Business Services Industry

Gameloft: 50% Growth in Sales and Sharp Improvement in Operating Margin During the First Half of 2007

Business Wire, August 30, 2007

PARIS -- 2007 Half-Year Results

Gameloft's financial statements for the first half-year ending 30 June 2007 break down as follows:

[TABLE OMITTED]

*before stock-based compensation

Total sales increased by 50% during the first six months of 2007. The growth of our game download sales, Gameloft's core business, reached 58% over the same period. This strong increase in sales is linked to our investments in R&D which allow us to release a growing number of games every year for a growing number of telephone models.

Gameloft recorded a very sharp improvement in current operating income during the first six months of 2007. The operating margin stands at 5.1%, gaining 11 margin points compared to the first half of 2006. This significant increase in the margin, despite a 42% increase in the average headcount over the period, highlights the substantial leverage that exists with the growth in sales. The margin should therefore continue to improve over the second half of the year and we are in a position to confirm our operating margin goal (excluding employee stock based compensation) in excess of 10% over the full year 2007.

The half-year impact from expensing stock options is EU1.5M. It is expected to reach around EU3.0M for the full year 2007. This charge will have no impact on the company's equity and cash level.

Our financial result was EU-0.1M, up significantly compared to the first six months of 2006. The company benefited from lower exchange rate losses on the US dollar and from interests on our available funds.

The net income stands just over the breakeven point, down however compared to the first half of 2006. This is due to the sale in June 2006 of our web site jeuxvideo.com which generated a capital gain of EU20.4M in our 2006 accounts.

Healthy financial position

Gameloft's financial position improved significantly during the year's first six months. The company's equity stands at EU48.6M at 30 June 2007, net cash was EU20.4M and financial indebtedness remained at zero. Operating cash flow reached 4.7Meuros during the period, a strong increase over the previous year. We can therefore renew with confidence our full year target of generating an operating cash flow close to breakeven or positive during fiscal 2007. Gameloft therefore has the financial resources necessary for its international growth strategy.

Outlook for 2007 and 2008

Investments in R&D over several years now have ideally positioned Gameloft in the mobile gaming industry. The company currently has:

- the industry's largest development capacity, well beyond that of its competitors;

- a growing number of outlets for its products as demonstrated by the release of Gameloft games for Apple's Ipod, XBox Live, Nintendo DS and PCs.

- a unique know-how demonstrated by the numerous awards that our mobile games have won worldwide;

- a catalogue of more than 150 games which generates recurrent revenue and which covers over 1000 mobile handset models;

- a large portfolio of IPs strengthened by the recent acquisition of the mobile rights to Beowulf, Heroes, Shrek The Third, 1 Vs 100, etc.

The company is therefore in a position today to confirm all of the

financial objectives that were set in the beginning of the year: sales between EU95M and EU100M in 2007 and exceeding EU130M in 2008 combined with an operating margin (excluding employee stock based compensation) in excess of 10% in 2007 and around 15% in 2008.

In the long term, the Company is therefore more than ever in a position to become a leader in a market of 4 billion potential consumers in 20101, a position for which it has invested heavily with success since 2002.

Sales for the third quarter of 2007 will be published on 26 October 2007.

1 Source: Strategy Analytics