TIDMGMG
RNS Number : 5259K
Game Group PLC
21 April 2010
THE GAME GROUP PLC
Preliminary Results
Highlights
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THE GAME GROUP PLC, Europe's leading retailer of pc and video games products,
today announces Preliminary Results for the 52 weeks ended 31 January 2010.
Preliminary Results for the 52 weeks ended 31 January 2010
Highlights
+----------------------------------+---------+---------+--------+
| All figures in GBP'm (unless | 52 | 53 | Var% |
| stated) | Weeks | weeks | |
| | ended | ended | |
| | 31 | 31 | |
| | January | January | |
| | 2010 | 2009 | |
| | | | |
| | | | |
+----------------------------------+---------+---------+--------+
| Group turnover | 1,772.4 | 1,968.6 | -10.0% |
+----------------------------------+---------+---------+--------+
| Gross profit margin (%) | 27.8% | 26.1% | |
+----------------------------------+---------+---------+--------+
| Operating profit before | 94.8 | 130.9 | -27.6% |
| non-recurring costs | | | |
+----------------------------------+---------+---------+--------+
| Non-recurring costs * | 6.2 | 6.6 | |
+----------------------------------+---------+---------+--------+
| Operating profit | 88.6 | 124.3 | -28.7% |
+----------------------------------+---------+---------+--------+
| Profit before non-recurring | 90.4 | 124.0 | -27.1% |
| costs and tax | | | |
+----------------------------------+---------+---------+--------+
| Profit before tax | 84.2 | 117.4 | -28.2% |
+----------------------------------+---------+---------+--------+
| Basic earnings per share before | 19.24 | 26.09 | -26.3% |
| non-recurring costs (pence) | | | |
+----------------------------------+---------+---------+--------+
| Basic earnings per share (pence) | 17.45 | 24.18p | -27.8% |
+----------------------------------+---------+---------+--------+
| Annual dividend per share | 5.78p | 5.50p | 5.0% |
| (pence) | | | |
+----------------------------------+---------+---------+--------+
| Trading store numbers | 1,380 | 1,342 | 2.8% |
| (including franchises) | | | |
+----------------------------------+---------+---------+--------+
| Trading square footage (sq. ft. | 1,438.4 | 1,392.8 | 3.3% |
| thousands) | | | |
+----------------------------------+---------+---------+--------+
* The non-recurring costs relate to the integration of Gamestation.
Financial and Operational highlights
· Profit before tax and non-recurring items of GBP90.4m (2009: GBP124.0m) is
the second best performance in Group's history
· Group's gross margin improved by 170bps.
· Increased preowned revenues to GBP374.5m (2009: GBP353.4m) representing
over 21% of sales; gross margin up by 260 bps to 41.7%
· Completed Gamestation integration on schedule and delivered GBP16m of
synergies
· Reduced costs across the business by GBP5m in 2009/10
· Dividend increased by 5%
Management Changes:
· Lisa Morgan has stepped down as CEO and Chris Bell has been appointed
interim CEO.
· UK Chief Operating Officer Terry Scicluna has also informed the Board of
his intention to step down (see separate announcement).
Current trading and Outlook:
· For the 11 weeks to 17 April 2010, total Group sales and lfl sales were
down by 13.3% and 14.4% respectively.
· In the UK and Ireland, total sales and lfl sales were down by 20.8% and
20.1% respectively. In our International business, total sales were up by 1.7%
and lfl sales on a constant currency basis were down by 3.9%. Online was down by
3.5 per cent.
Peter Lewis, Chairman, commented:
"The Group has delivered the second best trading performance in its history with
profit before taxation and non-recurring costs of GBP90.4 million (2009:
GBP124.0 million). Our results were delivered against the backdrop of a very
difficult trading environment, which saw the global pc and video games market
decline by over 20 per cent. We outperformed the market and our performance can
be attributed to our position as the market leading specialist, our strength in
preowned, our multi-channel customer offer and disciplined operational
management.
Complementing our traditional store offer, we are today announcing the launch of
a number of initiatives to strengthen our position in the growing ecommerce and
digital markets.
Whilst we remain mindful of the challenging market in which we operate, the
forthcoming new technology further enhances the profile of the specialist
retailer. This, together with our value driven offer to maintain a market
leading position, investment in new channels to market, and our focus on cost
reductions leads the Board to be confident in the Group's future prospects."
Enquiries
GAME Group PLC
+44 (0) 1256 784566
Chris Bell, Interim CEO
Ben
White, Group Finance Director
Simon Soffe, Investor Relations and Group
Communications Director
Brunswick
+44 (0) 20 7404 5959
Jonathan Glass
Mike
Harrison
Wendel Verbeek
Chairman's Statement
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CHAIRMAN'S REPORT
Overview
The Group has delivered the second best trading performance in its history with
profit before taxation and non-recurring costs of GBP90.4 million (2009:
GBP124.0 million). Our results were delivered against the backdrop of a very
difficult trading environment, which saw the global pc and video games market
decline by over 20 per cent. We outperformed the market and our performance can
be attributed to our position as the market leading specialist, our strength in
preowned, our multi-channel customer offer and disciplined operational
management.
We saw a decrease in the demand for consoles through the year. This was largely
attributable to the Nintendo Wii which performed exceptionally well in the
previous year. Strong comparables in the prior year, combined with declining
hardware sales and a number of key releases moving into 2010, resulted in a
decline in software sales.
The market responded well to the release of new hardware technology, the
Nintendo DSi, and innovative sequels to established franchises such as Call of
Duty Modern Warfare 2, FIFA 10, and Wii Sports Resort. GAME took the leading
market share in sales of these products.
The challenges in the pc and video games market were exacerbated by the
difficult economic conditions with customers understandably focussed on getting
the very best value for money. GAME responded rapidly to these challenges by
amplifying our core strengths.
These include a market leading preowned model which enables us to compete
directly in a market where some competitors are using loss leading tactics.
This, supported by the widest range of products, market leading promotions and
offers, over 14 million Reward Card holders and a strong online proposition,
enabled us to deliver recognisable value for money. We continue to believe that
this is the right offering in a market where we will see continued technological
advance and broadening customer appeal.
In addition, we maintained our focus on cost control and operational management.
We have taken decisive action to improve operational efficiency, driving through
significant cost synergies and exiting from underperforming store locations.
Results
Group turnover for the 52 weeks ended 31 January 2010 decreased by 10.0% to
GBP1,772.4m (year ended 31 January 2009: GBP1,968.6m) with lfl sales down by
15.0%. In the UK and Ireland, total sales decreased by 16.6% and lfl sales were
down by 17.3%. In our International operations, total sales increased by 4.8%
and lfl sales fell by 10.8%. Our Online operations outperformed the rest of our
business on a like for like basis although sales still decreased by 9.1%.
The Group gross margin improved by 170 basis points principally due to an
increase in higher margin preowned products within the overall sales mix, up
from 18% to 21%.
The Group continues to exercise strong cost control disciplines, with savings in
the underlying cost base of approximately GBP5m. Additionally, the Group has
achieved a further GBP6m of synergies from the Gamestation integration, bringing
the total synergies for the year to GBP16m.
Group operating profit before non-recurring costs was GBP94.8m (2009:
GBP130.9m). Profit before tax and non-recurring costs was GBP90.4m (2009:
GBP124.0m) and basic earnings per share before non-recurring costs were 19.24p
(2009: 26.09p).
Reflecting its confidence in the medium term prospects of the Group, the Board
proposes a final dividend of 3.9p per share (2009: 3.71p), an increase of 5%.
This will result in a full year dividend of 5.78p per share (2009: 5.5p), an
increase of 5%.
Our net cash position as at 31 January 2010 decreased to GBP44.9m (2009:
GBP81.4m). The decrease largely reflects a change in the timing of supplier
payments, with significant payments being made just before the year end rather
than just after, as they were in the prior year. On a like for like basis, our
cash position is consistent with last year, and the Group continues to be cash
generative with a strong balance sheet.
Business Development
Our market
With a record installed base in the UK of over 28m third generation consoles,
the market has, as expected, moved towards higher margin software and peripheral
products.
In the UK, hardware sales declined by over 26%. Though still the best selling
format, Nintendo Wii revenues were down by over 49% (use market numbers, not
GAME), compared to exceptional sales in 2008. Following price cuts, sales of PS3
and Xbox 360 hardware were down by only 6% and 19% respectively. Sales of
higher margin software were down by 17%. This was again led by Nintendo formats,
with software revenues for Sony PS3 and Xbox 360 formats showing an increase on
those achieved in 2008 (source GfK ChartTrack).
The manufacturers are focused on producing innovative new technology for the
current third generation of consoles. This year we expect to see more
sophisticated motion sensor controllers from both Microsoft, "Project Natal",
and Sony, "Playstation Move". These products will continue to broaden the
appeal of video games and expand customer choice, with GAME being a key
destination for showcasing their launches. They will require demonstration and
explanation, both of which are the province of the specialist. We are seeing
new entrants to our market, including mobile operators, and are extending our
offer in store and online to provide our customers with even more choice.
Our Channels and Locations
GAME delivers a specialist proposition that leads on value, product range and
choice, service and loyalty across all channels.
Stores: With over 1,300 stores, we are located in all of the major retail
locations in the countries in which we operate. Customers seek out GAME and
Gamestation stores for our specialist teams. Suppliers value the marketing power
of our brand presence, store displays and instore theatre. We are also
trialling changes to the look and feel of our stores, including interactive
kiosks, making sure we offer a powerful retail proposition as well as a place to
play and interact.
Global Online:We have transactional local language websites in every location in
which we operate and in the UK we have three: GAME.co.uk, Gamestation.co.uk and
Gameplay.co.uk. Through our ecommerce offering we are developing our digital
services, led by our well established digital download site which now features
over 1,000 titles. We can also be reached through a GAME iPhone app, our new
presence in Playstation Home (the online portal for Playstation 3 players)
called GAME Moonbase, and a new social network site called Gamesnation. A new
download site for mobile phone games is in development and over the coming
months we will announce our plans for other digital arenas.
UK
We end the year with 677 stores across two brands in the UK, and have maintained
market leadership despite increased competition from supermarkets, online
retailers and new entrants to the market.
In December 2009 we closed 19 GAME concessions in Borders stores, and since the
year end we have also taken the decision to terminate our concession partnership
with Debenhams and announced plans to close 18 other stores. Our strong
customer base of Reward Card holders enables us to contact customers and
transfer the majority of the revenues from these stores to the next nearest GAME
or Gamestation. There will be no material costs from these closures.
We continue actively to review our UK store base, with a view to minimising
store overlap and maximising opportunities from lease expiries, breaks and rent
reviews. Our average lease length of 6 years for our UK stores is an advantage.
By Christmas 2013, we expect the UK store portfolio to have been reduced to
about 550 stores. In addition, we are investing to create the leading pc and
video games website and download service in the UK.
Operationally we have continued to derive benefits from the integration of GAME
and Gamestation. We have also rationalised our store and head office cost base
which, in conjunction with the store closures, will result in savings of a
further GBP5m in each of the next two years.
International
We have opened 64 stores outside the UK and closed 7, taking the total to 703 at
year end. In every international location we have grown our market share.
We will continue to open stores in the markets which give us the greatest return
and can deliver further benefits of scale. We plan to open between 25 and 40
stores this year, which is less than prior years.
Iberia, where we are the market leader, remains our most successful
international market, and continues to grow. Gains in market share and margin
are encouraging, and we continue to open stores in select locations.
We are the market leader in the Czech Republic, and the business is showing good
growth and potential for entry into surrounding markets.
In Australia and France, where we are not market leader, we are reviewing the
store base and brand proposition to ensure we can compete more effectively and
deliver further growth.
In Scandinavia, we maintain the appropriate portfolio and are rationalising the
support function.
In all of our locations, we aim to support our store model with a leading
e-commerce offer.
Where we sell
+--------------------------+--------+---------------+---------------+
| As at 31 January | | 2010 | 2009 |
+--------------------------+--------+---------------+---------------+
| | | Number | Number |
+--------------------------+--------+---------------+---------------+
| Company owned and | | | |
| concessions | | | |
+--------------------------+--------+---------------+---------------+
| UK and Ireland | | | |
| - GAME | | 423 | 443 |
| - Gamestation | | 254 | 253 |
+--------------------------+--------+---------------+---------------+
| Total UK and Ireland | | 677 | 696 |
+--------------------------+--------+---------------+---------------+
| France | | 199 | 192 |
+--------------------------+--------+---------------+---------------+
| Iberia | | 283 | 258 |
+--------------------------+--------+---------------+---------------+
| Scandinavia | | 68 | 66 |
+--------------------------+--------+---------------+---------------+
| Czech Republic | | 29 | 22 |
+--------------------------+--------+---------------+---------------+
| Total Continental Europe | | 579 | 538 |
+--------------------------+--------+---------------+---------------+
| Australia | | 118 | 101 |
+--------------------------+--------+---------------+---------------+
| Total International | | 697 | 639 |
+--------------------------+--------+---------------+---------------+
| Total owned and | | 1,374 | 1,335 |
| concessions | | | |
+--------------------------+--------+---------------+---------------+
| Franchises | | | |
+--------------------------+--------+---------------+---------------+
| France | | 0 | 1 |
+--------------------------+--------+---------------+---------------+
| Iberia | | 5 | 5 |
+--------------------------+--------+---------------+---------------+
| Australia | | 1 | 1 |
+--------------------------+--------+---------------+---------------+
| Total franchises | | 6 | 7 |
+--------------------------+--------+---------------+---------------+
| Total operational | | 1,380 | 1,342 |
| outlets | | | |
+--------------------------+--------+---------------+---------------+
Treasury and Capital expenditure
Our net cash as at 31 January 2010 was GBP44.9m compared with GBP81.4m in the
prior year. As noted above, the decrease reflects a change in the timing of
supplier payments around the year end, and stock holding for January releases.
In the 2010/11 financial year, average net debt is anticipated to be around
GBP60m (2009: GBP60m). The Board is committed to an efficient capital structure
and continues to review the dividend policy and a share buyback strategy along
with continued organic or acquisitive growth of the business.
We anticipate that our total capital expenditure for the current year will be
around GBP20m to GBP25m (2010: GBP30m; 2009: GBP53m). Store openings and
refurbishment requirements will cost between GBP5m and GBP10m. In addition, we
will invest GBP10m in Global Online on eCommerce and digital development and
information technology, and approximately GBP5m on distribution centre
infrastructure.
The Board announced today that Lisa Morgan has stepped down from her role as CEO
to pursue other opportunities. The Board and Lisa have agreed that this is the
right time for a new CEO to lead the business through the next stage in its
development. The Board thanks her for her exceptional contribution through her
14 years with GAME. The Board has commenced a search for a new CEO and pending
this appointment has asked Non Executive Director Chris Bell to take up the role
of interim CEO.
In light of the Board's decision to commence a search for a new CEO, Terry
Scicluna, UK Chief Operating Officer has informed the Board of his intention to
step down. He will remain with the business through a handover period.
Responsibility for the UK operating activities will be retained by Martyn Gibbs,
former Managing Director of Gamestation, who was appointed GAME Group Managing
Director of UK and Eire in March 2010.
In July 2009 Ben White (37) succeeded David Thomas as Group Finance Director,
having been the Group's Reporting and Investor Relations Director since 2005.
In January 2010, Jean-Paul Giraud stepped down from the Board after two terms in
office, and Dennis Woodside returned to the USA with Google as VP Americas
Operations. In the same month, we announced the appointment of Dana Dunne (47),
COO of Easyjet plc, and David Mansfield (56), former Chief Executive of Gcap
plc, to our Board as non executive directors.
The three new directors bring a wealth of experience from different consumer
industries and entertainment markets, all of which will further strengthen our
Board.
We thank the directors who have left us for their service and contributions to
the Group's direction and growth.
Employees
This has been a more challenging year for our employees throughout the Group,
and I am grateful for their continued focus and professionalism. Our people are
the heart of our consumer offer, and it is their dedication and support which
helps us to give customers something extra in our stores and online.
Corporate Responsibility
Corporate Responsibility ("CR") is at the heart of our operations and strategy.
We recognise that the way we operate within our industry and the communities
that we share has a direct impact on our reputation and our brand. We are
continuing to develop our CR strategy and stakeholder relationships with a view
to ensuring that our behaviour and actions meet the highest standards expected
by our customers and owners.
Current Trading and Outlook
In the first 11 weeks to 17 April 2010, the Group's total sales were down by
13.3% and lfl sales were down by 14.4%. Excluding the impact of the launch of
the DSi in the prior year, lfl sales were down by 9.1%. Online was down by 3.5
per cent. This is in line with our expectations for the first part of the year.
In the UK and Ireland, total sales and lfl sales were down by 20.8 per cent and
20.1 per cent respectively. In our International business, total sales were up
by 1.7 per cent and lfl sales on a constant currency basis were down 3.4 per
cent.
Whilst we remain mindful of the challenging market in which we operate and that
the current year will be a difficult one, the forthcoming new technology further
enhances the profile of the specialist retailer. This, together with our value
driven offer to maintain a market leading position, investment in new channels
to market, and our focus on cost reductions leads the Board to be confident in
the Group's future prospects.
Peter Lewis
Chairman
21 April 2010
The Group will release an IMS statement on 10 June, and will host a Technology
Event for analysts and investors following the E3 industry conference in Los
Angeles, which is scheduled for 15 to 17 June 2010.
Chief Executive's Review
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Chief Executive's Review
Due to our established specialist proposition, our business is in a strong
position for the future. Central to this is our brand strategy which places our
customers at the heart of everything we do. Our relationship with them is
centred on a strong value message, offering the widest range of products, market
leading service and rewarding loyalty.
In a market where value for money has become increasingly important, we are
maintaining our competitive position through our trade-in and preowned programme
and "deal of the week" and "price promotion" campaigns, which help us to compete
with our competitors on price.
We ensure that our customers get the product that they want, when they want it,
so that they can be the first to play, delivered through exclusive products for
key new releases and first-to-market promotions, which offer customers a real
point of differentiation
Our stores make the buying decision as easy as possible and, more importantly,
our highly trained and knowledgeable teams provide great service to core gamers
and novices alike.
We have grown our GAME Reward Card database by 17% over the last year. We now
have over 14 million GAME Reward Card members around the world receiving loyalty
points on everything they buy from us. The Reward Card also enables us to
tailor our customer service to individual customer demands.
Through every channel and in every location in which we operate, our attributes
as a specialist are at the forefront of our interaction with the customer.
Market Development
Over the short to medium term, we believe that the pc and video games market
will continue to be dominated by boxed product. This is reinforced by the
manufacturers who are producing peripherals for the third generation console
hardware, before looking towards the fourth generation. This is positive news
for the specialist as we always perform well when new boxed product technology
is released.
Over the longer term, we expect to see increasing diversity in the way people
play and interact - more use of digital downloading to enhance disc based games,
games downloaded in their entirety, greater access to casual (free-to-play)
games, and more people playing mobile games. Customers will expect a seamless
service across stores, ecommerce and digital platforms. Fundamentally, however,
we still believe that customers will want to access the pc and video games world
through a trusted, reliable and independent provider, and we have developed a
GAME branded offer for them all.
Our Strategy - Brand Proposition
To strengthen our market leading position we believe that our specialist
proposition must evolve, and we must also ensure that our brands take a leading
role in the longer term structural changes in the market. Our brands offer
customers:
Value: We continue to give our customers value for money whenever and wherever
they shop with us. Through supplier supported deals we have unique bundle
deals, "deal of the week" promotions and other price campaigns on mint product
throughout the year. We are supporting this value message with an increase in
the frequency of sales.
We continue to be the leading preowned retailer by maintaining compelling
trade-in deals and offering the best prices on preowned product. By trading in
product that they have already played, our customers can buy new games for less.
We, in turn, sell those traded in games on to other customers at attractive
prices.
These value offers are supported by our Reward Card loyalty programme, which
provides points equivalent to a 2.5%discount on every purchase and 5% if you
pre-order with us.
Product and range: As a leading specialist, breadth of range is fundamental to
our offer. We obtain the best allocation of new release product on the day of
launch and through the product's lifecycle. The products we sell are
differentiated by the exclusives attached to them, both as tangible products
(such as the Guitar Hero exclusive Coloured Guitar) or digital downloads (such
as the exclusive race tracks in Forza Motorsport 3). The range in stores is
being extended significantly through greater connectivity to our websites via
interactive kiosks.
We are increasing the range of own brand products, Gameware, to provide our
customers with more choice at cheaper prices. These products are largely
peripheral items, such as controllers.
Our teams are gearing up for the launch of Sony's Playstation Move and
Microsoft's "Project Natal" in the second half of 2010. These new peripherals
will each be supported with a new software range and our brands are positioned
to be the lead launch partners in Europe with the most comprehensive range and
volume of products, combined with in store demonstrations and specialist advice.
Service: Our employees offer expert advice to consumers in an increasingly
complex market. We continue to champion new technology launches and enhance our
support service. To do this we are continuing to invest in our employee
training programmes (Xcite and Smile). All employees receive thorough training
in retail which, when combined with their genuine enthusiasm for pc and video
games, gives us a competitive advantage.
We are enhancing our ecommerce and digital services with such items as gift
selectors, exclusive product reviews and demonstrations. Our ecommerce offering
is more than just a virtual shop window, it acts to inform, compare and advise,
creating a sense of community with our customers.
Loyalty: Our loyalty scheme, the GAME Reward Card, has given us great insight
into our customers and provided real savings to its members. We are increasing
membership benefits and personalisation to continue to build trust between
ourselves and our customers. We are furthering our target audience through the
launch of a loyalty card in Gamestation before the end of the year.
These changes to our commercial offer will give us the points of difference to
compete against the price and offer-led propositions on the high street, in the
supermarkets and online.
Our Strategy - Infrastructure and Support
Location and technology
Consumers are buying and playing pc and video games through a variety of
different channels. Boxed products are still overwhelmingly the most popular
with customers, but playing games online and via digital downloads, although
less than 1% of sales today, will become an increasingly important part of it in
the future.
GAME is constantly updating its customer offer to continue its lead in this
evolving market. There is a GAME offering in every channel and our objective is
to offer customers the same value and service wherever they choose to shop and
interact with us.
Stores: remain central to our offer, delivering over 94% of our revenues. We
strongly believe that stores will continue to have a very significant role in pc
and video games retailing.
We actively manage our store portfolio in each of our territories, to create a
store footprint that is appropriately matched to local market conditions. As
non-boxed revenues increase, we are reducing the number of overlapping outlets
in the UK, targeting 550 stores by Christmas 2013. The profile of our leases
will allow us to do this. We are also limiting store openings in our existing
international locations, but will continue to look at new markets if they show
the right return characteristics.
Our stores are a place to experience games, and the format is evolving to cater
for their changing needs and the incoming new technology. We are trialling
interactive kiosks and improved ecommerce connectivity in selected stores to
expand further the range with thousands more product lines and enhanced the
customer experience.
To deal with the transactional volumes through our stores, we continually
upgrade our IT infrastructure. As part of this we are installing both customer
conversion technology and top-up card activation capabilities within our
outlets.
Ecommerce: is an important part of our customer offering, delivering over 5% of
our revenues. Through our websites we can offer the same services as in our
stores, plus a substantially enhanced range, online-only offers and additional
marketing and support, i.e. Click and Collect, to our customers and stores. We
are launching two ecommerce initiatives to develop this opportunity further.
To give our customers a seamless brand experience we are introducing a new
"Websphere" ecommerce platform over the next two years, linking all of our
territories and stores to provide a universal online portal, and fully connected
infrastructure. This will help customers by increasing the efficiency of
product targeting and searching, and will support GAME's marketing efforts by
increasing awareness of both new releases and back catalogue software. It will
also give us a single view of customer behaviour across our stores and websites,
and help us improve our services further. GAME will invest GBP5m this year and
the next in this ecommerce platform.
Our websites around the world receive 112 million visits per annum. This,
coupled with our Reward Card programme, already gives us one of the largest
communities of video gamers in the world. Now we are building on this position
by creating a social networking site, Gamesnation, which is currently in beta
testing with thousands of members to increase brand awareness further and to
appeal to a wider target audience.
Digital: revenues are small, less than 1% of turnover, but are a growing part of
our business. The digital market is still very disparate, and activity is
currently limited by technological capacity and customer appetite. However, as
digital revenues form a larger part of the market over the next five years, we
believe that both customers and manufacturers want a trusted brand to act as the
independent aggregator. Consequently we continue to grow our digital pc
download offer, which is now the largest in Europe with over 1,000 titles
available.
This gives us invaluable insight into customer demands as we extend our digital
offer. We can be reached through a GAME iPhone app which was launched in 2009
and we have become the first video games retailer to have a presence in Sony
Playstation Home (the online portal for 12 million Playstation 3 players). Over
the coming months we will announce our plans for other digital arenas.
We continue to participate in online gameplay, selling time cards, add-ons and a
wide range of peripherals to maximise the gameplay experience.
Our focus continues to be on our customers, ensuring that for every service they
want to use we can provide functionality, either by building it ourselves or by
involving a partner such as Metaboli. In every case we will also provide
extensive advice and full after-sales care.
Business relationships
To provide customers with all the product and offers they want from a specialist
it is vital that we maintain long-term and successful relationships with all of
our partners. We are committed to working with our suppliers to continually
improve our specialist proposition and we have recently appointed a Group
Commercial Strategy Director to work with our partners at a global level,
further strengthening our relationships, delivering joint benefits of scale and
enhancing our customer proposition in every territory and channel in which we
operate.
By seeking exclusives for all major titles we have a competitive point of
difference, and where those exclusives are digital content we are building a
brand image in the digital arena.
Distribution
In all of our markets, the majority of new products are sold in the first weeks
of launch, so immediate availability, and timely replenishment, is crucial to
our credibility. GAME Group has purpose-built distribution facilities in all
territories to ensure that products reach customers at the right time.
Distribution centres support our stores, as well as our direct to home
solutions.
Multi-channel
The actions we are undertaking will give us a genuine multi-channel proposition
that will make us the aggregator of choice for customers wherever they want to
shop and however they want to interact with pc and video games.
Summary
The resilience of our performance last year was entirely attributable to our
credentials as a specialist retailer, which gives us many competitive
advantages. We have clearly identified plans to move these forward, and in so
doing will address and outpace the current competitive pressures that we face
and position ourselves for the longer term changes in our market place.
Whilst we recognise that the outlook for the wider global economy remains
uncertain and that we face a difficult current year, we believe that our value
led offer positions us well and with our ongoing cost discipline, we are
confident about our prospects going forward.
Chris Bell
Interim Chief Executive
Finance Review
_______________________________________________________________________________
__
Profit and Loss Account
Revenue
Total sales decreased by 10.0% from GBP1,969m to GBP1,772m and lfl sales
decreased by 15.0%.
Average sales per annum per sq. ft. decreased by GBP181 to GBP1,232.
Gross Margin
Overall gross margin was 27.8% compared to a prior year margin of 26.1%. This
increase in gross margin was in line with our expectations. It was principally
caused by the increased participation of new software and preowned product in
our sales mix and the buying synergies we have been able to deliver through the
acquisition of GAME and Gamestation.
Operating Expenses
Total operating costs have increased by 3.6% from GBP383.6m to GBP397.9m,
excluding non-recurring costs, and as a percentage of sales were 22.4% compared
to 19.5% last year. On a cash basis our selling and distribution related
expenditure has increased year on year but this is in line with the increase in
outlets traded across our business. This was offset by a decrease in
administration costs, a testament to our ability to control our overheads across
the operating chain.
Profit before tax
We achieved a profit before tax of GBP84.2m compared to a profit before tax of
GBP117.4m for last year.
Taxation
The effective rate of Corporation Tax was 28.2% (2007: 28.7%) and we have
continued to provide for deferred taxation in line with IAS 12.
Earnings per share
Basic earnings per share were 17.45p compared to 24.18p last year, a decrease of
27.8%. Diluted earnings per share were 17.42p compared to 24.10p last year, a
decrease of 27.7%.
Dividend
The Board is recommending a final dividend of 3.90p per share, which will give a
total dividend for the period of 5.78p compared to 5.50p last year an increase
of 5%. The dividend will be paid on 16th July 2010, to shareholders on the
register at the 25 June 2010.
Balance Sheet
Capital Expenditure
Capital expenditure in the period, excluding acquisitions, amounted to GBP30m.
Almost half of this expenditure was invested in new and refurbished stores
internationally and in the UK. Additionally we invested in the IT
infrastructure, distribution facilities and web operations across the Group. In
summary:
+--+------------------------+------------+-----------+
| | Capital Expenditure | 31 Jan | 31 Jan |
| | | 2010 | 2009 |
+--+------------------------+------------+-----------+
| | | GBPm | GBPm |
+--+------------------------+------------+-----------+
| | | | |
+--+------------------------+------------+-----------+
| | Stores | 10 | 29 |
+--+------------------------+------------+-----------+
| | Refits | 3 | 7 |
+--+------------------------+------------+-----------+
| | Web | 5 | 8 |
+--+------------------------+------------+-----------+
| | Infrastructure | 12 | 9 |
+--+------------------------+------------+-----------+
| | | | |
+--+------------------------+------------+-----------+
| | | _______ | _______ |
+--+------------------------+------------+-----------+
| | Total | 30 | 53 |
+--+------------------------+------------+-----------+
| | | _______ | _______ |
+--+------------------------+------------+-----------+
Stock
Stock at the end of the period represented GBP128k per owned store compared to
GBP136k for the same period last year. The decrease in the average stock holding
per store reflects the fact that we were holding lower levels of hardware
product to meet ongoing consumer demand.
Cash flow
Net cash generated by operations was GBP13m compared to GBP118m last year. This
reflects the reduction in year on year trading performance together with the
movements in working capital. In particular, our trade creditor payments
schedule saw a lesser proportion of December deliveries paid after the year end,
while our VAT creditor reduced in line with lower rates and lower final quarter
sales. These effects reversed in February 2010 with lower payments being
required.
Reporting
During the year we adopted IFRIC 13 on Customer Loyalty Programmes. This
required the business to recognise an element of revenue on accounting for
Loyalty Card points, where previously we have only recognised the cost of those
points. This has resulted in a charge to the profit and loss for 2008/09 of
GBP1.8m.
When entering in to leases in France, businesses are required to pay key money
(called "Droit au bail" in France). The key money is not depreciated but the
carrying value is assessed annually on the basis of formal property market
valuations. We have assessed the carrying value, based on a representative
sample of properties, as at 31 January 2010 and concluded that there is no
material diminution in value. The carrying value of the key money in our books
is approximately GBP31m (2009: GBP31m). We will continue to review the position
in 2010/11.
Ben White
Group Finance Director
Directors' responsibility statement for the year ended 31 January 2010
_______________________________________________________________________________
__
Directors' responsibility statement
The Directors are responsible for keeping proper accounting records that are
sufficient to show and explain the company's transactions and disclose with
reasonable accuracy at any time the financial position of the group, and enable
them to ensure that the financial statements comply with the Companies Act 2006
and, as regards the group financial statements, Article 4 of the IAS Regulation.
They are also responsible for safeguarding the assets of the Company, for
taking reasonable steps for the prevention and detection of fraud and other
irregularities and for the preparation of a Directors' Report and Directors'
Remuneration Report which comply with the requirements of the Companies Act
2006. Under company law the directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state of
affairs of the group and company and of the profit or loss for the group for
that period.
The Directors are responsible for preparing the annual report and the financial
statements in accordance with the Companies Act 2006. The Directors are also
required to prepare financial statements for the Group in accordance with
International Financial Reporting Standards as adopted by the European Union
(IFRSs) and Article 4 of the IAS Regulation. The Directors have chosen to
prepare financial statements for the Company in accordance with UK Generally
Accepted Accounting Practice.
The directors are responsible for ensuring the annual report and the financial
statements are made available on a website. The financial statements are
published on the Group's web-site (www.gamegroup.plc.uk) in accordance with
legislation in the United Kingdom governing the preparation and dissemination of
financial statements, which may vary from legislation in other jurisdictions.
The maintenance and integrity of the Group's web-site is the responsibility of
the Directors. The Directors' responsibility also extends to the ongoing
integrity of the financial statements contained therein.
Group financial statements
International Accounting Standard 1 requires that financial statements present
fairly for each financial year the Group's financial position, financial
performance and cash flows. This requires the faithful representation of the
effects of transactions, other events and conditions in accordance with the
definitions and recognition criteria for assets, liabilities, income and
expenses set out in the International Accounting Standards Board's 'Framework
for the preparation and presentation of financial statements'. In virtually all
circumstances, a fair presentation will be achieved by compliance with all
applicable IFRSs. A fair presentation also requires the Directors to:
· consistently select and apply appropriate accounting policies;
· make judgements and accounting estimates that are reasonable and
prudent;
· state whether they have been prepared in accordance with IFRSs as adopted
by the European Union,, subject to any material departures disclosed and
explained in the financial statements;
· present information, including accounting policies, in a manner that
provides relevant, reliable, comparable and understandable information; and
· provide additional disclosures when compliance with the specific
requirements in IFRSs is insufficient to enable users to understand the impact
of particular transactions, other events and conditions on the entity's
financial position and financial performance.
Report of the Directors for the year ended 31 January 2010
_______________________________________________________________________________
__
Parent Company financial statements
Company law requires the directors to prepare financial statements for each
financial year which give a true and fair view of the state of affairs of the
Company and of the profit or loss of the Company for that period. In preparing
these financial statements, the Directors are required to:
· select suitable accounting policies and then apply them consistently;
· prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Company will continue in business;
· make judgements and estimates that are reasonable and prudent; and
· state whether applicable accounting standards have been followed,
subject to any material departures disclosed and explained in the financial
statements.
Directors' responsibility statement pursuant to DTR4
The Directors confirm to the best of their knowledge:
· The Group financial statements have been prepared in accordance with
International Financial Reporting Standards as adopted by the European Union
(IFRSs) and Article 4 of the IAS Regulation and give a true and fair view of the
assets, liabilities, financial position and profit and loss of the group.
· The Annual Report includes a fair review of the development and
performance of the business and the financial position of the Group and the
Parent Company, together with a description or the principal risks and
uncertainties that they face.
Consolidated Statement of Comprehensive Income for the year ended 31 January
2010
+-----------------+---------------------+---------------------+-----------+
| | | | Restated |
+-----------------+---------------------+---------------------+-----------+
| | Note | 2010 | 2009 |
+-----------------+---------------------+---------------------+-----------+
| | | GBP'000 | GBP'000 |
+-----------------+---------------------+---------------------+-----------+
| | | | |
+-----------------+---------------------+---------------------+-----------+
| Revenue | 1 | 1,772,358 | 1,968,604 |
+-----------------+---------------------+---------------------+-----------+
| | | | |
+-----------------+---------------------+---------------------+-----------+
| Cost of sales | | 1,279,666 | 1,454,097 |
+-----------------+---------------------+---------------------+-----------+
| | | _______ | _______ |
+-----------------+---------------------+---------------------+-----------+
| | | | |
+-----------------+---------------------+---------------------+-----------+
| Gross profit | | 492,692 | 514,507 |
+-----------------+---------------------+---------------------+-----------+
| | | | |
+-----------------+---------------------+---------------------+-----------+
| Other operating | 2 | 404,102 | 390,214 |
| expenses | | | |
+-----------------+---------------------+---------------------+-----------+
| | | _______ | _______ |
+-----------------+---------------------+---------------------+-----------+
| | | | |
+-----------------+---------------------+---------------------+-----------+
| Operating | | 94,789 | 130,881 |
| profit before | | | |
| non-recurring | | | |
| costs | | | |
+-----------------+---------------------+---------------------+-----------+
| | | | |
+-----------------+---------------------+---------------------+-----------+
| Non-recurring | 3 | (6,199) | (6,588) |
| costs | | | |
+-----------------+---------------------+---------------------+-----------+
| | | _______ | _______ |
+-----------------+---------------------+---------------------+-----------+
| | | | |
+-----------------+---------------------+---------------------+-----------+
| Operating | 4 | 88,590 | 124,293 |
| profit | | | |
+-----------------+---------------------+---------------------+-----------+
| | | | |
+-----------------+---------------------+---------------------+-----------+
| Finance income | 5 | 538 | 1,805 |
+-----------------+---------------------+---------------------+-----------+
| | | | |
+-----------------+---------------------+---------------------+-----------+
| Finance costs | 6 | (4,917) | (8,732) |
+-----------------+---------------------+---------------------+-----------+
| | | _______ | _______ |
+-----------------+---------------------+---------------------+-----------+
| | | | |
+-----------------+---------------------+---------------------+-----------+
| Profit before | | 84,211 | 117,366 |
| taxation | | | |
+-----------------+---------------------+---------------------+-----------+
| | | | |
+-----------------+---------------------+---------------------+-----------+
| Taxation | 8 | 23,744 | 33,716 |
+-----------------+---------------------+---------------------+-----------+
| | | _______ | _______ |
+-----------------+---------------------+---------------------+-----------+
| Profit for the year attributable to | 60,467 | 83,650 |
| equity holders of the parent | | |
+---------------------------------------+---------------------+-----------+
| | | | |
+-----------------+---------------------+---------------------+-----------+
| Other comprehensive income: | | |
+---------------------------------------+---------------------+-----------+
| Exchange differences on translating | 3,920 | 17,550 |
| foreign operations | | |
+---------------------------------------+---------------------+-----------+
| Deferred income tax on share-based | (1,078) | (442) |
| payments | | |
+---------------------------------------+---------------------+-----------+
| Income tax on share-based payments | 596 | 1,789 |
+---------------------------------------+---------------------+-----------+
| | | | |
+-----------------+---------------------+---------------------+-----------+
| | _______ | _______ |
+---------------------------------------+---------------------+-----------+
| Other comprehensive income for the | 3,438 | 18,897 |
| year, net of tax | | |
+---------------------------------------+---------------------+-----------+
| | _______ | _______ |
+---------------------------------------+---------------------+-----------+
| Total comprehensive income for the | 63,905 | 102,547 |
| year attributable to equity holders | | |
| of the parent | | |
+---------------------------------------+---------------------+-----------+
| | | _______ | _______ |
+-----------------+---------------------+---------------------+-----------+
| | | | |
+-----------------+---------------------+---------------------+-----------+
| | | | |
+-----------------+---------------------+---------------------+-----------+
| Earnings per | - basic | 17.45p | 24.18p |
| share | 10 | | |
+-----------------+---------------------+---------------------+-----------+
| | - diluted | 17.42p | 24.10p |
| | 10 | | |
+-----------------+---------------------+---------------------+-----------+
| | | _______ | _______ |
+-----------------+---------------------+---------------------+-----------+
| | | | |
+-----------------+---------------------+---------------------+-----------+
| All amounts relate to continuing | | |
| activities | | |
+-----------------+---------------------+---------------------+-----------+
_______________________________________________________________________________
________
+--------------------+--------+---------+----------+----------+
| | | | Restated | Restated |
+--------------------+--------+---------+----------+----------+
| | Note | 2010 | 2009 | 2008 |
+--------------------+--------+---------+----------+----------+
| | | GBP'000 | GBP'000 | GBP'000 |
+--------------------+--------+---------+----------+----------+
| Non-current assets | | | | |
+--------------------+--------+---------+----------+----------+
| Property, plant | 11 | 161,121 | 165,609 | 130,662 |
| & equipment | | | | |
+--------------------+--------+---------+----------+----------+
| Intangible | 12 | 180,135 | 182,267 | 172,871 |
| assets | | | | |
+--------------------+--------+---------+----------+----------+
| Deferred tax | 18 | 3,614 | 4,004 | - |
| asset | | | | |
+--------------------+--------+---------+----------+----------+
| | | _______ | _______ | _______ |
+--------------------+--------+---------+----------+----------+
| | | | | |
+--------------------+--------+---------+----------+----------+
| | | 344,870 | 351,880 | 303,533 |
+--------------------+--------+---------+----------+----------+
| | | _______ | _______ | _______ |
+--------------------+--------+---------+----------+----------+
| | | | | |
+--------------------+--------+---------+----------+----------+
| Current assets | | | | |
+--------------------+--------+---------+----------+----------+
| Inventories | 13 | 176,045 | 181,965 | 145,041 |
+--------------------+--------+---------+----------+----------+
| Trade and other | 14 | 48,316 | 55,465 | 53,845 |
| receivables | | | | |
+--------------------+--------+---------+----------+----------+
| Cash and cash | | 86,128 | 139,614 | 137,899 |
| equivalents | | | | |
+--------------------+--------+---------+----------+----------+
| | | _______ | _______ | _______ |
+--------------------+--------+---------+----------+----------+
| | | | | |
+--------------------+--------+---------+----------+----------+
| | | 310,489 | 377,044 | 336,785 |
+--------------------+--------+---------+----------+----------+
| | | _______ | _______ | _______ |
+--------------------+--------+---------+----------+----------+
| | | | | |
+--------------------+--------+---------+----------+----------+
| Total assets | | 655,359 | 728,924 | 640,318 |
+--------------------+--------+---------+----------+----------+
| | | _______ | _______ | _______ |
+--------------------+--------+---------+----------+----------+
| | | | | |
+--------------------+--------+---------+----------+----------+
| Current | | | | |
| liabilities | | | | |
+--------------------+--------+---------+----------+----------+
| Trade and other | 15 | 258,203 | 349,182 | 318,624 |
| payables | | | | |
+--------------------+--------+---------+----------+----------+
| Current portion | 16 | 17,361 | 26,325 | 38,038 |
| of long-term | | | | |
| borrowings | | | | |
+--------------------+--------+---------+----------+----------+
| Leasehold | 19 | 1,341 | 904 | 846 |
| property | | | | |
| incentives | | | | |
+--------------------+--------+---------+----------+----------+
| Corporation tax | | 12,943 | 26,037 | 15,862 |
| liabilities | | | | |
+--------------------+--------+---------+----------+----------+
| | | _______ | _______ | _______ |
+--------------------+--------+---------+----------+----------+
| | | | | |
+--------------------+--------+---------+----------+----------+
| | | 289,848 | 402,448 | 373,370 |
+--------------------+--------+---------+----------+----------+
| | | _______ | _______ | _______ |
+--------------------+--------+---------+----------+----------+
| | | | | |
+--------------------+--------+---------+----------+----------+
| Non-current | | | | |
| liabilities | | | | |
+--------------------+--------+---------+----------+----------+
| Long-term | 16 | 23,908 | 31,847 | 57,809 |
| borrowings | | | | |
+--------------------+--------+---------+----------+----------+
| Leasehold | 19 | 10,048 | 8,328 | 6,414 |
| property | | | | |
| incentives | | | | |
+--------------------+--------+---------+----------+----------+
| Deferred tax | 18 | - | - | 1,120 |
| liabilities | | | | |
+--------------------+--------+---------+----------+----------+
| | | _______ | _______ | _______ |
+--------------------+--------+---------+----------+----------+
| | | | | |
+--------------------+--------+---------+----------+----------+
| | | 33,956 | 40,175 | 65,343 |
+--------------------+--------+---------+----------+----------+
| | | _______ | _______ | _______ |
+--------------------+--------+---------+----------+----------+
| | | | | |
+--------------------+--------+---------+----------+----------+
| Total liabilities | | 323,804 | 442,623 | 438,713 |
+--------------------+--------+---------+----------+----------+
| | | _______ | _______ | _______ |
+--------------------+--------+---------+----------+----------+
| | | | | |
+--------------------+--------+---------+----------+----------+
| Net assets | | 331,555 | 286,301 | 201,605 |
+--------------------+--------+---------+----------+----------+
| | | _______ | _______ | _______ |
+--------------------+--------+---------+----------+----------+
| | | | | |
+--------------------+--------+---------+----------+----------+
| Equity attributable to | | | |
| equity holders of the | | | |
| parent | | | |
+-----------------------------+---------+----------+----------+
| Share capital | 20 | 17,333 | 17,316 | 17,167 |
+--------------------+--------+---------+----------+----------+
| Share premium | 21 | 46,662 | 46,462 | 44,848 |
| account | | | | |
+--------------------+--------+---------+----------+----------+
| Capital | 22 | 2,248 | 2,248 | 2,223 |
| redemption reserve | | | | |
+--------------------+--------+---------+----------+----------+
| Shares held in | 22 | (3,395) | (6,451) | (4,403) |
| Trust | | | | |
+--------------------+--------+---------+----------+----------+
| Merger reserve | 22 | 76,907 | 76,907 | 76,907 |
+--------------------+--------+---------+----------+----------+
| Foreign exchange | 22 | 27,374 | 23,454 | 5,904 |
| reserve | | | | |
+--------------------+--------+---------+----------+----------+
| Retained | 22 | 164,426 | 126,365 | 58,959 |
| earnings | | | | |
+--------------------+--------+---------+----------+----------+
| | | _______ | _______ | _______ |
+--------------------+--------+---------+----------+----------+
| | | | | |
+--------------------+--------+---------+----------+----------+
| Total equity | | 331,555 | 286,301 | 201,605 |
+--------------------+--------+---------+----------+----------+
| | | _______ | _______ | _______ |
+--------------------+--------+---------+----------+----------+
The financial statements were approved by the Board of Directors and authorised
for issue on 21 April 2010 and were signed on its behalf by:
Ben White
Statement of changes in equity for the year ended 31 January 2010
_______________________________________________________________________________
_________
+----------------+---------+---------+------------+---------+---------+----------+----------+----------+
| | Share | Share | Capital | Shares | Merger | Retained | Foreign | Total |
+----------------+---------+---------+------------+---------+---------+----------+----------+----------+
| | Capital | Premium | Redemption | held | Reserve | Earnings | Exchange | |
| | | | | in | | | | |
+----------------+---------+---------+------------+---------+---------+----------+----------+----------+
| | | | Reserve | Trust | | | Reserve | |
+----------------+---------+---------+------------+---------+---------+----------+----------+----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+----------------+---------+---------+------------+---------+---------+----------+----------+----------+
| At 1 February | 17,167 | 44,848 | 2,223 | (4,403) | 76,907 | 61,276 | 5,904 | 203,922 |
| 2008 | | | | | | | | |
+----------------+---------+---------+------------+---------+---------+----------+----------+----------+
| Restatement | - | - | - | - | - | (2,317) | - | (2,317) |
+----------------+---------+---------+------------+---------+---------+----------+----------+----------+
| At 1 February | 17,167 | 44,848 | 2,223 | (4,403) | 76,907 | 58,959 | 5,904 | 201,605 |
| 2008 after | | | | | | | | |
| restatement | | | | | | | | |
+----------------+---------+---------+------------+---------+---------+----------+----------+----------+
| Exchanges | - | - | - | - | - | - | 17,550 | 17,550 |
| differences | | | | | | | | |
+----------------+---------+---------+------------+---------+---------+----------+----------+----------+
| on translation | | | | | | | | |
| of foreign | | | | | | | | |
+----------------+---------+---------+------------+---------+---------+----------+----------+----------+
| currency net | | | | | | | | |
| investment | | | | | | | | |
+----------------+---------+---------+------------+---------+---------+----------+----------+----------+
| in | | | | | | | | |
| subsidiaries | | | | | | | | |
+----------------+---------+---------+------------+---------+---------+----------+----------+----------+
| Income tax on | | | | | | | | |
| share-based | | | | | | | | |
| payments | | | | | | | | |
+----------------+---------+---------+------------+---------+---------+----------+----------+----------+
| - Deferred tax | - | - | - | - | - | (442) | - | (442) |
+----------------+---------+---------+------------+---------+---------+----------+----------+----------+
| - Current tax | - | - | - | - | - | 1,789 | - | 1,789 |
+----------------+---------+---------+------------+---------+---------+----------+----------+----------+
| Net income | | | | | | | | |
| recognised | | | | | | | | |
+----------------+---------+---------+------------+---------+---------+----------+----------+----------+
| directly in | - | - | - | - | - | 1,347 | 17,550 | 18,897 |
| equity | | | | | | | | |
+----------------+---------+---------+------------+---------+---------+----------+----------+----------+
| Net income | | | | | | | | |
| recognised | | | | | | | | |
+----------------+---------+---------+------------+---------+---------+----------+----------+----------+
| in income | - | - | - | - | - | 83,650 | - | 83,650 |
| statement | | | | | | | | |
+----------------+---------+---------+------------+---------+---------+----------+----------+----------+
| Total | | | | | | | | |
| recognised | | | | | | | | |
| income | | | | | | | | |
+----------------+---------+---------+------------+---------+---------+----------+----------+----------+
| and expense | - | - | - | - | - | 84,997 | 17,550 | 102,547 |
+----------------+---------+---------+------------+---------+---------+----------+----------+----------+
| Issue of | 126 | 1,614 | - | - | - | - | - | 1,740 |
| shares | | | | | | | | |
+----------------+---------+---------+------------+---------+---------+----------+----------+----------+
| Purchase of | - | - | - | (3,828) | - | - | - | (3,828) |
| shares | | | | | | | | |
+----------------+---------+---------+------------+---------+---------+----------+----------+----------+
| Exercise of | - | - | - | 1,828 | - | (1,828) | - | - |
| options | | | | | | | | |
+----------------+---------+---------+------------+---------+---------+----------+----------+----------+
| Dividends paid | - | - | - | - | - | (16,490) | - | (16,490) |
+----------------+---------+---------+------------+---------+---------+----------+----------+----------+
| Share buyback | (25) | - | 25 | - | - | (1,241) | - | (1,241) |
+----------------+---------+---------+------------+---------+---------+----------+----------+----------+
| Share-based | - | - | - | - | - | 1,968 | - | 1,968 |
| payments | | | | | | | | |
+----------------+---------+---------+------------+---------+---------+----------+----------+----------+
| Net-settled | 48 | - | - | (48) | - | - | - | - |
| options | | | | | | | | |
+----------------+---------+---------+------------+---------+---------+----------+----------+----------+
| At 1 February | 17,316 | 46,462 | 2,248 | (6,451) | 76,907 | 126,365 | 23,454 | 286,301 |
| 2009 | | | | | | | | |
+----------------+---------+---------+------------+---------+---------+----------+----------+----------+
| Exchanges | - | - | - | - | - | - | 3,920 | 3,920 |
| differences | | | | | | | | |
+----------------+---------+---------+------------+---------+---------+----------+----------+----------+
| on translation | | | | | | | | |
| of foreign | | | | | | | | |
+----------------+---------+---------+------------+---------+---------+----------+----------+----------+
| currency net | | | | | | | | |
| investment | | | | | | | | |
+----------------+---------+---------+------------+---------+---------+----------+----------+----------+
| in | | | | | | | | |
| subsidiaries | | | | | | | | |
+----------------+---------+---------+------------+---------+---------+----------+----------+----------+
| Income tax on | | | | | | | | |
| share-based | | | | | | | | |
| payments | | | | | | | | |
+----------------+---------+---------+------------+---------+---------+----------+----------+----------+
| - Deferred tax | - | - | - | - | - | (1,078) | - | (1,078) |
+----------------+---------+---------+------------+---------+---------+----------+----------+----------+
| - Current tax | - | - | - | - | - | 596 | - | 596 |
+----------------+---------+---------+------------+---------+---------+----------+----------+----------+
| Net income | | | | | | | | |
| recognised | | | | | | | | |
+----------------+---------+---------+------------+---------+---------+----------+----------+----------+
| directly in | - | - | - | - | - | (482) | 3,920 | 3,438 |
| equity | | | | | | | | |
+----------------+---------+---------+------------+---------+---------+----------+----------+----------+
| Net income | | | | | | | | |
| recognised | | | | | | | | |
+----------------+---------+---------+------------+---------+---------+----------+----------+----------+
| in income | - | - | - | - | - | 60,467 | - | 60,467 |
| statement | | | | | | | | |
+----------------+---------+---------+------------+---------+---------+----------+----------+----------+
| Total | - | - | - | - | - | 59,985 | 3,920 | 63,905 |
| recognised | | | | | | | | |
| income | | | | | | | | |
+----------------+---------+---------+------------+---------+---------+----------+----------+----------+
| and expense | | | | | | | | |
+----------------+---------+---------+------------+---------+---------+----------+----------+----------+
| Issue of | 17 | 200 | - | - | - | - | - | 217 |
| shares | | | | | | | | |
+----------------+---------+---------+------------+---------+---------+----------+----------+----------+
| Purchase of | - | - | - | (1,893) | - | - | - | (1,893) |
| shares | | | | | | | | |
+----------------+---------+---------+------------+---------+---------+----------+----------+----------+
| Exercise of | - | - | - | 4,949 | - | (4,949) | - | - |
| options | | | | | | | | |
+----------------+---------+---------+------------+---------+---------+----------+----------+----------+
| Dividends paid | - | - | - | - | - | (19,366) | - | (19,366) |
+----------------+---------+---------+------------+---------+---------+----------+----------+----------+
| Share-based | - | - | - | - | - | 2,391 | - | 2,391 |
| payments | | | | | | | | |
+----------------+---------+---------+------------+---------+---------+----------+----------+----------+
| At 31 January | 17,333 | 46,662 | 2,248 | (3,395) | 76,907 | 164,426 | 27,374 | 331,555 |
| 2010 | | | | | | | | |
+----------------+---------+---------+------------+---------+---------+----------+----------+----------+
Consolidated Statement of Cash Flows for the year ended 31 January 2010
_______________________________________________________________________________
_________
+-----------------+---+----------------+----------------+-----------------+
| | | | Restated |
+-----------------+--------------------+----------------+-----------------+
| | Note | 2010 | 2009 |
+-----------------+--------------------+----------------+-----------------+
| | | GBP'000 | GBP'000 |
+-----------------+--------------------+----------------+-----------------+
| | | | |
+-----------------+--------------------+----------------+-----------------+
| Cash flow from operating activities | | |
+--------------------------------------+----------------+-----------------+
| Operating | | 88,590 | 124,293 |
| profit | | | |
+-----------------+--------------------+----------------+-----------------+
| Equity settled share-based payment | 2,391 | 1,968 |
| expense | | |
+--------------------------------------+----------------+-----------------+
| Depreciation and amortisation | 32,898 | 28,901 |
+--------------------------------------+----------------+-----------------+
| Loss on disposal of non current | 2,734 | 146 |
| assets | | |
+--------------------------------------+----------------+-----------------+
| Market value movement on financial | 81 | 211 |
| instrument | | |
+--------------------------------------+----------------+-----------------+
| | | _______ | _______ |
+-----------------+--------------------+----------------+-----------------+
| | | 126,694 | 155,519 |
+-----------------+--------------------+----------------+-----------------+
| Decrease in trade and other | 6,869 | 212 |
| receivables | | |
+--------------------------------------+----------------+-----------------+
| Decrease/(increase) | | 7,220 | (30,293) |
| in inventories | | | |
+---------------------+----------------+----------------+-----------------+
| Increase/(decrease) in trade and | (87,860) | 28,573 |
| other payables | | |
+--------------------------------------+----------------+-----------------+
| Increase in leasehold incentives | 1,757 | 1,573 |
+--------------------------------------+----------------+-----------------+
| | | _______ | _______ |
+-----------------+--------------------+----------------+-----------------+
| Cash generated from operations | 54,680 | 155,584 |
+--------------------------------------+----------------+-----------------+
| Finance costs | | (4,917) | (8,732) |
| paid | | | |
+-----------------+--------------------+----------------+-----------------+
| Corporation tax | | (36,626) | (28,844) |
| paid | | | |
+-----------------+--------------------+----------------+-----------------+
| | | _______ | _______ |
+-----------------+--------------------+----------------+-----------------+
| | | | |
+-----------------+--------------------+----------------+-----------------+
| Net cash from operating activities | 13,137 | 118,008 |
+--------------------------------------+----------------+-----------------+
| | | _______ | _______ |
+-----------------+--------------------+----------------+-----------------+
| | | |
+--------------------------------------+----------------+-----------------+
| Cash flows from investing activities | | |
+--------------------------------------+----------------+-----------------+
| Acquisitions | 23 | - | (6,804) |
+-----------------+--------------------+----------------+-----------------+
| Purchase of property, plant and | (26,322) | (48,727) |
| equipment | | |
+--------------------------------------+----------------+-----------------+
| Purchase of | | (3,568) | (4,718) |
| intangible | | | |
| assets | | | |
+-----------------+--------------------+----------------+-----------------+
| Proceeds from sale of equipment | 455 | 1,128 |
+--------------------------------------+----------------+-----------------+
| Finance income | | 538 | 1,805 |
| received | | | |
+-----------------+--------------------+----------------+-----------------+
| | | _______ | _______ |
+-----------------+--------------------+----------------+-----------------+
| | | | |
+-----------------+--------------------+----------------+-----------------+
| Net cash used in investing | (28,897) | (57,316) |
| activities | | |
+--------------------------------------+----------------+-----------------+
| | | _______ | _______ |
+-----------------+--------------------+----------------+-----------------+
| | | | |
+-----------------+--------------------+----------------+-----------------+
| Cash flows from financing activities | | |
+--------------------------------------+----------------+-----------------+
| Proceeds from issue of share capital | 217 | 1,740 |
+--------------------------------------+----------------+-----------------+
| Shares | | (1,893) | (3,828) |
| purchased for | | | |
| Trust | | | |
+-----------------+--------------------+----------------+-----------------+
| Purchase of own | | - | (1,241) |
| shares | | | |
+-----------------+--------------------+----------------+-----------------+
| Payment of Term Loan | (63,330) | (25,000) |
+--------------------------------------+----------------+-----------------+
| Proceeds from Term Loan | 50,000 | - |
+--------------------------------------+----------------+-----------------+
| Net payment of other long term | (2,935) | (13,765) |
| borrowings | | |
+--------------------------------------+----------------+-----------------+
| Payment of finance lease liabilities | (419) | (393) |
+--------------------------------------+----------------+-----------------+
| Dividends paid | | (19,366) | (16,490) |
+-----------------+--------------------+----------------+-----------------+
| | | _______ | _______ |
+-----------------+--------------------+----------------+-----------------+
| | | | |
+-----------------+--------------------+----------------+-----------------+
| Net cash used in financing | (37,726) | (58,977) |
| activities | | |
+--------------------------------------+----------------+-----------------+
| | | _______ | _______ |
+-----------------+--------------------+----------------+-----------------+
| | | | |
+-----------------+--------------------+----------------+-----------------+
| Net increase in net cash and cash | (53,486) | 1,715 |
| equivalents | | |
+--------------------------------------+----------------+-----------------+
| Cash and cash equivalents at | 139,614 | 137,899 |
| beginning of year | | |
+--------------------------------------+----------------+-----------------+
| | | _______ | _______ |
+-----------------+--------------------+----------------+-----------------+
| | | | |
+-----------------+--------------------+----------------+-----------------+
| Cash and cash equivalents at end of | 86,128 | 139,614 |
| year 24 | | |
+--------------------------------------+----------------+-----------------+
| | _______ | _______ |
+--------------------------------------+----------------+-----------------+
| | | | | |
+-----------------+---+----------------+----------------+-----------------+
Statement of Accounting Policies
_______________________________________________________________________________
_________
The financial information set out above and in the accompanying notes, does not
constitute the Company's statutory accounts for the years ended 31 January 2010
or 2009, but is derived from those Accounts. Statutory accounts for 2009 have
been delivered to the Register of Companies and those for 2010 will be delivered
following the Company's Annual General Meeting. The auditors have reported on
those accounts; their reports were unqualified and did not contain statements
under the Companies Act 2006, s 237 (2) or (3).
The Independent Auditors' report on the 2009 accounts was unqualified and did
not contain a statement under 237(2) or 237(3) of the Companies Act 1985. The
Independent Auditors' report on the 2010 accounts was unqualified* and did not
contain a statement under 498(2) or 498(3) of the Companies Act 2006.
* did not draw attention to any matters by way of emphasis
Basis of Preparation
The accounting reference date of The GAME Group plc and all of its subsidiary
undertakings (the "Group") is 31 January. The comparative year's results are
for the 53 week period ended 31 January 2009. The current year's results are
for the 52 week period ended 30 January 2010.
The consolidated financial statements incorporate the results of the Group made
up to 31 January 2010. The Group has used the acquisition method of accounting
to consolidate the results of subsidiary undertakings. The results of
subsidiary undertakings are included from the date of acquisition.
The Group consolidated financial statements have been prepared in accordance
with the Companies Act 2006 as applicable to companies reporting under IFRS and
those IFRSs and IFRIC interpretations issued and effective and endorsed by the
European Union as at the time of preparing these financial statements.
Notes to the Financial Statements for the year ended 31 January 2010
_______________________________________________________________________________
_________
1 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.
+---------------+-------------+---------------+----------------+----------+----------------+-------------+
| | United | International | Global Online | Total |
| | Kingdom | Stores | | |
| | and | 2010 | 2010 | 2010 |
| | Ireland | GBP'000 | GBP'000 | GBP'000 |
| | 2010 | | | |
| | GBP'000 | | | |
+---------------+-------------+---------------+--------------------------------------------+-------------+
| | | | | |
+---------------+-------------+---------------+--------------------------------------------+-------------+
| Revenue | 1,072,698 | 602,556 | 97,104 | 1,772,358 |
+---------------+-------------+---------------+--------------------------------------------+-------------+
| Cost of sales | (751,296) | (447,373) | (80,997) | (1,279,666) |
| | ________ | ________ | ________ | ________ |
+---------------+-------------+---------------+--------------------------------------------+-------------+
| Gross profit | 321,402 | 155,183 | 16,107 | 492,692 |
+---------------+-------------+---------------+--------------------------------------------+-------------+
| | | | | |
+---------------+-------------+---------------+--------------------------------------------+-------------+
| Other | (240,044) | (146,633) | (11,226) | (397,903) |
| operating | 3,331 | | | |
| expenses | ________ | (3,331) | - | - |
| excluding | | ________ | ________ | ________ |
| inter-segment | | | | |
| expenses | | | | |
| Inter-segment | | | | |
| expenses | | | | |
+---------------+-------------+---------------+--------------------------------------------+-------------+
| | | | | |
+---------------+-------------+---------------+--------------------------------------------+-------------+
| Operating | 84,689 | 5,219 | 4,881 | 94,789 |
| profit before | | | | |
| non-recurring | | | | |
| costs | | | | |
+---------------+-------------+---------------+--------------------------------------------+-------------+
| | | | | |
+---------------+-------------+---------------+--------------------------------------------+-------------+
| Non-recurring | (6,199) | - | - | (6,199) |
| costs | ________ | ________ | ________ | ________ |
+---------------+-------------+---------------+--------------------------------------------+-------------+
| | | | | |
+---------------+-------------+---------------+--------------------------------------------+-------------+
| Operating | 78,490 | 5,219 | 4,881 | 88,590 |
| profit | ________ | ________ | ________ | ________ |
+---------------+-------------+---------------+--------------------------------------------+-------------+
| Net Finance | (4,184) | (195) | - | (4,379) |
| costs | | | | |
| excluding | 2,544 | (2,544) | - | - |
| inter-segment | | | | |
| Inter-segment | | | | |
| finance costs | | | | |
+---------------+-------------+---------------+--------------------------------------------+-------------+
| Taxation | (20,321) | (3,423) | - | (23,744) |
+---------------+-------------+---------------+--------------------------------------------+-------------+
| | ________ | ________ | ________ | ________ |
+---------------+-------------+---------------+--------------------------------------------+-------------+
| Profit after | 56,529 | (943) | 4,881 | 60,467 |
| tax | | | | |
+---------------+-------------+---------------+--------------------------------------------+-------------+
| | ________ | _______ | ________ | _______ |
+---------------+-------------+---------------+--------------------------------------------+-------------+
| | | | | |
+---------------+-------------+---------------+--------------------------------------------+-------------+
| Other | | | | |
| segmental | | | | |
| information: | | | | |
+---------------+-------------+---------------+--------------------------------------------+-------------+
| | | | | |
+---------------+-------------+---------------+--------------------------------------------+-------------+
| Goodwill and | 153,649 | 25,974 | 512 | 180,135 |
| other | | | | |
| intangibles | | | | |
+---------------+-------------+---------------+--------------------------------------------+-------------+
| Other assets | 212,043 | 253,185 | 9,996 | 475,224 |
+---------------+-------------+---------------+--------------------------------------------+-------------+
| | _______ | _______ | _______ | _______ |
+---------------+-------------+---------------+--------------------------------------------+-------------+
| Assets | 365,692 | 279,159 | 10,508 | 655,359 |
| | | | | |
+---------------+-------------+---------------+--------------------------------------------+-------------+
| Liabilities | (166,077) | (149,524) | (8,203) | (323,804) |
+---------------+-------------+---------------+--------------------------------------------+-------------+
| | _______ | _______ | _______ | _______ |
+---------------+-------------+---------------+--------------------------------------------+-------------+
| Net assets | 199,615 | 129,635 | 2,305 | 331,555 |
+---------------+-------------+---------------+--------------------------------------------+-------------+
| | _______ | _______ | _______ | _______ |
+---------------+-------------+---------------+--------------------------------------------+-------------+
| Capital | 11,013 | 14,333 | 4,544 | 29,890 |
| expenditure | | | | |
+---------------+-------------+---------------+--------------------------------------------+-------------+
| | _______ | _______ | _______ | _______ |
+---------------+-------------+---------------+--------------------------------------------+-------------+
| Depreciation | 15,908 | 14,751 | 2,239 | 32,898 |
| and | | | | |
| amortisation | | | | |
+---------------+-------------+---------------+--------------------------------------------+-------------+
| | _______ | _______ | _______ | _______ |
+---------------+-------------+---------------+--------------------------------------------+-------------+
| Share based | 2,391 | - | - | 2,391 |
| payment | | | | |
| expense | | | | |
+---------------+-------------+---------------+--------------------------------------------+-------------+
| | _______ | _______ | _______ | _______ |
+---------------+-------------+---------------+--------------------------------------------+-------------+
| | | | | |
+---------------+-------------+--------------------------------+----------+------------------------------+
| | | | | |
+---------------+-------------+--------------------------------+----------+------------------------------+
| | United | International Stores | Global | Total |
| | Kingdom | 2009 | Online | |
| | and | GBP'000 | | 2009 |
| | Ireland | | 2009 | GBP'000 |
| | 2009 | | GBP'000 | |
| | GBP'000 | | | |
+---------------+-------------+--------------------------------+----------+------------------------------+
| | | | | |
+---------------+-------------+--------------------------------+----------+------------------------------+
| Revenue | 1,286,642 | 575,172 | 106,790 | 1,968,604 |
+---------------+-------------+--------------------------------+----------+------------------------------+
| Cost of sales | (932,434) | (434,914) | (86,749) | (1,454,097) |
| | ________ | _______ | ________ | _______ |
+---------------+-------------+--------------------------------+----------+------------------------------+
| Gross profit | 354,208 | 140,258 | 20,041 | 514,507 |
+---------------+-------------+--------------------------------+----------+------------------------------+
| | | | | |
+---------------+-------------+--------------------------------+----------+------------------------------+
| Other | (247,627) | (122,037) | (13,962) | (383,626) |
| operating | | | | |
| expenses | 7,182 | (7,182) | - | - |
| excluding | ________ | _______ | ________ | _______ |
| inter-segment | | | | |
| expenses | | | | |
| Inter-segment | | | | |
| expenses | | | | |
| | | | | |
+---------------+-------------+--------------------------------+----------+------------------------------+
| | | | | |
+---------------+-------------+--------------------------------+----------+------------------------------+
| Operating | | | | |
| profit before | 113,763 | 11,039 | 6,079 | 130,881 |
| non-recurring | | | | |
| costs | | | | |
+---------------+-------------+--------------------------------+----------+------------------------------+
| | | | | |
+---------------+-------------+--------------------------------+----------+------------------------------+
| Non-recurring | (6,588) | - | - | (6,588) |
| costs | | | | |
+---------------+-------------+--------------------------------+----------+------------------------------+
| | ________ | _______ | ________ | _______ |
+---------------+-------------+--------------------------------+----------+------------------------------+
| Operating | 107,175 | 11,039 | 6,079 | 124,293 |
| profit | ________ | ________ | ________ | ________ |
+---------------+-------------+--------------------------------+----------+------------------------------+
| Net Finance | (6,453) | (474) | - | (6,927) |
| costs | | | | |
| excluding | 4,370 | (4,370) | - | - |
| inter-segment | | | | |
| Inter-segment | | | | |
| finance costs | | | | |
+---------------+-------------+--------------------------------+----------+------------------------------+
| Taxation | (28,330) | (5,386) | - | (33,716) |
+---------------+-------------+--------------------------------+----------+------------------------------+
| | ________ | _______ | _______ | _______ |
+---------------+-------------+--------------------------------+----------+------------------------------+
| Profit after | 76,762 | 809 | 6,079 | 83,650 |
| tax | | | | |
+---------------+-------------+--------------------------------+----------+------------------------------+
| | ________ | _______ | ________ | _______ |
+---------------+-------------+--------------------------------+----------+------------------------------+
| | | | | |
+---------------+-------------+--------------------------------+----------+------------------------------+
| Other | | | | |
| segmental | | | | |
| information: | | | | |
+---------------+-------------+--------------------------------+----------+------------------------------+
| | | | | |
+---------------+-------------+--------------------------------+----------+------------------------------+
| Goodwill and | 154,362 | 27,134 | 771 | 182,267 |
| other | | | | |
| intangibles | | | | |
+---------------+-------------+--------------------------------+----------+------------------------------+
| Other assets | 280,987 | 258,154 | 7,516 | 546,657 |
+---------------+-------------+--------------------------------+----------+------------------------------+
| | _______ | _______ | _______ | _______ |
+---------------+-------------+--------------------------------+----------+------------------------------+
| Assets | 435,349 | 285,288 | 8,287 | 728,924 |
+---------------+-------------+--------------------------------+----------+------------------------------+
| Liabilities | (271,113) | (164,674) | (6,836) | (442,623) |
+---------------+-------------+--------------------------------+----------+------------------------------+
| | _______ | _______ | _______ | _______ |
+---------------+-------------+--------------------------------+----------+------------------------------+
| Net assets | 164,236 | 120,614 | 1,451 | 286,301 |
+---------------+-------------+--------------------------------+----------+------------------------------+
| | _______ | _______ | _______ | _______ |
+---------------+-------------+--------------------------------+----------+------------------------------+
| Capital | 20,152 | 28,805 | 4,488 | 53,445 |
| expenditure | | | | |
+---------------+-------------+--------------------------------+----------+------------------------------+
| | _______ | _______ | _______ | _______ |
+---------------+-------------+--------------------------------+----------+------------------------------+
| Depreciation | 15,451 | 12,059 | 1,391 | 28,901 |
| and | | | | |
| amortisation | | | | |
+---------------+-------------+--------------------------------+----------+------------------------------+
| | _______ | _______ | _______ | _______ |
+---------------+-------------+--------------------------------+----------+------------------------------+
| Share based | 1,968 | - | - | 1,968 |
| payment | | | | |
| expense | | | | |
+---------------+-------------+--------------------------------+----------+------------------------------+
| | _______ | _______ | _______ | _______ |
+---------------+-------------+---------------+----------------+----------+----------------+-------------+
+-------------------+-------------------+--------------+---------------+--------------+
| | 2010 | | 2009 | |
+ +-------------------+--------------+---------------+--------------+
| | GBP'000 | | GBP'000 | |
+-------------------+-------------------+--------------+---------------+--------------+
| | Total | % of Total | Total | % of |
| | | | | Total |
+-------------------+-------------------+--------------+---------------+--------------+
| Revenue | | | | |
+-------------------+-------------------+--------------+---------------+--------------+
| Hardware | 433,748 | 24.5 | 555,369 | 28.2 |
+-------------------+-------------------+--------------+---------------+--------------+
| Software | 730,800 | 41.2 | 873,835 | 44.4 |
+-------------------+-------------------+--------------+---------------+--------------+
| New hardware and | 1,164,548 | 65.7 | 1,429,204 | 72.6 |
| software | | | | |
+-------------------+-------------------+--------------+---------------+--------------+
| Preowned | 374,485 | 21.1 | 353,409 | 18.0 |
+-------------------+-------------------+--------------+---------------+--------------+
| Other | 233,325 | 13.2 | 185,991 | 9.4 |
+-------------------+-------------------+--------------+---------------+--------------+
| | | | | |
+-------------------+-------------------+--------------+---------------+--------------+
| Total | 1,772,358 | 100.0 | 1,968,604 | 100.0 |
+-------------------+-------------------+--------------+---------------+--------------+
| | | | | |
+-------------------+-------------------+--------------+---------------+--------------+
+-------------------+-------------------+--------------+----------------+--------------+
| | 2010 | | 2009 | |
+ +-------------------+--------------+----------------+--------------+
| | GBP'000 | | GBP'000 | |
+-------------------+-------------------+--------------+----------------+--------------+
| | Total | % of Total | Total | % of |
| | | | | Total |
+-------------------+-------------------+--------------+----------------+--------------+
| Gross Margin | | | | |
+-------------------+-------------------+--------------+----------------+--------------+
| New hardware and | 257,362 | 52.2 | 319,058 | 62.0 |
| software | | | | |
+-------------------+-------------------+--------------+----------------+--------------+
| Preowned | 156,007 | 31.7 | 138,176 | 26.9 |
+-------------------+-------------------+--------------+----------------+--------------+
| Other | 79,323 | 16.1 | 57,273 | 11.1 |
+-------------------+-------------------+--------------+----------------+--------------+
| | | | | |
+-------------------+-------------------+--------------+----------------+--------------+
| Total | 492,692 | 100.0 | 514,507 | 100.0 |
+-------------------+-------------------+--------------+----------------+--------------+
| | | | | |
+-------------------+-------------------+--------------+----------------+--------------+
+----------------------+------+------------+--------------+---------+
| | | 2010 | | 2009 |
+----------------------+------+------------+--------------+---------+
| | | % | | % |
+----------------------+------+------------+--------------+---------+
| | | Total | | Total |
+----------------------+------+------------+--------------+---------+
| Gross Margin | | | | |
+----------------------+------+------------+--------------+---------+
| New hardware and | | 22.1% | | 22.3% |
| software | | | | |
+----------------------+------+------------+--------------+---------+
| Preowned | | 41.7% | | 39.1% |
+----------------------+------+------------+--------------+---------+
| Other | | 34.0% | | 30.8% |
+----------------------+------+------------+--------------+---------+
| | | | | |
+----------------------+------+------------+--------------+---------+
| Total Group | | 27.8% | | 26.1% |
+----------------------+------+------------+--------------+---------+
| | | | | |
+----------------------+------+------------+--------------+---------+
+------------------------+----+----+--------+----+-----------+--+-----------+
| | | | | | Year | | 53 |
| | | | | | ended | | weeks |
| | | | | | 31 | | ended |
| | | | | | January | | 31 |
| | | | | | 2010 | | January |
| | | | | | | | 2009 |
| | | | | | | | |
+------------------------+----+----+--------+----+-----------+--+-----------+
| | | | | | GBP'000 | | GBP'000 |
+------------------------+----+----+--------+----+-----------+--+-----------+
| Turnover by territory | | | | | | | |
+------------------------+----+----+--------+----+-----------+--+-----------+
| United Kingdom and | | | | | 1,072,698 | | 1,286,642 |
| Ireland | | | | | | | |
+------------------------+----+----+--------+----+-----------+--+-----------+
| France | | | | | 187,291 | | 194,855 |
+------------------------+----+----+--------+----+-----------+--+-----------+
| Iberia | | | | | 288,342 | | 260,389 |
+------------------------+----+----+--------+----+-----------+--+-----------+
| Scandinavia | | | | | 49,962 | | 52,631 |
+------------------------+----+----+--------+----+-----------+--+-----------+
| Australia | | | | | 69,705 | | 62,751 |
+------------------------+----+----+--------+----+-----------+--+-----------+
| Czech Republic | | | | | 7,256 | | 4,546 |
+------------------------+----+----+--------+----+-----------+--+-----------+
| Total Stores | | | | | 1,675,254 | | 1,861,814 |
+------------------------+----+----+--------+----+-----------+--+-----------+
| Total Online | | | | | 97,104 | | 106,790 |
+------------------------+----+----+--------+----+-----------+--+-----------+
| Total Turnover | | | | | 1,772,358 | | 1,968,604 |
+------------------------+----+----+--------+----+-----------+--+-----------+
| | | | | | | | |
+------------------------+----+----+--------+----+-----------+--+-----------+
| | | | | | | | |
+------------------------+----+----+--------+----+-----------+--+-----------+
| Stores by territory | | | | | Number | | Number |
+------------------------+----+----+--------+----+-----------+--+-----------+
| United Kingdom and | | | | | 677 | | 696 |
| Ireland | | | | | | | |
+------------------------+----+----+--------+----+-----------+--+-----------+
| France | | | | | 199 | | 192 |
+------------------------+----+----+--------+----+-----------+--+-----------+
| Iberia | | | | | 283 | | 258 |
+------------------------+----+----+--------+----+-----------+--+-----------+
| Scandinavia | | | | | 68 | | 66 |
+------------------------+----+----+--------+----+-----------+--+-----------+
| Australia | | | | | 118 | | 101 |
+------------------------+----+----+--------+----+-----------+--+-----------+
| Czech Republic | | | | | 29 | | 22 |
+------------------------+----+----+--------+----+-----------+--+-----------+
| | | | | | 1,374 | | 1,335 |
+------------------------+----+----+--------+----+-----------+--+-----------+
| Franchises | | | | | | | |
+------------------------+----+----+--------+----+-----------+--+-----------+
| France | | | | | 0 | | 1 |
+------------------------+----+----+--------+----+-----------+--+-----------+
| Iberia | | | | | 5 | | 5 |
+------------------------+----+----+--------+----+-----------+--+-----------+
| Australia | | | | | 1 | | 1 |
+------------------------+----+----+--------+----+-----------+--+-----------+
| | | | | | 6 | | 7 |
+------------------------+----+----+--------+----+-----------+--+-----------+
| | | | | | | | |
+------------------------+----+----+--------+----+-----------+--+-----------+
| Trading square footage | | | | | Sq ft | | Sq ft |
| by territory at year | | | | | | | |
| end | | | | | | | |
+------------------------+----+----+--------+----+-----------+--+-----------+
| United Kingdom and | | | | | 797,594 | | 808,322 |
| Ireland | | | | | | | |
+------------------------+----+----+--------+----+-----------+--+-----------+
| France | | | | | 185,172 | | 177,729 |
+------------------------+----+----+--------+----+-----------+--+-----------+
| Iberia | | | | | 236,045 | | 218,395 |
+------------------------+----+----+--------+----+-----------+--+-----------+
| Scandinavia | | | | | 69,575 | | 62,367 |
+------------------------+----+----+--------+----+-----------+--+-----------+
| Australia | | | | | 132,564 | | 113,417 |
+------------------------+----+----+--------+----+-----------+--+-----------+
| Czech Republic | | | | | 17,483 | | 12,611 |
+------------------------+----+----+--------+----+-----------+--+-----------+
| | | | | | 1,438,433 | | 1,392,841 |
+------------------------+----+----+--------+----+-----------+--+-----------+
2 Other operating expenses
+---------------------------------------+----------------------+---------+
| | 2010 | 2009 |
+---------------------------------------+----------------------+---------+
| | GBP'000 | GBP'000 |
+---------------------------------------+----------------------+---------+
| | | |
+---------------------------------------+----------------------+---------+
| Selling and distribution | 324,198 | 304,428 |
+---------------------------------------+----------------------+---------+
| Administrative expenses | 79,904 | 85,786 |
+---------------------------------------+----------------------+---------+
| | _______ | _______ |
+---------------------------------------+----------------------+---------+
| | | |
+---------------------------------------+----------------------+---------+
| | 404,102 | 390,214 |
+---------------------------------------+----------------------+---------+
| | _______ | _______ |
+---------------------------------------+----------------------+---------+
Administrative expenses include non-recurring costs of GBP6,199,486 (2009:
GBP6,587,603) (see note 3).
3 Non-recurring costs
In the current year administrative expenses include non-recurring costs of
GBP6,199,486 (2009: GBP6,587,603) in relation to integration costs following the
acquisition of Gamestation.
4 Operating profit
+---------------------+---------------------------------+---------+---------+
| | | 2010 | 2009 |
+---------------------+---------------------------------+---------+---------+
| | | GBP'000 | GBP'000 |
+---------------------+---------------------------------+---------+---------+
| | | | |
+---------------------+---------------------------------+---------+---------+
| This is stated | | | |
| after charging: | | | |
+---------------------+---------------------------------+---------+---------+
| Depreciation charge | | 28,593 | 25,264 |
+---------------------+---------------------------------+---------+---------+
| Amortisation of intangible fixed assets | 4,305 | 3,637 |
+-------------------------------------------------------+---------+---------+
| Operating lease | - leasehold premises | 87,775 | 82,392 |
| rentals | | | |
+---------------------+---------------------------------+---------+---------+
| | - other | 1,289 | 1,627 |
+---------------------+---------------------------------+---------+---------+
| Loss on disposal of non current assets | 2,734 | 146 |
+-------------------------------------------------------+---------+---------+
| Auditors' | - Fees payable to the | 75 | 85 |
| remuneration | company's auditor for the audit | | |
| | of the company's annual | | |
| | accounts | | |
+---------------------+---------------------------------+---------+---------+
| | - Fees payable for the audit | 355 | 330 |
| | of the company's subsidiaries, | | |
| | pursuant to legislation | | |
+---------------------+---------------------------------+---------+---------+
| | - other services supplied | 33 | 32 |
| | pursuant to legislation | | |
+---------------------+---------------------------------+---------+---------+
| | - other services relating to | 294 | 178 |
| | tax | | |
+---------------------+---------------------------------+---------+---------+
| | - Recruitment and | - | - |
| | remuneration services | | |
+---------------------+---------------------------------+---------+---------+
| | - All other services | 169 | 70 |
+---------------------+---------------------------------+---------+---------+
| | | _______ | _______ |
+---------------------+---------------------------------+---------+---------+
5 Finance income
+-----------------+----------------------------+--------------+---------+
| | | 2010 | 2009 |
+-----------------+----------------------------+--------------+---------+
| | | GBP'000 | GBP'000 |
+-----------------+----------------------------+--------------+---------+
| | | | |
+-----------------+----------------------------+--------------+---------+
| Interest income on financial assets | 538 | 1,805 |
| classified as loans and receivables | | |
+----------------------------------------------+--------------+---------+
| | | _______ | _______ |
+-----------------+----------------------------+--------------+---------+
| | | | |
+-----------------+----------------------------+--------------+---------+
| | | 538 | 1,805 |
+-----------------+----------------------------+--------------+---------+
| | | _______ | _______ |
+-----------------+----------------------------+--------------+---------+
6 Finance costs
+-------------------------------------------+-----------------+----------+
| | 2010 | 2009 |
+-------------------------------------------+-----------------+----------+
| | GBP'000 | GBP'000 |
+-------------------------------------------+-----------------+----------+
| | | |
+-------------------------------------------+-----------------+----------+
| Interest expense for finance lease and | 49 | 35 |
| hire purchase arrangements | | |
+-------------------------------------------+-----------------+----------+
| Interest expense for borrowings at | 4,866 | 8,667 |
| amortised cost | | |
+-------------------------------------------+-----------------+----------+
| Other interest | 2 | 30 |
+-------------------------------------------+-----------------+----------+
| | _______ | _______ |
+-------------------------------------------+-----------------+----------+
| | | |
+-------------------------------------------+-----------------+----------+
| Finance costs | 4,917 | 8,732 |
+-------------------------------------------+-----------------+----------+
| | _______ | _______ |
+-------------------------------------------+-----------------+----------+
7 Employees
Staff costs for all employees (including directors) consist of:
+-------------------------------------------------+------------+---------+
| | 2010 | 2009 |
+-------------------------------------------------+------------+---------+
| | GBP'000 | GBP'000 |
+-------------------------------------------------+------------+---------+
| | | |
+-------------------------------------------------+------------+---------+
| Wages and salaries | 135,070 | 127,001 |
+-------------------------------------------------+------------+---------+
| Social security costs | 18,710 | 16,807 |
+-------------------------------------------------+------------+---------+
| Other pension costs | 1,700 | 1,445 |
+-------------------------------------------------+------------+---------+
| Share-based payment expense (see Note 20g) | 2,391 | 1,968 |
+-------------------------------------------------+------------+---------+
| | _______ | _______ |
+-------------------------------------------------+------------+---------+
| | | |
+-------------------------------------------------+------------+---------+
| | 157,871 | 147,221 |
+-------------------------------------------------+------------+---------+
| | _______ | _______ |
+-------------------------------------------------+------------+---------+
| | | |
+-------------------------------------------------+------------+---------+
| The average number of employees of the Group | | |
+-------------------------------------------------+------------+---------+
| during the year, including directors, was as | | |
| follows: | | |
+-------------------------------------------------+------------+---------+
| | 2010 | 2009 |
+-------------------------------------------------+------------+---------+
| | Number | Number |
+-------------------------------------------------+------------+---------+
| | | |
+-------------------------------------------------+------------+---------+
| Selling | 9,775 | 9,571 |
+-------------------------------------------------+------------+---------+
| Administration | 817 | 879 |
+-------------------------------------------------+------------+---------+
| | _______ | _______ |
+-------------------------------------------------+------------+---------+
| | 10,592 | 10,450 |
+-------------------------------------------------+------------+---------+
| | _______ | _______ |
+-------------------------------------------------+------------+---------+
8 Taxation
+------------------------------------------------+--------------+---------+
| (a) Analysis of charge in the year | 2010 | 2009 |
+------------------------------------------------+--------------+---------+
| | GBP'000 | GBP'000 |
+------------------------------------------------+--------------+---------+
| | | |
+------------------------------------------------+--------------+---------+
| Current tax | | |
+------------------------------------------------+--------------+---------+
| UK corporation tax | 22,192 | 34,235 |
+------------------------------------------------+--------------+---------+
| Adjustments in respect of prior periods | (1,950) | 190 |
+------------------------------------------------+--------------+---------+
| Overseas tax payable | 4,192 | 4,903 |
+------------------------------------------------+--------------+---------+
| | _______ | _______ |
+------------------------------------------------+--------------+---------+
| | | |
+------------------------------------------------+--------------+---------+
| Total current tax | 24,434 | 39,328 |
+------------------------------------------------+--------------+---------+
| | | |
+------------------------------------------------+--------------+---------+
| Deferred tax | | |
+------------------------------------------------+--------------+---------+
| Current year movement | (1,695) | (5,651) |
+------------------------------------------------+--------------+---------+
| Prior year movement | 1,005 | 39 |
+------------------------------------------------+--------------+---------+
| | _______ | _______ |
+------------------------------------------------+--------------+---------+
| | | |
+------------------------------------------------+--------------+---------+
| Taxation on profit on ordinary activities | 23,744 | 33,716 |
+------------------------------------------------+--------------+---------+
| | _______ | _______ |
+------------------------------------------------+--------------+---------+
| | | |
+------------------------------------------------+--------------+---------+
| (b) Factors affecting the tax charge for the | | |
| year | | |
+------------------------------------------------+--------------+---------+
| | | |
+------------------------------------------------+--------------+---------+
| | 2010 | 2009 |
+------------------------------------------------+--------------+---------+
| | GBP'000 | GBP'000 |
+------------------------------------------------+--------------+---------+
| | | |
+------------------------------------------------+--------------+---------+
| Profit on ordinary activities before taxation | 84,211 | 117,366 |
+------------------------------------------------+--------------+---------+
| | _______ | _______ |
+------------------------------------------------+--------------+---------+
| | | |
+------------------------------------------------+--------------+---------+
| Profit on ordinary activities multiplied by | | |
| the standard | | |
+------------------------------------------------+--------------+---------+
| rate of corporation tax in the UK of 28.0% | 23,579 | 33,247 |
| (2009: 28.3%) | | |
+------------------------------------------------+--------------+---------+
| | _______ | _______ |
+------------------------------------------------+--------------+---------+
| Effects of: | | |
+------------------------------------------------+--------------+---------+
| Expenses not deductible for tax purposes | 1,698 | 1,892 |
+------------------------------------------------+--------------+---------+
| Effect of foreign tax rates | 283 | 538 |
+------------------------------------------------+--------------+---------+
| Tax losses incurred and (utilised)/not | (1,128) | (1,705) |
| utilised in the year | | |
+------------------------------------------------+--------------+---------+
| Adjustments to tax charge in respect of | (946) | 229 |
| previous periods | | |
+------------------------------------------------+--------------+---------+
| Other items | 258 | (485) |
+------------------------------------------------+--------------+---------+
| | _______ | _______ |
+------------------------------------------------+--------------+---------+
| | | |
+------------------------------------------------+--------------+---------+
| Tax charge for the year | 23,744 | 33,716 |
+------------------------------------------------+--------------+---------+
| | _______ | _______ |
+------------------------------------------------+--------------+---------+
The Group has approximately GBP54 million (2009: GBP31 million) of unrelieved
trading losses available for offset against future taxable profits of certain
Group companies. Of these losses, GBP11.4m (2009: GBP4.5m) has been provided
which represents a recognised deferred tax asset of GBP3.1m (2009:GBP1.6m).
There are unprovided tax losses of GBP42.6m (2009:GBP26.5m). Deferred tax
assets have not been recognised in respect of these losses as there is
uncertainty over future taxable profits against which these can be offset.
9 Dividends
+-------------------------------+--------------+---------+-------+---------+
| | 2010 | 2010 | 2009 | 2009 |
+-------------------------------+--------------+---------+-------+---------+
| | Pence | | Pence | |
+-------------------------------+--------------+---------+-------+---------+
| | per share | GBP'000 | per | GBP'000 |
| | | | share | |
+-------------------------------+--------------+---------+-------+---------+
| | | | | |
+-------------------------------+--------------+---------+-------+---------+
| Final paid | 3.71 | 12,849 | 2.97 | 10,292 |
+-------------------------------+--------------+---------+-------+---------+
| Interim paid | 1.88 | 6,517 | 1.79 | 6,198 |
+-------------------------------+--------------+---------+-------+---------+
| | | _______ | | _______ |
+-------------------------------+--------------+---------+-------+---------+
| | | | | |
+-------------------------------+--------------+---------+-------+---------+
| | | 19,366 | | 16,490 |
+-------------------------------+--------------+---------+-------+---------+
| | | _______ | | _______ |
+-------------------------------+--------------+---------+-------+---------+
It is proposed that a final dividend of 3.90p will be paid on 16 July 2010 to
shareholders on the register on 25 June 2010.
10 Earnings per share
The calculation of earnings per share for the year ended 31 January 2010 is
based on the profit after taxation of GBP60,467,009 (2009: GBP83,650,000). The
calculation of basic earnings per share is based on a weighted average number of
346,512,537 (2009: 345,895,311) shares in issue during the year. 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 | Diluted |
| | | options | |
+----------------------------+-----------------+------------+-------------+
| | | | |
+----------------------------+-----------------+------------+-------------+
| Year ended 31 January 2010 | 346,512,537 | 677,327 | 347,189,864 |
+----------------------------+-----------------+------------+-------------+
| | | | |
+----------------------------+-----------------+------------+-------------+
| Year ended 31 January 2009 | 345,895,311 | 1,128,717 | 347,024,028 |
+----------------------------+-----------------+------------+-------------+
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.
+-------------------------------------------------------+----------+----------+
| | 2010 | 2009 |
+-------------------------------------------------------+----------+----------+
| | Pence | Pence |
+-------------------------------------------------------+----------+----------+
| | | |
+-------------------------------------------------------+----------+----------+
| Basic earnings per share | 17.45 | 24.18 |
+-------------------------------------------------------+----------+----------+
| | | |
+-------------------------------------------------------+----------+----------+
| Non-recurring costs per share | 1.79 | 1.91 |
+-------------------------------------------------------+----------+----------+
| | ________ | ________ |
+-------------------------------------------------------+----------+----------+
| | | |
+-------------------------------------------------------+----------+----------+
| Basic earnings per share before | | |
+-------------------------------------------------------+----------+----------+
| non-recurring costs | 19.24 | 26.09 |
+-------------------------------------------------------+----------+----------+
| | ________ | ________ |
+-------------------------------------------------------+----------+----------+
| | | |
+-------------------------------------------------------+----------+----------+
| Diluted earnings per share | 17.42p | 24.10p |
+-------------------------------------------------------+----------+----------+
| | ________ | ________ |
+-------------------------------------------------------+----------+----------+
There are 648,948 antidilutive share options in the current year (2009: nil).
11 Property, plant and equipment
+------------------+----------+-----------+--------------+-----------+---------+
| | | Short | | | |
+------------------+----------+-----------+--------------+-----------+---------+
| | Freehold | Leasehold | Improvements | Fixtures, | |
+------------------+----------+-----------+--------------+-----------+---------+
| | land | land and | to | fittings | |
| | and | | leasehold | and | |
+------------------+----------+-----------+--------------+-----------+---------+
| | property | Property | property | equipment | Total |
+------------------+----------+-----------+--------------+-----------+---------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+------------------+----------+-----------+--------------+-----------+---------+
| | | | | | |
+------------------+----------+-----------+--------------+-----------+---------+
| Group | | | | | |
+------------------+----------+-----------+--------------+-----------+---------+
| | | | | | |
+------------------+----------+-----------+--------------+-----------+---------+
| Cost | | | | | |
+------------------+----------+-----------+--------------+-----------+---------+
| At 31 January | 20,563 | 43,143 | 83,161 | 72,369 | 219,236 |
| 2008 | | | | | |
+------------------+----------+-----------+--------------+-----------+---------+
| Additions | 110 | 4,090 | 19,085 | 25,442 | 48,727 |
+------------------+----------+-----------+--------------+-----------+---------+
| Acquisitions | 125 | 224 | 33 | 224 | 606 |
+------------------+----------+-----------+--------------+-----------+---------+
| Disposals | (13) | (423) | (2,326) | (1,915) | (4,677) |
+------------------+----------+-----------+--------------+-----------+---------+
| Exchange | 9 | 6,126 | 6,419 | 3,298 | 15,852 |
| adjustment | | | | | |
+------------------+----------+-----------+--------------+-----------+---------+
| | _______ | _______ | _______ | _______ | _______ |
+------------------+----------+-----------+--------------+-----------+---------+
| | | | | | |
+------------------+----------+-----------+--------------+-----------+---------+
| At 31 January | 20,794 | 53,160 | 106,372 | 99,418 | 279,744 |
| 2009 | | | | | |
+------------------+----------+-----------+--------------+-----------+---------+
| Additions | 178 | 3,174 | 6,770 | 16,200 | 26,322 |
+------------------+----------+-----------+--------------+-----------+---------+
| Acquisitions | | | | | |
+------------------+----------+-----------+--------------+-----------+---------+
| Disposals | (362) | (615) | (2,648) | (3,393) | (7,018) |
+------------------+----------+-----------+--------------+-----------+---------+
| Exchange | 10 | (1,277) | (356) | 1,743 | 120 |
| adjustment | | | | | |
+------------------+----------+-----------+--------------+-----------+---------+
| | _______ | _______ | _______ | _______ | _______ |
+------------------+----------+-----------+--------------+-----------+---------+
| | | | | | |
+------------------+----------+-----------+--------------+-----------+---------+
| At 31 January | 20,620 | 54,442 | 110,138 | 113,968 | 299,168 |
| 2010 | | | | | |
+------------------+----------+-----------+--------------+-----------+---------+
| | _______ | _______ | _______ | _______ | _______ |
+------------------+----------+-----------+--------------+-----------+---------+
| | | | | | |
+------------------+----------+-----------+--------------+-----------+---------+
| Accumulated Depreciation | | | | |
| and Impairment | | | | |
+-----------------------------+-----------+--------------+-----------+---------+
| At 31 January | 1,323 | 7,779 | 36,027 | 43,445 | 88,574 |
| 2008 | | | | | |
+------------------+----------+-----------+--------------+-----------+---------+
| Charge for the | 581 | 1,663 | 11,578 | 11,442 | 25,264 |
| year | | | | | |
+------------------+----------+-----------+--------------+-----------+---------+
| Acquisitions | 71 | - | 7 | 85 | 163 |
+------------------+----------+-----------+--------------+-----------+---------+
| Disposals | (16) | (338) | (1,068) | (2,087) | (3,509) |
+------------------+----------+-----------+--------------+-----------+---------+
| Exchange | (116) | 255 | 1,987 | 1,517 | 3,643 |
| adjustment | | | | | |
+------------------+----------+-----------+--------------+-----------+---------+
| | _______ | _______ | _______ | _______ | _______ |
+------------------+----------+-----------+--------------+-----------+---------+
| At 31 January | 1,843 | 9,359 | 48,531 | 54,402 | 114,135 |
| 2009 | | | | | |
+------------------+----------+-----------+--------------+-----------+---------+
| Charge for the | 464 | 1,831 | 10,939 | 15,359 | 28,593 |
| year | | | | | |
+------------------+----------+-----------+--------------+-----------+---------+
| Acquisitions | | | | | |
+------------------+----------+-----------+--------------+-----------+---------+
| Disposals | (146) | (255) | (1,845) | (2,387) | (4,633) |
+------------------+----------+-----------+--------------+-----------+---------+
| Exchange | 4 | (63) | (221) | 232 | (48) |
| adjustment | | | | | |
+------------------+----------+-----------+--------------+-----------+---------+
| | _______ | _______ | _______ | _______ | _______ |
+------------------+----------+-----------+--------------+-----------+---------+
| | | | | | |
+------------------+----------+-----------+--------------+-----------+---------+
| At 31 January | 2,165 | 10,872 | 57,404 | 67,606 | 138,047 |
| 2010 | | | | | |
+------------------+----------+-----------+--------------+-----------+---------+
| | _______ | _______ | _______ | _______ | _______ |
+------------------+----------+-----------+--------------+-----------+---------+
| | | | | | |
+------------------+----------+-----------+--------------+-----------+---------+
| Carrying Amount | | | | | |
+------------------+----------+-----------+--------------+-----------+---------+
| | | | | | |
+------------------+----------+-----------+--------------+-----------+---------+
| At 31 January | 18,455 | 43,570 | 52,734 | 46,362 | 161,121 |
| 2010 | | | | | |
+------------------+----------+-----------+--------------+-----------+---------+
| | _______ | _______ | _______ | _______ | _______ |
+------------------+----------+-----------+--------------+-----------+---------+
| | | | | | |
+------------------+----------+-----------+--------------+-----------+---------+
| At 31 January | 18,951 | 43,801 | 57,841 | 45,016 | 165,609 |
| 2009 | | | | | |
+------------------+----------+-----------+--------------+-----------+---------+
| | _______ | _______ | _______ | _______ | _______ |
+------------------+----------+-----------+--------------+-----------+---------+
| | | | | | |
+------------------+----------+-----------+--------------+-----------+---------+
| At 31 January | 19,240 | 35,364 | 47,134 | 28,924 | 130,662 |
| 2008 | | | | | |
+------------------+----------+-----------+--------------+-----------+---------+
| | _______ | _______ | _______ | _______ | _______ |
+------------------+----------+-----------+--------------+-----------+---------+
The net book value of tangible fixed assets includes an amount of GBP323,485
(2009: GBP1,217,221) in respect of assets held under finance lease and hire
purchase contracts, and these are recorded in fixtures, fittings and equipment.
The related depreciation charge for the year was GBP893,736 (2009: GBP579,056).
The main finance leases are for EPOS equipment.
12Intangible fixed assets
+----------------------------+----------+------------+----------+---------+
| | Goodwill | Brands | Computer | Total |
+----------------------------+----------+------------+----------+---------+
| | | | Software | |
+----------------------------+----------+------------+----------+---------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+----------------------------+----------+------------+----------+---------+
| | | | | |
+----------------------------+----------+------------+----------+---------+
| Group | | | | |
+----------------------------+----------+------------+----------+---------+
| | | | | |
+----------------------------+----------+------------+----------+---------+
| Cost | | | | |
+----------------------------+----------+------------+----------+---------+
| | | | | |
+----------------------------+----------+------------+----------+---------+
| At 31 January 2008 | 152,117 | 17,991 | 8,972 | 179,080 |
+----------------------------+----------+------------+----------+---------+
| Additions | 306 | 25 | 4,433 | 4,764 |
+----------------------------+----------+------------+----------+---------+
| Acquisitions | 6,233 | 187 | 122 | 6,542 |
+----------------------------+----------+------------+----------+---------+
| Disposals | - | (83) | (24) | (107) |
+----------------------------+----------+------------+----------+---------+
| Exchange adjustment | 2,001 | 44 | 112 | 2,157 |
+----------------------------+----------+------------+----------+---------+
| | | | | |
+----------------------------+----------+------------+----------+---------+
| | _______ | _______ | _______ | _______ |
+----------------------------+----------+------------+----------+---------+
| | | | | |
+----------------------------+----------+------------+----------+---------+
| At 31 January 2009 | 160,657 | 18,164 | 13,615 | 192,436 |
+----------------------------+----------+------------+----------+---------+
| Additions | - | 10 | 3,558 | 3,568 |
+----------------------------+----------+------------+----------+---------+
| Acquisitions | - | - | - | - |
+----------------------------+----------+------------+----------+---------+
| Disposals | - | - | (2,460) | (2,460) |
+----------------------------+----------+------------+----------+---------+
| Exchange adjustment | (461) | 48 | (120) | (533) |
+----------------------------+----------+------------+----------+---------+
| | _______ | _______ | _______ | _______ |
+----------------------------+----------+------------+----------+---------+
| At 31 January 2010 | 160,196 | 18,222 | 14,593 | 193,011 |
+----------------------------+----------+------------+----------+---------+
| | _______ | _______ | _______ | _______ |
+----------------------------+----------+------------+----------+---------+
| | | | | |
+----------------------------+----------+------------+----------+---------+
| Amortisation | | | | |
+----------------------------+----------+------------+----------+---------+
| | | | | |
+----------------------------+----------+------------+----------+---------+
| At 31 January 2008 | 35 | 1,120 | 5,054 | 6,209 |
+----------------------------+----------+------------+----------+---------+
| Charge for the year | - | 1,155 | 2,482 | 3,637 |
+----------------------------+----------+------------+----------+---------+
| Acquisitions | - | 5 | 68 | 73 |
+----------------------------+----------+------------+----------+---------+
| Disposals/impairments | - | - | - | - |
+----------------------------+----------+------------+----------+---------+
| Exchange adjustment | 170 | (4) | 84 | 250 |
+----------------------------+----------+------------+----------+---------+
| | _______ | _______ | _______ | _______ |
+----------------------------+----------+------------+----------+---------+
| | | | | |
+----------------------------+----------+------------+----------+---------+
| At 31 January 2009 | 205 | 2,276 | 7,688 | 10,169 |
+----------------------------+----------+------------+----------+---------+
| Charge for the year | | 1,257 | 3,048 | 4,305 |
+----------------------------+----------+------------+----------+---------+
| Acquisitions | - | - | - | - |
+----------------------------+----------+------------+----------+---------+
| Disposals/impairments | - | - | (1,656) | (1,656) |
+----------------------------+----------+------------+----------+---------+
| Exchange adjustment | (24) | 7 | 75 | 58 |
+----------------------------+----------+------------+----------+---------+
| | _______ | _______ | _______ | _______ |
+----------------------------+----------+------------+----------+---------+
| At 31 January 2010 | 181 | 3,540 | 9,155 | 12,876 |
+----------------------------+----------+------------+----------+---------+
| | _______ | _______ | _______ | _______ |
+----------------------------+----------+------------+----------+---------+
| | | | | |
+----------------------------+----------+------------+----------+---------+
| Carrying Amount | | | | |
+----------------------------+----------+------------+----------+---------+
| At 31 January 2010 | 160,015 | 14,682 | 5,438 | 180,135 |
+----------------------------+----------+------------+----------+---------+
| | _______ | _______ | _______ | _______ |
+----------------------------+----------+------------+----------+---------+
| | | | | |
+----------------------------+----------+------------+----------+---------+
| At 31 January 2009 | 160,452 | 15,888 | 5,927 | 182,267 |
+----------------------------+----------+------------+----------+---------+
| | _______ | _______ | _______ | _______ |
+----------------------------+----------+------------+----------+---------+
| | | | | |
+----------------------------+----------+------------+----------+---------+
| At 31 January 2008 | 152,082 | 16,871 | 3,918 | 172,871 |
+----------------------------+----------+------------+----------+---------+
| | _______ | _______ | _______ | _______ |
+----------------------------+----------+------------+----------+---------+
Goodwill principally relates to the GAME and Gamestation brands. The goodwill
is allocated, for impairment testing purposes, to cash generating units as
follows:
+----------------+------------+
| | GBP'000 |
+----------------+------------+
| | |
+----------------+------------+
| UK and Ireland | 135,033 |
+----------------+------------+
| International | 24,982 |
+----------------+------------+
| | _______ |
+----------------+------------+
| Total | 160,015 |
+----------------+------------+
| | _______ |
+----------------+------------+
The carrying value of goodwill has been assessed on a value-in-use basis. The
key assumptions for the calculations are those regarding growth rates and
expected changes to selling prices and direct costs. The growth rates are based
on industry forecasts, changes in selling prices and direct costs are based on
past practices and expectations of future changes in the market. The Group
prepares cash flow forecasts derived from the most recent financial budgets
approved by management for the next 3 years and extrapolates cash flows for no
more than 13 years using a steady growth rate applicable to the relevant market.
This rate does not exceed the average long-term growth rate for the relevant
markets. The cash flows were discounted using pre-tax discount rates between 3%
and 8% dependent on the territories concerned and GAME's operations in those
territories. No impairments were recognised in the year.
To cause the carrying value of any of the Group's business units to exceed their
recoverable amount would require material and significant adverse changes in one
or a number of the assumptions made. The Board do not consider these to be
reasonably possible changes.
13 Inventories
+-----------------------------------+-------------------------+---------+
| | 2010 | 2009 |
+-----------------------------------+-------------------------+---------+
| | GBP'000 | GBP'000 |
+-----------------------------------+-------------------------+---------+
| | | |
+-----------------------------------+-------------------------+---------+
| Finished goods and goods held for | 176,045 | 181,965 |
| resale | | |
+-----------------------------------+-------------------------+---------+
| | _______ | _______ |
+-----------------------------------+-------------------------+---------+
The directors consider that the replacement value of inventories is not
materially different from their carrying value. The stock provision in the
current year is GBP24,905,000 (2009: GBP20,338,000).
14 Trade and other receivables
+------------------------------------+-------------------------+---------+
| | 2010 | 2009 |
+------------------------------------+-------------------------+---------+
| | GBP'000 | GBP'000 |
+------------------------------------+-------------------------+---------+
| | | |
+------------------------------------+-------------------------+---------+
| Amounts falling due within one | | |
| year: | | |
+------------------------------------+-------------------------+---------+
| Trade receivables | 16,022 | 16,197 |
+------------------------------------+-------------------------+---------+
| Other receivables | 13,134 | 22,066 |
+------------------------------------+-------------------------+---------+
| VAT recoverable | - | 64 |
+------------------------------------+-------------------------+---------+
| | _______ | _______ |
+------------------------------------+-------------------------+---------+
| | | |
+------------------------------------+-------------------------+---------+
| Total trade and other receivables | 29,156 | 38,327 |
+------------------------------------+-------------------------+---------+
| Prepayments and accrued income | 19,160 | 17,138 |
+------------------------------------+-------------------------+---------+
| | _______ | _______ |
+------------------------------------+-------------------------+---------+
| | | |
+------------------------------------+-------------------------+---------+
| | 48,316 | 55,465 |
+------------------------------------+-------------------------+---------+
| | _______ | _______ |
+------------------------------------+-------------------------+---------+
A large proportion of the trade receivables of the Group relates to customers
using credit cards or similar arrangements to purchase goods. GAME bears no
risk of recovery and as a result, the risk of impairment of accounts receivable
is not considered by the directors to be significant.
As at 31 January 2010 and 31 January 2009 there were no amounts which were past
due and no amounts which were impaired.
The fair values of trade and other receivables are the same as book values as
credit risk has been addressed as part of impairment provisioning and due to the
short term nature of the amounts receivable they are not subject to other
fluctuations in market rates.
15 Trade and other payables
+--------------------------------+-------------+-----------+-----------+
| | | Restated | Restated |
+--------------------------------+-------------+-----------+-----------+
| | 2010 | 2009 | 2008 |
+--------------------------------+-------------+-----------+-----------+
| | GBP'000 | GBP'000 | GBP'000 |
+--------------------------------+-------------+-----------+-----------+
| | | | |
+--------------------------------+-------------+-----------+-----------+
| Amounts falling due within one | | | |
| year: | | | |
+--------------------------------+-------------+-----------+-----------+
| Trade payables | 159,441 | 216,156 | 192,529 |
+--------------------------------+-------------+-----------+-----------+
| Other payables | 6,041 | 6,895 | 7,838 |
+--------------------------------+-------------+-----------+-----------+
| Tax and social security costs | 5,924 | 8,930 | 4,039 |
+--------------------------------+-------------+-----------+-----------+
| VAT payable | 34,091 | 45,359 | 50,206 |
+--------------------------------+-------------+-----------+-----------+
| Accruals and deferred income | 52,706 | 71,842 | 64,012 |
+--------------------------------+-------------+-----------+-----------+
| | _______ | _______ | _______ |
+--------------------------------+-------------+-----------+-----------+
| | | | |
+--------------------------------+-------------+-----------+-----------+
| | 258,203 | 349,182 | 318,624 |
+--------------------------------+-------------+-----------+-----------+
| | _______ | _______ | _______ |
+--------------------------------+-------------+-----------+-----------+
Trade payables are non-interest bearing and are normally settled on 30 days
following the end of the month of receipt.
Book values approximate to fair value at 31 January 2010 and 31 January 2009 due
to the short term nature of these items and taking into account the credit risk
of the Group. The difference between the book and fair values is not considered
to be material.
16 Borrowings
+-------------------------------------+------------------------+---------+
| | 2010 | 2009 |
+-------------------------------------+------------------------+---------+
| | GBP'000 | GBP'000 |
+-------------------------------------+------------------------+---------+
| | | |
+-------------------------------------+------------------------+---------+
| | | |
+-------------------------------------+------------------------+---------+
| Long term: | | |
+-------------------------------------+------------------------+---------+
| Current portion: | | |
+-------------------------------------+------------------------+---------+
| Bank loans | 16,864 | 25,948 |
+-------------------------------------+------------------------+---------+
| Obligations under finance leases | | |
| and | | |
+-------------------------------------+------------------------+---------+
| hire purchase contracts | 497 | 377 |
+-------------------------------------+------------------------+---------+
| | _______ | _______ |
+-------------------------------------+------------------------+---------+
| | | |
+-------------------------------------+------------------------+---------+
| | 17,361 | 26,325 |
+-------------------------------------+------------------------+---------+
| | _______ | _______ |
+-------------------------------------+------------------------+---------+
| | | |
+-------------------------------------+------------------------+---------+
| Non current portion: | | |
+-------------------------------------+------------------------+---------+
| Bank loans | 23,782 | 31,183 |
+-------------------------------------+------------------------+---------+
| Obligations under finance leases | | |
| and | | |
+-------------------------------------+------------------------+---------+
| hire purchase contracts | 126 | 664 |
+-------------------------------------+------------------------+---------+
| | _______ | _______ |
+-------------------------------------+------------------------+---------+
| | | |
+-------------------------------------+------------------------+---------+
| | 23,908 | 31,847 |
+-------------------------------------+------------------------+---------+
| | _______ | _______ |
+-------------------------------------+------------------------+---------+
| | | |
+-------------------------------------+------------------------+---------+
| The borrowings are repayable as | | |
| follows: | | |
+-------------------------------------+------------------------+---------+
| On demand or within one year | 16,864 | 25,948 |
+-------------------------------------+------------------------+---------+
| In one to two years | 15,736 | 31,183 |
+-------------------------------------+------------------------+---------+
| In more than two years but less | 8,046 | - |
| than five years | | |
+-------------------------------------+------------------------+---------+
| | _______ | _______ |
+-------------------------------------+------------------------+---------+
| | | |
+-------------------------------------+------------------------+---------+
| | 40,646 | 57,131 |
+-------------------------------------+------------------------+---------+
| | _______ | _______ |
+-------------------------------------+------------------------+---------+
| | | |
+-------------------------------------+------------------------+---------+
| The finance leases are repayable as | | |
| follows: | | |
+-------------------------------------+------------------------+---------+
| On demand or within one year | 497 | 377 |
+-------------------------------------+------------------------+---------+
| In one to two years | 126 | 221 |
+-------------------------------------+------------------------+---------+
| In more than two years but less | - | 443 |
| than five years | | |
+-------------------------------------+------------------------+---------+
| After five years | - | - |
+-------------------------------------+------------------------+---------+
| | _______ | _______ |
+-------------------------------------+------------------------+---------+
| | | |
+-------------------------------------+------------------------+---------+
| | 623 | 1,041 |
+-------------------------------------+------------------------+---------+
| | _______ | _______ |
+-------------------------------------+------------------------+---------+
| | | |
+-------------------------------------+------------------------+---------+
| The gross contractual maturity of financial liabilities is | |
| as follows: | |
+--------------------------------------------------------------+---------+
| | | |
+-------------------------------------+------------------------+---------+
| On demand or within one year | 18,662 | 27,574 |
+-------------------------------------+------------------------+---------+
| In one to two years | 16,581 | 32,102 |
+-------------------------------------+------------------------+---------+
| In more than two years but less | 8,140 | - |
| than five years | | |
+-------------------------------------+------------------------+---------+
| Less: interest due | (2,114) | (1,504) |
+-------------------------------------+------------------------+---------+
| | _______ | _______ |
+-------------------------------------+------------------------+---------+
| | 41,269 | 58,172 |
+-------------------------------------+------------------------+---------+
| | _______ | _______ |
+-------------------------------------+------------------------+---------+
There is no material difference between the book value and current value of
these borrowings.
17 Financial Instruments
Categories of financial instruments
+------------------------------------------------------+---------+---------+
| Financial assets | Loans and |
| | Receivables |
+------------------------------------------------------+-------------------+
| | 2010 | 2009 |
+------------------------------------------------------+---------+---------+
| | GBP'000 | GBP'000 |
+------------------------------------------------------+---------+---------+
| | | |
+------------------------------------------------------+---------+---------+
| Current financial assets | | |
+------------------------------------------------------+---------+---------+
| Trade and other receivables (Note 14) | 29,156 | 38,327 |
+------------------------------------------------------+---------+---------+
| Net cash and cash equivalents (Note 24) | 86,128 | 139,614 |
+------------------------------------------------------+---------+---------+
| | _______ | _______ |
+------------------------------------------------------+---------+---------+
| | | |
+------------------------------------------------------+---------+---------+
| | 115,284 | 177,941 |
+------------------------------------------------------+---------+---------+
| | _______ | _______ |
+------------------------------------------------------+---------+---------+
| | | |
+------------------------------------------------------+---------+---------+
| Financial Liabilities | Financial |
| | liabilities |
+------------------------------------------------------+-------------------+
| | measured at |
+------------------------------------------------------+-------------------+
| | amortised cost |
+------------------------------------------------------+-------------------+
| | 2010 | 2009 |
+------------------------------------------------------+---------+---------+
| | GBP'000 | GBP'000 |
+------------------------------------------------------+---------+---------+
| | | |
+------------------------------------------------------+---------+---------+
| Current financial liabilities | | |
+------------------------------------------------------+---------+---------+
| Trade and other payables (Note 15) | 258,203 | 349,182 |
+------------------------------------------------------+---------+---------+
| Loans and borrowings (Note 16) | 17,361 | 26,325 |
+------------------------------------------------------+---------+---------+
| | _______ | _______ |
+------------------------------------------------------+---------+---------+
| Total current financial liabilities | 275,564 | 375,507 |
+------------------------------------------------------+---------+---------+
| | | |
+------------------------------------------------------+---------+---------+
| | | |
+------------------------------------------------------+---------+---------+
| Non-current financial liabilities | | |
+------------------------------------------------------+---------+---------+
| Loans and borrowings (Note 16) | 23,908 | 31,847 |
+------------------------------------------------------+---------+---------+
| | _______ | _______ |
+------------------------------------------------------+---------+---------+
| Total non-current financial liabilities | 23,908 | 31,847 |
+------------------------------------------------------+---------+---------+
| | _______ | _______ |
+------------------------------------------------------+---------+---------+
| | | |
+------------------------------------------------------+---------+---------+
| Total financial liabilities | 299,472 | 407,354 |
+------------------------------------------------------+---------+---------+
| | _______ | _______ |
+------------------------------------------------------+---------+---------+
The directors consider that the carrying amounts of financial assets and
financial liabilities recorded at amortised cost in the financial statements
approximate their fair values.
The maximum exposure to credit risk at the reporting date is represented by the
carrying value of the financial assets in the balance sheet.
17 Financial Instruments (continued)
The directors review any requirement for interest rate hedging during the year
dependent upon the level of borrowings.
(a) Interest rate and currency of borrowings
The currency and interest rate exposure of the Group's borrowings is shown
below:
+----------------------------+---------------------------------+----------+
| | 2010 | 2009 |
+----------------------------+---------------------------------+----------+
| | GBP'000 | GBP'000 |
+----------------------------+---------------------------------+----------+
| | | |
+----------------------------+---------------------------------+----------+
| Floating rate Euro | 1,128 | 2,131 |
| borrowings | | |
+----------------------------+---------------------------------+----------+
| Floating rate Sterling | 40,141 | 56,041 |
| borrowings | | |
+----------------------------+---------------------------------+----------+
| | _______ | _______ |
+----------------------------+---------------------------------+----------+
| | | |
+----------------------------+---------------------------------+----------+
| | 41,269 | 58,172 |
+----------------------------+---------------------------------+----------+
| | _______ | _______ |
+----------------------------+---------------------------------+----------+
The floating rate borrowings comprise bank borrowings and finance leases bearing
interest rates based upon LIBOR and EURIBOR.
The Group holds a Revolving Credit Facility (RCF) of GBP125 million to be used
for general corporate and working capital purposes. As at 31 January 2010 an
amount of EURnil (2009: EURnil) was drawn down for use in Spain. The interest rate
on the RCF is based on LIBOR and EURIBOR.
The floating rate sterling borrowings comprise a GBP41.7 million Term Loan taken
out in order to refinance the existing debt at GAME. The interest rate on the
loan is based on LIBOR. The second repayment is due in July 2010 and four
further instalments are due.
The terms of the loan facility indicates a fixed charge over the freehold
property and a floating charge over assets.
(b) Interest rate and currency of cash balances
The currency and interest rate exposure of the Group's floating rate cash
balances is shown below:
+------------------------------------------------------+---------+---------+
| | 2010 | 2009 |
+------------------------------------------------------+---------+---------+
| | GBP'000 | GBP'000 |
+------------------------------------------------------+---------+---------+
| | | |
+------------------------------------------------------+---------+---------+
| Sterling | 45,500 | 109,254 |
+------------------------------------------------------+---------+---------+
| Euro | 26,783 | 21,765 |
+------------------------------------------------------+---------+---------+
| Swedish Krona | 4,473 | 3,377 |
+------------------------------------------------------+---------+---------+
| Danish Krone | 229 | 624 |
+------------------------------------------------------+---------+---------+
| Norwegian Krone | 806 | 1,115 |
+------------------------------------------------------+---------+---------+
| Australian Dollar | 7,447 | 3,157 |
+------------------------------------------------------+---------+---------+
| Czech Koruna | 890 | 322 |
+------------------------------------------------------+---------+---------+
| | _______ | _______ |
+------------------------------------------------------+---------+---------+
| | | |
+------------------------------------------------------+---------+---------+
| | 86,128 | 139,614 |
+------------------------------------------------------+---------+---------+
| | _______ | _______ |
+------------------------------------------------------+---------+---------+
The floating rate assets comprise bank accounts bearing interest rates based
upon LIBOR and EURIBOR. There are no fixed rate financial assets.
(c) Sensitivity analysis
The sensitivity analyses below are based on a change in an assumption while
holding all other assumptions constant. In practice this is unlikely to occur
and changes in some of the assumptions may be correlated, for example, a change
in interest rate and a change in foreign currency interest rates. The
sensitivity analysis prepared by management for foreign currency risk and
interest rate risk illustrates how changes in the fair value or future cash
flows of a financial instrument will fluctuate because of changes in foreign
exchange rates.
At 31 January 2010, if interest rates on the floating rate borrowings
denominated in sterling had been 100 basis points higher with all other
variables held constant, profit after tax for the period would be GBP1,131,051
lower (2009: GBP1,137,427 lower).
At 31 January 2010, if interest rates on the floating rate borrowings
denominated in euros had been 100 basis points higher with all other variables
held constant, profit after tax for the period would be GBP271,576 lower (2009:
GBP145,682 lower).
The directors consider that 100 basis points is the maximum likely change to
sterling and euro interest rates over the next year, being the period up to the
next point at which the Group expects to make these disclosures.
The tables in (a) and (b) above present financial liabilities and assets
denominated in foreign currencies held by the group in 2010 and 2009. If the
euro weakened or strengthened by 10% against sterling, with all other variables
held constant, profit after tax and equity would reduce by GBP331,991 (2009:
reduce by GBP850,255).
(d) Fair value of borrowings and financial assets
Set out below is an analysis of all the Group's borrowings and financial assets
by category. The fair value of floating rate borrowings is the amortised cost
because the interest rate payments are based on market value.
+--------------------------------------+------------------------+----------+
| | 2010 | 2009 |
+--------------------------------------+------------------------+----------+
| | GBP'000 | GBP'000 |
+--------------------------------------+------------------------+----------+
| | | |
+--------------------------------------+------------------------+----------+
| Trade and other receivables | 29,156 | 38,327 |
+--------------------------------------+------------------------+----------+
| Net cash and cash equivalents | 86,128 | 139,614 |
+--------------------------------------+------------------------+----------+
| Current portion of long term debt | (17,361) | (26,325) |
+--------------------------------------+------------------------+----------+
| Non current portion of long-term | (23,908) | (31,847) |
| debt | | |
+--------------------------------------+------------------------+----------+
| | _______ | _______ |
+--------------------------------------+------------------------+----------+
The Directors believe that as they are short term, the fair values for all
items, other than long term debt, equate to their book value.
The fair values of both current and non-current bank borrowings are based on
cash flows discounted using rates based on the applicable market rate. The
discount rate applied were within the range 3% to 4% (2009: 2% to 3%).
(e) The Group had no material monetary assets or liabilities that are not
denominated in the functional currency of the operating unit involved.
(f) As at 30 March 2010, the Group had undrawn working capital facilities
available to it of GBP54.8 million (2009: GBP32.0 million). There are no
significant conditions attached to these facilities.
(g) The Group has entered into standby letters of credit to the value of
GBP2,029,205 (2009: GBPNIL). In this respect, the Group treats these letters of
credit as a contingent liability until such time as it becomes probable that the
Group will be required to make a payment under the terms of the letters.
Capital risk management
The capital structure of the Group consists of debt, which includes the
borrowings disclosed in note 16, cash and cash equivalents and equity
attributable to equity holders of the parent, comprising issued capital,
reserves and retained earnings as disclosed in the statement of changes in
equity.
Gearing ratio
It is the Group's policy to maintain its gearing ratio within the range of
0-100% (2009: 0-100%). The Group's gearing ratio at the balance sheet date is
shown below:
+---------------------------------------+-----------------------+-------------+
| | 2010 | 2009 |
+---------------------------------------+-----------------------+-------------+
| | GBP'000 | GBP'000 |
+---------------------------------------+-----------------------+-------------+
| | | |
+---------------------------------------+-----------------------+-------------+
| Debt (i) | 41,269 | 58,172 |
+---------------------------------------+-----------------------+-------------+
| Trade and other payables | 258,203 | 349,182 |
+---------------------------------------+-----------------------+-------------+
| Net cash and cash equivalents | (86,128) | (139,614) |
+---------------------------------------+-----------------------+-------------+
| | _______ | _______ |
+---------------------------------------+-----------------------+-------------+
| | | |
+---------------------------------------+-----------------------+-------------+
| Net debt | 213,344 | 267,740 |
+---------------------------------------+-----------------------+-------------+
| | _______ | _______ |
+---------------------------------------+-----------------------+-------------+
| | | |
+---------------------------------------+-----------------------+-------------+
| | 2010 | 2009 |
+---------------------------------------+-----------------------+-------------+
| | GBP'000 | GBP'000 |
+---------------------------------------+-----------------------+-------------+
| | | |
+---------------------------------------+-----------------------+-------------+
| Equity (ii) | 331,555 | 286,301 |
+---------------------------------------+-----------------------+-------------+
| | _______ | _______ |
+---------------------------------------+-----------------------+-------------+
| | | |
+---------------------------------------+-----------------------+-------------+
| Capital and net debt | 544,899 | 554,041 |
+---------------------------------------+-----------------------+-------------+
| | _______ | _______ |
+---------------------------------------+-----------------------+-------------+
| Gearing ratio | 39% | 48% |
+---------------------------------------+-----------------------+-------------+
(i) Debt is defined as current and non-current portion of long term debt, as
detailed in note 16.
(ii) Equity includes all capital and reserves of the Group.
18 Deferred taxation
+-------------------------------------------+-------------------+-------------------+
| | 2010 | 2009 |
+-------------------------------------------+-------------------+-------------------+
| | GBP'000 | GBP'000 |
+-------------------------------------------+-------------------+-------------------+
| | | |
+-------------------------------------------+-------------------+-------------------+
| Accelerated capital allowances | (470) | 68 |
+-------------------------------------------+-------------------+-------------------+
| Tax losses carried forward | 3,113 | 1,596 |
+-------------------------------------------+-------------------+-------------------+
| Share options | 1,399 | 2,123 |
+-------------------------------------------+-------------------+-------------------+
| Other temporary and deductible | (428) | 217 |
| differences | | |
+-------------------------------------------+-------------------+-------------------+
| | _______ | _______ |
+-------------------------------------------+-------------------+-------------------+
| | | |
+-------------------------------------------+-------------------+-------------------+
| Deferred tax asset | 3,614 | 4,004 |
+-------------------------------------------+-------------------+-------------------+
| | _______ | _______ |
+-------------------------------------------+-------------------+-------------------+
| | | |
+-------------------------------------------+-------------------+-------------------+
| At 1 February 2009 | 4,004 | (1,120) |
+-------------------------------------------+-------------------+-------------------+
| Acquisition of subsidiary | - | (46) |
+-------------------------------------------+-------------------+-------------------+
| Deferred tax charge in the income | 690 | 5,612 |
| statement for the year (note 8) | | |
+-------------------------------------------+-------------------+-------------------+
| Deferred tax taken to equity | (1,078) | (442) |
| Other items | (2) | - |
+-------------------------------------------+-------------------+-------------------+
| | _______ | _______ |
+-------------------------------------------+-------------------+-------------------+
| | | |
+-------------------------------------------+-------------------+-------------------+
| At 31 January 2010 | 3,614 | 4,004 |
+-------------------------------------------+-------------------+-------------------+
| | _______ | _______ |
+-------------------------------------------+-------------------+-------------------+
19 Leasehold property incentives
+--------------------------------------------+-----------------+---------------+
| Rent free periods and reverse premiums | 2010 | 2009 |
+--------------------------------------------+-----------------+---------------+
| | GBP'000 | GBP'000 |
+--------------------------------------------+-----------------+---------------+
| | | |
+--------------------------------------------+-----------------+---------------+
| At 1 February | 9,232 | 7,260 |
+--------------------------------------------+-----------------+---------------+
| Rent free periods and reverse premiums | 3,311 | 3,240 |
| received during the year | | |
+--------------------------------------------+-----------------+---------------+
| Released to profit and loss account | (1,154) | (1,268) |
+--------------------------------------------+-----------------+---------------+
| | _______ | _______ |
+--------------------------------------------+-----------------+---------------+
| | | |
+--------------------------------------------+-----------------+---------------+
| At 31 January | 11,389 | 9,232 |
+--------------------------------------------+-----------------+---------------+
| | _______ | _______ |
+--------------------------------------------+-----------------+---------------+
| | | |
+--------------------------------------------+-----------------+---------------+
| Due within one year | 1,341 | 904 |
+--------------------------------------------+-----------------+---------------+
| Due greater than one year | 10,048 | 8,328 |
+--------------------------------------------+-----------------+---------------+
| | _______ | _______ |
+--------------------------------------------+-----------------+---------------+
| | | |
+--------------------------------------------+-----------------+---------------+
| At 31 January | 11,389 | 9,232 |
+--------------------------------------------+-----------------+---------------+
| | _______ | _______ |
+--------------------------------------------+-----------------+---------------+
| | | |
+--------------------------------------------+-----------------+---------------+
| | | |
+--------------------------------------------+-----------------+---------------+
| | | |
+--------------------------------------------+-----------------+---------------+
20 Called up share capital
+--------------------------+---------+-------------------------+----------+-------------+
| | 2010 | 2009 |
+--------------------------+-----------------------------------+------------------------+
| | 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 | 17,333 | 346,659,167 | 17,316 | 346,323,657 |
+--------------------------+---------+-------------------------+----------+-------------+
| | _______ | _________ | _______ | __________ |
+--------------------------+---------+-------------------------+----------+-------------+
a) Shares issued
During the year, 335,510 (2009: 3,479,091) shares were issued to employees
exercising share options granted under various option schemes. The total
consideration received on the exercise of these options was GBP216,799 (2009:
GBP1,740,436).
Between the year end and 1 April 2010, no shares have been exercised.
b) Shares purchased
During the year no shares (2009: 500,000) were repurchased for cancellation by
the Company at a cost of GBPnil (2009: GBP1,240,950).
c) Trust shares
During the year 1,450,000 shares (2009: 1,800,000 shares) were purchased at a
cost of GBP1,893,495 (2009: GBP3,828,470). These shares are to be used wholly
and exclusively to pay LTIP awards when they become due for payment.
Trust shares comprise 2,368,001 (2009: 3,129,834) 5p ordinary shares. The
market value of these shares at 31 January 2010 is GBP2,178,561 (2009:
GBP4,491,312).
21 Share premium account
+----------------------------------------------+---------------+---------+
| | 2010 | 2009 |
+----------------------------------------------+---------------+---------+
| | GBP'000 | GBP'000 |
+----------------------------------------------+---------------+---------+
| | | |
+----------------------------------------------+---------------+---------+
| Amount subscribed for share capital in | | |
| excess of nominal value. | | |
+----------------------------------------------+---------------+---------+
| | | |
+----------------------------------------------+---------------+---------+
| At 1 February | 46,462 | 44,848 |
+----------------------------------------------+---------------+---------+
| Arising on issue of shares during the year | 200 | 1,614 |
| (net of expenses) | | |
+----------------------------------------------+---------------+---------+
| | | |
| | _______ | _______ |
+----------------------------------------------+---------------+---------+
| | | |
+----------------------------------------------+---------------+---------+
| At 31 January | 46,662 | 46,462 |
+----------------------------------------------+---------------+---------+
| | _______ | _______ |
+----------------------------------------------+---------------+---------+
22 Reserves
Share Capital - the amount subscribed for share capital at nominal value.
Share Premium - the amount subscribed for share capital in excess of nominal
value.
Capital Redemption Reserve - relates to the capital redemption reserve; amounts
transferred from share capital on redemption of issued shares.
Shares held in Trust - relates to shares held in trust, being the weighted
average cost of own shares held in treasury and by the ESOP Trust, the Employee
Benefit Trust was established in January 2002 to provide for the future
obligations of the Company for share awards under the Performance Share Plan and
other share based plans. Under the scheme the trustee, BDO Guernsey Trustees
Limited, purchases the Company's ordinary shares in the open market.
Merger Reserve - relates to the merger reserve which holds the share premium
arising on the share for share exchange on acquisition of Game Plc.
Retained Earnings - relates to retained earnings, being the cumulative net gains
and losses recognised in the consolidated income statements.
Foreign Exchange Reserve - relates to the foreign exchange reserve, which holds
gains/losses arising on re-translating the net assets of overseas operations
into sterling since 1 February 2004.
The cumulative amount of goodwill resulting from acquisitions in previous years
prior to the adoption of FRS10 (Goodwill and intangible assets) which has been
eliminated against Group reserves, net of goodwill attributable to disposals
before 31 January 2010, is GBP9,639,000 (2009: GBP9,639,000).
23 Acquisitions
Current year acquisitions
During the period there were no acquisitions.
Prior year acquisitions
On 21 August 2008, the Group acquired 100% of the share capital of the Czech pc
and video games retailer JRC Czech a.s. On acquisition, JRC Czech a.s. owned 19
specialist pc and video games stores located in the principal cities in the
Czech market and transactional eCommerce site www.jrc.cz.
On 2 July 2008 ABC Games International S.A., a subsidiary of GAME Group plc,
acquired five French franchises for a total consideration of GBP2.2 million,
reflecting cash of GBP0.6 million and other working capital. In addition, on 21
August 2008, a further franchise was acquired for an initial consideration of
GBP0.7 million.
During the prior period the trade and assets of four Spanish franchises were
acquired by Engine Tecnology Systems SL, a subsidiary of GAME Group plc, for a
total consideration of GBP0.8 million.
+--------------------------+------------+------------+----------+---------+
| | French | Spanish | | |
+--------------------------+------------+------------+----------+---------+
| | franchises | franchises | JRC | Total |
+--------------------------+------------+------------+----------+---------+
| | Fair | Fair | Fair | Fair |
| | value | value | value | value |
+--------------------------+------------+------------+----------+---------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+--------------------------+------------+------------+----------+---------+
| | | | | |
+--------------------------+------------+------------+----------+---------+
| Property, plant and | 263 | 18 | 216 | 497 |
| equipment | | | | |
+--------------------------+------------+------------+----------+---------+
| Inventories | 262 | 390 | 855 | 1,507 |
+--------------------------+------------+------------+----------+---------+
| Trade and other | - | - | 163 | 163 |
| receivables | | | | |
+--------------------------+------------+------------+----------+---------+
| Long-term debtors | - | - | 88 | 88 |
+--------------------------+------------+------------+----------+---------+
| Trade and other payables | (221) | (331) | (1,314) | (1,866) |
+--------------------------+------------+------------+----------+---------+
| Cash and cash | 684 | - | (210) | 474 |
| equivalents | | | | |
+--------------------------+------------+------------+----------+---------+
| Intangible fixed assets | 1,882 | 700 | 3,651 | 6,233 |
| - goodwill | | | | |
+--------------------------+------------+------------+----------+---------+
| Intangible fixed assets | - | - | 182 | 182 |
| - brand | | | | |
+--------------------------+------------+------------+----------+---------+
| | _______ | _______ | _______ | _______ |
+--------------------------+------------+------------+----------+---------+
| Total purchase price | 2,870 | 777 | 3,631 | 7,278 |
+--------------------------+------------+------------+----------+---------+
| | | | | |
+--------------------------+------------+------------+----------+---------+
| Cash and cash | (684) | - | 210 | (474) |
| equivalents | | | | |
+--------------------------+------------+------------+----------+---------+
| | _______ | _______ | _______ | _______ |
+--------------------------+------------+------------+----------+---------+
| Cash flows on | | | | |
| acquisition net | | | | |
+--------------------------+------------+------------+----------+---------+
| of cash acquired | 2,186 | 777 | 3,841 | 6,804 |
+--------------------------+------------+------------+----------+---------+
| | ______ | _______ | _______ | _______ |
+--------------------------+------------+------------+----------+---------+
From the date of acquisition JRC added GBP4.5 million to turnover and GBP0.5
million to operating profit. If the acquisition had been completed on the first
day of the financial year, Group revenues for the year would have been increased
by GBP4.1million and the Group profit attributable to equity holders of the
parent would have been decreased by GBP13,000.
From the date of acquisition the French franchises added GBP2.3 million to
turnover and GBP338,000 to operating profit. From the date of acquisition the
Spanish franchises added GBP1.5 million to turnover and GBP160,000 to operating
profit. If these acquisitions had been completed on the first day of the
financial year, it is not anticipated that the operating profit would have been
materially different. No fair value adjustments were required on these
acquisitions.
24 Analysis of net funds
+-------------------------------------+------------------+--------------+
| | 2010 | 2009 |
+-------------------------------------+------------------+--------------+
| | GBP'000 | GBP'000 |
+-------------------------------------+------------------+--------------+
| | | |
+-------------------------------------+------------------+--------------+
| Cash and cash equivalents | 86,128 | 139,614 |
+-------------------------------------+------------------+--------------+
| | _______ | _______ |
+-------------------------------------+------------------+--------------+
| | | |
+-------------------------------------+------------------+--------------+
| Net cash and cash equivalents | 86,128 | 139,614 |
+-------------------------------------+------------------+--------------+
| | | |
+-------------------------------------+------------------+--------------+
| Current portion of long term | (17,361) | (26,325) |
| borrowings | | |
+-------------------------------------+------------------+--------------+
| | | |
+-------------------------------------+------------------+--------------+
| Long term borrowings | (23,908) | (31,847) |
+-------------------------------------+------------------+--------------+
| | _______ | _______ |
+-------------------------------------+------------------+--------------+
| | | |
+-------------------------------------+------------------+--------------+
| Net funds | 44,859 | 81,442 |
+-------------------------------------+------------------+--------------+
| | _______ | _______ |
+-------------------------------------+------------------+--------------+
During the year, the Group did not enter into any new finance lease
arrangements in respect of assets (2009: new finance lease arrangements totalled
GBP443,270).
25 Operating lease commitments
The Group leases certain land and buildings on short term leases. The rents
payable under these leases are subject to re-negotiation at various intervals
specified in the leases. At the balance sheet date, the Group has outstanding
commitments for future minimum lease payments under non-cancellable operating
leases, which fall due as follows:
+-------------------------------------+----------+-----------+----------+-----------+
| | Motor | Land | Motor | Land & |
| | | & | | |
+-------------------------------------+----------+-----------+----------+-----------+
| | vehicles | buildings | vehicles | buildings |
+-------------------------------------+----------+-----------+----------+-----------+
| | 2010 | 2010 | 2009 | 2009 |
+-------------------------------------+----------+-----------+----------+-----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+-------------------------------------+----------+-----------+----------+-----------+
| | | | | |
+-------------------------------------+----------+-----------+----------+-----------+
| The total future minimum lease | | | | |
| payments are due | | | | |
+-------------------------------------+----------+-----------+----------+-----------+
| as follows: | | | | |
+-------------------------------------+----------+-----------+----------+-----------+
| Not later than one year | 91 | 4,093 | 88 | 1,495 |
+-------------------------------------+----------+-----------+----------+-----------+
| Later than one year but not later | 795 | 110,805 | 980 | 83,507 |
| than five years | | | | |
+-------------------------------------+----------+-----------+----------+-----------+
| Later than five years | - | 326,950 | 95 | 384,509 |
+-------------------------------------+----------+-----------+----------+-----------+
| | _______ | _______ | _______ | _______ |
+-------------------------------------+----------+-----------+----------+-----------+
| | | | | |
+-------------------------------------+----------+-----------+----------+-----------+
| | 886 | 441,848 | 1,163 | 469,511 |
+-------------------------------------+----------+-----------+----------+-----------+
| | _______ | _______ | _______ | _______ |
+-------------------------------------+----------+-----------+----------+-----------+
The average remaining term on operating leases over land and buildings is 5
years.
The operating leases over land and buildings in International operations have
lengths of term for a maximum period of 9 years
26 Related Party Transactions
There were no related party transactions within the year or prior year.
27 Risks
Global Economic Conditions
There is a high degree of uncertainty in the global economy, with issues around
government and bank liquidity, business failures, and rising unemployment rates.
We recognise that all of these factors may have an impact on our customers'
willingness or ability to spend.
Our trading performance to date suggests that compared to some sectors of
retailing we are not being as significantly impacted by these wider economic
issues. We will continue to put forward compelling product offers to meet the
more value conscious demands of our consumers.
Technology
As with music and DVD entertainment, the opportunity exists for pc and video
games to be distributed digitally via the internet. Pc games which tend to have
smaller file sizes are available from a number of websites whereas video games
digital content is offered in a limited way via official format channels, e.g.
Microsoft's Xbox Live service.
As broadband technology improves there is a risk that more gamers start playing
their games online. This will reduce the number of people buying boxed product
from retailers such as ourselves.
Given the ever increasing size of pc and video games (up to 50Gb), the existing
broadband infrastructure in all of the countries in which we operate is not
currently sufficient to allow total online play. Additionally, we have
recognised the increasing prominence of eCommerce and digital downloading and we
have invested in state-of-the-art eCommerce websites.
Competition
The pc and video games market has become an increasingly attractive proposition
for retailers. We have seen new entrants to the market place, including
specialists, existing generalists and supermarkets and online players.
We believe that the specialist has all of the attributes to succeed in the pc
and video games market place. We measure our stores' performance against
specific KPIs to ensure our proposition is always appealing and relevant to
consumers.
Seasonality
The Group's business is seasonal with the key trading period being the Christmas
season. Turnover, operating profit and cash flow may be adversely impacted by
variations in demand during this period.
The Group works closely with suppliers to secure stock and implement high
profile preorder campaigns in advance of all major releases. The Group also
undertakes extensive marketing campaigns to drive consumer awareness, and flexes
headcount in store to maximise the sales potential.
Reputation
As a specialist retailer our customers demand that we stock the broadest range
of product. This means that we deal with a variety of video games, for example
age restricted products. Mis-selling such titles is illegal.
To mitigate any issues that may arise through the mis-selling of these games we
employ the very highest levels of training throughout our organisation.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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