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Made in gb
Stitch Counter






Rowlands Gill

investor.games-workshop.com/investor_relations/financial_results/Results2007/Interims/default.htm

Not good news for GW investors.

At least Kirby's stopped blaming the bursting of the LotR bubble...

Cheers
Paul 
   
Made in gb
Stitch Counter






Rowlands Gill

Just been pulling apart some of the detail in the accounts.

The turnover slide of 4% over the equivalent period last year (which was down 17% over the year before) was bad enough, but I've just noticed their debt position.

They are now £18M in debt, compared to £9M in May. That isn't good. Dividends continue to be funded from borrowin it appears.

Kirby's faith in the long term improvement and a return to profitabilty seems unshakeable!

Cheers
Paul 
   
Made in gb
Stitch Counter






Rowlands Gill

Found this interesting snippet in the press release:

<table width="379" height="280" cellspacing="0" cellpadding="0" border="1" style="border: medium none ; border-collapse: collapse;"> <tbody> <tr> <td width="569" valign="top" style="border-style: solid solid none; border-color: windowtext windowtext -moz-use-text-color; border-width: 0.5pt 0.5pt medium; padding: 0cm 5.4pt; width: 426.45pt;" colspan="3">

<strong style="">REVENUE BY GEOGRAPHICAL
[/b]

<strong style="">AREA OF SALES OPERATION IN [/b]

</td> </tr> <tr> <td width="190" valign="top" style="border-style: none none none solid; border-color: -moz-use-text-color -moz-use-text-color -moz-use-text-color windowtext; border-width: medium medium medium 0.5pt; padding: 0cm 5.4pt; width: 142.15pt;">

<!--[if !supportEmptyParas]--> <!--[endif]-->

</td> <td width="190" valign="top" style="border: medium none ; padding: 0cm 5.4pt; width: 142.15pt;">

<strong style="">LOCAL CURRENCY[/b]

</td> <td width="190" valign="top" style="border-style: none solid none none; border-color: -moz-use-text-color windowtext -moz-use-text-color -moz-use-text-color; border-width: medium 0.5pt medium medium; padding: 0cm 5.4pt; width: 142.15pt;">

<!--[if !supportEmptyParas]--> <!--[endif]-->

</td> </tr> <tr> <td width="190" valign="top" style="border-style: none none none solid; border-color: -moz-use-text-color -moz-use-text-color -moz-use-text-color windowtext; border-width: medium medium medium 0.5pt; padding: 0cm 5.4pt; width: 142.15pt;">

<!--[if !supportEmptyParas]--> <!--[endif]-->

</td> <td width="190" valign="top" style="border: medium none ; padding: 0cm 5.4pt; width: 142.15pt;">

<!--[if !supportEmptyParas]--> <!--[endif]-->

<strong style="">Six months to [/b]

<strong style="">26 November 2006[/b]

</td> <td width="190" valign="top" style="border-style: none solid none none; border-color: -moz-use-text-color windowtext -moz-use-text-color -moz-use-text-color; border-width: medium 0.5pt medium medium; padding: 0cm 5.4pt; width: 142.15pt;">

<!--[if !supportEmptyParas]--> <!--[endif]-->

Six months to

27 November 2005

</td> </tr> <tr> <td width="190" valign="top" style="border-style: none none none solid; border-color: -moz-use-text-color -moz-use-text-color -moz-use-text-color windowtext; border-width: medium medium medium 0.5pt; padding: 0cm 5.4pt; width: 142.15pt;">

<!--[if !supportEmptyParas]--> <!--[endif]-->

<!--[if !supportEmptyParas]--> <!--[endif]-->

Continental Europe

</td> <td width="190" valign="top" style="border: medium none ; padding: 0cm 5.4pt; width: 142.15pt;">

<strong style=""><!--[if !supportEmptyParas]--> <!--[endif]--> [/b]

<strong style=""><!--[if !supportEmptyParas]--> <!--[endif]--> [/b]

<strong style="">€32.1m[/b]<strong style=""> [/b]

</td> <td width="190" valign="top" style="border-style: none solid none none; border-color: -moz-use-text-color windowtext -moz-use-text-color -moz-use-text-color; border-width: medium 0.5pt medium medium; padding: 0cm 5.4pt; width: 142.15pt;">

<!--[if !supportEmptyParas]--> <!--[endif]-->

<!--[if !supportEmptyParas]--> <!--[endif]-->

€34.6m

</td> </tr> <tr> <td width="190" valign="top" style="border-style: none none none solid; border-color: -moz-use-text-color -moz-use-text-color -moz-use-text-color windowtext; border-width: medium medium medium 0.5pt; padding: 0cm 5.4pt; width: 142.15pt;">

United Kingdom

</td> <td width="190" valign="top" style="border: medium none ; padding: 0cm 5.4pt; width: 142.15pt;">

<strong style="">£17.1m [/b]

</td> <td width="190" valign="top" style="border-style: none solid none none; border-color: -moz-use-text-color windowtext -moz-use-text-color -moz-use-text-color; border-width: medium 0.5pt medium medium; padding: 0cm 5.4pt; width: 142.15pt;">

£17.4m

</td> </tr> <tr> <td width="190" valign="top" style="border-style: none none none solid; border-color: -moz-use-text-color -moz-use-text-color -moz-use-text-color windowtext; border-width: medium medium medium 0.5pt; padding: 0cm 5.4pt; width: 142.15pt;">

The Americas

</td> <td width="190" valign="top" style="border: medium none ; padding: 0cm 5.4pt; width: 142.15pt;">

<strong style="">US$22.9m[/b]<strong style=""> [/b]

</td> <td width="190" valign="top" style="border-style: none solid none none; border-color: -moz-use-text-color windowtext -moz-use-text-color -moz-use-text-color; border-width: medium 0.5pt medium medium; padding: 0cm 5.4pt; width: 142.15pt;">

US$21.9m

</td> </tr> <tr> <td width="190" valign="top" style="border-style: none none solid solid; border-color: -moz-use-text-color -moz-use-text-color windowtext windowtext; border-width: medium medium 0.5pt 0.5pt; padding: 0cm 5.4pt; width: 142.15pt;">

Asia Pacific

</td> <td width="190" valign="top" style="border-style: none none solid; border-color: -moz-use-text-color -moz-use-text-color windowtext; border-width: medium medium 0.5pt; padding: 0cm 5.4pt; width: 142.15pt;">

<strong style="">Aus$8.9m[/b]<strong style=""> [/b]

</td> <td width="190" valign="top" style="border-style: none solid solid none; border-color: -moz-use-text-color windowtext windowtext -moz-use-text-color; border-width: medium 0.5pt 0.5pt medium; padding: 0cm 5.4pt; width: 142.15pt;">

Aus$8.7m

</td> </tr> </tbody> </table>
Interesting to see growth in US sales in local currency.  The big fall in the dollar vs sterling recently wiped that out in the final accounts.  The Evil Empire's performance in the US is (to me) a barometer.  If they are ever to grow it will be in the US - as sales opportunities are pretty much at saturation point in the UK and Europe, and they are real minnows in Asia.

Cheers
Paul 
   
Made in gb
Been Around the Block




Reading, UK

Ok, let's first get the headline right - the revenue fell, not the profit. But apart from that yeah, their stuff is too expensive, what do they expect?
   
Made in gb
Stitch Counter






Rowlands Gill

I stand by the headline:


We can now see that our full year sales, and therefore profits, are likely to fall short of current market expectations.

Cheers
Paul 
   
Made in gb
Been Around the Block




Reading, UK

Falling short of market expectations does not necessarily equal a slide in profits (it might do; I dunno what the market expectations are).
   
Made in gb
Stitch Counter






Rowlands Gill

Operating profit for the six months to November:

2006: £456k
2005: £463k

That looks awfully like a fall of £7k to me...

Its tiny, but it ain't growth that's for sure! In "real" terms its a fall of around 4.7%

Cheers
Paul 
   
Made in gb
Been Around the Block




Reading, UK

And profit attributable to shareholders, which is what the dividend ultimately comes out of, grew by £11k. So between a small fall in operating profit and a less small gain in net profit, I?d say the true story is that their revenue is still going backwards.
   
Made in us
Hangin' with Gork & Mork






You're making my head hurt.

Amidst the mists and coldest frosts he thrusts his fists against the posts and still insists he sees the ghosts.
 
   
Made in gb
Stitch Counter






Rowlands Gill

Which doesn't invalidate my title.

Of course turnover dropping is the most important thing about the results. Profits, particularly "profit after tax" are open to manipulation from one year to the next, but Turnover reduction is a lot harder to hide.

Essentially the story is that be being more efficient in inventory control and reducing overheads they have managed to increase their margin, which when coupled with exchange rate fluctuations and falling turnover has lead to a slight fall in OP or a slight gain in PAT.

That indicates to me that those kind of efficiencies can't continue forever, and all the signs are that turnover will continue to slide and profits whither yet further.  Add in the effect of increasing interest payments on all that borrowing, and PAT is lined up for a hammering.

As I said: The profit slide continues...

Cheers
Paul 
   
Made in us
Bloodtracker




Seek and ye shall find

This sounds like most of the fluff from the upcoming Codex: Adeptus Financialis. It also includes details of the battles between the 'Cult of the Bear' (who believe the Emporer will be reborn in the form of a giant bear, bankrupting the Imperium and destroying the universe) and the 'Cult of the Bull' (who believe the Emporer will be reborn in the form of a giant bull, rescuing humanity - and dwindling profit margins)...

Gentlemen, we're in luck. These aliens speak American! 
   
Made in gb
Stitch Counter






Rowlands Gill

And here's me thinking that the "Cult of the Bull" was those that believed unquestionably everything emanating from the Golden Throne...

Cheers
Paul 
   
Made in us
Master of the Hunt





Angmar

Posted By Osbad on 01/05/2007 6:34 AM
And here's me thinking that the "Cult of the Bull" was those that believed unquestionably everything emanating from the Golden Throne...


No no, that would be the "Cult of the Elephant"...

"It is by caffeine alone I set my mind in motion.
It is by the seed of Arabica that thoughts acquire speed, the teeth acquire stains, the stains become a warning.
It is by caffeine alone I set my mind in motion."
 
   
Made in us
[MOD]
Madrak Ironhide







Aw come on fellas. D6 it. 1-3 profits are expected to fall. 4-6 profit has fallen.

DR:70+S+G-MB-I+Pwmhd05#+D++A+++/aWD100R++T(S)DM+++
Get your own Dakka Code!

"...he could never understand the sense of a contest in which the two adversaries agreed upon the rules." Gabriel Garcia Marquez, One Hundred Years of Solitude 
   
Made in us
Regular Dakkanaut



SF Bay Area, CA

"We have strengthened our gross margin to 70.1% (2005: 69.1%)."

Does that mean they make 70% profit on every sale?
   
Made in ca
Regular Dakkanaut



AJCarrington

Yes; for a $100 item, they would make $70.10 in gross profit.  How one defines gross profit can vary, but generally it is the difference between the selling price and the "landed" cost.  This number does not reflect overhead, R&D, taxes, etc.  I'd be curious as to their Net Profit, which takes these factors into account (except maybe taxes?).

AJC
   
Made in ca
Deathwing Terminator with Assault Cannon






In either case, it shows that have massive room to lower prices and increase volume if they chose to do so.
   
Made in us
Dakka Veteran




Yes, they can lower prices...at the cost of overhead, R&D...etc. If you thought they made a crappy product now, what would happen if they cut corners there?

Zoned?
   
Made in ca
Regular Dakkanaut



AJCarrington

Depends on what their net margin is.  If they're posting a loss, then their net margin would be negative; hence any drop in prices will immediately hit the bottom line.  It would all depend on how much increased volume a price drop would give them.  Based on a GP of 70%, if they dropped their prices 10%, they would need to see an increase in volume of ~17%, just to maintain the same level of gross profit.  Note this is a really rough comparison as it does not factor in reduced unit costs for increased volume, but it is a reasonable guideline.  Hence, for them to actually increase their profitability, they would need to see increased growth over 20% - something I doubt they could promise/guarantee to the shareholders.

They've really created a mess for themselves, raising prices with decreasing volumes.  In most of the business simulations that I've participated in, this is nothing but a stop-gap measure as ultimately one ends of with great margins, but little volume.

AJC
   
Made in us
5th God of Chaos! (Yea'rly!)




The Great State of Texas

Posted By Asmodai on 01/05/2007 11:40 AM
In either case, it shows that have massive room to lower prices and increase volume if they chose to do so.

No it doesn't. It shows they have improved their operating costs - usually accomplished through the joy of  "forced alternate employment opportunities."  There is no guarantee that price reductions will result in quantifiable sales increases.  Likely yes, but there is insuffiicent evidence that the valume increase would offset the cost decrease per SKU.

-"Wait a minute.....who is that Frazz is talking to in the gallery? Hmmm something is going on here.....Oh.... it seems there is some dispute over video taping of some sort......Frazz is really upset now..........wait a minute......whats he go there.......is it? Can it be?....Frazz has just unleashed his hidden weiner dog from his mini bag, while quoting shakespeares "Let slip the dogs the war!!" GG
-"Don't mind Frazzled. He's just Dakka's crazy old dude locked in the attic. He's harmless. Mostly."
-TBone the Magnificent 1999-2014, Long Live the King!
 
   
Made in us
40kenthus






Yoor Speeshawl too Gawd!

Posted By jfrazell on 01/05/2007 12:45 PM
Posted By Asmodai on 01/05/2007 11:40 AM
In either case, it shows that have massive room to lower prices and increase volume if they chose to do so.

No it doesn't. It shows they have improved their operating costs - usually accomplished through the joy of  "forced alternate employment opportunities."  There is no guarantee that price reductions will result in quantifiable sales increases.  Likely yes, but there is insuffiicent evidence that the valume increase would offset the cost decrease per SKU.

It is kinda sad that they did all that pruning and still are losing money,

Only now do I realize how much I prefer Pete Haines' "misprints" to Gav Thorpe's "brainfarts." :Abadabadoobaddon 
   
Made in ca
Dakka Veteran




Pirate Ship Revenge

It is kinda sad that they did all that pruning and still are losing money,

QFT.

I have nothing useful to add.
http://otzone.proboards34.com/index.cgi>the OT
Welp, that link ain't no good nomore. 
   
Made in us
Foul Dwimmerlaik






Minneapolis, MN

Posted By malfred on 01/05/2007 9:02 AM
Aw come on fellas. D6 it. 1-3 profits are expected to fall. 4-6 profit has fallen.

EXALT.
I love you, Malfred!

Forget having babies with your wife, come have my manbabies instead.

I have miniatures, she doesnt.  8)

   
Made in ca
Fixture of Dakka




Canada

Actually I'd say part of their increased profits in the Americas comes from the insane disparity between the increased value of the Canadian dollar and GW's inflated price for CDN models. We've seen the standard price increases here even though our dollar has shot up from ~60 cents US to ~90 cents US.

"Nothing from the outside world can be imported into Canada without first being doused in ranch dressing. Canadian Techs have found that while this makes the internet delicious it tends to hamper the bandwidth potential. Scientists are working furiously to rectify the problem. "

--Glaive Company CO 
   
Made in us
Jinking Ravenwing Land Speeder Pilot




In your house, rummaging through your underwear drawer

I knew you couldn't trust those tricksy Canadians, and their magical currency that has +2 spending power!

But yeah, I flunked Econ 201. You say "investments in infrastructure" and "gross margins" and I die a little inside.


"Seriousness is the only refuge of the shallow"~Oscar Wilde 
   
Made in us
Foul Dwimmerlaik






Minneapolis, MN

I find it humorous and sad that since Andy Chambers left GW, things have been going downhill very badly.

If I was AC, I would have to be smiling about how stupid the bean counters who took control of GW are. Tthe company was doing quite well when the gamers in that company had some say in how things went. Though that is merely specualtion and assumption that they had any say to begin with, but it felt that way in the early days up until a couple years ago.

   
Made in ca
Unhealthy Competition With Other Legions



Calgary Alberta

Posted By Drake_Marcus on 01/05/2007 6:32 PM
Actually I'd say part of their increased profits in the Americas comes from the insane disparity between the increased value of the Canadian dollar and GW's inflated price for CDN models. We've seen the standard price increases here even though our dollar has shot up from ~60 cents US to ~90 cents US.
AFAIK the Canadian prices are set in relation to the British Pound and not the American dollar.

An incredibly smart idea given our close geographic proximity to the UK.

Oh, wait...


   
Made in us
Sneaky Kommando



Texas

GW is run by idiots they continue to dump tons of sources into a dwindling product line (LOTR).  "only 10% of sales (are) still tied to Lords of the Rings" yet they continue to add supplements and dedicate huges sections of White Dwarf to it.

Where is the increase in core game releases that they promised 6 months ago?  The codex release schedule is far behind what it was when 3rd Edition was released.



Copy at your own risk 
   
Made in us
Fresh-Faced New User



The Woodlands, Texas

Whoever in GW brokered the deal with Tolkein Enterprises should be sacked. Whoever in Tolkein Enterprises brokered the deal with GW should be hired.

I believe that GW is still under contract with TE and has to churn out more LotR gak regardless of what we want. So thank Frodo for the craptastic release schedule of WFB and 40K. Focking hobbits.

"Do you rue attacking Kronk? Do you rue it?" - Raymond Ractburger 
   
Made in us
Plastictrees



Amongst the Stars, In the Night

These problems were extant before Andy Chambers left (he was, at least, trying to fix them) and go back four or more years, and probably longer than that. Even LotR in and of itself was a very wise move, as it was wildly successful (for a time) and made GW boat loads of money. The real problem lies with Kirby & Co's dunderheaded and hubris infused handling of it's LotR's success that not only squandered their new found popularity but also used it to ignored how it was masking the sharp decline in their other core market while simultaneously siphoning talent that could have been used to reduce said decline.

So what does GW do to fix this? Instead of working to increase customer relations, fixing things people are complaining about and making it easier for more independent stores and regular customers to get their product, what do they do? They raise prices while simultaneously lowering both product quality and general customer service, they cut off a massive retail channel (online sales) in an attempt to restrict it to only their own webstore (that worked out really well), and then also screw over indy stores in markets where they want to open a new Hobby Center. All the while arrogantly thinking their customers wouldn't notice. Well, we did.

I don't know what needs to happen, but it's obvious Kirby has been setting himself up with some very nice bonuses and a big golden parachute at the shareholders and company's expense, so to root him out will be rather expensive. By the time the board of directors does do something, I worry that GW will be in prime position for a hostile take over or similar acquisition by Hasbro or some other toy company. Won't that be fun?

OT Zone: A More Wretched Hive of Scum and Villany
The Loyal Slave learns to Love the Lash! 
   
 
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