Yesterday Games Workshop's financials came out, and overall they look rather healthy. It does look like there was some reduction in cash flow, but overall the profits were up from the previous report. (I will not pretend to be able to read the fine lines of the report). So here are the links where you can read them yourself, and people more qualified than myself can comment.


http://investor.games-workshop.com/2013/07/29/preliminary-results-2013/

http://investor.games-workshop.com/wp-content/uploads/2013/07/Preliminary-announcement-2013.pdf

via Tom Kirby, chairman and acting CEO of Games Workshop 
“Games Workshop has had a mixed year. Sales were stronger in the first half than the
second, but cost control and cash management have strengthened throughout the period.
We finish the year with the most profit this company has generated since flotation and have
returned £18.4 million to our owners.

55 Comments:

  1. I am waiting for the first guy to say "this is the end - gw is broke". Its allways fun since years if not decades.

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    1. "If this trend keeps up, GW will die."

      There You go.
      But seriously, they'll do if nothing change (and Kirby blaming "fad" isn't helping).

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    2. It's not that they're dying, it's just they're throwing their backs in to simply treading water. Needn't be alarmed over it but it's not the sign of a healthy company that's for sure. At the end of the day though, the status quo isn't going to effect me or my hobby in the short term.

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  2. The sky has been falling since 1992. Why should this year be any different?

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  3. Good, because there's no way I'm switching to trashy warmachine with its lazy ass community, since like 99% of the people at my local large FLGS don't even make any attempt to paint their models, and that's not even an exaggeration.

    Infinity's model quality is way overrated and the anime art direction puts me right off. Dust and drop zone commander are already dead.

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    1. lol, well aren't you just a little ray of sunshine...

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    2. Try Malifaux, there's no community for it round where I live but it's the only other system that remotely appeals to me although Dark Age is looking promising.

      I agree with you on infinity and frankly Warmachine models look bland, plus, and I could be wrong here, but the game seems to resolve around the sole objective of killing each others VIP and I don't see a lot of longevity in that. Of course if a Warmachine player wants to enlighten me feel free, so long as it's what the game is like, not just whining about 40k.

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    3. 40k is not much different it's basically just a run and gun with very few people thinking as to why a fight is happening, it's just a meat grinding game where at the onset, true players can tell just by the list who will win

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    4. The irony in the original statement is that in my area, 50% of people don't paint their 40k, but 100% paint their Warmachine.

      Myself included... painting tends to bore me to tears if I have too much to do.

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    5. William, that is a comment of such unbelievable ignorance, I had to do a doubletake when I read it.

      If players do not play for fluff, that is entirely their fault, and it is no different with warmachine.

      Skill, luck and your list are all equally balanced in 40k, anyone that is competent will tell you. If your plan is turd you will lose. If your luck is crap at vital moments you'll be at a great disadvantage.

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    6. I will agree with the one Malifaux comment above. It is a rather decent scene where I live, and the players are a good mix of old and new. Since each individual unit has more to do, games are made and broke based off of tactics, bluffs, and Skill. I may have lost one game due to bad luck, but even then, it was my fault for getting myself into a situation where bad luck could kill me.

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    7. And we have a new version of Malifaux coming soon. I just got the first print copy on my desk. M2E should be in shops early next month!

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    8. I play pretty much all of these games...

      In Warmahordes it's true that you can win by killing the other army's leader, but there are other, and often easier to achieve, objectives that can win you the game via scenario. Aesthetically, Privateer isn't my favorite, but I have to say that their resin and metal models are damn near immaculate in my experience.

      Infinity is excellent in both design and conception, but suffers from a ruleset that is constantly in flux and translated from Spanish which, although it is usually fine, sometimes leads to gray areas. That being said, if you don't like the sculpts, that's on you, but keep in mind you only need 8-10 models to play a reasonable force.

      Malifaux is a game that can be fun if you have fun people to play it with. I can't speak to the new edition, but in the last one it was a withering game for learners based not only on the sheer number of special rules but on the tendency of the game towards experienced players building a win-engine out of carefully synergized models. It was common to watch yourself lose for 2-3 turns with little or nothing you could do to stop it.

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  4. Pretty sure thsat they will get a propper surge in the end of this year, with the release of a new Space Marine codex.

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    1. The release of 6th, Hobbit, CSM, Daemons, Tau and Eldar didn't do it, but SM will. Solid thinking there.

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    2. Tau and Eldar wouldn't be included in these statements. Financial year ends April.

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  5. Replies
    1. Well that's the million dollar question...

      It's like saying there was no price rise this year, when actually paints went up in price, why? Because they're being made in the UK now. Ok fair enough, why are they being made in the UK now? Because it's cheaper logistically... Err? So again why the price rise?

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    2. Probably because they cost more to produce in the UK?

      lol

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    3. But if the purpose of bringing the manufacturing to the UK was to lower costs then why increase prices?

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    4. Probably because they control all aspects of the product now, yes certain costs will rise but not by much. I've worked for restaurant s that do a similar thing create from scratch lowering production costs but raise sale price for a "superior" product

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  6. http://yesthetruthhurts.com/2013/07/gws-financials/
    Also CTRL+F and search for "Agahnim" for pretty vague explanation "between the lines"

    http://theback40k.blogspot.com/2013/07/gw-financials-2013-first-five-pages.html

    Anyway, it's bad for GW. They control sales (via shoddy policies for independent retailers), expanded their range (GW never pumped as many models or books per year [in this case fiscal year]) and yet they actually lost money.

    Marines are red
    Marines are blue

    Kitby is bad CEO
    But still blames YOU.

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    1. You just argued against your own point...

      "They...expanded their range (GW never pumped as many models or books per year [in this case fiscal year]) and yet they actually lost money."

      It takes money to make money. They've obviously dumped a large chunk of capital back into production. Developers, printers, sculptors and shipping companies don't work for free. Same reason why games console release years tend to show downward blips in profitability for Sony, Microsoft, et al.

      Now I'm certain that this isn't the sole reason for a loss in the profit margin. I'm sure that there have been several other factors, from legal fees to some fringe-tourney-players-who-shall-not-here-be-named throwing their toys out of the pram.

      I think, however, that this is the initial down-turn of GW's change to the "long game" of investment versus payoff. I just hope that the right hand knows what the left is doing, and they don't use this initial downturn as an excuse for further price hikes.

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    2. Stelek and Sandwyrm aren't exactly objective voices when it comes to GW. Their whole schtick is "GW is a failing company that is produces terrible products and if you don't agree with me then you're an a-hole because I'm right." They've been banging that drum for years.

      Sandwyrm is not as bad as Stelek about it, but both of them love to dissect any news and then amplify anything to support their preconceived notion and trumpet about how right they are that GW is failing.

      But hey, I guess if it drives traffic to your blog...

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    3. Chris Kyle - makes me smile to hear you say that! An amusing historical sidebar - I'm lucky enough to own issue 51 of White Dwarf (March 1984) and even then there were people bellyaching in the little letters half-page that GW was a horrible failing company with terrible products that had sold out and was going under soon.

      Makes you laugh, doesn't it?

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    4. Bad breaker uppers. They should just play the games they like and let it go. I guess when you're rabid about the game for so long in such a public way, you have to act like that to save face. In crazy town at least.

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    5. In fairness, a lot of the models they released this year have been finished and awaiting distribution for some time (years.) The exceptions being the giant stuff and some of the one-off plastics.

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  7. Ironically, those who scream GW IS DEAD!!! the loudest whilst trashing them all over teh interwebz, are probably the same ones pre-ordering the ridiculous $250 'Collector Edition' codexes...

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    1. A sweeping assumption there;

      a) GW is dead!!!
      b) Collectors editions are only limited to a few thousand! It makes me a super special snowflake!

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    2. Alternatively, they're 1D4Chan viewers X3

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  8. What it DOSE NOT mention is the savings of CEO Mark Wells leaveing. Yes GW had a lot of cash it didnt have to pay a extra CEO millions of pounds.

    Just FYI...

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    1. They won't really benefit from that till fiscal 2014. They were paying him for most of their 2013 year and most likely had to pay him a severance package.

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  9. All in all, they are kinda right, their numbers are a mixed bag (accountant here). Could be way better, but not bad. Definitely not trying to sell themselves, everything they've been doing is to increase the health of their cash flow and balance sheet.

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    1. More details please, Accountant Man!

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    2. I don't understand the finance sheets at all, so I also would like more details please could you help make clear what it all means?

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    3. Sadly, I'm at work, so I can't look at the financials atm (damn filter). However, look at their new business practices as of late. Collector's editions (high priced, low cost of sale increase item); hard bound codex's (Streamlines production - same plant as the Fantasy stuff); far more frequent releases (we all can see this - more frequent sales); and an increase on the number of direct order only items (converting wholesale sales into retail company sales); these are the actions of a company attempting to increase their bottom line (CEO expulsion too).

      But the thing that strikes me is the margin. They had $134 million in gross revenue, but the profit after tax (if I remember right) was about $16.5 million. That's roughly about 13%, which isn't way thin (I work for a Ford franchise, auto industry and grocery stores are the poster children for thin margin), but could be way better. And that $16 mill figure is BEFORE they pay out their dividends, which further reduces the amount of cash they get to retain for the company for the next years business.

      As for my remark about not trying to sell themselves... They are not too particularly attractive to buy. Their own statement pretty much was a "Well, things could be better but at least they aren't worse." deal. Plus, they would honestly benefit more if they could go private again (no more dividends, no more answering to shareholders!).

      WALL OF TEXT CRITS YOU! :p

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    4. GW does pay out ALOT in dividends. It is currently around like 7 percent a year, which is quite high.

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    5. Thanks Asta, much appreciated :]

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  10. So in the end, no GW is not selling, no GW is not failing. What are the haters gonna hate now?

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    Replies
    1. Their prices.
      They can sell more for less, and make more money from that.

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    2. Zirakaji, that assumption relies on the idea that any price decrease will be immediately accompanied with a large increase in sales. You might see a slight boost, but people tend to budget a set amount of cash for models so it's more likely that they'll move more product but revenue will remain flat.

      They might bring in some new customers with a lower price point to be sure, but a majority of people who play buy their armies second hand on ebay anyways, so even then it probably wouldn't be a huge benefit.

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    3. Chris is correct, lower prices do NOT guarantee increased sales. It only guarantees lower margins on sales and increased vulnerability to risk and economic factors.

      Games Workshop is a public corporation, I do not think their major shareholders (other corporations and investment firms) will take a flattening or decrease in profitability with anything remotely positive in manner.

      Additionally, I'm starting to think the increases in prices we've seen have been more a result of increased costs of manufacture and taxation/labor/union costs (I don't know much on the UK labor environment).

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    4. How do you figure that a majority of people buy their armies second hand on ebay? You got any evidence to back this up?

      Or is it just more BS made up by the internets. Yeah, thought so.

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    5. I don't have a word on economy, but for my own experience when you got products you like and can enter a GW store and, without planning to waste money, get out of the shop with some products in your hands that you "just pick" because you like it, is WAAAAAAAAAY better than getting out of the store with empty hands once... or two times... third time you even don't go to the store if you don't plan to buy. So next time you only plan thinks for your birthday or christmas. So A LOT OF less money dedicated to the hobby. That's the side effect of increasing prices that hard, you don't see the hobby again as "something you can afford easily" and even your family begins to say you shouldn't have bought that crisis suit, and then you begin to ONLY but paints and the WD... simply because 15 dollars is something you and your family can afford without notice, but then you realize that the mag is not worth that price, and that vallejo paint is cheaper, and that there are great brushes out there that are really nice and cheaper... That hurts. GW shouldn't be counting on the BIG MEGA TOY to sell a lot, but in the little models, the cheap products. Should be really nice if they, for once, would be able to think slightly smaller and allow to have expensive products (but worthy! of course!!) combined with just things you can pick just because you like and you can.

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    6. The problem with the high prices is that it scares away new people. selling models to the same million people is neat and all, but with a lower price point, sure the million will buy the same cash value (possibly) but you can gain more customers. For instance, Bandai makes a killing selling its models. I got into malifaux since a starter box was 40$ and had almost an entire crew in it, so just being curious I jumped in. I could do that because it is cheap. if GW released tonnes of cheaper models, then people who are curious can get into the hobby, that is where the lower price point would get them more money.

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  11. A couple things I noticed after a quick scan, Kirby states the growth in sales is attributable to Forgeworld and Black Library. In the Segment section, Black Library, Forgeworld,and digital sales are all grouped together. Of the 3.6M (sorry I don't have the right currency sign) increase in sales in total, the sales for these three segments accounted for 2.8M. Which means increase in actual GW sales of hard products is 0.8M.

    Also, their stated inventory dropped this year. I don't know what they recorded in past years, but a 1.3M drop is noticeable. A factor could be closing the Memphis production facility ealier this year. It may also indicate they haven't rebuilt up inventory for any major releases or it could be that they're just tightening down on how much they produce and store away before upcoming releases.

    Royalty income is explained, but they're hoping to get some license agreements up and running with smaller games on apps and the like. That loss of income offset some of their other gains.

    They're closing stores and trying to open new ones with cheaper rents as they have been in the past couple of years. This is reflected in their decreased operating expenses. They want to add 10 stores in North America in the next year, and 9 more throughout the rest of the world. He mentions 40 to 50 new stores worlwide would be ideal, but I think that's a stretch.

    Their revenue and cost of sales have gone up as we get collector's editions and HH forgeworld releases. Even their Black Library book line of HH has gotten fancy. That's reflected in these increases.

    The other change in the balance sheet is cash. They made 26.6M of net profit, invested 12M in new assets and licenses, and then distributed out 18M. So they dropped 3M in cash, but still have 14M in the bank. I would think that would be enough to see them through any unexpected downturn in the short term. But I would be concerned if we saw another round of distributions exceed their profits next year.

    Oh and we should see a new online store in April 2014.

    Let me know if I missed anything or if anybody saw something different.

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    1. Agreed. These are hard times for everyone. That takes reflection on the actual state of affairs for GW. Even now they're staying at float which is a feat by itself. Their business model is not the best out there but seems to work, making them weather the storm quite safely. No one in their right mind should expect to see Apple-like profits in GW report. Even Apple failed to deliver this year. I am inclined to say that were not for 40k releases GW would have fared much worse.
      So now it's a new year for GW, let's see if they keep up with the momentum or just paly safely (wich could mean product cancellations).

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  12. Interesting points:

    1.) New CEO will "probably" (read: certainly) be an internal appointment.

    2.) New webstore opening Spring 2014. Back to bitz business after a 8-year hiatus, or something else? (2006 was IIRC when they closed the old store, trashed the bitz service, and removed free content from the site)

    3.) Risk: Fantasy becoming unfashionable. I'm not saying they're considering to shut down WHFB, but I'm saying it nevertheless.

    4.) "Loss" of cash. This is actually mostly from paying bigger dividends than last year. CF from operations increased (helped by the decreasing inventory levels) and increase in investments is roughly the same as increase in CF from operations, so they cancel each other out. Otherwise, profit margin and absolute profit increased, so GW is not going to go under anytime soon, no matter what the haters daydream.

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    1. 1) I think this is a given.

      2) Could be. There's been talk of GW going back into the Bitz buisness for a while (not that they haven't already with the upgrade packs). There's even a booming eBay market that trades with GW Bits that GW might want a cut off. It remains to be seen though if GW can offer a better service than them.

      3) There's a thing called Risk:Fantasy? If it's WHFB, I'm not so sure - I know a few people who play it here (then again, I live in Nottingham so this is probably why). It's more likely that the LOTR miniatures will be cut before WHFB.

      4) Given they made a profit the past couple of years, I think this is also a given. Though it remains to be seen with the failing English Economy just how long they can keep that momentum going.

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    2. I think you misread, its Risk (as in, there is a risk indicated here of...) = Fantasy being cancelled. Because WFB is apparently not fashionable per Kirby's comments.

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    3. I shouldn't worry about the game of Warhammer Fantasy too much. I think he's addressing 'fantasy' as a vague genre as will be understood by shareholders rather than 'Fantasy' in the GW sense of the word. And besides which, he's actually dismissing the threat. He makes the point that they were around before the fantasy genre boom (pre-Lotr) and have outlived it. It seems to me that he's coming up with all scenarios which the shareholders might panic about and soothing them. Kirby isn't daft enough to believe that fantasy is a dying genre (GOT etc) and he's certainly not daft enough to cancel a very popular and lucrative product range. That would be a sure way to harm the business - for example, 40k doesn't really engage me any more, getting rid of WFB would be the one and only way to ever drive me away from GW.
      Remember that further down he even discusses the insurance on the factory. He's just making shareholders feel better. Nothing to worry about.

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    4. Correct, he was referring to fantasy in general.

      40k is also fantasy, not sci-fi as there is no science behind why anything works. They don't explain why putting a battery in a sword makes it pass through armor. It just does it.

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    5. They don't explain in Star Wars how a light sabre works but its still sci-fi!

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  13. While I've been a 40k fanatic for years, sometimes I pray to the gods of economy that GW will see a sales decrease and luckily will crush. In greece,(the economical crisis is running rampant) already people have started doing a lot of proxy due to the very high prices, while a few are ready quit the hobby. And the interesting is that several asian companies have started making model copies from resin for 50% of the GW price. In conclusion, people aren't gonna suffer those prices for long

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