners of the parent (£000) 8,007 |
16,318 |
| Weighted average number of ordinary shares in issue (thousands) 31,805 |
31,671 |
| Adjustment for share options (thousands) 129 |
192 |
| Weighted average number of ordinary shares for diluted earnings per share (thousands) 31,934 |
31,863 |
| Diluted earnings per share (pence per share) 25.1 |
51.2 |
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 | Year ended | ||
|---|---|---|---|
| 1 June 2014 | 2 June 2013 | ||
| Pre-exceptional profit attributable to owners of the parent (£000) | 11,487 | 16,318 | |
| Weighted average number of ordinary shares in issue (thousands) | 31,805 | 31,671 | |
| Adjustment for share options (thousands) | 129 | 192 | |
| Weighted average number of ordinary shares for diluted earnings per share (thousands) | 31,934 | 31,863 | |
| Diluted earnings per share – pre-exceptional items (pence per share) | 36.0 | 51.2 |
A dividend of 18 pence per share, amounting to a total dividend of £5,711,000 and a dividend of 24 pence per share, amounting to a total dividend of £7,616,000 were declared and paid during the year ended 2 June 2013. A further dividend of 16 pence per share, amounting to a total dividend of £5,077,000 was declared during the year ended 2 June 2013 and paid during the current period.
After the balance sheet date, a dividend of 20 pence per share, amounting to a total dividend of £6,372,000 was declared and it was paid on 4 July 2014.
| Group | £000 |
|---|---|
| Cost | |
| At 2 June 2013 and 3 June 2013 | 2,355 |
| Additions | 54 |
| Exchange differences | (1) |
| At 1 June 2014 | 2,408 |
| Accumulated amortisation | |
| At 2 June 2013 and 3 June 2013 | (922) |
| Impairment charge | (54) |
| Exchange differences | 1 |
| At 1 June 2014 | (975) |
| Net book value at beginning of period and end of period | 1,433 |
The Company had no goodwill at either period end.
The goodwill arose on the acquisition of TJA Tooling Limited and Triple K Plastic Injection Moulding Limited.
During the year EURL Games Workshop entered into an agreement to purchase the lease associated to Heroic Diffusion SARL. Under IFRS this amounted to the purchase of a business. The cost of €64,000 was fully impaired during the year to reflect the carrying value of the business to the Group.
In accordance with the requirements of IAS 36 'Impairment of Assets' the Group completed a review of the carrying value of goodwill as at each period end. The impairment review was performed to ensure that the carrying value of the Group's assets are stated at no more than their recoverable amount, being the higher of fair value less costs to sell and value in use. The key assumptions for the recoverable amount of the goodwill are the long-term growth rate and the discount rate. The long-term growth rate used is purely for the impairment testing of goodwill under IAS 36 'Impairment of Assets' and does not reflect the long-term planning assumptions used by the Group for any other assessments.
In determining the value in use, the calculations use cash flow projections for a period no greater than five years based on plans approved by management and, for the Group's cash-generating unit concerned, assumes a long term growth rate no higher than 2% (2013: 2%). The estimated future cash flows expected to arise from the continuing use of the assets are calculated using a pre-tax discount rate of 10% (2013: 10.25%).
Management reviewed the planned sales growth and gross margin on the investment in future product releases and initiatives currently being undertaken, to deliver the expected future performance.
Goodwill is allocated to the Group's cash-generating units (CGUs) for impairment testing. All of the current goodwill arises in the Product and Supply segment. Sensitivity analysis has not been disclosed in these financial statements since management consider that there is no reasonably possible change in the key assumptions that would cause the carrying value of goodwill to fall below its recoverable amount.
| Computer | Development | ||
|---|---|---|---|
| software | costs | Total | |
| Group | £000 | £000 | £000 |
| Cost | |||
| At 3 June 2012 and 4 June 2012 | 10,905 | 21,205 | 32,110 |
| Additions | 3,605 | 3,531 | 7,136 |
| Exchange differences | 58 | - | 58 |
| Disposals | (1,617) | (2,722) | (4,339) |
| At 2 June 2013 and 3 June 2013 | 12,951 | 22,014 | 34,965 |
| Additions | 1,316 | 4,652 | 5,968 |
| Exchange differences | (247) | - | (247) |
| Disposals | (4,395) | (1,754) | (6,149) |
| At 1 June 2014 | 9,625 | 24,912 | 34,537 |
| Accumulated amortisation | |||
| At 3 June 2012 and 4 June 2012 | (8,041) | (18,892) | (26,933) |
| Amortisation charge | (1,178) | (2,700) | (3,878) |
| Exchange differences | (57) | - | (57) |
| Disposals | 1,214 | 2,722 | 3,936 |
| At 2 June 2013 and 3 June 2013 | (8,062) | (18,870) | (26,932) |
| Amortisation charge | (849) | (4,121) | (4,970) |
| Exchange differences | 232 | - | 232 |
| Disposals | 4,062 | 1,754 | 5,816 |
| At 1 June 2014 | (4,617) | (21,237) | (25,854) |
| Net book amount | |||
| At 2 June 2013 | 4,889 | 3,144 | 8,033 |
| At 1 June 2014 | 5,008 | 3,675 | 8,683 |
Amortisation of £4,394,000 (2013: £2,949,000) has been charged in cost of sales and £576,000 (2013: £929,000) in operating expenses.
The net book amount of internally generated intangible assets is £4,203,000 (2013: £3,561,000) and acquired intangible assets is £4,480,000 (2013: £4,472,000). All development costs are internally generated and £3,004,000 (2013: £2,569,000) is capitalised salary costs.
Salary costs of £195,000 (2013: £349,000) were capitalised during the period as part of computer software.
Assets in the course of development, and not amortised, amount to £189,000 (2013: £3,142,000). In both years these were included in computer software. The current year assets relate to trade CRM modules, and in the prior year related to the new web store which was launched in April 2014.
The Company had no other intangible assets at either period end.
| Freehold | Plant and | Fixtures | |||
|---|---|---|---|---|---|
| land and | equipment | and | Moulding | ||
| buildings | and vehicles | fittings | tools | Total | |
| Group | £000 | £000 | £000 | £000 | £000 |
| Cost | |||||
| At 3 June 2012 and 4 June 2012 | 14,763 | 19,428 | 21,607 | 25,209 | 81,007 |
| Additions | 7 | 1,556 | 1,472 | 2,091 | 5,126 |
| Exchange differences | - | 110 | 424 | (13) | 521 |
| Disposals | - | (2,398) | (2,007) | (1,032) | (5,437) |
| At 2 June 2013 and 3 June 2013 | 14,770 | 18,696 | 21,496 | 26,255 | 81,217 |
| Additions | 246 | 1,701 | 1,548 | 2,244 | 5,739 |
| Exchange differences | - | (345) | (972) | (6) | (1,323) |
| Disposals | (210) | (3,757) | (3,265) | (2,295) | (9,527) |
| At 1 June 2014 | 14,806 | 16,295 | 18,807 | 26,198 | 76,106 |
| Accumulated depreciation | |||||
| At 3 June 2012 and 4 June 2012 | (4,443) | (15,621) | (19,213) | (21,163) | (60,440) |
| Charge for the period | (265) | (1,702) | (1,308) | (1,824) | (5,099) |
| Exchange differences | - | (100) | (387) | 13 | (474) |
| Impairment | - | - | 69 | - | 69 |
| Disposals | - | 2,365 | 1,996 | 970 | 5,331 |
| At 2 June 2013 and 3 June 2013 | (4,708) | (15,058) | (18,843) | (22,004) | (60,613) |
| Charge for the period | (243) | (1,557) | (1,262) | (1,845) | (4,907) |
| Exchange differences | - | 294 | 839 | 1 | 1,134 |
| Impairment | 175 | - | 29 | - | 204 |
| Disposals | - | 3,632 | 3,180 | 2,291 | 9,103 |
| At 1 June 2014 | (4,776) | (12,689) | (16,057) | (21,557) | (55,079) |
| Net book amount | |||||
| At 2 June 2013 | 10,062 | 3,638 | 2,653 | 4,251 | 20,604 |
| At 1 June 2014 | 10,030 | 3,606 | 2,750 | 4,641 | 21,027 |
Depreciation expense of £2,917,000 (2013: £3,292,000) has been charged in cost of sales, £1,226,000 (2013: £1,446,000) in selling costs and £764,000 (2013: £361,000) in administrative expenses.
Freehold land amounting to £3,836,000 (2013: £3,836,000) has not been depreciated.
Assets in the course of construction, and not depreciated, amount to £943,000 (2013: £140,000). £500,000 (2013: £140,000) of these are included in moulding tools, £327,000 (2013: £nil) is included in plant and equipment and vehicles, £90,000 (2013: £nil) is included in freehold land and buildings, and £26,000 (2013: £nil) is included in fixtures and fittings above.
An impairment reversal of £29,000 (2013: £69,000) relates to fixtures and fittings within loss making retail stores previously written down to estimated value in use for which impairment was no longer required. This has been credited or charged in selling costs in both periods. £175,000 (2013: £nil) relates to the previous write down of the warehouse floor. This has been credited in selling costs in the current period.
The Company held no property, plant and equipment at either period end.
| 2014 | 2013 | |
|---|---|---|
| Company | £000 | £000 |
| Shares in group undertakings – cost | ||
| Beginning of period and end of period | 30,584 | 30,584 |
Investments in group undertakings are stated at cost less any provision for impairment.
The directors consider that to give full particulars of all subsidiary undertakings would lead to a statement of excessive length. A list of principal subsidiary undertakings is given below.
The following information relates to those subsidiary undertakings whose results or financial position, in the opinion of the directors, principally affect the Group:
| Proportion of nominal value | |||||
|---|---|---|---|---|---|
| of issued shares held by: | |||||
| Country of | |||||
| incorporation | Description of | Subsidiary | |||
| Name of undertaking | or registration | shares held | Company | Company | Principal business activity |
| Games Workshop Limited | England and | £1 ordinary | 100% | Manufacturer, distributor and | |
| Wales | retailer of games and miniatures | ||||
| Games Workshop Retail Inc. | United States | \$1 common | 100% | Distributor and retailer of games | |
| of America | stock | and miniatures | |||
| Games Workshop (Queen Street) | Canada | Can \$1 | 100% | Distributor and retailer of games | |
| Limited | and miniatures | ||||
| EURL Games Workshop | France | euro 1 | 100% | Distributor and retailer of games | |
| and miniatures | |||||
| Games Workshop SL | Spain | euro 1 | 100% | Distributor and retailer of games | |
| and miniatures | |||||
| Games Workshop Oz Pty Limited | Australia | Aus \$1 | 100% | Distributor and retailer of games | |
| and miniatures | |||||
| Games Workshop Deutschland GmbH | Germany | euro 1 | 100% | Distributor and retailer of games | |
| and miniatures | |||||
| Games Workshop Limited | New Zealand | NZ \$1 | 100% | Distributor and retailer of games | |
| and miniatures | |||||
| Games Workshop Italia SRL | Italy | euro 1 | 100% | Distributor and retailer of games | |
| and miniatures | |||||
| Games Workshop International Limited | England and | £1 ordinary | 100% | Holding company for overseas | |
| Wales | subsidiary companies | ||||
| Games Workshop US Limited | England and | £1 ordinary | 100% | Holding company for US subsidiary | |
| Wales | companies | ||||
| Games Workshop US (Holdings) Limited | England and | £1 ordinary | 100% | Intermediary holding company for US | |
| Wales | subsidiary companies | ||||
| Games Workshop Good Hobby | China | Owners capital | 100% | Retailer of games and miniatures | |
| (Shanghai) Commercial Co. Ltd |
All of the above entities are included in the consolidated accounts for the Group and 100% of the voting rights of all entities is held.
All of the above companies operate principally in their country of incorporation or registration.
The directors consider the value of the investments is supported by the underlying assets of the relevant subsidiary.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred taxes relate to the same fiscal authority. The amounts are as follows:
| Group | Company | |||
|---|---|---|---|---|
| 2014 | 2013 | 2014 | 2013 | |
| £000 | £000 | £000 | £000 | |
| Deferred tax assets: | ||||
| - deferred tax asset to be recovered after more than 12 months | 2,227 | 2,704 | 2 | 2 |
| - deferred tax asset to be recovered within 12 months | 2,488 | 4,517 | 4 | 3 |
| 4,715 | 7,221 | 6 | 5 | |
| The gross movement on the deferred tax account is as follows: | Group | Company | ||
| 2014 | 2013 | 2014 | 2013 | |
| £000 | £000 | £000 | £000 | |
|---|---|---|---|---|
| Beginning of period | 7,221 | 7,335 | 5 | 6 |
| Exchange differences | (482) | 131 | - | - |
| Income statement (charge)/credit | (1,990) | (286) | 1 | (1) |
| (Charged)/credited directly to retained earnings | (34) | 41 | - | - |
| End of period | 4,715 | 7,221 | 6 | 5 |
Analysis of the movement in deferred tax assets and liabilities is as follows:
| Losses | |||||
|---|---|---|---|---|---|
| Accelerated | Development | available | |||
| depreciation | costs | for offset | Other | Total | |
| Group | £000 | £000 | £000 | £000 | £000 |
| At 3 June 2012 and 4 June 2012 | 2,179 | (555) | 3,622 | 2,089 | 7,335 |
| (Charged)/credited to the income statement | (197) | (168) | (284) | 363 | (286) |
| Credited to equity | - | - | - | 41 | 41 |
| Exchange differences | 43 | - | 69 | 19 | 131 |
| At 2 June 2013 and 3 June 2013 | 2,025 | (723) | 3,407 | 2,512 | 7,221 |
| Charged to the income statement | (442) | (49) | (895) | (604) | (1,990) |
| Charged to equity | - | - | - | (34) | (34) |
| Exchange differences | (104) | - | (285) | (93) | (482) |
| At 1 June 2014 | 1,479 | (772) | 2,227 | 1,781 | 4,715 |
Other deferred tax assets include deferred tax on adjustments for profit in stock arising from intra-group sales of £921,000 (2013: £1,480,000).
Deferred tax assets are recognised in respect of tax losses and temporary differences to the extent that the realisation of the related tax benefit through future taxable profits is probable. This is based on a review of the track record of profitability in the country concerned. There was no unrecognised deferred tax at 2 June 2013 or 1 June 2014 in either the Group or the Company.
The Group did not obtain a current tax benefit from previously unrecognised tax losses in either of the periods presented.
| Accelerated | |||
|---|---|---|---|
| depreciation | Other | Total | |
| Company | £000 | £000 | £000 |
| At 3 June 2012 and 4 June 2012 | 2 | 4 | 6 |
| Charged to the income statement | - | (1) | (1) |
| At 2 June 2013 and 3 June 2013 | 2 | 3 | 5 |
| Credited to the income statement | - | 1 | 1 |
| At 1 June 2014 | 2 | 4 | 6 |
| 2014 | 2013 | |
|---|---|---|
| Group | £000 | £000 |
| Raw materials | 182 | 534 |
| Work in progress | 213 | 594 |
| Finished goods and goods for resale | 7,640 | 7,042 |
| 8,035 | 8,170 |
The Group holds no inventories at fair value less costs to sell.
During the period, the Group utilised an inventory provision of £1,175,000 (2013: £935,000) and £711,000 (2013: £1,282,000) has been charged to the income statement.
The Company holds no inventories at either period end.
| Group | Company | |||
|---|---|---|---|---|
| 2014 | 2013 | 2014 | 2013 | |
| £000 | £000 | £000 | £000 | |
| Trade receivables | 4,806 | 6,555 | - | - |
| Less provision for impairment of receivables | (370) | (416) | - | - |
| Trade receivables - net | 4,436 | 6,139 | - | - |
| Prepayments and accrued income | 4,361 | 4,427 | 44 | 35 |
| Other receivables | 1,756 | 1,936 | 16 | - |
| Receivables from related parties | - | - | 253 | 1,107 |
| Loans to related parties | - | - | 3,900 | 3,900 |
| Total trade and other receivables | 10,553 | 12,502 | 4,213 | 5,042 |
| Non-current receivables: | ||||
| Prepayments and accrued income | 177 | 205 | - | - |
| Other receivables | 1,231 | 1,433 | - | - |
| Loans to related parties | - | - | 3,900 | 3,900 |
| Non-current portion | 1,408 | 1,638 | 3,900 | 3,900 |
| Current portion | 9,145 | 10,864 | 313 | 1,142 |
Trade receivables are recorded at amortised cost, reduced by estimated allowances for doubtful debts. The fair value of trade and other receivables does not differ materially from the book value.
The effective interest rate on non-current loans to related parties is charged at LIBOR plus 1% in both periods.
There is no significant concentration of credit risk with respect to trade receivables as the Group has a large number of customers which are internationally dispersed.
The maximum exposure to credit risk at the balance sheet date is the carrying value of each class of asset above. The Group does not hold any collateral over these balances.
All non-current receivables are due within five years of the balance sheet date.
Trade receivables that are more than three months past due are considered to be impaired unless a payment plan has been agreed with the customer and is being adhered to. Trade receivables that are less than three months past due are not considered impaired unless amounts are specifically identified as irrecoverable. The ageing analysis of the Group's past due trade receivables is as follows:
| 2014 | 2013 | ||||||
|---|---|---|---|---|---|---|---|
| Not impaired | Impaired | Total | Impaired | Total | |||
| £000 | £000 | £000 | £000 | £000 | £000 | ||
| Up to 3 months past due | 264 | 72 | 336 | 350 | 63 | 413 | |
| 3 to 12 months past due | 2 | 152 | 154 | 135 | 255 | 390 | |
| Over 12 months past due | 35 | 30 | 65 | - | 62 | 62 | |
| 301 | 254 | 555 | 485 | 380 | 865 |
In addition to the above, current debt of £116,000 (2013: £36,000) has been impaired.
Movements on the provision for impairment of trade receivables are as follows:
| Group | £000 |
|---|---|
| At 3 June 2012 and 4 June 2012 | 684 |
| Charge for the period | 362 |
| Unused amounts reversed | (24) |
| Receivables written off during the period as uncollectible | (606) |
| At 2 June 2013 and 3 June 2013 | 416 |
| Charge for the period | 189 |
| Unused amounts reversed | (14) |
| Receivables written off during the period as uncollectible | (221) |
| At 1 June 2014 | 370 |
The carrying amounts of the Group's trade and other receivables are denominated in the following currencies:
| Total trade and other receivables | 10,553 | 12,502 |
|---|---|---|
| Other currencies | 1,400 | 1,742 |
| US dollar | 1,781 | 2,418 |
| Euro | 2,714 | 3,507 |
| Sterling | 4,658 | 4,835 |
| £000 | £000 | |
| 2014 | 2013 |
| Group | Company | |||
|---|---|---|---|---|
| 2014 | 2013 | 2014 £000 |
2013 £000 |
|
| £000 | £000 | |||
| Cash at bank and in hand | 16,432 | 13,019 | 266 | 5,727 |
| Short-term bank deposits | 1,118 | 912 | - | - |
| Cash and cash equivalents | 17,550 | 13,931 | 266 | 5,727 |
The Group's cash and cash equivalents are repayable on demand and include a right of set-off between sterling and other currencies held in the UK. Cash and cash equivalents and short-term deposits are floating rate assets which earn interest at various rates with reference to the prevailing interest rates. Short-term deposits have an average maturity of 7 days (2013: 95 days).
There were no utilised borrowing facilities at 2 June 2013 or 1 June 2014.
The Group's activities expose it to a variety of financial risks: market risk (including foreign currency risk and interest rate risk), liquidity risk, capital risk and credit risk. The Group's financial risk management objective is to understand the nature and impact of the financial risks and exposures facing the business.
The majority of the Group's business is transacted in sterling, euros and US dollars. The principal currency of the Group is sterling.
The Group does not use foreign currency borrowings or forward foreign currency contracts to hedge foreign currency risk. The level of the Group's exposure to foreign currency risk is regularly reviewed by the Group's chief operating officer and the Group's treasury policies, including hedging policies, are reviewed to ensure they remain appropriate.
The impact on the Group's financial assets and liabilities from foreign currency volatility is shown in the sensitivity analysis below.
The sensitivity analysis has been prepared based on all material financial assets and liabilities held at the balance sheet date and does not reflect all the changes in revenue or expenses that may result from changing exchange rates. The analysis is prepared for the euro and US dollar given that these represent the major foreign currencies in which financial assets and liabilities are denominated. The sensitivities shown act as a reasonable benchmark considering the movements in currencies over the last two financial periods.
The following assumptions were made in calculating the sensitivity analysis:
Using the above assumptions, the following table shows the sensitivity of the Group's income statement to movements in foreign exchange rates on US dollar and euro financial assets and liabilities:
| 2014 | 2013 | |
|---|---|---|
| Income | Income | |
| gain | gain/(loss) | |
| Group | £000 | £000 |
| 10% appreciation of the US dollar (2013: 10%) | 500 | 887 |
| 10% appreciation of the euro (2013: 10%) | 116 | (374) |
A depreciation of the stated currencies would have an equal and opposite effect.
There is no impact on equity gains or losses.
The Group no longer has a significant exposure to interest rate risk following repayment of its borrowings and hence no interest rate sensitivity has been shown.
Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions as well as credit exposures to independent retailers. The Group controls credit risk from a treasury perspective by only entering into transactions involving financial instruments with authorised counter-parties with a credit rating of at least 'A', and by ensuring that such positions are monitored regularly. Credit risk on cash and short-term deposits is limited because the counter-parties are banks with high credit ratings assigned by international credit rating agencies.
There is no significant concentration of credit risk with respect to trade receivables, as the Group has a large number of customers that are internationally dispersed. Policies are also in place to ensure the wholesale sales of products are made to customers with an appropriate credit history and credit limits are periodically reviewed. Amounts recoverable from customers are reviewed on an ongoing basis and appropriate provision made for bad and doubtful debts (note 20). Provision requirements are determined with reference to ageing of invoices, credit history and other available information.
Sales made through our own Hobby centres or via mail order are made in cash or with major credit cards.
The capital structure of the Group consists of net funds (see note 30) and owners' equity (see note 28). The Group manages its capital to safeguard the ability to operate as a going concern and to optimise returns to shareholders. The Group's objective is not to use long-term debt to finance the business. Overdraft facilities will be used to finance the working capital cycle if required.
The Group manages its capital structure and makes adjustments to it in light of changes to economic conditions and its strategic objectives. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, buy back shares and cancel them or issue new shares. The Group uses return on capital employed to assess capital asset performance.
Liquidity is managed by maintaining sufficient cash balances to meet working capital needs.
Cash flow requirements are monitored by short and long-term rolling forecasts both within the local operating units and for the overall Group. In addition, the Group's liquidity management policy involves projecting cash flows in the major currencies and considers the level of liquid assets necessary to meet these, monitoring working capital levels and liquidity ratios.
The undiscounted contractual cash flows of the Group's financial liabilities, including interest charges where applicable, are shown below. All trade payables are contractually due within 12 months and therefore the fair values do not differ from their carrying values.
| 2014 | 2013 | |||||||
|---|---|---|---|---|---|---|---|---|
| Within | Between 1 and 2 |
Between 2 and 5 |
More than |
Within | Between 1 and 2 |
Between 2 and 5 |
More than |
|
| Group | 1 year £000 |
years £000 |
years £000 |
5 years £000 |
1 year £000 |
years £000 |
years £000 |
5 years £000 |
| Trade and other payables | 9,521 | - | - | - | 16,728 | - | - | - |
| Provisions for redundancies and property | 303 | 173 | 4 | - | 633 | 147 | 142 | - |
| Exceptional provisions | 2,470 | - | - | - | - | - | - | - |
| 12,294 | 173 | 4 | - | 17,361 | 147 | 142 | - | |
| 2014 Within 1 year |
2013 Within 1 year |
|||||||
| Company | £000 | £000 | ||||||
| Trade and other payables | 548 | 5,782 | ||||||
| 548 | 5,782 |
Financial instruments by category
| Group | Company | |||
|---|---|---|---|---|
| Loans and receivables | Loans and receivables | |||
| 2014 | 2013 | 2014 | 2013 | |
| £000 | £000 | £000 | £000 | |
| Financial assets as per balance sheet | ||||
| Trade receivables | 4,436 | 6,139 | - | - |
| Accrued income | 139 | 166 | - | - |
| Other receivables | 1,756 | 1,936 | 16 | - |
| Receivables from related parties | - | - | 253 | 1,107 |
| Loans to related parties | - | - | 3,900 | 3,900 |
| Cash and cash equivalents | 17,550 | 13,931 | 266 | 5,727 |
| Total | 23,881 | 22,172 | 4,435 | 10,734 |
Within the Group net cash and cash equivalents are overdrafts of £2,810,000 (2013: £8,969,000) which are subject to a master netting arrangement.
Prepayments have been excluded from the above as they are not financial assets.
| Group | Company | |||
|---|---|---|---|---|
| Financial liabilities at | Financial liabilities at | |||
| amortised cost | amortised cost | |||
| 2014 | 2013 | 2014 | 2013 | |
| £000 | £000 | £000 | £000 | |
| Financial liabilities as per balance sheet | ||||
| Trade payables | 5,136 | 4,899 | 13 | 154 |
| Other payables | 2,286 | 3,945 | 13 | 18 |
| Accruals | 2,099 | 2,807 | 189 | 155 |
| Payables to related parties | - | - | 333 | 378 |
| Dividends payable to Company shareholders | - | 5,077 | - | 5,077 |
| Total | 9,521 | 16,728 | 548 | 5,782 |
Deferred income balances and other taxes and social security payables have been excluded from the above as they are not financial liabilities.
| Group | Company | |||
|---|---|---|---|---|
| 2014 | 2013 | 2014 | 2013 | |
| Current | £000 | £000 | £000 | £000 |
| Trade payables | 5,136 | 4,899 | 13 | 154 |
| Other taxes and social security | 1,008 | 872 | 35 | 19 |
| Other payables | 2,286 | 3,945 | 13 | 18 |
| Accruals | 2,798 | 3,556 | 189 | 155 |
| Deferred income | 1,537 | 1,288 | - | - |
| Payables to related parties | - | - | 333 | 378 |
| Dividends payable to Company shareholders | - | 5,077 | - | 5,077 |
| 12,765 | 19,637 | 583 | 5,801 |
The fair value of trade and other payables does not materially differ from the book value.
| Company | |||
|---|---|---|---|
| 2014 | 2013 | 2014 | 2013 |
| £000 | £000 | £000 | £000 |
| 360 | 360 | - | - |
| 360 | 360 | - | - |
| Group |
The fair value of other non-current liabilities does not materially differ from the book value.
The carrying amounts of the Group's trade and other payables and other non-current liabilities are denominated in the following currencies:
| 2014 | 2013 | |
|---|---|---|
| £000 | £000 | |
| Sterling | 8,205 | 12,841 |
| Euro | 1,963 | 3,604 |
| US dollar | 1,896 | 2,201 |
| Other currencies | 1,061 | 1,351 |
| Total trade and other payables and other non-current liabilities | 13,125 | 19,997 |
Analysis of total provisions:
| 2014 | Group 2013 |
Company | ||
|---|---|---|---|---|
| 2014 | 2013 | |||
| £000 | £000 | £000 | £000 | |
| Current | 3,009 | 946 | 10 | 9 |
| Non-current | 517 | 758 | - | - |
| 3,526 | 1,704 | 10 | 9 | |
| Exceptional | Employee | |||
| items | benefits | Property | Total | |
| Group | £000 | £000 | £000 | £000 |
| At 2 June 2013 | - | 751 | 953 | 1,704 |
| Charged/(credited) to the income statement: | ||||
| - Additional provisions |
2,470 | 33 | 274 | 2,777 |
| - Unused amounts reversed |
- | (95) | (165) | (260) |
| Exchange differences | - | (46) | (44) | (90) |
| Discount unwinding (note 8) | - | - | 3 | 3 |
| Utilised | - | (75) | (533) | (608) |
| At 1 June 2014 | 2,470 | 568 | 488 | 3,526 |
| At 1 June 2014 10 |
10 |
|---|---|
| - Additional provisions 1 |
1 |
| Charged to the income statement: | |
| At 2 June 2013 9 |
9 |
| Company £000 |
£000 |
| benefits | Total |
The fair value of provisions does not differ from the book value.
The Group operates a long service incentive scheme under which employees receive a one off additional holiday entitlement of two weeks when they reach 10 years of employment (10 Year Veterans). The cost of this benefit is accrued over the period of employment based on expected staff retention rates and the anticipated employment costs and are utilised once an employee reaches 10 years of employment.
Property provisions relate to property dilapidations and to committed costs outstanding under onerous or vacant lease commitments and will diminish over the lives of the underlying leases. The above provision is expected to be utilised by 2016. The estimated liability is discounted to its present value using a discount rate of 4.0% (2013: 3.0%).
Exceptional provisions relate to committed costs associated with the continental european reorganisation announced in January 2014. The provision is expected to be utilised by 2015.
| At 1 June 2014 | 31,860 | 1,593 | 9,490 | 11,083 | |
|---|---|---|---|---|---|
| Shares issued under employee sharesave scheme | 127 | 7 | 431 | 438 | |
| At 2 June 2013 | 31,733 | 1,586 | 9,059 | 10,645 | |
| Shares issued under employee sharesave scheme | 144 | 7 | 322 | 329 | |
| At 3 June 2012 | 31,589 | 1,579 | 8,737 | 10,316 | |
| Group and Company | (thousands) | £000 | £000 | £000 | |
| shares | shares | account | Total | ||
| Number of | Ordinary | premium | |||
| Share |
During the period 127,385 ordinary shares were issued (2013: 143,805). The total authorised number of shares is 42,000,000 shares (2013: 42,000,000 shares) with a par value of 5p per share (2013: 5p per share). All issued shares are fully paid.
| 2014 | 2013 | |||||||
|---|---|---|---|---|---|---|---|---|
| Capital | Capital | |||||||
| redemption | Translation | Other | redemption | Translation | Other | |||
| reserve | reserve | reserve | Total | reserve | reserve | reserve | Total | |
| Group | £000 | £000 | £000 | £000 | £000 | £000 | £000 | £000 |
| Beginning of period | 101 | 3,837 | (1,050) | 2,888 | 101 | 3,392 | (1,050) | 2,443 |
| Exchange differences on | ||||||||
| translation of foreign operations | - | (1,233) | - | (1,233) | - | 445 | - | 445 |
| End of period | 101 | 2,604 | (1,050) | 1,655 | 101 | 3,837 | (1,050) | 2,888 |
The other reserve was created on flotation following a payment to the previous holders of the Company's ordinary shares.
As at 1 June 2014, the Company's capital redemption reserve was £101,000 (2013: £101,000). The Company had no other reserves in addition to the capital redemption reserve at either period end.
| Group | £000 |
|---|---|
| At 3 June 2012 and 4 June 2012 | 35,848 |
| Profit attributable to owners of the parent | 16,318 |
| Deferred tax on share options | 41 |
| Current tax on share options | 232 |
| Share-based payments | 286 |
| Dividends to Company shareholders | (18,404) |
| At 2 June 2013 and 3 June 2013 | 34,321 |
| Profit attributable to owners of the parent | 8,007 |
| Deferred tax on share options | (34) |
| Current tax on share options | 74 |
| Share-based payments | 288 |
| At 1 June 2014 | 42,656 |
| Group | Company | |||
|---|---|---|---|---|
| 2014 | 2013 | 2014 | 2013 | |
| £000 | £000 | £000 | £000 | |
| Operating profit/(loss) | 12,297 | 21,254 | (2,408) | (2,766) |
| Depreciation of property, plant and equipment | 4,907 | 5,099 | - | - |
| Net impairment reversal on property, plant and equipment | (204) | (69) | - | - |
| Loss/(profit) on disposal of property, plant and equipment (see below) | 370 | (7) | - | - |
| Loss on disposal of intangible assets (see below) | 333 | 403 | - | - |
| Amortisation of capitalised development costs | 4,121 | 2,700 | - | - |
| Amortisation of other intangibles | 849 | 1,178 | - | - |
| Share-based payments | 288 | 286 | - | - |
| Dividend income from investments in subsidiary undertakings | - | - | 14 | 19,101 |
| Changes in working capital: | ||||
| - (Increase)/decrease in inventories | (468) | 1,422 | - | - |
| - Decrease in trade and other receivables | 1,545 | 315 | 1,056 | 975 |
| - (Decrease)/increase in trade and other payables | (952) | 17 | 450 | 440 |
| - Increase/(decrease) in provisions | 1,911 | (690) | 1 | - |
| Net cash from operating activities | 24,997 | 31,908 | (887) | 17,750 |
In the cash flow statement, proceeds from the sale of property, plant and equipment comprise:
| 2014 | 2013 | |
|---|---|---|
| £000 | £000 | |
| Net book amount | 424 | 106 |
| (Loss)/profit on sale of property, plant and equipment | (370) | 7 |
| Proceeds from sale of property, plant and equipment | 54 | 113 |
The Company sold no property, plant and equipment during either period.
The Group disposed of intangible assets with a net book amount of £333,000 during the period (2013: £403,000). There were no proceeds on disposal in either period and hence a loss on disposal equivalent to the net book value was recorded.
The Company sold no other intangibles during either period.
| As at | Cash | Exchange | As at |
|---|---|---|---|
| 2 June 2013 | flow | movement | 1 June 2014 |
| £000 | £000 | £000 | £000 |
| 13,931 | 3,948 | (329) | 17,550 |
| 13,931 | 3,948 | (329) | 17,550 |
| As at | |||
| 2 June 2013 | flow | movement | 1 June 2014 |
| £000 | £000 | £000 | £000 |
| 5,727 | (5,447) | (14) | 266 |
| 5,727 | (5,447) | (14) | 266 |
| As at | Cash | Exchange |
| Group | Company | |||
|---|---|---|---|---|
| 2014 | 2013 | 2014 | 2013 | |
| £000 | £000 | £000 | £000 | |
| Increase/(decrease) in cash and cash equivalents in the period resulting from cash flows | 3,948 | (3,425) | (5,447) | (212) |
| Change in net funds resulting from cash flows | 3,948 | (3,425) | (5,447) | (212) |
| Exchange movement | (329) | (2) | (14) | 7 |
| Net funds at start of period | 13,931 | 17,358 | 5,727 | 5,932 |
| Net funds at end of period | 17,550 | 13,931 | 266 | 5,727 |
Capital expenditure contracted for at the balance sheet date but not yet incurred is as follows:
| 2014 | 2013 | |
|---|---|---|
| Group | £000 | £000 |
| Property, plant and equipment | 478 | 484 |
The Company had no capital commitments at either period end.
The future aggregate minimum lease payments under non-cancellable operating leases are payable as follows:
| 2014 | 2013 | |||||
|---|---|---|---|---|---|---|
| Hobby | Other | Hobby | Other | |||
| centres | property | Other | centres | property | Other | |
| Group | £000 | £000 | £000 | £000 | £000 | £000 |
| Within 1 year | 6,519 | 548 | 183 | 6,161 | 673 | 228 |
| Between 2 and 5 years inclusive | 9,890 | 1,051 | 198 | 14,289 | 1,269 | 299 |
| In over 5 years | 503 | - | - | 2,028 | 52 | - |
| 16,912 | 1,599 | 381 | 22,478 | 1,994 | 527 |
The Company had no operating lease commitments at either period end.
| 2014 | 2013 | |
|---|---|---|
| Group | £000 | £000 |
| Raw materials | 365 | 214 |
The Company had no inventory purchase commitments at either period end.
The Group and Company operate defined contribution schemes. Commitments in respect of pensions are included within prepayments and accruals.
The Group and Company had no contingent liabilities that are expected to give rise to material liabilities at either period end.
The Group has contingent liabilities in respect of the potential reversionary interest in sub-let leasehold properties amounting to £139,000 (2013: £189,000).
The Company provides indemnities to third parties in respect of contracts regarding their use of the Group's intellectual property, under commercial terms in the normal course of business.
The Company has also guaranteed the bank overdrafts of certain Group undertakings for which the aggregate amount outstanding under these arrangements at the balance sheet date was £1,586,000 (2013: £1,585,000).
For the year ended 1 June 2014, the subsidiary companies listed below are exempt from the requirements of the Companies Act 2006 relating to the audit of individual statutory accounts by virtue of section 479A. As a result, the Company guarantees all outstanding liabilities to which the subsidiary companies are subject.
| Country of | |||
|---|---|---|---|
| incorporation | Company | ||
| Name of undertaking | or registration | Registration No. | |
| Games Workshop Limited | England and Wales | 1467092 | |
| Games Workshop International Limited | England and Wales | 2924330 | |
| Games Workshop US Limited | England and Wales | 7462905 | |
| Games Workshop US (Holdings) Limited | England and Wales | 4428814 |
During the period the Company provided management and similar services to Games Workshop Limited, a subsidiary undertaking.
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation for the Group.
The Group had no related-party transactions in the current or prior period.
Transactions between the Company and its subsidiaries are shown below:
| 2014 | 2013 | ||
|---|---|---|---|
| Subsidiary | Nature of transaction | £000 | £000 |
| Games Workshop International Limited | Dividends receivable | 16 | 1,000 |
| Games Workshop Limited | Recharges | 407 | 405 |
| Dividends receivable | - | 14,500 | |
| Games Workshop Retail Inc. | Dividends receivable | - | 3,601 |
Receivables/(payables) outstanding between the Company and its subsidiaries are shown below:
| Amounts owed by subsidiaries |
Amounts owed to subsidiaries |
|||
|---|---|---|---|---|
| 2014 | 2013 | 2014 | 2013 | |
| Subsidiary | £000 | £000 | £000 | £000 |
| Games Workshop Group PLC Employee Share Trust | 50 | 48 | - | - |
| Games Workshop Limited | 172 | 897 | - | - |
| Games Workshop Retail Inc. | 13 | - | - | (87) |
| EURL Games Workshop | - | 4 | (2) | - |
| Games Workshop SL | 8 | 13 | - | - |
| Games Workshop Oz Pty Limited | - | 3 | (10) | - |
| Games Workshop Deutschland GmbH | 4 | 11 | - | - |
| Games Workshop International Limited | - | - | (319) | (291) |
| Games Workshop (Queen Street) Limited | - | 5 | (2) | - |
| Games Workshop Italia SRL | 4 | 120 | - | - |
| Games Workshop Stockholm AB | 1 | 5 | - | - |
| Games Workshop Limited (New Zealand) | 1 | 1 | - | - |
| 253 | 1,107 | (333) | (378) |
Non-current loans outstanding between the Company and its subsidiaries are shown below:
| Amounts owed by | |||
|---|---|---|---|
| subsidiaries | |||
| 2014 | 2013 | ||
| Subsidiary | £000 | £000 | |
| Games Workshop Interactive Limited | 6,779 | 6,779 | |
| Less provision for impairment | (6,779) | (6,779) | |
| Games Workshop Limited | 3,900 | 3,900 | |
| 3,900 | 3,900 |
Mrs K Kirby (Lathbury) received £117,461 (2013: £73,620) during the year from the Group for her work as interim head of IT.
| 2014 | 2013 | 2012 | 2011 | 2010 | |
|---|---|---|---|---|---|
| £000 | £000 | £000 | £000 | £000 | |
| Revenue | 123,501 | 134,597 | 131,009 | 123,052 | 126,511 |
| Operating profit – pre-exceptional items and royalties receivable | 15,355 | 20,229 | 15,603 | 12,789 | 12,989 |
| Exceptional items | (4,500) | - | - | - | - |
| Royalties receivable | 1,442 | 1,025 | 3,537 | 2,455 | 3,991 |
| Operating profit | 12,297 | 21,254 | 19,140 | 15,244 | 16,980 |
| Finance income | 106 | 176 | 434 | 132 | 442 |
| Finance costs | (7) | (35) | (100) | (89) | (367) |
| Profit before taxation | 12,396 | 21,395 | 19,474 | 15,287 | 17,055 |
| Income tax expense | (4,389) | (5,077) | (4,760) | (4,047) | (1,302) |
| Profit attributable to owners of the parent | 8,007 | 16,318 | 14,714 | 11,240 | 15,753 |
| Basic earnings per ordinary share | 25.2p | 51.5p | 46.8p | 36.0p | 50.6p |
| Pre-exceptional earnings per ordinary share | 36.1p | 51.5p | 46.8p | 36.0p | 50.6p |
Annual general meeting 17 September 2014 Announcement of half year results January 2015 Financial year end 31 May 2015 Announcement of final results July 2015
Notice is hereby given that the annual general meeting of Games Workshop Group PLC (the 'Company') will be held at the Company's registered office, Willow Road, Lenton, Nottingham, NG7 2WS at 10.00am on 17 September 2014 for the following purposes:
As ordinary business to consider and, if thought fit, to pass the following resolutions 1 to 8 as ordinary resolutions:
To receive the Company's annual accounts for the year ended 1 June 2014 together with the directors' report, the remuneration report and the auditor's report on those accounts, the auditable part of the remuneration report and the directors' report.
To re-elect K D Rountree as a director.
To elect E O'Donnell as a director.
To re-elect C J Myatt as a director.
To re-elect N J Donaldson as a director.
To re-appoint PricewaterhouseCoopers LLP as auditors to hold office until the conclusion of the next general meeting at which accounts are laid by the Company and to authorise the directors to fix their remuneration.
To approve the remuneration report (excluding the directors' remuneration policy set out on pages 19 to 22) for the year ended 1 June 2014.
To approve the directors' remuneration policy set out on pages 19 to 22, such remuneration policy to take effect from the date on which the resolution is passed.
To consider and, if thought fit, pass the following resolutions, of which resolution 9 will be proposed as an ordinary resolution and resolutions 10 and 11 will be proposed as special resolutions.
That the directors of the Company be generally and unconditionally authorised in accordance with section 551 of the Companies Act 2006 (the 'Act') to exercise all the powers of the Company to allot Relevant Securities (as defined below) up to an aggregate nominal amount of £525,704 provided that this authority shall, unless renewed, varied or revoked by the Company, expire on 16 December 2015 or, if earlier, the date of the next annual general meeting of the Company save that the Company may, before such expiry, make offers or agreements which would or might require Relevant Securities to be allotted and the directors may allot Relevant Securities in pursuance of such offer or agreement notwithstanding that the authority conferred by this resolution has expired. This resolution revokes and replaces all unexercised authorities previously granted to the directors to allot Relevant Securities but without prejudice to any allotment of shares or grant of rights already made, offered or agreed to be made pursuant to such authorities. Relevant Securities means: (i) shares in the Company other than shares allotted pursuant to an employee share scheme (as defined by section 1166 of the Act), a right to subscribe for shares in the Company where the grant of the right itself constituted a Relevant Security or a right to convert securities into shares in the Company where the grant of the right itself constituted a Relevant Security; (ii) any right to subscribe for or to convert any security into shares in the Company other than rights to subscribe for or convert any security into shares allotted pursuant to an employee share scheme (as defined by section 1166 of the Act). References to the allotment of Relevant Securities in this resolution include the grant of such rights.
That subject to the passing of resolution 9 above, the directors of the Company be given the general power pursuant to sections 570 to 573 of the Companies Act 2006 (the 'Act') to allot or make offers or agreements to allot equity securities for cash, either pursuant to the authority conferred by resolution 9 above or by way of a sale of treasury shares, as if section 561(1) of the Act did not apply to any such allotment, provided that this power shall be limited to:
The power granted by this resolution will expire on 16 December 2015 or, if earlier, the conclusion of the Company's next annual general meeting (unless renewed, varied or revoked by the Company prior to or on such date) save that the Company may, before such expiry make offers or agreements which would or might require equity securities to be allotted after such expiry and the directors may allot equity securities in pursuance of any such offer or agreement notwithstanding that the power conferred by this resolution has expired. This resolution revokes and replaces all unexercised powers previously granted to the directors to allot equity securities as if either section 89(1) of the Companies Act 1985 or section 561(1) of the Act did not apply but without prejudice to any allotment of equity securities already made or agreed to be made pursuant to such authorities. For the purposes of this resolution the expression 'equity securities' and references to 'allotment of equity securities' respectively have the meanings given to them in section 560 of the Act.
That the Company be and is hereby granted general and unconditional authority for the purposes of section 701 of the Companies Act 2006 (the 'Act') to make market purchases (within the meaning of section 693(4) of the Act) of ordinary shares of 5p each in the capital of the Company ('ordinary shares') on such terms and in such manner as the directors may from time to time determine provided that:
By order of the board
Company secretary 28 July 2014 Registered office: Willow Road, Lenton Nottingham NG7 2WS Registered in England and Wales under number 2670969
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