TIDMGMG
RNS Number : 9624O
Game Group PLC
27 September 2011
The GAME Group plc
THE GAME GROUP PLC, Europe's leading retailer of pc and video
games products, today announces Interim Results for the 26 weeks
ended 31 July 2011.
Commenting on the results, CEO Ian Shepherd said:
"2011 has been a very tough year for the video games industry. A
combination of a cyclical low point in the industry itself and
unprecedented macro-economic conditions have led to significant
market revenue declines.
GAME Group has increased market share in this difficult climate
as we have focussed on delivering our strategy. Nonetheless, the
impact of the wider market can be seen on our first half
results.
Like many other retailers, we believe that trading conditions
will remain tough for the remainder of the year, and have set our
plans accordingly. We are determined to again outperform a
difficult market this Christmas, by using our unique specialist
position to give customers the very best choice and value.
For the future, we are investing for a different video games
market, with new games consoles coming to market and customers
exploring new ways of playing games, including digital; online; and
cloud-based gaming. The Group, through its Dedicated to Gaming
strategy initiatives, is taking a leading role in these
developments in order to benefit from market recovery in the coming
years."
Key points
Financial:
-- Group lfl down 9.9%, reflecting tough market conditions
-- Increased market share in period
-- Focus on generating cash and strong balance sheet in second
half
-- Interim dividend maintained
-- Store closures on track
Operations
-- Strategic progress, including accelerating digital sales and
robust preowned business
-- High quality Christmas software line-up
-- Prepared for key Christmas selling period
Financial Overview
All figures in GBP'm (unless 26 Weeks ended 26 weeks ended
stated) 31 July 2011 31 July 2010
-------------------------------------- ---------------- ----------------
Group turnover 558.8 624.6
-------------------------------------- ---------------- ----------------
Gross profit margin (%) 24.3 26.0
-------------------------------------- ---------------- ----------------
Operating loss before non-recurring
costs (45.0) (16.1)
-------------------------------------- ---------------- ----------------
Non-recurring costs(*) (3.0) (2.7)
-------------------------------------- ---------------- ----------------
Operating loss (48.0) (18.8)
-------------------------------------- ---------------- ----------------
Loss before non-recurring costs
and tax (48.5) (18.8)
-------------------------------------- ---------------- ----------------
Loss before tax (51.5) (21.5)
-------------------------------------- ---------------- ----------------
Basic earnings per share before
non-recurring costs (pence) (9.86) (3.66)
-------------------------------------- ---------------- ----------------
Basic earnings per share (pence) (10.72) (4.44)
-------------------------------------- ---------------- ----------------
Interim dividend per share
(pence) 1.88 1.88
-------------------------------------- ---------------- ----------------
Trading store numbers (including
franchises) 1,287 1,338
-------------------------------------- ---------------- ----------------
Trading square footage (sq.
ft. thousands) 1,344 1,394
-------------------------------------- ---------------- ----------------
H1 sales analysis 26 weeks to 31 July 2011
----------------------- ----------------------------
Total sales Lfl sales
(%) (%)
----------------------- --------------- -----------
Group (10.5) (9.9)
----------------------- --------------- -----------
UK & Ireland stores (12.0) (10.0)
----------------------- --------------- -----------
International stores (10.2) (11.4)
----------------------- --------------- -----------
Group Online 2.3
----------------------- --------------- -----------
*Non-recurring costs relate to strategic store change
programme
34 weeks to 24 September
Current trading sales analysis 2011
--------------------------------- ----------------------------
Total sales Lfl sales
(%) (%)
--------------------------------- --------------- -----------
Group (11.4) (10.4)
--------------------------------- --------------- -----------
UK & Ireland stores (13.3) (11.2)
--------------------------------- --------------- -----------
International stores (10.1) (10.8)
--------------------------------- --------------- -----------
Group Online 0.4
--------------------------------- --------------- -----------
Enquiries:
The GAME Group plc: +44 (0)1256 784566
Ian Shepherd, Group Chief Executive
Ben White, Group Finance Director
Simon Soffe, Investor Relations and Group
Communications Director
Brunswick: +44 (0)20 7404 5959
Jonathan Glass, James Olley, Natalia Marisova
- ENDS -
CEO Statement:
Overview
2011 has been a very tough year for the video games industry. A
combination of a cyclical low point in the industry itself and
unprecedented macro-economic conditions have led to significant
market revenue declines.
GAME Group has increased market share in this difficult climate
as we have focussed on delivering our strategy. Nonetheless, the
impact of the wider market can be seen in our first half
results.
We have two imperatives. In the short term, we need to deliver
results even in a tough market. In the longer term, we need to
enhance our position as the industry evolves and returns to
growth.
For the key Christmas period, our unique specialist retailing
skills and multi channel profile mean that we are positioned to
take a leading share on the high quality line-up of new games. We
also have a strong balance sheet and focus on cash generation. We
will continue to drive cost and working capital disciplines across
the business.
For the future, we are investing for a different video games
market, with new games consoles coming to market and customers
exploring new ways of playing games, including digital; online; and
cloud-based gaming. The Group, through its Dedicated to Gaming
strategy initiatives, is taking a leading role in these
developments in order to benefit from market recovery in the coming
years.
Market
Between 1 February and 31 July, the markets in which we operate
showed revenue declines of 15.5%, with hardware down 13.7% and
software down 16.5%.
Very few major software titles launched in the period, with only
LA Noire achieving sales in excess of GBP20m in the UK. In
hardware, the Nintendo 3DS launched satisfactorily, but slightly
behind market expectations.
In the first weeks of the second half, a number of significant
titles have launched including Deus Ex: Human Revolution, Dead
Island and Gears of War 3. Sales of these titles were broadly in
line with market expectations, confirming that good quality titles
still attract strong consumer demand. Additionally, Nintendo and
Sony have reduced their hardware prices, enabling all three
manufacturers to compete at mass-market price points.
As is always the case, the next 10 weeks will be extremely
important for the market as they represent some 40% of annual
revenues. A range of strong games will launch, with 15 AAA titles
still to come before December, and market data suggests that
preorder volumes are ahead of last year for the key titles
including: Call of Duty: Modern Warfare 3, Battlefield 3, FIFA 12,
Assassin's Creed Revelations, Forza 4, Batman: Arkham City, and The
Legend of Zelda: Skyward Sword.
Looking further ahead to 2012, the market is looking forward to
the launch of the Sony Playstation Vita handheld and the Nintendo
Wii U console in Europe.
Review of H1 performance:
Results
Group revenue for the 26 weeks ended 31 July 2011 decreased by
10.5% to GBP558.8m with lfl sales down by 9.9%. In the UK and
Ireland, total sales decreased by 12.0% and lfl sales were down by
10.0%. In our International operations, total sales decreased by
10.2% and lfl sales fell by 11.4%.
Our preowned business continues to attract value-conscious
consumers, and sales declined by only 1.8% and margins increased to
39.8%. Continued strategic focus on our online operations meant
that sales increased by 2.3%.
Total gross margin has declined by 170 basis points, as we
responded to a competitive market by investing in customer loyalty
and promotional deals.
Costs remain a critical focus for us, and are broadly flat year
on year. We have closed overlapping stores, rationalised working
hours in our stores and head office, and minimised our
discretionary spend. We have worked hard to make these savings,
GBP7.5 million in the underlying costs of the business, and these
actions are offsetting investment on our strategic priorities.
The non-recurring costs relate to the store closure programme
and one-off operational activities to implement our strategy.
Our net debt position as at 31 July 2011 was GBP91.0m (2010:
GBP63.5m), reflecting the lower profitability of the Group. Working
capital and capital expenditure remain in line with
expectation.
Strategy and Operations
Given the quiet market, we focused on driving sales through
tactical initiatives such as hardware bundle offers (for example
Wii consoles for GBP99.99 when bought with any chart game),
enhanced CRM activities and our preowned programme.
Our long term strategic activities are progressing well but are
at an early stage in their development. In the period we have
delivered the following important milestones:
Multichannel: GAME.co.uk, our main ecommerce site, was
relaunched on a new web platform in late August. It is a
significant improvement on our previous site. In the year to date
market share remains at 19%, but we expect to see improvement in
the remainder of the year. Our stated ambition is to treble our
2010 online market share by 2013, and we remain on track to achieve
this.
Right stores: Stores are the hub of our customer offering in
every market, but we continue to review the most efficient shape
and size of our portfolios. We have closed net 26 stores since the
start of the year, and continue to have a high transfer rate of
60-70% of customers from a closing store to our next nearest
location or to one of our websites. Converting footfall into sales
remains a key focus for our store teams. Whilst we are making
progress, we are not yet achieving our stated aim of growing
conversion by 1% this year, with an actual run rate of 18.3% (2010:
18.3%). As the busy software release schedule kicks in during the
second half, we remain confident that we will deliver a better
performance. With a short average lease profile of 4.6 years, we
have the ability to change our portfolio to match consumer
behaviour.
Unique Product Range: Digital sales across the Group are
accelerating rapidly: up more than 40% in the year to date. Our
digital product range is expanding further, and all of our UK
stores are skilled at offering customers a wide choice of
downloadable titles across the three principle digital formats:
Xbox Live, Sony PlayStation Network, and pc and browser games.
Customers can use cash, loyalty points and traded-in products to
pay for their digital items, which is not possible online. We are
the first and only retailer in Europe to offer this breadth of
range.
We have also added new digital partners to our range, and on 22
September we became the first games retailer in the world to
announce a partnership with OnLive, the games on demand service.
This will be the first subscription service that we have introduced
to our product range, and demonstrates our commitment to offering
customers a wide range of ways to purchase and play video
games.
Our customers will be able to buy an exclusive version of 18 of
the top 20 software titles from our stores and websites this
Christmas, as well as three exclusive console models.
Novel ways to buy: Our preowned business continues to
demonstrate strong revenues and margins. The GAME gift card service
has been relaunched in the UK, giving better functionality for
customers and broadening our reach, and is available in other
retailers such as Clinton Cards. We are also examining a way to
expand our Reward card scheme so that loyalty card points can be
used to purchase digital content online, and we will provide
further details as the service develops.
Strong customer relationships: Our loyalty schemes already have
18 million members and continue to grow, with 1 million customers
joining this year. We have also seen the number of transactions
using a loyalty card increase from 42% to 53%. We have overhauled
our CRM activities to ensure that we are communicating effectively
with customers to build our relationship further. The CRM team has
been expanded, and we are analysing our data in new ways to ensure
customers receive the most relevant information.
Current Trading and Outlook for the Full Year
In the 34 weeks to 24 September 2011, the Group's total sales
were down by 11.4% and lfl sales were down by 10.4%. In the UK and
Ireland, total sales and lfl sales were down by 13.3% and 11.2%
respectively. In our International business, total sales were down
by 10.1% and lfl sales on a constant currency basis were down
10.8%. Online sales were up by 0.4%.
The current shape of both the wider economy and the pc and video
games market leaves us under no illusion about the challenges we
face in the remainder of the year.
To deliver our revenue and margin targets, we will need to
achieve year on year revenue growth in the second half, and a
better gross margin than the first half. We are clear about the
context of these requirements. In the market, we will need to see
the major titles launching well and consumers' confidence returning
at Christmas.
In addition to that, GAME will need to deliver:
-- A leading share on all product launches. We plan to achieve
this by focusing on our wide range of exclusive products, and
trade-in deals.
-- Increased gross margins, driven by our launch plans for the
major titles, attractive Christmas console bundles and increased
preowned sales.
-- Continued progress in our strategic ambitions.
The performance of the new releases in the last three weeks
indicates that we can deliver on these plans.
Since we last updated the market, nothing has fundamentally
changed our outlook for the full year, other than wider economic
conditions. Good preorder volumes indicate that customers are
responding to the strength of the second half launch slate, our
margin driving activities are working, and tight cost management is
being maintained. Therefore we continue to target revenues down -3%
to 0%, which will be a significant overperformance of the market as
a whole, gross margins down 100bps, and cost savings now at levels
of GBP6m to GBP9m.
Cashflow and Dividend
To protect ourselves against the backdrop of difficult trading
conditions, we are taking decisive action to maintain the robust
balance sheet and cash position we have always enjoyed. We
anticipate that total capital expenditure for the current year will
now be lower than previously guided at around GBP15m, and expect
working capital improvements of around GBP15m in the full year as
we improve our stock cover profile from 6.5 to 6 weeks. Given the
first half trading performance, average net debt in 2011/12
financial year is expected to be GBP55m.
Combined with our relentless focus on costs, the refinancing we
announced in February to provide us over the next three years with
a GBP130m RCF and a GBP30m amortising term loan, gives us a sound
foundation from which to deliver our second half plans.
Given our cash and balance sheet position, and our confidence in
the Group's strategic direction, the Board proposes a flat interim
dividend of 1.88p per share.
Summary
Like many other retailers, we believe that trading conditions
will remain tough for the remainder of the year, and have set our
plans accordingly. We are determined to again outperform a
difficult market this Christmas, by using our unique specialist
position to give customers the very best choice and value.
The strategic progress that we have made in the last year gives
us a stronger proposition with which to tackle the short term
challenges, while also building us a firm foundation for the longer
term as our market changes.
Ian Shepherd
Chief Executive
Statement of Directors' Responsibilities
The Directors confirm, to the best of their knowledge and
belief, that this condensed consolidated set of interim financial
statements have been prepared in accordance with IAS 34 as adopted
by the European Union, and that the interim management report
herein includes a fair review of the information required by the
DTR 4.2.7 and DTR 4.2.8 namely:
-- an indication of important events that have occurred during
the six months ended 31 July 2011 and their impact on the condensed
consolidated financial statements, and a description of the
principal risks and uncertainties for the remaining six months of
the financial year; and
-- material related party transactions in the six months ended
31 July 2011 and any material changes in the related party
transactions described in the last Annual Report.
A copy of the Company's 2011 Annual Report and Accounts is
available on GAME's website www.gamegroup.plc.uk.
By order of the Board
Ben White
Director
Unity House
Telford Road
Basingstoke
RG21 6YJ
27 September 2011
Unaudited Condensed Consolidated Statement of Comprehensive
(Loss)/Income
for the six months ended 31 July 2011
Six months Six months Year
ended ended ended
31 July 31 July 31 January
2011 2010 2011
Unaudited Unaudited Audited
Note GBP'000 GBP'000 GBP'000
============================ ====== ============ ============ ============
Revenue 2 558,800 624,550 1,625,034
Cost of sales 422,825 462,461 1,197,638
============================ ====== ============ ============ ============
Gross profit 135,975 162,089 427,396
Other operating expenses 3 183,992 180,901 398,921
Operating (loss) / profit
before non-recurring
costs (45,035) (16,106) 43,208
Non-recurring costs 3 (2,982) (2,706) (14,733)
---------------------------- ------ ------------ ------------ ------------
Operating (loss) / profit (48,017) (18,812) 28,475
Finance income 73 161 375
Finance costs (3,522) (2,822) (5,745)
============================ ====== ============ ============ ============
(Loss) / Profit before
taxation (51,466) (21,473) 23,105
Taxation 4 14,227 6,072 (7,452)
============================ ====== ============ ============ ============
(Loss) / Profit for the
year attributable to
equity holders of the
parent (37,239) (15,401) 15,653
============================ ====== ============ ============ ============
Other comprehensive
income:
Exchange differences
on translating foreign
operations 2,850 (3,531) 2,921
Differences on valuation
of Swaps under hedge
accounting (260)
Deferred income tax on
share-based payments - - 370
Income tax on share-based
payments - - 37
============================ ====== ============ ============ ============
Other comprehensive income
/ (expense) for the
period, net of tax 2,590 (3,531) 3,328
============================ ====== ============ ============ ============
Total comprehensive
(expense) / income for
the period attributable
to equity holders of the
parent (34,649) (18,932) 18,981
============================ ====== ============ ============ ============
Earnings per share -
basic 6 (10.72)p (4.44)p 4.51p
- diluted 6 (10.72)p (4.44)p 4.51p
============================ ====== ============ ============ ============
All amounts relate to continuing activities
Unaudited Condensed Consolidated Balance Sheet
as at 31 July 2011
Restated
As at As at As at
31 July 31 July 31 January
2011 2010 2011
Unaudited Unaudited Audited
Note GBP'000 GBP'000 GBP'000
============================== ====== =========== =========== ============
Non-current assets
Property, plant and
equipment 7 98,222 123,907 109,122
Intangible assets 8 211,750 210,000 209.875
Deferred tax asset 3,647 3,614 3,647
============================== ====== =========== =========== ============
313,619 337,521 322,644
============================== ====== =========== =========== ============
Current assets
Inventories 144,787 144,168 149,915
Trade and other receivables 9 46,229 44,712 48,538
Current tax debtor 10,597 832 -
Cash and cash equivalents 40,964 48,995 151,243
============================== ====== =========== =========== ============
242,577 238,707 349,696
============================== ====== =========== =========== ============
Total assets 556,196 576,228 672,340
============================== ====== =========== =========== ============
Current liabilities
Trade and other payables 10 133,562 156,897 294,570
Current portion of long-term
borrowings 11 109,241 96,784 15,875
Leasehold property
incentives 1,485 1,347 1,869
Current tax liabilities - - 7,755
============================== ====== =========== =========== ============
244,288 255,028 320,069
============================== ====== =========== =========== ============
Non-current liabilities
Long-term borrowings 11 22,722 15,714 15,559
Leasehold property
incentives 9,746 10,246 9,718
============================== ====== =========== =========== ============
32,468 25,960 25,277
============================== ====== =========== =========== ============
Total liabilities 276,756 280,988 345,346
============================== ====== =========== =========== ============
Net assets 279,440 295,240 326,994
============================== ====== =========== =========== ============
Equity attributable to
equity holders of the
parent
Share capital 13 17,373 17,361 17,373
Share premium account 14 47,086 46,950 47,086
Capital redemption reserve 2,248 2,248 2,248
Shares held in trust (3,629) (4,199) (3,629)
Hedge Accounting Reserve (260) - -
Merger reserve 76,907 76,907 76,907
Foreign exchange reserve 33,145 23,843 30,295
Retained earnings 106,570 132,130 156,714
============================== ====== =========== =========== ============
Total equity 279,440 295,240 326,994
============================== ====== =========== =========== ============
Approved and authorised for issue by the Board on 27 September
2011
Ben White
Director
Unaudited Condensed Statement of Changes in Equity
for the six months ended 31 July 2011
Share Share Capital Hedge Shares Merger Retained Foreign Total
held
Capital Premium Redemption Accounting in Reserve Earnings Exchange
Reserve Reserve Trust Reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=================== ========= ========= ============ ============ ========= ========= ========== ========== ==========
At 1 February
2011 17,373 47,086 2,248 - (3,629) 76,907 156,714 30,295 326,994
=================== ========= ========= ============ ============ ========= ========= ========== ========== ==========
Exchanges
differences - - - - - - - 2,850 2,850
on translation
of foreign
currency net
investment
in subsidiaries
Differences on
valuation of
Swaps under
hedge
accounting - - - (260) - - - - (260)
Income tax on
share-based
Payments
- Deferred tax - - - - - - - - -
- Current tax - - - - - - - - -
Other
comprehensive
income/(expense) - - - (260) - - - 2,850 2,590
Loss for the
period - - - - - (37,239) - (37,239)
=================== ========= ========= ============ ============ ========= ========= ========== ========== ==========
Total
comprehensive
income/(expense) - - - (260) - - (37,239) 2,850 (34,649)
Issue of shares - - - - - - - - -
Purchase of
shares - - - - - - - - -
Exercise of
options - - - - - - - - -
Dividends paid - - - - - - (13,422) - (13,422)
Share-based
payment expense - - - - - - 517 - 517
At 31 July 2011 17,373 47,086 2,248 (260) (3,629) 76,907 106,570 33,145 279,440
=================== ========= ========= ============ ============ ========= ========= ========== ========== ==========
Unaudited Condensed Statement of Changes in Equity
for the six months ended 31 July 2010
Share Share Capital Shares Merger Retained Foreign Total
held
Capital Premium Redemption in Reserve Earnings Exchange
Reserve Trust Reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
================ ========= ========= ============ ========= ========= ========== ========== ==========
At 1 February
2010 17,333 46,662 2,248 (3,395) 76,907 164,426 27,374 331,555
================ ========= ========= ============ ========= ========= ========== ========== ==========
Exchanges
differences - - - - - - (3,531) (3,531)
on translation
of foreign
currency net
investment
in
subsidiaries
Income tax on
share-based
payments
- Deferred tax - - - - - - - -
- Current tax - - - - - - - -
Other
comprehensive
expense - - - - - - (3,531) (3,531)
Loss for the
period - - - - - (15,401) - (15,401)
================ ========= ========= ============ ========= ========= ========== ========== ==========
Total
comprehensive
expense - - - - - (15,401) (3,531) (18,932)
Issue of
shares 28 288 - - - - - 316
Purchase of
shares - - - (1,925) - - - (1,925)
Exercise of
options - - - 1,121 - (1,121) - -
Dividends paid - - - - - (13,541) - (13,541)
Share-based
payment
credit - - - - - (2,233) - (2,233)
At 31 July
2010 17,361 46,950 2,248 (4,199) 76,907 132,130 23,843 295,240
================ ========= ========= ============ ========= ========= ========== ========== ==========
Audited Condensed Statement of Changes in Equity
for the year ended 31 January 2011
Share Share Capital Shares Merger Retained Foreign Total
held
Capital Premium Redemption in Reserve Earnings Exchange
Reserve Trust Reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
================ ========= ========= ============ ========= ========= ========== ========== ==========
At 1 February
2010 17,333 46,662 2,248 (3,395) 76,907 164,426 27,374 331,555
================ ========= ========= ============ ========= ========= ========== ========== ==========
Exchange
differences - - - - - - 2,921 2,921
on translation
of foreign
currency net
investment
in
subsidiaries
Income tax on
share-based
payments
- Deferred tax - - - - - 370 - 370
- Current tax - - - - - 37 - 37
Other
comprehensive - - - - - 407 2,921 3,328
income - - - - - -
Profit for the
period - - - - - 15,653 - 15,653
================ ========= ========= ============ ========= ========= ========== ========== ==========
Total
comprehensive
income - - - - - 16,060 2,921 18,981
Issue of
shares 40 424 - - - - - 464
Purchase of
shares - - - (1,926) - - - (1,926)
Exercise of
options - - - 1,692 - (1,692) - -
Dividends paid - - - - - (20,073) - (20,073)
Share-based
payment
credit - - - - - (2,007) - (2,007)
At 31 January
2011 17,373 47,086 2,248 (3,629) 76,907 156,714 30,295 326,994
================ ========= ========= ============ ========= ========= ========== ========== ==========
Unaudited Condensed Consolidated Statements of Cash Flows
for the six months ended 31 July 2011
Restated
Six months Six months Year
Ended ended ended
31 July 31 July 31 January
2011 2010 2011
Unaudited Unaudited Audited
Note GBP'000 GBP'000 GBP'000
============================ ====== ============ ============ ============
Cash flow from operating
activities
Operating (loss) / profit (48,017) (18,812) 28,475
Equity-settled share-based
payment expense/(credit) 517 (2,233) (2,007)
Depreciation and
amortisation 14,884 14,737 30,521
Impairment of goodwill - - 3,354
Loss / (profit) on
disposal of non-current
assets 149 (689) 4,800
Market value movement
on financial instrument 314 - 5
============================ ====== ============ ============ ============
(32,153) (6,997) 65,148
Decrease in trade and
other receivables 2,310 3,604 (236)
Decrease in inventories 5,127 31,878 27,750
Decrease in trade and
other payables (160,915) (102,334) 38,623
Increase / (decrease)
in leasehold incentives (356) 204 198
============================ ====== ============ ============ ============
Cash (absorbed by) /
generated from operations (185,987) (73,645) 131,483
Finance costs paid (3,522) (2,822) (5,745)
Corporation tax paid (4,157) (7,685) (14,359)
============================ ====== ============ ============ ============
Net cash from operating
activities (193,666) (84,152) 111,379
============================ ====== ============ ============ ============
Cash flows from investing
activities
Purchase of property,
plant and equipment (1,712) (8,021) (9,763)
Purchase of intangible
assets (3,192) (2,752) (7,909)
Proceeds from sale of
equipment 1,110 1,544 2,396
Finance income received 73 161 375
============================ ====== ============ ============ ============
Net cash used in investing
activities (3,721) (9,068) (14,901)
============================ ====== ============ ============ ============
Cash flows from financing
activities
Proceeds from issue of
share capital - 316 464
Shares purchased for
Trust - (1,925) (1,926)
Payment of Term Loan (33,340) (8,330) (8,330)
Proceeds from Term Loan 30,000 - -
Receipt /(payment) of
other long-term
borrowings 103,944 79,709 (1,023)
Payment of finance lease
liabilities (74) (142) (475)
Dividends paid (13,422) (13,541) (20,073)
============================ ====== ============ ============ ============
Net cash used in financing
activities 87,108 56,087 (31,363)
============================ ====== ============ ============ ============
Net decrease in net cash
and cash equivalents (110,279) (37,133) 65,115
Cash and cash equivalents
at beginning of period 151,243 86,128 86,128
============================ ====== ============ ============ ============
Cash and cash equivalents
at end of period 12 40,964 48,995 151,243
============================ ====== ============ ============ ============
Notes to the Interim Results
1 General
The GAME Group plc is a company incorporated, domiciled and
registered in England and Wales and is listed on the London Stock
Exchange. The address of its registered office is Unity House,
Telford Road, Basingstoke, RG21 6YJ.
Basis of preparation
The financial information presented in this Interim Report has
been prepared in accordance with the accounting policies the Group
expects to be applicable at 31 January 2012. The Interim Report has
been prepared in accordance with those IFRS and IFRIC
interpretations issued and effective as at the time of preparing
the statement, and with the Disclosure and Transparency Rules of
the Financial Services Authority and with IAS 34, Interim Financial
Reporting, as adopted by the European Union. In line with this
standard, the financial statements are referred to as
condensed.
The results for the six months ended 31 July 2011 and the
comparative results for the six months ended 31 July 2010 are
unaudited. The financial information for the year ended 31 January
2011 does not constitute the full statutory accounts for that
period. The Annual Report and Financial Statements for the year
ended 31 January 2011 have been filed with the Registrar of
Companies. The Independent Auditors' Report on the Annual Report
and Financial Statements for the year ended 31 January 2011 was
unqualified, did not draw attention to any matters by way of
emphasis, and did not contain a statement under 498(2) or 498(3) of
the Companies Act 2006.
Accounting policies
The accounting policies used in preparing the Interim Report are
as set out in the statutory accounts for the year ended 31 January
2011. There have been no changes in accounting estimates.
Estimates and judgements
The preparation of financial statements in conformity with IFRS
requires management to make judgements, estimates and assumptions
that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of
revenues and expenses during the reporting period.
Significant items subject to such assumptions and estimates
include the useful lives of assets, the measurement and recognition
of provisions, the recognition of deferred tax assets and
liabilities for potential corporation tax. The most critical
accounting policies in determining the financial condition and
results of the Group are those requiring the greatest degree of
subjective or complex judgements. These relate to Droit au Bail;
lease costs; the valuation of goodwill and acquired intangible
assets; share-based payments and taxation. These also relate to
inventory valuation where the most complex area of judgement is in
respect of any obsolescence provision required. These are assessed
based on the stock of each item compared to demand.
The estimates and associated assumptions are based on historical
experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the
basis of making the judgements about carrying values of assets and
liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates.
Changes in accounting policies
In the current year, the Group has revised its policy for hedge
accounting. The Group uses derivative financial instruments to
hedge its exposure to cash flow interest rate risks. Derivatives
are initially recognised at fair value on the date on which the
derivative contract is entered into and are subsequently
re-measured at fair value.
Derivatives are classified either as derivatives in effective
hedges or held for trading. It is anticipated that, generally, all
hedging arrangements will be 'highly effective' within the meaning
of IAS 39 and that the criteria necessary for applying hedge
accounting will be met. Hedges are assessed on an ongoing basis to
ensure they continue to be effective.
The gain or loss on the portion of an instrument that qualifies
as an effective hedge of cash flow interest rate risk is recognised
directly in other comprehensive income. The gain or loss on
derivative financial instruments which are classified as held for
trading, because they are not effective hedges, is recognised in
the income statement.
In the prior year, the Group revised its accounting policy for
the classification of Droit au Bail (a type of French key money).
The balance of GBP32,533,000 at 31 January 2010 was previously
classified within "Short leasehold land and property" as the
payments confer onto the Group many rights similar to those
associated with a leasehold. These assets are assessed as having an
indefinite useful life and the carrying value is tested for
impairment. In light of proposed amendments to accounting for
leases, the nature of these assets has been reviewed and the
accounting policy revised to classify Droit au Bail within
Intangible Assets.
There was no effect on the equity, or results of the Group
arising from the revision of this policy. The financial position
and cash flows for the period to 31 July 2010 of the Group have
been re-stated to show the revised disclosure within Non-current
Assets.
Notes to the Interim Results
1 General (continued)
Adoption of new and revised standards
Standards and interpretations effective in the current
period
In the current period the Group has adopted the following
standards:
Effective
International Accounting Standards (IAS/IFRS) Date
====================================================== ============
IFRS
1 First-time adoption of IFRS amendment 01/07/2010
IAS 24 Related Party Disclosures amendment 01/01/2011
Improvements to IFRSs Various
There has been no effect on the results, cash flows, financial
position of the Group or their presentation as a result of the
adoption of these standards.
Two interpretations issued by the International Financial
Reporting Interpretations Committee are effective for the current
year as follows:
International Financial Reporting Interpretations
Committee (IFRIC) Effective Date
======================================================= ================
IFRIC Extinguishing Financial Liabilities
19 with Equity Instruments 01/07/2010
IFRIC The limit on a defined benefit asset,
14 and minimum funding requirements
IAS 19 and their interaction amendment 01/01/2011
The adoption of these Interpretations has not led to any changes
in the Group's accounting policies.
Notes to the Interim Results (continued)
1 General (continued)
Standards and Interpretations in issue not yet adopted
The International Accounting Standards Board and the
International Financial Reporting Interpretations Committee have
issued the following standards and interpretations to be applied to
financial statements with periods commencing on or after the
following dates:
Effective
International Accounting Standards (IAS/IFRS) Date
============================================================== =============
IFRS Disclosure of transfers of financial
7* assets amendment 01/07/2011
IFRS Severe hyperinflation and removal of
1* fixed dates for first-time adopters 01/07/2011
amendment
Deferred tax: recovery of underlying
IAS 12* assets amendment 01/01/2012
Presentation of Items of Other Comprehensive
IAS 1* Income Amendment 01 /07/2012
IFRS
9* Financial Instruments 01/01/2013
IFRS
10* Consolidated Financial Statements 01/01/2013
IFRS
11* Joint Arrangements 01/01/2013
IFRS
12* Disclosure of Interests in Other Entities 01/01/2013
IFRS
13* Fair Value Measurement 01/01/2013
IAS 27* Separate Financial Statements Amendment 01/01/2013
Investments in Associates and Joint Ventures
IAS 28* Amendment 01/01/2013
IAS 19* Employee Benefits Amendment 01/01/2013
*These standards are not endorsed by the EU at present.
The Directors do not anticipate that the adoption of these
standards will have a material impact on the Group's financial
statements in the period of initial application.
Notes to the Interim Results (continued)
2 Revenue, profit and net assets
Revenue, pre-tax profits and net assets all relate to the retail
of pc and video game products and the Group's operations are
organised and managed by geographic location only. Management
consider the reportable operating segments in accordance with IFRS
8 to be split between the UK and Ireland Stores, International
Stores, and Global Online. Management do not consider there to be
any major individual customers of the Group.
Revenue by origin and destination are not materially different.
Inter-segment transactions between operating segments are entered
into on an arms-length basis in a manner similar to transactions
with third parties.
The Group's business is seasonal with the key trading period
being the Christmas season.
United
Kingdom
and Ireland International Global
stores stores online Total
Six months Six months Six months Six months
ended ended ended ended
31 July 31 July 31 July 31 July
2011 2011 2011 2011
Unaudited Unaudited Unaudited Unaudited
GBP'000 GBP'000 GBP'000 GBP'000
Revenue 310,024 214,106 34,670 558,800
Cost of sales 229,700 159,432 33,693 422,825
Gross profit 80,324 54,674 977 135,975
Other operating
expenses
excluding
inter-segment
expenses (101,434) (74,944) (4,632) (181,010)
Inter-segment
expenses - - - -
Operating loss
before
non-recurring
costs (21,110) (20,270) (3,655) (45,035)
Non-recurring
costs (2,297) (685) - (2,982)
Operating loss (23,407) (20,955) (3,655) (48,017)
================== ============= =============== ============ ============
Net finance
costs excluding
inter-segment (3,213) (236) - (3,449)
Inter-segment
finance costs 2,363 (2,363) - -
Taxation 6,793 6,636 798 14,227
Loss after tax (17,464) (16,918) (2,857) (37,239)
================== ============= =============== ============ ============
Other segmental
information:
Goodwill and
other
intangibles 151,075 54,116 6,559 211,750
Other assets 127,380 209,970 7,096 344,446
================== ============= =============== ============ ============
Assets 278,455 264,086 13,655 556,196
Liabilities (107,525) (167,730) (1,501) (276,756)
Net assets 170,930 96,356 12,154 279,440
================== ============= =============== ============ ============
Capital
expenditure 2,164 1,104 1,636 4,904
================== ============= =============== ============ ============
Depreciation and
amortisation 7,505 5,546 1,833 14,884
================== ============= =============== ============ ============
Share-based
payment
expense 517 - - 517
================== ============= =============== ============ ============
Notes to the Interim Results (continued)
2 Revenue, profit and net assets(continued)
United
Kingdom
and Ireland International Global
stores stores online Total
Six months Six months Six months Six months
ended ended ended ended
31 July 31 July 31 July 31 July
2010 2010 2010 2010
Re-stated Re-stated Re-stated Re-stated
Unaudited Unaudited Unaudited Unaudited
GBP'000 GBP'000 GBP'000 GBP'000
Revenue 352,253 238,409 33,888 624,550
Cost of sales (254,538) (177,855) (30,068) (462,461)
Gross profit 97,715 60,554 3,820 162,089
Other operating
expenses
excluding
inter-segment
expenses (99,276) (73,468) (5,451) (178,195)
Inter-segment
expenses - - - -
Operating loss
before
non-recurring
costs (1,561) (12,914) (1,631) (16,106)
Non-recurring
costs - (2,706) - (2,706)
Operating loss (1,561) (15,620) (1,631) (18,812)
================== ============= =============== ============ ============
Net finance
costs excluding
inter-segment (2,582) (79) - (2,661)
Inter-segment
finance costs 1,638 (1,638) - -
Taxation 3,112 2,613 347 6,072
Profit / (loss)
after tax 607 (14,724) (1,284) (15,401)
================== ============= =============== ============ ============
Other segmental
information:
Goodwill and
other
intangibles 141,577 59,039 9,384 210,00
Other assets 133,174 220,315 12,739 366,228
================== ============= =============== ============ ============
Assets 274,751 279,354 22,123 576,228
Liabilities (96,564) (173,814) (10,610) (280,988)
Net assets 178,187 105,540 11,513 295,240
================== ============= =============== ============ ============
Capital
expenditure 1,260 3,074 6,439 10,773
================== ============= =============== ============ ============
Depreciation and
amortisation 8,010 5,389 1,338 14,737
================== ============= =============== ============ ============
Share-based
payment credit (2,233) - - (2,233)
================== ============= =============== ============ ============
Notes to the Interim Results (continued)
2 Revenue, profit and net assets (continued)
United
Kingdom
and Ireland International Global
stores stores online Total
Year ended Year ended Year ended Year ended
31 January 31 January 31 January 31 January
2011 2011 2011 2011
Audited Audited Audited Audited
GBP'000 GBP'000 GBP'000 GBP'000
Revenue 935,320 594,566 95,148 1,625,034
Cost of sales (673,286) (442,821) (81,531) (1,197,638)
Gross profit 262,034 151,745 13,617 427,396
Other
operating
expenses
excluding
inter-segment
expenses (223,222) (149,170) (11,796) (384,188)
Inter-segment
expenses 3,619 (3,619) - -
Operating
profit /
(loss) before
non-recurring
costs 42,431 (1,044) 1,821 43,208
Non-recurring
costs - (14,733) - (14,733)
Operating
profit /
(loss) 42,431 (15,777) 1,821 28,475
================ ============= =============== ============= =============
Net finance
costs
excluding
inter-segment (5,208) (162) - (5,370)
Inter-segment
finance
costs 3,503 (3,503) - -
Taxation (5,384) (2,068) - (7,452)
Profit /
(loss) after
tax 35,342 (21,510) 1,821 15,653
================ ============= =============== ============= =============
Other
segmental
information:
Goodwill and
other
intangibles 155,693 53,584 598 209,875
Other assets 189,088 258,600 14,777 462,465
================ ============= =============== ============= =============
Assets 344,781 312,184 15,375 672,340
Liabilities (143,482) (201,500) (364) (345,346)
Net assets 201,299 110,684 15,011 326,994
================ ============= =============== ============= =============
Capital
expenditure 8,222 5,032 4,418 17,672
================ ============= =============== ============= =============
Depreciation
and
amortisation 15,774 12,079 2,668 30,521
================ ============= =============== ============= =============
Impairment of
goodwill - 3,354 - 3,354
================ ============= =============== ============= =============
Share-based
payment
credit (2,007) - - (2,007)
================ ============= =============== ============= =============
Notes to the Interim Results (continued)
2 Revenue, profit and net assets (continued)
Six months Six months
ended ended
31 July 31 July
2011 2010
Total Total
% of % of
GBP'000 Total GBP'000 Total
================ ============ ======== ============ ============
Revenue
Hardware 98,463 17.6 115,830 18.5
Software 212,781 38.1 249,070 39.9
================ ============ ======== ============ ============
New hardware
and software 311,244 55.7 364,900 58.4
Preowned 168,366 30.1 171,497 27.5
Other 79,190 14.2 88,153 14.1
================ ============ ======== ============ ============
Total 558,800 100.0 624,550 100.0
================ ============ ======== ============ ============
Six months Six months
ended ended
31 July 31 July
2011 2010
Total Total
% of % of
GBP'000 Total GBP'000 Total
================ ============ ======== ============ ============
Gross margin
New hardware
and software 51,966 38.2 70,813 43.7
Preowned 66,990 49.3 66,100 40.8
Other 17,019 12.5 25,176 15.5
================ ============ ======== ============ ============
Total 135,975 100.0 162,089 100.0
================ ============ ======== ============ ============
Six months Six months
ended ended
31 July 31 July
2011 2010
Total Total
% %
================ ============ ======== ============ ============
Gross margin
New hardware
and software 16.7 19.4
Preowned 39.8 38.5
Other 21.5 28.6
================ ============ ======== ============ ============
Total Group 24.3 26.0
================ ============ ======== ============ ============
Notes to the Interim Results (continued)
2 Revenue, profit and net assets (continued)
Six months Six months Year
ended ended ended
31 July 31 July 31 January
2011 2010 2011
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Revenue by territory
United Kingdom and Ireland 310,024 352,253 935,320
France 57,397 65,259 163,441
Iberia 108,970 115,092 300,823
Scandinavia 17,326 21,786 48,963
Australia 26,240 32,861 71,568
Czech Republic 4,173 3,411 9,771
==================================== ============ ============ ============
Total Stores 524,130 590,662 1,529,886
Total Online 34,670 33,888 95,148
==================================== ============ ============ ============
Total Revenue 558,800 624,550 1,625,034
==================================== ============ ============ ============
Number Number Number
==================================== ============ ============ ============
Stores by territory
United Kingdom and Ireland 615 635 639
France 195 198 197
Iberia 292 287 287
Scandinavia 62 68 65
Australia 92 118 93
Czech Republic 30 31 31
==================================== ============ ============ ============
1,286 1,337 1,312
==================================== ============ ============ ============
Franchises
Australia 1 1 1
==================================== ============ ============ ============
1 1 1
==================================== ============ ============ ============
Sq ft Sq ft Sq ft
==================================== ============ ============ ============
Trading square footage by
territory
United Kingdom and Ireland 737,452 756,292 760,591
France 182,589 183,622 183,547
Iberia 238,971 236,988 236,389
Scandinavia 64,035 69,575 67,209
Australia 103,039 129,304 104,050
Czech Republic 18,021 18,494 18,494
==================================== ============ ============ ============
1,344,107 1,394,275 1,370,280
==================================== ============ ============ ============
Notes to the Interim Results (continued)
3 Other operating expenses
Six months Six months Year
ended ended ended
31 July 31 July 31 January
2011 2010 2011
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
=========================== ============ ============ ============
Selling and distribution 152,472 156,306 316,078
Administrative expenses 31,520 24,595 82,843
=========================== ============ ============ ============
183,992 180,901 398,921
=========================== ============ ============ ============
Administrative expenses include non-recurring costs of
GBP2,982,146 (2010 interim: GBP2,706,251; full year GBP14,732,620).
Current year non-recurring costs relate to strategic store change
programme. Prior year interim and full year non-recurring costs
relate to the restructuring of the Australian and French
businesses.
Notes to the Interim Results (continued)
4 Taxation
The UK corporation tax charge has been included at an underlying
corporation tax rates in line with the previous year
Six months Six months Year
ended ended ended
31 July 31 July 31 January
2011 2010 2011
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Current tax
UK corporation tax (credit) /
expense (14,140) (7,249) 7,513
Adjustments in respect of prior
periods - - (5,182)
Overseas tax payable (87) 1,177 4,784
==================================== ============ ============ ============
Total current tax (14,227) (6,072) 7,115
Deferred tax
Current year movement - - (641)
Change in tax rates - - 173
Prior year movement - - 805
==================================== ============ ============ ============
Total deferred tax - - 337
==================================== ============ ============ ============
Taxation on profit on ordinary
activities (14,227) (6,072) 7,452
==================================== ============ ============ ============
Notes to the Interim Results (continued)
5 Dividends
Six months Six months Year
ended ended ended
31 July 31 July 31 January
2011 2010 2011
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
===================== ============ ============ ============
Ordinary dividends
Final paid 13,422 13,541 13,541
Interim paid - - 6,532
===================== ============ ============ ============
13,422 13,541 20,073
===================== ============ ============ ============
The interim dividend in relation to the period ended 31 July
2011 of 1.88p per share (31 July 2010: 1.88p per share) was
declared on 27 September 2011 and is payable on 17 November 2011 to
shareholders on the register on 21 October 2011. This dividend is
therefore not included in the above.
Notes to the Interim Results (continued)
6 Earnings per share
The calculation of earnings per share for the six months ended
31 July 2011 is based on the loss after taxation of GBP37,238,599
(2010 interim: loss GBP15,400,763; full year profit GBP15,652,502).
The calculation of basic earnings per share is based on a weighted
average number of shares in issue during the period of 347,461,388
(2010 interim: 346,899,493; full year: 347,170,991). The number of
shares used in these calculations and the reconciliation of
denominators used for basic and diluted earnings per share
calculations is set out in the table below:
Effect
of
Basic share options Diluted
================== ============= =============== =============
31 July 2011 347,461,388 87,688 347,549,076
================== ============= =============== =============
31 July 2010 346,899,493 156,558 347,056,051
================== ============= =============== =============
31 January 2011 347,170,991 38,242 347,209,233
================== ============= =============== =============
Additional disclosure has been provided in respect of earnings
per share before non-recurring costs as the directors believe this
gives a better view of ongoing maintainable earnings in the prior
year.
As at As at As at
31 July 31 July 31 January
2011 2010 2011
Unaudited Unaudited Audited
Pence Pence Pence
====================================== =========== =========== ============
Basic earnings per share (10.72) (4.44) 4.51
Non-recurring costs per share 0.86 0.78 4.24
====================================== =========== =========== ============
Basic earnings per share before
non-recurring costs (9.86) (3.66) 8.75
Diluted earnings per share (10.72) (4.44) 4.51
Non-recurring costs per share 0.86 0.78 4.24
====================================== =========== =========== ============
Diluted earnings per share before
non-recurring costs (9.86) (3.66) 8.75
====================================== =========== =========== ============
There are 863,435 anti-dilutive share options in the current
period (2010 interim: 653,297; full year 475,452).
Notes to the Interim Results (continued)
7 Property, plant and equipment
As at As at As at
31 July 31 July 31 January
2011 2010 2011
Unaudited Unaudited Audited
Restated
GBP'000 GBP'000 GBP'000
============================== =========== =========== ============
Cost
Balance brought forward 261,873 266,635 266,635
Additions 1,712 8,021 9,763
Disposals (6,731) (2,336) (18,657)
Foreign exchange adjustment 2,670 (1,541) 4,132
============================== =========== =========== ============
Balance carried forward 259,524 270,779 261,873
============================== =========== =========== ============
Depreciation
Balance brought forward 152,751 138,047 138,047
Charge for the period 12,921 11,578 25,404
Disposals (5,742) (1,929) (12,201)
Foreign exchange adjustment 1,372 (824) 1,501
============================== =========== =========== ============
Balance carried forward 161,302 146,872 152,751
============================== =========== =========== ============
Carrying amount 98,222 123,907 109,122
============================== =========== =========== ============
Notes to the Interim Results (continued)
8 Intangible fixed assets
As at As at As at
31 July 31 July 31 January
2011 2010 2011
Unaudited Unaudited Audited
Restated
GBP'000 GBP'000 GBP'000
============================== =========== =========== ============
Cost
Balance brought forward 226,418 225,544 225,544
Additions 3,192 2,752 7,909
Disposals (322) (450) (4,776)
Foreign exchange adjustment 1,012 (1,803) (2,259)
============================== =========== =========== ============
Balance carried forward 230,300 226,043 226,418
============================== =========== =========== ============
Depreciation
Balance brought forward 16,543 12,876 12,876
Charge for the period 1,963 3,159 5,117
Disposals/impairments (52) - (682)
Foreign exchange adjustment 96 8 (768)
============================== =========== =========== ============
Balance carried forward 18,550 16,043 16,543
============================== =========== =========== ============
Carrying amount 211,750 210,000 209,875
============================== =========== =========== ============
Notes to the Interim Results (continued)
9 Trade and other receivables
As at As at As at
31 July 31 July 31 January
2011 2010 2011
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
====================================== =========== =========== ============
Amounts falling due within one year:
Trade receivables 11,752 13,895 11,660
Other receivables 15,457 12,123 14,852
VAT recoverable 632 1,616 -
====================================== =========== =========== ============
Total trade and other receivables 27,841 27,634 26,512
Prepayments and accrued income 18,388 17,078 22,026
====================================== =========== =========== ============
46,229 44,712 48,538
====================================== =========== =========== ============
10 Trade and other payables
As at As at As at
31 July 31 July 31 January
2011 2010 2011
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
====================================== =========== =========== ============
Amounts falling due within one year:
Trade payables 77,919 83,645 201,009
Other payables 8,011 11,021 9,619
Tax and social security costs 4,444 5,450 8,022
VAT payables 11,768 13,315 32,792
Accruals and deferred income 31,420 43,466 43,128
====================================== =========== =========== ============
133,562 156,897 294,570
====================================== =========== =========== ============
Notes to the Interim Results (continued)
11 Long-term borrowings
As at As at As at
31 July 31 July 31 January
2011 2010 2011
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
=================================== =========== =========== ============
Current portion
Bank loans 109,167 96,424 15,727
Obligations under finance leases
and hire purchase contracts 74 360 148
=================================== =========== =========== ============
109,241 96,784 15,875
=================================== =========== =========== ============
Non-current portion
Bank loans 22,722 15,594 15,559
Obligations under finance leases
and hire purchase contracts - 120 -
=================================== =========== =========== ============
22,722 15,714 15,559
=================================== =========== =========== ============
12 Analysis of net (debt) / funds
As at As at As at
31 July 31 July 31 January
2011 2010 2011
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
====================================== =========== =========== ============
Cash and cash equivalents 40,964 48,995 151,243
====================================== =========== =========== ============
Net cash and cash equivalents 40,964 48,995 151,243
Current portion of long-term
borrowings (109,241) (96,784) (15,875)
Long-term borrowings (22,722) (15,714) (15,559)
====================================== =========== =========== ============
Net (debt) / funds (90,999) (63,503) 119,809
====================================== =========== =========== ============
Notes to the Interim Results (continued)
13 Called-up share capital
2011 2010
======================== ========================
GBP'000 Number GBP'000 Number
========================== ========= ============= ========= =============
Authorised
Ordinary shares of 5p 24,000 480,000,000 24,000 480,000,000
========================== ========= ============= ========= =============
Allotted, called-up and
fully paid
Ordinary shares of 5p 17,373 347,461,388 17,361 347,213,312
========================== ========= ============= ========= =============
Shares issued
During the period, no (2010 interim: 554,145; full year:
802,221) shares were issued to employees exercising share options
granted under various option schemes. The total consideration
received on the exercise of these options was GBPnil (2010 interim:
GBP315,879; full year: GBP464,158).
Trust shares
During the period no shares (2010 interim: 2,000,000; full year:
2,000,000) were purchased at a cost of GBPnil (2010 interim:
GBP1,925,800; full year: GBP1,925,800). These shares are to be used
wholly and exclusively to pay LTIP awards when they become due for
payment.
Trust shares comprise 3,297,275 (2010 interim: 3,684,073; full
year: 3,297,275) 5p ordinary shares. The market value of these
shares at 31 July 2011 is GBP923,237 (2010 interim: GBP2,652,533;
full year: GBP2,209,174).
14 Share Premium account
As at As at As at
31 July 31 July 31 January
2011 2010 2011
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
===================================== =========== =========== ============
Amount subscribed for share
capital in excess of nominal
value
At 1 February 47,086 46,662 46,662
Arising on issue of shares
during the year (net of expenses) - 288 424
===================================== =========== =========== ============
47,086 46,950 47,086
===================================== =========== =========== ============
15 Related party transactions
There were no related party transactions within the period.
Notes to the Interim Results (continued)
16 Principal risks and uncertainties
Risk at GAME
Our Board believes that recognising and managing risks is the
key to an effectively run business. The monitoring of risk is
delegated to the Audit Committee which has tasked the business with
capturing and reporting on risk in a consistent manner across the
Group. The methodology is both bottom up, with detailed risk
reports on all operating matters being sent from each territory,
and top down, with senior management identifying all risks that
could potentially prevent us from delivering our agreed strategy.
Every identified risk is examined and mitigating activities are put
in place. A risk report is presented to the Audit Committee half
yearly.
Risk Type Impact Risk Mitigation
------------------------- ----------------------- --------------------------
Technology Speed of The digital world We are investing
change and growth of is evolving quickly. in the mobile and
technology in the If we do not digital future
market place adapt to the to ensure we can
changes we run serve our customers
the risk of failing in whichever medium
to deliver a they wish to purchase
truly multichannel games, be that
offering to our digital download,
customers. web or in store.
------------------------- ----------------------- --------------------------
Competition The pc and If we are unable We use a suite of
video games market to compete we specialist tools to give
continues to be an run the risk customers great value.
attractive place to do of losing our We recognise that this
business. Our customers and is not always direct
competition comes in our market share. price cuts. This is
many guises. A where our position as a
relatively new entrant specialist in the market
to the games market is place must give us the
found in the mobile edge. We strive to find
operators selling exclusive offerings for
directly to consumers our customers that they
whilst supermarkets cannot get anywhere
continue to discount else. Our preowned
heavily or run offerings, trade-in
short-term loss leading promotions and the use
campaigns on newly of loyalty card points
released products. We as currency allows our
also have our more customers to enjoy
traditional competition popular and new products
from other specialists at great value.
and online players.
------------------------- ----------------------- --------------------------
Reputational We have Damage to our We protect our
built up customer reputation could reputation by ensuring
loyalty over many lead to loss that our staff
years. GAME and of revenue and are highly trained
Gamestation are trusted shareholder value. and know their
brands. Our customers obligations to
demand that we stock protect and respect
the broadest range of our customers.
products but trust us We demand that
to sell those products our teams follow
appropriately. Some of regular rigorous
our video games, for training programmes,
instance, are age and adhere to strict
restricted and policies and procedures
mis-selling is illegal. relating to age-rated
Through our loyalty products, and data
card programmes we have protection.
built up a valuable
database of information
about our customers.
Our customers give us
personal information so
that we can keep them
up to date with offers
and new releases of
interest to them. It is
vital that this data is
protected and secure.
------------------------- ----------------------- --------------------------
Notes to the Interim Results (continued)
16 Principal risks and uncertainties (continued)
Risk Type Impact Risk Mitigation
-------------------------- ---------------------- --------------------------
Major Business Like all businesses All parts of our
Interruption any disruption business, in every
to our capacity territory, have put
to do business together business
will affect our continuity plans to
profitability. ensure we are able to
trade through
challenges. This was put
to the test recently in
the UK when adverse
weather conditions close
to Christmas threatened
to disrupt our supply
chains. Our processes
worked, and business
interruption was
minimised.
-------------------------- ---------------------- --------------------------
People and Change Business change Every aspect of
cannot be delivered the Group's reward
if we fail to and development
attract, develop programmes is regularly
and retain the reviewed to ensure
right people that it keeps pace
in the right with our business
roles. needs and market
conditions. Our
Group HR Director
works closely with
the Remuneration
Committee to ensure
best practice across
the Group.
-------------------------- ---------------------- --------------------------
Directors and advisers
Directors
Christopher Bell Non-Executive Chairman
Ian Shepherd Chief Executive
Ben White ACA Group Finance Director
Ishbel Macpherson Senior Non-Executive Director
Dana Dunne Non-Executive Director
Martin Davies Non-Executive Director
Russ Shaw Non-Executive Director
Secretary
Vivienne Hemming ACIS
Registered office
Unity House, Telford Road, Basingstoke RG21 6YJ
Stockbrokers
Deutsche Bank, Winchester House,
1 Great Winchester Street, London EC2N 2DB
Peel Hunt LLP, 111 Old Broad Street
London EC2N 1PH
Principal Bankers
The Royal Bank of Scotland plc,
Thames Valley Corporate Banking Centre,
Abbey Gardens, 4 Abbey Street, Reading RG1 3BA
Independent auditors
BDO LLP, 55 Baker Street,
London W1U 7EU
Registrars and transfer office
Capita Registrars, Northern House,
Woodsome Park, Fenay Bridge, Huddersfield HD8 0GA
Corporate website
www.gamegroup.plc.uk
Registered number
875835
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR PGUBCBUPGGQQ
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