RESULTS FOR 2002/2003: OBJECTIVES ACHIEVED

Solid Prospects for 2003/2004

Paris, France - June 26, 2003 - Ubi Soft Entertainment, one of the world's leading video game publishers today announced its 2002/2003 fiscal year results.

Highlights:

• Record turnover: 456 million dollars/453 million euros (+30% at constant exchange rates) thanks to the success of the blockbusters Tom Clancy's Splinter Cell(tm), Rayman(r) 3: Hoodlum Havoc, and Tom Clancy's Ghost Recon.
• Gross margin rate: 61%, up by 2 percent, due to an improved product mix.
• Operating result:
  • + 20% according to French accounting standards at 37.1 million euros
  • +259% according to US GAAP pro forma at 31.2 million euros.
• Net income before goodwill and business assets amortization: 10.4 million euros, including a provision of 22.9 million euros on the 1 169 733 treasury shares valued at 10.64 EUR per share as of 03/31/03.
• Significant improvement of working capital requirement: 36.5% of the turnover compared with 40% in 2001/2002. Net debt amounted to 169.9 million euros as a result of considerable activity level during the final quarter (179 million euros).

Prospects for 2003-2004:

• Turnover: + 17% to 22% at constant exchange rates
• Operating result: 42 to 48 million euros in French accounting standards and 45 to 51 million euros in US GAAP pro forma
• Net result excluding exceptional items (before goodwill and business assets amortization): 19 to 23 million euros in French accounting standards and 21 to 25 million euros in US GAAP pro forma
• Net free cash flow: + 40 to 50 million euros

"We are particularly proud of our results for the 2002-2003 fiscal year. Our development studios have produced games internationally acclaimed, and they are now among the best in the world. We have continued to enrich our brands through our new creations and our consumer centric marketing. Tom Clancy's Splinter Cell(tm) became the No. 1 seller in Europe and the United States since it was launched on PlayStation?2 and Xbox?. Tom Clancy's Ghost Recon on Xbox(tm) is the No.2 seller in the United States over the five first months of the year. We are relying on the excellence of our talented studios to pursue a strategy based on the consistent creation of new brands," says Yves Guillemot, President and CEO of Ubi Soft Entertainment.

Principal elements of profit and loss statement:

Results for 2002-2003: objectives achieved

Ubi Soft has achieved all its objectives, in terms of turnover (17% to 22% growth at constant exchange rates), operating income (35 to 40 million euros according to French accounting standards and 29 to 34 million euros according to US GAAP pro forma), and net debt (170 million euros).

Turnover rose by 30% at constant exchange rates (+23% at current exchange rates), thanks to the success of the blockbusters launched during the fiscal year.

Gross profit was up by 28%. This represented 61% of the turnover (compared with 59% for the 2001/2002 period), due to a higher proportion of sales in 128 bit-consoles (62% in 2002-2003 compared with 19% in 2001-2002) and a significant rise in the volume of average sales per game.

According to US GAAP pro forma, the operating result before goodwill and business assets amortization rose by a factor of 3.6. This performance was made possible by concentrating on AAA titles, therefore reducing internal development costs, which dropped by 6.5% to 72,1 million euros.

According to French accounting standards, the operating result before goodwill and business assets amortization was up by 20%. This particularly reflected the anticipated increase in internal development amortization charges (66.1 million euros compared with 54.7 million euros the previous year).

The financial results breaks down as follows:

• 11.4 million euros in finance costs, up by 18.7% compared with 2001/2002: the result of concentrated activity during the second half of 2002/2003 ;
• 1.2 million euros in exchange losses, due to the growth in North America business towards the end of the financial year: the time when the dollar was at its lowest against the euro.

The exceptional results chiefly arose from:

• a provision of 22.9 million euros on Ubi Soft treasury shares (1 169 733 shares whose value was recorded at 10.64 EUR as of 03/31/2003) ;
• a profit on the convertible bonds (OCEANE) 2006 buy-back of 20.7 million euros (1 200 699 bonds bought back during the 2002-2003 period) ;
• exceptional amortization of product developments of 5.4 million euros according to French accounting standards and 3.9 million euros according to US GAAP pro forma (including 3.5 million euros relating to acquisitions) ;
• litigation profits of 2.4 million euros relating to acquisitions.

Corporate tax included a charge of 0.6 million euros arising from the cancellation of a tax credit on the subsidiary Ubi Soft Ltd. Apart from this exceptional element, the tax rate amounted to 37.5% according to French accounting standards and to 39.0% according to US GAAP pro forma.

Before goodwill and business assets amortization (5.5 million euros), net income came to 10.4 million euros according to French accounting standards (compared with 13.4 M EUR in 2001/2002) and 7.5 million euros according to US GAAP pro forma (compared with a loss of 0.7 million euros in 2001/2002).

A stronger financial situation

Ubi Soft financial ratios continued to improve. The stock level was reduced to 2.5 months compared with 3.8 months in 2001/2002. Accounts receivable for the fourth quarter of 2002/2003 represented 77 days compared with 105 days in 2001/2002. The working capital requirement now only represented 36.5% of the turnover compared with 40% in 2001/2002 and 46% in 2000/2001.

Lastly, at 169.9 M EUR, net debt was up by +38.2 M EUR compared with 2001/2002, due to a particularly busy fourth quarter (179 million euros in turnover). This represents 56% of equity capital as at March 31, 2003.

Very solid prospects for 2003/2004

Ubi Soft is entering the Fiscal Year 2003/2004 with 8 major titles in its portfolio, compared with 5 the previous year:

• Prince of Persia: The Sands of Time™: was voted Best Action Adventure Game at the E3 professional trade show last May.
• Tom Clancy's Splinter Cell™: Pandora Tomorrow: to date, the first version of this blockbuster has sold over 4.5 million units. The new episode is due for March 2004.
• Tom Clancy's Rainbow Six™03: a completely new console version will be available at Christmas.
• XIII: will be offering a highly original video game version of a comic strip.
• Uru™: Ages Beyond MYST: the fourth episode of this legend in adventure gaming. It will feature both 3D graphics and online play for the first time in the franchise history.
• Beyond Good and Evil™: new action adventure game from the creator of Rayman.
• Far Cry™: notable for its astonishing accuracy, this has a future generation engine enabling it to extend the limits of the action genre.
• Tom Clancy's Ghost Recon: Island Thunder: the elite American Ghosts unit is back and ready for action. The game will now be offering 12 maps dedicated to the multi-player mode on Xbox LiveTM.

Ubi Soft products were nominated 17 times and received 7 awards at E3 2003, the biggest video game trade show in the world that took place in Los Angeles in May of this year.

The sales objective for these 8 major products is over 10 million units throughout 2003/2004. With Prince of Persia: The Sands of Time™ and Beyond Good and Evil™, Ubi Soft is aiming to become the leader in the vast action adventure game segment. In the FPS (First Person Shooter) segment, Ubi Soft intends to make considerable inroads with Far Cry™ and XIII.

In 2003/2004, with 65 new products and a very strong back catalog, the Group is forecasting organic growth at constant exchange rates between 17% to 22%. Over the first quarter of the 2003/2004 period, Ubi Soft is anticipating a turnover of between 60 and 65 million euros.

Operating income could lie between 42 and 48 M EUR according to French accounting standards and between 45 million euros and 51 million euros in US GAAP pro forma. Excluding exceptional items, net result (before goodwill and business assets amortization) should be between 19 and 23 million euros in French accounting standards and between 21 and 25 million euros in US GAAP pro forma. The Group should generate net free cash flow between 40 and 50 million euros over the fiscal year.

The turnover for the first quarter of 2002/2003 will be published on July 30th this year.

Notes:
US GAAP Pro forma accounting standards consist of posting internal R&D expenses as operating expenses .