24th Mar 2015 07:52
LONDON (Alliance News) - GAME Digital PLC Tuesday reported lower profits and revenue for the first half of its financial year, after it was hit by difficult trading over the key Christmas period, and it also warned that 2015 has got off to a slower start than it had expected although it's hoping for a pickup in coming weeks.
It sweetened the news by declaring a maiden interim dividend of 7.35 pence a share and a special dividend of 14.7 pence, or GBP25 million, a move it said reflected its longer-term prospects and a strong cash position.
The video game and console retailer reported a pretax profit of GBP33.2 million for the 26 weeks to January 24, down from GBP33.8 million a year earlier, as revenue slipped to GBP582.1 million from GBP586.4 million. Its closely-watched earnings before interest, tax, depreciation and amortisation, also stripping out items including exceptional costs and restructuring costs, fell to GBP43.0 million, from GBP51.3 million, as margins came under pressure as it bundled more games with consoles and costs rose as it invested in its online strategy.
Still, it generated cash from operations of GBP66.7 million, up from GBP44.5 million a year earlier, and it swung to a net cash position of GBP140.4 million compared with a net debt of GBP48.6 million at the end of the previous first half.
The company is focusing on developing a digital strategy as its high-street stores in the UK and Spain continue to struggle amid tough competition and as gamers increasingly switch to online gaming.
GAME said it had a strong first quarter of the financial year, but then faced a highly competitive key Christmas trading period in the UK and weaker market conditions in Spain, meaning profits and sales were below its own hopes for the first half as a whole.
It also said the UK market has been slower than it hoped so far in the second half of the year, but it hopes business will pick up as new games are released for the Xbox One and PlayStation 4 consoles.
"The video games market in the UK has started 2015 more slowly than we anticipated, however we continue to maintain our strong market shares and expect activity in the UK to pick up in coming weeks, driven by promotional campaigns around Easter and the launch of a number of key titles," it said.
"Our costs remain well controlled and we anticipate a modest positive impact to percentage gross margin in the second half, driven by our pre-owned performance. Overall, management expects the Group to deliver adjusted Ebitda for the full year within the range of current market expectations," it added.
By Steve McGrath; [email protected]; @stevemcgrath1
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