DIRECTORS' REPORT
The directors present their annual report together with the financial statements and independent auditors’ report for the year ended 30 May 2004. A review of the business is given in the operating review and financial review.
Principal activities
The principal activities of the Group are the design
and manufacture of miniature figures and games and
the retail and wholesale distribution of these products.
Dividend
The directors recommend a final dividend of 14.025
pence per share to be paid on 29 October 2004 to
ordinary shareholders on the register at close of
business on 8 October 2004.
Substantial shareholdings
The following interests in 3% or more of the issued
share capital of the Company as at 14 July 2004 have
been disclosed to the Company:
| No. ordinary shares | Percentage | |
|---|---|---|
 |
||
| Schroder Investment Management Limited | 5,409,121 | 17.5 |
| Fidelity International Limited | 3,958,971 | 12.8 |
| Henderson Investors Limited | 2,339,693 | 7.6 |
| Barclays Global Investors Limited | 1,574,180 | 5.1 |
| Scottish Widows Investment Partnership Limited | 1,278,626 | 4.1 |
| Legal & General Investment Management Limited | 1,233,416 | 4.0 |
| Standard Life Investments
Limited |
1,170,750 | 3.8 |
The Company has not been notified of any other substantial shareholdings other than those of the directors which are disclosed in the remuneration report.
Directors
The present directors of the Company are listed here.
All of the directors were members of the board throughout
the year. C J Myatt and M Sherwin are retiring by rotation
and being eligible, offer themselves for re-election.
Directors’ interests
The interests of the directors in the shares of the
Company are disclosed in the remuneration
report, together with details of share options
granted to the directors. None of the directors had
a material interest in any contract of significance
to which the Company, or any of its subsidiaries, was
a party during the year.
Information on executive directors
T H F Kirby (age 54), Chairman and Chief Executive.
Tom Kirby joined Games Workshop in April 1986 as
general manager and led the management buy-out in
December 1991, becoming chief executive at that time.
Between 1998 and 2000 he took on the role of non-executive
chairman, returning to the role of chief executive
in September 2000. Prior to joining Games Workshop,
he worked for six years for a distributor of fantasy
games in the UK and was previously an Inspector of
Taxes. He is also Visiting Professor of Business
and Management to the Derbyshire Business School
at the University of Derby.
M Sherwin (age 45), Finance Director. Prior to joining Games Workshop in June 1999, Michael Sherwin was group financial controller of Courtaulds Textiles plc where he had worked for six years. He was previously with Price Waterhouse for 12 years where he qualified as a chartered accountant in 1984. On 7 July 2004 he was appointed a non-executive director of Plusnet plc.
Information on non-executive directors
C J Myatt (age 60). Chris Myatt is the senior non-executive
director, joining the board on 18 April 1996. He is
chairman of Palgrave Brown Holdings Limited and a
non-executive director of SRS Holdings Limited and
Ying Tai (UK) Limited. He is the Honorary Treasurer
of Keele University and a member of its council. He
was formerly a divisional managing director within
Tarmac PLC.
A J H Stewart (age 44). Alan Stewart joined the board as a non-executive director on 12 September 1996. Alan was an executive director of Thomas Cook AG and chief executive of Thomas Cook UK Limited until 2003. He was previously an executive director with HSBC Investment Bank and is a qualified chartered accountant.
N J Donaldson (age 50). Nick Donaldson was appointed to the board on 18 April 2002. A barrister by profession, Nick was until recently head of corporate finance at Arbuthnot Securities Limited (formerly Old Mutual Securities Limited). He has spent the majority of his career to date in investment banking, and has previously held senior positions at Robert W Baird Limited and at Credit Lyonnais Securities. He is a non-executive director of The Clapham House Group PLC and chairman of F4G Software plc.
Community support and donations
The Group does not make significant cash donations
to charities. However the Group encourages all employees
to engage with their community in whatever way each
individual believes to be most appropriate. In many
instances this is in the field of education, and
the Group provides time and resources for staff members
who work with local libraries, who take on leadership
roles (such as school governors) or occasional teaching
roles. Both executive directors have been actively
involved during the year in supporting both undergraduate
and postgraduate education.
The Group encourages staff to raise money for children’s charities by providing time and resources. During this financial year, staff in several of our businesses raised money for good causes through sponsored events. Games Workshop helped them to realise their fundraising targets by matching the sponsorship monies raised. This matching cost for the Group was £13,000 during the year. In addition to staff fundraising, gifts in kind have been donated to a number of charities. The Group made no contributions for political purposes.
Employees
The Group’s policy is to consult and discuss with
employees, at meetings, matters likely to affect employees’
interests. Information on matters of concern to employees
is given through information bulletins and reports which
seek to achieve a common awareness on the part of all
employees of the financial and economic factors affecting
the Group’s performance.
The Group operates employee sharesave schemes as a means of further encouraging the involvement of employees in the Group’s performance.
The Group’s policy is to consider, for recruitment, disabled workers for those vacancies that they are able to fill. All necessary assistance with training courses is given. Once employed, a career plan is developed so as to ensure suitable opportunities for each disabled person. Arrangements are made, wherever possible, for retraining employees who become disabled, to enable them to perform work identified as appropriate to their aptitudes and abilities.
Creditor payment policy
The Company’s current policy concerning the payment
of the majority of its trade creditors is to follow the
DTI’s Better Payment Practice Code. For other suppliers,
the Company’s policy is to:
a. settle the terms of payment with those suppliers when agreeing the terms of each transaction
b. ensure that those suppliers are made aware of the terms of payment by inclusion of the relevant terms in contracts
c. pay in accordance with its contractual and other legal obligations
The payment policy applies to all payments to creditors for revenue and capital supplies of goods and services without exception. Wherever possible UK subsidiaries follow the same policy and overseas subsidiaries are encouraged to adopt similar policies, by applying local best practices.
The number of days credit taken by the Group from its suppliers at the year end is 41 days (2003: 39 days).
Health and safety
The Group’s policy is to achieve and maintain high
standards of health and safety. The Group believes this
to be a key part of good business management.
The chairman and chief executive has overall responsibility for health and safety matters across the Group, however the day-to-day execution of this responsibility is embedded into the roles of the general managers and line managers in each business area. Health and safety developments, initiatives and best practices are co-ordinated by the corporate social responsibility (CSR) group, which is chaired by the finance director and includes the general managers of each of the operating divisions.
The number of reportable accidents is tracked by business area, and the following table indicates the progress that has been made in our manufacturing activities, which has been assessed as the area of highest risk in our operations:
Reportable accidents/1000 employees
– UK Manufacturing * Source: Page 31 of the Office for National Statistics, Health and Safety Statistics for 2002/03 |
Risk assessments are reviewed annually, or when a change to a process or to an item of machinery is made. In our manufacturing and supply activities, compliance audits of the Group’s policy and practices have been carried out annually, or more frequently if a new process has been introduced. The audit process is now being included in the job descriptions of line managers to embed health and safety further into the day-to-day activities of the business. |
To enhance further health and safety at all sites, extensive training programmes are being undertaken ranging from induction improvements through cell leader training to senior management responsibilities training.
In the UK sales business a full time health and safety officer has now been employed to audit performance and to promote improved practices throughout the business.
Environmental performance
The Group aims to manage its operations in ways which
are environmentally sustainable and economically feasible,
and to minimise the negative impact of its activities
on the environment.
The chairman and chief executive has overall responsibility for environmental matters across the Group, however the day-to-day execution of this responsibility is embedded in the supply chain. Environmental developments, initiatives and best practices are co-ordinated by the CSR group.
Last year a three year strategic environmental management system was established, to focus upon:
Year 1 – 2003 waste management
Year 2 – 2004 pollution assessment and control
Year 3 – 2005 energy management
The progress that has been made in the first two years of this programme is reported below:
Waste management
During the year significant improvements were made to
the Group’s waste reduction and recycling programme,
adding wood recycling to the portfolio.
2004 Waste - proportions recycled by category
(numbers in brackets are 2003 values)
A life cycle analysis has been instigated for all manufactured goods
to ensure that the impact of our products on the environment and upon
energy consumption can be assessed. The first stage of this has been
completed by working with suppliers to set environmental standards.
The next stage is to determine the point of origin of all raw materials.
The Group is working to integrate an environmental management system into
all aspects of the business. Packaging is a key marketing, logistical,
economic and environmental concern. Therefore environmental considerations
are introduced at the beginning of the packaging design, to include
legislative compliance, material use and future initiatives, whilst
striving for environmental and business improvements. The Group
continues to explore ways of reducing the amount of waste which our
products generate for the end consumers by minimising the plastic content
of sprues, re-using trays and ensuring full boxes are despatched from our
warehousing facilities, with investigations continuing into new packaging
and product development.
Pollution assessment and control
The environmental management system has been developed
to cover pollution present in the air, water and on land.
A pollution control barrier has been erected around our
main UK manufacturing and distribution site to eliminate
the possibility of wind blown litter leaving the site.
A full water services network map has been produced and
a wash-down containment station has been constructed.
Staff are trained in the use of pollution clean up response
kits to respond to any possible acidic or oil based spillage
on the site. The environmental training library has been
expanded, highlighting the need for awareness to all employees.
In the manufacturing and supply activities, compliance audits of the Group’s policies and practices have been carried out annually, or more frequently if a new process has been introduced. These audits have been performed following the ISO 14001 standard.
The Group has continued to work in co-operation with environmental lobby groups and non-governmental organisations, including Friends of the Earth and EIRIS, to assist in data compilation and transparent public environmental reporting with a view to incorporating ethical values into our manufacturing principles.
Constructive use of the annual general meeting
The chairmen of the audit, and remuneration and nomination,
committees will be available to answer questions at the
annual general meeting. Separate resolutions are proposed
for substantially separate issues at the meeting and the
chairman of the Company will declare the number of proxy
votes received both for and against each resolution.
Special business at the annual general meeting
The directors are currently authorised to allot relevant
securities under section 80 of the Companies Act 1985
and to allot equity securities under section 95 of the
Companies Act 1985. Those authorities expire at the conclusion
of the annual general meeting. Resolutions are therefore
being put to the annual general meeting to renew those
authorities, resolution 7, to give the directors authority
to allot relevant securities up to an aggregate nominal
amount of £514,120 (representing one third of the
Company’s current issued share capital). The directors
have no present intention of exercising this authority.
Resolution 8 authorises the directors to allot equity
securities for cash otherwise than on a pre-emptive basis
in certain limited circumstances and otherwise up to an
aggregate nominal amount of £77,118 (representing
5% of the Company’s current issued share capital).
The directors are also currently authorised to make market purchases of the Company’s shares pursuant to section 166 of the Companies Act 1985. This authority expires at the conclusion of the next annual general meeting of the Company. Resolution 9 renews this authority for up to a maximum of 4,596,238 ordinary shares (representing 14.9% of the Company’s current issued share capital). The directors’ intentions regarding exercising this authority are set out in the financial review.
Under the Companies (Acquisition of Own Shares) (Treasury Shares) Regulations 2003, which came into force on 1 December 2003, the Company is allowed to hold its own shares in treasury following a buy-back as an alternative to cancelling them. Shares held in treasury may be subsequently sold for cash, but all rights attaching to them, including voting rights and the right to receive dividends, are suspended while they are held in treasury.
Auditors
Resolution 5 for the re-appointment of Deloitte &
Touche LLP will be proposed at the forthcoming annual
general meeting.
Going concern
After making appropriate enquiries, the directors have
a reasonable expectation that the Company and Group
have adequate resources to continue in operational existence
for the foreseeable future. For this reason they continue
to adopt the going concern basis in preparing the Group’s
financial statements.
By order of the board
M Sherwin
Secretary
26 July 2004
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