Games Workshop shares dipped on Tuesday after the table-top gaming company said their profit in the six months to 27 November 2022 dropped as a result of external cost pressures.

Despite the drop in profit, Games Workshop achieved record sales in the period of £226m.

“Another rewarding and successful period for the global team with core sales for the six months of over £200 million for the first time,” said Kevin Rountree, CEO of Games Workshop.

External cost pressures put pressure on margins with Brexit costs and the ongoing impact of COVID-19 causing gross margin compression of 4.5% to 64.1%. The company said they now saw Brexit costs as an ongoing cost of doing business.

“First half results for Games Workshop reveal some growing pains for the business. The company has admitted the level of global sales achieved in recent times is a new development and inevitably that creates challenges,” said AJ Bell investment director Russ Mould.

“In many ways it is a positive that management are willing to be so open about the need to learn and improve the way its range of brands and new releases are brought to market. An upgrade to its IT systems is also taking longer and costing more than it previously expected. It is crucial that it gets the basics like this in place if it is to thrive as a global business.”

The Warhammer operator added 20 new jobs in the period as the company prepares for increased demand in the future.

Licensing revenue did fall in the period as a result a recording revenue when a deal was signed, but investors will look forward to further news on potentially lucrative deal with Amazon Studios. In December last year, Games Workshop said they were exploring opportunities with the streaming company but didn’t comment further in today’s update.

Games Workshop have a generous dividend policy and are increasing their payout to 295p per share, up from 165p in the year prior.

It may well be some time until any real value comes back into the shares of the ‘Fridays’ UK operator.

The group’s CEO Robert Cook has decided to step down with immediate effect.

A number of management changes for various reasons has seen the top team being reshaped.

Will it be good enough to handle the current headwinds, bad weather and train strikes?

Red and White-striped

The £15m capitalised Hostmore (LON:MORE) operates ‘Fridays’, the American-themed casual dining brand, and ‘63^rd+1^st’ the cocktail bar and restaurant chain, as well as the fast casual dining brand ‘Fridays and Go’ – a total of 91 sites across the country.

Situated mainly in locations where footfall is generally high, like shopping centres, city centres and retail parks – the group’s sites gave the group some trade protection, despite the impact of the Quuen’s passing, rail strikes, the Football World Cup and the bad weather.

Analyst Opinion

Following the latest Trading Update analysts Nigel Parson and Michael Clifton at finnCap, the group’s broker, have almost halved their Target Price for the group’s shares from 80p to just 45p.

Their latest estimates for the year just ended see takings up from £159.0m to £196.8m, while the group’s EBITDA will slip from £43.5m to £31.7m. 

Pre-tax profits could have swung from a £7.2m positive to a £5.0m loss for the 2022 year, with earnings collapsing from 7.2p to a negative 3.2p per share.

For the current year now underway the brokers are looking for some £213.9m takings, £36.6m EBITDA, and just £0.9m losses pre-tax.

The analysts have pencilled in £232.1m revenues for the group in 2024, with an EBITDA of £41.4m, a pre-tax profit of £2.8m, with earnings of 1.8p per share.

Following the CEO departure and the Update the group’s shares eased 20% to 11.25p.

Fission 3.0 Corp (TSX.V:FUU) has established a substantial portfolio of 16 uranium projects across four defined areas in the Athabasca Basin in Canada. The region holds some of the world’s largest uranium deposits and accounts for a significant proportion of global uranium production.

With major uranium producers such as Cameco and Orano as their neighbours in the Athabasca Basin, Fission’s projects sit in close proximity to the world’s top producing high-grade uranium mines.

Fission 3.0 is project generator and exploration company and aims to develop and de-risk uranium projects ready for sale.

Of paramount importance is their Patterson Lake North project which recently produced high-grade shallow depth assays of 15.0 m @ 6.97% U₃O₈ including a high-grade 5.5 m interval averaging 18.6% U₃O₈.

PLS Area Projects

The PLS area holds the world class Triple R discovery, Athabasca’s highest grade uranium deposit with mineralisation starting from 50m below the surface.

Fission 3.0 have four projects in the area; Clearwater West, Patterson Lake North (PLN), Wales Lake and PLN A1.

In late December 2022, Fission 3.0 announced assay results at the PLN project that encountered one continuous 15.0 m interval averaging 6.97% U₃O₈ including a high-grade 5.5 m interval averaging 18.6% U₃O₈. In addition, the assay revealed a ultra high core of 59.2% over 1.0 m.

Further assay results from the project are due in early 2023.

The prevalence of high grade uranium at the Tripe R discovery substantiates early evaluations at the PLS area making this project area Fission 3.0’s primary concern in the near future.

The Fission 3.0 technical team undergoing the assessment of PLN project have deep experience operating and defining resources the region, having been at the forefront of Fission Uranium’s Triple R discovery at Patterson Lake South. The Fission 3.0 technical team will count the discovery at Patterson Lake South as their third significant uranium discovery.

The Clearwater and Wales Lake projects are considered to be highly prospective and will undergo evaluation in due course.

Key Lake Road Projects

The Key Lake Road project group consists of Hobo Lake, Lazy Edward Bay, Bird Lake and Seahorse Lake.

The area previously produced 208M lbs @ 2.32 U₃O₈ from shallow depth resources and Fission’s project all have confirmed uranium encounters from historical studies.

The project group is located close to refining mills and other uranium mining infrastructure which supports their economics.

Beaverlodge Area Projects

The Beaverlodge Area was once home to 12 open pit mines in the 1950s and 1960s and Fission’s recent survey’s have identified additional areas warranting further exploration.

The four projects in the area are Beaver River, Midas, Hearty Bay and North Sore.

Beaver River was subject to assays in 2007 that yielded results of 3.66% U₃O₈ (over 0.61m), 3.37% U₃O₈ and 2.93% U₃O₈ in the central area of the project. The project consists of 21 mineral claims totaling 19,474 ha.

Midas straddles the Black Bay fault, which is associated with the deposits of Uranium City and Beaverlodge areas. Midas is home to historical uranium mines.

Hearty Bay and North Shore sit in close proximity to uranium encounters and have undergone early stage evaluation.

Northeastern Athabasca Basin

The Northeastern Athabasca region is home to two operating uranium mines including Cameco’s Cigar Lake mine.

The Cigar Lake mine produces 15-million pounds of uranium concentrate per year and is one of the world’s highest grade uranium mines.

Fission’s four Northeastern Athabasca projects are situated on geological structures known to hold high grade uranium. The four projects are Murphy Lake, Cree Bay, Eagle and Flowerdew Lake.

Ocado was the FTSE 100’s top riser in afternoon trade on Monday ahead of a raft of Christmas updates from Tesco, Sainsbury’s and JD Sports this week.

Ocado themselves are set to provide a trading update next week.

UK retail companies have so far provided reasonably positive Christmas trading updates with Next and Greggs producing robust figures last week. In the face of concerns about the cost of living crisis, the FTSE 100’s consumer-facing companies have had a strong start to the year and are among the FTSE 100’s best performers in the new year.

Ocado shares are up 21% this year while Sainsbury’s and JD Sports have gained 13% and 11% respectively. The worst performers so far in 2023 are Centrica and Pearson, both down in the region of 5%.

FTSE 100 hits 4-year highs

The FTSE 100 momentarily traded at the highest level for four years on Monday, before falling back to 7,698, down 0.05%, at the time of writing.

A strong US jobs number last week ignited a rally in US stocks which continued into early European trade on Monday.

“The FTSE 100 briefly touched four-year highs as the trading week got away – a significant milestone and some way above where it was in the weeks before the pandemic hit in 2020,” said AJ Bell investment director Russ Mould.

“Although US jobs figures came in above expectations at the end of last week, suggesting the labour market is still tight, investors seem to have focused on wage growth coming in slightly below what had been pencilled in. From their perspective that might prompt the Fed to slow its rate rises, hence the positive market reaction to the figures.

“Further easing of China’s Covid measures, despite surging cases in the country, have also helped create a happier mood.”

Miners were among the beneficiaries of improving Chinese sentiment with Glencore and Antofagasta moving higher. Both miners are particularly exposed to copper, which has rallied as the Chinese economy reopens.

Anglo Asian Mining have made their third investment in Libero Copper & Gold Corporation as part of a placing to maintain their 19.8% stake in the company.

 Anglo Asian Mining subscribed for 2.6 million new Libero Copper & Gold Corporation shares at CAN 15 cents per share for a total of CAN$390,000 (US$289,000).

Anglo Asian Mining have sought additional exposure to copper and Libero’s exploration projects with their investment in the TSX-listed company. Libber’s exposure includes Mocoa, one of the world’s largest undeveloped copper-molybdenum resources.

Anglo Asian Mining is one of the leading gold and copper producers in Azerbaijan. The company said they expect production of between 54,000oz to 58,000oz gold in 2022.

“We are pleased to make a third investment in Libero in little over a year. With an exciting range of significant copper assets across the Americas, and an experienced management team, we have the upmost confidence in Libero to develop these assets in a swift and responsible manner,” said Anglo Asian CEO Reza Vaziri.

“I look forward to updating our shareholders on Libero’s progress in the coming months.”

Richard Morris, Chief Executive of Tortilla Mexican Grill (LON:MEX), in announcing a Trading Update for the full year to 1 January, declared that:

“We have a proven and highly popular customer proposition. During difficult economic times, restaurants that offer great, consistent food at competitive price points will be the winners, and we sit comfortably in this space.”

It goes without saying that times have been tough out there in the hospitality sector over the last six months or so. 

Therefore the confidence of Morris rings more hopeful than many would have expected.

The £35m capitalised Tortilla Mexican Grill group now has some 82 fast-casual sites worldwide selling freshly made Californian-inspired Mexican cuisine, 65 of which are in the UK operated by the group, 9 are franchised out in the UK and 8 are franchised sites in the Middle East.

The last year was one of high resilience, especially in the face of so many challenges.

The group stated that it was helped by the ongoing strength of its customer proposition and the demand for its sector-leading brands.

Despite the Q4 rail strikes and weather disruptions the group actually saw a 16% like-for-like sales advance over the same period in 2019.

Analyst Anna Barnfather at Liberum Capital rates the group’s shares as a Buy at the current 87p, with a Target Price of 170p.

Her estimates for the last year suggest sales of £58.4m (£48.1m) and an EBITDA of £4.0m (£8.7m).

For the current year Barnfather is going for £69.8m takings and an EBITDA of £5.0m.

The ability of the group to fund itself through current pressures is seen by her estimate of current year end cash of £2.3m (est £0.4m debt).

The group’s management remains confident in its outlook for this year and beyond, and its ability to continue to implement its proven growth strategy. 

Richard Morris stated that:

“Looking ahead, we remain as motivated and enthusiastic as ever about Tortilla’s significant organic growth opportunities in the UK, with the added excitement of growing our already successful franchise partnerships both in the UK and abroad.”

Understandably, with so many external pressures over which its management had no control, this group has withstood and now is ready to push forward again.

The group’s shares reflect the balance sheet ability to resume growth and the continuation of new sites and franchises being rolled out this year.