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The report does paint a rosy picture, but that is what it is supposed to do. I expect that if you look deeper, it is not so bright. We know that they have been cutting costs with such innovations as one man stores and finecast. Yet their operating expenses and cost of sales are going up. Maybe they are spending lots of money designing new minis.

Just remember there legal costs re:the chapterhouse case hasn't come out of that yet, as a guess that's probably going to run to a few million

spaceelf wrote:The report does paint a rosy picture, but that is what it is supposed to do. I expect that if you look deeper, it is not so bright. We know that they have been cutting costs with such innovations as one man stores and finecast. Yet their operating expenses and cost of sales are going up. Maybe they are spending lots of money designing new minis.

I'm guessing that the change to Failcost would have, incured on some extra expenses in aquiring the production capability for it. So that would explain the increased operating expenses during this period.

spaceelf wrote:..................... Maybe they are spending lots of money designing new minis.

IIRC their last yearly report did denote an increase in R&D and the design studio.

UNCLEBADTOUCH wrote:Just remember there legal costs re:the chapterhouse case hasn't come out of that yet, as a guess that's probably going to run to a few million

At what point to they actually have to declare these costs? Could look a bit embarrassing throwing millions at squashing a gnat, which is all Chapterhouse is really.

Don't Chapterhouse pay the legal fees if they are 'squashed'?

Medium of Death wrote:Don't Chapterhouse pay the legal fees if they are 'squashed'?

Probably not. It is highly unlikely that a small company like Chapterhouse has access to even a tiny fraction of the funds available to cover the costs that GW is spending in pursuing this lawsuit. Even if GW does win, and the courts award GW full compensation for their legal fees, Chapterhouse could just file for bankruptcy and not end up paying much of anything, just whatever they could get after liquidating their tiny assets.

Let me see if i understood: GW keep bleeding, but the wounds are small so the blood loss is small too?

Medium of Death wrote:Don't Chapterhouse pay the legal fees if they are 'squashed'?

We don't have a "loser pays" system in the USA. Usually, the only time you get money is if you're awarded damages.

LunaHound wrote:

Grimtuff wrote:So, for all of us not versed in business doublespeak and all that malarkey, is this a good or bad report for GW? How much "spin" have they put on it this time?

Good and Bad

The Good: For the share holders that only care about crunching CURRENT numbers, they are doing.... not too good, but OK. ( this part instil confidence in share holders to NOT FOLD )

the numbers only tell half the story though.

The Bad.

e.g why despite the price increase, the profit didn't increase accordingly.

Its late so cant read through the pages but.... Im mostly curious in Australia , Canada ( where we were always hit the hardest + embargo )

Looking at the initial post,

Gross margin at 76.8% (2010: 76.7%)

This would tell me that the increase in price kept the gross margin consistant with prior year. If the Gross Margin went up substantially, your argument that the price increase was only there to increase their profit was correct. The Gross Margin is calculated as follows GM = Revenues less COGS. Revenues are the sales figures and the COGS are the costs to actually make the product (resin, pewter, scultor/art fees, labor for the sculptor, the casting process, for the rules/armybooks - the printing costs, etc). This does not include over head costs such as management, R&D, retail arm, etc. The fact that the GM increased 0.1% from prior year means the price increase is due to the manufacturing costs. A price increase does not mean instant profit or an increase in profit. It just means they passed the increase in materials on to the customer.


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Breotan wrote:

Medium of Death wrote:Don't Chapterhouse pay the legal fees if they are 'squashed'?

We don't have a "loser pays" system in the USA. Usually, the only time you get money is if you're awarded damages.

Usually the only time you are required to pay the legal fees for someone else is a divorce and that is because the funds are all coming from the same "pot" and one person is required to absorb them as part of their settlement.


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Howard A Treesong wrote:

UNCLEBADTOUCH wrote:Just remember there legal costs re:the chapterhouse case hasn't come out of that yet, as a guess that's probably going to run to a few million

At what point to they actually have to declare these costs? Could look a bit embarrassing throwing millions at squashing a gnat, which is all Chapterhouse is really.

Not sure about UK GAAP but unless they are expecting damages that will offset their legal fees, they should be recognizing these expenses as incurred. Unless you're seeing a large increase in the Company's prepaid expenses/other assets which should be itemized or broken out if they relate to a legal preceding.

Breotan wrote:

Medium of Death wrote:Don't Chapterhouse pay the legal fees if they are 'squashed'?

We don't have a "loser pays" system in the USA. Usually, the only time you get money is if you're awarded damages.

And additionally, as I hinted at in my previious post, just because a court awards you damages doesn't mean that you will ever see a single penny of it. Getting a judgment from the court is only the beginning of the process; collecting on that judgment can take much longer.

As an example, I saw a credit report for a customer just last week who had two judgments totalling $5K+ in her public records that have gone uncollected since before 2006. If the winner of the suit cannot find your assets, then they cannot attach them. It's even harder to collect when the losing party is a corporation, because the obligations of the corporation do not pass onto the individuals who run it (barring criminal activity like Ponzi schemes and such).

Nice to see I'll be getting another dividend. I honestly do not get all the doom and gloom from people, my share continues to rise, overall, and now they're back to paying dividends. From an investor standing, they're a healthy company with a reasonable balance sheet and have been a solid investment for me.

I have to say they're doing much better than my Citibank stock right now.

Howard A Treesong wrote:

UNCLEBADTOUCH wrote:Just remember there legal costs re:the chapterhouse case hasn't come out of that yet, as a guess that's probably going to run to a few million

At what point to they actually have to declare these costs? Could look a bit embarrassing throwing millions at squashing a gnat, which is all Chapterhouse is really.

The bigger picture with Chapterhouse is that if the 'gnat' gets away with it then someone will do it on a larger scale and GW will loose their IP. At the same time the experience gained from fighting this would be a good lever when sending out the C&D letters next time round.

I am very intrigued by these figures as they relate to the Finecast release and the price rises in Australia and the shipping clampdown in Europe. It doesn't seem to relate to the amount of noise on the internet about GW's policies.

I'm curious, if GW dropped its retail division (I.E. all the GW Hobby Centers, etc.) perhaps keeping open only the larger battlebunkers and a handful of stores in larger metropolitan areas dotted across the world, what would be the impact on revenues, and what would be the impact on profits... and how soon would that translate to a price drop across the product range :3

Bloodwin wrote:

Howard A Treesong wrote:

UNCLEBADTOUCH wrote:Just remember there legal costs re:the chapterhouse case hasn't come out of that yet, as a guess that's probably going to run to a few million

At what point to they actually have to declare these costs? Could look a bit embarrassing throwing millions at squashing a gnat, which is all Chapterhouse is really.

Not sure about UK GAAP but unless they are expecting damages that will offset their legal fees, they should be recognizing these expenses as incurred. Unless you're seeing a large increase in the Company's prepaid expenses/other assets which should be itemized or broken out if they relate to a legal preceding.

Actually, under US GAAP, successful defence of a copyright is not an expense, but increases the asset value of the copyright which is amoritized over the length of the copyright (I believe 31 years?). If GW is reasonably convinced that they would win the suit, then it would be acceptable to apply the legal fees to increase the asset value of copyright. Likely they have done that. As an auditor, I'd slap them on that since I don't think it's reasonable that they'll win Unsuccessful defence should be charged as incurred. I believe UK GAAP is similar in this regards, but don't quote me on that.

Regardless, this is something that should be included in the notes to the financial statements.

In other words, we won't see the effects of the legal fees on the income statements until the case is settled.

chaos0xomega wrote:I'm curious, if GW dropped its retail division... how soon would that translate to a price drop across the product range

About the same time Satan goes shopping for a ice pick so he can feed his goldfish.

chaos0xomega wrote:I'm curious, if GW dropped its retail division (I.E. all the GW Hobby Centers, etc.) perhaps keeping open only the larger battlebunkers and a handful of stores in larger metropolitan areas dotted across the world, what would be the impact on revenues, and what would be the impact on profits... and how soon would that translate to a price drop across the product range :3

Why would you expect a price drop?

Mr. Burning wrote:

chaos0xomega wrote:I'm curious, if GW dropped its retail division (I.E. all the GW Hobby Centers, etc.) perhaps keeping open only the larger battlebunkers and a handful of stores in larger metropolitan areas dotted across the world, what would be the impact on revenues, and what would be the impact on profits... and how soon would that translate to a price drop across the product range :3

Why would you expect a price drop?

Think he may mean a price freeze, or with inflation a future drop in prices.

Basically this report says that GW is putting prices up to compensate for the increase in production costs, ok.

This relates pretty much directly to finecast I would most probably think. Not that resin is expensive, no it is cheaper than metal. The cost of that production is all the extra QA that GW has had to put in place to ensure the product meet the required standard and personally I think they are doing a great job of this (sarcasm), non of the finecast models I have seen from GW have had any defects in them (mega sarcasm).

What is more of an eye opener is the retail arm that is struggle. They are taking a loss on this and trying to keep stores open for the time being. This is no doubt because there is a big cost in the closing then re-opening of stores. The hiring, training then firing then re-hiring and training is expensive. They would probably only really consider closing stores if they didn't see a future in that store, that it could probably never make a profit. By doing this games workshop are basically gambling that retail will pick up in the short to mid term, not a bad assumption if you ask me.

The number of financial and strategic experts in this thread is amazing!

Leenus wrote:The number of financial and strategic experts in this thread is amazing!

Being an expert in financial strategy is a prerequisite for joining Dakka. Didn't you take the test?

Flashman, when did that lady get added to your avatar?

Has she always been there?

There's an avatar under that lady?

Flashman wrote:

Leenus wrote:The number of financial and strategic experts in this thread is amazing!

Being an expert in financial strategy is a prerequisite for joining Dakka. Didn't you take the test?

We had better send the memo around again, Flashman. Can't have people working here at dakka that haven't taken the competency test. Good timing seen as the dakka office Chirstmas party has just been and gone.

Does this mean there's about to be another price hike? There always seems to be one of those after these reports. . .


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Medium of Death wrote:Flashman, when did that lady get added to your avatar?

Has she always been there?

It's a Frank Frazetta painting entitled, "Flashman on the Charge." I believe.

puma713 wrote:

Medium of Death wrote:Flashman, when did that lady get added to your avatar?

Has she always been there?

It's a Frank Frazetta painting entitled, "Flashman on the Charge." I believe.

Correct, the lady is part of the painting and has been there since I've been using it as my Avatar

Flashman wrote:

Leenus wrote:The number of financial and strategic experts in this thread is amazing!

Being an expert in financial strategy is a prerequisite for joining Dakka. Didn't you take the test?

Ha! Test??? Was a sneaky little DE and got in through the back door.

Thanks for the everyone's ideas. As a business owner it's good to see how other people think about this and what it might mean for us laters.

puma713 wrote:Does this mean there's about to be another price hike? There always seems to be one of those after these reports. . .

There is one price rise a year and it happens every June. It's been like that for several years now.

Flashman wrote:

puma713 wrote:

Medium of Death wrote:Flashman, when did that lady get added to your avatar?

Has she always been there?

It's a Frank Frazetta painting entitled, "Flashman on the Charge." I believe.

Correct, the lady is part of the painting and has been there since I've been using it as my Avatar

OHOH! Please stay where you are, the Dakka morals and clothing enforcement team will be with you shortly.


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boyd wrote:and the COGS are the costs to actually make the product (resin, pewter, scultor/art fees, labor for the sculptor, the casting process, for the rules/armybooks - the printing costs, etc). This does not include over head costs such as management, R&D, retail arm, etc.

Would these costs include any new machinery that needed to be bought to implement the Failcrap production methods? Because if they did, then those are 1 time investments that wouldn't be reflected in future reports.

Flashman wrote:

puma713 wrote:

Medium of Death wrote:Flashman, when did that lady get added to your avatar?

Has she always been there?

It's a Frank Frazetta painting entitled, "Flashman on the Charge." I believe.

Correct, the lady is part of the painting and has been there since I've been using it as my Avatar

Mind Blown. First time I've noticed... yet I was always aware of the dashing man with the glorious moustache... wait a minute...

Have to take a closer look tomorrow.
First impression: Operating profit 9.1m £. Paid dividend: 9.1m £ (Kirby 554.772£, Wells 38.924£).

Oh, and Chapterhouse doesn't have to pay any fees, the lawyers work pro bono (that is for no money).