2017/18 INTERIM RESULTS 27 MARCH 2018
GAME DIGITAL PLC – INTERIM RESULTS 2017/18 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 forward-looking 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
MARTYN GIBBS Chief Executive Officer 3
GAME DIGITAL PLC – INTERIM RESULTS 2017/18 H1 Group headlines Strategic progress made across the Group Redefining the Group through BELONG which is not exposed to the traditional console gaming • cycle, has high margins and a unique position in the significant growth area of esports Collaboration agreement signed with Sports Direct on 12 February 2018, which will accelerate • transformation of the business Sale of Multiplay Digital during H1 for £19 million • Positive UK & Spanish GTV trading performance, with reported GTV up +3.8% GTV improvement of +24.7% in hardware • Physical software GTV up +3.3% • GTV in Events and Esports (excluding Digital) up +31.5% • Preowned decline of (8.6)% reflecting 2016/17 release schedule • Increased level of cost savings and operational improvements delivered UK retail costs reduced by £5 million year on year • Continued focus on costs and property optimisation, with 272 lease events over the next 2 years • Even greater efficiencies and savings being implemented during H2 that will completely right size • the business Cash & liquidity position improved Group remains well funded with net cash of £84.9 million • Total current facilities increased to up to c£130 million on signing of collaboration agreement • 4
1 GAME DIGITAL PLC – INTERIM RESULTS 2017/18 Our proposition exploits all elements of esports Professional / Elite Fewer participation, greater viewership 2 GLOBAL PRO 1 UK PRO 3 2 AMATEUR Tournaments 3 GRASSROOTS Tournaments 4 Casual / Amateur 4 COMPETITIVE GAMING EXPERIENCE Higher participation, Low viewership Customer Proposition B2B Proposition 6
GAME DIGITAL PLC – INTERIM RESULTS 2017/18 BELONG overview and trajectory Average Gaming Hours per Improved retail performance Overview week per arena 5.6% improved core retail LFL performance in Q2 400 BELONG is the leader in local and • regional esports whilst driving GAME Customer type & spend revenues 350 24% of customers are new to GAME Expanded to 19 locations alongside 36% of them are ‘Big Time Spenders • GAME retail with wide geographical 300 +58% 56% of customers are under 30 spread £364 Av. annual customer value (GAME £192) Relatively low capex with high ROI and 250 • fast payback +38% Gaming hours & utilisation 370 average store gaming hours per week 200 Creates a very high margin profile for • 176,000 gaming hours in H1 pay to play Arenas have held over 450 parties 150 Margin rate of arenas circa. 45% across • 28.5% utilisation across all arenas pay to play, PC hardware and food & beverage 100 Attracting high value PC gamers 27% purchase PC products 50 £5.1k av. store per week through PC categories 0 FY17 H1 FY17 H2 FY18 H1 7
GAME DIGITAL PLC – INTERIM RESULTS 2017/18 Core elements of the proposition Venues Infrastructure Tournaments 1 2 3 19 BELONG Locations BELONG.gg Website Booking Platform UK Masters (Semi-pro streamed Tournament Platform BELONG Arenas tournament) Insomnia Gaming Festival Studio & Production BELONG Arena Clash Player Support Retail Team 4 5 6 Tribes PC, hardware, accessories, digital Team partnerships GAME has the required specialist VR and merchandise Industry and charity collaborations gaming resource Food and drink 8
GAME DIGITAL PLC – INTERIM RESULTS 2017/18 BELONG illustrative financials Number of Hours Price Per Annual Pay To Other Total Operating Stations Utilisation Hour Play Revenue Revenue Revenue Margin Collaboration The annual pay to play Assumed average price Average pay to play Average arena retail Average total revenue GAME share of average Agreement allows for hours per desk per paid for every hour of revenue per arena is sales of £500k per per arena is £700k pa annual operating larger arenas going arena are 1,156 gameplay is £4.50 c.£200k large arena pa margin per large arena forward with c.40 c.23% Each arena includes desks or more 78 hours per week, per Including activities such £150k - £175k additional sales for arena x 52 weeks x as: Food and Beverage, PC Each location also Our most recent average large arena Desk hire • hardware, accessories, generates profits from openings have been of utilisation c.28.5% Party hire • digital and Virtual GAME Retail (including large arenas with 24- Arena Clash • Reality potential incremental 36 desks uplifts) Stations Growth Utilisation Growth Price Per Hour Growth Capex Cumulative BELONG PC Gaming Desk Utilisation % Gross Price Per gaming hour Std Pay to Play Parties Desks £8.00 30.0% Desk P2P Average capex per 340 £7.00 large BELONG/ GAME 25.0% +10.8% £350k 330 £6.00 20.0% 320 £5.00 +4.7% Average arena capex £230k and average 310 £4.00 15.0% 28.5% retail capex of £120k 334 300 £3.00 10.0% 18.7% Average payback per £4.23 £7.48 £4.43 £4.19 £3.97 £6.75 290 £2.00 large BELONG/ GAME 5.0% 294 c.2 - 2.5 years 280 £1.00 +5.5% 270 0.0% £0.00 FY17 H2 FY18 H1 FY17 H2 FY18 H1 FY17 H2 FY18 H1 9
GAME DIGITAL PLC – INTERIM RESULTS 2017/18 Broad spectrum of games and support NEW PUBLISHER AND DEVELOPER PARTNERS LONG STANDING PUBLISHER PARTNERS INVESTING Most participated PC Games in Titles participated arenas are the largest esports titles from BETA UK World team meet & • greet Arena Clash title Publisher: Epic Games Publisher: Riot Games • Publisher: Valve 1 st birthday promotion Released: 2017 Released: 2009 Released: 2012 • Status: Status: Overwatch league viewing Status: Available to play 6 x PlayStation arenas • Pay to play live • • parties Pay to play live Streams from BELONG • launched • • Full launch events for: League Unlocked Monthly • • • Mass Effect Andromeda, (access to content) 6x PSVR executions tournaments • FIFA 18, Star Wars Arena Clash title Team partnerships Third party event & • • • Battlefront II Team partnerships tournament support • Merchandise Madden 2018 tournament • First party title • • & stream WWII launch events tournaments • Players signings for FIFA & WWII BETA event • • NFL 2018 WWII DLC event • Publisher: BlueHole Arena Clash activity CWL • Released: 2017 tie in Status: P2P tournament agreement • Monthly tournaments • Merchandise • BELONG delivers participation in major established esports titles and new releases 10
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