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Eidos profits defy Legacy of Kain

Revenues up despite struggling titles

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Eidos plc - the software outfit behind Lara Croft - racked up increased profit even though half-year revenues dipped after two titles failed to perform as expected.

The UK's largest video games developer and publisher said that weaker than expected sales for two of its titles in the US market had contributed to the dip in turnover.

Earlier this year the company warned that sales of Commandos 3 and Legacy of Kain had proved disappointing. This, combined with US hardware sales falling short of market forecasts and a weaker US dollar, would result in revenue for the period being "modestly below market expectations", it predicted.

And it was right. For the six months to the end of December 2003 revenues were £78.7m, compared with £88.9 in the same period in 2002.

Despite this, profit was up from £4.4m to £6.2m.

The company also announced today that it has entered into a conditional agreement to acquire Danish-based studio IO Interactive - which develops the "Hitman" franchise - for £23 million in cash and stock.

Once the deal goes ahead it's expected to make a small contribution to operating profit in this financial year, the company said in a statement.

Commenting on the results, Eidos chief exec, Mike McGarvey, said: "I am pleased to announce operating profits pre goodwill and exceptionals up 30 per cent and profit after tax up 42 per cent, our third consecutive profitable six month period.

"This performance has been driven by the on-schedule release of a strong portfolio of quality games and demonstrates the benefits of our strategy of owned IP supported by stringent cost and process controls.

"We look forward to the remainder of this financial year, which will see the release of some of our most exciting titles. We remain confident in meeting current market expectations for the full year to 30 June 2004," he said.

During the second half of this financial year, Eidos expects to release a further six titles including Thief: Deadly Shadows, ShellShock: Nam ’67 (previous working title: Tour of Duty) and, on 30 April, the next sequel in the Hitman franchise, Hitman: Contracts.

By late morning shares in Eidos were down 2p (1.5 per cent) at 131.5p. ®

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