GAME Digital earnings soar on strong showing from events and e-sports wing

London-listed video games retailer Game Digital saw underlying earnings soar in its last trading year despite a slip in revenues.

Even as it saw revenues dip 0.1% to £782.3m, Game's adjusted EBITDA rose 26.3% to £10.1m in the twelve months ended 28 July.

However, Game warned investors that its core retail division had witnessed a 12.9% decline in adjusted EBITDA to £12.2m as a result of its UK retail performance being hit by margin declines on the back of a change in product mix.

Game's events, e-sports and digital unit narrowed its adjusted EBITDA loss 135% to £2.1m due to a strong demand for its BELONG gaming areas.

Game, which signed a collaboration agreement with Sports Direct back in February for 50% of its BELONG intellectual property in exchange for a £3.2m cash injection, rounded out the year with a net cash balance of £58.7m - a 24.36% year-on-year improvement.

Moving forward, Game was "cautiously optimistic" regarding its prospects into the new year, with trading for the first 14 weeks ahead of the same period twelve months earlier.

BELONG pay-to-play performance was up 50% on the prior year, while gross transaction value from its UK and Spanish operations were up 6.6% and 1.7%, respectively.

Losses per share widened from 3.8p to 4p.

Analysts at Liberum, who reiterated their 'buy' rating and 50p target price on the group on the heels of its latest results, said operational efficiencies and the strong showing from Game's EED segment had "more than offset the challenges in a tough retail market".

The broker stated the firm's strong balance sheet would continue to support its ability to "accelerate diversification into additional, long-term revenue streams."

As of 1330 GMT, Game shares had advanced 3.75% to 29.88p.