Games Workshop Regulatory News (GAW)

3 May 2007 07:02

Games Workshop Group PLC03 May 2007 TRADING STATEMENT AND COST REDUCTION PROGRAMME TRADING Since our interim announcement and trading statement on 5 January 2007 the Grouphas continued to make sales progress in our more established markets (UK andAustralia), with further evidence of promising developments in our US business.However, in Continental Europe we have continued to see sales declines,particularly in Germany and France. Management changes have recently been madein this area. Consequently, our overall sales performance, particularly over the recenttrading period, has not been as strong as expected and therefore profits areunlikely to meet market expectations for the year to May 2007. The Board expects to announce the Group's 2007 preliminary results on 31 July2007. COST REDUCTION PROGRAMME In view of the Group's current trading performance the Board has decided toaccelerate and intensify its programme of cost reduction in the business. Duringthe next six months this programme will include: * The closure of 35 loss-making stores* The reorganisation of warehousing and manufacturing activities* The centralisation of various sales support and back office activities We expect this programme to result in a reduction of full time headcount of over10% and to generate annualised cost savings of some £7m. These changes will focus on the removal of administrative and back officeactivities from our sales businesses, leaving them better equipped toconcentrate on and deliver sales growth. The estimated cost of this programme is approximately £6m, which will be takenas an exceptional charge in the current financial year. CONTINUED INVESTMENT IN THE BUSINESS AND DIVIDEND In addition to this essential short term revenue investment of £6m to restoreand strengthen the future profitability of the business, Games Workshop willcontinue to invest in opening new stores in growth areas and in other long termcapital projects in the normal course of business. This reflects the Board'scontinued confidence in the long term growth credentials of the business. In order to retain funding flexibility and to avoid placing excessive short termstrain on the Group's finances, the Board does not intend recommending thepayment of a final dividend for the current year. PROSPECTS The measures set out above are designed to address short term issues. The Boardremains confident in the long term future of the business and continues to focuson growing the Games Workshop Hobby throughout the world. For further information, please contact: Games Workshop Group PLC Tel: 0115 900 4001Tom Kirby, Chairman and Chief Executive Michael Sherwin, Finance Director Rawlings Financial PR Limited Tel: 0207 628 4681John Rawlings This information is provided by RNS The company news service from the London Stock Exchange