GW Annual Report for 2012-2013

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**Herzlos**

Davylove21 wrote:
Surely making more money, however you go about it, is good?

Short term, yes.

Long term, it depends on how you go about it.
Milking a shrinking consumer base will always be bad; as you'll need to squeeze harder to remain profitable, and the more you squeeze the faster it'll shrink.
Making profits by cost cutting isn't as bad, but there's only so many costs you can reduce before you're stuck.

**Koppo**

Jack_Death wrote:
Koppo wrote:
Jack_Death wrote:
Koppo wrote:
Hang on..
Earnings per share of 51.5p (2012:46.8p)
Dividends per share declared in the year of 58p (2012: 63p)
Does that not mean that GW went in to debt and borrowed money (at interest) to pay dividends? Or did this come from some cash reserve?

Short answer. No.

Are you sure, the preamble was appended after I posted (or after I started to post anyway) and includes this

The fact that we have been paying a lot of surplus cash out as dividends hasn’t put them off! We’ll see what happens when we have a bad year and stop.

Which would indicate that the answer is "No and yes". That surplus was not generated this year as earning per share was less than dividends, neither was it generated last year as again earning per share were less than the dividends. So this surplus must be somewhere and must have been generated at least 2 years ago.
If the company make £1 in earnings for every share in issue and gives £2 in dividends for each share in issue then money out is greater than money in, so it must either come from some pot or be loaned from somewhere.
Unless I am missing something here (corporate finance is not my strong suit).

Longer answer - no, they did not borrow money (at interest) to pay dividends. Dividends reduce the cash (asset) and retained earnings (equity) accounts. Look at the statement of equity and the statement of cash flows, that is where you will find the dividend accounting. The takeaway is that they burned about 3MM in cash from reserves. GW doesn't borrow money and has zero debt.

Right so, No to the first option, yes to the second then.

**Alabaster.clown**

Prices went up, number of releases increased, overheads were removed, but sales were down so the dividend was paid from cash reserves and overall profit margin was virtually flat.

Is that a fairly accurate summary?

**notprop**

Koppo wrote:
From the telegraph

http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/10211193/Games-Workshop-Tom-Kirby.html

By Harriet Dennys1:10PM BST 30 Jul 2013CommentsComment
Posting preliminary figures today, chairman and acting chief executive Tom Kirby uses his introduction to inform the market of his aim to “continue to make the best fantasy miniatures in the world and sell them at a profit”.
And how does he plan to do this? “We run a tight ship, and do our damnedest to get more sales,” he says. “Everything else is just whistling Dixie.”

Games Workshop, which makes and sells fantasy games such as Warhammer and Lord of the Rings and model figures with which to play them, posted pre-tax profits of £19.5m for the 53 weeks to June 3 2012. But royalty income from licences sold to computer games companies fell £2.5m to £1.0m.
“We expected a significant decline,” says Mr Kirby, who says the traditional computer games industry has been “changed utterly and permanently” by the arrival of smartphones and iPads.
“We switched as fast as we could,” he confesses. “But [we] were limited by the constraints of the deals we already had in place.”

Games Workshop may have adapted but Mr Kirby hasn't quite kept up referring to a one new product as "Warhammer Quest for iOS (Apple stuff). Buy it now! Good fun."
He also goes back to basics as runs through the company's performance. "Sales," Mr Kirby explains, "is all the money we take in and we quantify by counting it."
Such ideas are not "mysterious" he admits.

On the subject overheads he is equally pithy: "With overheads we try to have them not grow at all. Easy to say. Hard to do."
Mr Kirby also tells investors in the London-listed business to take next year’s capital investment numbers “with a pinch of salt”.
“We think it many be £9.3m,” he says, before referencing the 19th century German military strategist Helmuth von Moltke. “But remember that, as von Moltke said, ‘No plan survives contact with the enemy’.”
However, he says the biggest threat to the company is internal – its own staff. This is why Mr Kirby will only hire employees who understand that Games Workshop’s business ethic is modelled on inventor Thomas Edison’s methodology.
Mr Kirby explains the modus operandi: “After 10,000 attempts to make an incandescent lightbulb, [Edison] was asked about the 9,999 failures. ‘They weren’t failures, he said. I now know 9,999 ways it won’t work’.”

But if Games Workshop’s factory burns down, the company is “well insured”. In fact, says Mr Kirby, it could be back into full-scale production “within 12 months”.
Mr Kirby has a policy of never giving interviews or speaking to the press, leaving his “CEO’s Commentary” to do the talking for him.
He is part of a tradition of plain-speaking business leaders that includes Andrew Perloff, the outspoken chairman of Panther Securities, whose bi-annual “ramblings” have become more of a media event than the financial performance of his property investment company.
Although, of course, that may be the intention.

Yep, there's the reason why GW don't do media.

1. Only Kirb's is allowed to do it.
2. He comes across as a complete fist - ergo the media have twisted his words again.

Still the business seems to be healthy enough. I'm interested to see what (I assume) the retooling enables model-wise from that hefty reinvestment.- an end to Finecast with more plastic machinery?

**Crablezworth**

"However, he says the biggest threat to the company is internal – its own staff. This is why Mr Kirby will only hire employees who understand that Games Workshop’s business ethic is modelled on inventor Thomas Edison’s methodology.
Mr Kirby explains the modus operandi: “After 10,000 attempts to make an incandescent lightbulb, [Edison] was asked about the 9,999 failures. ‘They weren’t failures, he said. I now know 9,999 ways it won’t work’.”

Wow, just wow.

**Howard A Treesong**

Pacific wrote:
Howard A Treesong wrote:
How about other games like Pokémon or role-playing games? (Who can remember them, now?)

Just who is he trying to kid?

When will he retire.... ???

I have to say, regardless of anything else, the guy comes across as an absolute prat.

Is it an accurate reflection of his beliefs? He appears to dismiss his competition as not even existing or being significant. Well I don't know about D&D and other RPGs, but they seem to be on a constant churn of releases, and Pokémon and other card games are fething huge. Do GW really believe they exist in a vacuum?

**Crablezworth**

The guy sounds like a used car salesman.

**Zweischneid**

Alabaster.clown wrote:
Prices went up, number of releases increased, overheads were removed, but sales were down so the dividend was paid from cash reserves and overall profit margin was virtually flat.

Is that a fairly accurate summary?

Number of releases did not increase all that much. They just released em differently, with more Codex books in the mix than the previous release format. That, perhaps, may not be working

**Howard A Treesong**

Kirby wrote:"Sales, is all the money we take in and we quantify by counting it."

Listen in awe to the insight of this shrewd man.

**RogueRegault**

So my takeaway from their "attitude" hiring strategy is "We make sure they don't just drink the kool-aid, but quaff it."

**Wolfstan**

Dear Mr. Kirby, ref the "nothing to worry about from competitors" part of your statement.

Games Workshop

10 man Tactical Space Marine boxset: 23.00 (plastic)
10 man Imperial Guard boxset: £18.00 (plastic)

Warlordgames

25 man infantry unit boxset: 22.50 (plastic)

Games Workshop:

1 Rhino: £23.00 (plastic)
1 Chimira £22.50 (plastic)

Warlordgames

1 Hanomag: £15.00 (plastic)
1 King Tiger: £26.00 (resin & metal)
1 panther: £25.00 (resin & metal)

Interesting that another company can produce cheaper plastic kits as well as resin kits, at the same scale.

**H.B.M.C.**

The biggest threat to GW are its own staff?

I guess it's true then. Societal collapse at the hight of a civilisation's power comes from within.

**Ouze**

Kroothawk wrote:
Oh, and I think this quote will become a classic, showing the CEO's respect for his employees:

Tom Kirby wrote:we recruit for attitude, not for skills.

I have to again reiterate I'm not sure why this statement is either controversial or untrue. In fact, I strongly agree with what he posted.

The vast majority of people who work for Games Workshop in customer-facing positions, such as their customer service team, the employees at the retails stores, etc, are simply not positions that require a unique skillset to walk into the door. You don't need to know how to stock a shelf or talk to customers about how to paint their Space Marines or manage inventory. All of that can be taught. You can become skilled at something, and in fact for many positions it's required you learn these things effectively after being hired, but it's not a prerequisite to being hired.

What you cannot train people to do is be upbeat, enthusiastic, or have a good work ethic. Once you find someone who wants to do a good job, you can teach them how, but you can't teach someone enthusiasm or why you should show up on time or that you shouldn't be rude.

Anyway, I think there are plenty of things it's fair to give Games Workshop crap about, but am mystified as to why people keep picking this one particular thing as being shocking. I guess it's because I work in IT and for many years did so on an employee-facing helpdesk, and came to realize how true what he said is - we can teach people how to fix computers, but we can't teach them how not to be donkey-caves.

**Fezman**

Crablezworth wrote:
"However, he says the biggest threat to the company is internal – its own staff. This is why Mr Kirby will only hire employees who understand that Games Workshop’s business ethic is modelled on inventor Thomas Edison’s methodology.
Mr Kirby explains the modus operandi: “After 10,000 attempts to make an incandescent lightbulb, [Edison] was asked about the 9,999 failures. ‘They weren’t failures, he said. I now know 9,999 ways it won’t work’.”

Wow, just wow.

So staff are the biggest threat to the company? Um...

I assume (from the reference to Edison) that this is another reference to attitude vs skill. A person with the "right" attitude might be willing to tactfully call a failure a "way it won't work." OK, when a business tries something new there will probably be an element of risk, but when it flops is it really so important to make sure you have the loyal yes-men ready to sugar-coat it? BTW I'm talking about head office positions here, not retail staff.

**loki old fart**

H.B.M.C. wrote:
The biggest threat to GW are its own staff?

I guess it's true then. Societal collapse at the hight of a civilisation's power comes from within.

Always has

**Surtur**

Koppo wrote:
From the telegraph

http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/10211193/Games-Workshop-Tom-Kirby.html

By Harriet Dennys1:10PM BST 30 Jul 2013CommentsComment
Posting preliminary figures today, chairman and acting chief executive Tom Kirby uses his introduction to inform the market of his aim to “continue to make the best fantasy miniatures in the world and sell them at a profit”.
And how does he plan to do this? “We run a tight ship, and do our damnedest to get more sales,” he says. “Everything else is just whistling Dixie.”

Games Workshop, which makes and sells fantasy games such as Warhammer and Lord of the Rings and model figures with which to play them, posted pre-tax profits of £19.5m for the 53 weeks to June 3 2012. But royalty income from licences sold to computer games companies fell £2.5m to £1.0m.
“We expected a significant decline,” says Mr Kirby, who says the traditional computer games industry has been “changed utterly and permanently” by the arrival of smartphones and iPads.
“We switched as fast as we could,” he confesses. “But [we] were limited by the constraints of the deals we already had in place.”

Games Workshop may have adapted but Mr Kirby hasn't quite kept up referring to a one new product as "Warhammer Quest for iOS (Apple stuff). Buy it now! Good fun."
He also goes back to basics as runs through the company's performance. "Sales," Mr Kirby explains, "is all the money we take in and we quantify by counting it."
Such ideas are not "mysterious" he admits.

On the subject overheads he is equally pithy: "With overheads we try to have them not grow at all. Easy to say. Hard to do."
Mr Kirby also tells investors in the London-listed business to take next year’s capital investment numbers “with a pinch of salt”.
“We think it many be £9.3m,” he says, before referencing the 19th century German military strategist Helmuth von Moltke. “But remember that, as von Moltke said, ‘No plan survives contact with the enemy’.”
However, he says the biggest threat to the company is internal – its own staff. This is why Mr Kirby will only hire employees who understand that Games Workshop’s business ethic is modelled on inventor Thomas Edison’s methodology.
Mr Kirby explains the modus operandi: “After 10,000 attempts to make an incandescent lightbulb, [Edison] was asked about the 9,999 failures. ‘They weren’t failures, he said. I now know 9,999 ways it won’t work’.”

But if Games Workshop’s factory burns down, the company is “well insured”. In fact, says Mr Kirby, it could be back into full-scale production “within 12 months”.
Mr Kirby has a policy of never giving interviews or speaking to the press, leaving his “CEO’s Commentary” to do the talking for him.
He is part of a tradition of plain-speaking business leaders that includes Andrew Perloff, the outspoken chairman of Panther Securities, whose bi-annual “ramblings” have become more of a media event than the financial performance of his property investment company.
Although, of course, that may be the intention.

Makes sense to take business direction from Edison. He was a thief who abused the hell out of the copyright system and made gobs of money by selling the ideas of other people. Just like GW! *ba dun tish!*

Automatically Appended Next Post:

H.B.M.C. wrote:
The biggest threat to GW are its own staff?

I guess it's true then. Societal collapse at the hight of a civilisation's power comes from within.

Kirby fears a communist uprising from his workers. The will scream "plastics for the proletariat!"

**boyd**

Alabaster.clown wrote:
Prices went up, number of releases increased, overheads were removed, but sales were down so the dividend was paid from cash reserves and overall profit margin was virtually flat.

Is that a fairly accurate summary?

Profit margin should be flat. Your margin is Revenue less COGS divided by your revenue (it's expressed as a %). If gross profit fluctuated a lot, it would be a sign that they are using volatile materials. If prices go up and the profit margin is flat, they passed an expense on to you the consumer.

**Ouze**

Surtur wrote:
Makes sense to take business direction from Edison. He was a thief who abused the hell out of the copyright system and made gobs of money by selling the ideas of other people. Just like GW! *ba dun tish!*

Yeah, that's a great post. As I read that quote I was thinking uh... maybe not the best example.

**boyd**

Zweischneid wrote:
Alabaster.clown wrote:
Prices went up, number of releases increased, overheads were removed, but sales were down so the dividend was paid from cash reserves and overall profit margin was virtually flat.

Is that a fairly accurate summary?

Number of releases did not increase all that much. They just released em differently, with more Codex books in the mix than the previous release format. That, perhaps, may not be working

Isn't that Q3 and Q4? GW has a 52/53 week year from June to May. Q3 would be Dec to Feb and Q4 would be Mar to May. The June releases are Q1 for next year.

**Zweischneid**

boyd wrote:

Isn't that Q3 and Q4? GW has a 52/53 week year from June to May. Q3 would be Dec to Feb and Q4 would be Mar to May. The June releases are Q1 for next year.

For GW's financial year, yes.

I didn't make that table for the current financial year. I made it a few weeks ago - and 40K specific at that - as already back than people where claiming that GW was churning out significantly more product in 6th Edition than they had ever before.

They simply don't. They just added a few more books to a fairly steady miniature-release schedule.

**boyd**

Crablezworth wrote:
The guy sounds like a used car salesman.

Most CEOs do. They tend to look for new ways to grow the company. They also are the ones in charge of employee morale and directing the company. The COO is the one responsible for the majority related to the core business and improving it. The CEO and COO usually work tandem with each other with the CEO providing overall vision and the COO working towards the vision.

**Megalomaniac**

H.B.M.C. wrote:
The biggest threat to GW are its own staff?

What does this mean?

**boyd**

Crablezworth wrote:
azreal13 wrote:
Speaking as someone who used to have responsibility for training new staff, I'll take a cynical genius over an enthusiastic idiot every time.

I couldn't agree more with that statement. I will fully admit a lot of that depends on the context of the job but in my context hell ya.

Put a cynical donkey-cave in a customer service job and see how we'll the people on Dakka react. GW is falling apart, I got poor customer service. It's the end of days.

There are few jobs where you can be a cynical donkey-cave and keep it. Yes, you want someone who has the basic skill set (ie for technical positions you want someone who has a degree or certification) but if they have a poor work ethic and are not efficient workers, then you don't want them working for you. You're acting like skill and enthusiasm are mutually exclusive when in fact they are two different axis. Most high performers are both enthusiastic and good at what they do. One trait is learned whereas the other is usually not.

**notprop**

Megalomaniac wrote:
H.B.M.C. wrote:
The biggest threat to GW are its own staff?

What does this mean?

Sabotage!

Kenneth "Kirby" Williams wrote:Infamy! Infamy! they've all got in in for me!

**BryllCream**

Megalomaniac wrote:
H.B.M.C. wrote:
The biggest threat to GW are its own staff?

What does this mean?

It means that having shops staffed by anti social bullying blackshirts makes for poor sales. Hence a drive towards recruiting people based on their customer service skills rather than how many armies you have painted.

**B0B MaRlEy**

If G.W.'s biggest threat lies in their staff, they're doing a fairly good work working on that in my area it seems.
I've heard of a GW shop where 3 staff members left in a row,
some of which had more than 10 years of working with GW...
The winds of change?

**Kroothawk**

Ouze wrote:
Kroothawk wrote:
Oh, and I think this quote will become a classic, showing the CEO's respect for his employees:

Tom Kirby wrote:we recruit for attitude, not for skills.

I have to again reiterate I'm not sure why this statement is either controversial or untrue. In fact, I strongly agree with what he posted.

Problem is that not only sales staff is populated with skill-less minions, but also higher ups:
1.) Boss of GW USA is a woman without any skills and authority, just chosen for her attitude as a yes-woman, blindly following orders from Kirby.
2.) Boss of UK legal team didn't show any competence, just an attitude that GW invented the world and everyone should bow to them.
3.) The accountant getting the numbers for the annual report claims that Nottingham has a negative inflation, while the rest of UK had a 2.7% inflation (exactly the amount the total revenue grew in that year), so he obviously wasn't hired for skills either.

One major problem with GW is that only strict yes-men are hired and any independent thinker is fired (Rick Priestley, Alessio Calvatore, Gav Thorpe). Like Saddam Hussein, Tom Kirby fears his own staff the most and takes measures that any potential thread is removed from staff. That's why you find so many characterless minions as staff in GW stores, who burn out fast trying desperately to achieve the impossible goals set by GW management and are fired soon to be replaced by another characterless minion. So attitude is just another word of yes-man.

**porkuslime**

Is the Telegraph a humor paper like the Onion? Or is it serious journalism.. or something in between?

I have a difficult time understanding if those quotes from Kirby are direct from the man himself, or journalistic paraphasing for effect..

**Zweischneid**

porkuslime wrote:
Is the Telegraph a humor paper like the Onion? Or is it serious journalism.. or something in between?

I have a difficult time understanding if those quotes from Kirby are direct from the man himself, or journalistic paraphasing for effect..

The Kirby quotes in the telegraph article are from the GW reports themselves, the "CEO's Commentary"

The last few lines give it context

Mr Kirby has a policy of never giving interviews or speaking to the press, leaving his “CEO’s Commentary” to do the talking for him.

He is part of a tradition of plain-speaking business leaders that includes Andrew Perloff, the outspoken chairman of Panther Securities, whose bi-annual “ramblings” have become more of a media event than the financial performance of his property investment company.

Although, of course, that may be the intention.

**weeble1000**

Exactly. By attitude, Kirby means yes man. This is why vacuous, unskilled yes men populate upper management. This is why Alan Merrett is Director of Intellectual Property, Andrew Jones is Head of Legal and Licensing, and Ronnie Renton is the CEO of Mantic Games.