THE GAME GROUP PLC
Interim Results 26 weeks to 31st July 2009 WorldReginfo - af42532c-e4da-4747-8abb-cf9d75078216 Lisa Morgan Chief Executive WorldReginfo - af42532c-e4da-4747-8abb-cf9d75078216 Agenda
Overview
Finance and property
Market update
Our specialist proposition
Divisional performance
Current trading & Outlook
Summary WorldReginfo - af42532c-e4da-4747-8abb-cf9d75078216 2 Overview
Gross margin improvement of 190bps
Revenues down 7.0% and LFL sales down 16.3%
Half year PBT* of £14.8m (2008: £36.3m) in line with guidance
Preowned momentum accelerating
UK integration completed successfully
Hardware and software activity to drive second half
*before non-recurring costs and accounting adjustments WorldReginfo - af42532c-e4da-4747-8abb-cf9d75078216 3 The First Half
Challenging macro economic environment
Tough H1 comparables – Hardware installed base growing but at slower rate – More “seasonal” software release schedule
Maintained our competitive position or outperformed the market
Focus on delivering our specialist proposition
Operational readiness for peak WorldReginfo - af42532c-e4da-4747-8abb-cf9d75078216 4 Ben White Group Finance Director WorldReginfo - af42532c-e4da-4747-8abb-cf9d75078216 Income Statement
Period ended 31st July (£m) 2009 2008 Turnover 690.8 742.6 Gross margin % 28.9% 27.0% Operating expenses 186.9 164.7 Operating profit* 13.0 35.5
Net interest payable (2.3) (2.7) Pre tax profit 10.8 32.8 IFRIC13 impact on profit 0.3 0.5 Non-recurring costs 3.7 3.0 Pre tax profit before non-recurring and IFRIC13 14.8 36.3 Tax charge (effective rate) 28.3% 30.2%
Dividend per share 1.88p 1.79p
* After non-recurring costs of £3.7m in 2009 and £3.0m in 2008 WorldReginfo - af42532c-e4da-4747-8abb-cf9d75078216 6 Turnover Analysis - Geographic
Period ended 31st July (£m) 2009 2008 UK 428.3 499.3 France 76.9 78.3 Iberia 105.9 97.1 Scandinavia 19.5 19.7 Australia 24.5 18.5 Czech 2.5 - Total - International 229.3 213.6 Online 33.2 29.7 Group Total 690.8 742.6 WorldReginfo - af42532c-e4da-4747-8abb-cf9d75078216 7 Turnover and Margin Analysis - Product
Period ended 31st July (£m) 2009 2008 Turnover New hardware 146.7 21.2% 187.9 25.3% New software 282.8 40.9% 318.6 42.9% New hardware & software 429.5 62.1% 506.5 68.2% Preowned 177.3 25.7% 157.8 21.3% Peripheral and other 84.0 12.2% 78.3 10.5% Total 690.8 100.0% 742.6 100.0%
Gross Margin % New hardware & software 23.9% 23.8% Preowned 41.0% 38.1% Peripheral and other 29.6% 25.1% Total 28.9% 27.0% WorldReginfo - af42532c-e4da-4747-8abb-cf9d75078216 8 Operating Profit Bridge (£m)
-3.9 Annualising -13.3 13.1 Stores Cost -9.6
Sales GM New Stores -5.1 Volume Increase Cost -1.5 38.5 Decrease -1.5 Underlying Head Stores Online Cost Office Costs Costs
16.7
HY 08/09 HY 09/10 Ops Profit Ops Profit WorldReginfo - af42532c-e4da-4747-8abb-cf9d75078216 9 Income Statement Extract
Period ended 31st July (£m) 2009 2008 Net interest payable (2.3) (2.7) Pre tax profit 10.8 32.8 Tax charge (effective rate) 28.3% 30.2%
Dividend per share 1.88p 1.79p WorldReginfo - af42532c-e4da-4747-8abb-cf9d75078216 10 Balance Sheet
As at 31st July (£m) 2009 2008 Y/E Jan 2009 Tangible fixed assets 162.2 144.9 165.6 Intangible fixed assets 181.4 175.6 182.3 Stock 166.5 184.0 182.0 Trade and other payables (192.4) (265.3) (349.2) Net cash and borrowing (80.2) (57.8) 81.4 Other 42.1 38.0 22.9 Net assets 279.6 219.4 285.0 WorldReginfo - af42532c-e4da-4747-8abb-cf9d75078216 11 Cashflow
Period ended 31st July (£m) 2009 2008 Cash inflow from operations 29.9 48.9 Working Capital Movements (139.5) (97.7) Tax and interest (24.1) (15.2) Cashflow generated from operations (133.7) (64.0) Capital expenditure and financial investment (14.0) (21.8) Acquisitions (0.0) (1.6) Dividends paid (12.8) (10.3) Share movements and other (1.1) (2.7) Decrease in net cash (161.6) (100.4)
Half Year net debt (80.2) (57.8) WorldReginfo - af42532c-e4da-4747-8abb-cf9d75078216 12 Treasury
Refinanced facilities of £175m over 3 years
LIBOR + margin of 250-300bps
Syndicate of five banks, including existing lenders – repaid previous facility (expiry May 2010) – cover working capital requirements – increase financial flexibility for the future WorldReginfo - af42532c-e4da-4747-8abb-cf9d75078216 13 GAME / Gamestation Synergies
Op costs £16m
Margin £10m Revenue
2008-09 YE 2009-10 FC WorldReginfo - af42532c-e4da-4747-8abb-cf9d75078216 14 Property Review WorldReginfo - af42532c-e4da-4747-8abb-cf9d75078216 Property Review Number of Stores opened (including franchises)
Additional 50-60 stores to end of year
97 26 84 77 267 646 670 512 21 96
410 290
649 696 698 410 407
2005- 2006- 2006- 2006- 2007- 2007- 2007- 2008- 2008- 2008- 2009- 2009- 06 YE 07 H1 07 H2 07 YE 08 H1 08 H2 08 YE 09 H1 09 H2 09 YE 10 H1 10 HY
UK International New Stores WorldReginfo - af42532c-e4da-4747-8abb-cf9d75078216 16 GAME Group Worldwide (at 31 July 2009)
UK & Eire Scandinavia Basingstoke Stockholm 698 stores Sweden: 45 stores Norway: 13 stores Denmark: 9 stores www.game.se
254 stores 444 stores www.gamestation.co.uk www.gameplay.com www.game.co.uk
Australia Sydney France Czech Republic 109 stores Paris Prague www.game.com.au 198 stores 21 stores www.game.fr www.jrc.cz
Iberia Madrid 275 stores www.game.es - Head office and DC www.game.pt WorldReginfo - af42532c-e4da-4747-8abb-cf9d75078216 17 Lisa Morgan Chief Executive WorldReginfo - af42532c-e4da-4747-8abb-cf9d75078216 The Marketplace
Global Market 2008: $46.6bn Europe Market: 2008: $19.8bn
Scandinavia 2008: $1.4bn
UK & Ireland 2008: $6.0bn
France 2008: $4.2bn
Czech Republic Australia 2008: $0.1bn 2008: $1.4bn Iberia 2008: $1.9bn
Source: IDG Report, 2008 WorldReginfo - af42532c-e4da-4747-8abb-cf9d75078216 19 UK Market Evolution
Third Generation
25.0m consoles sold to date £4,000m
£3,600m
£3,200m Second Generation £2,800m 16.5m consoles £2,400m First Generation sold £2,000m 10.0m consoles £1,600m sold
£1,200m
£800m
£400m Console Peripherals £0m PC games 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Source: Chart Track UK market value including hardware, software and peripherals WorldReginfo - af42532c-e4da-4747-8abb-cf9d75078216 20 Evolution – Third Generation
= Hardware = Software
£m PS3 PS3 (SW) launch £425 Wii (SW)
XB360 (SW) Wii launch £179 PS3 (HW) £249 Xbox 360 launch £279 Wii (HW) £179
XB360 (HW) £199
2004 2005 2006 2007 2008 65% 56% 55% 45% Hardware mix WorldReginfo - af42532c-e4da-4747-8abb-cf9d75078216 21 UK Customer Evolution
1st Generation 2nd Generation 3rd Generation
88% 12% 75% 25% 64% 36%
1995 2000 2005 2008
Source: GAME reward card WorldReginfo - af42532c-e4da-4747-8abb-cf9d75078216 22 Our Specialist Offering WorldReginfo - af42532c-e4da-4747-8abb-cf9d75078216 23 Preowned
Increased revenues to £177.3m from £157.8m
25.7% of turnover (H1 2008: 21.3%)
Increased gross margin from 38.1% to 41.0%
Our value proposition
Proven growth strategy in place WorldReginfo - af42532c-e4da-4747-8abb-cf9d75078216 24 UK & Ireland Stores
No. 1 in market
Change in competitive landscape
Successful dual brand strategy
Integration complete
Delivering operational efficiency WorldReginfo - af42532c-e4da-4747-8abb-cf9d75078216 25 International Stores
Revenues up 7.3%, lfl down 15.5%
Challenging markets in all territories
Store portfolio increased by 24 to 670 stores
Operational efficiency is key WorldReginfo - af42532c-e4da-4747-8abb-cf9d75078216 26 eCommerce
Revenues up 12.1%
www.game.co.uk www.gamestation.co.uk www.gameplay.co.uk
6 transactional sites internationally
Using online to support stores
Extending eCommerce reach
Investment in eCommerce proposition (£5m) WorldReginfo - af42532c-e4da-4747-8abb-cf9d75078216 27 Online Initiatives
Establish our role as Aggregator of Choice
Online gaming
Digital distribution
Community interaction
Mobile and new applications
– Mobile / iphone store finder WorldReginfo - af42532c-e4da-4747-8abb-cf9d75078216 28 Current Trading and Second Half Expectations
Group sales down 9% and lfl sales down 16.6%
Prior year comparative softening
Hardware price cuts and new models
Strong Christmas software line up WorldReginfo - af42532c-e4da-4747-8abb-cf9d75078216 29 New Software in H2 WorldReginfo - af42532c-e4da-4747-8abb-cf9d75078216 30 Summary and Outlook
Well positioned to take advantage of: – Wider installed base – Hardware price cuts – Exciting product line up
Excellent momentum on preowned
Improved gross margin guidance
Ongoing cost control disciplines
Leveraging specialist proposition WorldReginfo - af42532c-e4da-4747-8abb-cf9d75078216 31 Q&A WorldReginfo - af42532c-e4da-4747-8abb-cf9d75078216