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Wednesday 11 September, 2013

Gameloft

Results for the first-half of 2013

PR Newswire/Les Echos/

Results for the First Half of 2013

                          Sales of EUR109.4M, up 15%
               Current operating income of EUR11.2M, up 71 %
                   Operating income of EUR8.4M, up 93%
                      Net profit of EUR1.8M, down 60%

                      Record net cash of EUR60.6M

Paris (France), September 10, 2013 - Gameloft's financial statements for the
first half-year ending June 30, 2013; breakdown as follows:

In millions of EUR                 H1 2013   % of sales   H1 2012   % of sales

Sales                               109.4                   95.2      
Cost of sales                       -19.1       -17%       -13.7      -14%
Gross profit                         90.3        83%        81.5       86%
R&D                                 -51.6       -47%       -50.0      -53%
Sales and marketing                 -17.8       -16%       -17.4      -18%
Administration                       -9.2        -8%        -8.5       -9%
Other operating income 
and expenses                         -0.4         0%         0.9        1%
Current operating income             11.2        10%         6.6        7%
Stock-based compensation             -1.7        -2%        -1.2       -1%
Other income and expenses            -1.1        -1%        -1.0       -1%
Operating income                      8.4         8%         4.3        5%
Financial income                     -2.7        -2%         0.4        0%
Net income before tax                 5.7         5%         4.7        5%
Tax expense                          -3.9        -4%        -0.2        0%
Net income                            1.8         2%         4.6        5%

Over the first half of 2013, Gameloft achieved consolidated sales of EUR109.4
million, up 15% year on year. On a constant-exchange-rate basis, growth for the
first half was 17%. EMEA represented 32% of f irst half sales; North America,
25%; LATAM, 23%; and APAC, 20%. Sales continue to be driven by the worldwide
success of Gameloft games on smartphones and tablets. Gameloft's first-half
sales on smartphones and tablets grew by 45% year on year. They represented 61%
of total Group sales compared with 48% in the first half of 2012. Gameloft's
rapid growth is also driven by the success of virtual goods and advertising
which currently account for 80% of the company's smartphone revenues. This
business model increases the longevity of the company's products. Games dating
from 2011 and 2012 such as Ice Age Village, Modern Combat 4: Zero Hour, World 
at Arms, MY LITTLE PONY, Order & Chaos Online, and Six-G uns have contributed 
to the solid performance of the company in the first six months of 2013.

The first-half gross profit reached EUR90.3 million, up 11 %. The gross margin
for the period reached 83%, down from 86% in H1 2012 but stable compared with
the gross margin achieved in H2 2012.

The solid growth in sales, stable headcount and efficient cost control in the
company's three departments - R&D, Sales and Marketing and Administration - 
have allowed Gameloft to increase significantly its current operating income 
which stood at EUR1 1.2 million, up 71%. R&D, Sales and Marketing and 
Administration costs all decreased as a percentage of sales during the first 
half of 2013. R&D costs for instance represented 47% of first-half sales in 
2013, significantly lower than the rate of 53% achieved in the same period in 
2012. The first-half current operating margin therefore reached 10.3% compared 
with 6.9% in the first half of 2012.

Compensation costs related to bonus shares awarded to employees stood at EUR1.7
million in the first half of 2013 from EUR1.2 million in the same period in
2012. Stock-based compensation costs do not impact negatively the company's
equity and cash level. Other income and expenses of EUR1 .1 million are linked
essentially to the restructuring of Gameloft's development studios in India and
the Philippines. This restructuring reflects the major market changes of the
last two years and in particular the technological evolution of feature phones
and smartphones. The operating income for the first half of 2013 therefore
reached EUR8.4 million, up 93% year on year, and the operating margin stood at
7.7%.

Net financial income for the first half of 2013 amounted to -EUR2.7 million and
is essentially comprised of latent foreign exchange losses on intragroup
receivables related to the fall of several foreign currencies against the Euro
during the period (Brazilian Real, Argentine Peso, Canadian Dollar and Japanese
Yen). The net income before tax therefore stood at EUR5.7 million, up 20% year
on year.

The net income for the first half of 2013 stood at EUR1 .8 million, down 60%
year on year. The net income for the first half of 2012 was, however, 
positively impacted by the recognition of tax loss carry-forwards in France 
amounting to EUR2.0 million. This non-cash item renders a basic comparison of 
first-half 2013 and 2012 net income figures difficult.

The amount of unrecognized consolidated tax loss carry-forwards at the end of
June 2013 was EUR11.7 million.

Healthy financial position

The company's equity stood at EUR130.6 million and net cash reached an all-time
high of EUR60.6 million at the end of June 2013. Cash generation was strong
during the first six months of 2013: Gameloft's operating cash flow stood at
EUR1 2.9 million, up 52% year on year, and net cash increased by EUR5.0 million
in six 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, Gameloft launched a share buy-back plan on
April 16, 2013. At the end of June 2013 the company had bought 724,491 Gameloft
shares on the market at an average price of EUR5.2 per share for a total amount
of EUR3.8 million.

Outlook for 2013 and 2014

Gameloft has the development capacity to release annually between twenty and
thirty high-quality games on feature phones, smartphones and tablets. These
games are launched worldwide in thirteen different languages on 3,000 
smartphone models and 350 feature phone models. There is, to our knowledge, no 
equivalent to Gameloft's development and distribution capacity in the mobile 
gaming industry.

To this day, 800 million freemium and paymium Gameloft games have been 
installed on iOS and Android. During the last thirty days 150 million people 
have played a Gameloft game. The huge success of the company's last two 
releases: Despicable Me: Minion Rush and Asphalt 8 Airborne highlights as well 
the ability of the company to release worldwide hits in a very competitive 
environment.

In 2012, 700 million smartphones were sold compared with 490 million in 2011(1).
Gameloft expects strong smartphone and tablet sales in 2013. 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 should be 
able to leverage its ten-year experience on feature phones in this new segment 
and take significant market shares. The momentum of the smartphone and tablet 
market should therefore continue to sustain Gameloft's growth in the upcoming
quarters.

The company therefore confirms its target to reach between EUR235 million and
EUR240 million in sales for the full year of 2013, as well as an increase of
profitability and net cash. Sales for the third quarter of 2013 will be
published on November 4, 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 (including Apple(r) iOS and Android(r) devices), 
set-top boxes and connected TVs. Gameloft operates its own established 
franchises such as Asphalt(r), Order & Chaos, Modern Combat or Dungeon Hunter 
and also partners with major rights holders including Universal(r), 
Illumination Entertainment(r), Disney(r), 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 (Euronext: GFT.PA, Bloomberg: GFT FP,
Reuters: GLFT.PA). Gameloft is traded OTC in the US (sponsored Level 1 ADR
ticker: GLOFY).

For further information:
Heather Cosby
+1 (646) 203-8643
Email: [email protected]

For more information, consult www.gameloft.com.

(1) Strategy Analytics

PROFIT & LOSS ACCOUNT (KEUR)                              H1 2013    H1 2012

Revenue                                                   109 374     95 191
Cost of sales                                             -19 118    -13 734
Gross margin                                               90 256     81 457
R&D                                                       -51 586    -50 005
Sales and Marketing                                       -17 827    -17 369
Administration                                             -9 210     -8 456
Other operating income and expenses                          -418        941
Current operating income                                   11 215      6 569
Stock-based compensation                                   -1 708     -1 246
Other income and expenses                                  -1 134       -983
Operating income                                            8 373      4 339
Cost of net financial indebtedness                            963        529
Exchange rate gains                                         1 988      3 077
Exchange rate losses                                       -5 630     -3 218
Net financial income                                       -2 679        388
Net income before tax                                       5 694      4 728
Tax expense                                                -3 868       -170
Net profit (group share)                                    1 826      4 558
Earnings per share                                           0,02       0,06
Fully diluted earnings per share                             0,02       0,05

BALANCE SHEET (KEUR)                                    30/06/13  31/12/2012
ASSETS
Net intangible fixed assets                                9 634      10 482
Net tangible fixed assets                                 10 597       9 098
Non-current financial assets                               2 558       2 397
Tax assets                                                17 814      17 149
Total non-current assets                                  40 603      39 126
Client receivables                                        61 652      59 658
Other receivables                                         22 958      20 520
Cash and cash equivalents                                 60 951      55 654
Total current assets                                     145 562     135 832
TOTAL                                                    186 164     174 958
LIABILITIES                                           
Capital                                                    4 148       4 091
Issue premium                                             89 134      85 669
Reserves                                                  35 508      28 937
Net income                                                 1 826       9 280
Shareholder equity                                       130 616     127 977
Non-current liabilities                                    5 403       4 400
Current liabilities                                       50 145      42 582
TOTAL                                                    186 164     174 958

CASH-FLOW STATEMENT (KEUR)                               H1 2013     H1 2012

Net income                                                 1 826       4 558
Amortization and provisions                                7 298       8 022
Stock-based compensation                                   1 708       1 246
Capitalized R&D                                             -489        -996
Asset sales                                                   91          65
Other non-cash items                                          97           0
Deferred tax                                                  14      -2 249
Self-financing capacity                                   10 545      10 646
Change in trade receivables                               -6 042      -7 596
Change in operating liabilities                            8 431       5 454
Change in working capital                                  2 389      -2 142
Operating cash-flow                                       12 934       8 504
License acquisitions                                      -3 202      -2 030
Acquisitions of intangible fixed assets                     -486        -472
Acquisitions of tangible fixed assets                     -4 587      -3 086
Acquisition of other fixed financial assets                 -359        -380
Repayment of loans and other financial assets                146          83
Asset sales                                                   45          16
Total cash flows linked to investments                    -8 443      -5 870
Free Cash-Flow                                             4 491       2 634
Capital increase related to stock options 
and bonus shares                                           3 330       5 158
Share buy-back                                            -3 763           0
Total cash flows from financing activities                  -434       5 158
Effect of exchange rate changes                              949      -1 050
Change in cash                                             5 006       6 743
Net cash at the beginning of the period                   55 606      36 948
Net cash at the end of the period                         60 612      43 690
                      
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