GAME CHANGING GAME DIGITAL PLC | 2018/19 INTERIM RESULTS - 21ST MARCH 2019

 
GAME CHANGING GAME DIGITAL PLC | 2018/19 INTERIM RESULTS - 21ST MARCH 2019
GAME DIGITAL PLC – 2018/19 INTERIM RESULTS

       GAME CHANGING
       GAME DIGITAL PLC | 2018/19 INTERIM RESULTS
       21ST MARCH 2019
GAME CHANGING GAME DIGITAL PLC | 2018/19 INTERIM RESULTS - 21ST MARCH 2019
GAME DIGITAL PLC – 2018/19 INTERIM RESULTS

FORWARD LOOKING STATEMENTS

 This presentation includes statements that are, or may be deemed to be, “forward-looking
 statements”. These forward-looking statements can be identified by the use of forward-looking
 terminology, including the terms “believe”, “estimates”, “plans”, “projects”, “anticipates”, “expects”,
 “intends”, “may”, “will”, or “should” or, in each case, their negative or other variations or comparable
 terminology. These forward-looking statements include matters that are not historical facts and
 include statements regarding the Company’s intentions, beliefs or current expectations.

 Any forward-looking statements in this presentation reflect the Company’s current expectations
 and projections about future events. By their nature, forward-looking statements involve a
 number of risks, uncertainties and assumptions that could cause actual results or events to
 differ materially from those expressed or implied by the forward-looking statements. These risks,
 uncertainties and assumptions could adversely affect the outcome and financial effects of the plans
 and events described herein. Forward-looking statements contained in this presentation regarding
 past trends or activities should not be taken as a representation that such trends or activities will
 continue in the future. You should not place undue reliance on forward- looking statements,
 which speak only as of the date of this presentation. No representations or warranties are made
 as to the accuracy of such statements, estimates or projections.

 Please note that the Directors of the Company are, in making this presentation, not
 seeking to encourage shareholders to either buy or sell shares in the Company. Shareholders in
 any doubt about what action to take are recommended to seek financial advice from an
 independent financial advisor authorised by the Financial Services and Markets Act 2000.

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GAME CHANGING GAME DIGITAL PLC | 2018/19 INTERIM RESULTS - 21ST MARCH 2019
MARTYN GIBBS
CHIEF EXECUTIVE OFFICER

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GAME CHANGING GAME DIGITAL PLC | 2018/19 INTERIM RESULTS - 21ST MARCH 2019
GAME DIGITAL PLC – 2018/19 INTERIM RESULTS

H1 GROUP HEADLINES
SOLID GTV AND GROSS PROFIT RATE PERFORMANCE ACHIEVED IN A CHALLENGING RETAIL
ENVIRONMENT
    •    Group GTV broadly flat on a like-for-like basis
            •   GTV improvement of 5.8% in Content (physical and digital)
            •   GTV increased by 9.2% in Accessories & Other
            •   GTV in Hardware down (9.3)% and Preowned down (20.9)%
    •    Group gross profit rate maintained at 21.0%
    •    Group Adjusted EBITDA up 21.7% to £25.8 million (2018: £21.2 million)

DRIVING OPERATIONAL EFFICIENCIES
    •    Strong Core UK Retail performance with Adjusted EBITDA growth of 49.5% to £14.8 million from
         improved gross profit rate and the delivery of £4.9 million of operational efficiencies and cost
         savings
    •    Average length to break on leases in the UK and Spain under 1 year and average savings on rents
         renegotiated in the period of 59%
    •    Further strategic progress achieved towards repositioning and right sizing the retail business in
         the UK with savings in distribution, head office, store payroll and store rent
    •    Continued strong liquidity with Group cash of £95.5 million as at 26 January 2019 (2018: £84.9
         million) and access to aggregated facilities as at today’s date of up to £110 million across the UK
         and Spain

STRATEGY PROGRESSION TOWARDS REPOSITIONING THE BUSINESS
    •    20% increase in station count this period, and 44% increase in stations YoY
    •    2 new arenas opened, Stratford and West Thurrock Lakeside
    •    52% Increase in pay-to-play revenue in H1 FY19 vs H1 FY18, driven by new arenas and
         enlargement of existing arenas

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GAME CHANGING GAME DIGITAL PLC | 2018/19 INTERIM RESULTS - 21ST MARCH 2019
GAME DIGITAL PLC – 2018/19 INTERIM RESULTS

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GAME CHANGING GAME DIGITAL PLC | 2018/19 INTERIM RESULTS - 21ST MARCH 2019
GAME DIGITAL PLC – 2018/19 INTERIM RESULTS

BELONG IS A SOCIAL GAMING NETWORK

               1                              2                             3                              4
              Our arenas provide a physical   Each arena can support more   The community talks to each    Arena Clash and CRM retain
              home for the community          community members than        other generating content for   and continuously engage
                                              the number of stations. A     BELONG that reaches new        BELONG gamers in the
                                              network of gamers forms       potential community            network, further building
                                              around the arena              members                        customer value

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GAME CHANGING GAME DIGITAL PLC | 2018/19 INTERIM RESULTS - 21ST MARCH 2019
GAME DIGITAL PLC – 2018/19 INTERIM RESULTS

BELONG GAMER SEGMENTATION
 •     Five BELONG gamer segments established and profiled:
         1.   Competitive & community – Strong interest in esports
         2. Fun with friends – Enjoy playing together in one location
         3. Private player – Solo gamers playing to unwind in their downtime
         4. Time together – Parents & children who like to game together
         5. Grateful guardians – Parents not interested in gaming, but children are

 •    Establishing programmes to target different segments that increases
      utilisation
 •    Segmentations inform decision making when planning new arena locations
 •    Primary focus is segment one, competitive gamers, with a tailored programme
      of activities such as Arena Clash and Arena Cups (multi-arena), as well as
      community cups and leader board competitions (individual arenas)
 •    Subscription trials target segment one gamers, offering them better value
      pricing per hour and incentivising them to visit BELONG more frequently
 •    Other four segments continue to be important, with tailored experiences such
      as parties and casual play which drives utilisation within these segments

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GAME CHANGING GAME DIGITAL PLC | 2018/19 INTERIM RESULTS - 21ST MARCH 2019
GAME DIGITAL PLC – 2018/19 INTERIM RESULTS

BELONG’S ESPORTS PROGRAMME IN 2019
       APRIL                 MAY             JUNE            JULY           AUGUST        SEPTEMBER    OCTOBER        NOVEMBER        DECEMBER

           ARENA
                                             ARENA CLASH SUMMER                                                   ARENA CLASH WINTER
           CLASH
                                             MINIMUM OF FIVE TITLES                                              MINIMUM OF FIVE TITLES
           SPRING

              ARENA RIVALS                                                           ARENA RIVALS

                                                                JUNIOR ARENA CLASH

                                                                      ACADEMY BOOT CAMPS

                    ESPORTS TEAMS                                                                                                         ACADEMY
                                                            ACADEMY CLASSES                     ESPORTS TEAMS MEET & GREETS
               RELATIONSHIPS FORMALISED                                                                                                   CLASSES

  TOURNAMENT                                                              TOURNAMENT
   ZONE AT I64                                                             ZONE AT I65

  ARENA CLASH                                                             ARENA CLASH
  FINALS AT I64                                                           FINALS AT I65

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GAME CHANGING GAME DIGITAL PLC | 2018/19 INTERIM RESULTS - 21ST MARCH 2019
GAME DIGITAL PLC – 2018/19 INTERIM RESULTS

CREATING VALUE THROUGH BELONG

                   52%                            20%                        44%                       72%                         £4.71

              Increase in pay-to-play               Increase in                Increase in         Increase in pay-to-play        H1 FY19 Average
                revenue in H1 FY19                stations this FY       stations YoY at Jan 19    revenue in arenas with         Price Per Hour vs
                                                                                                    an increased station           H1 FY 18 £4.43
                                                                                                      count for H1 FY19

                   28%                             740                       47%                       224k                        54%

             Utilisation rate for the H1           Parties hosted         Increase in average        Total gaming hours             More spent by
              FY19 vs 28.5% H1 FY18              in H1 FY19, a 64%           customer value           in H1 FY19, a 25%         subscription customer
                                             increase vs H1 FY18 (450)       Jan 19 vs Jan 18     increase vs H1 FY18 (179k)   on arena play time than
                                                                           (Rolling 12 months)                                    segment 1 gamer

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GAME CHANGING GAME DIGITAL PLC | 2018/19 INTERIM RESULTS - 21ST MARCH 2019
GAME DIGITAL PLC – 2018/19 INTERIM RESULTS

BELONG LOCATIONS
  •       Total number of stations increased by 44% to 4401 by          CURRENT BELONG GAMING
                                                                                                      Station Count
                                                                                                      unchanged

          January 2019 vs 3051 in January 2018                          ARENA LOCATIONS               Station Count Increased

                                                                                                      New Arena Location

          Two new arenas opened in the half – Stratford and West
                                                                                                      FY18/19
  •
          Thurrock (Lakeside Sports Direct Concession), catering to
                                                                        •   Bradford
          two different gaming communities                              •   Bristol Cribbs Causeway
                                                                        •   Bristol City Centre
  •       Ongoing focus to drive hours played in existing arenas by     •   Cardiff
          increasing station count, with seven arenas increased         •   Colchester
                                                                        •   Craigavon
  •       Arenas with an increased station count have seen a slight     •   Gateshead
                                                                        •   Glasgow
          decline in utilisation that is more than compensated for by   •   Hull
                                                                        •   Kingston
          the total increased revenue
                                                                        •   London Wardour Street
  •       Top 50 locations identified across the UK, with the key       •   London Stratford
                                                                        •   Manchester
          requirement being larger locations to accommodate             •   Milton Keynes
                                                                        •   Norwich
          higher station counts                                         •   Portsmouth
  •       Establishing larger premises for higher station count         •   Preston
                                                                        •   Plymouth
  •       Defining the best possible rent deals based on current        •   Teesside
                                                                        •   West Thurrock
          property landscape                                            •   York

1 EXCLUDING   ALT GAMING LOUNGE

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GAME DIGITAL PLC – 2018/19 INTERIM RESULTS

VENUE IMPROVEMENTS FOR THE COMPETITIVE GAMER
   HIGH-SPEC KIT DESIGNED FOR COMPETITIVE PLAY                   LARGER 100-SEATER LOCATIONS

                                                 ESPORTS TRIBE
                                                    JERSEYS

                                                                  LOCAL COMMUNITY AREAS &
                                                                 COMPETITIVE LEADER BOARDS

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GAME DIGITAL PLC – 2018/19 INTERIM RESULTS

THE VALUE WE DELIVER FOR OUR SUPPLIER PARTNERS

                                             BELONG Gaming Arenas social
      Supplier partners and publishers                                                                        Partners and/or BELONG utilise
                                               channels and programmes      Lapsed, existing and new gamers
        seek ways to promote their                                                                             this content to sell/promote
                                             provide authentic engagement    generate content by engaging
             products or brand                                                                                     brands and products
                                               mechanics to reach gamers

                                                OUR PARTNERS & BRANDS WE WORK WITH

                                                                                                                                               12
RAY KAVANAGH
CHIEF FINANCIAL OFFICER

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GAME DIGITAL PLC – 2018/19 INTERIM RESULTS

H1 GROUP FINANCIAL SUMMARY
All figures in £m (unless stated)                                                             H1 2019                  H1 2018                   VAR, %
                                                                                                                                                                       •     Group GTV down 1.4% reflecting:
  Gross Transaction Value (GTV)1                                                                 578.4                     586.8                       (1.4)                     • LFL sales broadly flat
                                                                                                                                                                                 • Content improvement of 5.8%
  Gross profit rate²                                                                             21.0%                     21.0%                          -                      • Accessories & Other up 9.2%
                                                                                                                                                                                 • Hardware and Preowned down 9.3% and
                                                                                                                                                                                   20.9% respectively
  Underlying operating costs³                                                                    (95.8)                  (101.9)                        6.0
                                                                                                                                                                       •     Gross profit rate maintained at 21.0%
                                                                                                                                                                       •     Strong cost discipline across the Group with £4.9
  Adjusted EBITDA                                                                                  25.8                      21.2                      21.7
                                                                                                                                                                             million of savings realised in UK Retail
                                                                                                                                                                       •     Adjusted EBITDA increased by £4.6 million as a result
  Adjusted profit before tax                                                                        19.9                      14.2                      40.1
                                                                                                                                                                             of UK Retail improvement
                                                                                                                                                                       •     Positive cash generation continued in the period
  Net cash from operating activities                                                                41.6                      32.2                     29.2
                                                                                                                                                                       •     Group remains well funded with net cash of £95.5
                                                                                                                                                                             million at 26 January 2019 and current facilities of up
  Net cash                                                                                         95.5                      84.9                      12.5
                                                                                                                                                                             to £110 million

                   22% GROWTH IN ADJUSTED EBITDA WITH SIGNIFICANT IMPROVEMENT IN UK RETAIL

                                GROUP REMAINS WELL FUNDED AND HAS £110M OF FACILITIES AVAILABLE
¹ GROSS TRANSACTION VALUE IS A NON-IFRS MEASURE DEFINED AS TOTAL RETAIL RECEIPTS AND ALL OTHER GROUP REVENUE EXCLUDING VAT AND BEFORE THE DEDUCTION OF LOYALTY POINTS AND OTHER ACCOUNTING ADJUSTMENTS. GTV REFLECTS THE FULL SALES VALUE OF
DIGITAL SALES, AGENCY SALES, WARRANTIES AND OTHER SIMILAR ARRANGEMENTS AND THEREBY INCLUDES THE PUBLISHERS' AND SELLERS' SHARES OF THOSE TRANSACTIONS
² GROSS PROFIT EXPRESSED AS A PERCENTAGE OF GTV
³ OTHER OPERATING EXPENSES EXCLUDING DEPRECIATION AND AMORTISATION CHARGES, AND BEFORE EXCEPTIONAL AND ADJUSTING ITEMS

                                                                                                                                                                                                                                               14
GAME DIGITAL PLC – 2018/19 INTERIM RESULTS

GROUP GTV BY CATEGORY
 All figures in £m (unless stated)           H1 2019    H1 2018   VAR, %

 Total Content                                280.8      265.3       5.8     • Physical software in line with previous year with UK
                                                                               growing 3% and improving market share
            Physical software                  190.1      190.8     (0.4)
                                                                             • Digital growth driven by continued popularity of
            Digital content                    90.7        74.5      21.7      Fortnite and enhancing gaming experience

 Total Hardware                                133.1      146.7     (9.3)    • Hardware sales growth in Nintendo Switch and
                                                                               PlayStation 4, but older formats and Xbox sales down
 Total Accessories & other                     95.3        87.3      9.2

            Core Accessories & other           89.8        78.4      14.5    • Growth in PC & console accessories, licensed
                                                                               merchandise and figurines offset the decline in VR
            Events & Esports                     5.5        7.1    (22.5)      categories
            Multiplay Digital¹                      -       1.8         -    • Sales in Events declined from removal of Runefest,
                                                                               Bricklive and Minecon events
 Total Preowned                                69.2        87.5    (20.9)

            Preowned core                        51.1      63.2     (19.1)   • Decline in core driven by both hardware and software
                                                                               where the market continues structural decline
            Preowned tech                       18.1       24.3    (25.5)    • Tech has also seen a decline, partly due to the general
                                                                               slowdown in the mobile replacement cycle
 Total                                        578.4      586.8      (1.4)

                          STRONG GTV GROWTH IN DIGITAL, ACCESSORIES AND LICENSED MERCHANDISE
                                 TO PARTLY MITIGATE PREOWNED AND HARDWARE DECLINE
¹MULTIPLAY DIGITAL SOLD 28 NOVEMBER 2017

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GAME DIGITAL PLC – 2018/19 INTERIM RESULTS

GROUP GROSS PROFIT RATE (AS % OF GTV) BY CATEGORY
                                             H1 2019   H1 2018   % PT CHANGE

  Total Content                                 21.7      21.6           0.1    • Benefiting from improved mix of new releases where
                                                                                  the Group secured higher margin exclusives for the
                                                                                  majority of these releases
          Physical software                     25.6      24.5            1.1
                                                                                • Digital margins down from mix of console and non-
                                                                                  console sales
          Digital content                       13.5      14.2          (0.7)
                                                                                • Lower promotional activities together with improved
                                                                                  PlayStation bundling on new software releases
  Hardware                                       7.7       7.1           0.6
                                                                                • Mix effect of products and services in this category, with
                                                                                  improvements on accessories & licensed merchandise
  Accessories & Other                           30.1      32.9          (2.8)     offsetting decline on VR & toys

                                                                                • Driven by hardware & tech trading and tighter stock
  Preowned                                      31.5     30.5            1.0      management

                                                                                • Overall Group gross profit rate maintained despite
  Total                                         21.0      21.0              -     higher mix of lower margin digital and declining sales
                                                                                  of preowned

             HIGHER MARGIN RATES ACHIEVED ACROSS SOFTWARE, HARDWARE AND PREOWNED

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GAME DIGITAL PLC – 2018/19 INTERIM RESULTS

GROUP OPERATING COSTS
  Group operating expenses1
                                                      H1 2019    H1 2018    VAR, £m
  All figures in £m (unless stated)
  Selling & distribution costs                           76.7      80.5        (3.8)    •   Significant cost savings and operational
                                                                                            efficiencies realised in the UK as detailed
  Administrative costs                                   24.4       27.8       (3.4)
                                                                                            on the next page
  Total operating expenses                              101.1     108.3        (7.2)
                                                                                        •   Spain Retail costs up €0.4 million in local
  Less: Underlying depreciation & amortisation           (5.3)      (6.4)       (1.1)       currency, largely volume-related, and in
  Total operating expenses before D&A                   95.8       101.9       (6.1)        sterling this equated to an increase of £0.3
                                                                                            million
            As % of revenue                            19.4%      19.7%
                                                                                        •   Events & Esports costs down £1.5 million
  Group continuing costs by division1,2                                                 •   Higher costs from the continued
                                                      H1 2019    H1 2018    VAR, £m
  All figures in £m (unless stated)                                                         expansion of BELONG were offset by
  Core Retail                                            93.3      97.9        (4.6)        savings in Game Esports & Events and
            UK Retail                                    62.4       67.3       (4.9)
                                                                                            from the sale of Multiplay Digital part way
                                                                                            through last year
            Spain Retail                                 30.9      30.6         0.3
            Spain Retail, €m                             34.7      34.3         0.4
  Events, Esports & Digital                               2.5        4.0       (1.5)

                                 CONTINUED STRONG COST REDUCTION PROGRAMME IN THE UK BUSINESS
¹EXCLUDES EXCEPTIONAL AND ADJUSTING ITEMS
² BEFORE DEPRECIATION AND AMORTISATION

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GAME DIGITAL PLC – 2018/19 INTERIM RESULTS

UK OPERATIONAL EFFICIENCIES & COST SAVINGS CONTINUED

  Total UK Retail savings £m                                H1 2019 TOTAL
                                                                             •   H1 savings of £4.9 million delivered across all
                                                                                 aspects of the UK operation
  Property (rent & rates)                                              1.7
                                                                             •   Significant savings delivered on property
                                                                                 estate through annualisation of prior year
                                                                                 reductions and new in-year negotiations
  Payroll                                                             1.6    •   Store payroll hours reduced over peak trading
                                                                                 while maintaining customer service levels
                                                                             •   Head office reorganisation fully embedded
                                                                                 during the period
  Procurement, distribution, efficiency savings and other             1.6
                                                                             •   Annualisation of changes made during FY18
                                                                                 delivered ongoing benefits in distribution and
                                                                                 controllable costs
  Total                                                               4.9    •   Further property savings already secured in H2
                                                                                 to date

                CONTINUED DELIVERY OF EFFICIENCY INITIATIVES & OTHER COST SAVING ACTIONS

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GAME DIGITAL PLC – 2018/19 INTERIM RESULTS

UK PROPERTY OPTIMISATION PROGRAMME UPDATE

 •    Average length to first break 0.8 years                                           UK Store Lease Expiries at H1 2019
 •    Successfully realising opportunities to further reduce      160
      UK estate costs
                                                                  140
        •     Annualised rent reductions of c.£0.5 million
                                                                            138
              realised in H1 representing a 59% reduction
                                                                  120
        •     Since the end of the period this has increased to
              £2.2 million                                        100

        •     Further potential opportunities continue to be
                                                                  80
              negotiated and large, multi-site landlord
              negotiations have commenced                         60

 •    Flexibility is being retained in the estate which allows                                52                54
      for BELONG growth strategy and to respond to UK             40

      retail market conditions
                                                                  20
        •     26 leases on zero rent at the end of H1 2019                                                                      19
                                                                                                                                            11
        •     A total 138 lease events on rolling breaks, plus     0
                                                                        Rolling Break   To December 2019   December 2020   December 2021   2022+
              52 potential events before December 2019

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GAME DIGITAL PLC – 2018/19 INTERIM RESULTS

CASH FLOW & NET CASH
All figures in £m (unless stated)            H1 2019    H1 2018    VAR, £m

 Cash generated by operations                  42.8        36.3         6.5    •   Strong closing cash position of £95.5 million
                                                                               •   All facilities undrawn at end of the period and UK facilities
 Finance costs and tax                          (1.2)      (4.1)      (2.9)
                                                                                   yet to be drawn
 Net cash from operating activities             41.6       32.2         9.4    •   Total available facilities c.£110 million as at today’s date
 Capital expenditure                           (4.0)       (6.2)        2.2          •   UK ABL facility of up to £50 million, rising to £75
                                                                                         million in peak
 Disposal of Multiplay Digital                      -      14.9       (14.9)
                                                                                     •   SPD capex facility of £35 million
 Dividends                                          -      (1.7)         1.7
                                                                                     •   Working capital and guarantee facilities in Spain of
 Finance leases                                 (0.3)      (1.3)        1.0              €28 million, rising to €44 million in peak
                                                                               •   Total maximum facilities over peak season of c.£149 million
 Other                                         (0.5)       (0.2)      (0.3)

 Movement in cash                              36.8        37.7       (0.9)

 Opening net cash                               58.7       47.2         11.5

 Closing net cash                              95.5       84.9        10.6

                               STRONG CASH GENERATION AND UK FACILITIES YET TO BE DRAWN

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BUSINESS & STRATEGY
GAME DIGITAL PLC | 2018/19 INTERIM RESULTS

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GAME DIGITAL PLC – 2018/19 INTERIM RESULTS

BUILDING THE MOST VALUABLE COMMUNITY FOR GAMERS

      CORE SPECIALIST RETAIL                                                    MAJOR GAMING EVENTS
                                                       BUILDING THE
                                                      MOST VALUABLE
                                                      COMMUNITY FOR
                                                         GAMERS

                                             ESPORTS, BELONG & COMPETITIVE GAMING

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GAME DIGITAL PLC – 2018/19 INTERIM RESULTS

GAME CHANGING STRATEGY PROGRESS & PRIORITIES
                       Continue to improve our core                                                             Expand the group’s live and
                       multichannel retail business,                                                            online gaming services for
                                                                  Optimise the organisation’s
                       based around the needs and                                                               consumers and publishers in
                                                                  efficiency while investing for the
                       behaviours of customers, in                                                              order to build customer &
                                                                  future
                       order to maximise market                                                                 gamer engagement and
   IMPROVE             potential and profitability     OPTIMISE                                        EXPAND   generate incremental revenues

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GAME DIGITAL PLC – 2018/19 INTERIM RESULTS

GAME CHANGING STRATEGY PROGRESS & PRIORITIES

                       Continue to improve our core multichannel retail business, based around the needs and behaviours of
                       customers, in order to maximise market potential and profitability
     IMPROVE

   1.    Expansion of the Group’s exclusive proposition across new game releases and licensed merchandise
   2. Ongoing development of new product categories including PC gaming accessories and licensed merchandise
      for gamers
   3. Continued growth of market share in online through proposition improvements:
           •    Enhanced customer journey across desktop, mobile and social channels
           •    New ‘paid for’ delivery services offered increasing choice and convenience. Further service enhancements
                planned in H2
           •    Access to extended ranges online including through Marketplace
           •    Increased range and availability of preowned stock online using store fulfilment

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GAME DIGITAL PLC – 2018/19 INTERIM RESULTS

GAME CHANGING STRATEGY PROGRESS & PRIORITIES

                       Optimise the organisation’s efficiency while investing for the future
     OPTIMISE

   1.    Leveraging our specialist retailer credentials to improve supplier terms
   2. Focus on better service across our channels resulted in a 30% reduction in inbound customer service contacts,
      with wait times reduced by more than 80% vs. last year
   3. Significant operating cost savings delivered through efficiencies and better procurement in distribution and
      across the store estate
   4. Further material savings in property costs
   5. More selective investment in marketing across our channels, spending only where the ROI justifies it
   6. Maintained robust stock and cash disciplines across all areas of the business ensuring our available cash
      resources provide adequate headroom

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GAME DIGITAL PLC – 2018/19 INTERIM RESULTS

GAME CHANGING STRATEGY PROGRESS & PRIORITIES

                       Expand the group’s live and online gaming services for consumers and publishers in order to build
                       customer & gamer engagement and generate incremental revenues
        EXPAND

   1.    Delivering growth of revenue and margin through our existing arena network:
   2. Ongoing focus on identifying suitable arena locations to support expansion
   3. Expansion of Arena Clash to feature 5 major titles across 21 participating arenas
   4. Growth of the BELONG online community and unique visitors to Belong.gg
   5. Evaluating potential strategic international opportunities for BELONG
   6. Continued growth of Insomnia in the UK with I64 (April) to feature more esports tournament zones
   7. International expansion of Insomnia franchise events. First overseas event held in Egypt in Oct 2018, with Dubai
      and Dublin scheduled later this year

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MARKET UPDATE
GAME DIGITAL PLC | 2018/19 INTERIM RESULTS

                                             27
GAME DIGITAL PLC – 2018/19 INTERIM RESULTS

UK & SPAIN MARKET UPDATE
 •      The UK and Spanish mint console markets have                UK MINT VIDEO GAME MARKET                                SPAIN MINT VIDEO GAME MARKET
        both shown growth in the period
           •      Driven by consumer demand for the
                                                                                                                                 15.4%
                  PlayStation 4 and Nintendo Switch                           14.1%
                                                                                                                                         13.5%
                  consoles
           •      Digital currency, PC and console
                                                                       8.8%
                  accessories growth driven by Fortnite and
                  other Battle Royale games                                            5.8%

 •      For the 6 weeks ended 9 March 2019, the mint                                           3.6%                                               3.5%
                                                                                                               2.7%
                                                                                                                          1.9%                            1.9%            1.5%
        market in the UK market was down 5.9% and in
        Spain it was down 2.3% on a constant currency
        basis
                                                                                                                                                                  -2.3%
           •      UK market has seen a decline in hardware
                  and digital                                                                         -5.9%
           •      The Spanish market has seen similar
                  declines in hardware and digital
           •      Accessories is up in both markets           -12.5%

                                                              H1 16/17 H2 16/17 H1 17/18 H2 17/18 H1 18/19 WEEKS WEEKS   H1 16/17 H2 16/17 H1 17/18 H2 17/18 H1 18/19 WEEKS WEEKS
                                                                                                           27-32  1-32                                                27-32  1-32

SOURCE: GFK CHART-TRACK

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GAME DIGITAL PLC – 2018/19 INTERIM RESULTS

MARKET OUTLOOK
 •     Challenging retail climate in the UK likely to continue in the short term due to
       weakening consumer confidence and economic uncertainty

 •     Our retail performance is impacted by the console cycle timings and we are
       managing the low point of the current cycle through our cost savings
       programme and investment and growth in BELONG

              •   Current console cycle has entered its sixth year with projected decline in low
                  margin console sales

              •   Physical software has held up well in the year to date, with Kingdom Hearts
                  and Division 2 anticipated to perform well in H2

              •   Preowned revenues will continue to decline

 •     The current IHS market expectations is for a new PlayStation and Xbox console to
       launch in 2020

 •     Apex Legends launched in February 2019 and has disrupted the market
       considerably with the opportunity to monetise through digital currency, high-end
       accessories and licensed merchandise

 •     Our focus remains on our transformational strategy to move from a seller of
       physical products to a provider of gaming experiences and services

SOURCE: IHS

                                                                                                   29
CLOSING REMARKS
GAME DIGITAL PLC | 2018/19 INTERIM RESULTS

                                             30
GAME DIGITAL PLC – 2018/19 INTERIM RESULTS

SUMMARY & H2 PRIORITIES
SUMMARY
    •   Delivered a 22% growth in adjusted EBITDA in the first half
    •   Material improvement in cash and liquidity during the period
    •   Ongoing economic uncertainty and market headwinds expected to affect performance in the
        near term

CONTINUE TO IMPROVE OUR CORE MULTICHANNEL RETAIL BUSINESS
    •   Continuous improvement of our customer proposition through exclusive offers, range
        development, market leading customer service and expertise
    •   Further enhancements and development of our online channel and mobile app, encouraging
        increased customer engagement and spend

OPTIMISE THE ORGANISATION’S EFFICIENCY WHILE INVESTING FOR THE FUTURE
    •   Realise further opportunities to reduce UK estate costs whilst retaining flexibility to allow for
        BELONG growth and evolving UK retail market conditions
    •   Continued focus on cost management across all areas of the Group
    •   Disciplined approach to cash management and use of capital

EXPAND THE GROUP’S LIVE AND ONLINE GAMING SERVICES
    •   Ongoing transformation of our business to a provider of gaming experiences and services
    •   Focus on identifying suitable arena locations with the right cost infrastructure to support
        profitable expansion of BELONG
    •   Development of content at Insomnia and international Insomnia franchises

                                                                                                            31
QUESTIONS
GAME DIGITAL PLC | 2018/19 INTERIM RESULTS

                                             32
APPENDIX
GAME DIGITAL PLC | 2018/19 INTERIM RESULTS

                                             33
GAME DIGITAL PLC – 2018/19 INTERIM RESULTS

BELONG ILLUSTRATIVE FINANCIALS & CORE ELEMENTS

       NUMBER OF STATIONS                         HOUR UTILISATION                 PRICE PER HOUR                ANNUAL PAY TO PLAY                       CAPEX
                                                                                                                      MARGIN
       Collaboration Agreement               The annual pay to play hours     Assumed average price paid                                          Average capex per large
     allows for larger arenas going            per station per arena are      for every hour of gameplay is    Average pay to play revenue        BELONG/GAME £350k
     forward with c.40 stations or                        1,156                           £4.50                   per arena is c.£200k
                  more                                                                                                                          Average arena capex £230k
                                             78 hours per week, per arena x   Including activities such as:                                     and average retail capex of
      Our most recent openings                  52 weeks x average large              Station hire                                                        £120k
    have been of large arenas with              arena utilisation c.28.5%              Party hire
           24-36 stations                                                            Arena Clash                                                 Average payback per large
                                                                                                                                                BELONG/GAME c.2 - 2.5 years

                                                            CORE ELEMENTS OF BELONG PROPOSITION

            1. VENUES                 2. INFRASTRUCTURE              3. TOURNAMENTS           4. PLAYER SUPPORT               5. RETAIL                   6. TEAM

         BELONG Gaming                  Belong.gg Website           BELONG Arena Clash            BELONG Tribes            PC Hardware,              GAME & BELONG
             Arenas                     Booking Platform            BELONG Arena Cups               Academy             Accessories & Digital       Specialist Resource
        Insomnia Gaming               Tournament Platform                                       Team Partnerships        VR & Merchandise
             Festival                  Studio & Production                                      Industry & Charity         Food & Drink
                                                                                                  Collaborations

                                                                                                                                                                              34
GAME DIGITAL PLC – 2018/19 INTERIM RESULTS

A WEALTH OF INSIGHT INTO OUR BELONG CUSTOMERS
  1. COMPETITIVE & COMMUNITY                   2. FUN WITH FRIENDS                3. PRIVATE PLAYER                   4. TIME TOGETHER              5. GRATEFUL GUARDIANS

                                         These players are motivated by      These gamers use BELONG for        Kids / teens who are passionate      This segment is made up of
  Strong interest in esports and are
                                          having all their friends in one   some private down time and to       about gaming and also parents       parents who do not have an
 likely have experience in Amateur
                                        place, the environment and using      unwind playing video games,       who go along to play alongside     interest in gaming themselves
            tournaments
                                           the best quality equipment.        often filling a gap in the day.             their children               but whose children do.

            % OF TOTAL                               % OF TOTAL                       % OF TOTAL                         % OF TOTAL                        % OF TOTAL

       7%                19%                    42%              35%            24%                19%              19%              14%               8%              13%

   % of users      % of bookings             % of users     % of bookings     % of users     % of bookings       % of users     % of bookings       % of users    % of bookings

                 WHEN                                     WHEN                             WHEN                              WHEN                              WHEN

              Evenings &                           Afternoons during                  Weekdays & early                   Early afternoons &                 Early afternoons &
           weekday afternoons                     weekends & weekdays                   afternoon                            weekends                           weekends

            HOW LONG                                 HOW LONG                         HOW LONG                            HOW LONG                          HOW LONG

             Average usage:                            Average usage:                   Average usage:                     Average usage:                    Average usage:
            3 hours at a time                         2 hours at a time                2 hours at a time                 1.5 hours at a time               1.5 hours at a time

 TOP AGE RANGE          ESPORTS         TOP AGE RANGE            ESPORTS    TOP AGE RANGE         ESPORTS       TOP AGE RANGE        ESPORTS      TOP AGE RANGE        ESPORTS

                      69% View                                50% View                          50% View                            15% View                          27% View
     38%                                       17%                             21%                                 47%                               66%
                      esports                                  esports                          esports                            esports                           esports
    20-21 yrs.                               12-15 yrs.                       12-15 yrs.                          30+ yrs.                          30+ yrs.
                    competitions                             competitions                     competitions                       competitions                      competitions

                                                                                                                                                                                   35
GAME DIGITAL PLC – 2018/19 INTERIM RESULTS

GLOBAL ESPORTS MARKET
      IN 2019, 1.8 BILLION PEOPLE WILL BE AWARE OF ESPORTS WORLDWIDE
  ESPORTS AUDIENCE GROWTH (M)                                      ESPORTS REVENUE GROWTH ($M)                       2019 ESPORTS REVENUE STREAMS | GLOBAL
  GLOBAL | FOR 2017, 2018, 2019, 2022                              GLOBAL | FOR 2017, 2018, 2019, 2022               INCLUDING YEAR-ON-YEAR GROWTH
                                                      645M
     Esports Enthusiasts
                                                       +14.0%                                            +22.3%       +34.3%
                                                      CAGR 2017-                                                        YOY
                                                                                                           CAGR
     Occasional Viewers                                 2022
                                                                                                         2017-2022

                                                                                                                                                                         $1.1Bn
                                            454M
                                             +15.0%
                         395M                  YOY      297
                                                                                                                                                                    2019 total esports
                          +17.8%                                                            +26.7%                                                                  revenues, +26.7%
                            YOY                                                               YOY                                    +41.8%                                YOY
                                                                                                                                       YOY
       335M                                                                      +32.0%
                                               201                                                                                                 +14.8%
                                                                                  YOY
                                                                                                           1,790        456.7                         YOY
                             173
          143
                                                                                                                                                                   +22.4%         -3.0%
                                                                                             1,096                                    251.3                          YOY
                                                                                                                                                                                   YOY
                                                        347
                                                                                  865
                                                                                                                                                     189.2
                                               253                     655
                            222
          192
                                                                                                                                                                    103.7          95.2

                                                                                                                      Sponsorship   Media Rights   Advertising   Merchandise & Game Publisher
          2017              2018              2019      2022           2017       2018       2019          2022                                                     Tickets        Fees

SOURCE: NEWZOO 2019 GLOBAL ESPORTS MARKET REPORT

                                                                                                                                                                                            36
GAME DIGITAL PLC – 2018/19 INTERIM RESULTS

CONSOLE DIGITAL MARKET
                                                                                                SUBSCRIPTIONS
                                   Group Console Digital Sales
   £m
   120.0

                                                           111.9

   100.0

                                                    96.8
                                                                                                  CURRENCY

    80.0
                                                                             29%
                                             79.3
                                                                                    76.7
                            72.3

    60.0
                  60.4                                              59.5
                                                                                                  CONTENT

    40.0

    20.0                                                                                     FULL GAME DOWNLOADS

     0.0
                  FY14      FY15             FY16   FY17   FY18    H1 FY18         H1 FY19

SOURCE IHS: CALENDAR

                                                                                                                   37
GAME DIGITAL PLC – 2018/19 INTERIM RESULTS

HARDWARE & SOFTWARE MARKET OUTLOOK – UK & SPAIN
                 UK MINT MARKET VALUE - HARDWARE & SOFTWARE (£M)                         SPAIN Mint Market Value - Hardware & Software (€m)
  1,600                                                                         1,600

  1,400                                                                         1,400

  1,200                                                                         1,200

  1,000                          733              744                           1,000
                                                                         556
                                                                 627
   800            656                                                            800

   600                                                                           600

                                                                                                     298              328
   400                                                                           400                                                 291      270
                                 664              649                    650            211
                                                                 537
   200            458                                                            200
                                                                                                     340              330
                                                                                        235                                          269      265

      0                                                                            0
                      2016       2017             2018           2019    2020           2016         2017             2018           2019     2020

                             PS, XB & SWITCH HW     PS, XB & SWITCH SW                           PS, XB & SWITCH HW     PS, XB & SWITCH SW

SOURCE HIS CALENDAR

                                                                                                                                                     38
GAME DIGITAL PLC – 2018/19 INTERIM RESULTS

GROUP STORE ESTATE

                                             UK     SPAIN    GROUP

      Stores at beginning of the year        276      267      543

      Openings                                 3        3        6

      Closures                                (5)      (1)      (6)

      Stores at H1 2019                      274      269      543

      Relocations                              3       2         5

      Average years to first break           0.8      0.8      0.8

                                                                      39
GAME DIGITAL PLC – 2018/19 INTERIM RESULTS

IFRS 16 – ILLUSTRATIVE IMPACT
                                                                            52 weeks ended 28 July 2018         AS         IFRS 16     VAR,
 •     GAME will adopt IFRS 16 Leases from FY20
                                                                            (Underlying)                  REPORTED      RESTATED        £M
 •     The transition approach is still to be determined
                                                                            Revenue                            782.3          782.3      0.0
 •     Over 540 store leases across the Group plus head office and
       distribution centre leases                                           Cost of sales                    (586.1)        (586.1)      0.0
 •     We will recognise right of use assets on the balance sheet and a
       corresponding obligation for the lease liabilities                   Gross profit                       196.2          196.2      0.0

 •     In the statement of comprehensive income, operating lease rental     Other operating costs             (198.4)        (195.5)     2.9
       costs will be replaced by depreciation charges on the asset and a
       finance cost on the liability                                        Operating (loss) / profit          (2.2)            0.7      2.9

 •     These high level calculation for FY18, based on general
                                                                            Net finance costs                   (1.3)          (4.7)    (3.4)
       assumptions applied to all leases, show a minimal impact on
       profit before tax but a significant improvement in adjusted          Loss before tax                    (3.5)          (4.0)    (0.5)
       EBITDA. These are estimated calculations to show the potential
       impact of IFRS 16 and actual restatements for FY19 may differ
       from this illustration
                                                                            Adjusted EBITDA                     10.1          42.0      31.9
 •     No impact on cash flow
 •     One of the key judgements relates to the treatment of store leases   Depreciation & amortisation        (12.3)          41.3    (29.0)
       on rolling breaks or where the lease has expired and we are in
                                                                            Operating (loss) / profit          (2.2)            0.7      2.9
       negotiation with the landlord

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