GMD.L Regulatory News (GMD)

30 June 2017

GAME DIGITAL PLC

Trading Update

GAME Digital plc ("GAME" or the "Group") today provides an update on trading and key business developments.

In the UK, the Group continues to focus on addressing the market challenges faced in its core console categories and on delivering on its strategic and cost efficiency initiatives. Our Spanish business continues to trade strongly, in line with expectations, and is on track to achieve record sales in the year.

In our half year results announcement on 29 March 2017, we stated that we expected the challenging trading environment faced in the UK retail market in the first half to continue into the second half of the financial year. We also stated that we anticipated an overall positive sales performance in the second half of the year, underpinned by the successful launch and continued consumer demand for the Nintendo SwitchTM console, as well as further progress across our other UK sales initiatives, although this positive momentum would be highly dependent on stock availability of Nintendo SwitchTM.

Consumer demand for Nintendo SwitchTM has been, and remains, very strong, however the level of supply to the UK market has been lower than expected. These lower levels, combined with the continued softness in our core Xbox and PlayStation markets, have impacted sales. The Group still expects to deliver positive Group GTV2 growth in the second half of approximately 5-6%3, however this is below our previous expectation. As a result, we now expect Adjusted EBITDA4 for the full year to be substantially below previous expectations.

Looking forward, we continue to be encouraged by the positive consumer reception of Nintendo SwitchTM in both of our geographic markets. This demand is helping to strengthen the outlook for our next financial year and we expect to benefit from both greater Nintendo SwitchTM hardware supply as well as the strong interest that is building for Microsoft's new Xbox One X console. Furthermore, we expect to see growth returning to the UK and Spanish software markets in our next financial year, benefiting from a stronger line up of new releases on Xbox, PlayStation and Nintendo.

The Board is pleased with the progress achieved on the Group's key growth initiatives. In particular, we continue to be encouraged by the initial performance of our new in-store gaming arenas, now trading out of 12 locations, under the BELONG banner. As a result, the Group is exploring new funding arrangements to enable an acceleration of the roll-out of this new initiative.

The Group continues to actively implement its UK action plan, encompassing improved supplier arrangements, enhancements to the customer experience, further operational progress including cost reduction programmes and disciplined cash management. Significant efforts are being made on reducing fixed and variable costs across the Group's UK retail footprint, where we have over 220 lease events to manage by the end of 2018.

The Group will announce its full year results for the 52 weeks ending 29 July 2017 in October 2017.

- ENDS -

Enquiries:

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). Upon the publication of this announcement this inside information is now considered to be in the public domain.

Notes:

1. 'New' retail categories defined as preowned technology products, digital content, PC and other non-console accessory and peripheral products, virtual reality headsets, licensed merchandise and services, as well as the Group's online Marketplace.

2. Gross Transaction Value is a non-IFRS measure defined as total retail receipts excluding VAT and before the deduction of revenue deferral relating to loyalty points. Gross Transaction Value reflects the full retail sales value of digital sales, agency sales (including sales by business partners on GAME's Marketplace website), warranties and other similar arrangements and thereby includes the publishers' and sellers' shares of those transactions. Gross Transaction Value provides the most reliable measure of activity in an environment where more sales are expected to move from physical to digital.

3. In sterling, based on the 52 week comparative year period

4. Adjusted EBITDA is a non-IFRS measure defined by the Group as operating profit before tax, depreciation, amortisation, net finance costs, exceptional and adjusting items

Forward Looking Statements

This announcement contains certain forward-looking statements which have been made by the Directors in good faith using information available up until the date they approved the announcement. Forward-looking statements should be regarded with caution as by their nature such statements involve risk and uncertainties relating to events and circumstances that may occur in the future. Actual results may differ from those expressed in such statements, depending on the outcome of these uncertain future events.