21 Aug 2018 07:00
21 August 2018
GAME DIGITAL PLC
Year end Trading and Business Update
GAME Digital plc ("GAME" or the "Group") today provides an update on trading for the 52 week period ended 28 July 2018 and recent business developments ahead of entering its year end close period. Second half and full year figures are compared to the 26 week and 52 week period ended 29 July 2017 respectively in the prior year period.
H2 & FULL YEAR GROUP PERFORMANCE
H2 (26 weeks to 28 July 2018) | UK | Spain⁴ | Group |
Mint Retail Market, YOY % change¹ | +6.2% | +5.3% | +5.9%⁵ |
GAME Gross Transaction Value², YOY % change | (3.0)%³ | +0.7% | (1.6)% |
Full year to 28 July 2018 | UK | Spain⁴ | Group |
Mint Retail Market, YOY % change¹ | +11.8% | +13.1% | +12.2%⁵ |
GAME Gross Transaction Value², YOY % change | (1.0)%³ | +7.0% | 1.8% |
¹ Source: GfK Chart-Track, based on value of retail sales of mint console hardware, software, digital and accessories for the 52 weeks ended 28 July 2018
² Gross Transaction Value is a non-IFRS measure defined as total retail receipts and all other Group revenue excluding VAT and before the deduction of revenue deferral relating to loyalty points and other accounting adjustments. 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
³ UK includes UK Retail and UK Esports, Events & Digital sales
⁴ Converted into Sterling equivalent
⁵ UK and Spanish markets combined
The Group's total Gross Transaction Value ('GTV') for the full year to 28 July 2018 increased by 1.8% to £907.2 million (2017: £891.0 million), with a decline of 1.6% in the second half, to £320.4 million (H2 2017: £325.6 million). On a statutory basis, Group revenue for the 52 weeks ended 28 July 2018 is expected to show a small decline at approximately £780 million (2017: £782.9 million). We have seen the trends of the first half continue during the last six months, with strong sales of lower-margin Digital and Hardware, and continued challenges in the Preowned business that have impacted on the overall gross profit rate. Where quality new releases have launched, such as God of War 3, the market and GAME volumes have been positive.
The Group has continued to maintain a highly-disciplined approach to both working capital and cash management and expects to report an increased year end cash position (net of overdrafts) of approximately £58 million (2017: £47.2 million). In addition to this positive net cash balance, the Group has access to combined facilities across the UK and Spain of up to £130 million, increasing up to £169 million over the peak period.
OPERATIONAL UPDATE
The Group continues to focus on delivering cost savings in the UK in order to offset the continuing sales mix impact on gross margin. In particular, significant progress has been made on reducing fixed and variable costs across the UK store estate from the continued lease renegotiation programme and a reorganisation of the Head Office and Distribution Centre teams took place in the second half of the year. Ray Kavanagh has succeeded Martin Hopcroft as the interim CFO.
STRATEGIC UPDATE
The collaboration agreement with Sports Direct to facilitate our expansion of the BELONG business was signed in February 2018 and the foundation work required to build and accelerate BELONG in the next financial year has largely been completed. This has also enabled us to increase capacity in our existing arenas by 16%. Our first new BELONG arena under the collaboration agreement opened in Westfield Stratford on 17 August 2018, with a second arena in Lakeside Thurrock set to open in September. These two arenas have capacity for 50+ and 24 gaming desks respectively, versus the current average of 19, and represent a significant step forward in our optimisation and expansion of the BELONG business.
Martyn Gibbs, Chief Executive Officer of GAME Digital, commented:
"We have made further progress in the second half of the year to right-size the UK retail business by reducing the cost base, whilst capitalising on all market opportunities to address the challenges and changes in the UK retail market. This review of costs will continue into the next financial year. Our Spanish business continues to perform well, with strong full year sales performance and sustained management of its efficient operation.
"The existing 19 BELONG arenas continue to perform well with all key metrics advancing, a considerable affirmation of the offering. Opening the first two arenas in collaboration with Sports Direct represents a significant step forward as we implement our strategy to increase the availability and scale of BELONG, our experienced based gaming offer and esports activities.
"The UK and Spanish mint retail markets continue to show growth and we expect that this momentum will continue into our new financial year and the peak trading period, driven by a strong line up of new software releases."
Enquiries
GAME Digital plc | +44 (0) 1256 784000 |
Martyn Gibbs | Chief Executive Officer |
Citigate Dewe Rogerson | +44 (0) 20 7638 9571 |
Jos Bieneman | |
Michael Russell | |
This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014
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 or may not occur in the future. Actual results may differ from those expressed in such statements, depending on the outcome of these uncertain future events.
Notes to editors
Listed on the London Stock Exchange in June 2014, GAME Digital plc is dedicated to delivering an authoritative range of specialist gaming products and services to the gaming communities of the UK, Spain and beyond, providing more ways for gamers to enjoy more games and unique gaming experiences, more often. GAME's UK and Spanish retail businesses are the market leaders in those geographical areas, operating a total of over 540 stores across the two areas, a fully integrated omnichannel offer including the multi-award winning GAME App, and over 4.6 million active customers across its Reward programmes. GAME is developing its proposition with the continued expansion of BELONG, the Group's leisure experience, which brings video-gaming to high streets, shopping centres and communities nationwide. Through its esports and events activities the Group is delivering unparalleled consumer gaming experiences directly, and on behalf of third parties, including its flagship event, Insomnia, the UK's largest gaming festival. The Group's visual recognition and augmented reality business, Ads Reality, is pioneering the use of new technologies to reach gamers and business partners outside its main markets.
For more information please visit:
www.gamedigitalplc.com, www.game.co.uk, www.game.es, www.insomniagamingfestival.com or www.adsreality.com