Six months ago we wondered whether it would be second time lucky for Game Digital (GMD). The retailer relisted last year, claiming to be a sleeker and better-invested business than the one that went bust back in 2012.
Now we're not so sure. Just weeks after a profit warning in January sent the shares tumbling by one-third, finance director Benedict Smith has announced he is to step down. Pre-Christmas trading disappointed, as a highly competitive market forced Game Digital to slash prices to win business. Add to that higher costs, and adjusted cash profits finished the half-year down 16 per cent at £43m. Management now expects full-year cash profits of £51.3m, against a previous estimate of £64m. But the video games market has had a sluggish start to the 2015 calendar year, leading some analysts to trim their earnings forecasts even further.
On a positive note, digital revenues grew 40 per cent, and another half million customers signed up to the reward programme. After the period-end, Game launched its online marketplace - a would-be Amazon of the gaming world - and acquired Multiplay, a live events, online gaming and eSports company. It has also announced a special dividend of 14.7p a share.
Liberum has trimmed its adjusted full-year pre-tax profit forecast from £39.8m to £38.7m, giving EPS of 17p - down from £39.8m and 18p in 2014.
| GAME DIGITAL (GMD) | ||||
|---|---|---|---|---|
| ORD PRICE: | 248p | MARKET VALUE: | £422m | |
| TOUCH: | 247-250p | 12-MONTH HIGH: | 365p | LOW: 174p |
| DIVIDEND YIELD: | 3.0% | PE RATIO: | 18 | |
| NET ASSET VALUE: | 99p* | NET CASH: | £140.4m | |
| Half-year to 24 Jan | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p)** | Dividend per share*** (p) |
|---|---|---|---|---|
| 2014** | 586 | 33.8 | 14 | 0 |
| 2015 | 582 | 33.2 | 15 | 7.35 |
| % change | -1 | -2 | +7 | - |
Ex-div: 2 Apr Payment: 17 Apr *Includes intangible assets of £51.2m, or 30p a share **Pre-IPO pro-forma EPS ***Excluding special dividend of 14.7p a share | ||||
