Game Digital has performed well in a challenging market. EBITDA for the full year was £10.1m, a 26% rise against FY17, and in line with the pre-close guidance. The second half more than reversed the 9% year-on-year decline in the first.
Achievement of full-year cost saving initiatives was key to the result. Further savings are in the pipeline, as the company has over 200 potential lease events by the end of 2019 out of a UK store estate of 276.
Management is focused on the BELONG gaming arena initiative, which is designed to position the concept as a national market leader in e-sports. Since the February collaboration agreement with Sports Direct, which included a substantial £55m financing package, the roll-out of BELONG has been Game Digital’s key strategic objective.
In its existing 21 sites the concept has demonstrated high occupancy, high margin and low capex. Detailed planning has now been completed, and the first two arenas following the agreement opened in Westfield Stratford in August and Lakeside Thurrock in October.
Neither the core retail business nor the prospects for BELONG are recognised in GMD’s share price, which at 29p at yesterday’s close is less than its net cash of 33p per share.