Gameloft: Results for the First Half of 2010

Aug 31, 2010, 13:49 ET from Gameloft

    PARIS, August 31, 2010 /PRNewswire-FirstCall/ --
    - 11% Sales Growth
    - Current Operating Income of EUR5.8M, up 29%
    - Net Profit of EUR5.3M, up 140%
    - Net Cash of EUR25.9M
    2010 Half-Year Results

Gameloft's financial statements for the first half-year ending June 30, 2010 breaks down as follows:

    In EUR millions                           S1 2010       S1 2009

    Revenue                                     66.6          60.1
    Other income                                 0.1           0.1
    Cost of sales                               (9.4)         (7.7)
    R&D                                        (32.0)        (29.2)
    Sales & Marketing                          (13.7)        (13.8)
    Administration                              (5.3)         (4.3)
    Other income and expenses                   (0.5)         (0.6)
    Current operating income                     5.8           4.5
    Stock-based compensation                    (0.9)         (1.3)
    Other operational revenues and expenses     (0.2)          0.0

    Operating income                             4.7           3.2
    Net financial income                         1.3           0.3
    Tax expense                                 (0.7)         (1.2)
    Net profit/loss (group share)                5.3           2.2

Gameloft achieved consolidated sales of EUR66.6 million for the first half of 2010, up by 11% from the first half of 2009. The company's growth accelerated during the second quarter of 2010. The activity continues to be driven by increased market share in traditional Java and Brew phones, as well as by the massive success enjoyed by Smartphones around the world.

The solid growth in sales and efficient cost control in the company's three departments, R&D, Sales & Marketing, and Administration, have resulted in a substantial increase in Gameloft's operating and net income in the first half of 2010. The current operating income for the first six months of fiscal year 2010 stands at EUR5.8 million, up 29% compared to the first half of 2009. Therefore, the operating margin stands at 8.8%, compared to 7.6% during the first half of 2009.

The half-year impact from expensing stock options is EUR0.9 million. This charge does not have an impact on the company's equity and cash level. Interest income amounted to EUR+1.3 million and is comprised of exchange gains and interest on the company's net cash.

The net half-year profit stands at EUR5.3 million, up 140% compared to the first half of 2009. The Group's net margin reached 7.9% which more than doubled compared to the first half of 2009. Earnings per share and fully diluted earnings per share both stand at 0.07EUR.

Healthy Financial Position

Gameloft's financial position was very solid on June 30, 2010. The company's equity stood at EUR69.6 million and net cash and cash equivalents totaled EUR25.9 million. Cash generation was particularly strong during the first half of the year. The company's self-financing capacity reached EUR6.9 million and on June 30, 2010 Gameloft's net cash increased by EUR6.2 million. Therefore, the company has the financial resources necessary to continue its fast growth and take market share around the world.

    Outlook for 2010-2011

    - Gameloft should continue to win over market share in Java and Brew
      phones, as a result of the progressive withdrawal of a large number of

    - The recent and future releases of new high-performance Smartphones from
      Apple, Samsung, Nokia and Google should continue sustaining Gameloft's
      growth in the upcoming quarters. Gameloft has become one of the top
      game publishers on Apple's iPhone and iPad, and its AppStore revenues
      grew 82% during the first half of 2010.

    - The release of new devices that are suited for video games such as
      Apple's iPad will allow Gameloft to continue its diversification with
      other formats and provide the company with interesting relays for
      growth. Gameloft is one of the very few players in the market that has
      the resources and know-how allowing it to be present systematically at
      the launch of all the new downloadable consoles and tablets (iPad,
      PlayStation Network, Nintendo DSiWare, Nintendo WiiWare, etc.).

Gameloft is renewing its growth target for sales, profitability and net cash over the full year of 2010. In the long term, Gameloft appears to be in an ideal position to benefit from the rapid emergence of the digital distribution of video games on mobile phones, tablets and consoles.

Sales for the third quarter will be published on November 3, 2010 after the market closes.

About Gameloft

Gameloft is the worldwide leader in developing and publishing downloadable video games. Gameloft is now positioned, after 10 years, as one of the most innovative companies in its field. The company designs games for mobile phones, smartphones, iPhone, iPod touch and iPad for which the number of units should exceed four billion in 2012. As a pioneer in the new downloadable game console market, Gameloft publishes games for WiiWare, DSiWare, Microsoft Xbox LIVE Arcade and PlayStation Network. Partnership agreements with major licensors allow Gameloft to associate the strongest international brands with such games as Uno, Ferrari, Shrek, CSI, Iron Man, Spiderman and Sonic. The company also has its own brand portfolio with established franchises such as Real Football, Asphalt and Cerebral Challenge. Gameloft has locations on all continents, distributes its games in 100 countries and has its own production studios with over 3,500 developers. Gameloft is listed on the Paris Stock Exchange (ISIN: FR0000079600, Bloomberg: GFT FP, Reuters: GLFT.PA).

    For more information, consult

    P&L (EURK)                                   S1 2010         S1 2009
    Revenue                                       66,563          60,102
    Other revenue from the activity                  114             137
    Cost of sales                                 -9,420          -7,720
    R&D                                          -31,958         -29,234
    Sales and Marketing                          -13,669         -13,847
    Administration                                -5,312          -4,310
    Other income and operating expenses             -476            -587
    Current operating income                       5,842           4,541
    Stock-based compensation                        -941          -1,261
    Other operating revenue and expenses            -174             -44
    Operating income                               4,727           3,237
    Cost of net financial indebtedness                34              58
    Interest income                                5,772           1,965
    Interest expense                              -4,491          -1,739
    Net financial income                           1,315             284
    Employee profit-sharing                          -24             -78
    Tax expense                                     -748          -1,248
    Net profit/loss (group share)                  5,270           2,194
    Earnings per share                              0.07            0.03
    Fully diluted earnings per share                0.07            0.03

    BALANCE SHEET (EURK)                      30/06/2010      31/12/2009
    Net intangible fixed assets                   14,720          12,602
    Net tangible fixed assets                      5,249           4,579
    Non-current financial assets                   2,364           1,948
    Assets from deferred assets                    3,384           2,762
    Total non-current assets                      25,718          21,892
    Inventory                                         60             457
    Clients receivables                           34,324          32,626
    Cash and cash equivalents                     25,985          19,804
    Other current assets                           8,207           8,674
    Total current assets                          68,577          61,562
    TOTAL                                         94,294          83,454

    Capital                                        3,744           3,740
    Issue premium                                 66,803          66,593
    Reserves                                      -6,264         -16,368
    Result                                         5,270           5,972
    Shareholders' equity                          69,552          59,936
    Non-current liabilities                        1,551           1,639
    Current liabilities                           23,191          21,878
    TOTAL                                         94,294          83,454

    Cash flow statement (EURK)                        S1 2010        S1 2009
    Operating transactions
    Net profit/loss                                     5,270          2,194
    Depreciation of tangible and intangible             6,500          5,492
    Result from stocks options and assimilated            941          1,261
    Tax paid                                               60           -190
    Sales of assets                                        37             79
    Capitalized R&D expense                            -3,015         -1,784
    License acquisition                                -2,888         -3,214
    Self-financing capacity                             6,903          3,838

    Change in inventories                                 397          1,619
    Change in trade receivables                           -26          7,086
    Change in operating liabilities                      -744         -5,154
    Change in the working capital requirement            -373          3,551

    Operating cash flow                                 6,531          7,389

    Investment-related cash flow
    Acquisitions of intangible fixed assets              -313           -300
    Acquisitions of tangible fixed assets              -1,643           -960
    Acquisition of other fixed financial assets          -648            -27
    Acquisition of controlling interests                   65              4
    Repayment of loans and other financial                 51            189
    Change in scope                                        39             45
    Total transactions linked to investments           -2,450         -1,049

    Total flows from financing activities                 174             75

    Change in cash                                      4,255          6,414

    Net cash at the beginning of the year              19,749         10,748
    Impact of conversion differentials                  1,921           -262
    Net cash at the end of the year                    25,925         16,900


    Aude Fouquier
    European Communication Director
    Tel +33-1-5816-2155

SOURCE Gameloft