Regulatory Announcements
08 December 2000
David Mackay, Chief Executive of John Menzies plc, said:
"We have enjoyed a successful relationship with Nintendo, but the computer console and games market is highly volatile, exposing the Group to potentially significant profit variations and working capital and currency risks.
"Although THE Games has traded strongly in the last few months, particularly benefiting from the Pokémon phenomenon, it remains a highly seasonal and unpredictable business. The closure of this Division will remove the Group's exposure to a market in which product can have a short life cycle, and which involves early commitment to stocks based on a demand which is extremely difficult to forecast.
"Unfortunately this decision will mean the closure of THE Games in Eastleigh, which will result in redundancy for the majority of our 90 employees there who have done so much to make the business succeed, despite the inherent uncertainty of a short-term contract.
"Our withdrawal from this market is in line with Menzies' strategy of focusing on our newspaper and magazine wholesaling business as well as expanding our interests in aviation services. Our recent purchase of Ogden Ground Services has established Menzies Aviation Group as a major world-wide business in the international aviation services market. We also remain committed to divest our Early Learning Centre retail business in due course."
THE Games had net assets of £3.2m at 6 May 2000, and made an operating profit of £5.5m in the year ended on the same date. Redundancy and other potential closure costs are expected to be around £3m, depending on trading through to the end of February 2001.
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John Menzies and Nintendo not to renew THE Games contract
However, Menzies has agreed to represent Nintendo for a handover period until the end of February 2001, and Nintendo will take on full responsibility for the sale and distribution of Nintendo products in the UK from 1 March 2001.David Mackay, Chief Executive of John Menzies plc, said:
"We have enjoyed a successful relationship with Nintendo, but the computer console and games market is highly volatile, exposing the Group to potentially significant profit variations and working capital and currency risks.
"Although THE Games has traded strongly in the last few months, particularly benefiting from the Pokémon phenomenon, it remains a highly seasonal and unpredictable business. The closure of this Division will remove the Group's exposure to a market in which product can have a short life cycle, and which involves early commitment to stocks based on a demand which is extremely difficult to forecast.
"Unfortunately this decision will mean the closure of THE Games in Eastleigh, which will result in redundancy for the majority of our 90 employees there who have done so much to make the business succeed, despite the inherent uncertainty of a short-term contract.
"Our withdrawal from this market is in line with Menzies' strategy of focusing on our newspaper and magazine wholesaling business as well as expanding our interests in aviation services. Our recent purchase of Ogden Ground Services has established Menzies Aviation Group as a major world-wide business in the international aviation services market. We also remain committed to divest our Early Learning Centre retail business in due course."
THE Games had net assets of £3.2m at 6 May 2000, and made an operating profit of £5.5m in the year ended on the same date. Redundancy and other potential closure costs are expected to be around £3m, depending on trading through to the end of February 2001.
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