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Sounds like the normal corporate looting procedure.. Glad I just write the rules I want to use nowadays than deal with GW's "new strategy"

Why are you all talking about Tom Kirby?
Didn't he quit?

Nope

 frozenwastes wrote:

It's possible that they are correct. That the demographic shift that propelled them into an international company (the children of the baby boomers growing up) is over, they got the money they could from the LOTR boom and now are simply in decline no matter what they do. So they may as well get all the money they can into their pockets now. And then manage the decline, staying ahead of falling revenue through cost controls. Hopefully (from GW's perspective) they will find a stabilization point and the decline can cease.

In no way can I believe that is true. Every way I look at it table top gaming, and miniatures gaming along with it, is booming right now. I can't tell you how many sculptors have told me that they can't take commissions because they are fully booked through the end of 2015. Every other day there is a new Kickstarter project, new releases are coming so fast that Table Top Fix can barely keep up with them, we now have a wide range of mainstream IP licences in miniatures gaming from Aliens to Marvel & DC, convention attendance has been rising every year, there's a fething gaming-focused cruise ship!

If GW can't capitalize on this market expansion, the company is doing something wrong. The fact is that the kids of the folks who were playing the first games of Chainmail are now adults with disposable income. I went to Mox Boarding House in Seattle for the first time this past Friday, and five minutes in there is all you need to know that this market is expanding aggressively. At 2PM on a Friday I saw a restaurant that is good enough that I would go to it were it not attached to a game store filled with customers from their early 20s to late 40s, almost all of whom were playing games right at their tables, some with kids of their own.

The demand is there. GW can't figure out how to meet that demand. Rather than admitting that and putting effort into redressing this problem, GW has instead chosen to pretend that this demand simply does not exist.

That's what I was thinking. I see a lot of gamers at shows that have brought their kids along who also play. You'd assume 2nd gen gamers would be a pretty much captive market.

I also don't see any indication that the industry isn't involved in huge growth

 Verviedi wrote:
Why are you all talking about Tom Kirby?
Didn't he quit?

Kirby stepped down as Chairman, a position which he held in addition to CEO, which AFAIK is not legal in this country, hence why a new Chairman had to be appointed.

It's legal, but it isn't encouraged.

Gotcha!

 Thud wrote:
~£350k for Kirby.

What I would be able to do with that kind of money right now......

Am I the only one that gets angry and frustrated when you find out there are people out there that can make that kind of money so easily?

I don't begrudge anyone who earns that sort of money through talent, ability or vision one penny of it.

Anyone who's simply in the right place at the right time, went to the right school who knows the right people? They can go hang for all I care.

 Azreal13 wrote:
Anyone who's simply in the right place at the right time, went to the right school who knows the right people? They can go hang for all I care.

In other words, 99% of the people who earn that sort of money

99% is probably conservative!

weeble1000 wrote:

 frozenwastes wrote:

It's possible that they are correct. That the demographic shift that propelled them into an international company (the children of the baby boomers growing up) is over, they got the money they could from the LOTR boom and now are simply in decline no matter what they do. So they may as well get all the money they can into their pockets now. And then manage the decline, staying ahead of falling revenue through cost controls. Hopefully (from GW's perspective) they will find a stabilization point and the decline can cease.

In no way can I believe that is true. Every way I look at it table top gaming, and miniatures gaming along with it, is booming right now. I can't tell you how many sculptors have told me that they can't take commissions because they are fully booked through the end of 2015. Every other day there is a new Kickstarter project, new releases are coming so fast that Table Top Fix can barely keep up with them, we now have a wide range of mainstream IP licences in miniatures gaming from Aliens to Marvel & DC, convention attendance has been rising every year, there's a fething gaming-focused cruise ship!

If GW can't capitalize on this market expansion, the company is doing something wrong. The fact is that the kids of the folks who were playing the first games of Chainmail are now adults with disposable income. I went to Mox Boarding House in Seattle for the first time this past Friday, and five minutes in there is all you need to know that this market is expanding aggressively. At 2PM on a Friday I saw a restaurant that is good enough that I would go to it were it not attached to a game store filled with customers from their early 20s to late 40s, almost all of whom were playing games right at their tables, some with kids of their own.

The demand is there. GW can't figure out how to meet that demand. Rather than admitting that and putting effort into redressing this problem, GW has instead chosen to pretend that this demand simply does not exist.

Agree with this comment. A lot. Hopefully you people will understand where this company is heading.

Isn't the accepted wisdom that if an established company has cash reserves that a shareholder is more likely to see greater value through a cash dividend rather than through reinvestment.

Business history is littered with examples of poor investment decisions by cash rich firms.

weeble1000 wrote:In no way can I believe that is true. Every way I look at it table top gaming, and miniatures gaming along with it, is booming right now. I can't tell you how many sculptors have told me that they can't take commissions because they are fully booked through the end of 2015. Every other day there is a new Kickstarter project, new releases are coming so fast that Table Top Fix can barely keep up with them, we now have a wide range of mainstream IP licences in miniatures gaming from Aliens to Marvel & DC, convention attendance has been rising every year, there's a fething gaming-focused cruise ship!

I completely agree, actually. I was responding to the notion that paying out more than the company earns in dividends must somehow be a good idea. Exploring the idea that there is literally nothing GW could do with the money to make more money for their investors. Or that there was some how no way to know if reinvesting would have been a good idea or not.

PLC wrote:Isn't the accepted wisdom that if an established company has cash reserves that a shareholder is more likely to see greater value through a cash dividend rather than through reinvestment.

You should take a look at the dividend payout ratios of established companies, their revenue, the changes to their revenue and compare it all to GW to figure out whether or not GW qualifies.

I think what you'll find is that GW grew massively in the 90s, had a big boom with the LOTR license and has largely been struggling since. They're not an "established company" they're a company who got off track and hasn't yet figured out to get back on track. They've slashed their costs, jacked up their prices and sacrificed both market share and volume for margins. They wouldn't have massive revenue swings and inconsistent earnings if they were the type of company you are talking about.

Business history is littered with examples of poor investment decisions by cash rich firms.

They can just look at what worked for them in the past and make similar decisions. What were they doing when they grew in the 90s? What were they doing to get the word out about their LOTR game? What was their product like both when 40k & WFB were growing in the 90s and what was LOTR like? What did they have in common? How do they differ from today's products? What was the price point? What was a GW hobby centre doing during that time? What was the magazine content and approach like? Who were they doing business with? What was the breakdown by sales channel? Are there business partners that have been successfully dealt with in the past that are currently not being dealt with? Can modern analogues be found? Why does the rest of the market seem to be growing? What are they doing differently than GW? Where are the customers who were teenagers in the 90s? Are they still spending money on games?

GW doesn't have to go back to 37.7% dividends to look into that and make some reinvesments. They could maintain a very high dividend ratio of 75-95% and still have tons of cash to investigate how to return to growth and implement a plan.

I just don't think they're actually interested in returning to growth. GW is Kirby's personal cash machine and he's going to maximize what he can get out of it before he fully retires. GW *knows* that converting a fully staffed store into a single employee location cuts sales by around 40% (if you take a look at the sales channel break downs and the last few annual reports, you can do the math yourself), but it saves them enough money that they think it's worth the decline in revenue and volume to save money and protect their margins. There can be no talk of a return to growth when they are still implementing a plan that intentionally reduces both revenue and volume in order to protect margins.



.

 frozenwastes wrote:

weeble1000 wrote:In no way can I believe that is true. Every way I look at it table top gaming, and miniatures gaming along with it, is booming right now. I can't tell you how many sculptors have told me that they can't take commissions because they are fully booked through the end of 2015. Every other day there is a new Kickstarter project, new releases are coming so fast that Table Top Fix can barely keep up with them, we now have a wide range of mainstream IP licences in miniatures gaming from Aliens to Marvel & DC, convention attendance has been rising every year, there's a fething gaming-focused cruise ship!

I completely agree, actually. I was responding to the notion that paying out more than the company earns in dividends must somehow be a good idea. Exploring the idea that there is literally nothing GW could do with the money to make more money for their investors. Or that there was some how no way to know if reinvesting would have been a good idea or not.

Yea, I know that Frozenwastes. I am constantly surprised by how much the market appears to be expanding though, and feel the need to talk about it. My trip to Seattle was another in a long series of trend-confirming experiences.

 Kilkrazy wrote:
There is a worry over the apparent decline in sales of the past few years, but this will not be a problem if it can be stopped.

This is the big one.

The actions that seemingly started causing the loss of sales are the same actions they repeat every year like clockwork - raised prices, cut services. They show no intention of turning around the sales volumes they have, and are more content with explaining why the lower sales are their target (collectors models), regardless of the sanity of the claims.

weeble1000 wrote:
Yea, I know that Frozenwastes. I am constantly surprised by how much the market appears to be expanding though, and feel the need to talk about it. My trip to Seattle was another in a long series of trend-confirming experiences.

I recently visited a nearby city and found a board game restaurant. It was licensed to serve alcohol and a bit up scale and not catering to the fast food and card games crowd at all. .
I'm seeing the same things you are. The 30 somethings and those in their 40s that were teens in the 90s are still into gaming and have more money than any other time in their lives.

 frozenwastes wrote:

I completely agree, actually. I was responding to the notion that paying out more than the company earns in dividends must somehow be a good idea. Exploring the idea that there is literally nothing GW could do with the money to make more money for their investors. Or that there was some how no way to know if reinvesting would have been a good idea or not.

Whereas it is certainly debatable if GW's strategy is good long-term plan, they do not really pay out more dividend than they earn. In their previous financial year their earnings were 36.1p per share, and in response they declared dividends totalling 36p per share. It can be difficult to follow as sometimes the dividend is declared in present financial period, sometimes in current.

GW's cash position has been relatively stable in recent years:
17,089 k£ in 2010
17,572 in 2011
17,358 in 2012
13,931 in 2013
17,550 in 2014

It is quite true that sometimes profitable companies are at loss what to do with their money. Microsoft keeps buying other companies, but doesn't know what to do with them. Apple returns some of their money to investors, but mostly they just sit on it.

Sorry, I don't think we should use the "pre-exceptional" earnings per share of 36.1p. The expenses were there regardless and their actual earnings for 2013-2014 are 25.2p. When comparing earnings and dividends you need to compare what was actually the expenses and not exclude things because the board would like to paint a rosier picture of the numbers.

36p in dividiends, 25.2p in earnings = 142.8% payout.

Also, as for cash being stable, look what happened in the last half year report: Cash and cash equivalents 8,410

More than half gone. And then we have these expenditures coming up:

12. Commitments
Capital expenditure contracted for at the balance sheet date but not yet incurred is £3,302,000 (2013: £606,000). The
committed spend includes the renovation of our visitor centre in Nottingham, tooling and machinery spend and web store
improvements.

So of that £8.4 million, £3.3 is already spoken for. And then on the 20th of March the dividend is paid at 16p each for 32 million shares. So there is another £5.1 million.

So they're pretty much running on cash from operations at this point. Hope it's enough or they'll be borrowing to cover costs (and probably to maintain a dividend like they did in the past). If their revenue continues to dip while their expenses fail to also decline, it'll be a loss making report coming up.

Fortunately for GW they have a big splash release coming up. The relaunch of Warhammer Fantasy Bubbles. It might sell well enough to prevent the decline into a loss.

weeble1000 wrote:
If GW can't capitalize on this market expansion, the company is doing something wrong.

I dunno... I could totally believe that GW is approaching saturation. They are the biggest players, I could believe that almost anyone who would potentially play table top games have already given GW a go. How many of the people buying in to all the new games already own or have owned a bunch of GW stuff?

I don't necessarily think it's the most likely answer, but I do think it's an answer that needs to be considered, GW have grown the market and for a lot of people were the only game in town, it's entirely possible that they've gone over their crest and now gamers are more educated and have broader tastes so no matter what they do they're not going to keep up with the growth in the rest of the market because the growth in the rest of the market is to some extent coming out of GW's existing customers, not simply new customers getting in to wargaming.

AllSeeingSkink wrote:
I dunno... I could totally believe that GW is approaching saturation. They are the biggest players, I could believe that almost anyone who would potentially play table top games have already given GW a go. How many of the people buying in to all the new games already own or have owned a bunch of GW stuff?

I find the saturation argument difficult to believe when GW refuses to accept that marketing is a useful tool and doesn't seem to care about the huge up-front costs scaring away new players. I'm sure some of the growth of other games is coming at GW's expense, but I wouldn't be surprised at all to see that it's also coming from those games recruiting new customers that GW failed to get. So until GW makes a legitimate effort to expand their business instead of acting like they can just sit back and let the cash come in I don't think we can say that it's impossible for GW to see similar growth.

Didn't GW make like £7,000,000 in profit in 2014?

Edit: Sort of, maybe post-tax http://investor.games-workshop.com/wp-content/uploads/2014/07/2013-14-Press-statement-final-website.pdf

Yes. And about 17 the year before. A companies financial report is like a snapshot in a point in time (in the case of the last half year report, November 30, 2014). They had 8.4 million in cash and 3.3 in upcoming contractual commitments and now have announced 5.1 million in dividends, so we can project their future cash position will be about cash earned through operations rather than relying on past reserves. See page 7 of the half year report and you can follow all the money going in and out to go from 17 million to 8.4. Then took a look at point 12 on the last page to see about contractual commitments that will appear on future reports and then the dividend announcement that is currently the latest item on GW's investor relations page.

GW is not in a cash crunch, but they have paid away their reserves as dividends. Down to the point where the dividend payment + contractual obligations pretty much equal their reserve cash. So when March 20 rolls around, they'll have the money from their December, January, February and some of March in the bank. If they don't decline any further, that'll be about ~3.5 to 4 million. And they have excellent credit. So if they do continue to decline they can easily cover operating expenses by borrowing money for a long, long time (likely years).

.




Automatically Appended Next Post:

 Koppo wrote:
According to Morning Star http://www.morningstar.co.uk/uk/news/AN_1423808141935072800/uk-dividends-calendar---week-ahead.aspx

GW are paying a special dividend next week (the 19th), does anybody know why this is or from where they have this spare cash?

One thing I wanted to touch on is that all dividends are technically "special" for GW as they currently don't have a set dividend schedule. Here's what GW has to say about when they will pay dividends:

"We will only pay dividends out of cash which is truly surplus to the business, after making allowance for the costs of new Hobby centre openings, regular capital expenditure and maintenance, investment in tooling, plus a sum to ensure the business has sufficient working capital for its needs."

So all their dividends will be seen as "special" by the financial press.

 Peregrine wrote:

AllSeeingSkink wrote:
I dunno... I could totally believe that GW is approaching saturation. They are the biggest players, I could believe that almost anyone who would potentially play table top games have already given GW a go. How many of the people buying in to all the new games already own or have owned a bunch of GW stuff?

I find the saturation argument difficult to believe when GW refuses to accept that marketing is a useful tool and doesn't seem to care about the huge up-front costs scaring away new players. I'm sure some of the growth of other games is coming at GW's expense, but I wouldn't be surprised at all to see that it's also coming from those games recruiting new customers that GW failed to get. So until GW makes a legitimate effort to expand their business instead of acting like they can just sit back and let the cash come in I don't think we can say that it's impossible for GW to see similar growth.

Well we can't say anything for sure, I just tend to think GW's fall is partly because of their business practices but also partly because they are losing their top dog position in a natural progression of new games from other companies starting up and their customers becoming broader, the same way the iPhone didn't grow as much as the overall smartphone market once people starting buying Android phones, when new companies start up and are successful, it's mathematically impossible for the company that was previously top dog to grow at the same rate as the overall market.

The question is where is the balance... I don't want to sound too depressing but personally I think GW would only be doing mildly better if they had better business practices and better rules. Better, sure, but no where near as much as the rest of wargaming is growing. Anecdotally I'd have to say wargaming in my area is about the same size as it ever was, it's just now more scattered where as previously it was almost all GW.

As for the advertising thing, we can't really know unless GW give a decent crack at advertising. But even there, I don't think it's a stretch to say wargaming only really appeals to a small subset of the community, it's not like video gaming or movies where your potential market is damned near everyone who is alive, wargaming (especially the larger games like 40k and WHDB) is only ever going to appeal to a special type of nerd who is willing to spend hundreds of dollars and hundreds of hours assembling an army. I don't think it's a stretch that those type of people don't need to be advertised to as heavily, I'd say most people who would be interested in starting a 40k or WHFB army probably already know about the game. I'm sure DoW has done a good job of marketing GW directly to the people who are most likely to play it.

But who knows, maybe if GW did some more advertising their sales would rise, I tend to be more on the fence about it.

AllSeeingSkink wrote:
Better, sure, but no where near as much as the rest of wargaming is growing.

Sure, but GW doesn't have to match the percent annual growth for a new game. Just keeping their sales at the levels the had in 2010-12, before the current decline started, would have been a major win compared to the current situation. Adding on some modest growth would have been even better.

But even there, I don't think it's a stretch to say wargaming only really appeals to a small subset of the community, it's not like video gaming or movies where your potential market is damned near everyone who is alive, wargaming (especially the larger games like 40k and WHDB) is only ever going to appeal to a special type of nerd who is willing to spend hundreds of dollars and hundreds of hours assembling an army.

But you could have said the same thing about (PC) video games back in 1990. And really, a lot of this is GW's fault for making the game so inaccessible to new players. If GW matched their advertising with a low-price starter game to get people into 40k without having to spend $500-1000 to get a playable army it would be a lot easier to turn interested potential customers into actual customers.

I don't think it's a stretch that those type of people don't need to be advertised to as heavily, I'd say most people who would be interested in starting a 40k or WHFB army probably already know about the game.

GW's own history disagrees with you. Back when they advertised the LOTR game they got a lot of sales from people who had never bought GW products and only knew about miniatures because of LOTR. Now, things could be different with 40k/WHFB, but we won't know until GW puts some effort into finding the answer.

I'm sure DoW has done a good job of marketing GW directly to the people who are most likely to play it.

Sure, DoW was a good thing for GW, but DoW is dead and forgotten now. Where's the big mainstream 40k game to continue that marketing? And where's GW's advertising campaign to say "you liked playing the video game, now why not buy the tabletop game?", an inexcusable missed opportunity with DoW. Video games would be fine as a marketing tool if GW showed any interest in using them effectively instead of licensing the IP out to every random smartphone developer with a spare lunch break.

I don't believe the saturation argument at all because they are losing customers, they can't even keep those they have. And it's nothing like when they were rushing LotR product off the shelves. But they've killed that game by screwing down the prices making it an expensive game to get into. They seem to be murdering the Hobbit in the same way they killed of Specialist Games, keeping it around just to gouge a few remaining collectors.

GW have choked off their market primarily through over pricing. It's just getting daft now when some plastic figures are nearly £20 each, no one else charges like that in this industry. They seem to have this approach that they can force sales by limiting their games to just two and making the miniature requirement very high, and then piling high prices on top as well. It doesn't add up, make small highly priced games, or mass battle games with cheap miniatures. To push mass battle games with their prices will just make it too difficult for enough people to get into the game. You can't force a market to buy your product in the way you want by constantly restricting their choice and laying on punishing price increases. Especially when you are producing low quality product like Finecast that just doesn't compare well to other manufacturers. Their hubris is clearly evidence from their "GW hobby is buying our miniatures" attitude.

GW want people to choose between only two games, be required to buy a ton of stuff, then pay a premium on all of it and then not be too fussy about the quality of the rules or the production of the models. Seems like a pretty big ask to me, at least one of those things they have to compromise on. Make more variety of games, reduce the game size, reduce prices, or make sure their stuff really is of a premium standard.

 frozenwastes wrote:
Sorry, I don't think we should use the "pre-exceptional" earnings per share of 36.1p. The expenses were there regardless and their actual earnings for 2013-2014 are 25.2p. When comparing earnings and dividends you need to compare what was actually the expenses and not exclude things because the board would like to paint a rosier picture of the numbers.

36p in dividiends, 25.2p in earnings = 142.8% payout.

Also, as for cash being stable, look what happened in the last half year report: Cash and cash equivalents 8,410

More than half gone.

There is no point comparing half-year report with annual report in that respect. In their previous half-year report their cash position was £9.3 million, so you could have made that same claim.

Market research and investment should be considered first before paying a higher dividend.
In the case of GW it appears that they could improve definitely their market position.

Backfire wrote:

 frozenwastes wrote:
Sorry, I don't think we should use the "pre-exceptional" earnings per share of 36.1p. The expenses were there regardless and their actual earnings for 2013-2014 are 25.2p. When comparing earnings and dividends you need to compare what was actually the expenses and not exclude things because the board would like to paint a rosier picture of the numbers.

36p in dividiends, 25.2p in earnings = 142.8% payout.

Also, as for cash being stable, look what happened in the last half year report: Cash and cash equivalents 8,410

More than half gone.

There is no point comparing half-year report with annual report in that respect. In their previous half-year report their cash position was £9.3 million, so you could have made that same claim.

Cash is one of the few things you can compare regardless of the period of time being talked about.