Gameloft posted consolidated sales of EUR21.8 million ($28 million US) in the last quarter of 2006, up by 41% from the previous year. Full year sales increased by 46% compared to 2005, reaching EUR68.4 M ($89 million US). The annual revenue target that had been revised upwards to EUR68 M in September 2006 has therefore been reached and even slightly exceeded.

Mobile gaming generated 99% of 2006 sales, increasing by 51% over 2005. Within the mobile games activity, the sales of downloadable games, which are the company’s core business and accounted for 91% sales, increased by 78% over the full year.

Internet sales generated by the jeuxvideo.com web site accounted for 1% of total sales in 2006. This activity was sold for EUR22.9 million in cash on 10 June 2006.

Sales in Europe, up 60% quarter on quarter, strongly accelerated during Q4. Europe represented 45% of turnover in Q4, North America 39% and the rest of the world (mainly Asia and Latin America) 15%.

During 2006, Group sales have evened out considerably between Europe, North America and the rest of the world. Europe represented 43% of the company’s sales in 2006, North America 41% and the rest of the world 17%. In 2005, Europe, North America and the rest of the world represented respectively 57%, 29% and 13% of Gameloft’s total sales.

2006 highlights

Throughout 2006, Gameloft continued to consolidate its position as the leading mobile gaming company in Europe and the second largest player on the North American market. The market shares gained by the Company in 2006 were in part due to the longstanding success of games it launched between 2002 and 2005. Gameloft’s back catalogue generated 70% of its total downloads in 2006. The 45 new games launched by Gameloft in 2006 also helped the Company grow its market share worldwide. Games such as 2006 Real Football, Mission Impossible III, And1 Street Ball and Platinum Sudoku, released during 2006, were all among Gameloft’s 20 best sellers. The immediate success of Tom Clancy’s Splinter Mobile: Double Agent, Brain Challenge, Asphalt 3: Street Rules and Deal or No Deal, launched shortly before the beginning of, or during, Q4 2006 contributed also to the excellent performance during this period, supporting expectations of a successful 2007. The excellent quality of Gameloft games and licences together with its ability to launch its games onto all models of mobile phones ensures recurring revenues from its back catalogue and rapid success for recently launched games.

The sustained growth recorded in 2006 was also made possible by Gameloft’s extensive distribution network developed since 2000. This direct distribution network - the first in the mobile gaming industry - includes over 160 telecom operators covering over 70 countries, enabling the games to be made available worldwide at launch.

The installed base of Java and Brew handsets continues to grow, stimulating the growth of the wireless gaming industry even further. Over 1 billion mobile phones were sold throughout the world in 2006 alone. Gameloft’s potential customer base is therefore expanding apace.

2007 Outlook

At the end of 2006, Gameloft had over 2600 employees, a 36% year on year increase. With its current staff, Gameloft can support the growing number of handset models selected by the carriers while releasing more than 50 new games a year. This unique production strength in the mobile gaming industry, combined with the quality of its creations and brands, should drive further sales increases and market share gains in 2007. During the first half of 2007, the company will release many high potential games such as Lost, Desperate Housewives, Tom Clancy’s Ghost Recon Advanced Warfighter, and Real Football 2007.

On this basis, Gameloft announces guidance for 2007 sales of EUR90 to EUR100 million as well as a strong increase in the operating margin, expected to be in excess of 10% (excluding employee stock based compensation). The Company’s growth will be made possible by the release of over 50 new mobile phone games in 2007 as well as by recurring revenues generated by the thousands of game versions launched over the last few years.

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 since 2002. The Group’s results for 2006 will be published on 16 March 2007.

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