Financial · August 1, 2019

Games Workshop Group PLC Annual Report FY2019

Summary

Games Workshop achieved record-breaking financial performance for the 2018/19 fiscal year, with annual revenue surpassing £250 million for the first time. Reaching £256.6 million in sales and £81.3 million in profit before tax, the company demonstrated a third consecutive year of significant growth. This expansion was driven by a 29% increase in the trade channel, particularly within North American and Asian markets, alongside a rising contribution from intellectual property royalties. To sustain this momentum, the company invested approximately £14 million in manufacturing and tooling, including a new production facility in Nottingham and global warehousing upgrades. The strategic focus centered on a centralized business model and high-quality fantasy miniatures, supported by the opening of 40 new retail stores and the addition of 600 trade accounts. Beyond core manufacturing, the company expanded its brand reach through the "Warhammer Story Forge" for animation and a development agreement for an *Eisenhorn* television series. While operating profit rose by 9%, gross margins saw a slight decline to 67.5% due to shifts in product and channel mix, and return on capital adjusted to 100% following substantial capital expenditures. Corporate governance and workforce investment remained central to operations. The workforce grew to 2,110 employees, supported by the UK living wage and a discretionary £1,500 payment to all staff in recognition of exceptional performance. Executive remuneration also saw significant adjustments following external benchmarking, with CEO total pay rising to £1.077 million. Despite increased energy efficiency at headquarters, the company’s carbon footprint rose slightly to 5,240 tonnes of CO2e. Looking forward, the company maintains a strong balance sheet with £29.4 million in cash and no utilized borrowing facilities, confirming financial viability for the next three years while navigating potential economic uncertainties related to Brexit.

From the report

FINANCIAL HIGHLIGHTS Restated 2019 2018 £000 £000 Revenue 256,574 221,304 Revenue at constant currency* 255, 295 221,304 Operating profit - pre-royalties receivable 69,834 64,702 Royalties receivable 11,365 9,617 Operating profit 81,199 74,319 Profit before taxation 81,296 74,270 Cash generated from operations 88, 776 82,332 Earnings per share 202.9p 184.3p Dividends per share declared in the year 155p 126p CONTENTS Chairman’s statement 2 Strategic report 3 Directors’ report 15 Corporate governance report 21 Audit and risk committee report 25 Remuneration report 28 Directors’ responsibilities statement 37 Company directors and advisers 38 Indepe

21 Audit and risk committee report 25 Remuneration report 28 Directors’ responsibilities statement 37 Company directors and advisers 38 Independent auditors’ report 39 Consolidated income statement 45 Statements of comprehensive income 45 Balance sheets 46 Consolidated and Company statements of changes in total equity 47 Consolidated and Company cash flow statements 48 Notes to the financial statements 49 Five year summary 72 Financial calendar 72 Notice of annual general meeting 73 *Constant currency revenue is calculated by comparing results in the underlying currencies for 2019 and 2018, both converted at the 2018 average exchange rates as set out on page 12. 1 Games Workshop Group PLC

CHAIRMAN’S STATEMENT I’m delighted to report that Games Workshop’s financial year ended 2 June 2019 was another great year for the Company. Revenue and profit before tax were both at record levels, revenue exceeding £250 million for the first time. Games Workshop’s 2019 performance beat the 2018 result with sales and profit growth across all channels. This is the first time in the Company’s history that performance in the financial year following a Warhammer 40,000 launch year has beaten the Warhammer 40,000 year! Dividend payments in respect of the 2019 financial year amounted to 155 pence per share, compared with 126 pence per share in respect of 2018. I’m sure that Games Workshop shareholders appreciate the fact that our dividends are paid entirely out of surplus cash generated, not debt. We continue to have no borrowings. This performance was achieved notwithstanding a busy year on other fronts: phase 1 of Leenside - our new production facility in Nottingham – was completed (on time and on budget) and commenced operations in December 2018. Phase 2 of the Leenside project is underway and is expected to be operational in Autumn 2019. Other investment projects, which Kev describes in his report later in this annual report, continue to make progress. I would also draw to shareholders’ attention the growing contribution to our performance from royalty income. There is increasing interest on the part of media businesses in Games Workshop’s intellectual property - our rich fantasy worlds of Warhammer.

is annual report, continue to make progress. I would also draw to shareholders’ attention the growing contribution to our performance from royalty income. There is increasing interest on the part of media businesses in Games Workshop’s intellectual property - our rich fantasy worlds of Warhammer. We continue to try to remain alert to the business risks we must address. This includes the risks which confront every business routinely – for example, finding and retaining good people, innovation, sales growth, cost control – and those which a business that has grown fast over a short period of time might consider in particular, such as the effectiveness of our operating systems, our design, development and manufacturing capacity; in short, how best to address our ‘growing pains’. No easy task: your executive team has a lot on its plate. The process of refreshing the composition of the board of the Company continues. As noted in our 2018 annual report, Chris Myatt, our senior independent director, will step down from the board at our AGM in September 2019. Chris has been a great source of clear, independent-minded advice to Games Workshop since his appointment to the board as a non-executive director in April 1996. On behalf of everyone involved in any way in Games Workshop, thank you, Chris. We will miss your contribution.

ur AGM in September 2019. Chris has been a great source of clear, independent-minded advice to Games Workshop since his appointment to the board as a non-executive director in April 1996. On behalf of everyone involved in any way in Games Workshop, thank you, Chris. We will miss your contribution. Finding new non-executive director candidates who ‘fit’ with Games Workshop does take time – and we believe ‘fit’ to be of great importance. Your board has spent a good deal of time on this exercise since our last annual report. We have however now appointed as non-executive directors John Brewis in June 2018 and Kate Marsh in July 2019. Following the 2019 AGM, your board now has in place three non-executive directors (besides me). We will commence our search for a fourth non-executive in 2019/20 and I expect my successor as non-executive chairman to be appointed from this group within the next few years. We will keep you fully updated on our progress on this front. Our 2018 AGM had a structure similar to most other listed companies, focusing on normal AGM business. This year’s AGM will be similar in format, but following the AGM this year Kev and Rachel will make a presentation about the business. And, as before, there will be the opportunity for shareholders to meet and engage with all board members and some of our senior operational team.

mal AGM business. This year’s AGM will be similar in format, but following the AGM this year Kev and Rachel will make a presentation about the business. And, as before, there will be the opportunity for shareholders to meet and engage with all board members and some of our senior operational team. On the subject of trying to improve awareness generally about what we’re doing at Games Workshop and in particular in the light of the MIFID II regulations, we recently appointed Edison Group, an independent research firm, to publish research into our business. You can access this on our investor relations website. I encourage you to read it! I hope you will find it informative and helpful. Finally, and as was the case last year, I have three enjoyable responsibilities to discharge before concluding this statement: - Firstly, to thank our executive directors and the Games Workshop team as a whole for achieving such success this year. I know you will try and keep it up. The team’s performance has been fantastic. - Secondly, to thank our loyal customers: we will do our best to continue to produce what you’re looking for and to include you in the conversation. - Thirdly, to thank you, our shareholders, for your support and your loyalty. Do please try and come to our AGM on 18 September 2019: we look forward to seeing you there. With thanks, and best wishes. Nick Donaldson Non-executive chairman 29 July 2019 2 Games Workshop Group PLC

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