Games Workshop Regulatory News (GAW)

PRESS ANNOUNCEMENT

GAMES WORKSHOP GROUP PLC

16 January 2014

Games Workshop Group PLC ("Games Workshop" or the "Group") announces its half-yearly results for the six months to 1 December 2013.

Highlights:

Tom Kirby, Chairman and Acting CEO of Games Workshop, said:

"Our costs are well under control and margins remain strong. Cash management is good and our capital expenditure continues as planned. Following the implementation of the structural changes just announced we expect to benefit from the more focussed selling operation across all channels against the background of a materially lower cost base."

…Ends…

*Constant currency revenue is calculated by comparing results in the underlying currencies for 2012 and 2013, both converted at the average exchange rates for the six months ended 2 December 2012.

FIRST HALF HIGHLIGHTS

*Constant currency revenue is calculated by comparing results in the underlying currencies for 2012 and 2013, both converted at the average exchange rates for the six months ended 2 December 2012.

INTERIM MANAGEMENT REPORT

First half performance

Sales in the first half of the year were down against the comparable period in the prior year, continuing the trend that developed in the second half of 2012/13. During the first half, the rapid transition from multi-man stores to one-man stores and the reduction of trading hours across the Group caused disruption in our retail chain. We also experienced some decline in sales through independent stockists.

We view these as short-term issues and expect to see growth return in both channels. We continue with our store opening programme (27 stores opened, 20 closed in the period) secure in the knowledge that our one man model allows us to ensure new openings are profitable. In the future we expect to benefit from the more focussed selling operation across all channels against the background of a materially lower cost base.

Changes to operating structure

We have just announced a major re-organisation of our sales businesses to allow management by channel: retail, trade and direct. Our retail businesses will be consolidated under a single Retail Sales Manager for each of our key geographic areas - UK, Europe and North America. Trade sales will be consolidated into a global business, operating from Lenton, Nottingham.

Prospects

Our costs are well under control and margins remain strong. Cash management is good and our capital expenditure continues as planned. The principal risks and uncertainties for the rest of the financial year relate to sales and the implementation of the structural changes we have just announced. Whilst profit will remain under pressure during the implementation of the structural changes mentioned above, the board remains confident in the future growth and profitability of the Group.

Going concern

After making appropriate enquiries, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason they have adopted the going concern basis in preparing this condensed consolidated interim financial information.

Statement of directors' responsibilities

The directors confirm that this condensed consolidated interim financial information has been prepared in accordance with IAS 34, 'Interim Financial Reporting', as adopted by the European Union, and that the interim management report herein includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:

· an indication of important events that have occurred during the first six months and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

· material related-party transactions in the first six months and any material changes in the related-party transactions described in the last annual report.

In the six months to 1 December 2013, E M O'Donnell was appointed to the board as a non-executive director. There have been no other changes to the board since the annual report for the year to 2 June 2013. A list of all current directors is maintained on the investor relations website at investor.games-workshop.com.

By order of the board

T H F Kirby

Chairman and Acting CEO

K D Rountree

COO

16 January 2014

CONSOLIDATED INCOME STATEMENT

*Prior periods have been restated to reflect a change in the classification of product design and development costs within the income statement with effect from 29 May 2011 (see note 6).

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME AND EXPENSE

The following notes form an integral part of this condensed consolidated interim financial information.

CONSOLIDATED BALANCE SHEET

The following notes form an integral part of this condensed consolidated interim financial information.

CONSOLIDATED STATEMENT OF CHANGES IN TOTAL EQUITY

The following notes form an integral part of this condensed consolidated interim financial information.

CONSOLIDATED CASH FLOW STATEMENT

The following notes form an integral part of this condensed consolidated interim financial information.

NOTES TO THE FINANCIAL INFORMATION

1. Basis of preparation

The Company is a limited liability company, incorporated and domiciled in the United Kingdom. The address of its registered office is Willow Road, Lenton, Nottingham, NG7 2WS.

The Company has its listing on the London Stock Exchange.

This condensed consolidated interim financial information does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year ended 2 June 2013 were approved by the board of directors on 29 July 2013 and have been delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under either section 498 (2) or section 498 (3) of the Companies Act 2006.

This condensed consolidated interim financial information has not been audited or reviewed pursuant to the Auditing Practices Board guidance on 'Review of Interim Financial Information' and does not include all of the information required for full annual financial statements.

This condensed consolidated interim financial information for the six months ended 1 December 2013 has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority and with IAS 34, 'Interim Financial Reporting' as adopted by the European Union. The condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended 2 June 2013 which have been prepared in accordance with IFRSs as adopted by the European Union.

After making appropriate enquiries, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason they have adopted the going concern basis in preparing this condensed consolidated interim financial information.

This condensed consolidated interim financial information was approved for issue on 15 January 2014.

This condensed consolidated interim financial information is available to shareholders and members of the public on the Company's website at investor.games-workshop.com.

The preparation of interim financial information requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

In preparing this condensed consolidated interim financial information, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 2 June 2013.

The accounting policies applied are consistent with those of the annual financial statements for the year ended 2 June 2013, as described in those financial statements.

Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.

There are no new standards, amendments to standards or interpretations which are expected to have a significant impact on the Group.

2. Segment information

The chief operating decision-maker has been identified as the executive directors. They review the Group's internal reporting in order to assess performance and allocate resources. Management has determined the segments based on these reports.

As Games Workshop is a vertically integrated business, management assess the performance of sales businesses and manufacturing and distribution businesses separately. At 1 December 2013, the Group is organised as follows:

- Sales businesses. These businesses sell product to external customers, through the Group's network of Hobby centres, independent retailers and direct via the global web store. The sales businesses have been aggregated into segments where they sell products of a similar nature, have similar production processes, similar customers, similar distribution methods and are affected by similar economic factors. The segments are as follows:

- UK. This sales business operates in the UK and Ireland.

- Continental Europe. This combines the France, Germany, Italy, Spain and Northern Europe sales businesses.

- North America. This combines the United States and Canada sales businesses.

- Australia. This is the Australia sales business.

- Export. This is the export sales business selling into emerging market territories.

- Asia. This combines the Japan, China retail and Asia trade sales businesses.

- Other. This includes the other operating segments reviewed by the chief operating decision-maker. These are the Forge World business, the Black Library business, digital sales and Warhammer World.

- Product and supply. This includes the design and manufacture of the products and incorporates production facilities in the UK and, until March 2013, in North America.

- Logistics and stock management. This represents the warehousing and distribution activities needed to supply product to the sales businesses and includes facilities in the UK, Australia and North America.

- Licensing costs. These are the costs of running the licensing department.

- Service centre costs. Service centres are established in the UK, Australia and in North America to provide support services (IT, accounting, payroll, personnel, supplier development and legal) to activities across the Group.

- Web costs. These are the costs associated with the running of the Games Workshop global web store.

- Central costs. These include the Company overheads, head office site costs and the costs of running the Games Workshop Academy.

- Profit in stock. This includes adjustments for profit in stock arising from inter-segment sales.

- Royalty income. This is royalty income earned from third party licensees.

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 periods included in this financial information is as follows:

Segment costs of £790,000 for the six months ended 2 December 2012 relating to finance, IT and personnel teams based in North America have been restated since the last interim report into Service centre costs rather than being shown in Product and supply. This reflects the management structure in place for the year ended 2 June 2013 and for the six months ended 1 December 2013.

Segment costs of £425,000 for the six months ended 2 December 2012, and segment 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 interim and annual reports into Service centre costs rather than being shown in Product and Supply. This reflects the management structure in place for the six months ended 1 December 2013.

Segment costs of £265,000 for the six months ended 2 December 2012, and costs of £529,000 for the year ended 2 June 2013 relating to european language translation costs have been restated since the last interim and annual reports into Product and supply rather than being shown in the Continental Europe sales business. This reflects the management structure in place for the six months ended 1 December 2013.

Segment costs of £486,000 for the six months ended 2 December 2012 in Other sales businesses, and segment costs of £2,116,000 for the six months ended 2 December 2012 in Product and supply have been reclassified from operating expenses to cost of sales to reflect a change in the classification of development costs with effect 29 May 2011 (see note 6).

3. Dividends

A dividend of £5,077,000 (16 pence per share) was paid in the six months to 1 December 2013 (six months to 2 December 2012: £5,054,000 (16 pence per share)). There were no further dividends declared in the six months to 1 December 2013 (six months to 2 December 2012: £5,711,000 (18 pence per share)).

Dividends of £18,381,000 were paid during the year ended 2 June 2013.

4. Profit before taxation

The following costs have been incurred in the reported periods in respect of ongoing redundancies, impairments and loss-making Hobby centres:

5. Tax

The taxation charge for the six months to 1 December 2013 is based on an estimate of the full year effective rate of 27.5% reflecting higher overseas tax rates offset by the UK tax rate reducing to 23%, 21% and to 20% from 1 April 2013, 2014 and 2015 respectively. (2012: 27.2%, reflecting higher overseas tax rates offset by UK tax rate reductions).

6. Change of accounting policy

Since the last condensed interim financial report the Group has changed the application of its accounting policy for the classification of development costs within the income statement. Previously development costs were recognised in the income statement within operating expenses. Under the new policy, development 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 development costs in the Group income statement.

There is no impact on assets or liabilities reported at either 2 December 2012 or 27 November 2011, hence no balance sheet has been presented as at 27 November 2011.

The change in accounting policy has resulted in an increase in cost of sales and a decrease in operating expenses of £2,602,000 in the income statement for the six months to 2 December 2012.

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 £3,204,000 in the consolidated income statement.

7. Earnings per share

Basic earnings per share

Basic earnings per share is calculated by dividing the profit attributable to equity shareholders of the Company by the weighted average number of ordinary shares in issue throughout the relevant period.

Diluted earnings per share

The calculation of diluted earnings per share has been based on profit attributable to equity shareholders and the weighted average number of shares in issue throughout the relevant period, adjusted for the dilution effect of share options outstanding at the period end.

8. Reconciliation of profit to net cash from operating activities

9. Cash and cash equivalents

Cash and cash equivalents include the following for the purposes of the cash flow statement:

10. Other intangible assets

11. Property, plant and equipment

12. Provisions

Analysis of total provisions:

13. Seasonality

The Group's monthly sales profile demonstrates an element of seasonality around the Christmas period which impacts sales in the month of December.

14. Commitments

Capital expenditure contracted for at the balance sheet date but not yet incurred is £606,000 (2012: £2,356,000).

15. Related-party transactions

There were no material related-party transactions during the period.