2012 Annual Results

PR Newswire/Les Echos/

2012 Annual Results
Full-year sales reach EUR208.3M, up 27%
Operating income ofEUR14.9M, up 2%
Net profit of EUR9.3M, down 49%
Record net cash ofEUR55.6M, up 50%

                        Launch of a share buy-back program
                     Partnership deal with Disney Interactive

Paris (France), April 15, 2013 - Gameloft's consolidated profit and loss
statement for the year ending December 31, 2012, breaks down as follows:

(MEUR)                                        2012       2011

Sales                                        208.3      164.4
Cost of sales                               - 32.6     - 19.4
Gross margin                                 175.8      145.0
R&D                                         -103.1      -78.0
Selling and marketing                       - 35.5     - 30.0
Administration                              - 17.2     - 14.5
Other operating income and expenses            0.5      - 0.4
Current operating income                      20.4       22.0
Stock-based compensation                     - 4.0       -2.1
Other income and expenses                    - 1.6      - 5.3
Operating income                              14.9       14.5
Financial income                             - 0.5      - 1.1
Net income before tax                         14.3       13.4
Tax expense                                   -5.0        4.8
Net income                                     9.3       18.2
Net income per basic share                    0.12       0.24
Net income per diluted share                  0.11       0.23

In 2012, Gameloft's consolidated sales reached EUR208.3 million, up by 27% year
on year. North America represented 31% of 2012 sales; EMEA, 27%; APAC, 22%; and
LATAM, 20%. On a constant exchange rate basis, the full-year growth was 25% in
2012 compared with 19% in 2011. Gameloft's sales are driven by the massive
success of its games on smartphones and tablets for which the installed base is
increasing rapidly. The company's 2012 smartphone and tablet game sales grew by
90% year on year. They represented 51% of total Group sales compared with only
34% a year earlier.

Costs of sales have increased significantly in 2012 due to the considerable
success of Gameloft's licensed games such as Ice Age Village, The Dark Knight
Rises(tm), MY LITTLE PONY, LITTLEST PETSHOP and The Amazing Spider-Man(tm). This
explains the decrease of the gross margin to 84% in 2012 from 88% in 2011.

Gameloft hired close to 800 employees in 2012 in order to complete the full
transition of the company towards the "free-to-play" model and to lay the
groundwork for future growth. The solid growth in sales and efficient cost
control in the company's three departments - R&D, Selling and Marketing and
Administration - have allowed Gameloft to limit the impact of its massive hiring
plan. The 2012 current operating income stood at EUR20.4 million, down 7%, and
the operating income reached EUR14.9 million, up 2%.

R&D costs represented 49% of 2012 sales; Selling and Marketing, 17%; and
Administration 8%. In 2011 those ratios amounted respectively to 47%, 18% and
9%. R&D costs have therefore increased in 2012 as a percentage of sales while
Selling and Marketing and Administration costs decreased as a percentage of
sales during the same period.

It is however absolutely key to underline the negative impact on 2012 accounts
of two non-cash items that render the immediate comparison of 2012 and 2011
operating income numbers difficult:

- In the course of 2011, Gameloft reassigned its entire console and PC game
development staff (whose costs are capitalized on the balance sheet) to the
development of smartphone games (whose costs are expensed in the P&L). The net
amount of R&D capitalized on the balance sheet rather than expensed in the P&L
therefore decreased by EUR6.5 million between 2011 and 2012. On a like-for-like
basis, excluding capitalized R&D, the current operating income increased by 26%
in 2012.

- Starting in 2012, compensation costs related to bonus shares awarded to
employees are expensed over two years rather than four years. This explains the
significant increase in 2012 of the stock-based compensation to EUR4.0 million
from EUR2.1 million in 2011. It is important to highlight that stock-based
compensation costs do not impact negatively the company's equity and cash level
and that the amortization over two years rather than four years will benefit to
the 2014-2016 operating income.

Other income and expenses are linked essentially to the restructuring of
Gameloft's Chinese development studios. The company has decided to focus its
Chinese R&D on high value-added activities and closed down its Shanghai studio
as well as its QA and porting departments in Beijing and Cheng Du in 2012.
Nearly all of Gameloft's staff in China is now exclusively dedicated to the
creation of digital games.

Net financial income amounted to -EUR0.5 million compared with -EUR1.1 million
in 2011 thanks to the interests earned on cash.

The net income before tax therefore stood at EUR14.3 million, up 7% year on

The net income for 2012 reached EUR9.3 million, down 49% year on year. The net
income for 2011 was, however, positively impacted by the recognition of tax loss
carry-forwards in France amounting to EUR9.6 million. This non-cash item renders
a basic comparison of 2012 and 2011 net income figures difficult.

On a like for like basis, excluding recognition of French tax loss
carry-forwards and net capitalized R&D, the net income for 2012 was up 13%
compared with 2011.

The amount of unrecognized consolidated tax loss carry-forwards at the end of
December 2012 was EUR9.4 million.

Earnings per share and fully diluted earnings per share stand at EUR0.12 and
EUR0.11 respectively. Healthy financial position and launch of a share buy-back

For the fourth year in a row Gameloft has improved significantly its financial
position. The company's equity stood at EUR128.0 million and net cash reached
an all-time high of EUR55.6 million at the end of 2012. Cash generation was
strong during the year: Gameloft's operating cash flow before change in working
capital stood at EUR28.3 million, up 28% year on year, and net cash increased by
EUR18.7 million in twelve months. Therefore, the company has the financial
resources necessary to continue to grow and increase its market shares around
the world.

Given its healthy net cash position and the stock's historically low multiples,
the company has decided to launch an ambitious share buy-back program totaling
1.5 million shares at a maximum purchase price of EUR7.0 per share over a period
of eight months starting on April 16, 2013.

Multiple Licensing Deals Announced 

Gameloft has secured the worldwide rights to several major new franchises in
recent months. These agreements with some of the most prestigious players in the
entertainment industry illustrate once again the reputation for quality of our
development studios as well as the unparalleled distribution reach put in place
by Gameloft around the world. The company is in particular very proud to
announce its first ever licensing deal with Disney Interactive

Starting in 2013 the company will launch games based on:

Disney.Pixar's upcoming release of "Monsters University" for feature phones 
Disney.Pixar's "Cars" for feature phones, smartphones and tablets
Universal's upcoming movie "Despicable Me" for smartphones and tablets
Marvel's upcoming movie "Iron Man 3" for feature phones, smartphones and tablets
The rights to several additional franchises have been secured recently and will
be announced in the course of 2013 by the company.

Outlook for 2013 and 2014

After three financial years of significant investments which led to the hiring
of close to 2,000 additional employees since the beginning of 2010 and which has
allowed the company to complete its full transition towards the "free-to-play"
model and to accelerate the growth of its revenues, Gameloft is entering an
exciting new phase of its development.

The company now has the means to release between twenty and thirty high-quality
games on feature phones, smartphones and tablets. These games are launched in
thirteen different languages on 1,500 smartphone models and 300 feature phone
models. There is, to our knowledge, no equivalent even remotely close in the

All smartphone and tablet games that are now released by Gameloft are freemium
or paymium and heavily social. To this day, 515 million of its freemium and
paymium games have been installed on iOS and Android, and during the last thirty
days close to 75 million users have played a Gameloft game. The "free-to-play"
model has been applied successfully to feature phones as well by the company.
This new offer is allowing Gameloft to target new customers on feature phones
around the world.

One of the company's main objectives for the coming months will be to optimize
the monetization of its games which increasingly resemble services rather than
simple games. The monetization of Gameloft's games has improved significantly
since its first freemium title was launched in March 2011, but there is still a
significant margin for improvement which should allow Gameloft to improve the
return on investments of its creations.

In 2012, 700 million smartphones were sold compared with 490 million in 2011(1).
Gameloft expects strong smartphone and tablet sales in 2013. The momentum of the
smartphone and tablet market should therefore continue to sustain Gameloft's
growth in the upcoming quarters. In particular, the company expects, starting in
2013, a flood of low-end smartphones and tablets priced between EUR50 and EUR100
across the world. Games on these low-end smartphones and tablets will be
radically different from the games that have been developed until now on
smartphones and tablets, and Gameloft will be able to leverage its ten-year
experience on feature phones in this new segment and take significant market

Therefore, the company is expecting growth in 2013 in terms of sales,
profitability and net cash.

As a reminder, sales for the first quarter of 2013 will be published on May 
14, 2013, after the market closes.

About Gameloft:
A leading global publisher of digital and social games, Gameloft(r) has
established itself as one of the top innovators in its field since 2000.
Gameloft creates games for all digital platforms, including mobile phones,
smartphones and tablets, set-top boxes and connected TVs. Gameloft operates its
own established franchises such as Asphalt(r), Real Football(r), Modern Combat
and Order & Chaos(r), and also partners with major rights holders including
Marvel(r), Hasbro(r), FOX(r), Mattel(r) and Ferrari(r). Gameloft is present on
all continents, distributes its games in over 100 countries and employs over
5,000 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 further information:
Gabriel Goldwasser
Tel: 415-615-0520
Email: [email protected]

For more information, consult

(1) Strategy Analytics

P&L (KEUR)                                2012        2011
Revenue                                208 315     164 357
Cost of sales                          -32 555     -19 377
Gross margin                           175 759     144 980 
R&D                                   -103 054     -78 011
Sales and Marketing                    -35 522     -30 046
Administration                         -17 239     -14 508
Other operating income and expenses        504        -432
Current operating income                20 448      21 982
Stock-based compensation                -3 985      -2 139
Other income and expenses               -1 613      -5 311
Operating income                        14 850      14 532
Cost of net financial indebtedness       1 327         377
Exchange rate gains                      5 869       5 097
Exchange rate losses                    -7 730      -6 618
Net financial income                      -534      -1 144
Net income before tax                   14 316      13 388
Tax expense                             -5 036       4 837
Net profit (group share)                 9 280      18 225
Earnings per share                        0.12        0.24
Fully diluted earnings per share          0.11        0.23
BALANCE SHEET (KEUR)                31/12/2012  31/12/2011
Net intangible fixed assets             10 482      11 856
Net tangible fixed assets                9 098       7 509
Non-current financial assets             2 397       2 211
Assets from deferred tax                17 149      14 863
Total non-current assets                39 126      36 439
Client receivables                      59 658      50 609
Other receivables                       20 520      13 417
Cash and cash equivalents               55 654      38 034
Total current assets                   135 832     102 060
TOTAL                                  174 958     138 499  
Capital                                  4 091       3 855
Issue premium                           85 669      71 625
Reserves                                28 937       9 209
Net income                               9 280      18 225
Shareholder equity                     127 977     102 914
Non-current liabilities                  4 400       3 086
Current liabilities                     42 582      32 499
TOTAL                                  174 958     138 499

CASH FLOW STATEMENT (EURK)                2012        2011

Net income                               9 280      18 225
Amortization and provisions             16 390      18 597
Stock-based compensation                 3 985       2 139
Capitalized R&D                         -1 368      -7 934
Asset sales                                347         154
Deferred tax                              -294      -9 066
Self-financing capacity                 28 340      22 115
Change in trade receivables            -17 380     -12 400
Change in operating liabilities          8 559       6 533
Change in working capital               -8 822      -5 867

Operating cash flow                     19 518      16 248

Investment-related cash flow
License acquisitions                    -5 536      -3 695
Acquisitions of intangible 
fixed assets                              -812        -813
Acquisitions of tangible fixed assets   -6 097      -5 190
Acquisition of other fixed financial 
assets                                    -546        -810
Repayment of loans and other 
financial assets                           353         912
Asset sales                                 60          49
Total cash flows linked to 
investments                            -12 578      -9 547

Free cash flow                           6 940       6 701

Cash flows from financing activities
Capital increase related to stock 
options and bonus shares                13 179       4 274
Other financing flows                        0           6
Total cash flows from financing 
activities                              13 179       4 280

Effect of exchange rate changes         -1 461         834

Change in cash                          18 658      11 815

Net cash at the beginning of the 
year                                    36 948      25 133
Net cash at the end of the year         55 606      36 948

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