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Gameloft 2004 Operating Profit Doubled to 2.4 Million Euros; 2005 Revenue Forecasts Revised Upward

Gameloft 2004 Operating Profit Doubled to 2.4 Million Euros; 2005 Revenue Forecasts Revised Upward

PARIS — Gameloft

2004 year-end results

Gameloft’s 2004 figures are as follows:

In million euros 2004 S2 2004 S1 2004 2003

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Revenues 23.2 14.5 8.7 10.2

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Net operating profit/loss 2.4 1.6 0.8 1.2

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Net financial income/expense 7.5(a) 7.5 (0.1) 2.0

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Net extraordinary income/expense (7.6)(a) (7.7) 0.1 (0.6)

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Net profit/loss (group share) 1.9 1.3 0.6 2.4

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Gameloft has once again confirmed its ability to combine fast growth with profitability. The strong growth in revenues in 2004 and active cost control have allowed the company to double its operating profit to 2.4 million euros, for a 10.2% operating margin, while at the same time investing heavily in its development capability.

The company’s workforce increased from 248 employees at the end of 2003 to nearly 750 in December 2004. This strong effort positions Gameloft perfectly vis-a-vis its competitors to respond to the sharp growth in the mobile phone game industry and the emergence of 3G networks and mobile phones.

Net profit for the year was 1.9 million euros, down compared to 2003 net profit, which had, however, been positively impacted by 2 million euros of non-recurring financial capital gains on the sale of short-term investment securities.

Sound financial position

The company ended fiscal year 2004 with a greatly improved financial position. The 3.9 million euro capital increase in the second half of the year coupled with the strong 2004 profit allowed Gameloft to multiply by 5.7 its shareholders’ equity, which stood at 7.3 million euros as of December 31, 2004, and to reach net cash position of 1.4 million euros.

The company also underscores that its cash flow from operating activities(1) neared the positive mark in the second half of 2004 without any slowdown in investments as more than 300 people were hired between June and December of that year. Gameloft thus demonstrated in the second half of 2004 its ability to self-finance its brisk growth. The company will continue to apply this development model – which combines strong growth, profitability and self-financing – in the years ahead. Today, Gameloft has sufficient financial resources and profit margins to continue to build up its staff and expand its catalog of licenses at a rapid pace, as it demonstrated in 2004.

2005 forecasts

In 2005, Gameloft will continue to expand its line of games with the scheduled release of more than 20 new games, about 10 of which are 3D games designed for use on 3G telephones and networks. The company also plans to sign new large license deals in 2005 as demonstrated by the exclusive agreement announced today with Paramount and Dreamworks for the upcoming release of the Steven Spielberg and Tom Cruise film, “War of the Worlds”.

The quality of Gameloft games, as evidenced by the numerous awards received worldwide, the ability of its production teams to support the growing number of mobile phone models on the market, and access to nearly one billion global subscribers via its carrier network will allow the company to sustain the rapid growth in sales in 2005.

The company has therefore revised upward its 2005 revenue target and now forecasts close to 70% growth in revenues, positive operating profit and a positive bottom line.

Gameloft’s Q1 sales will be published on April 28, 2005.

(a) : Financial income/expense and net extraordinary income/expense should be restated by 7.9 million euros to allow a better understanding of these figures. The liquidation of two former inactive Gameloft subsidiaries resulted in 7.9 million euros in financial income and an extraordinary expense in the same amount. After restating this purely accounting transaction, which had no impact on 2004 net profit, financial income/expense is -0.4 million euros, due mainly to interest on debt and exchange rate differentials, and net extraordinary income/expense amounts to 0.3 million euros, due primarily to write-backs of provisions.

(1)Gross cash flow + change in WCR

Consolidated income statement – in K

euros 2004 2003

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Revenue 23.2 10.2

Other income 1.4 1.1

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Total operating income 24.6 11.3

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Purchases and external expenses 10.6 4.4

Salaries and social security taxes 11.0 5.2

Amortization expense and provisions 0.5 0.3

Other expenses 0.1 0.2

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Total operating expenses 22.3 10.1

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Net operating profit/loss 2.4 1.2

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Sales of short-term investment

securities 0.0 2.0

Exchange rate differentials -0.2 -0.1

Interest on financial debt -0.1 -0.3

Gains on liquidation of subsidiaries 7.8 0.4

Other financial expenses 0.0 0.0

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Net financial income/expense 7.5 2.0

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Write-backs of provisions 0.4 0.4

Losses on liquidation of subsidiaries -7.9 -0.9

Other extraordinary expenses -0.1 -0.1

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Net extraordinary income/expense -7.6 -0.6

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Corporate tax -0.3 -0.2

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Profit/loss non-group 0.0 0.0

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Net profit/loss (group share) 1.9 2.4

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Consolidated balance sheet – in K

euros 12/31/2004 12/31/2003

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ASSETS

Net intangible assets 1.4 1.0

Net tangible assets 0.9 0.2

Long-term investments 0.3 0.3

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Total long-term assets 2.6 1.5

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Trade receivables 8.9 4.2

Short-term investment securities 0.2 0.6

Cash assets 2.3 1.9

Other current assets 2.4 0.8

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Total current assets 13.8 7.5

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TOTAL 16.4 9.0

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LIABILITIES

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Capital 3.2 47.8

Issue premium 44.4 40.6

Reserves -42.3 -89.4

Income 1.9 2.4

Other 0.0 0.0

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Shareholders’ equity 7.3 1.3

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Minority interests 0.1 0.1

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Provisions 2.2 2.2

Borrowings and financial debt 1.1 3.0

Short-term debt 5.7 2.5

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TOTAL 16.4 9.0

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