JoWooD Productions Software AG

euro adhoc: JoWooD Productions Software AG
Quarterly or Semiannual Financial Statements
Result 3rd Quarter 2004 - JoWooD reports positive operating result for Q3 - EBIT influenced by conservative depreciation of titles - Group result negative because

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JoWooD Productions Software AG a publicly listed company at the Vienna Stock Exchange reported a sta-ble result for Q3 2004 despite significant write offs due to a conservative balance sheet policy. EBIT for the 9 months period ending September 30 amounted to EUR 1,190,899. The group result after minorities reflects an extraordinary write off of deferred taxes due to a reduction of the Austrian federal income tax rate from 34% to 25%. The reported taxes are almost completely non-cash.

Sales revenue of the first 9 months of 2004 amounted to EUR 12.4m. Cumulated revenue for Q3 2003 still included a contribution from (discontinued) distribution activities of EUR 6.9m. The sales revenue of the pre-sent reporting period is 20% above the publishing revenue (adjusted for distribution activities) of last year’s reference period.

Depreciation of capitalized development costs in connection with releases of game titles in Q3 caused a slight decrease in the gross margin from 57% (2003) to 53%. As a consequence CoGs rose to EUR 5.8m. Assets are depreciated quarterly. Titles released near the end of a quarter are therefore depreciated for 3 months although the related revenues may correspond to only one month or less of sales. As compared to general industry practice JoWooD pursues a conservative policy of capitalization and depreciation.

JoWooD continues to profit from a low cost structure. A small increase of 6% in administration, distribution and other expenses from EUR 6.1m in the previous year to EUR 6.5m was caused by an intensification of in-ternational sales and marketing activities in particular for upcoming PC and console titles as well as by a one-time write off provision of accounts receivable from trade. The increased financial result is caused by the fact that the majority of last year’s liabilities have been set free of interest charges during the fiscal year 2003 as a result of a banking agreement supporting the re-structuring plan and by a valuation adjustment of own shares coming in during the second quarter amounting to EUR 257,000. Contrary to other assets, purchases of own shares are booked as an expense (allocation to reserves) and sales or write offs thereof are booked as liquidations of reserves. Thus, the receipt of own shares produced an expense of EUR 192,000.

The negative taxes on income are a consequence of the positive ordinary result and an adjustment of de-ferred taxes due to a change in Austrian federal income tax. The income tax charges are non-cash because of existing deficits carried forward.

As of September 30, 2004 JoWooD employed 140 full-time employees and 49 free lancers.

The first 3 quarters were characterized by high investments into titles due for release in the second half of 2004 and in particular for the highly attractive product catalogue of 2005 which includes titles such as Gothic III, SpellForce II, The Guild II, Hotel Giant II or Stargate. The strategic objective for 2005 is a substantial in-crease in sales revenue.

Shipment of console and multiplatform titles has commenced in Q3 and will culminate with the release of „Ski Racing 2005 featuring Hermann Maier“ in Q4. JoWooD has successfully positioned itself as a multiplatform publisher. The market for console games is significantly larger than the market for PC titles.

For the fiscal year 2004 JoWooD expects a sales revenue of EUR 23m to 25m. EBIT and group result will be impacted by a non-cash extraordinary write off caused by a change in federal income tax, relatively late re-lease dates of certain titles within the business year, and JoWooD’s conservative depreciation policy as compared to industry peers. JoWooD expects an EBIT margin of approx. 10% for 2004.


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Key figures                                                    
in EUR 000                            Jan - Sept 2004 Jan - Sept 2003
Sales                                                  12,414                17,276
Costs of goods sold                            -2,037                -2,234
Development costs                                -3,800                -5,117
Gross profit                                         6,577                 9,924
Result before restruct.                        1,191                 4,887
Result after restruct.                         1,191                 1,313
Ordinary result                                        446                    955
Income before minorities *)                -1,536                    272
Group result *)                                  -1,474                    266
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*) includes extraordinary adjust-ments for deferred taxes due to a change in federal income tax

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                                                Jan - Sept 2004 Jan - Sept 2003
Non- current assets                                13,079                17,384
Current assets                                        41,578                22,753
Total assets                                          54,658                40,137
                                                                    
Shareholders' equity                              39,801                20,416
Minority interests                                        24                -8,109
Long term payables                                  7,452                 4,053
Short term debts to banks                        1,809                15,907
Other short term payable                         5,572                 7,870
thereof advanced payment                         2,491                 2,085
equity ratio                                                 73%                    51%
                                                                    
Number of fixed employees                          140                    117
Number of free lancers                                 49                      26

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end of announcement                                euro adhoc 04.11.2004 08:03:22
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Further inquiry note: JoWooD Productions Software AG Dr. Michael Pistauer, Vorstand. Karin Kraberger, Investor Relations Tel.: +43 (0)3614 2966 1015 mailo:investor@jowood.com http://www.jowood.com

Branche: Software
ISIN:      AT0000747357
WKN:        074735
Index:    WBI, ATX Prime, ViDX
Börsen:  Berliner Wertpapierbörse / free trade
              Baden-Württembergische Wertpapierbörse / free trade
              Frankfurter Wertpapierbörse / free trade
              Bayerische Börse / free trade
              Wiener Börse AG / official dealing



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