Argonaut Games PLC
17 January 2002
For Immediate Release Thursday 17 January 2002
PRESS RELEASE
Argonaut Games PLC
Acquisition of Particle Systems Ltd
And
Trading update for 5 months to December 2001
Argonaut Games PLC ('Argonaut' or 'the Group'), a leading European developer
of video games, announces the acquisition of Particle Systems Ltd ('Particle
') and provides an update on trading for the five months to the end of
December 2001.
The Acquisition of Particle Systems Ltd
Argonaut has acquired 100% of the equity capital of Particle , a two-team
games development company based in Sheffield with 40 employees. The founders
of Particle, Michael Powell and Glyn Williams, are highly regarded veterans of
the games industry, having produced games such as Powerdrome, SubWar 2050,
Cholo and Warhead and more recently the very successful, award winning, three
gamed I War series; I War, Defiance and Edge of Chaos. Including the teams
from Particle, Argonaut will employ over 210 games developers in the Group.
Particle is currently developing the eagerly anticipated squad based shooter
EXO on the PlayStation 2 ('PS2') platform under a development agreement with
Infogrames Entertainment SA. EXO uses Particle's new PS2 engine 'Flux' and is
scheduled for release in Autumn 2002. Particle is currently in negotiation
with a number of publishers and anticipates entering into a development
agreement for its second game in the near future.
The acquisition involves a total maximum consideration of £2.4m in cash or
cash equivalents plus 3.5m Argonaut shares. The initial consideration paid was
£0.2m in cash, £0.8m in loan notes, redeemable on 31 December 2003, the
assumption of £0.6m of debt plus 2m Argonaut shares. The balance of the
consideration, £0.8m in cash plus 1.5m Argonaut shares, is payable over a
period of two and a half years subject to Particle achieving certain
performance targets.
As at 31 July 2001, Particle's net liabilities were £0.8m and its loss before
tax, for the eight months ending 31 July 2001 was £0.2m, and for the year
ending 30 November 2000 was £0.1m. Argonaut anticipates that the acquisition
of Particle will have a slightly negative impact on the Group's results* for
the current financial year and will make a positive contribution* in the full
financial year ending 31st July 2003.
The acquisition of Particle with its wealth of experience and proven ability
to produce high quality games, substantially enhances the Group's development
capacity. Further to this, Particle's Intellectual Property portfolio is very
strong being highly marketable with clear sequel potential.
Trading Update for the five months to 31 December 2001
The increased pace of activity in the Video Game industry noted in Argonaut's
announcement on 7 August 2001 has continued throughout the period with new
developments and innovations occurring on almost a weekly basis. The
successful launch of both Microsoft's Xbox and Nintendo's Game Cube during
November in the US has undoubtedly given the US market a welcome boost and we
look forward to the Spring 2002 release of these consoles throughout the rest
of the worldwide games market.
We are delighted with Electronic Arts Inc's ('EA') release of Harry Potter and
the Philosopher's Stone for PlayStation (PS one) and to have secured the
number 1 position in the UK PlayStation Charts for every week since the game's
release in November. Although we will only receive official notification of
the number of units sold for the period ending 31 December 2001 in mid
February, anecdotal evidence points to the game being a hit all around the
world. As such, we remain confident of achieving our royalty income
expectations for the financial year.
New Contracts
Since signing the development agreement on the game SWAT with Vivendi
Universal in August 2001, we have entered into two further development
contracts.
The first of these is with EA and covers the development of a further Harry
Potter game. We are pleased to be continuing our strong relationship with EA
and to have secured a second title under this great license.
The second development contract heralds a major new relationship with LEGO,
one of the biggest toy companies in the world. The agreement covers the
development of two games under the Bionicle license, a GameBoy Advance title
plus a PS2 and PC title, and includes an option for an additional GameCube
game. Bionicle is one of LEGO's largest ever product lines and we are
delighted that Argonaut has been chosen to bring the Bionicle characters to
video game players throughout the world.
Development of our other games including Malice, SWAT, Kung Fu Party, Orchid
and our confidential Microsoft title proceeds apace. Discussions with various
publishers concerning the development of Orchid are progressing well and we
anticipate signing this title in the near future.
Commenting on these developments Julian Paul, Chairman of Argonaut, said:
'The acquisition of Particle represents further progress of our expansion
strategy with an emphasis on quality. Particle is a very experienced, highly
regarded studio with two great games in development and will consolidate
Argonauts' position as a dynamic and broad based market leader in the
development of leading edge high quality games.
Capturing the Christmas number one position with Harry Potter and the
Philosopher's Stone game is another great achievement for the Group and we are
very pleased to be following this up with a further Harry Potter title for EA.
In addition, the development agreement with LEGO marks a further consolidation
of our strategy to build relationships with the truly global players in our
market.'
*Pre goodwill
For Further Information, please contact:
Argonaut Games PLC 020 8951 6000
Jez San, Chief Executive
jez@argonaut.com
Joss Ellis, Chief Operating Director
joss@argonaut.com
www.argonaut.com
Buchanan Communications 020 7466 5000
Bobby Morse/Isabel Petre
Application has been made to the UK Listing Authority for the 2m Argonaut
shares payable as part of the initial consideration for the acquisition of
Particle to be admitted to the Official List, and to the London Stock Exchange
for admission to trading on the London Stock Exchange's market for listed
securities. In addition, such application has also been made in relation to
400,000 Argonaut shares issued as part of the consideration for the
acquisition of Just Add Monsters Limited (announced in October 2000) and
2,432,478 Argonaut shares issued pursuant to the exercise of options. It is
expected that admission will occur and dealings will commence on 22 January
2002.