GFT GFT Technologies SE

2006 Annual Results Gameloft's financial statements for the year ending December 31, 2006 is as follows: In M� 2006 IFRS 2005 IFRS Revenues 68.4� 46.8� Other Income 0.6� 0.1� Cost of revenues (5.0) (4.3) R&D (39.4) (24.9) Sales & Marketing (16.5) (11.7) Administration (5.6) (4.0) Other income and expenses 0.1� 0.3� Current operating income* 2.5� 2.3� Stock-based compensation (3.0) (2.5) Other operational revenues and expenses 19.7� 1.4� Operating income 19.2� 1.2� Financial income / (loss) (1.6) 0.8� Tax expense (1.3) (0.5) Group Share of Net Income 16.3� 1.4� *before stock-based compensation Gameloft�s total sales increased 46% over fiscal year 2006. The growth of download revenues�stands at 78%. This is the company's core business, representing 91% of annual sales. As announced, the Group�s current operating margin recorded a very sharp rebound during the last six months of 2006, reaching 11.4% over the second half-year of the period compared to -5.9% over the first half-year. As forecasted, this substantial improvement in operating profitability during the second half of the year is tied to the strong slowdown in the number of employee growth and to the leverage effect on sales. Over the entire period for 2006, operating income (before stock-based compensation) reached �2.5M, up slightly compared to 2005. The annual impact from expensing stock options is 3.0M�. This charge will have no impact on the company's equity and cash level. The sale of its interest in Internet site jeuxvid�o.com enabled Gameloft to make a net capital gain of 20.4M�. Therefore, operating profit for fiscal 2006 reached �19.2M compared to 1.2M� in 2005. Financial income amounted to -1.6M� and is mainly comprised of exchange rate losses, due to the decline in the American dollar. 2006 net profit stands at 16.3M�, a strong increase compared to 2005. Healthy financial position For the fourth year in a row, Gameloft's financial position improved significantly. The company's shareholder�s equity doubled in one year and stands at 44.2M�. On December 31, 2006, the cash level was 18.7M� and financial indebtedness was reduced to zero. Gameloft therefore has the financial resources necessary for its international growth strategy. In the second half of 2006, cash flows from operating activities came close to the break even point. This illustrates that the company is in a position to continue to self-finance its strong growth and aim for operating cash flow that is close to the break even point or even positive during fiscal 2007. Outlook 2007 Investments made since 2002 have put Gameloft in an ideal position for the upcoming fiscal years. The company currently has: - with over 2,300 developers, the industry's top development capacity, far ahead of all its competitors. That ability allows Gameloft to launch more then 50 games with worldwide potential on the market every year; - a unique know-how demonstrated by the numerous awards that our mobile games have won worldwide; - a catalogue of more than 120 games which generates recurrent revenue and which covers above 800 handset models. No single game represents more than 10% of the company's sales; - strong licenses in addition to many of its own brands, which are part of the top selling mobile games (Block Breaker Deluxe, Asphalt: Urban GT, Miami Nights, Real Soccer, etc.) and with new world-renown brands (Driver, Lost, Desperate Housewives, Dear Or No Deal, etc.); - the world's most complete distribution network with over 160 operators and over 150 affiliates distribute our games in more than 70 countries throughout the world. Gameloft can therefore confirm its 2007 sales forecast, between �90M and �100M. After the sharp improvement in its operating margin over the second half of 2006, Gameloft is confident in renewing its goal for operating profitability exceeding 10% (excluding employee stock based compensation) for 2007. On the longer term, the company aims to become the leader in a market of 4 billion potential consumers in 20101, a position for which it has invested successfully since 2002. Sales for the first quarter of 2007 will be published on April 30, 2007. P&L (in thousands of euros) 2006 IFRS S2 2006 IFRS S1 2006 IFRS 2005 IFRS Sales 68,421� 37,892� 30,529� 46,841� Other revenue from the activity 566� 366� 200� 131� Cost of revenues -4,999� -2,929� -2,070� -4,297� R&D -39,422� -19,652� -19,770� -24,949� Sales and Marketing -16,545� -8,530� -8,015� -11,698� Administration -5,596� -2,988� -2,608� -4,007� Other income and operating expenses 105� 166� -61� 258� Current operating income (before stock-based compensation) 2,530� 4,325� -1,795� 2,280� Stock-based compensation -3,029� -1,339� -1,690� -2,475� Other operating revenue and expenses 19,672� -12� 19,684� 1,378� Operating income 19,172� 2,974� 16,198� 1,183� Cost of net financial indebtedness 199� 261� -63� 591� Interest income 207� -9� 216� 227� Interest expense -1,986� -858� -1,127� -31� Financial result -1,580� -606� -974� 787� Tax expense -1,297� -820� -477� -529� Net income 16,295� 1,548� 14,747� 1,441� . Group's share 16,258� 1,548� 14,710� 1,364� . minority interests 37� 0� 37� 77� EPS 0.23� 0.02� 0.21� 0.02� EPS fully diluted 0.22� 0.02� 0.20� 0.02� BALANCE SHEET 12/31/2006 IFRS 12/31/2005 IFRS ASSETS Net intangible fixed assets 2,816� 2,482� Net tangible fixed assets 3,551� 2,688� Non-current financial assets 962� 672� Assets from deferred assets 821� 783� Total non-current assets 8,151� 6,625� Inventory 111� 241� Client receivables 26,283� 16,998� Investment securities 7,119� 2,494� Liquid assets 11,573� 6,354� Other current assets 5,154� 5,330� Total current assets 50,240� 31,418� TOTAL 58,390� 38,042� � � � � � LIABILITIES Capital 3,538� 3,443� Issue premium 58,592� 55,389� Reserves -34,223� -37,971� Result 16,258� 1,364� Shareholders' equity 44,165� 22,225� Minority interests 0� 210� Non-current liabilities 1,036� 5,959� Current liabilities 13,190� 9,648� TOTAL 58 390� 38 042� � � � � � � CASH FLOW STATEMENT 2006 IFRS 2005 IFRS Operating transactions � � Net income 16 258� 1 364� Depreciation of tangible and intangible fixed assets 3 229� 1 479� Variation of provisions -27� -2 341� Result from stocks options and assimilated 3 029� 2 475� Variation of deferred taxes -2� -3� Capital gains or losses on sales of assets -20 349� 170� Cash flows 2 138� 3 145� � � � Change in stocks 130� -143� Change in operating receivables -9 140� -12 099� Change in operating debts 2 640� 4 719� Change in the working capital requirement -6 370� -7 524� � � � Cash flows from operating activities -4 232� -4 379� � � � Cash Flows from investing activities � � Acquisitions of intangible fixed assets -186� -112� Acquisitions of tangible fixed assets -2 171� -2 530� Acquisition of other fixed financial assets -469� -590� Acquisition advances -2 174� -1 771� Sale of fixed assets 21 561� 32� Repayment of loans and other capital assets 153� 56� Reimbursement advances 204� 8� Change in scope -1 003� 241� Total cash flows from investing activities 15 916� -4 666� � � � Cash Flows from financing activities � � New long- and medium-term loans 88� 83� Reimbursement of loans -5 036� 13 956� Capital increase 95� 88� Increase in the issue premium 3 203� 1 105� Total cash flows from financing activities -1 649� 15 231� � � � Impact of conversion differentials -217� 186� � � � Change in cash flow 9 819� 6 372� Net cash flow at the beginning of the year 8 840� 2 469� Net cash flow at the end of the year 18 660� 8 840�