Forum adverts like this one are shown to any user who is not logged in. Join us by filling out a tiny 3 field form and you will get your own, free, dakka user account which gives a good range of benefits to you: No adverts like this in the forums anymore. Times and dates in your local timezone. Full tracking of what you have read so you can skip to your first unread post, easily see what has changed since you last logged in, and easily see what is new at a glance. Email notifications for threads you want to watch closely. Being a part of the oldest wargaming community on the net. If you are already a member then feel free to login now.

Did they? As far as I know GW have done all there manufacturing in the UK or the US. FW has all be done in the UK. They are talking about doing some FW casting in the US, but at the moment it is all at the Lenton site. They have had some stuff made in China, tools and the like, but as far as I know that was not in factory's they own.

Secondly that would show in the balance sheet rather than the income statement so you can't hide selling assets as sales, for a very good reason.

Captain Avatar wrote:What I am getting at is, "Could it be possible that GW has maintained its profit margin these past few years by quietly selling off holdings and production facilities made redundant by recent stream-lining measures?"

Sales of assets are actually covered in the report - they are negligible in the grand scheme of things. However, cost savings in other areas (inventory reductions, lower cost paints, lower cost finecast) are used to pad the bottom line. Combine that with significant price increases and it looks different than it might otherwise...

Most of the people who are talking about GWs slide are not referring to drastic drops in their earnings report - rather a progressive loss of market share which will eventually create an unsustainable position.

If you look at simple numbers, you can see another trend beyond what the Chairman is seeing. What was the average price increase in last years annual price hike? I don't have the numbers in front of me - but it was substantial, 10-15% on average IIRC. If the sales volumes were to remain constant - that is they were selling as many figures this year as last - we should see a corresponding 10-15% increase in revenues. Instead, you are seeing a touch under a 6% increase in revenues (revenues, less royalties as the royalties are unaffected by the price increase in calculating volume sales).

A good portion of that came in the last quarter as well with the paint sales which were recognized in the report (2 million pots sold with an MSRP of £2.30...figure no more than half were sold at wholesale discount of 40% = £3.7 million pounds revenue on the new paints since their release). That ends up being a one time shot in the arm so you could reasonably remove that from the sales - or at the very least the £2.75 which were sold in April alone.

All of those things point to GW shrinking its market. Eventually, the market becomes too small to maintain the overhead.


Automatically Appended Next Post:

Steve steveson wrote:Did they? As far as I know GW have done all there manufacturing in the UK or the US. FW has all be done in the UK. They are talking about doing some FW casting in the US, but at the moment it is all at the Lenton site. They have had some stuff made in China, tools and the like, but as far as I know that was not in factory's they own.

Secondly that would show in the balance sheet rather than the income statement so you can't hide selling assets as sales, for a very good reason.

No one "owns" a Chinese factory - one of the funny things with doing business there. One of the cost savings schemes which they implemented several years ago was to shifting plastic manufacturer to China though. It didn't work out well, and in 2010 they pretty much shut that down (there were things which extended past that happening there - but no plastic manufacturing). All books are still published there though.

Steve steveson wrote:Did they? As far as I know GW have done all there manufacturing in the UK or the US. FW has all be done in the UK. They are talking about doing some FW casting in the US, but at the moment it is all at the Lenton site.

FW utilisted 3 different casting compaines in the UK to produce their products at 1 point in time. They have also utilised a Company in China to produce their stuff in order to keep up with Christmas demand. Its only in the last couple of years the've shifted the majority of thier production in house. They still use external casting companies when demand is high.

I can see how the new Paint range made an impact. Personally I really like the new range with lots of colours that are progressively lighter enough that I no longer need to mix paints to highlight. So I've bought into the new range quite a bit. In terms of actual products, GW have now priced me out the market and I've not bought anything substantial from them for almost 3 years. I've switched to other games systems such as DUST, Relic Knights, Firestorm Armada, and recently I've invested in Sedition Wars.

I think GW will see a boom again for the Hobbitt sales, but if their prices continue to rise as they are doing, more people will be like me, and their sales are going to peak out.

When I get time I'll have to look at the report. The company actually operated at a loss this year when you look at dividends as opposed to EPS. The companies that I invest in don't do that as it's not sustainable.

The paint sales are definitely an extraordinary event as every store that stocks GW stuff had to buy all new paints.

Another thing I'm interested in seeing is if intangibles went up on the balance sheet and how much. With the Chapterhouse litigation going on, GAAP requires one of two things happening based on how likely the company thinks it will win. If they think they'll win a copyright case, the money spent to defend the copyright goes towards the copyright intangible asset which is amoritized. If they don't think they'll win, the legal expenses are expensed immediately. I'm assuming that the IFRS requires the same thing.

Sean_OBrien wrote:
No one "owns" a Chinese factory - one of the funny things with doing business there. One of the cost savings schemes which they implemented several years ago was to shifting plastic manufacturer to China though. It didn't work out well, and in 2010 they pretty much shut that down (there were things which extended past that happening there - but no plastic manufacturing). All books are still published there though.

Yes, sorry, control would probably be a better phrase (although given the fuzzy lines around that in most Chinese industry even control, is probably a poor phrase, but "have an interest in, dependent on the whim of their local partner" is a little long winded). I didn't realize they tried to shift manufacturing to China. Because of these problems China is not a good place to do business unless you know 100% what you are doing, and I fear they, like many others, didn't and just thought "everyone else is doing it to save money". So many companys have been burned by this.

As for the books, they are printed in China, not published. The publishing is still done in the UK (however I admit that may be a technical and semantic point of no interest outside publishing). Try finding a publisher who dose not print in China or India, outside of the indy publishers who sell on the fact that they use local printers.

The Chinese factories still sell FW stuff, but not exactly legally

BTW Tom Kirby own 2,123,394 shares, so he earned 993,748 £ (Dividends declared: 1,337,738 £, are they in addition?). That's in addition to his 462,000 £ salary.

Also: Sales slightly up in Austalia: 11,328,000 £ (2011: 10,630,000 £) but negative operating profit (loss) almost doubled: 735,000 £ (2011: 406,000 £). Also loss in Asia and Export, flat in UK and win in Continental Europe and North America.

Kroothawk wrote:

BTW Tom Kirby own 2,123,394 shares, so he earned 993,748 £ (Dividends declared: 1,337,738 £, are they in addition?). That's in addition to his 462,000 £ salary.

And thus the mystery of dividend payments exceeding profits

With all the talk of 'elastic' and 'inelastic' commodities, it really surprises me that they are reporting an overall increase in volume of sales. While this could be limited to the sales of the new paints, I'd be really interested to see any data they have broken out into product lines.

Has their revenue increased by more than their prices increased? If the answer to that is no, which it almost certainly is, then they are still losing sales and GW have yet to turn the corner. The increase in revenue is suprising but unless it is sustained then I see no reason to change my assessment about GW's long term future.

skyth wrote:When I get time I'll have to look at the report. The company actually operated at a loss this year when you look at dividends as opposed to EPS. The companies that I invest in don't do that as it's not sustainable.

The paint sales are definitely an extraordinary event as every store that stocks GW stuff had to buy all new paints.

Another thing I'm interested in seeing is if intangibles went up on the balance sheet and how much. With the Chapterhouse litigation going on, GAAP requires one of two things happening based on how likely the company thinks it will win. If they think they'll win a copyright case, the money spent to defend the copyright goes towards the copyright intangible asset which is amoritized. If they don't think they'll win, the legal expenses are expensed immediately. I'm assuming that the IFRS requires the same thing.

Okay, I looked at this a little more.

First off, there are no intangibles relating to copyright. This means than any expenses towards protecting the copyright were expensed as it is not probable that they will succeed. This means they don't think they'll win the Chapterhouse lawsuit. Accounting for this is the same under GAAP and IFRS.

Second off, they had a change in accounting standards that allowed them to shift 1.7 million of revenue from the previous two years to this year, artificially inflating the earnings for this year.

I want to compare their miniature business with previous years, so out come the royalties:

131,009,000 minus royalty income of 3,537,000 = 127,472,000

Then it's 53 weeks instead of 52. So that's 127,472,000 x 52/53 = 125,066,867

So then let's look at 2011

123,052,000 minus royalty income of 2,455,000 = 120,597,000

125,066,867 / 120,597,000 = 1.037

In their miniature business GW saw a revenue increase of 3.7%

Let's remove gains from inflation. Latest data puts it at 2.84% over the last 12 months.

GW's actual revenue growth from their miniature business?

0.86%

Were miniature prices increased by more than 3.7% over the last year?

If so, then GW's unit sales continue to be fall. Less people are buying less product. The pool of potential opponents is still stagnating and in decline.

GW has found a way to increase their margins and make an increased amount of both revenue and profit off of falling unit sales yet again.

I know it sounded good when you first saw the numbers higher above in this thread, but GW is barely growing in terms of revenue and stagnating in terms of unit sales.

GW's miniature business grew less than a percent this year. And again, their price increase rate is higher than their revenue growth rate, so their unit sales is still in decline.

In order to return to a growth model, GW needs to stop the falling of their unit sales. They need to get more customers buying more in order to stop the trend of nearly a decade of less customers buying less.

I have seen the figure of 12% mentioned for their last price rise, is that accurate?

Palindrome wrote:I have seen the figure of 12% mentioned for their last price rise, is that accurate?

I believe that was the average for their entire product line.

But we don't know what items make up what proportions of their revenue. If a third of their revenue is made up of space marine battleforces or Black Reach boxes, then those percentage increases matter more than other products.

But yeah, I think 12% was the average across everything.

But what you really want is the percentage of the June 2011 increase. The average % increase there was 13.2%

2012
125 = x * 1.132
x= 125/1.132

x = 110.42

2011
120 = x*1.00
x = 120/1

x= 120

110.42 / 120 = 0.9202

GW's unit sales fell about 8%. So there's some combination of less customers making less purchases to account for around an 8% decline.

This is a simplistic and rough number. We don't have the weighting of products by price increase and sales volume in order to do this calculation to a degree of certainty.

What we do know for sure though, is that the price increase is greater than the growth, so GW is still stagnating. At an estimated 8% of units sold over the last year.

EDIT: Just realized my numbers don't remove the increase in sales by Black Library. So it's actually slightly worse for GW in terms of the stagnation of their core business (miniatures) and the shrinking of their customer base. Anyone who wants to adjust the numbers can do so.

Im still buying but Id really like to see them branch out into media and merch.

Palindrome wrote:I have seen the figure of 12% mentioned for their last price rise, is that accurate?

That might be the average price raise but it doesn't include the stuff that didn't go up in price at all.

Forward projection:

If GW want to keep all the customers and have them buying as much as they do know, they need to have revenue just on their miniatures (not royalties) of 140 million pounds for 2012-2013.

If instead, they have an increase in keeping with the current trend, they'll have about 130 million in miniatures revenue and will again lose 5-8%+ of their customer base.

How many years of your local gaming scene losing atleast one player out of twenty can go on before you can't reliably find opponents? Have enough customers to sustain the local stores? Many are already reporting this critical mass crash is occurring in their area for WFB and LOTR. Will 40k follow as well?

My local store has all of a rulebook, and 2 starter sets for LotR, and there are about 6 fantasy players, including one guy who's buying non-GW wood elves. Compared to our maybe 40 odd 40k players, and two dozen warmahordes players. And this store dedicates as much shelf space to PP games as they do to Tau models, which is to say 5 GW boxes + Battleforce placed the narrow way. GW just isn't doing a good job of keeping their customers, and management is doing a great job of fooling themselves otherwise...

You and I are the lucky ones, with independent retailers who can offer other lines if GW can't keep their customers. What about those with nothing but a GW store around? It's going to seem like gaming died completely when their local player base hits that critical mass and crashes.

Vaktathi wrote:

Kroothawk wrote:

BTW Tom Kirby own 2,123,394 shares, so he earned 993,748 £ (Dividends declared: 1,337,738 £, are they in addition?). That's in addition to his 462,000 £ salary.

And thus the mystery of dividend payments exceeding profits

For umpteenth time, there is nothing unusual in company execs and chairmen owning stock (in fact, it would be far more suspicious if they DIDN'T). Also, if you look closely, dividend did not actually exceed profit. Declared dividend includes 18p per share from last years profits, so real dividend was 45p per share, less than the profits.



Automatically Appended Next Post:

warboss wrote:

Palindrome wrote:I have seen the figure of 12% mentioned for their last price rise, is that accurate?

That might be the average price raise but it doesn't include the stuff that didn't go up in price at all.

Someone calculated that this years price increase was about 5% when averaged over entire miniature range. Their profits (in constant currency) increased about 6.25% over financial year. But of course you would have to figure in sales volume of individual items, some of which saw signifant price increases, some of which had modest, and some not at all. So it's impossible to say to which extent price increase factored in. It does seem they had very small volume increase.

frozenwastes wrote:Forward projection:

If GW want to keep all the customers and have them buying as much as they do know, they need to have revenue just on their miniatures (not royalties) of 140 million pounds for 2012-2013.

I was being lazy with my early post - it actually is much less than that for their core "GW" business. The big number includes the royalties (which you mention) as well as Black Library and Forge World - both of which are managed significantly different than the core business.

This years core number is £120,791,000. FY2011 had a core revenue of £114,851,000. Year over year change was 5.17%. Black Library and Forge World (and Warhammer Wold - though I am not sure how much revenue it actually brings in) saw a 20% increase, no doubt helped along by the price increases within the core business and the lack of corresponding price increases on Forge World products. Previous years core numbers are as follows:

FY2010 - £118,224,000
FY2009 - £117,251,000
FY2008 - £104,800,000
FY2007 - £105,200,000


Automatically Appended Next Post:
https://docs.google.com/spreadsheet/ccc?key=0An-qBba7fMe1dEl5dG9uUlVwbTZmUmt4cElqcWNEelE&pli=1#gid=0

The 2011 price changes (which are the ones which impact this report). Will go through and do a more detailed analysis to see how much the average price increased and then figure out how much it goes up for Timmy (just starting out with his first army).

Basically though, while there were a lot of things which didn't go up - most of those are things that didn't matter. Things like troops choices and codices (which everyone buys) did go up...many of them substantially.

carabine wrote:Dear god, all this proves is that we're all a bunch of abused addicts.

We're all abused spouses addicted to this plastic crack they keep pedaling to us. Personally I spent 2012 and late 2011 spending $0.00 on GW product and I'm sad to see that other people haven't made their displeasure known with their wallets. It's the only way we'll get any progress out of this company.

Perhaps other people aren't as displeased as you? I've noticed a lot of people complaining on the Internet, but people have been much happier in person. I personally think GW is moving from strength to strength and that it's about to enter another golden age.

Jomy wrote:Wow. People are actually buying finecast then.

This is another one of those things that was only a failure from the Internet's perspective. Despite the "Failcost" or "Finecrap" Internet memes, Finecast is popular in the real world, since it makes modeling and converting much easier.

PsychoticStorm wrote:So in the year that they released a new paint range and a new expensive rulebook for their most successful game system, they managed to get just 7,7 million more revenue, I am not that impressed.

Actually, the 6e rulebook is not included in this report.


It's interesting to see the number of people who seem intent on claiming that Games Workshop is going down the drain, no matter what their financial reports actually indicate. It seems like, as always, there is a lot of wishful thinking going on in this thread. I've always been somewhat amazed by the number of people who either play GW games but insist on hating GW and the number of people who quit playing GW games and feel the need to loudly announce this and decry GW whenever threads about GW products come up. Luckily, most of these haters seem to be on the Internet-- in real life I tend not to encounter such people.

I don't get all the haters, I truly don't. Bare in mind, I haven't bought any new models for ages either, and I still haven't bought any finecast, In fact, I ebayed loads to get back under 3000 points.. my missus beats me up ive Ive got too many minis laying around the house. But I suppose that is linked to what I'm saying. I understand (to some extent) people "hating" because the hobby is so important to some people, I just don't understand why they are still here, and why they post in GW threads?

I'm not a hater, I'm nonchalantly ambivalent to GWs fortunes really, and as such I should be posting here, I'm firmly in the middle ground. If you are a hater, and you are displaying said bizarre hatred for a faceless corporation, why the feth are you so desperate to give reasons as to why they turn a profit? Why aren't you off happily playing infinity and posting on boards about games you still play?

Is it just childish spite that motivates you?

If you left GW and you hate them, feel free to go hate, but why bore the fething tits off people like me (happy medium people - the majority of people) with your endless whinging and doom saying? Oh and throwing insults around, and accusing said normal ambivalent people of being "fan boys" or "Jervis posting by proxy" or any of the other nonsense things you come out with?

There are tens of thousands of things I don't like. Baseball caps, hippies, Celine Dion. Funny thing you don't see me spamming baseball cap/hippy/Celine Dion forums. We get it, you are filled with hate and spite.. but still.. why are you posting here when you could be enjoying life elsewhere?

On topic, I think more new players start the hobby than leave. Older people like me buy way less gak that new people, and thanks to a population explosion, I hardly see GW being devoid of any newbies any time soon.

Thus GW wont wind up bankrupt, despite what us auld blokes get up to.

Fetterkey wrote:

PsychoticStorm wrote:So in the year that they released a new paint range and a new expensive rulebook for their most successful game system, they managed to get just 7,7 million more revenue, I am not that impressed.

Actually, the 6e rulebook is not included in this report.

Thanks, but I have been informed about it by the post just after mine.

carabine wrote:Dear god, all this proves is that we're all a bunch of abused addicts.

We're all abused spouses addicted to this plastic crack they keep pedaling to us. Personally I spent 2012 and late 2011 spending $0.00 on GW product and I'm sad to see that other people haven't made their displeasure known with their wallets. It's the only way we'll get any progress out of this company.

This exactly. You people are all crazy.

I think gw is going to do very well; reason is that their business model is vertically integrated; from design manufacture, distribution and shops.

their manufacturing process are capital intensive; with large outlay cost but individual item are cheap to produce; they try not to retire old plastic models in ther game therefore the same mould keep producing.

you might think the shops are costing them; yes, it probably making a loss, but without the shop where will anyone go and play? friends house may be; but what if you are in your 30s and have family and kids? vet night are there. the shops runs like clubs, I checked out locally if I want to book a room and start a club for 1 hour it will cost around £20 - 30; then I will have to pass on the cost to the club members. having the store there means that I get to play when I like without the hussle of table and other props.

there are other places in london that I can go and play; but there are entry fees.

they have a three tier product system; those most popular will be in plastic; the more special ones was in metal; now in finecast (admittedly there were quality issues); the third tier is the forge world stuff. with each level the quailty goes up and the price goes up as well.

they are also going to have movie tie in; hobbits will be 3 movies; over may be say 3 years; so for the next 3 years there will be LOTR like rush; eventually more new gamer will switch to fantasy and 40k.

finally the rule set are Anti-rival goods; i.e. the more people use them the more valuable the rule set becomes; just like computer languages. my brain is only so small it can only store finite set of rules; I have been trying to learn fantasy as well; but keep failing to do so; why, because there is a large entry cost to invest into learning a new rule set.

rule; the more popular they are the more valuable they become.

Jesus....

Rewarding GW for how they operate is like giving a pyro a flamethrower after he burnt down a hospital. Get your helmets on kids and expect a bad year of scottish karate.

I would love to see a poll of how many people that love GW also like Micheal Bay and eating paint chips.

I can like a product without liking business practices. I'm just saying.....

And I'm glad this came out. I was missing all the doom and gloom people and this will concentrate them nicely again.

When looking at the numbers and the 3% price increase over the fiscal year (this is the #, it's 12% average increase..but not all things were increased). Looks like SALES are about equal, they have continued to try to cut cost by removing stores from malls and closing stores with high rent and/or that weren't making money.

considering the only real big release last year was paint....and Dreadfleet was a big loser (finecast too, I doubt with all of the replacement stuff they had to give people they made much money out of the gate with it)....it was a decent year for them. It should have been a loser year TBH. I think this speaks to their cost cutting and price raising.

I imagine that 2012-13 is going to be a very big year for GW. I know my local GW is constantly sold out of rule books, every week, and I imagine the new starter set will be the same way.

2012-13, I think, will be a record profit year for GW. They may not make popular decision according to 20 year vets who have their armies and remember the "good ole days" and don't buy stuff really....but they are turning a profit and their recent products have been very fun and creative.

Go GW!

Backfire wrote: Also, if you look closely, dividend did not actually exceed profit. Declared dividend includes 18p per share from last years profits, so real dividend was 45p per share, less than the profits.

Does that figure in the over 1.8 million of revenues from past years that was moved to this year?

Some points:
1.) The change in paints is a huge part of the sales, about 2000€ for each store in April ("To give you an idea of how well the new Citadel paints were received by Hobbyists, the launch generated £2.75 million sales of paint in April alone.")
2.) This is also the first full year of Finecast recasts. While technically new products, they essentially are huge price increases of existing products. So average price increase should be more than 10%.

skyth wrote:Second off, they had a change in accounting standards that allowed them to shift 1.7 million of revenue from the previous two years to this year, artificially inflating the earnings for this year.

Care to elaborate?