JoWooD Productions Software AG

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JoWooD announces preliminary result for 2004 • The Result is influenced by extraordinary write off of titles and deferred taxes as well as provision of depreciation and similar effects. • Preliminary

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08.03.2005

JoWooD Productions Software AG, a company quoted at the Vienna Stock Exchange announces preliminary sales of 18, 4 Mio. EUR, a preliminary EBIT before restructuring of minus 6,9 Mio. EUR and a result of minus 21,3 Mio. EUR.

The result in details:

Sales                                                 +18,4 Mio EUR
Cost of Sales                                     -5,3 Mio EUR
Development Costs                       -12,8 Mio EUR
Gross Profit                                     +0,3 Mio EUR
EBIT prior to restructuring           -6,9 Mio EUR
Restructuring Result                         -7,8 Mio EUR
Financial Result                         -1,1 Mio EUR
Amortization of tax assets           -5,7 Mio EUR
Result                                                 -21,3 Mio EUR

Compared with the year 2003 the balance sheet total was reduced by 10 Mio. EUR to approx. 38 Mio. EUR.  This includes active deferred taxes, (6,6 Mio EUR), products, finished and unfinished goods, (15,9 Mio EUR), cash and shares, (2,6 Mio. EUR) and receivables, (11,9 Mio EUR).  Equity ratio is approximately 49%.

Management sees the following topics as primary issues affecting the result:

Strong sales instead of result orientation in distribution. This led to a negative gross margin, (sales minus cost of goods, external marketing costs and provision for depreciation), of approx. -600 TEUR in the fourth Quarter.

The business model of ‘finished goods’ involves considerable problems despite the theoretical potential.  This led to sales corrections, price protections, result decrease, special provision for depreciation and others in the amount of approx. 7,8 Mio EUR.

The amortization model of activated titles was more restrictive than planned. Within the maximum amortization period of 12 months JoWooD changed to a digressive amortization.  Intangible assets from titles, (from 2002 and before), have been amortized completely, (2,7 Mio EUR).

Titles from 2004 which do not fit in the product-focus of 2005 have been corrected, (1,7 Mio EUR).

The general cost of restructuring, (closing of studios, depreciation etc) is approx. 1 Mio. EUR.

Deferred tax assets have been written off from 34% to 25%.

To resolve the described deficits Management has implemented the following 7-point program; Actions to Secure Liquidity

This includes actions to secure the actual liquidity of the company. It was possible to reduce the time frames for payments resulting from old contracts, positively effecting liquidity.

Financing of Projects

Implementation of a ‘project financing model’ with the focus on cash flow relevant actions with distribution-partners; this action is linked to the financing of specific titles.  JoWooD will be using financing-tools, which have already proved successful within the games and film industries. With these actions JoWooD will achieve a cost saving of several million euros.

Actions to Optimize Processes along with Cost Reduction

This action, the implementation of which has already started, will allow cost savings of an additional 3,5 Mio EUR (including studios).

The Handling of Strategic Markets

The handling of new strategic markets outside of the well-established European home-market is another important factor. Relating to this JoWooD can already refer to a finalised licence transaction for one title with an International Publisher from the Asia/Pacific Basin that exceeds the whole annual budget 2005 for the entire region.For the line up 2005, further orders are in discussion regarding this territory. In the next weeks the signing of a contract with a distributor from the Scandinavian region is expected. This proves that rapid results are possible with JoWooD titles within the identified markets and territories.For the West European territory JoWooD is currently receiving offers within the seven-figure range.

US Strategy

Concerning the US strategy, meetings have already taken place with International Co-publishing partners.  The line up 2005 contains a number of titles of a quality and scope that are of great interest for these partners.  Offers have been made and after verification, comparison and further negotiations JoWooD is planning to complete the necessary Agreements within April, this year.

Licence and Co-Publishing Deals

The US strategy is primarily focused on licence and co publishing deals with International Companies with excellent strategic positioning on the market.  This means that any co-publishing partner is especially qualified for the commercialisation and marketing due to its market position.  Production and licence costs would also be borne by the partner.

The revenue model will also be affected insofar as a revenue split would take place.  On the other side, this business model would bear less risk in commercialisation and, in comparison to the ‘finished goods model’, expenses are reduced. Therefore, relating to this business model, JoWooD will receive fixed royalties and in return would take no risk regarding price reductions, returns or amortisation of inventories, issues that have had a significant effect on the result 2004.

Further information: Dr. Michael Pistauer E-mail: investor@jowood.com Tel.: +43 3614 2966 1021 Fax: +43 3614 2966 1023 www.jowood.com

end of announcement                                euro adhoc 08.03.2005 18:40:29
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Further inquiry note: JoWooD Productions Software AG Dr. Michael Pistauer, Vorstand Mag. Oliver Ruetz, Investor Relations Tel.: +43 (0)3614 2966 1016 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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