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Kuju PLC (KUJ)


Thursday 31 July, 2003

Kuju PLC

AGM Statement

Kuju PLC
31 July 2003

For Immediate Release                                               31 July 2003

                                  Kuju plc

        Chairman's statement at the AGM held at 4.00pm on 30 July 2003

Despite the group increasing turnover for the year ended 31 March 2003 by 29%,
the market for development of console games remains difficult with most of the
major publishers reducing the number of games in development. This is in
response to increasingly stringent concept approval processes by the format
holders in North America. In addition, the steady growth of the installed base
of PlayStation 2 makes the creation of new Intellectual Properties (IP) an ever
more expensive task leading to an emphasis on sequels and licensed third party
IP. There has been significant consolidation in the UK development sector. This
will improve Kuju's position in the medium term but in the short term has led to
fierce competitive pressure on development budgets and winning development
projects. The value market for console games is growing rapidly in Europe.

The structure of the wireless gaming market is continuing to develop as we
expected. This year we have signed distribution agreements for our Java
catalogue in line with original plans. In addition, the market for high quality
development on a work for hire basis remains strong. The period covered by the
rest of Kuju's financial year will be a pivotal phase in the development of this
market, particularly in Europe. Kuju expects a self-sustaining business model
for publishing wireless games to appear in that time frame.

In the Annual Report, I reported that the nature of the industry is one of peaks
and troughs and that in recent weeks the industry seems to be displaying more
optimism reflected in current discussions with a number of publishers for
potential new projects.  Analysis of those discussions shows a significant list
of potential projects varying in size. Yet despite this level of interest,
converting prospects into signed contracts remains difficult. We had assumed two
major projects being signed and starting by the end of July, however to date
these have not been signed. Yet despite the significant number of prospects
discussed above, new budgeted projects are continuing to take longer to close
than had been anticipated. Trading remains difficult.

In the Annual Report I also reported that the Board had reviewed and was
restructuring the cost base with an intent to move more toward the Film Industry
resourcing model with as much work as possible being outsourced or fulfilled by
contract staff.  In this way the type of additional costs carried in the year
recently completed would be minimised in the future.  In addition the Board has
undertaken a review of all other overheads and is implementing a cost reduction

In view of these continuing difficulties, the restructuring and cost reduction
will have to be deeper than was previously envisaged and this will be
accelerated in coming weeks. The continuing delays in new projects being signed
this year together with the structural changes will be painful both in terms of
people and costs, and the results for the coming year will reflect this. However
the new structure will result in a lower cost base going forward and ensure that
the impact on profitability of short-term fluctuations in capacity will be
minimised in future.

We continue to pitch to the high quality publishers for the best game licences
and ideas in order to maximise our chances of achieving additional royalties as
evidenced by our recent signing of a project with Konami.  The product releases
this year; Firewarrior (a Games Workshop licensed title developed for THQ
expected for release in the Autumn) and Train Simulator 2 (a PC title for
Microsoft with an intended Christmas release)  will serve to strengthen our
reputation as creative but dependable and open the doors of opportunity.

Board Changes

The Company announces that Edward Levey, the current finance director, has
stepped down and will remain as a non-executive director.  David Stanley, the
current commercial director, has been appointed to the role of finance director.

For further information, please call:

Jonathan Newth, Managing Director                           Tel: 01483 414 344
Kuju plc

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

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