The Future of Games Workshop Part 13 - and 14

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**Herzlos**

I've no less of an axe to grind than you do. I just see a company that had a terrible half year and drop the dividend to witness a huge drop in stock price announce a higher-than-normal dividend a week after the next half year finished and a month before the report is due out.

Whilst they may have turned it around hugely and had a strong half year, all of the anecdotal evidence points to it being more of the same, so the most likely reason for the dividend is to hold up the stock price.

Do you have anything (anecdotal or not) that'll hold up to any scrutiny and indicate that they've had a strong half year?

Selling out of mission cards doesn't - since the quantities appear to be low. Selling out of LE rulebooks doesn't because it hasn't happened yet. Maybe someone can she light into the number of regular edition 7th books to be sold?

The pre-orders/store orders alone must be a few hundred thousand dollars (my local claims to have ordered 100 copies which would be £3000 at wholesale), and they must have got about £360,000 from the LE's (assuming 1800 out of 2000 sold in the last financial year).

**Wayshuba**

dereksatkinson wrote:
I think you have an axe to grind.. It's possible they are about to release a good report despite all the hate mongering of the interwebs.

It is possible. But I guess the largest distributor in Australia must be hatemongering when he say Dystopian Wars is outselling 40k 7 to 1. I guess many of the people commenting (including myself) that their stores haven't even bothered with 40k 7th edition must be hatemongering. I guess it must be hatemongering when many store owners and distributors have commented on having double-digit growth and NONE of it came from GW. I guess it must be hatemongering to say 7th edition was rushed when an $85 premium printed product is missing a significant portion of the cut-and-paste timeline of the Imperium in the book, yet it is found in the electronic version. And finally, I guess GW must be hatemongering on GW themselves, when they still have 154 copies of 7th edition LE left three weeks after pre-order which was a run at 40% total of the 6th edition LE (2,000 copies versus 5,000 copies) which sold out in a matter of hours.

Anecdotal evidence is saying quite the contrary. But, it is true, maybe GW will surprise everyone despite the "hatemongering".

HATEMONGERING - Customers disappointed in being used a meat wallets, being feed half-baked inferior products at a luxury price and expected to shut up and take it. "Thank you sir! May I have another sir!"

**loki old fart**

Wayshuba wrote:
dereksatkinson wrote:
If he is registered with finra, he can't legally claim to be an analyst and provide analysis anonymously.

A.) It is his personal analysis based on management experience, not an investment analysis - which he clearly states as such. FINRA regulations apply to brokers giving investment advise. Of which he is NOT doing.

B.) He is NOT selling GW securities. FINRA regs apply when pushing securities or providing analysis of those securities. He is doing neither.

C.) GW is a UK-based company. FINRA is an American organization authorized by Congress.

But here, since you want to throw it out there:

Every investor in America relies on one thing: fair financial markets. That's why FINRA works every day to ensure that:
• every investor receives the basic protections they deserve;
• anyone who sells a securities product has been tested, qualified and licensed;
• every securities product advertisement used is truthful, and not misleading;
• any securities product sold to an investor is suitable for that investor's needs; and
• investors receive complete disclosure about the investment product before purchase

Doesn't work very well then

**PhantomViper**

dereksatkinson wrote:

I didn't ask where you got the idea they announced a dividend. Specifically, I was asking what the problem was with their last report that would preclude them from paying a dividend following a strong period.

Their first period report included a re-release of GW's best selling line. Despite this they still had a 10% decline in revenue and a 30% drop in profits.

The second period didn't include any obvious best sellers like the first one did, especially considering all the anecdotal data that we are seeing regarding the sales of the new edition rulebook.

Do you have any shred of evidence that the second period has been better than the first one or are you basing your analysis on the strong performance of Cyprus banking system this quarter?

**Azreal13**

dereksatkinson wrote:
I think you have an axe to grind.. It's possible they are about to release a good report despite all the hate mongering of the interwebs.

Yeah because this...

INTERIM MANAGEMENT STATEMENT

For the period 2 December 2013 to 6 April 2014

Games Workshop Group PLC today issues the following interim management statement for the period 2 December 2013 to 6 April 2014.

In the four months to 6 April 2014 trading has been broadly in line with the board’s expectations.

Is exactly the sort of thing you release when you're in the midst of turning around your decidedly ordinary first half performance two months before your FYE.

**Shadow Captain Edithae**

Baragash wrote:
20p dividend announced.

http://investor.games-workshop.com/2014/06/06/dividend-4/

Can they even afford to pay dividends at this point? Surely given their falling revenue and sales, giving away their cash reserves doesn't strike me as very wise.

**Azreal13**

It is technically possible they've made a bucketload since the interim statement.

Unlikely, but possible, and we cannot judge whether this is a sensible move or not until we have all of the information to hand.

**agnosto**

It's also possible for a company to borrow money in order to issue a dividend which GW did several years ago. You do this to ensure stockholder complacency and prevent a run on the stock.

Something that was mentioned in that warseer thread is that if the stock drops low-enough, GW will be in an exposed position for a potential hostile take-over. If you are a company with a genuine fear of losing control, you do everything you can, including borrowing from peter to pay paul, to forestall any negative actions by outside elements.

**Kilkrazy**

IMO the key reason for the release of 7th edition two weekends before the end of GW's financial year is that they had good expectations of selling perhaps 100,000 copies straight away, which would be sales revenue of £6 million -- verrrrry useful in making your end of year figures look good.

Just my guess of course. Perhaps they may hope to sell a lot more than 100,000 copies.

**Azreal13**

agnosto wrote:
It's also possible for a company to borrow money in order to issue a dividend which GW did several years ago. You do this to ensure stockholder complacency and prevent a run on the stock.

Something that was mentioned in that warseer thread is that if the stock drops low-enough, GW will be in an exposed position for a potential hostile take-over. If you are a company with a genuine fear of losing control, you do everything you can, including borrowing from peter to pay paul, to forestall any negative actions by outside elements.

Maybe, but if you're CEO and Chairman of said company, as well as one of the single largest entities owning shares, and if you get offered above market value for those shares, or shares in the new parent company with greater value or long term potential returns, and you're only a couple of years off retirement, you might feel differently.

**Mysterious Pants**

The other day, I had a thought.

Even if GW isn't totally collapsing, other hobbies are growing more popular than it. For example, my FLGS; as it expands they've added large displays and huge collections of Magic Cards, comic books, and D&D books. But the Warhammer section has never grown.

So maybe I'm seeing the same number of 40k players as I did before, it just seems like less because of the takeoff success of so many other hobbies. When I see 25-50 people playing Magic, several large D&D groups, and four people playing Warhammer it just makes Warhammer seem smaller.

So... maybe GW will never have serious issues or go bankrupt, it'll just become increasingly fringe as other hobbies grow and it stagnates?

**PhantomViper**

Mysterious Pants wrote:
The other day, I had a thought.

Even if GW isn't totally collapsing, other hobbies are growing more popular than it. For example, my FLGS; as it expands they've added large displays and huge collections of Magic Cards, comic books, and D&D books. But the Warhammer section has never grown.

So maybe I'm seeing the same number of 40k players as I did before, it just seems like less because of the takeoff success of so many other hobbies. When I see 25-50 people playing Magic, several large D&D groups, and four people playing Warhammer it just makes Warhammer seem smaller.

So... maybe GW will never have serious issues or go bankrupt, it'll just become increasingly fringe as other hobbies grow and it stagnates?

Both MtG and D&D have always been bigger than 40k and comic books probably dwarf all of them combined! That is not a new development in any way.

**Mysterious Pants**

PhantomViper wrote:
Mysterious Pants wrote:
The other day, I had a thought.

Even if GW isn't totally collapsing, other hobbies are growing more popular than it. For example, my FLGS; as it expands they've added large displays and huge collections of Magic Cards, comic books, and D&D books. But the Warhammer section has never grown.

So maybe I'm seeing the same number of 40k players as I did before, it just seems like less because of the takeoff success of so many other hobbies. When I see 25-50 people playing Magic, several large D&D groups, and four people playing Warhammer it just makes Warhammer seem smaller.

So... maybe GW will never have serious issues or go bankrupt, it'll just become increasingly fringe as other hobbies grow and it stagnates?

Both MtG and D&D have always been bigger than 40k and comic books probably dwarf all of them combined! That is not a new development in any way.

This might be unscientific because it's just from observing my local community, but where I live pretty much all other hobbies have grown impressively in the last five-ten years... except 40k and Fantasy. What I'm saying is that if I established a baseline some years ago and worked from there, literally everything has been massively growing in quantity, number of players, etc. with Warhammer being the only exception.

**slowthar**

azreal13 wrote:
agnosto wrote:
It's also possible for a company to borrow money in order to issue a dividend which GW did several years ago. You do this to ensure stockholder complacency and prevent a run on the stock.

Something that was mentioned in that warseer thread is that if the stock drops low-enough, GW will be in an exposed position for a potential hostile take-over. If you are a company with a genuine fear of losing control, you do everything you can, including borrowing from peter to pay paul, to forestall any negative actions by outside elements.

Maybe, but if you're CEO and Chairman of said company, as well as one of the single largest entities owning shares, and if you get offered above market value for those shares, or shares in the new parent company with greater value or long term potential returns, and you're only a couple of years off retirement, you might feel differently.

Perhaps, but if you're that CEO and have been surrounding yourself with yes-men and driving out creative/dissenting thought for the past 20 years, your ego is probably pretty big and you genuinely believe that you're the best person to run the company and it's only a matter of time before your vision becomes successful and things begin to turn around.

**agnosto**

slowthar wrote:
azreal13 wrote:
agnosto wrote:
It's also possible for a company to borrow money in order to issue a dividend which GW did several years ago. You do this to ensure stockholder complacency and prevent a run on the stock.

Something that was mentioned in that warseer thread is that if the stock drops low-enough, GW will be in an exposed position for a potential hostile take-over. If you are a company with a genuine fear of losing control, you do everything you can, including borrowing from peter to pay paul, to forestall any negative actions by outside elements.

Maybe, but if you're CEO and Chairman of said company, as well as one of the single largest entities owning shares, and if you get offered above market value for those shares, or shares in the new parent company with greater value or long term potential returns, and you're only a couple of years off retirement, you might feel differently.

Perhaps, but if you're that CEO and have been surrounding yourself with yes-men and driving out creative/dissenting thought for the past 20 years, your ego is probably pretty big and you genuinely believe that you're the best person to run the company and it's only a matter of time before your vision becomes successful and things begin to turn around.

I don't think he's looking to sell or he wouldn't have hired people recently with experience in fighting off hostile takeover bids...

**Azreal13**

I'm not sure he has?

Both in the sense that Kirby wouldn't be directly responsible, at least not solely for much of the hiring and firing, but wasn't the most recent appointment to the board someone with experience in managing takeovers and mergers, not resisting them?

**agnosto**

azreal13 wrote:
I'm not sure he has?

Both in the sense that Kirby wouldn't be directly responsible, at least not solely for much of the hiring and firing, but wasn't the most recent appointment to the board someone with experience in managing takeovers and mergers, not resisting them?

You could be right there, my memory's spotty. We'll find out soon enough I suppose.

**Backfire**

Herzlos wrote:

Baragash wrote:

I haven't seen or heard of a debt offering.

They've done it before, and it seems likely they'd try to shore up the stock price with a dividend even if the report was bad.

As I understand, "taking debt to pay dividend" episode was in the middle of the LOTR crash (or so it is said, I haven't checked so old reports myself). They have decent amount of cash, they can easily afford to pay out some dividend without taking debt (except for operational purposes).

As said, given that they didn't announce any dividend following previous half-year report, 20p dividend now seems well within line of their financial performance. They paid out 63p per share in 2012, and 58p in 2013.

**Grimtuff**

MWHistorian wrote:
Just a quick note, Marmachine's fluff isn't "Bizarre." Most of it is actually grounded in real events from history. The major factions are all based off real countries, with mirrors of real wars and real people. They just add magic steampunk stuff in it for fun.

If you find history, bizarre, then sure. Warmachine's fluff is bizarre.

As a historian I love their fluff!

Is that a genuine typo or a reference to Warmachine being a very "marmite" game...?

**Kilkrazy**

azreal13 wrote:
I'm not sure he has?

Both in the sense that Kirby wouldn't be directly responsible, at least not solely for much of the hiring and firing, but wasn't the most recent appointment to the board someone with experience in managing takeovers and mergers, not resisting them?

Poachers make the best gamekeepers, maybe? I don't know anything about this appointment.

**Azreal13**

Kilkrazy wrote:
azreal13 wrote:
I'm not sure he has?

Both in the sense that Kirby wouldn't be directly responsible, at least not solely for much of the hiring and firing, but wasn't the most recent appointment to the board someone with experience in managing takeovers and mergers, not resisting them?

Poachers make the best gamekeepers, maybe? I don't know anything about this appointment.

Elaine O’Donnell (age 43). Elaine O’Donnell was appointed to the board on 28 November 2013. A chartered accountant by profession, until recently Elaine was a corporate finance partner with EY.

This is the one I was referring to.

**Kilkrazy**

Chartered accountant, corporate finance expert. It sounds like a good person to have on any large company's board.

**Azreal13**

Kilkrazy wrote:
Chartered accountant, corporate finance expert. It sounds like a good person to have on any large company's board.

From a puff piece when she was leaving EY..

The 42-year-old has spent 15 years at the firm's Manchester office, during which time she has advised on deals worth more than £2bn.

Elaine joined E&Y in 1997 as a manager, having trained with PwC and is the only female mergers and acquisitions partner at a big four firm in Manchester.

For the past four years, she has been the lead partner for E&Y’s Entrepreneur of the Year awards.

She said: "If you had told me 15 years ago I would still be working at the same firm, I wouldn’t have believed you. I always had ambitions to be a partner and am very proud of that. It is testament to the culture here that I have stayed so long.

"Reaching the 15-year milestone made me reflect and realise I am still young enough to do something different and that there are lots of opportunities out there, particularly for a female businesswoman.

"I am really excited by the prospect of not just being an adviser to business but being in business. I am considering a number of opportunities with some businesses in the region and some further afield."

Born in Derry, O’Donnell studied at the University of Kent and graduated with a degree in accounting and finance in 1992. She joined E&Y in 1997, was promoted to director in 2002 and became a partner in 2005.

She has worked with clients including tool rental firm Speedy Hire, glass maker Pilkington NSG and specialist insurer Carole Nash.

She also spent nine months on secondment at Caradon Plumbing, Cheshire, having advised on the deal that saw HSBC Private Equity buy it for £496m in 2000.

Elaine is married to Andrew Curwen, partner at Stockport law firm Gorvins, and has sons Niall, nine, and Eoin, seven.

In terms of career highlights, she added: "What I have really loved is the diversity. I have worked with Pilkington NSG doing a large transaction and at the same time will have been running that alongside selling an entrepreneur’s business.

"I have particularly enjoyed being involved with the entrepreneur of the year programme."

I've bolded a couple of key parts, her expertise seems firmly based in mergers and acquisitions, whether this was key to her GW appointment, and which direction (the acquirer or acquiree) we can only speculate on.

**dereksatkinson**

Wayshuba wrote:

A.) It is his personal analysis based on management experience, not an investment analysis - which he clearly states as such. FINRA regulations apply to brokers giving investment advise. Of which he is NOT doing.

http://www.finra.org/web/groups/industry/@ip/@reg/@rulfil/documents/rulefilings/p000446.pdf

Rule 2711. Research Analysts and Research Reports

“Public appearance” means any participation in a seminar, forum
(including an interactive electronic forum), radio or television interview,
or other public speaking activity in which a research analyst makes a
recommendation or offers an opinion concerning an equity security.

There are two scenarios here..

1) He is a registered member that is "providing his opinion" and has failed to make the proper disclosures (IE his name).

-or-

2) He isn't a registered member.

There isn't a middle ground here or a grey area. I'm required to provide my name for a reason. So people can see my certifications and any marks against my record. There are very clear rules about this.

Any time you provide analysis, you have to make disclosures, period. It doesn't matter if you say "oh it's just my opinion". You lost that right when you registered as a financial adviser. You can't go off the cuff once you've done that.

**Azreal13**

You're really not fond of topic, are you Derek?

**Kilkrazy**

Report the anonymous forum user who claims to be a stockbroking advisor to the Financial Services Authority if it matters, but let us keep this thread on topic.

**Herzlos**

dereksatkinson wrote:
Wayshuba wrote:

A.) It is his personal analysis based on management experience, not an investment analysis - which he clearly states as such. FINRA regulations apply to brokers giving investment advise. Of which he is NOT doing.

http://www.finra.org/web/groups/industry/@ip/@reg/@rulfil/documents/rulefilings/p000446.pdf

Rule 2711. Research Analysts and Research Reports

“Public appearance” means any participation in a seminar, forum
(including an interactive electronic forum), radio or television interview,
or other public speaking activity in which a research analyst makes a
recommendation or offers an opinion concerning an equity security.

There are two scenarios here..

1) He is a registered member that is "providing his opinion" and has failed to make the proper disclosures (IE his name).

-or-

2) He isn't a registered member.

There isn't a middle ground here or a grey area. I'm required to provide my name for a reason. So people can see my certifications and any marks against my record. There are very clear rules about this.

Any time you provide analysis, you have to make disclosures, period. It doesn't matter if you say "oh it's just my opinion". You lost that right when you registered as a financial adviser. You can't go off the cuff once you've done that.

or 3) He didn't offer an "opinion concerning an equity security". He didn't discuss equities, or securities, or try to sell anything or provide advice. Report him if you believe he has done wrong, but it really doesn't look like it, and I'm pretty sure he'd agree. He really doesn't seem to be the kind of guy to risk his position over a forum post, so I don't believe he's violated anything.

But that's completely off topic.

**Alpharius**

Kilkrazy wrote:
Report the anonymous forum user who claims to be a stockbroking advisor to the Financial Services Authority if it matters, but let us keep this thread on topic.

Quoted for EMPHASIS.

**Wayshuba**

dereksatkinson wrote:
Wayshuba wrote:

A.) It is his personal analysis based on management experience, not an investment analysis - which he clearly states as such. FINRA regulations apply to brokers giving investment advise. Of which he is NOT doing.

http://www.finra.org/web/groups/industry/@ip/@reg/@rulfil/documents/rulefilings/p000446.pdf

Rule 2711. Research Analysts and Research Reports

“Public appearance” means any participation in a seminar, forum
(including an interactive electronic forum), radio or television interview,
or other public speaking activity in which a research analyst makes a
recommendation or offers an opinion concerning an equity security.

There are two scenarios here..

1) He is a registered member that is "providing his opinion" and has failed to make the proper disclosures (IE his name).

-or-

2) He isn't a registered member.

There isn't a middle ground here or a grey area. I'm required to provide my name for a reason. So people can see my certifications and any marks against my record. There are very clear rules about this.

Any time you provide analysis, you have to make disclosures, period. It doesn't matter if you say "oh it's just my opinion". You lost that right when you registered as a financial adviser. You can't go off the cuff once you've done that.

Of which is he doing neither. The key word their is SECURITIES. It doesn't preclude talking about a company in general. Offering an opinion about the management and commenting on a companies behavior is NOT the same as offering an opinion on a security. Key words there are to look at the entire definition under part B.

While I am not a registered financial adviser, I do receive a lot of advise from one about what I must disclose, even in private equity settings in regards to my company.

I am done with this conversation. It is pointless and off-topic.

Automatically Appended Next Post:

Shadow Captain Edithae wrote:
Baragash wrote:
20p dividend announced.

http://investor.games-workshop.com/2014/06/06/dividend-4/

Can they even afford to pay dividends at this point? Surely given their falling revenue and sales, giving away their cash reserves doesn't strike me as very wise.

With the current announcement, GW will be paying out £6.37 million in dividends. At the end of their last period, they had £9.2 million cash on hand. So they are already in a cash positive position to pay the dividends. If they generate a similar amount of cash to the first period (£8.9 million), they have more than enough to pay the dividend (but man do they run really close on their cash reserves should they have a bad downturn).

**jonolikespie**

Mysterious Pants wrote:
This might be unscientific because it's just from observing my local community, but where I live pretty much all other hobbies have grown impressively in the last five-ten years... except 40k and Fantasy. What I'm saying is that if I established a baseline some years ago and worked from there, literally everything has been massively growing in quantity, number of players, etc. with Warhammer being the only exception.

That's entirely anecdotal but it lines up with the vast majority of other anecdotals and icv2 was claiming that (within America at least) the hobby has doubled in size of the last few years.
Infinity has had 75% growth two years strait (not sure about this last year but they certainly don't seem to have slowed down).
X wing burst onto the scene and suddenly outsold everything.
Dyst Wars and Firestorm Armada have been huge for Spartan Games with their 2nd editions recently.

There really isn't much in the way of actual, solid, evidence since none of the competition are public but it very much looks like GW are the only one in the market on the backfoot. Your theory about GW just becoming smaller is flawed though since they have so many expenses with their retail chain. If they where to sell it they could go and become one of the smaller parts of the market and sell to people who just want to forge a narrative and all that, but so lond as they have the massive money pit that is their stores they NEED to be the dominant force in the market or die.

Mark Wells left what.. 3 years ago now? He was brought in to reduce waste and when he left he was praised for his efforts in trimming the fat. After he was gone GW then powered ahead cutting costs everywhere, especially with their 1 man store method. That says a lot to me. The guy they brought in to cut costs leaving would, to me, suggest that the fat is gone. GW then slashing costs more and more means they are getting rid of anything they posibly can because they simply can't support the massive retail chain like they used to.