Codemasters® Achieves 38% Annual Growth Worldwide with 151% Increase in US Net Sales

Highlights:

Monday, 19 November, 2007 [9.00am GMT] - The Codemasters Software Company Limited (" Codemasters"), developer and publisher of award-winning interactive entertainment software, has today reported the results from the most successful period in its 22-year history.

In the 12 months to June 30, 2007, the group increased sales by 38% to £71.5m ($149m). One driving force in the company's performance was a 332% increase in dollar sales of video game software in the US retail channel, according to The NPD Group in the same period. NPD charts Codemasters as one of the top five fastest growing video game companies in the US.

With hit titles such as Colin McRae: Dirt and Overlord, Codemasters achieved a five-fold increase in operating profits to £5.6m ($11.6m) (2006: £1.1m/$2.3m). Net cash-flow from operating activities improved by 33%, to £9.0m ($18.7m).

US Success Drives Growth

In North America, net sales grew by 151% year on year to £17.1m, fuelled by a strong performance in the US. Software sales in the US, bolstered by expanded distribution and a high percentage of full-price sales, contributed more than 20% to overall group sales.

The results stem from improvements in sales, marketing and distribution established during the past two years. In December 2006, the company signed a distribution agreement with Warner Bros. Home Entertainment Group, which has enabled Codemasters to achieve record sales in the US. In 2007, Codemasters further demonstrated its commitment to the US market by appointing a management team of accomplished industry veterans based in Los Angeles.

Rod Cousens, chief executive of Codemasters, said:

"The company has never been in a better position to innovate and grow. Codemasters has the right team and the right technology to compete on a global scale in the interactive entertainment industry. Our results demonstrate that Codemasters is firing on all cylinders."

Innovative Games and Worldwide Strength

In the 2007 fiscal year, Codemasters hit the Top 40 charts with seven games in the U.K. and earned three spots in the US Top 20 listings. The creativity of Codemasters Studios was recognised last month when it was named as UK Developer of the Year at the 25th Golden Joystick Awards.

Building on its legacy of quality product, Codemasters invested £40.5m ($84.3m) in game design and development, an increase of over 150% over the previous year. The company is committed to creating innovative games, not just on the existing console, PC and portable platforms, but for emerging segments of the market, including the casual and mobile spaces.

On its release in June 2007, Colin McRae: DiRT topped the US best-seller charts for titles on the Xbox 360® video game and entertainment system from Microsoft®, and has sold more than one million copies to date. Overlord, a new action adventure game, also reached the top 10 charts in the US, the UK, Germany, France, Italy, Spain and the Netherlands.

Brian Lara International Cricket 2007 continued its reign as the world's number one selling cricket game, assisted by the ICC Cricket World Cup. This latest version of the million-selling franchise was the first to allow players to participate in multi-player online tournaments through Xbox LIVE®. A version of the game was also developed for mobile handsets in partnership with Glu Mobile Inc.

In April, Codemasters launched The Lord of the Rings Online: Shadows of Angmar in Europe, which has become one of the most successful massively multi-player online games (MMOGs) seen to-date.

Codemasters recently signed a licensing agreement with The Templar Company to create original video games for the Nintendo DS and Wii These will be based on Templar's 14-million selling series of Dragonology, Wizardology and Pirateology books.

Codemasters will shortly launch Dirty Dancing® game, based on the Hollywood film, and one of the company's first products to address the casual gaming market.

Forward-Looking Technology Infrastructure

Codemasters has built a portfolio of technology designed to maximize its investments in developing games for the most popular platforms and scale its business in emerging interactive entertainment categories.

- Proprietary Game Technology Engine:

The highly-acclaimed Colin McRae: DiRT title first showcased, Codemasters' proprietary technology engine, introduced as 'Neon'. The engine is a highly versatile middleware technology that can be used to develop games for all genres and platforms. Its advanced graphics and physics technology brings an unmatched cinematic quality and realism to interactive entertainment. The engine is being deployed in the development of Operation Flashpoint2: Dragon Rising, a military action title, and a new Race Driver game in the best-selling Codemasters flagship racing series. Further details and the new tech branding for the engine is to be announced.

- Online Games Technology:

Codemasters has invested in server, network management and customer service capabilities to deliver highly reliable, engaging online gaming experiences. The company has also created Code M, an online community hub, which boasts over 1.7m subscribers from all over the world.

- Funsta.com Casual Online Games

The company continues to grow its Funsta.com online gaming portal. With more than 1,000 games available for people of all ages, Funsta.com is a website that offers a wide range of games that can either be played on the web or downloaded to a PC.

Looking Forward

The recent investment in the business, made possible by the backing that Codemasters received from Balderton Capital and Goldman Sachs earlier this year, has created a strong release schedule that will underpin further progress in the current financial year.

Since the end of the fiscal year, the company has launched Clive Barker's Jericho, a game created in partnership with the legendary horror writer and film maker. In the coming months, Jericho will be followed by the launches of Turning Point: Fall of Liberty, a first-person-shooter game set in an alternate history that sees New York City invaded by Nazi forces; HEI$T, a bank robbery game set in San Francisco circa 1969; Rise of the Argonauts, a gladiatorial adventure set in ancient Greece; and a new Race Driver title. Other games are also in development and will be announced in due course.

ENDS