Gameloft: Results for the First Half of 2014, Sales of €111.3M

PARIS, September 10, 2014 /PRNewswire/ --

Current operating income of €1.6M

Net loss of €0.1M

Net cash of €58.5M

Gameloft's financial statements for the first half-year ending June 30, 2014; breakdown as follows:

    In millions of EUR                H1 2014  % of sales H1 2013  % of sales
    Sales                              111.3      100%     109.4      100%
    Cost of sales                      -19.7      -18%     -19.1      -17%
    Gross profit                        91.6       82%      90.3       83%
    R&D                                -56.1      -50%     -51.6      -47%
    Sales and marketing                -20.2      -18%     -17.8      -16%
    Administration                     -13.2      -12%      -9.2       -8%
    Other operating income and
    expenses                            -0.5       0%       -0.4        0%
    Current operating income             1.6       1%       11.2       10%
    Stock-based compensation            -2.0      -2%       -1.7       -2%
    Other income and expenses           -0.2       0%       -1.1       -1%
    Operating income                    -0.6      -1%        8.4        8%
    Financial income                     2.9       3%       -2.7       -2%
    Net income before tax                2.3       2%        5.7        5%
    Tax expense                         -2.4      -2%       -3.9       -4%
    Net income                          -0.1       0%        1.8        2%

Over the first half of 2014, Gameloft achieved consolidated sales of €111.3 million, up 10% year on year on a constant-exchange-rate basis, and up 2% on a current-exchange-rate basis. EMEA represented 33% of first-half sales; North America, 30%; APAC, 19%; and LATAM, 18%. Gameloft's organic growth remained strong during the first half in the absence of major project launches. Of the twelve to fifteen new games currently expected to be released in 2014 by the company, only four were launched during the first half. More than 95% of first-half sales were therefore generated from the back catalogue titles, whose lifespan is progressively increasing thanks to the groundwork completed on game updates.

The gross profit reached €91.6 million, up 1%. The gross margin for the period remained relatively stable at 82% compared with the gross margin of 83% achieved in the first half of 2013.

The low number of new game releases in the first-half combined with maintaining R&D investments at an ambitious level did not allow the company to benefit from a leverage effect on sales. R&D, Sales and Marketing, and Administration expenses represented 50%, 18%, and 12% respectively of first-half sales in 2014. The current operating margin of the first half stood at 1.4%, compared to 10.3% for the first half of 2013. The coming months should witness improved synchronization between the frequency of new game releases and the company's investments.  

Stock-based compensation reached €2.0 million in the first half of 2014, compared to €1.7 million for the same period in 2013. Stock-based compensation costs do not negatively impact the company's equity and cash level. The operating income was -€0.6 million, representing an operating margin of -0.5% compared to 7.7% from the first half of 2013.    

Gameloft's financial income reached €2.9 million, a strong increase compared to the first half of 2013, and was driven mostly by interest income earned on cash and currency exchange gains. Net income before tax stood at €2.3 million and net loss at €0.1 million.      

The amount of unrecognized consolidated tax loss carry-forwards reached €15.1 million on June 30, 2014.

Sound financial situation 

On June 30, 2014, the company's equity capital reached €139.4 million and net cash was €58.5 million. Operational cash flow generation was relatively solid during the first six months of the year, which allowed the company to continue to invest in IT infrastructure. Operational cash flow stood at €8.6 million, of which close to €8.0 million was re-invested in purchasing IT equipment and software. These investments allow Gameloft to manage the build-up in the number of users for its smartphone and tablet games. The company currently supports an average of over 20 million players per day on its game servers.      

Outlook for 2014 and 2015 

Gameloft was ranked the second largest publisher in the world in July 2014 in terms of game downloads on smartphones and tablets, according to the App Annie index. With over 20 million daily users and 1.7 billion Gameloft games downloaded to date, the company is a key and leading player in the mobile game market.    

Gameloft has the in-house development teams necessary to launch over fifteen games on smartphones and tablets per year and to maintain services for over 25 games. These games are marketed in 15 different languages and on over 4,500 smartphone models. To our knowledge there are no other companies in the mobile game sector that have production and distribution capacities that rival Gameloft.      

In 2014, 1.25 billion smartphones are expected to be sold, compared to 1 billion in 2013^[1]. Sales growth of smartphones and tablets combined with the forthcoming releases of many new high-quality games are expected to drive Gameloft's growth in the coming quarters. Michel Guillemot, CEO of Gameloft, states, "After several quarters with a low number of releases, Gameloft will return to releasing new games at a regular and brisk pace starting from the fourth quarter of 2014, which should result in accelerated growth for the company."          

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1. IDC, August 2014

The company targets 2014 sales and current operating expenses of close to €245 million and €230 million respectively. Sales for the third quarter of 2014 will be published on November 4, 2014, after the market closes.

About Gameloft 

A leading global publisher of digital and social games, Gameloft® has established itself as one of the top innovators in its field since 2000. Gameloft creates games for all digital platforms, including feature phones, smartphones, tablets, set-top boxes and connected TVs. Gameloft operates its own established franchises such as Asphalt®, Real Football®, Modern Combat and Order & Chaos®, and also partners with major rights holders including Marvel®, Hasbro®, FOX®, Mattel® and Disney®. Gameloft is present on all continents, distributes its games in over 120 countries and employs over 5,200 developers.

Gameloft is listed on NYSE Euronext Paris (NYSE Euronext: GFT.PA, Bloomberg: GFT FP, Reuters: GLFT.PA). Gameloft's sponsored Level 1 ADR (ticker: GLOFY) is traded OTC in the US.

For more information, consult http://www.gameloft.com.

    PROFIT & LOSS ACCOUNT (KEUR)                  H1 2014           H1 2013
    Revenue                                       111,277           109,374
    Cost of sales                                 -19,705           -19,118
    Gross margin                                   91,572            90,256
    R&D                                           -56,085           -51,586
    Sales and Marketing                           -20,200           -17,827
    Administration                                -13,177            -9,210
    Other operating income and expenses              -518              -418
    Current operating income                        1,593            11,215
    Stock-based compensation                       -1,974            -1,708
    Other income and expenses                        -206            -1,134
    Operating income                                 -587             8,373
    Cost of net financial indebtedness              1,362               963
    Exchange rate gains                             2,680             1,988
    Exchange rate losses                           -1,187            -5,630
    Net financial income                            2,855            -2,679
    Net income before tax                           2,268             5,694
    Tax expense                                    -2,410            -3,868
    Net profit (group share)                         -142             1,826
    Earnings per share                              -0.00              0.02
    Fully diluted earnings per share                -0.00              0.02

    BALANCE SHEET (KEUR)                      30/06/2014        31/12/2013
    ASSETS
    Net intangible fixed assets                    8,268             8,146
    Net tangible fixed assets                     21,254            16,445
    Non-current financial assets                   6,145             6,749
    Tax assets                                    13,986            11,163
    Total non-current assets                      49,653            42,503
    Client receivables                            58,345            62,802
    Other receivables                             23,750            20,572
    Cash and cash equivalents                     58,968            61,797
    Total current assets                         141,063           145,171
    TOTAL                                        190,715          187, 675

    LIABILITIES
    Capital                                        4,255             4,201
    Issue premium                                 92,076            88,553
    Reserves                                      43,197            35,973
    Net income                                      -142             7,526
    Shareholder equity                           139,386           136,253
    Non-current liabilities                        6,691             4,286
    Current liabilities                           44,638            47,135
    TOTAL                                        190,715           187,675

    CASH FLOW STATEMENT (KEUR)                             H1 2014           H1 2013
    Net income                                                -142             1,826
    Amortization and provisions                              8,032             7,298
    Stock-based compensation                                 1,974             1,708
    Deferred tax                                            -2,083                14
    Asset sales                                                 36                91
    Other                                                       56                97
    Self-financing capacity                                  7,872            11,034

    Change in trade receivables                              1,062            -6,042
    Change in operating liabilities                           -303             8,431
    Change in working capital                                  759             2,389

    Operating cash flow                                      8,631            13,424

    License acquisitions                                    -3,912            -3,202
    Acquisitions of intangible fixed assets                 -1,090              -975
    Acquisitions of tangible fixed assets                   -9,084            -4,587
    Acquisitions of other fixed financial assets              -723              -359
    Repayment of loans and other financial
    assets                                                     567               146
    Asset sales                                                 34                45
    Total cash flows linked to investments                 -14,208            -8,932

    Free Cash-Flow                                          -5,576             4,491

    Medium and long term debt                                1,414                 0
    Capital increase related to stock options
    and bonus shares                                         2,920             3,330
    Share buyback                                             -522            -3,763
    Total cash flows from financing activities               3,812              -434

    Effect of exchange rate changes                            -23               949

    Change in cash                                          -1,787             5,006

    Net cash at the beginning of the period                 60,329            55,606
    Net cash at the end of the period                       58,542            60,612

SOURCE Gameloft