RNS Number:7256L
Argonaut Games PLC
30 May 2003


For Immediate Release                                            30 May 2003




                               Argonaut Games Plc

                          ("Argonaut" or "the Group")



                                 Trading update



Argonaut Games Plc ("Argonaut") announces the cancellation of its game Malice by
Vivendi Universal Games Inc (VUG), the termination of its game Orchid and
provides a development update.



MALICE AND ORCHID



VUG has informed Argonaut that it no longer wishes to publish Malice and has
cancelled the development contract, returning all rights in the game to
Argonaut. This decision was reached following the consolidation of all of
Vivendi SA's video game assets into VUG and a comprehensive review of the
resulting portfolio of future releases. The publisher stressed their portfolio
now contained a number of character games and commercial logic dictated they
should concentrate their resources on their own intellectual property.
Argonaut's other contract (SWAT: GST for Playstation2 and Xbox) with VUG is
unaffected. VUG has offered to assist Argonaut in signing Malice to an
alternative publisher and it is our intention to pursue this course of action.
However, this secondary signing is unlikely to attain an advance at the level
which had been agreed with VUG or be accomplished prior to the end of the
financial year.



Following discussions with Namco Hometek Inc. on the redesign of Orchid we have
concluded that the potential returns on this title do not justify the additional
investment required to complete the game in its new form and have therefore
terminated its development. Argonaut's other contract (I-Ninja) with Namco is
unaffected.



DEVELOPMENT UPDATE



Kung Fu Chaos, developed exclusively for the Xbox by Justaddmonsters Ltd, our
Cambridge studio, and published by Microsoft, was released in the first quarter
of 2003. Although the game was very well received by both its publisher and the
industry press, retail sales have been disappointing. As a result Microsoft has
not commissioned a sequel as previously anticipated and Justaddmonsters Ltd is
currently designing a new game, which will be marketed to publishers in due
course.



Development of the Group's games scheduled for release in the fourth quarter of
2003 continues to plan. SWAT: GST, Argonaut's other game being developed for VUG
has passed its Alpha and is now in the final stages of its development. The four
platform Bionicle title being developed for LEGO and I-Ninja being developed for
Namco Hometek Inc are both approaching their content complete stages and are on
schedule. Carve, our Xbox Live watercraft-based racing game has been completed
and we are currently in discussions with publishers to facilitate its release.



Development of Powerdrome is progressing well and our demonstrations of this
title to potential publishers have been well received. We anticipate that we
will sign a development contract on this title but this is now likely to be
after the end of the current financial year.



The events described above will have a significant impact on the Group's results
for the year ending 31st July 2003, as they will necessitate the reversal of all
revenue recognised during the development of Malice and Orchid and a lower than
expected revenue because of the lack of a sequel to Kung Fu Chaos and delays
with Powerdrome. In addition, as the majority of the advance on Malice would
have been payable on completion of the game, its cancellation will mean the
Group's cash flow for the year will be lower than anticipated.  Notwithstanding
this, the Group estimates that it will still have a substantial cash balance at
the year-end and through the course of next year. The Board is currently
undertaking a review of the Group's cost base in the light of the lower levels
of expected revenue in the immediate future. The Group's present cash balance is
#7.2m.



Commenting on the statement Julian Paul, Chairman of Argonaut, said



"These developments are very disappointing for Argonaut. Malice and Orchid are
heavy blows and the unfortunate delay of Powerdrome very frustrating. However, I
am confident we will work through these present difficulties and that the
results of our current review will strengthen the Group going forward. The Board
is determined not to permit these disappointments to impact on the development
of our other games and we look forward to the upcoming release of some very
exciting titles in the autumn."



For further information, please contact:


Argonaut Games PLC                                     020 8951 6000
Jez San, Chief Executive
Joss Ellis, Chief Operating Officer
John Crilly, Finance Director
www.argonaut.com

Buchanan Communications                                020 7466 5000
Bobby Morse / Isabel Petre




                      This information is provided by RNS
            The company news service from the London Stock Exchange
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