CHAIRMAN'S PREAMBLE

To paraphrase Margaret Thatcher: 'The wisdom of hindsight, so useful to analysts and some shareholders, is sadly denied to practising businessmen.' Or least it is when we take our decisions. Like everyone else I wonder about the decisions I took and the things I said over the last few months and years. One can lose a great deal of sleep that way, but it is, of course, a futile exercise unless one is an historian. The real question is: did I do what I did and say what I said in good faith, with serious intent and with appropriate cognisance of the needs of all our stakeholders? Now, this is a good question and the answer for every one alive, never mind the few of us leading public companies, had better be yes. It is for me.

'No plan survives contact with the enemy.' Who said that and why did he say it? It was Field Marshall von Moltke and he was not denying the value of a plan but reminding us that a plan is not enough. It has to be executed well and with due attention to what others are doing.

So who was the enemy?

Is the world turning in such a way that mankind no longer wants or needs hobbies? No. All the evidence I see, with growing prosperity and increasing leisure time, is an increase in hobbies. Perhaps it is just collecting, painting and wargaming with miniatures that is passé? The evidence again says no. Too many of our stores around the world and their neighbouring independent accounts are in good healthy growth for that to be true. Have computer games, and especially these new online role-playing games, finally bitten Games Workshop? We have lived in happy harmony with computer games for our entire business life, our customers play computer games (they also eat meals and watch movies) but not at the expense of their hobby. The recent extraordinarily popular MMORPGs1 would not, I think, have trimmed a little from us at the edges had they been in direct competition, they would have wiped us out. Are our overheads killing us? Well, yes, they could have, but they don't stop us selling things. Is it a change in society? No. Demographics? No. World recession? No, no, no. It was us.

We grew fat and lazy on the back of easy success. We forgot about customer service and forgot that hard work2 is and always has been the route to success. We forgot that we are a company which pursues profit and likes paying surplus cash to its owners. What was not expected was that it would take two poor years and a management reorganisation to get the problems taken seriously. Somewhere along the line too many of us thought that selling, sweating and saving were someone else's job. Well they aren't. That's my job and the job of all of us here at Games Workshop.

I'm sorry we have not done as well as we should these last two years. I know our owners expect better from us in the future. I do as well.

The management reorganisation I’ve mentioned is fleshed out later in this document. It is a real reorganisation that allows us to remove significant cost from the business and to re-focus energy on sales. I had hoped that the same would have been accomplished gently over time. Events instead demanded sudden and decisive change; there was an urgent need to do something now and we need to retain that sense of urgency into the future. As a consequence a lot of people have left the business, some of whom are old friends. It has been a sad process. Unfortunately it was also a necessary process and I am grateful for the decent, caring way it has been carried out.

I am not happy that it has come to this. I am pleased, however, by the way it has been planned and executed. There is a steely determination in the business to put things right.

I used to sign off my annual message to all staff with ‘per ardua ad astra’. It’s healthy to be reminded from time to time about the ‘ardua’.

The signature of Tom Kirby.
Tom Kirby
Chairman and chief executive

1 Massively multiplayer online role-playing games.

2 Working clever is good too, but if I had to choose I'd take 'hard' first every time.

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