Smaller companies: Games top fantasy league
Sunday 17 August 1997
The company, floated in October 1994 at 115p, now stand at an unearthly 645p.
Much like the games it supplies its eager following, the plot is fantastic. Games Workshop makes lead and plastic models of the bizarre characters used for complex fantasy games. Many of its customers are teenagers, but there is an adult audience as well.
Last week it posted the now-obligatory stellar performance in sales and profit growth. Turnover was up 30 per cent to pounds 58.37m; pre-tax profit jumped 27 per cent to pounds 11.12m. Clearly its margins are almost as unreal as its products, but the games are highly crafted and imaginative and very much in demand.
In the UK, it operates through a chain of 101 shops. It also now owns 14 stores in France, 10 in Australia, eight in Spain, five in both Canada and Germany, four in the US, and two in both Hong Kong and Ireland.
The US is a key market, accounting for 20 per cent of sales, a rise of 42 per cent from last year. US growth, said chief executive Tom Kirby, was helped by the decision to sell direct to independent retailers rather than by using distributors. Games Workshop has won sales in Europe by translating its games into other languages, and they will soon be available in Mandarin Chinese.
A number of points stand out about the business. First, it has no obvious competitors. Second, most of its markets remain under-exploited. Third, cash flow is exceptionally good. But a potential downside is that interest from its fans might wane. And the games compete in a wider market for hard-earned leisure spending - although fantasy games are popular, there are all sorts of broadly competing products, especially computer games. If the UK market is not yet saturated, coverage of its products must be reaching a significant proportion of the population by now.
Still, it seems reasonable to assume that the strong expansion of recent years can be maintained. The question is whether the shares offer much in the way of value. If profits were to grow at a similar rate next year to hit, say, pounds 13m, and earnings per share rose to 27p, the shares would trade at 22 times earnings.
On the basis of how far and how fast the company has come, that seems to offer fair value. There must always be a possibility that it will attract the interest of a larger group, possibly even one of the US leisure or toy empires. Buy.
- 4 Frankie Boyle on Scottish independence: 'In the Interests of Unity, F**k Off'
- 5 Florida couple forced to register as sex offenders for having sex on public beach
Boston Marathon runner's search for mystery man she kissed ends with letter from his wife
Italian police 'reveal' what Jesus looked like as a young boy
Florida couple forced to register as sex offenders for having sex on public beach
Mysterious 'X-Files' sounds heard miles above the Earth
Met Gala 2015: Beyoncé manages to out-skimp Rihanna, Miley and Kim Kardashian with near-naked ensemble
In defence of liberal democracy
General Election 2015: Post-election 'shambles' looms as 70 per cent of voters say SNP 'should not be able to veto UK government policies'
The Rothschild Libel: Why has it taken 200 years for an anti-Semitic slur that emerged from the Battle of Waterloo to be dismissed?
General Election 2015: UK will be 'run for the wealthy and powerful' if Tories retain power, Labour warns
General election live: SNP suspends two members for disrupting Labour rally
Schools forced to act as 'miniature welfare states' with teachers buying underwear and even haircuts for poor pupils
iJobs Money & Business
£60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...
£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...
£27 - 35k + Bonus + Benefits: Guru Careers: A Management Accountant is needed ...
£40-50k + Benefits.: Guru Careers: A Project Manager / Business Analyst is nee...