TIDMGMD
RNS Number : 7123O
GAME Digital PLC
23 August 2017
23 August 2017
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 29 July 2017 and
recent key business developments ahead of entering its year end
close period. Unless otherwise stated, second half and full year
figures are compared to the 26 week and 52 week period to 23 July
2016 respectively in the prior year period.
H2 & FULL YEAR GROUP PERFORMANCE
H2 (26 weeks) to 29 UK Spain Group
July 2017
------------------------ ----------- ------------ ----------
Retail Market, YoY
% change(*) +8.8% +26.4%(***) +13.8%(^)
======================== =========== ============ ==========
GAME Gross Transaction
Value, YoY % change (1.3)%(**) +23.1%(***) +6.8%
======================== =========== ============ ==========
Full Year to 29 July UK Spain Group
2017
------------------------ ------------ ------------ ---------
Retail Market, YoY
% change(*) (6.8)% +22.4%(***) +0.1%(^)
======================== ============ ============ =========
GAME Gross Transaction
Value, YoY % change (12.1)%(**) +22.7%(***) (2.3)%
======================== ============ ============ =========
Note:
* Source: GfK Chart-Track; based on value of retail sales of
mint console hardware, software, digital and accessories for 52
weeks ended 29 July 2017
** UK includes both UK Retail and UK Esports, Events &
Digital (E,E&D) sales
*** Converted into sterling equivalent
(^) UK and Spanish markets combined
As reported in the Group's trading update on 30 June 2017,
following the launch of the Nintendo Switch(TM) console in March
2017, both the UK and Spanish video games markets have experienced
growth, with total mint market sales in the second half up 8.8% and
15.7% respectively in the UK and Spain, in local currencies.
Adjusting for the impact of a weaker Pound, the Spanish market rose
26.4% in Sterling terms.
Against this backdrop, the Group's total Gross Transaction
Value(1) ("GTV") rose 6.8% in the second half, to GBP325.4 million
(H2 2016: GBP304.6 million) which resulted in total GTV for the
full year to 29 July 2017 of GBP891.7 million (2016: GBP912.6
million). On a statutory basis, Group revenues for the 52 weeks
ended 29 July 2017 are expected to be approximately GBP780 million
(53 weeks ended 30 July 2016: GBP822.5 million).
The Group has continued to maintain a highly-disciplined
approach to both working capital and cash management and given the
recent improved sales performance expects to report an increased
year end cash position (net of overdrafts) of approximately GBP47
million (2016: GBP43.1 million). In addition to this positive net
cash balance, as at the year end the Group had access to combined
facilities across the UK and Spain of over GBP77 million.
OPERATIONAL UPDATE
The Group continues to focus on delivering the UK Action Plan,
initiated in January 2016 to address the challenges faced in its
core console markets in the UK. Further encouraging progress has
been made in the second half delivering on key strategic
initiatives and realising cost efficiencies.
In particular, significant focus has been placed on reducing
fixed and variable costs across the Group's UK retail footprint,
where it has over 220 lease events to manage by the end of 2018
(out of a total UK footprint of 306 at year end). In aggregate,
across these property and other operational efficiencies, the Group
expects to deliver a total cost reduction of approximately GBP5
million across its UK retail operations compared with last year,
before absorbing the impact of statutory increases in staff
costs.
STRATEGIC UPDATE
Given the encouraging early performance and significant
potential of the Group's esports activities, including the first 18
retail concepts now in operation under the BELONG(TM) brand, the
Board has recently undertaken a review of all business areas across
the Group. Following this review the Board has prioritised the
further development of the Group's experience based gaming
proposition and esports activities and, consequently, the Board has
taken the decision to evaluate strategic options for the Group's
digital enterprise activities, including Multiplay's Digital
division. It is intended that the Group will focus management and
capital resources on the acceleration of the development of the
esports and live gaming initiatives and maximise the performance of
the core multi-channel retail businesses.
Accordingly, the Group is continuing to develop Multiplay's
Events and Esports activities, including the Insomnia gaming
festival, and has recently commenced a review to maximise
shareholder value in respect of Multiplay's Digital business.
Having acquired Multiplay in March 2015, the Group has further
developed both the Digital division, comprising its multiplayer
game server-hosting technology, and the Events and Esports
activities, encompassing major gaming and esports events and the
new BELONG concept. Benefiting from this development both divisions
have independently delivered significant revenue growth over the
last twelve months. Multiplay's Digital sales have more than
doubled, from GBP2.1 million to GBP4.5 million, whilst Multiplay's
Events and Esports sales have increased almost 50%, from GBP4.8
million to GBP7.1 million. Last year, the Multiplay Events and
Esports business was relocated and its integration into the core
GAME business has commenced. Multiplay's Digital division remains a
separate business unit, based in the New Forest, Hampshire.
Martyn Gibbs, Chief Executive Officer of GAME Digital,
commented:
"GAME has made further progress in the second half of the year
as we continue to focus on developing our strategic initiatives
whilst creating a new cost base for our UK retail business to
address the challenges in the UK console market.
"We have been encouraged by the recent growth in both the UK and
Spanish markets overall and we expect that this momentum will
continue into peak trading driven by the benefits of continued
customer demand for the Nintendo Switch(TM) , the launch of
Microsoft's Xbox One X and a strong line up of new games
releases.
"GAME has now opened 18 BELONG(TM) arenas, and we have seen
encouraging early performance. We have reviewed our operations and
are now accelerating development plans as we seek to fully
capitalise on the strong growth potential in our exciting and
growing esports activities."
Enquiries:
GAME Digital plc +44 (0) 1256 784 000
Martyn Gibbs Chief Executive Officer
Mark Gifford Chief Financial Officer
James Staveley Investor Relations & Corporate
Development Director
Citigate Dewe Rogerson +44 (0) 20 7638 9571
Grant Ringshaw
Jos Bieneman
1. Gross Transaction Value is a non-IFRS measure defined as
total retail receipts excluding VAT and before the deduction of
revenue deferral relating to reward points. Gross Transaction Value
reflects the full 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.
2. 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.
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
and 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 570 stores across the
two areas, a fully integrated omni-channel offer including the
multi-award winning GAME App, and a reach of more than 17 million
customers across its Reward programmes. Multiplay Events and
Esports delivers unparalleled gaming events and experiences
directly and on behalf of third parties, including its flagship
consumer event, Insomnia, the UK's largest gaming festival. For
more information please visit www.gamedigitalplc.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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