FFL SWOT by

Unmatched service to retailers - Exh 5

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Cash - dipping into overdraft

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Cash flow - 60 days payment terms for large retailers - especially considering xmas is where most revenue is earned - Exh 5

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Gross margin (exhibit 5)- continuing to deteriorate each year

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Exhibit 3, Page 8; Can take advantage of online sales allowing full MSRP

Revenue has grown contrary to market expectations. Ex 2

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Not yet involved in the licensing market for jigsaws (pg8)

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Physical store presence as 3 retailer customers have stores accross UK pg 22

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Opportunities in licensing - exhibit 14

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All revenue lines continuing to grow year on year p16

Disproportionate increase in admin expenses to income Pg12

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Licencing arrangements with jigsaws

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Per Exhibit 3, FFL does not currently have any licencing arrangements in place for jigsaws. Given these produce high sales volume, it could be an opportunity to obtain licencing agreements for jigsaws.

2025-05-12 11:21:09 UTC

Heritage Games revenue is drying up (growing at 1%) - page 12

High staff retention

LoudOctopus — 2025-05-12 11:21:18 UTC

This means that as more staff stay over a longer period of time, they would be more experienced

industry is worth £3b - exh 2

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Seasonal sales are adverse to consistent cashflow. Ex 2

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PZ jigsaw manufacturer - declining quality and missed orders. May need to find new manufacturer

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Exhibit 11: there are minimum license fees payable to Ringover regardless of sales.

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Exhibit 14 page 38 - Strong and diverse competition that continues to expand and deliver for customers

Only 1/4 aimed at adults - exh 2

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Suppliers in UK but manufacturing is outside UK, seems like an additional expense/wasted opportunity to have both in the same place pg 4

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Multiple revenue streams to ensure they have a foot in each segment (Ex 4, page 8)

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High quality product, does not rely on influencing reviews unlike rivals due to strong belief in quality of product p20

Exh 11

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Cost of sales from Licensing arrangements are higher because licensors are charging FFL based on gross revenue rather than net.

Exhibit 14a

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Yolki's demand may increase due to positive changes to it's role playing game, without increasing the cost for customers

Recent signing of CH an established licence Pg10

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electronic platforms = emerging markets - Exh 2

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Toy safety

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All games undergo a rigorous safety assessment and testing (exhibit 6 pg 21) very unlikely that there will be a breach of the BSI & EU requirements for children's toys (exhibit 13 pg 37)

Pg 21 1st para

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This is a strength because it shows that FFL makes safe and high-quality games, which helps protect children, builds trust and avoids problems like product recalls or complaints. & increased reputation

Licensing revenue may fall as competitor signed a new deal

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Industry as whole expected to reduce by 4% 21-22 page 6 exhibit 2

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Monetising Apps

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Per Exhibit 3 - FFL do not currently charge for the majority of their mobile apps. This could be a new revenue stream whereby FFL charge for use of their gaming apps or offer paid premium versions of the existing free apps.

The App needs some improvements and collaboration with licensor (33)

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Licence board games are trending upwards Pg12

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Revenue is reliant on disposable income - Exh 2

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Exhibit 14b - page 38 Growth and automation of existing supplier could reduce manufacturing cost and boost output

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Increasingly reliant on supplier Orvan (pg 30). So far no severe impacts from this but Orvan could end up with influence/power if FFL can't survive without them

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High staff retention - page 20

Potential to invest in heritage board games and assess overall strategy. Ex 4

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High fixed licence fees (34)

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YH customer contract renewal coming up - can improve position against competitors

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Exhibit 3, Page 8; Sales values are c.50% made up of one product line, can indicate reliance and a need to diversify product sales

pg 20 marketing and advertising section

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Strong and honest marketing across TV, social media, and digital platforms helps FFL reach a wide audience and build trust by not paying for biased reviews.

Exh 14c

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Hamlin win a licensing agreement charged on net revenue which puts them in a better gross profit position on their licensing arrangements than FFl currently have.

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FFL are ensuring they benefit from the industry-wide growth in sales, with volume and sales growing consistently over the last couple of years and receives funds within a couple of days ensuring steady cash flow (Ex6, page 18)

Good relation with larger customers - Trendy toys - FFL gets preferential shelf space - TT continues to progressively grow, benefiting FFL due to long standing relationship - Special launch programmes offered to FFL Pg22

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Trendy Toys

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Trendy Toys makes up 10% of the revenue annually. If lose this customer to competitor, could significantly damage revenue

Increase of number of returns from online customers (35)

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Mostly developed in the UK - sustainability and product control - Exh 3

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Inventory management issues due to informal returns policy pg 35

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Exhibit 6: Environmental policy could be a differentiator against competitors (but could also be a threat given cost implication and not staying in line with policy).

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Reduction in economies of scale for admin and distributions costs may mean they have to charge more for delivery, which could impact sales. Ex 5

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Exh 14b

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Important supplier due to open new state of the art factory which will bring quality improvements to products.

expected increase in revenue to £75m but fall in OP to £2m (35)

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Impact of falling retail sales on profit margins

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In Exhibit 4, it details that FFL have seen lower profit margins due to the higher discounts having to be given to some retailers as they have not met the minimum sales targets in the agreements. This could become a worsening pattern as retail sales continue to fall and further erode profit margins.

Exhibit 2

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Demand is influenced by the UK economy, which has been fragile in the last two years

Existing and future regulation (Exhibit 13)

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Changes in regulation could require existing games to be designed differently (which could increase manufacturing costs), or restrict the potential for future game development.

licensed board games give best value/volume. But Hamlin have recently announced 5 year licensing deal and are aggressive in their negotiations - threatening our sales here - exh 3 and 14c

2025-05-12 11:27:58 UTC

Reliance on only 3 main manufacturers; if any of these have problems it impacts the supply chain significantly. e.g Grand Games flood (pg 31) luckily occurred during the off season, but if it happened pre-Xmas would have caused major losses

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FFL benefiting from its store customers revamping their stores - Pg 22 (YH)

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Exh 8: The inability to allocate design and development expenditure could lead to lack of clarity on profitability of a product.

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discount to retailers of 25% - exh 3

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YH (Your Home) renewal contract due on jan 23 (23)

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FFL have an established pipeline for product development - pg 24

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Pg 18 3rd para

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Because some large customers try to use their power to delay payments or push back against contract terms, which makes it hard for FFL to manage cash flow and enforce rules.

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Product development takes months - cant move fast based on trends exhibit 8