GAME Digital plc 2015/16 Half Year Results

Transcription

GAME Digital plc 2015/16 Half Year Results
building the most valuable community of gamers
GAME Digital plc  2015/16 Half Year Results
23 MARCH 2016
1
FORWARD LOOKING STATEMENTS
This presentation includes statements that are, or may be deemed to be, “forward-looking statements”. These forward-looking statements can be identified by the use of forwardlooking terminology, including the terms “believe”, “estimates”, “plans”, “projects”, “anticipates”, “expects”, “intends”, “may”, “will”, or “should” or, in each case, their negative or other
variations or comparable terminology. These forward-looking statements include matters that are not historical facts and include statements regarding the Company’s intentions, beliefs
or current expectations.
Any forward-looking statements in this presentation reflect the Company’s current expectations and projections about future events. By their nature, forward-looking statements involve
a number of risks, uncertainties and assumptions that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. These
risks, uncertainties and assumptions could adversely affect the outcome and financial effects of the plans and events described herein. Forward-looking statements contained in this
presentation regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. You should not place undue reliance on
forward-looking statements, which speak only as of the date of this presentation. No representations or warranties are made as to the accuracy of such statements, estimates or
projections.
Please note that the Directors of the Company are, in making this presentation, not seeking to encourage shareholders to either buy or sell shares in the Company. Shareholders in any
doubt about what action to take are recommended to seek financial advice from an independent financial advisor authorised by the Financial Services and Markets Act 2000.
2
GROUP H1 HEADLINES
»
»
»
»
»
H1 results ahead of January guidance; lower year on
year due to challenging UK market dynamics
Strong performance in Spain
UK business review undertaken and action plan
implemented to address current market trends and
improve profitability
Good progress across the Group’s retail and business
diversification strategies
» Committed to financial investment to support
multichannel, community and digital growth plans
Clear focus across the business on driving trading
performance, the UK action plan and the Group’s
strategic priorities
Insomnia 56 CS:GO Final, December 2015
3
MARK GIFFORD
CHIEF FINANCIAL OFFICER
4
GAME DIGITAL PLC - FIRST HALF RESULTS 2015/16
FINANCIAL HEADLINES
All figures in £’m (unless stated)
Gross Profit
Operating costs pre depreciation, amortisation,
exceptional & adjusting items
Adjusted EBITDA
H1
2016
H1
2015
VAR %
130.7
135.2
(3.3)
(97.6)
(92.2)
(5.8)
33.1
43.0
(23.0)
 Gross Profit decline of 3.3%; -1.2% on a constant currency basis
 Margin performance reflects Xbox One and PS4 software growth plus
new category growth and Multiplay
 Content margins (mint and preowned) down given the sales decline of
old generation software
 Higher operating costs due to first time inclusion of Multiplay. Core
operating cost inflation of 3.6%
 EBITDA declined to £33.1m, £9.9m lower than the prior year
Gross Transaction Value
Total
608.0
644.1
(5.6)
Total excluding Hardware
450.8
446.6
0.9
 H1 decline in GTV of 5.6%; down 3.6% on a constant currency basis
 GTV growth excluding Hardware up 0.9%, up 3.1% on a constant
currency basis
SWITCH FROM OLD GEN TO NEW GEN IMPACTING MARGINS
CONTINUED INVESTMENT AND PROGRESS IN GROWTH CATEGORIES AND MULTIPLAY
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
5
GAME DIGITAL PLC - FIRST HALF RESULTS 2015/16
FINANCIAL HEADLINES - CONTINUED
All figures in £’m (unless stated)
H1 2016
H1 2015
VAR
%
27.7
38.9
(28.8)
Adjusted (basic) EPS
12.2p
17.8p
(31.5)
Dividend – Interim
1.67p
7.35p
(77.3)
66.6
64.9
2.6
120.2
140.4
(14.4)
Adjusted Profit before tax
Net cash from operating activities
Net cash
 H1 Adjusted PBT of £27.7m
 Higher effective tax rate (predominantly due to the greater profit
contribution from Spain)
 New dividend policy targeting 1/3:2/3 split between interim and final
 Interim dividend of 1.67p declared
 Positive cash generation continued in the period
 After special dividend of £25m paid last year, net cash closed at
£120.2m
 Group remains well funded with new and increased facilities
GROUP WELL-FUNDED, POSITIVE CASH GENERATION CONTINUES
6
GAME DIGITAL PLC - FIRST HALF RESULTS 2015/16
GTV BY CATEGORY
H1 2016
£m
H1 2015
£m
VAR
%
Content
267.2
281.0
(4.9)
Preowned
104.8
102.4
2.3
78.8
63.2
24.7
Sub-total
450.8
446.6
0.9
Hardware
157.2
197.5
(20.4)
Total
608.0
644.1
(5.6)
Group GTV Mix, %
13%
17%
44%
26%
AT&O
 New Gen software up 25%, Old Gen down 59%
 Solid digital content growth, +9.2%
 Driven by preowned tech sales of £23m, +93%
 New Gen software up 40%, Old Gen down 37%
 Growth in Accessories, Toys-To-Life and Other
sales, excl. Multiplay, up 18.5%
 Multiplay sales of £3.9m (2015: Nil)
 Ongoing impact of lower average selling
prices and lower volumes
STRONG GROWTH IN AT&O PLUS PREOWNED PHONES AND TABLETS
7
GAME DIGITAL PLC - FIRST HALF RESULTS 2015/16
GROSS PROFIT MARGIN, % OF GTV
Gross Profit Margin, % (of GTV)
%pt Change
H1 ‘16
%
H1 ‘15
%
Content
22.8
24.9
(2.1)
Preowned
37.0
38.1
(1.1)
AT&O
32.5
31.0
1.5
Sub-total
27.8
28.8
(1.0)
Hardware
3.4
3.3
0.1
21.5
21.0
0.5
Total
 Underlying software margins increased marginally, +0.1%
 Overall margin decline explained by growth in digital
content (stronger digital currency sales) as well as a nonrecurring digital bundling benefit last year
 Preowned software margins increased
 Mix effect of increased preowned tech
 AT&O margins benefited from mix effects, with increase of
higher margin licensed product and lower contribution
from lower margin DVD sales
 Hardware margins stable
GREATER MIX OF HIGHER MARGIN CATEGORIES DROVE A 50BPT INCREASE IN GM%
8
GAME DIGITAL PLC - FIRST HALF RESULTS 2015/16
GROSS TRADING MARGIN1, £M
PS3/Xbox360
and all other
Software (Mint
and Preowned)
£78.4m
£132.7m1
Other
categories
£54.3m
PS4/XB1
 Growth categories up 25% in H1
 Old format content (preowned and mint) of £29.4m down 44% on
last year explaining overall Group performance
 Old format content (representing 22% of overall margins) will
have a reducing impact on overall performance going forwards
Other categories
AT&O2 (Mint & Preowned)
Digital Content
Preowned Tech
A Sub-Total
Hardware (Mint & Preowned)
Total
Gross profit, £m
28.3
10.9
5.5
44.7
9.6
54.3
GM, %
33.1
17.3
23.8
26.1
5.5
15.7
GTV VAR, %
+21.1
+9.2
+93.0
+22.4
(19.2)
(2.8)
Software (Mint & Preowned)
B PS4 and Xbox One
PS3 and Xbox 360
All other formats
Sub-Total
Total
Gross profit, £m
49.0
18.2
11.2
29.4
78.4
GM, %
27.0
36.7
35.2
36.1
29.8
GTV VAR, %
+27.0
(50.8)
(30.1)
(44.3)
(9.0)
Total A + B
93.7
26.5
+24.7
GROWTH CATEGORIES CONTRIBUTED GROSS PROFIT OF c£94M, OVER 70% OF TOTAL
1 Gross trading margin is gross profit before adjusting for rebates, loyalty and other margin adjustments, totalling (£2 million) in aggregate
2 Group figures including UK and Spanish Retail plus Multiplay
9
GAME DIGITAL PLC - FIRST HALF RESULTS 2015/16
INSTALLED BASE GROWTH
Units sold, millions
Installed User Base (UK)
PS3/Xbox360
14
 Adoption rate of the latest generation of consoles (PS4, Xbox1)
remains well ahead of previous generation (PS3, Xbox360) at
same point in cycle
PS4/Xbox1
12
 5.1 million vs. 3.5 million
10
8
 Significant further hardware sales of the latest generation of
consoles to come
5.1m
6
4
 current PS4/Xbox1 installed base approximately 1/3rd
that of the prior generation (c.14.5 million units)
3.5m
2
0
0
1
2
3
4
5
6
7
8
 Further PS4/Xbox1 hardware growth expected to drive
continued content and accessories sales growth
Years after launch
ACCELERATED CUSTOMER RECRUITMENT FOR NEW GENERATION CONSOLES CONTINUES
Source: IHS Screen Digest, GfK Chart-Track, IDG
10
GAME DIGITAL PLC - FIRST HALF RESULTS 2015/16
MARKET BACKDROP: H1 CONSOLE PERFORMANCE
Console Gaming Market (Hardware, Software, Accessories, Digital)
11.1%
Console Gaming Market (Hardware, Software, Accessories, Digital)
17.5%
-12.8%
Spain Console Market
GAME Spain GTV
Ex. Hardware
UK Console Market
-9.6%
GAME UK GTV
Ex. Hardware
5.5%
13.1%
-0.2%
-5.2%
Spain Console Market
GAME Spain GTV
UK Console Market
GAME UK GTV
1)
Source: GfK Chart-Track (Based on value of retail sales of mint hardware, mint software, console digital content and gaming accessories), 26 weeks to 23 January 2016. Spain figures in local currency
2)
Gross Transaction Value (“GTV”) is a non-IFRS measure defined as total retail receipts excluding VAT, including publishers’ share of digital sales and before the deduction of the cost of Reward points. GTV provides a more
comparable measure to market growth as it includes total digital receipts at till, rather than digital commissions
11
GAME DIGITAL PLC - FIRST HALF RESULTS 2015/16
REGIONAL PERFORMANCE
Spain
GTV
GTV ex. Hardware
Gross Profit
Operating Costs (ex D&A)
Adjusted EBITDA
UK1
GTV
GTV ex. Hardware
Gross Profit
Operating Costs (ex. D&A)
Adjusted EBITDA
H1 2016
£m
156.4
117.0
33.8
(22.2)
11.6
H1 2015
£m
144.3
112.0
32.5
(21.4)
11.1
VAR
%
8.4
4.5
4.0
3.7
4.5
H1 2016
£m
451.6
333.8
96.9
(75.4)
21.5
H1 2015
£m
499.8
334.6
102.7
(70.8)
31.9
VAR
%
(9.6)
(0.2)
(5.6)
6.5
(32.6)
LC VAR
%
17.5
13.1
13.1
13.0
13.5
 Strong GTV and GP growth in Spain in local currency. Reported
growth rates reduced due to currency
 Performance helped by addition of 44 GameStop Spain
stores in October 2014
 Spanish LFL sales +16.1% in LC
 Spanish EBITDA +13.5% in LC
 UK GP decline due to impact of decline in older gen software
sales
 Overall UK Operating costs increased 6.5%, including the first
time addition of Multiplay
 Actions to improve UK profitability launched with benefits
already being delivered
STRONG GROWTH IN SPAIN; ACTIONS BEING TAKEN TO IMPROVE UK PROFITABILITY
LC = Local Currency (EUR)
1) UK figures incorporate Multiplay, Digital Solutions and Group (PLC) costs
12
GAME DIGITAL PLC - FIRST HALF RESULTS 2015/16
OPERATING EXPENSES
Selling & Distribution
Administrative
Of which exceptional items
Of which adjusting items
Administrative expenses pre
exceptional and adjusting items
Total Operating expenses pre
exceptional and adjusting items
as % of revenues
July 15
£m
July 14
£m
VAR
%
(79.4)
(77.9)
1.9
(28.5)
(23.8)
19.7
0.4
-
-
(5.6)
(5.7)
-
(23.3)
(18.1)
28.7
(102.7)
(96.0)
7.0
18.7%
16.4%
 Total operating costs of £102.7m, up £6.7m in H1 including first
time inclusion of Multiplay costs
 Costs (excluding Multiplay and deprecation and amortisation) of
£95.5m, up £3.3m or 3.6%




Distribution cost increases of £1.5m to £10.8m driven by online growth
Rent decreases of £0.6m to £17.1m
Store payroll increase of £0.5m (1.7%) to £31m
£0.6m decrease in net marketing costs

Underlying £5.2m increase in Administrative costs explained by:

£2.1m of Multiplay costs

£1.3m increase in depreciation and amortisation

£0.7m Digital Solutions set up

£1.0m in UK / Spain central cost increases
COST CONTROL IN CORE ACTIVITES; INVESTMENT CONTINUED IN HIGH GROWTH OPPORTUNITIES
13
GAME DIGITAL PLC - FIRST HALF RESULTS 2015/16
12 MONTH CASH FLOW AND NET CASH
OPERATING CASH FLOW
£m
FREE CASH FLOW
£m
CASH GENERATION
£m
NET CASH
£m
Operating Profit
15.5
Operating cash flow
50.9
Free cash flow
33.4
Depreciation & Amortisation
18.6
Capital expenditure
(11.8)
Interim Dividend
(12.4)
Cash generation
8.4
Working capital & other items
16.8
Taxation
(5.1)
Acquisition of subsidiary
(12.4)
Special Dividend
(24.8)
Net Interest
(0.6)
Acquisition of investment
(0.2)
FREE CASH FLOW
33.4
CASH GENERATION
OPERATING CASH FLOW
50.9
8.4
OPENING NET CASH
Increase borrowings and FX
CLOSING NET CASH
140.4
(3.8)
120.2
 In 12 months to 23 January 2016
 Positive operating cash flow from core business of £50.9m, including positive working capital management
 Continuing investment for growth with capital expenditure of £11.8m
 Free cash flow of £33.4m before dividends and acquisitions
 Cash generation of £8.4m before payment of £24.8m special dividend
POSITIVE OPERATING CASHFLOWS AND WORKING CAPITAL MANAGEMENT
14
GAME DIGITAL PLC - FIRST HALF RESULTS 2015/16
BALANCE SHEET, WORKING CAPITAL AND TREASURY
£m
Tangible fixed assets
Investments
Intangible assets
Inventory
Trade and other receivables
Trade and other payables
Cash (net of borrowings)
Other liabilities
Net assets
Inventory
Trade receivables
Trade payables
Trade working capital
Jan 2016
23.9
0.2
56.9
103.9
37.6
(197.7)
120.2
(12.5)
132.5
Jan 2015
19.6
51.2
74.5
57.4
(160.1)
140.4
(14.5)
168.5
103.9
17.7
(99.6)
22.0
74.5
34.7
(86.2)
23.0
 Strong cash position of over £120m
 New and increased facilities agreed in the first half
 £30m RCF facility in UK
 €38.5m facilities in Spain, currently Spring annual review
 Review of UK facilities
 Net investment in trade working capital decreased by £1.0m, or 4.3%, to £22.0m
 Inventory increased 39% to £103.9m due to:

additional stock investment in the growth AT&O category

increased GAMEtronics stock levels to support the current sales demand

greater stock investment put into software following the agreement of
extended payment terms from certain suppliers
STRONG CASH POSITION AND IMPROVED FACILITIES; INVESTMENT IN STOCK IN NEW GROWING CATEGORIES
15
GAME DIGITAL PLC - FIRST HALF RESULTS 2015/16
OUTLOOK AND FY15/16 GUIDANCE
 Targeting a modest, positive Group EBITDA for H2
 Second half trading in line with expectations
 Cost investment in faster growth categories in retail and investing in new divisions
 Cost efficiencies being delivered across the UK business
 Group capex for core retail business and Multiplay
 Planned EBITDA growth for 2016/17 and beyond
 Targeting dividend split of approximately 1/3, 2/3 between interim and final
FOCUSED ON REALISING GROWTH OPPORTUNITIES WHILST CONTROLLING COSTS IN CORE ACTIVITES
16
MARTYN GIBBS
CHIEF EXECUTIVE OFFICER
17
1.
UK ACTION PLAN
2.
STRATEGIC AND BUSINESS UPDATE
18
1.
SUPPLIER ARRANGEMENTS
2.
ORGANISATIONAL DESIGN
3.
PROPERTY REVIEW AND OPTIMISATION
4.
BUSINESS PROCESSES
5.
CASH PLANNING & STOCK EFFICIENCES
© Tom Clancy’s Rainbow Six Siege, Released 1 December 2016 (UBISOFT)
UK ACTION PLAN
COMMERCIAL OPPORTUNITIES
IMPROVED CONSUMER PROPOSITION
REALISING OPERATIONAL EFFICIENCIES
19
SUPPLIER ARRANGEMENTS: BROADENING BUSINESS PARTNERSHIPS
CUSTOMER & CHANNELS COLLABORATION
EXCLUSIVE & DIFFERENTIATED RANGE AND OFFER
CUSTOMER AND GAMER INSIGHT AND
ENGAGEMENT
ACTIVATION THROUGH GAMING EVENTS
COMPETITIVE GAMING & ESPORTS
INNOVATIVE DIGITAL GAMING SOLUTIONS
WORKING TOGETHER TO BUILD GAMING COMMUNTIES AND FUEL THEIR PASSION
20
PROPERTY REVIEW AND OPTIMISATION
OPPORTUNITY TO SIGNIFICANTLY REDUCE ESTATE COSTS PRIOR
TO ANY STORE CLOSURES
» PROGRESS ALREADY ACHIEVING RESULTS
NO LOSS MAKING STORES IN THE UK*
120
100
80
60
40
20
0
246 EVENTS
114
75
57
37
34
30
25
20
15
10
5
0
£m
SIGNIFICANT CONSIDERATION GIVEN TO EVERY LEASE RENEWAL
UK LEASE EVENTS
# of lease events
246 UK LEASE EVENTS BY JULY ‘18; £55M TOTAL FIXED COSTS
2015/16 2016/17 2017/18 2018/19 After
18/19
# LEASE EVENTS
TOTAL FIXED COSTS (RHS)
* Calculated as store EBITDA contribution in LTM before allocation of central costs
21
BUILDING THE MOST VALUABLE COMMUNITY OF GAMERS
22
GAMERS ARE AT THE HEART OF EVERYTHING WE DO
PRO ESPORTS
TOURNAMENTS
LOCAL
COMPETITIONS
INSOMNIA
ACTIVITY
STORES
ONLINE
MOBILE
CONSOLE TITLES
PC TITLES
LIVE EVENTS
AND ONLINE
SOCIAL & CRM
APP
CUSTOMER
SUPPORT
PASSIONATE & KNOWLEDGABLE TEAMS
FROM GRASSROOTS TO THE WORLD’S TOP PROS
INSOMNIA
GAMING
CONVENTIONS
REGIONAL
EVENTS
EXCLUSIVES
PHYSICAL &
DIGITAL CONTENT
BRANDED H/W &
ACCESSORIES
STORE EVENTS
ROADSHOWS
FIRST PLAYS
BRANDED
MERCHANDISE
PC GAMING
RANGE OF
SERVICES
UNIQUE AND MEMORABLE GAMING EVENTS
AUTHORITATIVE RANGE AND RELEVANT SERVICES
REWARD &
DIGITAL WALLET
APP
SCAN IT!
SOCIAL MEDIA
CLUBS
NEWSLETTERS
GROWING DIGITAL ENGAGEMENT
23
PRIORITIES TO DELIVER LONG TERM, SUSTAINABLE GROWTH
SPECIALIST RETAIL
ESPORTS & EVENTS
DIGITAL SOLUTIONS
Multichannel retail operations in the UK and
Spain
Insomnia, gaming events, eSports and local
competitive gaming
Clanforge server management
24
SPECIALIST RETAIL
25
STORE PURPOSE AND PROFITABILITY
CONVENIENCE – CHOICE – EXPERIENCE - DISCOVERY
TARGETED NEW STORE OPENINGS IN H1
- TRIALLING IN-STORE INITIATIVES
EXPLORING PARTNERSHIP OPPORTUNITIES
TRIALLING NEW FORMATS
IMPROVED SPACE PLANNING
METRO STORE OPENING, OCTOBER 2015
26
CUSTOMER INSIGHT AND SEGMENTATION
NAME: MIKE B
SEGMENT: 8
SEGMENT PROFILE (EXAMPLES):
ATF
9.4X
% DIGITAL
59%
% TRADE-IN
50%
SHOP IN STORE & ONLINE
24%
SHOP PHYSICAL & DIGITAL
56%
SHOP MINT AND PREOWNED
64%
GAMING PREFERENCES:
Platform: Xbox One, PlayStation 4
Genres: First Person Shooters, Racing, Sports
Local Store: Liverpool
GAME Wallet: 
DEEP UNDERSTANDING OF CUSTOMER SHOPPING AND PLAYING PREFERENCES
27
CUSTOMER & CHANNELS: CONTINUED MULTICHANNEL DEVELOPMENTS
NEW CUSTOMER AND CHANNELS DIRECTOR ONBOARD
ENHANCED WAYS TO ORDER AND RECEIVE
MOBILE SITE UPGRADE COMPLETED
FURTHER DESKTOP / TABLET SITE IMPROVEMENTS PLANNED
MARKETPLACE / ENDLESS RANGE DEVELOPMENTS
+5.7%
50%
Unique web visits, H1
% of online sessions via mobile, H1
28
CUSTOMER & CHANNELS: DRIVING ENGAGEMENT THROUGH AN ENRICHED DIGITAL APP EXPERIENCE
MAJOR APP UPGRADE PLANNED FOR IN 2016
RICHER CONTENT, COMPETITIONS AND EXCLUSIVE OFFERS
EXPANDING BEYOND GAMING - EVENTS, MOVIES ETC.
BUILDING COMMUNITY VIA SOCIAL ENGAGEMENT AND EXPERIENCES
GAME WALLET INTEGRATION WITH ONE TOUCH PAYMENT
SIMPLE & SECURE REWARD ACCESS
3,000,000
DOWNLOADS TO DATE
750,000
GAME WALLET USERS
29
RANGE AND OFFER: DELIVERY IN CORE CATEGORIES AND DEVELOPMENT OF NEW GROWTH AREAS
NEW GEN SOFTWARE (PS4/XB1)
DIGITAL CONTENT
PREOWNED TECH
PC GAMING
+27%
+9.2%
+93%
+9.4%
Mint and Preowned sales
Digital sales
Preowned tech sales
PC Category sales
ACCESSORIES, TOYS TO LIFE &
LICENSED MERCHANDISE
MARKETPLACE
+150%
150,000
Licensed merchandise sales
New online products
VIRTUAL REALITY
Major devices
launching in H2
Note: All growth figures represent category GTV growth for the 26 weeks ended 23 January 2016 (UK & Spain combined). Source: Company
NEW SERVICES
Click & Collect
Consumer Finance
Device repair
Online Trade-in (H2)
Product protection
30
GAMING EVENTS & ESPORTS
31
GROWING INSOMNIA
LARGEST EVER INSOMNIA HELD (I55) IN AUGUST 2015
LARGEST WINTER INSOMNIA (I56) HELD AT NEC IN DECEMBER 2015
INSOMNIA 57 SET TO BREAK RECORDS FOR AN EASTER EVENT
NEW EVENTS ANNOUNCED FOR IRELAND AND SCOTLAND
GAMEFEST CONSUMER EXPO ANNOUNCED TO COINCIDE WITH INSOMNIA 58
£2.9m
DISCUSSIONS ONGOING WITH POTENTIAL INTERNATIONAL PARTNERS
H1 events sales
Insomnia 56 opening ceremony, NEC, December 2015
32
INCREASING ESPORTS AND LOCAL COMPETITIVE GAMING ACTIVITY
ACTIVITY HEADLINED BY EVENTS AT INSOMNIA
HUNDREDS OF TEAMS / THOUSANDS OF PLAYERS COMPETED IN 2015
FIRST PRO TOURNAMENT HOSTED IN DECEMBER 2015
ACQUIRED POPULAR SPANISH ESPORTS PLATFORM: SOCIALNAT
PLANS TO BUILD LOCAL ACTIVITY THROUGH LOCAL COMMUNITIES
33
DIGITAL SOLUTIONS
34
87 TITLES CURRENTLY SUPPORTED ACROSS B2B AND B2C
CONTINUED INVESTMENT IN CLANFORGE PLATFORM, TEAM AND INFRASTRUCTURE
SIGNIFICANT CONTRACT SUCCESS IN H1
CONTRACT DISCUSSIONS ONGOING WITH SEVERAL OTHER PARTIES
35
© No Man’s Sky, Releasing 2 June 2016 (Hello Games)
CLOSING REMARKS
36
SUMMARY
CHALLENGING HALF DUE TO UK MARKET DYNAMICS; IMPACT OF PRIOR
GEN DECLINES NOW DIMINISHING
STRATEGY FOCUSED ON MAXIMISING CURRENT CONSOLE GAMING
APPETITE COMBINED WITH NEW CATEGORY DEVELOPMENT
NEW DIVISIONS ESTABLISHED TO TARGET SIGNIFICANT GROWTH
MARKETS
PLANS FOR REMAINDER OF YEAR, INCLUDING LAUNCH OF VR, WELL
DEVELOPED
INVESTING FOR GROWTH WHILST REALISING ALL COST EFFICIENCIES
IN CORE RETAIL BUSINESS
© Quantum Break, Releasing 5 April 2016 (Remedy Entertainment/Microsoft Studios)
37
building the most valuable community of gamers
38
RECONCILIATION TO ADJUSTED EBITDA
H1 16
£m
H1 15
£m
22.8
33.5
9.6
8.0
4.5
4.2
EBITDA
32.4
41.5
Exceptional costs / (income)
(0.4)
-
Cost of IPO-related share-based payment compensation
(0.1)
1.3
1.2
-
-
0.2
33.1
43.0
Operating profit
Depreciation and amortisation
of which Brand and other acquired intangibles amortisation
Costs of post-acquisition remuneration
Cost of transferring GameStop Spain stores
Adjusted EBITDA
 Exceptional income of £0.4m (2015: nil) relating to the
release of provisions associated with the former GAME
Group plc
 Adjusting amortisation charges increased by £0.3m as a
result of the acquisition of Multiplay
 IPO-related share-based payment compensation
reduced £0.1m
 Post-acquisition remuneration of £1.2m relates to cash
and shares payable to certain Multiplay shareholders
 Other adjusting costs of £0.2 million, comprising legal
and professional fees, incurred in relation to the transfer
of Spanish stores from GameStop in October 2014
39
H1 2015/16 CATEGORY PERFORMANCE
All figures in £’m (unless stated)
Gross Transaction Value
Content
Preowned
Accessories, Toys-To-Life, & Other (AT&O)
Sub-Total
Hardware
Total
Gross Profit
Content
Preowned
Accessories, Toys-To-Life, & Other (AT&O)
Hardware
Total
Operating Costs pre exceptional and adjusting items and D&A
Adjusted EBITDA
H1 2016
H1 2015
VAR %
267.2
104.8
78.8
450.8
157.2
608.0
281.0
102.4
63.2
446.6
197.5
644.1
(4.9)
2.3
24.7
0.9
(20.4)
(5.6)
61.0
38.8
25.6
5.3
130.7
(97.6)
33.1
70.0
39.0
19.6
6.6
135.2
(92.2)
43.0
(12.9)
(0.5)
30.6
(19.7)
(3.3)
5.9
(23.0)
 GTV ex Hardware up 0.9%; up 3.1% on a constant
currency basis
 Gross profit ex Hardware down 2.5%, -0.4% on a
constant currency basis
 Total Gross Profit down 3.3%, down 1.2% on a
constant currency basis
 Total GTV down 5.6%
 Hardware GTV down with gross profit fall of
£1.3m, 1% of total margin
 Continued growth in Preowned sales driven
by mobile phones and tablets
 AT&O GTV and margin growth significant
 Operating costs excluding D&A included Multiplay
costs of £2.1m
 Group underlying operating costs excluding D&A
and Multiplay of £95.5m vs. £92.2m, up 3.6%
OVERALL GROWTH DELIVERED IN HIGHER MARGIN CATEGORIES OF CONTENT, PREOWNED & AT&O
40
H1 STRATEGIC PROGRESS
BUILD
DRIVE
OPTIMISE
EXPAND
DEVELOP
on our position as the #1
destination for gamers
digital sales
the omni-channel
experience
beyond retail
and monetise technology
32%
38%
Market share in UK1
9%
Over
180,000
Acquisition of eSports
business
Increase in digital GTV
Products added online
through GAME Marketplace
93%
60%
Click & Collect
Over
GAMEtronics GTV growth (H1)
Share of console digital
content in UK and Spain2
launched in the UK
Insomnia 55 footfall (largest
ever)
Market share in Spain1
Significant contract success
36,000
1)
Source: GfK Chart-Track (Based on value of retail sales of mint hardware, mint software, console digital content and gaming accessories), 26 weeks to 23 January 2016. Spain figures in local currency
2)
Source: GfK Chart-Track (Based on value of retail sales of console digital content, 26 weeks to 23 January 2016. Spain figures in local currency
3,000,000+
App downloads
41
42
© Unchartered 4: A Thief’s End, Releases 10 May 2016 (Naughty Dog/Sony Computer Entertainment)
GROWING NEW GEN SOFTWARE SALES
LEADING SHARES ACHIEVED ON KEY RELEASES IN H1
 25%
LEADING DIGITAL ATTACH RATES
H1 PS4 / XB1 MINT SOFTWARE GTV
SOLID SCHEDULE OF NEW RELEASES FOR H2
 40%
H1 PS4 / XB1 PREOWNED SOFTWARE GTV
42
43
INCREASED DIGITAL RANGE AND SALES
» H1 DIGITAL GTV 9% TO £63M
» GROWTH ACROSS BOTH CONSOLE AND NON-CONSOLE
 9.2%
» OVER 1,000 DIGITAL PRODUCTS ADDED TO RANGE IN H1
H1 DIGITAL SALES
» DIGITAL SALES REPRESENTED c25% OF CONTENT SALES
(2015: 20%)
GROUP DIGITAL GTV, £M
95.4
67.0
73.5
57.5
FY12/13 FY13/14 FY14/15
© Call of Duty: Black Ops III, Released 6 November 2015 (Treyarch/Activision)
62.8
H1 14/15 H1 15/16
43
44
GROWING PREOWNED TECH SALES
PREOWNED TECH SALES +93%
STRONG PERFORMANCE IN BOTH TERRITORIES
CONTINUED STOCK INVESTMENT TO SUPPORT SALES DEMAND
CENTRALISED DISTRIBUTION AND IMPROVED LOGISTICS
ONLINE TECH TRADE-IN LAUNCHING H2
GROWING ACCESSORIES RANGE
44
45
PUTTING THEPCCUSTOMER
COMMUNITIES AT THE HEART OF OUR BUSINESS
GROWING
GAMING &RANGE
» DEVELOPMENT ACROSS PC HARDWARE,
ACCESSORIES AND CONTENT OFFER
» SOLID PC CATEGORY GROWTH YTD
» VERY STRONG ACCESSORIES GROWTH
» PC DOWNLOAD GROWTH
 9.4%
PC CATEGORY GROWTH, YTD
(HARDWARE, ACCESSORIES AND CONTENT)
» NEW HARDWARE AND ACCESSORIES
RANGES ADDED
» ‘BUILD YOUR OWN PC’ SERVICE LAUNCHED
IN SPAIN
45
46
NEW GROWTH CATEGORIES
NEW PRODUCTS AND RANGES ADDED
 15%
IMPROVED IN STORE MERCHANDISING
TOYS-TO-LIFE H1 GTV GROWTH
EXPANDED RANGE AVAILABLE ONLINE
 150%
LICENSED MERCHANDISE H1 GTV GROWTH
47
46
CONTINUED MARKETPLACE DEVELOPMENT
FOCUSED ON GROWING VENDORS AND RANGE
47
48
VIRTUAL REALITY
MAJOR DEVICES COMING 2016
- HTC VIVE, £689 (MAY 2016)
- OCULUS RIFT, £499 (JULY 2016)
- SONY VR, £350 (OCTOBER 2016)
KEY LAUNCH PARTNER
CONSUMER ANTICIPATION BUILDING
PREPARATIONS WELL DEVELOPED
48
49
CUSTOMER & CHANNELS: NEW CONSUMER SERVICES
CONSUMER FINANCE ROLLED OUT IN UK
NEW PRODUCT SERVICE PLANS LAUNCHING IN H2
BROADBAND, MOBILE & TV IN STORE OFFER
24/7 CUSTOMER SERVICES LAUNCHED
ONLINE TRADE-IN LAUNCHING IN H2
EXPANDED PRODUCT REPAIR SERVICE LAUNCHING
49
50
ANNOUNCED 2016 INSOMNIA EVENTS
SPRING: Insomnia 57, 25 – 28 March
SCOTLAND: Insomnia Scotland, 29 Apr – 2 May
IRELAND: Insomnia Ireland, 10 – 12 June
SUMMER: Insomnia 58 & GAMEfest, 26 – 29 August
WINTER: Insomnia 59, 9 – 12 December
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