<PAGE>

                                    FORM 20-F
                       SECURITIES AND EXCHANGE COMMISSION

                              WASHINGTON D.C. 20549

                                  ANNUAL REPORT

                    for the fiscal year ended March 31, 1999

                                    EIDOS plc
    (incorporated with limited liability in England and Wales with registered
                                 number 2501949)

                     Business Address and Telephone Number:
  Wimbledon Bridge House 1, Hartfield Road, Wimbledon, London SW19 3RU, 44 181
                                    636 3000

                            Securities registered:--

American Depositary Shares*     Nasdaq
Ordinary Shares**               London Stock Exchange

*     American Depositary Shares evidenced by American Depositary Receipts. Each
      Depositary Share represents one Ordinary Share.

**    The Ordinary Shares (the "Ordinary Shares") have a par value of 10 pence
      per share.

                                                               Outstanding as of
Title of Class                                                   March 31, 1999
--------------                                                 -----------------
Ordinary Shares                                                     17,282,280
American Depositary Shares                                           4,233,817

Indicated by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes |X|  No |_|

Indicated by check mark which financial statement item the registrant has
elected to follow. Item 17 |_| Item 18 |X|

In this document, Eidos plc is referred to as the "Company" and the Company and
its consolidated subsidiaries are together referred to as "Eidos" or the
"Group". Also, sales and operating revenue is referred to as "sales" in the
narrative description except in Consolidated Financial Statements.

As of March 31, 1999, the Company had 11 principal consolidated subsidiaries. It
has applied the equity accounting method in respect to its affiliated companies.
On July 19, 1999, the Noon Buying Rate was $1.56 for each (pound)1.

Cautionary Statement With Respect to Forward-Looking Statements
<PAGE>

Statements made in this annual report with respect to Eidos' plans, strategies
and beliefs and other statements which are not historical facts are
forward-looking statements which involve risks and uncertainties because they
relate to events and depend on circumstances that will occur in the future.
There are a number of factors that could cause actual results and developments
to differ materially from those expressed or implied by these forward looking
statements, including without limitation, general economic conditions in Eidos'
markets, particularly levels of consumer spending; exchange rates, particularly
between sterling and the U.S. dollar, in which Eidos makes significant sales;
and Eidos' ability to continue to win acceptance of its products, which are
offered in highly competitive markets characterized by continual new product
introductions, rapid developments in technology and subjective and changing
consumer preferences (particularly in the entertainment business); and those
factors identified under "Item 1 Description of Business - Risk Factors".
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                                TABLE OF CONTENTS

                                                                            Page
Part I Item 1 Description of Business                                          3
              General                                                          3
              Industry Background                                              4
              Products                                                         5
              Interactive Software Development                                 6
              Additional Product and Service Groups                            8
              Research and Development                                        10
              Distribution                                                    10
              Marketing and Sales                                             10
              Manufacturing                                                   12
              Principal Subsidiaries of the Company                           12
              Risk Factors                                                    13
Item 2  Description of Property                                               20
Item 3  Legal Proceedings                                                     21
Item 4  Control of Registrant                                                 22
Item 5  Nature of Trading Market                                              23
Item 6  Exchange Controls and Other Limitations Affecting Security Holders    24
Item 7  Taxation                                                              25
Item 8  Selected Financial Data                                               29
Item 9  Management's Discussion and Analysis of Financial Condition and
        Results of Operations                                                 33
Item 9A Quantitative and Qualitative Disclosures About Market Risk            45
Item 10 Directors and Officers of the Registrant                              47
Item 11 Compensation of Directors and Executive Officers                      50
Item 12 Options to Purchase Securities from Registrant or Subsidiaries        53
Item 13 Interest of Management in Certain Transactions                        55
Part III Item 15 Defaults Upon Senior Securities                              57
Item 16 Changes in Securities and Changes in Security for Registered
        Securities                                                            58
Part IV Item 18 Financial Statements                                          59
Item 19 Financial Statements and Exhibits                                     59

----------

Note: Omitted items are inapplicable
<PAGE>

                                     PART I

ITEM 1 -- DESCRIPTION OF BUSINESS

General

Eidos develops and publishes interactive software products and advanced video
technology applications. Eidos has built a group of over 550 employees, which
includes a development resource of over 270 employees. In addition, Eidos has
development arrangements with an additional twenty two companies (seven of which
Eidos has minority shareholding in) increasing its development resource by an
estimated further 450 people. Through its acquisitions, Eidos has established a
diversified interactive software portfolio that includes many popular multimedia
personal computer ("MPC") and dedicated console titles. Eidos and its
collaborative partners are currently developing over thirty titles for two
primary platforms: the MPC and Sony PlayStation and eight titles for Nintendo
64, Dreamcast or Gameboy. Eidos has built a substantial and growing library of
proprietary technologies for use in software development, including 3D models,
texture maps, development tools, game engines and compression-decompression
algorithms ("Codecs"), that Eidos believes provide it with a competitive
advantage in the growing interactive software market.

Eidos expects that it will obtain future software products through internal and
external development groups and by acquiring additional products, technologies
and development groups. Eidos' substantial portfolio of owned and licensed
software titles has allowed it to establish brand recognition through the sale
of titles such as Tomb Raider, Gex, Fighting Force, Commandos and Championship
Manager. Eidos' Tomb Raider titles have sold in excess of 15 million units since
the release of Tomb Raider in November 1996. Eidos currently publishes products
in the major interactive software genres: action, strategy, role playing, sports
and resource management and has products in development in each of these genres.

Eidos believes that the best interactive software products are produced by
smaller independent development groups. Accordingly, Eidos operates its internal
development groups as autonomous development studios. Each internal studio is
allowed wide creative freedom and receives compensation based in part upon the
success of the titles it produces. Each internal studio, however, remains
subject to the ultimate supervision of the centralized Eidos Publishing
Committee and is generally supported by Eidos' central administrative and
technology resources. Eidos seeks to expand its access to talented developers
and high quality interactive software products by establishing long-term
relationships with independent development groups. Eidos generally extends its
decentralized development, centralized support model to these external
developers. In pursuing relationships with independent development groups, Eidos
may seek a minority interest, outright acquisition, multiple title publishing
arrangements and/or licensing of finished products for distribution in limited
territories.

Eidos' strategy of building up long-term relationships allows internal and
external development groups to establish a growing library of proprietary
technologies. These technologies enable development groups to focus on the
creation of imaginative content rather than technology, leading to the efficient
development of quality products with complex graphics, fluid animation and
compelling game play.

Eidos has an 85% interest in Glassworks Productions Limited ("Glassworks"),
which provides post-production video editing and digital animation services to
the television and advertising industries. Glassworks is utilized by Eidos'
developers for the creation of complex pre-rendered sequences and motion capture
processes that otherwise would be extremely expensive and time consuming to
create in-house. Eidos has also developed a video compression technology that is
incorporated into certain of its interactive software products and is sold as a
toolkit to third parties. This compression technology also has various potential
applications, including CD-ROM publishing and desktop video telephony. A video
capture device, complete with hardware, is being designed to facilitate the use
of video telephony on network computers and personal computers. Eidos has
acquired a 50% interest in a joint venture with Opticom ASA to develop a games
storage device.

At March 31, 1999, the Company had 552 employees (excluding employees from
associated companies), of which 283 were based in the United Kingdom, 183 were
based in the United States and 86 were based elsewhere.

Industry Background

In the early 1980s, the Atari Corporation pioneered the interactive software
industry with the introduction of dedicated consoles. The industry has gone
through many generations of hardware since then. The current

<PAGE>

generation of hardware may be separated into two categories: MPCs and dedicated
consoles such as the Sony PlayStation ("PlayStation" or "PSX"), Sega Dreamcast
("Dreamcast") and Nintendo 64.

MPCs are personal computers that are equipped with a CD-ROM drive and sound
enhancement cards that enable the computer to operate sophisticated CD-ROM based
software with stereo sound. Due to the market dominance of Windows and MS-DOS
based computers, the term MPC is generally accepted as referring only to the
Windows and MS-DOS based computers.

The dedicated console market has evolved from the original Atari products of the
early 1980s to the 8-bit Nintendo Entertainment System, released in 1985, to the
32-bit PlayStation, the 64-bit Nintendo 64 and 128-bit Dreamcast. Traditionally,
each successive generation of hardware has offered enhanced performance and
features, and has displaced prior generation consoles. Consequently, each
successive generation of hardware drives new demand for the compatible software.
The adoption rate of the 32-bit PlayStation has been comparable with that of the
highly successful 8-bit and 16-bit platforms.

Unlike Nintendo's latest cartridge-based console (the Nintendo 64) the MPC,
Dreamcast and PlayStation all utilize CD-ROMs as their primary delivery medium.
Cartridges have to be ordered exclusively from the console manufacturer and must
be paid for months in advance of sale. If a product does not sell as expected,
the software publisher loses its up-front investment. If the software sells
better than expected, the publisher frequently is unable to manufacture
additional cartridges to meet promptly time-sensitive demand for the product.
For example, in the 16-bit market, sales of 16-bit cartridge-based software
declined more rapidly than anticipated and publishers with a significant
presence in this market have been forced to write off excess inventory and
capitalized development costs. In contrast, CD-ROMs can be ordered in relatively
small quantities and with generally quick turn-around times, providing
significant improvements in asset management and reduced exposure to inventory
write-down. Consequently, while the Company has several titles in development
which are suitable for Nintendo 64, the Company will exercise great caution in
determining which of these titles will be published on that platform.

The rapid technological advances in MPCs and dedicated consoles have
significantly changed the look and feel of interactive software as well as the
software development process. Software is no longer limited to low-resolution,
two-dimensional environments. Increased storage capacity and processing power
allow for data-intensive, mathematically complex, high-resolution 3-D
environments. Given the greater technological complexity in developing
interactive software, the development process can be lengthy and expensive,
particularly for newer market entrants who do not already have a significant
amount of reusable technology assets available to them such as models, texture
maps and game engines. Reusable technology assets not only facilitate
development of subsequent titles, but also facilitate porting products from one
platform to another.

The recent release of Dreamcast further reinforces this strategy as the console
is based on high end PC specifications and promises to deliver graphics
previously only available on expensive, high-end PCs.

Following development of a title, developers and publishers face additional
hurdles to releasing a successful interactive software title. Competition for
shelf space in the primary retail outlets is intense. Retailers attempt to
increase the likelihood of quick product turns by dealing with companies that
have proven track records of producing successful titles and a broad product
line. Large product lines enable publishers to be responsive to retailers'
requests to replace slow-moving products with new product offerings. Eidos
believes that publishers with a large selection of products are often able to
secure valuable shelf space on terms that are more favorable than those
available to smaller competitors.

The World Wide Web (the "Web") constitutes a new platform with a unique
distribution model. Current uses of the Web include game play, feedback,
technical support, marketing and distribution. Currently, the principal
revenue-generating Web-based game play is through multi-player games, access to
which is via companies providing "game-matching" facilities. These facilities
utilize games software which is generally technically limited to a maximum of 16
players. However, games may be designed for use exclusively via the Web (using
client-server architecture) where the number of players can be greatly expanded,
potentially to hundreds of simultaneous players ("Web-based games"). If and when
issues relating to the Web, such as bandwidth constraints, costs, network
latency and the lack of a clear revenue model are resolved, Eidos believes that
the focus on development of products exclusively for use on the Web will
increase.

Products

<PAGE>

Eidos publishes interactive software, including titles such as the Tomb Raider
series, Fighting Force, Commandos and Championship Manager, each of which has
sold over 350,000 units. The Company's Tomb Raider franchise has sold in excess
of 15 million units since its release in November 1996.

Eidos currently publishes products in five major interactive software genres:
action, strategy, role playing, sports and resource management. Strategy, role
playing and resource management titles tend to be published for MPC, while the
action and sports titles are published primarily for PlayStation. The
determination of the number of titles published within each genre is influenced
by the estimated product lives within the genres. Sales of action, role playing
and sports titles are usually highest in the first month of release and
generally become insignificant after six months. However, strategy, simulation
and resource management titles may have consistent sales throughout the course
of a year or more. Eidos strives to keep a balance of products in each genre to
ensure that quality product is always on the shelves.

Eidos obtains its products from four main sources:

(i)   internal development studios;

(ii)  external development groups in which Eidos has an equity stake and which
      develop products in collaboration with Eidos;

(iii) external development groups which are wholly independent of Eidos, but
      which develop products in collaboration with Eidos; and

(iv)  external development groups from whom Eidos licenses completed products
      for distribution in limited territories, generally Europe.

Eidos believes that Web-based games may represent a significant area of future
growth. The Company believes that the ability to play games for free on the
Internet has become increasingly attractive. Eidos has partnered with M-Path,
the U.S. based multi-player gaming network, to create its own online gaming
service called Eidosgames.com.

Further, Eidos has entered into an agreement with M-Path, to bring their
M-Player services into the U.K. The Company is installing game servers which
will allow players to game match with their U.S. counterparts.

While the Company believes that based on its catalog of products and its
proprietary technology, it will be able to respond adequately when a viable
technological and economic model emerges for Web-based games, no assurance can
be given that this will in fact be the case. See "Description of Business --
Risk Factors -- Dependence on New Products," " -- Reliance on Third-Party
Software Developers and Publishers" and " -- Reliance on Sony".

Interactive Software Development

Eidos uses a combination of internal studios and external development groups to
develop its products. When working with external developers, Eidos seeks to
establish long-term relationships that give the Company marketing rights to
products in development, as well as rights to future products. In certain cases,
however, Eidos may license only distribution rights to specific completed
products.

Development Process

Development of Eidos' interactive software products is managed by its Publishing
Committee, comprising members of senior management with input from developers
and producers. Themes which originate from in-house development studios and
external development groups, as well as from members of the Publishing
Committee, are considered by the Publishing Committee for technical feasibility,
product quality, consumer appeal, product mix among the various genres, fit with
Eidos' product line and consistency of concept with the submitting studio's
capabilities. Following selection of a theme, a producer is assigned to oversee
the project and the relevant development group prepares a design of the game and
play-flow, establishes play strategies and diagrams and develops game
storyboards and key characters. The research and development time associated
with the development and/or modification of technology is factored into the
final design document and a development budget is calculated. Once the final
design document and budget are approved by the Publishing Committee, Eidos
begins funding development of the product.
<PAGE>

Both internal and external products are generally funded against milestones. In
each case the milestone deliverables are reviewed by the product's producer and,
in some cases, by the Publishing Committee. Eidos generally has the right to
terminate the development of any product and further payment if it reasonably
determines that the milestones are not met. Upon termination of a product being
developed by an internal development studio, the development resources are
usually allocated to an alternative project.

Technology

The software products for the MPC and PlayStation are composed of graphics and
an engine which drives the graphics. A software engine may instruct the computer
to display a graphical depiction of a character on the screen and when a button
is pushed make the character perform an action under user control. These
graphical depictions are called models. Models are constructed as wire mesh
shapes composed of hundreds or thousands of polygons. The developer will then
create a texture to place over the model to make it appear as a solid object.
These textures, called texture maps, may be created to look like wood, marble,
skin, hair or any other conceivable surface. The computer will then render the
texture map onto the model. Each of the components of the game, including the
engines, the models and the texture maps, may be reused.

Eidos believes that Artificial Intelligence ("AI") is becoming increasingly
important in interactive software, especially in strategy and role playing
games. Eidos' aim is to direct research into AI in such a manner that the
results can be applied to numerous future products. Eidos' intended
implementations of AI include neural networks, which are intended to simulate
human playing characteristics and to be capable of learning a variety of playing
styles, and applications include character modeling, which seeks to emulate
human-like memory and the ability to reason, plan courses of action and
interpret and predict the actions of others. The Company believes that these
applications may provide the Company with a new basis for embedding human-like
strategy in new games, such as Warrior Kings and Warzone 2100.

In addition to the technology developed and collected from its interactive
software development teams, Eidos has created applications of its audio/video
compression technology for use in interactive software development. The
compression technology allows for more video data to be stored on the CD-ROMs
at higher quality and for the video to be played back smoothly on a standard
PC without the need for additional video-specific hardware. The availability
of a proprietary Codec eliminates the need for Eidos to pay royalties to
third parties for use of Codecs.

Internal Development Studios

With over 240 development employees as at March 31, 1999, Eidos believes that
its internal development studios constitute one of the largest internal
development staffs engaged in interactive software development. The internal
development studios include:

Core Design: Core Design has developed and published such hit products as
Thunderhawk 1 and 2, ShellShock and Fighting Force. Core Design developed Tomb
Raider, Tomb Raider 2 and 3 which have sold over 15 million units since November
1996. All three reached number one in certain U.S. and U.K. weekly industry
sales charts in the 1996, 1997 and 1998 Christmas selling seasons. Core Design's
development efforts are focused on products for dedicated consoles. See
"Interest of Management in Certain Transactions".

Pumpkin: Pumpkin was formed in July 1996 by Jim Bambra (former Head of Design at
Microprose) and Nick Cook (former Art Director at Microprose). It specializes in
fast action strategy games that combine state-of-the-art graphical effects with
speedy game-play, highly developed Artificial Intelligence and exhilarating full
motion video (FMV) cut scenes.

Pumpkin's real-time strategy title for the MPC and PlayStation, Warzone 2100,
was released in Spring 1999.

Crystal Dynamics: As Eidos Interactive's Menlo Park based entertainment software
studio, Crystal Dynamics focuses on the development and marketing of top-quality
game software. Founded in 1992, the company was one of the first to develop and
publish a 32-bit console-format video game in 1993, The company's emphasis
remains on developing products for the Sony PlayStation, MPC and Nintendo 64
platforms. Recent releases include Akuji the Heartless (PlayStation) and GEX
III: Deep Cover Gecko (PlayStation, Nintendo 64, and MPC). The next title,
Legacy of Kain: Soul Reaver (PlayStation and MPC) is due out shortly.

External Development Groups
<PAGE>

Eidos has entered into long-term relationships with various external development
groups which are not wholly-owned by Eidos. Eidos' principal external
development relationships are as follows:

Hothouse Studios Limited: Eidos has a minority equity interest in Hothouse
Studios. Hothouse Studios' principals were involved in the development of such
hits as Transport Tycoon, Grand Prix, B-17 and UFO. The first title from
Hothouse, Gangsters, was released in December 1998 and has sold over 300,000
units. Hothouse are currently completing two action games, entitled CutThroats
and Abomination as well as starting a sequel to Gangsters.

Innerloop Technologies AS: Eidos has a minority equity interest in Innerloop,
which is in the process of developing an action adventure game, currently
entitled IGI. The Innerloop principals were involved in the development of FX
Skiing, Impact Racing, Casper, Pocahontas, Dragonheart and NBA Hangtime.

Looking Glass Technologies, Inc.: Eidos has established a four-year licensing
deal with Looking Glass, whose action game Thief: The Dark Project was released
in December 1998. They are currently working on a sequel.

Ion Storm: Eidos has entered into a multi-title development agreement with Ion
Storm, whose founders include John Romero, the co-creator and designer of Doom,
Doom II and Quake. Ion Storm is in the process of developing three titles: an
action game, Daikatana, due for release in Autumn 1999; a role playing game,
currently entitled Anachronox, and Deus Ex.

Sports Interactive Limited: Eidos has acquired a minority equity interest in
Sports Interactive. Sports Interactive's principal was involved in the
development of Championship Manager, a popular soccer management game, and
Championship Manager 2. They have recently released Championship Manager 3,
which became the fastest selling UK MPC game of all time in its first weekend of
sales.

Silicon Dreams: Silicon Dreams is responsible for developing a line of soccer
products based on the critically acclaimed World League Soccer engine. During
the year they released World League Soccer 1998 and 1999. The 1999 version was
endorsed by Liverpool's Michael Owen. They have also developed UEFA Champions
League soccer game which was released in March 1999.

Quantic Dream: Quantic Dream is developing a 3-D action adventure game, using
revolutionary facial and motion capture technologies, currently entitled The
Nomad Soul. This has original music by and an in-game representation of David
Bowie.

Mucky Foot: Mucky Foot are a highly experienced group of ex-Bullfrog developers
who are working on a 3-D action adventure game currently entitled Urban Chaos.

Pyro Studios: Pyro, a subsidiary of Eidos' Spanish distributors, Proein, are
currently working on a sequel to the hugely successful Commandos: Behind Enemy
Lines which was released in the summer of 1998 and sold over 700,000 units.

Kronos Digital Entertainment: Eidos has a minority interest in Kronos Digital
Entertainment which is developing an action/adventure game for the PlayStation
called Fear Factor, currently due for release in Winter 1999/2000. Kronos is a
young, innovative multimedia content developer specializing in high quality, 3-D
computer graphics for the next generation of 32- and 64-bit game platforms.
Kronos also provides broadcast quality computer generated images and special
effects to interactive and network television, motion picture and theme park
entertainment industries.

Eidos oversees the development of products by these groups in a manner similar
to that applied to the internal studios. Each product is funded against
milestones, which are approved by a producer and the Publishing Committee. The
groups have access to technology and creative input on an as-needed basis. As
with internal development, Eidos generally has the right to terminate the
development of any product for failure to meet milestones. See "Description of
Business -- Risk Factors -- Reliance on Third-Party Software Developers and
Publishers".

Additional Product and Service Groups

Post-Production, Video Editing and Rendering Capabilities
<PAGE>

Glassworks was established by Eidos in early 1996 as a joint venture with Hector
Macleod, pursuant to which Mr. Macleod along with two other employees retained a
15% interest in Glassworks. The company utilizes state-of-the-art technology and
a team of experts to provide post-production video effects and digital animation
services to the television and advertising industries. In its short history,
Glassworks has provided special effects for videos by singers George Michael,
Bjork, Sting and Elton John and a number of widely viewed commercials, including
those for Britain's National Lottery Draw, The Coca-Cola Company, Esso, British
Telecommunications, Microsoft Corporation, Ford, Orange, General Motors, Honda,
Kraft Foods, Nike, Helen Curtis, Nissan, BMW, Lego, Hoover and Electrolux.

Glassworks is also utilized by Eidos' interactive software developers for the
creation of pre-rendered sequences and motion capture. One of the
characteristics of interactive software-based games is the complex pre-rendered
animation included at the beginning of the game and at the end of each level.
These sequences may use many hundreds of frames of pre-rendered animation
assembled into a single sequence, which typically requires massive computing
power and many hours to render. However, Glassworks' hardware and expertise
enable these sequences to be created relatively quickly and efficiently.

Eidos Technologies

Eidos Technologies, which designs and develops Eidos' video compression together
with a number of related technologies, continues its work in the areas of video
compression, video editing and Internet communications.

Eidos is currently developing new video editing systems named Justice and
Judgement. The new products are software-based and run under Windows NT, which
has become the industry standard. Justice and Judgement are planned to form the
core of a family of digital content creation products targeted at the broadcast,
commercial and new media markets.

Eidos Technologies' communications technology team is developing a video mail
system which is believed to offer a number of significant benefits over
competing products by virtue of a superior architecture. A patent application
has been filed by Eidos Technologies in relation to the new technology and a
number of commercial opportunities for the product are under examination.

Internet Publishing (Eidoscope)

Eidoscope was established in December 1996 to exploit Eidos' potential both on
the Internet and within new media in general. The company recruited a team with
a strong design base and has produced the Official McLaren Formula One web-site,
the ITV-F1 web site, ICG (International Computer Group) global web site as well
as the UK Eidos Interactive game specific web sites. In addition Eidoscope
worked on a number of CD ROMs promoting Eidos' games.

The Division has developed a graphical and technical expertise on the Internet
and operates as both a producer and an adviser. Its work can be split into three
areas:

Internal: It is working to increase the scale of Eidos' presence on the Internet
and to ensure that all territories collaborate to provide a global brand. In
addition, it is working to establish a global customer support web site to
enhance the service to Eidos Interactive customers. A strategy for E-Commerce is
being developed; first to exploit the merchandising opportunities provided by
the brand and second to position Eidos for selling games on-line.

Eidosnet: Eidos' own Internet Service Provider, Eidosnet, was launched during
the year as part of a coordinated strategy of developing on-line gaming. Steps
are being taken to ensure that all games in development with multi-player
capacity are M-Player compatible.

External: The Division's strategy for external clients is to build on
relationships with companies who have links with Eidos' games (for example,
soccer and Formula One) or companies that can facilitate Eidos' development into
other media or technologies.

Eidopt AS

In December 1997 Eidos entered into a joint venture agreement with Opticom ASA.
The purpose of the joint venture, Eidopt AS, is to develop and subsequently to
exploit commercially a prototype device, based upon Opticom's storage and
processing technologies, which can be used to store and operate computer games
software.

<PAGE>

Research and Development

During the three financial periods ended March 31, 1997, 1998 and 1999 the Group
has invested an aggregate of just under (pound)100 million (including employment
costs) on research and development into its video compression technology and on
developing computer and video games. Such investments were made principally in
the United Kingdom and consisted mainly of salaries and related employment costs
incurred in the development of video compression technology and computer and
video games. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations".

Distribution

Interactive Software Products

Eidos currently sells its interactive software products in over fifty countries
and in up to eight languages. In fiscal 1999, sales in the United Kingdom, North
America, Continental Europe and the rest of the World accounted for
approximately 16%, 35%, 44% and 5% of net revenues, respectively. At March 31,
1999 the Company's marketing and sales staff included 177 employees working from
offices in London, Birmingham, Paris, Hamburg, San Francisco, Palo Alto, Tokyo
and Singapore. Refer to pages F-12 to F-15 for the detailed segmental analysis
of revenue.

Europe: Eidos distributes its products directly to the major computer software
retailers, discount warehouses and music stores in the United Kingdom, France
and Germany. The Company believes that this direct distribution in the United
Kingdom, France and Germany has had a major influence on the increase in each
territory's revenues. However, the Company does still rely on independent
distributors to reach the smaller independent retail outlets. Direct
distribution has had a number of positive effects in addition to increasing
revenues: improved communication with customers (retailers), greater access to
the ultimate end user, improved inventory management and a greater than average
selling price.

Eidos also believes that the life cycle management of products is an area of the
interactive software market not yet fully exploited. Accordingly, in March 1998
the Premier range was launched; this is a budget/mid price range which offers
customers the opportunity to purchase high quality catalog titles at a lower
price point. The range is repackaged and is restricted to quality titles,
originally released by Eidos and selected other publishers.

This constant management of each title through its various price points allows
Eidos to recoup development costs over a longer period, whilst offering
alternative distribution avenues for products which may not be appropriately
priced at the high end of the market. See "Description of Business -- Risk
Factors -- Evolving Distribution Channels".

North America: North American sales of Eidos' MPC-based games are primarily
handled through Strategic Marketing Partners ("SMP"), one of the largest
software representatives in the industry. Through SMP, Eidos also receives
merchandising support, market feedback, support of retail channels and access to
market penetration information. Console games are sold in North America through
nine regional sales representative groups. Based on the variable nature of costs
in the industry, Eidos periodically assesses the continuation of these
relationships.

Marketing and Sales

Eidos targets the retail and end-user communities through a marketing strategy
which includes retail promotions, public relations campaigns, consumer
advertising, web-based marketing and direct marketing.

Retail Promotion

Once development of a product has commenced, Eidos begins to send product
information to major industry buyers and selected retail store managers. The
mailings include game descriptions, preliminary pricing information, ordering
information, product merchandise and available press coverage. As the product
nears completion the content and frequency of the mailings become more focused,
culminating with the "launch" mailing which is designed to secure significant
sales at product launch. Eidos also carries out "co-operative" marketing
campaigns with major retailers to improve store presence and participate in the
retailer's own advertising. See "Description of Business --Risk Factors --
Dependence on Availability of Adequate Shelf Space".

Public Relations Campaigns
<PAGE>

Shortly after the initial mailings, Eidos commences public relations campaigns
which include personal visits to magazine publishers, trade show appearances,
and weekly and monthly mailings to the video game press, on-line publications,
lifestyle and sports press, national dailies and broadcast media. Depending on
the perceived potential of the product, the process may be repeated a number of
times prior to the product's release. As the launch of the title nears, the
process intensifies. Eidos believes that this repetitive contact results in
continued coverage of the product through the development cycle in different
consumer and retail publications, leading to increased sales and brand equity.

Consumer Advertising

Eidos generally begins a media and in-store consumer advertising campaign two to
three months prior to launch of a product. The type and scale of the campaign is
dictated by the nature of the product being promoted. The advertising may
include: print, television, radio, outdoor, on-line advertising, cinema
advertising, direct mail, co-marketing ventures and creative packaging. In-store
promotions may include videos, window displays, product signage and/or product
demonstrations. Eidos believes that the collaborative strategy of targeting the
consumer with both general media and in-store campaigns enhances word-of-mouth
advertising.

World Wide Web

Eidos' current efforts on the Web are focused on bringing Eidos closer to its
customers. Eidos' Internet Publishing Division maintains and develops the Eidos
web-site. Through provision of technical support at its web-site, Eidos is able
to quickly respond to customer inquiries and post answers to frequently asked
questions. This not only cuts down on the resources required for customer
support, but also enables customers to receive a more immediate response to a
question. By providing demos and samples to stimulate interest in products,
Eidos is able to solicit input from potential consumers regarding the features,
functionality and game play of certain products while Eidos is still in a
position to respond to their suggestions. These postings also provide advanced
notice of products which are currently in development and soon to be released.

Direct marketing

Eidos holds a considerable database of customers built from the return of
warranty cards. The database is used for profiling exercises and segmented
direct marketing campaigns. Campaigns are extended via physical mailings and,
wherever possible, electronic mailing. Eidos also participates in direct
marketing activities using databases built by retailers loyalty schemes.
<PAGE>

Manufacturing

For each MPC product, Eidos prepares master software disks, camera-ready user
manuals and collateral materials. Eidos' disk duplication, packaging, printing
of manuals, manufacture of related materials, warehousing, assembly and shipping
are performed by outside vendors. To date, Eidos has not experienced any
material difficulties or delays in the manufacture and assembly of its products
or material returns due to product defects. See "Description of Business -- Risk
Factors -- Manufacturing Risks".

Products for the PlayStation are manufactured exclusively by Sony. Should Sony
be unable to satisfy the Company's demand for products for any reason, the
Company would be unable to turn to alternative manufacturers. Any failure by
Sony to supply the Company with sufficient quantities of products could have a
material adverse effect on the Company's business, results of operations and
financial condition. See "Description of Business -- Risk Factors -- Reliance on
Sony".

Principal Subsidiaries of the Company

The Company is the holding company of the Group. The Company has the following
principal subsidiaries:

                                               % of
                                               share
                                Date of       capital
Name                         incorporation      held       Nature of Business
----                         -------------    -------    -----------------------
Eidos Interactive Limited       03/24/84       100       Developer and publisher
                                                         of computer software
Core Design Limited             05/13/88       100(1)    Developer of computer
                                                         software
Eidos Interactive, Inc.         08/15/92       100(1)    Developer and publisher
                                                         of computer software
Crystal Dynamics, Inc.          07/08/92       100(1)    Developer of computer
                                                         software
Eidos Interactive France SARL   12/10/85       100(1)    Publisher of computer
                                                         software
Eidos Interactive
(Deutschland) GmbH              02/08/96       100(1)    Publisher of computer
                                                         software
Eidos Interactive KK            07/30/98       100       Publisher of computer
                                                         software
Eidos Interactive Pte Limited   11/17/98       100       Publisher of computer
                                                         software
Eidos Technologies Limited      07/20/89       100       Developer of computer
                                                         software
Glassworks Productions Limited  11/14/95        85       Post production video
                                                         editing
Eidoscope Limited               11/12/96       100       Internet publishing

With the exception of the companies marked(1), the share capital of the above
companies is held directly by the Company.

The registered office of Eidos Interactive Limited and Eidos Technologies
Limited is Wimbledon Bridge House, 1 Hartfield Road, Wimbledon, London SW19 3RU.
The registered office of Core Design Limited is 55 Ashbourne Road, Derby D22
2FS. The registered office of Eidoscope Limited and Glassworks Productions
Limited is 6th Floor, Aldwych House, 81 Aldwych, London WC2B 4RP. The registered
office of Eidos Interactive, Inc. is 651 Brannan Street, 4th Floor, San
Francisco, California 94107. The registered office of Crystal Dynamics is 2468
Embarcadero Way, Palo Alto, County Of Santa Clara, California. The registered
office of Eidos Interactive France SARL is 8th Floor, 6 Boulevard du General
Leclerc, 92115 Clichy, France. The registered office of Eidos Interactive
(Deutschland) GmbH is Leverkusenstrasse 54 VI, 22761, Hamburg, Germany. The
registered office of Eidos Interactive KK is Etsuzan LK Building 4F, 1-10-4,
Hiroo, Shibuya-Ku, Tokyo 150-0012, Japan. The registered office of Eidos
Interactive Pte Limited is 16 Raffles Quay, #23-01 Hong Leong Building,
Singapore 048581.

With the exception of Eidos Interactive, Inc. and Crystal Dynamics, Inc., which
are incorporated and operate in the United States, Eidos Interactive France
SARL, which is incorporated, registered and operates in France, Eidos
Interactive (Deutschland) GmbH, which is incorporated, registered and operates
in Germany, Eidos Interactive KK which is incorporated and operates in Japan and
Eidos Interactive Pte Limited which is incorporated and operates in Singapore
all the above companies are incorporated, registered and operate in England and
Wales.

Risk Factors
<PAGE>

The statements contained in or incorporated into this Report which are not
historic facts are forward-looking statements that are subject to risks and
uncertainties that could cause actual results to differ materially from those
set forth in or implied by forward-looking statements. Factors that could cause
or contribute to such differences include those discussed below, as well as
those discussed elsewhere in this Report. In addition to the other information
contained and incorporated by reference in this Report, the following risk
factors should be considered carefully in evaluating the Company and its
business.

Integration of Acquisitions

The Company has experienced rapid growth through the acquisition of several
software publishers and developers. The Company intends to continue to evaluate
potential acquisitions of, or investments in, software publishers and developers
which the Company believes will complement or enhance its existing business. In
connection with any future acquisitions or strategic investments, the Company
may incur debt or issue debt or equity securities depending on market conditions
and other factors. There can be no assurance that the Company will consummate
any acquisition in the future or, if consummated, that any such acquisition will
ultimately be beneficial to the Company.

The integration of acquired companies is typically difficult, time consuming and
subject to a number of inherent risks. In particular, in the case of interactive
software development enterprises, the success of acquisitions is dependent upon
the integration and retention of existing employees. There can be no assurance
that employees of an acquired enterprise, particularly those responsible for
software development, will remain with the Company after an acquisition. The
success of acquisitions will also be dependent upon the Company's ability to
fully integrate the management information and accounting systems and procedures
of acquired companies with those of the Company. The Company's management will
be required to devote substantial time and attention to the integration of these
businesses and to any material operational or financial problems arising as a
result of the acquisitions. There can be no assurance that operational or
financial problems will not occur as a result of any acquisition. Failure to
effectively integrate acquired businesses could have a material adverse effect
on the Company's business, results of operations and financial condition.

Dependence on New Product Introductions; Product Delays

The Company's success depends on the timely introduction of new products to
replace declining revenues from older products. The bulk of revenues generated
from interactive software products is generally realized in the first few months
following release. Few interactive software products achieve sustained market
acceptance. Some of the products released by the Company over the past eighteen
months have failed to meet the Company's sales expectations. If, for any reason,
revenues from new products fail to replace declining revenues from existing
products, as was the case with Domark in fiscal 1994 and 1995 and CentreGold in
fiscal 1995, the Company's business, results of operations and financial
condition would be adversely affected. Moreover, because of the hit-driven
nature of the interactive software industry and the inability to predict
consumer preferences, the Company's revenues and financial results may decline
on a sequential period-to-period basis following periods in which a particular
Company product generates significant revenues. A significant delay in the
introduction of, or the presence of a material defect in, one or more new
products could have a material adverse effect on the ultimate success of such
products and on the Company's business. Furthermore, because of the boost to
revenues typically associated with the initial shipments of a new product,
delaying a product introduction beyond the end of a fiscal quarter may
materially adversely affect operating results for that quarter. The process of
developing software products such as those offered by the Company is extremely
complex and is expected to become more complex and expensive in the future as
new platforms and technologies are addressed. In the past, the Company has
experienced significant delays in the introduction of certain new products and
the Company anticipates that there will be similar delays in the development and
introduction of new products in the future. There can be no assurance that new
products will be introduced on schedule, that they will achieve market
acceptance or that they will generate significant revenues.

Product Concentration; Dependence on Hit Products

A key aspect of the Company's strategy is to focus its development and
acquisition efforts on selected, high quality entertainment software products.
The Company derives a significant portion of its revenues from a select number
of high quality entertainment software products released each year, and many of
these products have substantial development costs and marketing budgets. Due to
this dependence on a limited number of products, the Company

<PAGE>

may be adversely affected if one or more principal entertainment software
products fail to achieve anticipated results.

The Company's strategy also includes as a key component developing and releasing
products that have franchise value, so that sequels, enhancements and add-on
products can be released over time, thereby extending the life of the property
in the market. While the focus on franchise properties, if successful, results
in extending product life cycles, it also results in the Company depending on a
limited number of titles for its revenues. There can be no assurance that the
Company's existing franchise titles can continue to be exploited as successfully
as in the past. In addition, new products that the Company believes will have
potential value as franchise properties may not achieve market acceptance and
therefore may not be a basis for future releases.

Fluctuations in Operating Results; Seasonality

The Company has experienced, and expects to continue to experience, significant
fluctuations in operating results due to a variety of factors including, among
others: (i) the timing and success of product introductions; (ii) the market
acceptance of the Company's products; (iii) delays in product completion; (iv)
order cancellations; (v) product returns; (vi) projected and actual changes in
platforms; (vii) changes in pricing policies by the Company and its competitors;
(viii) development and promotional expenses relating to the introduction of new
products or new versions of existing products; (ix) changes in the value of the
pound sterling and U.S. dollar in relation to other currencies and in relation
to each other; and (x) the size and rate of growth of the interactive software
market. In response to competitive pressures, the Company may take certain
pricing or marketing actions that could materially adversely affect the
Company's business, results of operations and financial condition. Products are
generally shipped as orders are received; accordingly the Company operates with
little backlog. Furthermore, the interactive software business is highly
seasonal. Net revenues are typically significantly higher during the second half
of the Company's financial year, due primarily to the increased demand for
interactive software products during the year-end holiday buying season. Net
revenues in other periods are generally lower and vary significantly as a result
of new product introductions and other factors. As a very significant percentage
of the Company's total sales arise in the second half, the Company has limited
ability to compensate for shortfalls in second half sales by changes in its
operations or strategies in the first half. The Company's expense levels are
based, in part, on its expectations regarding future sales, and, as a result,
operating results would be disproportionately and adversely affected by a
decrease in sales or a failure to meet the Company's sales expectations.

Changing Product Platforms and Formats

The Company must continually anticipate the emergence of, and adapt its products
to, new technologies and popular platforms for consumer software. The
introduction of new technologies could render some of the Company's existing
products obsolete or unmarketable. The development cycle for products for new
platforms or formats may be significantly longer than the Company's current
development cycle. If the Company chooses not to develop for a platform that
achieves significant market success, the Company's revenue growth may be
adversely affected. The Company is currently developing products mainly for Sony
PlayStation and MPCs. The Company is also developing products for the Nintendo
64, Dreamcast and Gameboy. The Company is no longer developing products for the
Sega Saturn. There can be no assurance that the Company has chosen to support
the platforms that will be successful.

Evolving Distribution Channels

Eidos distributes its products directly to major computer software retailers,
discount warehouses and music stores in the United Kingdom, United States,
Germany and France. There can be no assurance that the Company will be
successful in distributing its products, that the costs associated with
developing and maintaining a direct distribution operation in these markets will
not exceed the amounts previously paid to distributors or that the Company will
not experience other material problems in performing distribution operations.
Any of the foregoing events could have a material adverse effect on the
business, results of operations and financial condition of the Company.

Dependence on Availability of Adequate Shelf Space

Retailers of the Company's products typically have a limited amount of shelf
space and promotional resources, and there is intense competition among
interactive software producers for such shelf space and promotional support. To
the extent that the number of interactive software products or hardware
platforms increases, the competition for shelf space may intensify. Due to
increased competition for limited shelf space, retailers and distributors are
<PAGE>

increasingly in a better position to negotiate favorable terms of sale,
including price discounts and product return policies. In the United States,
retailers often require software publishers to pay fees in exchange for
preferred shelf space. The Company's products constitute a relatively small
percentage of its retailers' sales volumes, and there can be no assurance that
retailers will continue to purchase the Company's products or provide the
Company's products adequate levels of shelf space and promotional support on
acceptable terms. If the Company is not able to obtain adequate shelf space and
promotional support, sales of the Company's products and the Company's business,
results of operations and financial condition could be materially adversely
affected.

Reliance on Third-Party Software Developers and Publishers

Products published by the Company include those which have been either developed
specifically for the Company by independent software developers or developed by
such parties or other publishers and licensed to the Company as completed
products. Due primarily to increased competition among publishers for
interactive software programs, the size of advances and guaranteed royalties
paid to independent developers has increased and may continue to increase. There
can be no assurance that products developed for the Company will be completed on
time, if at all. Moreover, there can be no assurance that third-party products
developed for or licensed to the Company will generate sufficient revenues to
cover the amount of any advances or guarantees. The Company's product
development efforts depend, in part, on its continued ability to obtain and
renew product license or development agreements. As independent developers are
in high demand, there can be no assurance that the Company will continue to
attract high quality independent developers, including those which have
developed products for the Company in the past. Failure to obtain or renew
agreements with independent developers or publishers, or the termination of
existing or future agreements with such parties, could adversely affect the
Company's business, results of operations and financial condition.

Reliance on Key Personnel

The continued success of the Company depends, to a significant extent, upon the
performance and contribution of its senior management and its ability to
continue to attract, motivate and retain highly qualified employees. The loss of
the services of any of the Company's senior management could have a material
adverse effect on the Company's business, results of operations and financial
condition. Competition for highly skilled employees with product development,
sales, technical, management and other specialized training is intense, and
there can be no assurance that the Company will be successful in attracting and
retaining such personnel. In addition, while the Company has entered into
employment agreements and other compensatory arrangements with certain key
employees, there can be no assurance that such employees will not leave the
Company. The Company's failure to attract additional qualified employees or to
retain the services of key personnel could materially adversely affect the
Company's business, results of operations and financial condition.

Competition

The market for the Company's interactive products is highly competitive and is
characterized by rapidly changing technology, evolving industry standards and
frequent new product introductions. A number of competitors offer products that
compete with one or more of the Company's products. The Company's competitors
include Sony Corporation ("Sony"), Nintendo, Sega, Microsoft Corporation,
Electronic Arts, Inc., GT Interactive Software Corp., Activision, Inc., Acclaim
Entertainment, Inc, Infogrames Entertainment SA, and a number of smaller
companies. Principal competitive factors in the market for consumer software
include quality of the product, technological innovation, breadth of product
line, quality of game play, price, access to retail shelf space, frequency of
new product introductions and marketing support. Some of the Company's
competitors have greater financial, technical, marketing, sales and customer
support resources, as well as greater name recognition and larger customer bases
than the Company. Competitors of the Company, including those named above, may
form strategic or cooperative relationships, which could present even more
formidable competition to the Company than such entities acting alone. To the
extent that competitors achieve price, shelf access, product selection,
marketing support, distribution or other selling advantages, the Company could
be adversely affected. There can be no assurance that the Company will have the
resources required to respond to market or technological changes, that the
Company will be able to compete successfully with current or future competitors
or that competitive pressures faced by the Company will not materially adversely
affect its business, results of operations and financial condition.

The market is also extremely competitive with respect to access to development
groups and content providers. Eidos believes that access to a sufficient number
of high quality, proven development groups and sufficient content will be a
significant competitive factor in the interactive software market. Only a
limited number of people and

<PAGE>

organizations are capable of creating high quality interactive software
products. Competition for these resources is intense and is expected to
increase, and there can be no assurance that the Company will be able to
identify or effectively compete for products from the limited number of
development groups.

The Company also faces significant competition for its video compression
technology. In the area of CD-ROM publishing, competitors include software
developers such as Sorenson Vision, Inc., Intel Corporation ("Intel"), which has
released the latest version of its Indeo Codec, and hardware-based solutions
such as the MPEG-2 standard, which is closely associated with the standard for
the next generation of DVD storage devices. With regard to video communications
and video editing, the Company competes with companies such as Picturetel
Corporation, British Telecommunications plc, Intel, Creative Labs, Inc., Avid
Technology, Inc., VDOnet Corporation, RealNetworks, Inc. and other companies
which are producing systems based on the H.263 standard. The Company also
believes that several major computer and consumer electronic manufacturers such
as International Business Machines Corporation ("IBM"), Compaq Computer
Corporation and Sony may be developing products and technologies that could
compete directly with the Company's video communication products. All of these
companies have substantial experience in the development and marketing of
compression technologies and related products, and also have substantially
greater engineering, marketing and financial resources than the Company. The
Company expects that to compete effectively it will continually have to improve
the technological and price/performance characteristics of its Codecs, and will
have to attract and support a large installed user base.

Product Returns

The Company accepts product returns and provides markdowns or other credits in
the event that a retailer holds excess inventory of the Company's products. It
is also the Company's practice to accept returns of defective, damaged or
shelf-worn products at any time. At the time of product shipment, the Company
establishes reserves which estimate potential future returns of products based
on historical return rates, seasonality of sales, retailer inventories of the
Company's products and other factors. The Company typically reserves for product
returns and price reductions at rates ranging from approximately 10% to 15% of
gross turnover. Although the Company believes that it maintains adequate
reserves with respect to product returns and price reductions, there can be no
assurance that actual returns or price reductions will not exceed the reserves
established. Product returns or price reduction credits that exceed the
Company's reserves could materially adversely affect the Company's business,
results of operations and financial condition.

Risks Associated with International Operations; Currency Fluctuations

Currently, the Company's products and services are marketed in over 35
countries, covering primarily Europe and the U.S.. Sales of the Company's
products in such markets are subject to risks inherent in international business
activities, including general economic conditions in each country, overlapping
of differing tax structures, managing an organization spread over various
jurisdictions, unexpected changes in regulatory requirements, complying with a
variety of foreign laws and regulations and varying accounts receivable cycles.

The Company publishes its consolidated financial statements in pounds sterling.
A significant portion of the Company's assets and net revenues are generated in
foreign currencies, primarily French francs, German marks and U.S. dollars. In
translating the results of its overseas operations the Company is subject to
fluctuations in the exchange rates between pound sterling and the overseas
currency. Accordingly, depreciation in the weighted average value of the
overseas currency against pound sterling could decrease reported revenues and
appreciation in the weighted average value of the overseas currency against
pound sterling could increase reported revenues. As a result of the foregoing,
results of operations can be expected to fluctuate significantly from period to
period.

In the year ended March 31, 1999 the Company recorded 34% of its costs in pounds
sterling with the remaining 66% in other currencies primarily U.S. dollars,
French francs, German marks and Euros. 72% of total turnover was generated in
these other currencies. In the year ended March 31, 1997, the Company incurred
exchange losses (under U.K. GAAP) of (pound)1.8 million, due to the appreciation
of the pound during the period. The Company takes steps to hedge its foreign
currency exposure and in the year ended March 31, 1999 the net exchange losses
(under U.K. GAAP) were only (pound)8,000 (gains of (pound)0.6 million taken to
income offset by losses of (pound)0.6 million taken to reserves). However no
assurance can be given that the Company will not incur losses similar to those
in fiscal 1997 in future periods.

Risk of Software Errors or Failures

<PAGE>

Software products as complex as those offered by the Company may contain
undetected errors when first introduced or when new versions are released. The
Company has in the past discovered software errors in certain of its product
offerings after their introduction and has experienced delays or lost revenues
during the period required to correct those errors. In particular, the MPC
hardware environment is characterized by a wide variety of non-standard
peripherals (such as sound cards and graphics cards) and configurations that
make pre-release testing for programming or compatibility errors very difficult.
The Company has experienced delays and significant technical support expenses in
the past. There can be no assurance that, despite testing by the Company,
programming or compatibility errors will not be found in new products or
releases after commencement of commercial shipments. Any such errors could
result in the loss of or delay in achieving market acceptance, which could have
a material adverse effect on the Company's business, results of operations and
financial condition.

Intellectual Property and Proprietary Rights

The Company relies primarily on a combination of patent, copyright, trademark
and trade secret laws, employee and third party non-disclosure and
non-competition agreements and other methods to protect its proprietary rights.
Although the Company is not currently the subject of any material intellectual
property litigation, there has been substantial litigation regarding copyright,
trademark and other intellectual property rights involving computer software
companies. There can be no assurance that third parties will not assert
infringement claims in the future with respect to current or future products of
the Company. Any claims or litigation, with or without merit, could be costly
and could require a significant amount of management's attention and result in
adverse determinations, each of which could have a material adverse effect on
the Company's business, results of operations and financial condition. Policing
unauthorized use of the Company's products and trademarks is difficult and,
while the Company is unable to determine the extent to which infringement of its
proprietary products and marks, software piracy and trademark infringement can
be expected to be persistent problems. In selling its products, the Company
relies primarily on "shrink wrap" licenses that are not signed by licensees and,
therefore, may be unenforceable under the laws of certain jurisdictions.
Furthermore, the Company enters into transactions in certain countries where
intellectual property laws are not well developed or are poorly enforced. Legal
protection of the Company's rights may be ineffective in such countries.

Manufacturing Risks

The manufacturing of the Company's interactive software products involves
duplicating software onto CD-ROM disks, printing user manuals, product
packaging and shipping materials, and packaging finished products. Each of
the foregoing activities is performed for the Company by third parties in
accordance with the Company's specifications. While these services are
available from multiple parties and at multiple sites, with respect to MPC
products, there can be no assurance that any interruption in the manufacture
of the Company's products will not occur and, if it does occur, that it could
be remedied without undue delay and without materially adversely affecting
the Company's business, results of operations or financial condition.
Moreover, the Company's titles for the PlayStation are manufactured
exclusively by Sony. Should Sony be unable to satisfy the Company's demand
for products for any reason, the Company would be unable to turn to
alternative manufacturers. Any failure by Sony to supply the Company with
sufficient quantities of products for the PlayStation could have a material
adverse effect on the Company's business, results of operations and financial
condition.

Reliance on Sony

The Company publishes products in the United States pursuant to master license
agreements with Sony Computer Entertainment of America, and in Europe and
certain additional territories pursuant to agreements with Sony Computer
Entertainment of Europe. Pursuant to these agreements the Company is permitted
to use the proprietary information of Sony in connection with the development of
products for Sony's platforms. The agreements with Sony with respect to U.S.
publication and distribution rights expire in March 2003, while the agreements
with respect to publication and distribution rights in Europe and certain
additional territories expire in December 2005.

Although the Company has successfully negotiated agreements for the publication
of its products in the past, there can be no assurance that it will be able to
obtain publishing rights for all of its products in the future. Further, there
are no provisions for renewal of existing agreements, and there can be no
assurance that, at the end of their current terms, the Company will be able to
renegotiate its agreements with Sony, or that the Company will be successful in
negotiating license agreements with developers of new hardware systems. The
termination of any of the Company's license agreements or the inability to
negotiate agreements with developers of new hardware systems could have a
material adverse effect on the Company's business, results of operations and
financial condition.

<PAGE>

Prior to release for manufacturing, Sony has the right to review, evaluate and
approve, under standards established by it, each title for its proprietary
platform and the right to inspect and evaluate all promotional materials in
connection with such title. The inability of the Company to obtain timely
approvals or the rejection by Sony of titles or related promotional materials
could materially adversely affect the Company's future results of operations or
result in quarterly variations in operating results if a product scheduled for
release in any quarter is delayed. There can be no assurance that Sony will
approve any product submitted by the Company or that the review process of Sony
will not result in unscheduled delays in the introduction of new titles.

European Union Competition Law

Eidos' activities are subject to European Union competition law, including
Article 85 of the Treaty of Rome ("Article 85") which prohibits agreements and
concerted practices which may affect trade between European Union member states
and which have as their object or effect the prevention, restriction or
distortion of competition within the European Union. Provisions in agreements
which prevent, restrict or distort competition within the meaning of Article 85
will, subject to certain exceptions, be void (and in some cases the agreement
itself may be void) and parties to such agreements may be subject to substantial
fines imposed by the European Commission and may be liable to third parties for
claims for damages. Agreements satisfying certain criteria are exempt from the
application of Article 85 by virtue of so-called block exemptions issued by the
European Commission. Agreements not covered by a block exemption may be notified
to the European Commission and may, in appropriate circumstances, obtain
negative clearance or an exemption. There can be no assurance that one or more
of Eidos' collaborative or licensing agreements does not violate Article 85 or,
if such a violation exists, that it would be excused by a block exemption or
eligible for specific clearance or exemption. The imposition of fines, award of
damages, voidance of a whole agreement or inability to enforce exclusivity of
rights due to a breach of Article 85 could have a material adverse effect on the
Company's business, results of operations and financial position.

Year 2000

Although the Company has developed and is currently implementing its Year 2000
strategy at negligible marginal costs, there can be no assurance that the
Company will not encounter unexpected Year 2000 compliance problems in the
future that may have a materially adverse effect on the Company's business,
results of operations and financial condition. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations --Year 2000".
Furthermore, there can be no assurance that the Company will not be materially
adversely impacted by Year 2000 issues faced by major distributors, suppliers,
customers, vendors and financial service organizations with which the Company
interacts.
<PAGE>

ITEM 2 - DESCRIPTION OF PROPERTY

The Company maintains an aggregate of approximately 88,000 square feet of office
and commercial studio space in Bath, Birmingham, Derby and London, England; in
Hamburg, Germany; in Paris, France, in San Francisco and Palo Alto, California;
in Tokyo, Japan and in Singapore.

Details of the principal establishments of the Eidos Group are as follows:

<TABLE>
<CAPTION>
                                                                                                    Approximate
                                                                                                    Area Occupied
Property                       Tenure                                         Description           (square feet)
--------                       ------                                         -----------           -------------
<S>                            <C>                                            <C>                   <C>
(a) Eidos plc                  Leasehold 10 years from November 22, 1996      Office                19,000
Eidos Interactive Limited
Eidos Technologies Limited
Part 2nd Floor
Wimbledon Bridge House
Hartfield Road
London SW19 3RU

(b) Eidos Interactive Limited  Leasehold 1 year from May 27, 1998 thereafter  Office                1,800
Parts of Ground Floor          on three months' notice (Sections 24 to 28
Units 2/3 Holford Way          Landlord and Tenant Act 1954 excluded)
Holford
Birmingham
1 Riverside Court              Leasehold 10 years from June 24, 1996          Office                2,129(c) Core
Lower Bristol Road                                                                                  Design Limited
Bath                                                                                                55 Ashbourne
                                                                                                    Road
                                                                                                    Derby
Leasehold 10 years             Office                                         6,889
from February 10, 1994

(d) Glassworks Productions     Leasehold 10 years from December 35, 1995      Commercial Studio     2,800
Limited
3rd Floor
33/34 Great Pulteney Street
London W1
2nd Floor                      Leasehold from May 1, 1996 to                  Commercial Studio     2,870
33/34 Great Pulteney Street    December 24, 2005
London W1

(e) Eidoscope Limited          Leasehold expiring December 20, 2000           Office                1,640
3rd and 4th Floor
111-113 Great Tichfield Street
London W1

(f) Eidos Interactive, Inc.    Leasehold 5 years from May 12, 1997            Office                15,000
651 Brannan Street
4th Floor,
San Francisco
California 94107

(g) Eidos Interactive France   Leasehold 9 years from September 21, 1994      Office                3,422
SARL
8th Floor
6 Boulevard du General
Leclerc
Clichy

(h) Eidos Interactive          Leasehold 3 years from October 1, 1996         Office                2,500
(Deutschland) GmbH
Leverkusenstrasse 54,
22761 Hamburg
</TABLE>
<PAGE>

<TABLE>
<S>                            <C>                                            <C>                   <C>
(i) Crystal Dynamics, Inc.
64 Willow Place                Leasehold from January 1, 1999 to              Office                26,788
Menlo Park                     March 31, 2007
California 94025-3691

(j) Eidos Interactive KK
Etsuzan LK Building 4F,        Leasehold 2 years from June 25, 1998           Office                2,337
1-10-4, Hiroo,
Shibuya-Ku,
Tokyo 150-0012, Japan

(k) Eidos Interactive Pte
Limited
2 Handy Road                   Leasehold from December 1, 1998 to June 30,    Office                936
Cathay Building                2000
#16-03, Singapore 229233
</TABLE>

The principal place of business of each of the above companies is the first
relevant address shown above.
<PAGE>

ITEM 3 - LEGAL PROCEEDINGS

None.
<PAGE>

ITEM 4 - CONTROL OF REGISTRANT

The following table sets forth certain information known to the Company with
respect to the beneficial ownership of the Ordinary Shares as at June 30, 1999:

<TABLE>
<CAPTION>

                                                                                 Percent of
Title of Class                  Identity of Person or Group         No. Owned      Class
--------------                  ---------------------------         ---------      -----
<S>                            <C>                                  <C>             <C>
Ordinary Shares of 10p each    Directors and Officers of Eidos      1,259,479       6.8%
</TABLE>

There are no interests of more than 10% in the Company's shares. So far as Eidos
is aware it is not directly or indirectly owned or controlled by another
corporation(s) or by any foreign government nor are there any arrangements which
may at a subsequent date result in a change of control of Eidos.
<PAGE>

ITEM 5 - NATURE OF TRADING MARKET

The Ordinary Shares were included on the Unlisted Securities Market of the
London Stock Exchange from December 1990 until October 1995 when they were
included on the Official List of the London Stock Exchange under the symbol
"EID". On December 20, 1996, 3,000,000 Ordinary Shares were listed on Nasdaq in
the form of ADSs evidenced by ADRs under the symbol "EIDSY". Morgan Guaranty
Trust Company of New York is the Depositary and transfer agent for the ADSs.

The following table sets forth, for the periods indicated, the period high and
low middle market quotation for the Ordinary Shares as derived from the London
Stock Exchange Daily Official List.

                                                              Price Per
                                                           Ordinary Share
                                                         -------------------
                                                         High           Low
                                                         ----           ----
Calendar 1997:
2nd Quarter                                      (pound) 8.98   (pound) 7.35
3rd Quarter                                              8.10           4.48
4th Quarter                                              8.23           6.20

Calendar 1998:
1st Quarter                                     (pound) 11.80   (pound) 6.70
2nd Quarter                                             12.63           7.70
3rd Quarter                                              8.93           5.88
4th Quarter                                              9.95           5.55

Calendar 1999:
1st Quarter                                     (pound) 20.35   (pound) 9.40

                                                           Price Per ADS(1)
                                                         -------------------
                                                         High           Low
                                                         ----           ----
Calendar 1997:
2nd Quarter                                           $ 15.25        $ 12.25
3rd Quarter                                             13.25           7.50
4th Quarter                                             14.50          10.63

Calendar 1998:
1st Quarter                                           $ 20.00        $ 11.50
2nd Quarter                                             20.50          13.00
3rd Quarter                                             15.00           9.25
4th Quarter                                             16.63           9.25

Calendar 1999:
1st Quarter                                           $ 32.44        $ 15.88

----------

(1)   Each ADS represents 1 Ordinary Share On June 30, 1999, there were 53
      registered ADR holders and 1,184,533 ADSs were outstanding (equivalent to
      1,184,533 Ordinary Shares or approximately 6.4% of the total).

<PAGE>

ITEM 6 - EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS

There are currently no U.K. foreign exchange controls or restrictions on the
payment of dividends on the Ordinary Shares or the conduct of the Company's
operations. There are no restrictions under the Company's Memorandum and
Articles of Association or under English law that limit the right of
non-resident or foreign owners by virtue solely of being non-resident or foreign
owners to hold or to vote the Company's Ordinary Shares.
<PAGE>

ITEM 7 - TAXATION

The following is a summary of certain U.K. tax consequences generally applicable
to the acquisition, ownership and disposition by a beneficial owner of ADSs
representing Ordinary Shares and of Ordinary Shares not in ADS form that is
resident in the United States and not resident in the United Kingdom (a "U.S.
Holder") for the purpose of the current double taxation convention between the
United States and the United Kingdom (the "Convention"). The summary is based on
current U.K. tax law as of the date of this document and is therefore subject to
any changes to U.K. tax law. Because the following discussion is a general
summary that does not purport to address all potential tax consequences for all
types of investors. U.S. Holders of ADSs or Ordinary Shares should consult their
own tax advisers as to the particular tax consequences to them of acquisition,
ownership and disposition of the ADSs or the Ordinary Shares. The following
summary of certain U.K. tax considerations does not address the tax consequences
to a U.S. Holder (i) who is a resident (or in the case of an individual,
ordinarily resident) in the United Kingdom for U.K. tax purposes or (ii) whose
holding of Ordinary Shares or ADSs is effectively connected with a permanent
establishment in the United Kingdom through which such U.S. Holder carries on
business activities or, in the case of an individual, performs independent
personal services, with a fixed base situated therein.

For the purposes of the Convention, U.S. Holders of ADSs will be treated as the
beneficial owners of the underlying Ordinary Shares represented by the ADSs and
evidenced by the ADRs. Accordingly, except as noted, the U.K. tax consequences
discussed below apply equally to U.S Holders of ADSs and Ordinary Shares.

Taxation of Dividends under U.K. Law and Refunds of Tax Credits

The discussion of U.K. taxation or dividends and refunds or tax credits is
based on current U.K. tax law as amended by the 1998 Budget and the ensuing
Finance Act.

The Company did not pay a dividend in the period ended March 31, 1999. For
illustrative purposes, however, the paragraph below describes the difference
between the results of a U.S. holder of ordinary shares or ADSs who received
a dividend prior to April 6, 1999 and such a U.S. holder receiving a dividend
after that date.

Under the provisions of the Convention and current U.K. law, a U.S. holder of
ordinary shares or ADSs who is an individual or a corporate portfolio holder
(which is broadly defined as a shareholder who holds less than 10% of the voting
shares of the Company) would be entitled to receive from the U.K. Inland Revenue
a refund (the "Tax Treaty Payment") of an amount equal to the tax credit in
respect of ACT (Advance Corporation Tax) minus a withholding tax of 15% of the
sum of the cash dividend plus the tax credit (limited to the tax credit). The
rate of ACT is currently 25% of the cash dividend paid. On the basis of an ACT
rate of 25% of the dividend, an (pound)80 dividend (which amount and rate of ACT
have been selected for illustrative purposes only) would result in a (pound)20
payment of ACT by the Company. The tax credit related to the dividend would be
equal to (pound)20 (20% of the sum of the (pound)80 dividend and the (pound)20
tax credit). A U.S. holder who is an individual or corporate portfolio holder
would be entitled to receive a (pound)5 Tax Treaty Payment, calculated by
reducing the (pound)20 tax credit by withholding tax of (pound)15 (15% of the
sum of the (pound)80 dividend and the (pound)20 tax credit). Accordingly, such
U.S. holder would have a total net receipt of (pound)85 (cash dividend of
(pound)80 plus a net tax credit of (pound)5). Under the new U.K. law, the rate
of tax credits will be halved from 20% to 10% of the gross dividend for
dividends paid on or after April 6, 1999, with the result that a U.S. holder who
is an individual or a corporate portfolio holder would not be entitled to
receive any Tax Treaty Payment. Thus, using the example set out above, an
(pound)80 dividend will result in the US holder only receiving (pound)80.

For dividends paid on or after April 6, 1999 (assuming that no further relevant
changes in law occur), a U.S. holder who is an individual or a corporate
portfolio holder who receives the (pound)80 dividend in the above example should
be considered for U.S. federal income tax purposes to receive a dividend of
(pound)88.89 ((pound)80 dividend plus the (pound)8.89 tax credit) and would
include that amount in income. Such U.S. holder also should be considered to
have paid (pound)8.89 of U.K. tax that, subject to the applicable limitations,
would be creditable against such U.S. holder's U.S. federal income tax
liability.

The aggregate of the dividend paid to a U.S. holder who is an individual or a
corporate portfolio holder and the gross tax credit in respect of it will be
treated as dividend income for U.S. federal income tax purposes to the extent
made from the Company's current or accumulated earnings and profits, as
determined under U.S. federal income tax principles. The amount of any dividend
paid in pounds sterling will equal the U.S. dollar value of the pounds sterling
received calculated by reference to the exchange rate in effect on the day that
the dividend is received by the U.S. holder, in the case of ordinary shares, or
by the Depositary (or its Custodian), in the case of
<PAGE>

ADSs, regardless of whether converted into U.S. dollars. Foreign currency
exchange gain or loss, if any, realised in a subsequent sale or other
disposition of pounds will be treated as ordinary income or loss to the U.S.
holder.

Dividends received on the ordinary shares of ADSs will generally not be eligible
for the dividends received deduction allowed to U.S. corporations under Section
245 of the U.S. Internal Revenue Code. However, the withholding tax will be
treated as foreign income tax eligible for credit or deduction against such U.S.
holder's U.S. federal income tax liability at such U.S. holder's option, subject
to applicable limitations. U.S. holders should consult their tax advisers as to
the method of claiming such foreign tax credit or deduction and compliance with
special tax return disclosure requirements that may apply to U.S. holders who
claim the benefit of the foreign tax credit on such U.S. holder's U.S. federal
income tax return.

A U.S. holder will be denied a foreign tax credit (and instead allowed a
deduction) for foreign taxes imposed on a dividend if the U.S. holder has not
held the ordinary shares or ADSs for at least 16 days in the 30-day holding
period beginning 15 days before the ex-dividend date. Any days during which a
U.S. holder has substantially diminished its risk of loss on the ordinary shares
of ADSs are not counted towards meeting the 16-day holding period required by
the statute. A U.S. holder that is under an obligation to make related payments
with respect to the ordinary shares or ADSs (or substantially similar or related
property) also is not entitled to claim a foreign tax credit with respect to a
foreign tax imposed on a dividend.

Under current U.S. Treasury regulations, dividends paid on ordinary shares or
ADSs will not be subject to U.S. backup withholding tax. However, under final
regulations that will be effective for payments after December 31, 1999,
dividends paid on ordinary shares or ADSs to a U.S. holder or to a non-U.S.
holder in the U.S. or through U.S. or U.S.-related persons may be subject to
a 31% U.S. backup withholding tax in certain circumstances. In addition,
under both current U.S. Treasury regulations and those scheduled to take
effect for payments after December 31, 1999, the payment of proceeds of a
sale, exchange or redemption of ordinary shares or ADSs to a U.S. holder or
non-U.S. holder in the U.S. or through U.S. or U.S.-related persons may be
subject to U.S. information reporting requirements and/or backup withholding
tax.

U.S. holders can avoid the imposition of backup withholding tax by reporting
their tax payer identification number to their broker or paying agent on U.S.
Internal Revenue Service Form W-9. Non-U.S. holders can avoid the imposition of
backup withholding tax by providing a duly completed U.S. Internal Revenue Form
W-8 to their broker or paying agent. Any amounts withheld under the backup
withholding rules from a payment to a holder will be allowed as a refund or a
credit against such holder's U.S. federal income tax liability, provided that
the required returns are filed with U.S. Internal Revenue Service on a timely
basis.

U.K. Taxation of Capital Gains

A U.S. Holder, which is a corporation, will not be liable for U.K. tax on
capital gains realized on the disposal of their ADSs or Ordinary Shares unless
the ADSs or Ordinary Shares are held or acquired in connection with a trade,
profession or vocation carried on in the United Kingdom through a U.K. branch or
agency. A U.S. holder who is an individual and who is resident or ordinarily
resident in the United Kingdom for the purposes of U.K. taxation may be liable
for U.K. tax on capital gains realized on the disposal of their ADSs or Ordinary
Shares. Generally, gains realized on the disposal of ADSs or Ordinary Shares
held other than as capital assets have a different U.K. tax treatment.

Neither the surrender of ADSs in exchange for the deposited Ordinary Shares
represented by the surrendered ADSs nor the deposit of Ordinary Shares for ADSs
representing the Ordinary Shares will be a taxable event for purposes of U.K.
income and corporation tax or U.K. capital gains tax. Accordingly, U.S. Holders
will not recognize any gain or loss upon the surrender of ADSs or the deposit of
Ordinary Shares. See "U.K. Stamp Duty and Stamp Duty Reserve Tax."

U.K. Estate and Gift Tax

U.K. Inheritance Tax ("IHT") is a tax levied at death on the value of an
individual's estate at death plus the value of any gifts made within seven years
of death. It may also apply to certain lifetime transfers or to property
comprised in a trust or settlement. A U.S. domiciliary need only be concerned
about liability for IHT to the extent he is or is deemed to be also a U.K.
domiciliary (or was a U.K. domiciliary at the time he created any trust or
settlement) or otherwise to the limited extent of his U.K. assets. Generally, an
individual who is domiciled in the United Kingdom is liable for IHT on his
worldwide estate. An individual who is domiciled within the United States would
only be subject to IHT on United Kingdom situated assets which would include
shares in a U.K. company.
<PAGE>

Domicile in the U.K. can arise either as a matter of general law, because the
individual regards the United Kingdom as his permanent home and intends to
remain in the United Kingdom for the rest of his life, or it can arise through
residence in the United Kingdom over a number of years. Once United Kingdom
domicile has been acquired then an individual will be treated as continuing to
be deemed domiciled in the United Kingdom for IHT purposes for three years after
giving up that domicile.

Under the Convention between the United States and the United Kingdom relating
to estate and gift taxes, ADSs or Ordinary Shares held by an individual who is
domiciled for the purpose of the Convention in the United States and is not for
the purposes of the Convention a national of the United Kingdom will not,
provided any applicable U.S. tax is paid, be subject to IHT on the individual's
death or on a gift of the ADSs or the Ordinary Shares during the individual's
lifetime unless the ADSs or the Ordinary Shares form part of the business
property of a permanent establishment of the individual in the United Kingdom
or, in the case of a holder who performed independent personal services, pertain
to a fixed base in the United Kingdom used for the performance of independent
personal services. Where the ADSs or Ordinary Shares have been placed in trust
by a settler who, at the time of settlement, was a U.S. Holder, the ADSs or
Ordinary Shares will generally not be subject to IHT unless the settler, at the
time of settlement, was not domiciled in the United States and was a United
Kingdom national. In the exceptional case where the ADSs or Ordinary Shares are
subject both to IHT and to U.S. Federal gift or estate tax, the Convention
generally provides for tax paid in the United Kingdom to be credited against tax
payable in the United States or for tax paid in the United States to be credited
against tax payable in the United Kingdom based on priority rules set forth in
the Convention.

U.K. Stamp Duty and Stamp Duty Reserve Tax

U.K. stamp duty is payable in respect of certain documents and U.K. Stamp
Duty Reserve Tax ("SDRT") is imposed in respect of certain transactions in
securities. Transfers for value of the Ordinary Shares will be subject to AD
VALOREM stamp duty at the rate of (pound)0.50 per (pound)100 (or part of
(pound)100) of the amount or value of the consideration given irrespective of
the place of execution of any instrument of transfer. U.K. stamp duty is
normally paid by the purchaser.

There is generally no AD VALOREM stamp duty on a gift or on an instrument of
transfer which is neither a sale nor made in contemplation of sale. In those
cases, the instrument of transfer will either be exempt from stamp duty or a
fixed stamp duty of (pound)0.50 per instrument of transfer will be payable.

Proposals in the Chancellor of the Exchequer's Budget Statement dated March
9, 1999, if enacted, will result in such fixed stamp duty increasing from its
former rate of 50p to (pound)5. The amount of ad valorem stamp duty payable
is generally calculated at the applicable rate on the purchase price of the
ordinary shares.

An agreement to transfer the Ordinary Shares or any interest therein (but not
an agreement to transfer an interest in an ADS evidenced by an ADR (for the
purposes of this section an "ADS")) for money or money's worth will normally
give rise to a charge to SDRT at the rate of 0.5% of the amount or value of
the consideration given. The charge will generally arise on the day on which
the agreement to transfer the Ordinary Shares is made, or, where the
agreement is conditional, on the day on which the condition is satisfied.
However, such liability to SDRT will be cancelled (or where SDRT has already
been paid, the SDRT will be refunded) if the agreement is completed by a duly
stamped transfer within six years of the agreement or within six years of the
agreement having become unconditional, as the case may be. The SDRT would
generally be the liability of the purchaser.

Charges to stamp duty or SDRT at the higher rate of (pound)1.50 per
(pound)100 (or part of (pound)100) or 1.5% (respectively) of the amount or
value of the consideration or, in some circumstances, the value of the
Ordinary Shares (the "Consideration") may arise on the transfer or issue of
Ordinary Shares to, or to a nominee or agent for, the Depositary. Charges to
SDRT at the higher rate of 1.5% of the Consideration given may arise on the
transfer or issue of Ordinary Shares to, or to a nominee for, a person whose
business includes the provision of clearance services. Transfers of Ordinary
Shares into and within the clearance service will not be subject to U.K.
stamp duty.

Clearance services may opt, under certain conditions (and subject to U.K.
Inland Revenue approval) for a rate of 0.5% SDRT to apply to a transfer of
shares within the clearance service instead of the higher rate applying to an
issue or transfer of shares into the clearance service. In accordance with
the terms of the Deposit Agreement, any tax or duty payable by the Depositary
on other deposits of the Ordinary Shares will be charged by the Depositary to
the party to whom ADRs are delivered against the deposits.

<PAGE>

It is not necessary to pay any U.K. stamp duty on the transfer of, or
agreement to transfer, an ADS or beneficial ownership of an ADS, so long as
the instrument of transfer and/or written agreement to transfer is executed
and remains at all times outside the United Kingdom. In any other case, the
transfer of, or agreement to transfer, an ADS or beneficial ownership of an
ADS could, depending on all the circumstances of the transfer, give rise to a
charge to AD VALOREM stamp duty. The current rate of AD VALOREM stamp duty on
a transfer of stock or marketable securities, which would include the
Ordinary Shares and ADSs, is (pound)0.50 per (pound)100 (or part of
(pound)100) of the value of the consideration (a transfer in contemplation of
sale being stampable by reference to the value of the property transferred).
No SDRT will be payable in respect of an agreement to transfer ADSs or
beneficial ownership of ADSs.

A transfer for value of Ordinary Shares underlying ADSs by the Depositary at
the direction of the ADS seller directly to a purchaser may give rise to a
liability to U.K. stamp duty or SDRT. A transfer of Ordinary Shares from the
Depositary to a U.S. Holder or registered holder of an ADS upon cancellation
of the ADS is subject to a fixed U.K. stamp duty of (pound)0.50 per
instrument of transfer.

<PAGE>

ITEM 8 - SELECTED FINANCIAL DATA

The following selected consolidated financial data should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations" of the Company and the Consolidated Financial Statements and Notes
included elsewhere in this document.

The selected consolidated financial data presented below for Eidos plc in
accordance with U.K. GAAP for the year ended December 31, 1994, the fifteen
months ended March 31, 1996, and the years ended March 31, 1997, 1998 and 1999
and at December 31, 1994, March 31, 1996, March 31, 1997, March 31, 1998 and
March 31, 1999 are derived from the Consolidated Financial Statements audited by
the Company's independent auditors.

The selected consolidated financial data presented below for Eidos plc in
accordance with U.K. GAAP for the three months ended March 31, 1995 and year
ended March 31, 1996 have been derived from unaudited financial statements and,
in the opinion of management, include all adjustments, consisting solely of
normal, recurring adjustments necessary to present fairly the information
contained therein.

The Company prepares its Consolidated Financial Statements in accordance with
U.K. GAAP, which differs in certain material respects from U.S. GAAP. These
differences have a material effect on net income and shareholders' equity and
are described in Note 28 of the Notes to the Consolidated Financial Statements
of the Company. The selected consolidated financial data presented below for
Eidos plc in accordance with U.S. GAAP for the year ended December 31, 1994,
fifteen months ended March 31, 1996 and the year ended March 31, 1997, 1998 and
1999 and at December 31, 1994, March 31, 1996, March 31, 1997, March 31, 1998
and March 31, 1999 are derived from audited financial statements, but are
unaudited except for the amounts covered by the reconciliation set forth in Note
28 of the Notes to the Consolidated Financial Statements of the Company.

In management's opinion, the reconciliation between U.K. GAAP and U.S. GAAP has
been prepared by the Company on a consistent basis from period to period and
includes all adjustments and reclassifications that the Company considers
necessary for a fair presentation of such reconciliation for the periods
presented.
<PAGE>

Eidos -- U.K. GAAP

<TABLE>
<CAPTION>
Consolidated
Statement of
Operations
Data:                                    Three             15
                          Year           Months          Months
                         Ended           Ended           Ended
In thousands,           December         March           March
except per                 31,            31,              31,              Year Ended March 31,            Year Ended March 31,
share data              --------       --------         --------         ------------------------        --------------------------
                          1994           1995             1996             1996           1997             1998            1999
                        --------       --------         --------         --------       --------         --------        --------
<S>                   <C>              <C>           <C>              <C>            <C>             <C>             <C>
Turnover(1)           (pound)254       (pound)78     (pound)3,706     (pound)3,628   (pound)75,531   (pound)137,234  (pound)226,284
Cost of sales                 33              12            1,025            1,013          27,989           47,263          81,628
                    ------------    ------------    -------------    -------------   -------------   --------------  --------------
Gross profit                 221              66            2,681            2,615          47,542           89,971         144,656
Operating
expenses:
 Selling and
marketing                     10               5              721              716          13,178           23,697          37,096
 Research and
development                  139               6            2,561            2,555          26,809           29,898          39,619
 General and
administrative               185             154            2,502            2,348          13,996           16,923          28,771
                    ------------    ------------    -------------    -------------   -------------   --------------  --------------
Income/(loss)
from
operations                  (113)            (99)          (3,103)          (3,004)         (6,441)          19,453          39,170
Income/(loss)
from sale or
termination
of operations                 --              --               --               --             130           (1,852)             --
Interest
income/(expense),              6               3                5                2            (520)          (1,094)         (1,250)
net
Provision for
income taxes                  --              --               --               --          (1,450)          (5,642)        (13,670)
                    ------------    ------------    -------------    -------------   -------------   --------------  --------------
Net
profit/(loss)        (pound)(107)     (pound)(96)   (pound)(3,098)   (pound)(3,002)  (pound)(8,281)   (pound)10,865   (pound)24,250
Earnings/(loss)
per share           (pound)(0.04)   (pound)(0.03)    (pound)(0.67)    (pound)(0.59)   (pound)(0.59)     (pound)0.64     (pound)1.42
Diluted
earnings/(loss)
per share           (pound)(0.04)   (pound)(0.03)    (pound)(0.67)    (pound)(0.59)   (pound)(0.59)     (pound)0.61     (pound)1.25
                    ============    ============    =============    =============   =============   ==============  ==============

Weighted
average
number of
shares used
to compute
net
earnings/(loss)
per share                  2,752           2,839            4,649            5,086          13,921           16,943          17,138
                    ============    ============    =============    =============   =============   ==============  ==============
</TABLE>
<PAGE>

Consolidated Balance Sheet Data:

<TABLE>
<CAPTION>
                          December          March            March           March           March
In thousands                 31,             31,              31,             31,             31,
                          --------        --------         --------        --------        --------
                            1994            1996             1997            1998            1999
                          --------        --------         --------        --------        --------
<S>                      <C>          <C>              <C>             <C>             <C>
Working capital          (pound)368   (pound)(1,319)   (pound)25,592   (pound)52,074   (pound)53,574
Goodwill                         --              --               --              --          25,939
Total assets                    621           5,296           47,438          96,717         155,394
Long-term liabilities            21             580              425          29,454          30,813
Shareholders' equity            526             174           30,382          40,936          66,532
</TABLE>

----------

(1)   The results in the periods ended March 31, 1996 and March 31, 1997 reflect
      the acquisition of Domark Group Limited in October 1995 and CentreGold plc
      in April 1996.

(2)   The results for the periods ending March 31, 1996 and March 31, 1997 and
      the position as at March 31, 1996 and March 31, 1997 have been restated to
      reflect the new accounting policy for software development costs as
      discussed in Note 2 on page F-8.
<PAGE>

Eidos -- U.S. GAAP

<TABLE>
<CAPTION>
Consolidated
Statement of
Operations
Data:                                    Three             15
                          Year           Months          Months
                         Ended           Ended           Ended
In thousands,           December         March           March
except per                 31,            31,              31,                             Year Ended March 31,
share data              --------       --------         --------         --------------------------------------------------------
                          1994           1995             1996             1996           1997             1998            1999
                        --------       --------         --------         --------       --------         --------        --------
<S>                   <C>              <C>           <C>              <C>            <C>             <C>             <C>
Turnover(1)           (pound)254       (pound)78     (pound)3,706     (pound)3,628   (pound)75,531   (pound)137,234  (pound)226,284

Cost of sales                 --              (7)           1,025            1,032          32,311           47,263          81,628
                    ------------    ------------    -------------    -------------   -------------   --------------  --------------
Gross profit                 254              85            2,681            2,596          43,220           89,971         144,656
Operating
expenses:
Selling and
marketing                     10               5              721              716          13,178           23,697          37,096
Research and
development(2)               247               6           10,455           10,449          22,720           40,141          41,987
General and
administrative              (185)            154            3,723            3,569          18,903           24,983          33,090
                    ------------    ------------    -------------    -------------   -------------   --------------  --------------
Income/(loss)
from
operations                  (188)            (80)         (12,218)         (12,138)        (11,581)           1,150          32,483
Income/(loss)
from sales of
operations                    --              --               --               --             130              (52)             --
Losses from
interests in
associates                    --              --               --               --            (127)             118              --
Interest
income/(expense),              6               3                5                2            (520)          (1,094)         (1,250)
net
Provision for
income taxes                  --              --               --               --          (1,450)          (5,642)        (13,670)
                    ------------    ------------    -------------    -------------   -------------   --------------  --------------
Net
income/(loss)        (pound)(182)     (pound)(77)  (pound)(12,213)  (pound)(12,136) (pound)(13,548)          (5,520)         17,563
Earnings/(loss)
per share           (pound)(0.07)   (pound)(0.03)    (pound)(2.63)    (pound)(2.39)   (pound)(0.97)    (pound)(0.33)    (pound)1.03
Diluted
earnings/(loss)
per share           (pound)(0.07)   (pound)(0.03)    (pound)(2.63)    (pound)(2.39)   (pound)(0.97)    (pound)(0.33)    (pound)0.92
                    ============    ============    =============    =============   =============   ==============  ==============

Weighted
average
number of
shares used
to compute
net
earnings/(loss)
per share                  2,752           2,839            4,649            5,086          13,921           16,943          17,138
                    ============    ============    =============    =============   =============   ==============  ==============
</TABLE>

<PAGE>

Consolidated Balance Sheet Data:

<TABLE>
<CAPTION>
                          December          March            March           March           March
In thousands                 31,             31,              31,             31,             31,
                          --------        --------         --------        --------        --------
                            1994            1996             1997            1998            1999
                          --------        --------         --------        --------        --------
<S>                      <C>          <C>              <C>             <C>             <C>
Working capital.         (pound)368   (pound)(1,319)   (pound)35,694   (pound)54,077   (pound)55,567
Goodwill                         --           6,883           10,690           7,217          26,164
Total assets                    502          12,318           68,314         105,937         157,612
Long-term liabilities            21             580              486          29,454          30,813
Shareholders' equity            407           7,196           51,197          50,156          68,750
</TABLE>

----------
(1)   The results in the periods ended March 31, 1996 and March 31, 1997 reflect
      the acquisition of Domark Group Limited in October 1995 and CentreGold plc
      in April 1996.

(2)   Operating expenses in the years ended March 31, 1996, 1997 and 1999
      include write-offs of in-process research and development of (pound)8.2
      million, (pound)13.8 million and (pound)2.4 million respectively, recorded
      in connection with the acquisitions of Domark (and certain smaller
      entities), CentreGold and Crystal Dynamics, Inc.

      Operating expenses in the year ended March 31, 1998 include write-offs of
royalty advances and internal development costs of (pound)10.2 million relating
to earlier periods resulting from the change in accounting principle and
estimate (see Note 28 of the Notes to the Consolidated Financial Statements).
Exchange Rates

The following table sets forth certain information with respect to the Noon
Buying Rate for pounds sterling expressed in U.S. dollars per pound sterling.
These translations should not be construed as a representation that the pound
sterling amounts actually represent such U.S. dollar amounts or could be
converted into U.S. dollars at such rate. Such rates are not used by the Company
in the preparation of its Consolidated Financial Statements included elsewhere
herein. See Note 2 of the Notes to the Consolidated Financial Statements of the
Company.

                                                                        Period
Fiscal Year Ended March 31,               Average(1)   High     Low       End
                                          ----------  -----    -----    -------
1995                                         $1.56    $1.64    $1.51    $1.62
1996                                          1.56     1.71     1.51     1.53
1997                                          1.63     1.69     1.59     1.64
1998                                          1.65     1.71     1.59     1.67
1999                                          1.65     1.71     1.60     1.61

----------
(1)   Represents the average of the Noon Buying Rates on the last day of each
      month during the relevant period. On July 19, 1999 the Noon Buying Rate
      was $1.56 for each (pound)1.00.

History of Dividends

Although CentreGold paid dividends to its shareholders prior to its acquisition
by the Company, the Company has never declared or paid dividends on its Ordinary
Shares. The Company intends to reinvest its earnings, if any, to finance the
growth of its business, and does not anticipate paying any dividends in the
foreseeable future. Any payment of dividends would be subject, under English
law, to the Companies Act 1985, which requires that all dividends may only be
paid from the Company's distributable profits and only to the extent that the
Company has retained earnings, both determined on an unconsolidated basis. See
"Dilution" and "Description of Share Capital".
<PAGE>

ITEM 9 - MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of the financial condition and results of operations of
the Company should be read in conjunction with the Company's Consolidated
Financial Statements and Notes included elsewhere in this document. The
following discussion contains forward-looking statements that involve risks and
uncertainties.

Overview

Eidos develops and publishes advanced interactive software products and video
compression technologies. The Company was formed in May 1990 to develop video
editing systems and subsequently expanded its activities to include developing
proprietary, software-based video compression technology to be used in CD-ROM
and video telephony applications. Sales of video compression products have not
been significant, and the Company broadened its strategic focus to include
developing and publishing interactive software. To implement this strategy, the
Company effected a number of acquisitions which resulted in a substantial
expansion of the Company's operations. In October 1995, the Company acquired
three interactive software companies (Domark Group Limited, Simis Limited and
The Big Red Software Company Limited) for aggregate consideration, including
costs, of (pound)13.8 million. In April 1996, Eidos acquired CentreGold plc, an
interactive software company, for consideration, including costs, of (pound)17.6
million. The consideration for each of these acquisitions consisted primarily of
newly issued Eidos shares. As contemplated at the time of the CentreGold
acquisition, in June 1996 the Company disposed of CentreSoft Limited and PDQ
Limited, the distribution arms of CentreGold, for (pound)7.5 million in cash,
the net book value of such companies at the date of acquisition by Eidos.
Subsequently CentreSoft Limited was acquired by Activision, Inc. resulting in an
additional (pound)0.5 million deferred consideration recognized in fiscal 1998.
In November 1998 the Company acquired Crystal Dynamics, Inc. for $49.1m
including costs. From inception until the acquisition of Domark in October 1995,
the Company had a December 31 fiscal year end. In connection with the
acquisition of Domark, the Company changed its fiscal year end to March 31.

Eidos earned a profit under U.K. generally accepted accounting principles
("GAAP") of (pound)24.3 million ((pound)17.6 million under U.S. GAAP) for fiscal
1999 and (pound)10.9 million ((pound)5.5 million under U.S GAAP) for fiscal
1998. Prior to this Eidos experienced losses under U.K. GAAP of (pound)8.3
million in fiscal 1997 ((pound)13.5 million under U.S. GAAP).

The Company's future success is dependent upon the Company developing and
publishing additional interactive software titles and such titles achieving
significant market acceptance. There can be no assurance that the Company's
profitability recorded in respect of the year ended March 31, 1999 will be
sustained. Furthermore, because of the substantial acquisition and disposition
activities by the Company and its constituents, many of which had different
fiscal year ends, comparison of the Company's financial statements from period
to period is difficult.

The Company maintains its accounting records and reports its results in pounds
sterling in accordance with U.K. GAAP. There are significant differences between
U.K. GAAP and U.S. GAAP (these are discussed in Note 28 of the Notes to the
Eidos Consolidated Financial Statements). A summary of the principal relevant
differences between U.K. GAAP and U.S. GAAP follows:

Acquisitions. Under U.S. GAAP, goodwill arising on acquisitions accounted for
under the purchase method is amortized over the estimated useful life of the
goodwill, with amortized amounts being included in general and administrative
expenses. Each of the Company's acquisitions has been accounted for using the
purchase method for U.S. GAAP purposes. Each of the businesses acquired by the
Company was involved in the development of computer games software. The Company
acquired such businesses for their established names in the computer games
software market, for the experience of their personnel in the development of
computer game software, and for an aggregate of in excess of 25 games (together
with underlying technologies) which were under development by or on behalf of
such businesses. Upon review of the acquired companies' technology, the Company
determined that a portion of such technology had neither reached technological
feasibility nor had alternative future uses and that completion of the games
under development would require substantial additional effort and expenditures
by the Company. Accordingly, for U.S. GAAP purposes, the Company treated an
aggregate of (pound)24.4 million as in-process research and development, all of
which was expensed in the periods in which the related acquisitions were
completed. The Company also recorded (pound)49.4 million of goodwill for U.S.
GAAP purposes in connection with such acquisitions. The Company recognises the
fast changing industry in which it is involved and believes the remaining
goodwill has a useful life of 3 years.
<PAGE>

Under U.K. GAAP, goodwill arising on consolidation of acquisitions (which
represents the excess of the fair value of the consideration paid in the
acquisition over the fair value of the identifiable net assets acquired) prior
to April 1, 1998 was written-off immediately against related reserves, and had
no impact upon the Company's statement of operations until disposal. Goodwill
arising after April 1, 1999 is being capitalized and amortized in a method
similar to U.S. GAAP however there is no charge for in-process research and
development. The Company is therefore recording different amounts of capitalized
goodwill and amortization under U.K. GAAP than it is under U.S. GAAP. Currently
the amortization charge under U.S. GAAP exceeds that under U.K. GAAP because of
the charges for companies acquired prior to April 1, 1998. It is anticipated
that in the future the difference will decrease and eventually the U.K. GAAP
charge will exceed the U.S. GAAP charge because of the one-off in-process
research and development charges.

Additionally U.K. GAAP requires that on subsequent disposal or closure of a
previously acquired business, any goodwill previously taken directly to
shareholders' equity is reflected in the income or loss on disposal. Under U.S.
GAAP the appropriate balance to be written off on the disposal of the business
is the remaining unamortized balance of goodwill.

For acquisitions prior to April 1, 1998, the benefit of acquired tax losses, as
they are recognised in periods subsequent to the acquisition, are credited to
goodwill for US GAAP purposes and credited to income under U.K. GAAP. There is
no difference in treatment for acquisitions after April 1, 1998.

Deferred taxation. U.K. GAAP requires that no provision for deferred taxation
should be made if there is reasonable evidence that such taxation will not be
payable within the foreseeable future. U.S. GAAP requires full provision for
deferred taxation liabilities, and permits deferred tax assets to be
recognised if their realisation is considered to be more likely than not.

Investments. Unlike U.K. GAAP that recognises gains and losses in the periodic
performance statements; U.S. GAAP requires unrealized changes in the value of
listed investments to be recognised as a separate component of shareholders'
equity until realized.

Change in accounting policy. The accounting policy with respect to software
development costs was changed during fiscal 1998. Under U.K. GAAP, prior
periods were restated to reflect the new accounting policy. This has affected
the statements of operations for the years ended March 31, 1997 and March 31,
1996 and the fifteen months ended March 31, 1996 and reduced post tax profits
by (pound)14.5 million, (pound)1.1 million and (pound)1.1 million
respectively.

Under U.S. GAAP, prior periods are not restated and the entire effect of the
change in accounting principle which is inseparable from a change in estimate
((pound)15.8 million) was taken in the year ended March 31, 1998.

The consolidated balance sheet at March 31, 1997 was restated under U.K. GAAP
to show the affect of writing off all development costs, both internal and
external. This resulted in a reduction in net assets of (pound)15.6 million.
Under U.S. GAAP, the balance sheet at March 31, 1997 was not restated.

Research and development costs. Following the change in accounting policy there
was no longer any difference between the U.K. and U.S. GAAP treatment of
research and development costs. All internal and external development costs and
royalty advances are expensed as incurred. However, under U.S. GAAP the change
is reflected prospectively. Consequently the U.S. GAAP results fiscal 1998 and
earlier differ from the U.K. GAAP results (as restated).

In these prior periods in accordance with U.S. GAAP, development expenditure
relating to computer games software to be sold was expensed in the period in
which incurred until the specific project had reached technological feasibility.
Development costs incurred after establishing technological feasibility were
capitalized and amortized on a product by product basis over the estimated life
of the production (generally three months).

In prior periods, under U.S. and U.K. GAAP royalty advances to third party
developers and licensors were treated as prepaid royalties and classified under
receivables. Royalty advances were expensed at the contractual royalty rate as
cost of sales based on actual net product sales. Management evaluated the future
realization of royalty advances quarterly, and charged to cost of sales any
amounts management deemed unlikely to be recovered at the contractual royalty
rate through product sales.
<PAGE>

For the years ended March 31, 1996, 1997, and 1999 U.S. GAAP research and
development expenses also include (pound)8.2 million, (pound)13.8 million,
(pound)2.4 million relating to the write-off of in-process research and
development expenses in connection with the acquisitions of Domark (and certain
smaller entities), CentreGold, and Crystal Dynamics respectively.

Unless otherwise indicated, all financial results and analyses in this document
refer to the Company's U.K. GAAP financial statements.

The Company has historically recorded over 50% of its costs in pounds sterling
however with the increasing amount of globalization and overseas development
commitments this had decreased to 34% of total costs in 1999. During the year
ended March 31, 1999, 66% of costs were paid in currencies other than sterling.
A similar portion of its turnover (72% in the year ended March 31, 1999) is
denominated in other currencies, primarily French francs, German marks and U.S.
dollars. The Company reports its results in sterling; as a result, changes in
the value of the pound sterling in relation to other currencies will affect the
Company's turnover and operating margins. The impact of future exchange rate
fluctuations between the pound sterling and other currencies on the Company's
turnover and operating margins cannot be accurately predicted. Since December
31, 1996, the Company has taken steps to reduce its exposure to currency
fluctuation through foreign exchange management aimed at protecting margins and
fixing future pound sterling cash flows. In particular the Company has adopted a
policy of hedging against the devaluation of a portion of its short-term foreign
currency cash flows using forward contracts and options issued by the Company's
bankers. The Company has unhedged commitments of U.S.$50 million in 6.25%
Convertible Bonds and, in addition, unhedged royalty and licence commitments at
March 31, 1999 of U.S.$3.5 million.

Results of Operations

Comparisons of the Company's operations from period to period are difficult to
make because of the substantial acquisition and disposition activities by the
Company and its acquired subsidiaries and the different historical fiscal year
ends of the Company and its acquired subsidiaries.

The Company has experienced, and expects to continue to experience, significant
fluctuations in operating results due to a variety of factors including, among
others: (i) the timing and success of product introductions; (ii) market
acceptance of the Company's products; (iii) delays in product completion; (iv)
order cancellations; (v) product returns; (vi) projected and actual changes in
platforms; (vii) changes in pricing policies by the Company and its competitors;
(viii) costs associated with the write-off of discontinued development projects;
(ix) development and promotional expenses relating to the introduction of new
products or new versions of existing products; and (x) the size and rate of
growth of the consumer software market. In response to competitive pressures,
the Company may take certain pricing or marketing actions that could materially
adversely affect the Company's business, results of operations and financial
condition. Products are generally shipped as orders are received; accordingly,
the Company operates with little backlog. The Company's expense levels are
based, in part, on its expectations regarding future sales, and, as a result,
operating results would be disproportionately and adversely affected by a
decrease in sales or a failure to meet the Company's sales expectations.
Furthermore, the interactive software business is highly seasonal. Net revenues
are typically significantly higher during the fourth calendar quarter, due
primarily to the increased demand for interactive software products during the
year-end holiday buying season. Net revenues in other quarters are generally
lower and vary significantly as a result of new product introductions and other
factors. As a result of the foregoing, results of operations can be expected to
fluctuate significantly from period to period.


<PAGE>

The following table sets forth the actual selected statements of operations data
of Eidos as a percentage of turnover for the periods presented:

Consolidated Statements of
Operations Data:

<TABLE>
<CAPTION>
                                                 Year        Year       Year
                                                 Ended       Ended      Ended
                                                March 31,   March 31,  March 31,
                                                --------    ------     ------
As a percentage of turnover                       1997       1998       1999
                                                --------    ------     ------
                                               (unaudited)

<S>                                              <C>        <C>        <C>
Turnover                                         100.0%     100.0%     100.0%
Cost of sales                                     37.1       34.4       36.1
                                                 -----      -----      -----
Gross profit                                      62.9       65.6       63.9
Operating expenses:
 Selling and marketing                            17.4       17.3       16.4
 Research and development                         35.5       21.8       17.5
 Goodwill amortization                            --         --          1.8
 Other general and administrative                 15.8       12.3       10.9
Other operating expenses                           2.7       --         --
                                                 -----      -----      -----
Income/(loss) from operations                     (8.5)      14.2       17.3
Income/(loss) from sale or termination of
operations                                         0.2       (1.3)      --
Interest expense, net                             (0.8)      (0.8)      (0.6)
Provision for income taxes                        (1.9)      (4.1)      (6.0)
                                                 -----      -----      -----
Net income/(loss)                                (11.0)%      8.0%      10.7%
</TABLE>

----------

(1)   The results for the year ended March 31, 1997 have been restated to
      reflect the change in accounting policy (see Note 2 on page F-8).

(2)   The acquisition of Crystal Dynamics in November 1998 has not had a
      significant impact on results for fiscal 1999. Year ended March 31, 1999
      compared to the year ended March 31, 1998

Revenue. Eidos reported revenue of (pound)226.3 million for the year ended March
31, 1999 compared to (pound)137.2 million in the year ended March 31, 1998.
Nineteen new titles were launched in the year (1998: nineteen), including Tomb
Raider 3, Final Fantasy VII, Deathtrap Dungeon, Ninja, Gex III: Deep Cover
Gecko, UEFA Champions League, Championship Manager 3, Gangsters, Thief: The Dark
Project and Commandos. Eight titles (including catalog) managed to achieve sales
in excess of 350,000 units. Revenue has increased 65% compared to 1998 even
though the same number of new titles were released. This is due to a significant
increase in volume of units sold of each title and therefore is evidence of the
popularity of the new titles being released and Eidos' back catalog.

Eidos continues to derive the majority of its revenue (98.3%) from the games
business. The balance of the Group's revenue comes from its post production
video editing, video technologies, internet publishing and new media businesses.
Towards the year end, Eidos' Internet Service Provider, Eidosnet, was launched.
This has yet to generate any significant revenue but Eidos is now strategically
well placed to benefit from this rapidly growing area.

Revenue has increased across all territories with sales to continental Europe
increasing by 88% and sales to the United States increasing by 59%. Sales within
the domestic market have grown by 39%, modest compared to the U.S. and rest of
Europe but still a substantial increase on 1998. During the year Eidos opened
offices in Japan and Singapore. Previously sales in these territories were
sub-licensed out to other publishers. The impact on the operating results of
this change is marginal since the higher revenues are offset by the
establishment and running costs of these offices.

Eidos releases games for the Sony PlayStation and MPC. In addition revenue is
generated from the sale of clue books and other merchandise and sub-licensing
games onto other platforms, such as the Nintendo 64. Approximately 62% of Eidos'
games revenue is derived from console based games compared to 65% in 1998. The
proportion will vary according to the games released. In 1999 a number of the
most popular games Eidos released were only available on MPC (including
Championship Manager 3, Commandos and Final Fantasy VII).

During the year the volume of units shipped increased 73% from 9.7 million to
16.7 million. The average selling price decreased from (pound)15.16 to
(pound)14.61. This is largely a result of the increasing proportion of back
catalog (budget priced) sales which more than doubled from 1.4 million units to
3.4 million units. The average selling price of budget priced titles increased
from (pound)7.29 to (pound)8.92. Titles now being released on the budget labels
tend to be more

<PAGE>

popular and therefore command higher prices. Inflation has not had a significant
impact on the average selling prices.

Cost of sales. Cost of sales represents the manufacturing costs of the games,
origination (design of packaging and other printed material), storage,
distribution and royalties. The manufacturing cost of PlayStation and Saturn
games includes the royalties payable to Sony and Sega respectively; this has the
effect of reducing the gross margin on these games. Gross margin for the year
was 63.9% compared to 65.6% last year. Cost of sales includes royalties paid to
developers in excess of development advances paid. A successful game can earn
considerable excess royalties. Royalty costs in the year were (pound)15.7
million compared to (pound)6.2 million last year, reflecting the increasing
success of titles from associate and external studios.

Selling and marketing. Selling and marketing comprise product marketing and
advertising as well as salaries, bonuses and commissions paid to sales and
marketing personnel. Advertising expenses on titles are recognized in the period
in which they are incurred. Advertising costs for the year were (pound)20.7
million (9% of net revenue) compared to (pound)13.8 million (10% of net revenue)
in 1998. The increase in expenditure reflects the growing use of TV, print and
on-line advertising to promote Eidos' existing and emerging franchises.

The fixed element of selling and marketing costs was (pound)16.4 million (1998:
(pound)9.9 million) for the year ended March 31, 1999. The increase is a result
of both the increased costs of licensing and additional headcount in new and
existing offices.

Research and development. Research and development spend represents the
Company's investment in product development of (pound)36.8 million for the year
(1998: (pound)28.1 million). The increase reflects the increasing amount of new
development being undertaken by the Group as well as the higher costs resulting
from the growth of the industry generally. Also included in the category is pure
research and development of (pound)2.8 million (1998: (pound)1.8 million) for
the year to March 31, 1999. The product development charge for the year includes
(pound)20.7 million invested in a pipeline of 38 titles which have yet to be
released.

General and administrative. Total general and administrative costs were
(pound)28.8 million or 12.7% of net revenue (1998: (pound)16.9 million or 12.3%)
for the year ended March 31, 1999. In accordance with Financial Reporting
Standard No.10 goodwill arising on the acquisition of Crystal Dynamics has been
capitalized and is being amortized over three years. General and administrative
costs excluding goodwill were (pound)24.7 million (10.9% of net revenue). In
addition, the full year's charge includes (pound)3.8m attributable to abortive
acquisitions with related funding costs. Excluding this exceptional charge and
goodwill, general and administrative costs represented 9.2% of revenue compared
to 12.3% last year.

After deducting operating expenses of (pound)187.1 million, Eidos reported an
operating profit of (pound)39.2 million. This includes a (pound)4.1 million
goodwill amortization charge. Excluding this charge operating profit was
(pound)43.2 million (19% of net revenue) compared to (pound)19.5 million (14% of
net revenue) in 1998.

Interest payable of (pound)3.0 million includes (pound)1.9 million interest
payable on the convertible bonds (see below). The overall increase is due to the
additional costs of arranging working capital facilities in the U.S. This is
offset by an increase in interest receivable (from (pound)1.3 million to
(pound)1.8 million) which is due to improved liquidity during the year and the
continuing use of a formal treasury policies designed to maximize returns from
surplus funds.

Provision for income taxes. The effective tax rate for the full year is 36%
compared to 34% last year. The principal cause of the rate being in excess of
the U.K. standard rate is the overseas profits being taxed at higher rates.
These overseas profits represented a higher proportion of total Group profit
this year and hence the effective tax rate is higher than the 34% reported last
year. Significant tax losses ((pound)6.7 million) have been utilized during the
year, leaving tax losses of up to (pound)17.5 million available in the future.
Because of the significant proportion of Eidos' activities in countries with
higher tax rates than the U.K., it is anticipated that Eidos will continue to
have an effective rate in excess of the U.K. rate. Effective tax planning and
management is therefore important to the Group and is done on an ongoing basis.

Net income. Eidos reported net income of (pound)24.3 million for the year ended
March 31, 1999 compared to (pound)10.9 million for the corresponding period last
year. The basic earnings per share was 141.5p compared to 64.1p last year based
on a weighted average number of shares of 17,137,829 (1998: 16,943,461). The
earnings per share excluding goodwill amortization was 165.2p. The diluted
earnings per share was 125.2p compared to 61.2p for the corresponding period
last year (the comparative has been restated in accordance with Financial
Reporting Standard No.14). Again, excluding goodwill the diluted earnings per
share was 145.1p.
<PAGE>

Year ended March 31, 1998 compared to the year ended March 31, 1997

Turnover. Eidos derived 97.7% (1997: 97.1%) of its turnover from the sale of
internally and externally developed computer games. The remainder of Eidos'
turnover relates to its other businesses. Revenues from the record company have
been negligible and this activity was terminated in February 1998.

Eidos released nineteen titles for the year, compared to twenty eight in the
previous year. This reflected Eidos' commitment to releasing fewer, better
quality games to avoid incurring unnecessary variable costs on marginal games.

Turnover increased across all territories with sales to North America increasing
by 112% and sales to French and German speaking parts of Europe increasing by
122%. In 1997 the vast majority of U.K. sales were classified as domestic
because the export sales from the U.K. were handled via an independent
U.K.-based distributor. In 1998 the method of analysis was changed to show a
revised geographical split of turnover. Using the same method of analysis on the
1997 turnover domestic sales in the U.K. increased by 33% and export sales
increased by 57%. As a result of the increasing proportion of non-domestic
sales, 66.4% of turnover in the year was generated in currencies other than
sterling, predominantly French Francs (16.1%), Deutschmarks (13.1%) and U.S.
Dollars (37.2%), compared to 57% in 1997.

Eidos has released games for the MPC and Sony PlayStation. 65% of Eidos' games
turnover is derived from sales of console games (1997: 60%), although this
represents fewer titles (and units) than PC games. The overall increase in
turnover is largely due to the strength of the titles being released and the
significant continued growth in the installed base of PlayStation and powerful
games-capable PCs.

The average selling price on premium products increased in fiscal 1998 but the
overall average selling price decreased slightly due to a decrease in the
average price of budget products.

Cost of Sales. Cost of sales represents the manufacturing costs of the games,
origination, storage, distribution and royalties. The manufacturing cost of
PlayStation and Saturn games includes the royalties payable to Sony and Sega
respectively; this has the effect of reducing the gross margin on these games.
Internal royalties paid to development staff increased in the period to
(pound)4.6 million from (pound)1.0 million in 1997. This contributed to the
increase in cost of sales (and staff costs). However, the overall gross margin
in 1998 was 65.6% compared to 62.9% in 1997. It is a measure of the Group's
ability to control costs that the average gross margin has increased in spite of
an increase in the proportion of lower margin console sales.

Selling and Marketing. Selling and marketing comprise product marketing and
advertising as well as salaries, bonuses and commissions paid to sales and
marketing personnel. Advertising expenses on titles are recognized in the
period in which they are incurred. Expenses for the year ended March 31, 1998
were (pound)23.7 million, or 17.2% of turnover compared to (pound)13.2
million, or 17.4% of turnover in 1997. The fixed element of selling and
marketing costs has increased in line with the activity and size of the Group
and includes corporate marketing, attending the major trade exhibitions and
promoting the Eidos' valuable brands (notably "Tomb Raider" and "Championship
Manager"). The variable element of product advertising is expected to remain
at around 8-10% of turnover in the future (1998: 10%, 1997: 8.5%).

Research and Development. Research and development expenditure has increased
to (pound)29.9 million (1997: (pound)26.8 million) for the year. This
represents product development costs incurred in the period, advance
royalties payable to third party software developers or licensors and other
research and development activity. Eidos has spent (pound)1.8 million (1997:
(pound)0.7 million) on pure research and development activity in the year and
(pound)28.1 million (1997: (pound)26.1 million) on the development of
computer games. The games charge includes (pound)18.9m invested in 33 titles
still to be released at March 31, 1999, including Daikatana, Final Fantasy
VII, Dominion Storm and Ninja which, under the old accounting policy, would
have been deferred in the balance sheet as an intangible asset until release.

General and Administrative. General and administrative expenses for the year
ended March 31, 1998 were (pound)16.9 million, or 12.3% of turnover compared
to (pound)14.0 million or 18.5% of turnover in 1997. The increase in absolute
expenses results from the general expansion of Eidos and also includes such
one off costs as relocation and reorganization in the early part of the year
and a write off of goodwill arising on certain associated undertakings.

Other Operating Expenses. Foreign exchange losses for 1998 were (pound)21,000
compared to (pound)1.8 million in 1997. This is partially a result of the
Group's foreign exchange management and hedging policies adopted in June 1997.

<PAGE>

After deducting operating expenses of (pound)70.5 million Eidos generated an
operating profit of (pound)19.5 million in the year ended March 31, 1998
representing 14% of turnover, compared to a loss of (pound)6.4 million 1997.

Included within operating results are operating results for the year of Simis
and Naked Records, which were sold and terminated respectively during the
final quarter of the year. The operating profit of (pound)22.0 million (16.1%
of turnover) before their results represents a better measure of the
performance of the ongoing activities of the Group.

Other Non-Operating Income/Expenses. This includes (pound)2.4 million of
goodwill previously written off directly to reserves for Simis and Naked net of
(pound)0.5 million of deferred consideration received from the 1996 sale of
CentreSoft, triggered by their subsequent disposal to Activision.

Interest payable of (pound)2.4 million includes (pound)1.8 million interest
payable on the convertible bonds (see below). The large increase in interest
receivable (from (pound)0.3 million to (pound)1.3 million) is due to improved
liquidity during the year and the introduction of formal treasury policies
designed to maximize returns from surplus funds.

The Group has eight associated undertakings all involved in the development of
computer games with their major source of income being the development advances
paid by Eidos and other publishers. Where paid by Eidos, these advances are
expensed in full in accordance with the Group's accounting policy. The Group's
policy is to account only for any expenses incurred by the associates which are
materially in excess of the funding received or any material income earned
elsewhere (for example, royalties). The majority of the games being developed by
the associates have yet to be released. In the year ended March 31, 1998 there
were no excess profits or losses to report.

Provision for Income Taxes. The effective tax rate for the full year of 34% is
the same rate used at the half year. The principal cause of the rate being in
excess of the U.K. standard rate is the overseas profits being taxed at higher
rates. Significant tax losses ((pound)6.3 million) have been utilized during the
year which leaves losses of approximately (pound)0.3 million and (pound)2.0
million in the U.K. and U.S. respectively.

Net Income. Net income for the year ended March 31, 1998 was (pound)10.9 million
compared to a loss in 1997 of (pound)8.3 million. This gives an earnings per
share of 64.1 pence (1997: loss of 59.5 pence) and a fully diluted earnings per
share of 59.8 pence, based on a weighted average number of shares outstanding in
the period of 16,943,461 (1997: 13,921,162) and 21,000,879 respectively. The
adjusted earnings per share from earnings before exceptional items amounted to
75.1 pence. This earnings per share gives a better indication of the underlying
performance of Eidos without the distortion of the one-off loss on terminated
activities.

Liquidity and Capital Resources

Eidos has funded its operations primarily through public sales of equity
securities and convertible bonds. In December 1996, the Company raised
(pound)18.1 million (net of issue costs) through the issue and sale of
3,000,000 Shares pursuant to public offerings in the United States and the
United Kingdom. The 3,000,000 Shares issued in the offerings were listed on
the Official List of the London Stock Exchange and, in ADR form, on Nasdaq.
In April 1996, the Company raised (pound)22.0 million (net of issue costs)
through a 12 for 25 rights issue. In October 1995, the Company raised
(pound)5.7 million (net of issue costs) through a placing of 1,680,000
Shares. Additionally, the Company has raised (pound)2.5 million to date from
the exercise of warrants and options.

In March 1996, the Company arranged an overdraft facility of (pound)5.5
million. This is renewed annually. The facility was increased to (pound)20
million over the Christmas period when working capital requirements are at
their highest. In addition, the U.S. office has secured a similar facility to
cover its working capital requirements ($5 million increasing to $15 million
over the winter months). This facility is in place for two years.

In April 1997 the Company raised U.S.$50 million ((pound)29.9 million net of
issue costs) through issuing 6.25% convertible bonds. These are convertible
on or prior to July 24, 2002. At March 31, 1999 U.S.$100,000 had been
converted. At March 31, 1999, the Company had cash of (pound)48.2 million. At
March 31, 1999, Eidos' working capital was approximately (pound)53.6 million.

Eidos increased cash by (pound)30.1 million from its operating activities in
the year ended March 31, 1999 consisting of an operating profit of
(pound)39.2 million and depreciation and amortization of assets of (pound)8.2
million less a (pound)17.3 million increase in non-cash working capital.

Eidos' operating activities generated (pound)15.9 million in the year ended
March 31, 1998 and utilized (pound)7.5 million of cash in the year ended March
31, 1997.
<PAGE>

Capital expenditure and financial investment activities used (pound)2.7 million
in cash in the year ended March 31, 1999, consisting of (pound)0.6 million for
the purchase of investments and (pound)2.1 million for the purchase of tangible
assets. Acquisitions and disposals activity used (pound)14.9 million in cash in
the year ended March 31, 1999, mainly due to the acquisition of Crystal
Dynamics. For the year ended March 31, 1998, net capital expenditure was
(pound)16.0 million, consisting mainly of (pound)11.7 million for the purchase
of investments and (pound)4.2 million for tangible assets. Acquisitions and
disposals of subsidiaries and associates utilized a net (pound)2.7 million. For
the year ended March 31, 1997, investment activities utilized (pound)14.0
million, consisting mainly of (pound)19.9 million for acquisitions (less
(pound)8 million received for the re-sale of businesses) and (pound)2.4 million
for tangible fixed asset purchases.

Financing activities generated (pound)0.8 million, (pound)31.0 million and
(pound)41.9 million in the years ended March 31, 1999, 1998 and 1997,
respectively, primarily from issuance of equity securities and convertible
bonds. In the years ended March 31, 1999, 1998 and 1997 the Company repaid debt
of (pound)0.7 million, (pound)0.8 million and (pound)1.7 million respectively in
connection with finance leases for capital equipment.

Acquisitions, investments and disposals

The following acquisitions/investments were made during the year.

On November 5, 1998 the Company acquired the entire share capital of Crystal
Dynamics, Inc., a software development studio based in Palo Alto, California,
for a total consideration of approximately $49.1 million including costs of $2.1
million. The consideration comprised a cash payment of (pound)$23.0 million on
November 5, 1998, a cash payment of $23.0m on April 1, 1999 (together with
accrued interest of $0.4 million, which was not added to the total acquisition
cost) and the assumption of $0.9 million stock options.

The company generated (pound)2.2 million external revenue and (pound)3.7 million
internal revenue. Crystal Dynamics generates the majority of its revenue from
other group companies who publish and distribute the software it develops. It is
therefore necessary to take the internal royalty revenue (which is determined on
arm's length basis) into account when measuring the performance of the
acquisition. On this basis, Crystal Dynamics reported a net operating profit of
(pound)2.5 million for the five months since acquisition.

Eidos holds approximately 15% of the share capital of Opticom ASA, a Norwegian
listed company and a leader in the research and development of polymer based
storage and processing devices and internet technologies. Following the recovery
of the share price of Opticom, the market value of Eidos' holding in the company
at March 31, 1999 was (pound)24.2 million, which was significantly above cost.
Consequently the (pound)5.25 million non operating charge taken at the interim
in respect of this holding has been reversed in the second half of the year
((pound)2.25 million was reversed in the third quarter and (pound)3.0 million
was reversed in the fourth quarter). The investment is shown at cost at the year
end.

In June 1998 the Company acquired the remaining 25% of its subsidiary, Eidoscope
Limited, for (pound)120,000.

In February 1999 Eidos terminated the activities of its development studio, Big
Red Software, and the goodwill arising on original acquisition ((pound)0.4
million) was expensed through income.

Year 2000

The Year 2000 presents potential problems for all companies using computers,
software and other electronic equipment. At the year 2000 issues may arise for
one of the following reasons. The use of "00" may imply that there is no current
date. Any system using date based functionality for processing may fail due to
calculation errors. Any interfaces using date based data storage must be
unambiguous i.e. store all 4 digits of the date. The Year 2000 must be
recognised as a leap year. The following sections describe what steps Eidos have
made to minimise the risk of exposure to these problems.

State of readiness

Eidos commenced its Year 2000 compliance project in late 1997. A co-ordinator
was appointed who liaised with local management and IT personnel across the
Group, and reported directly to the Board on progress made. A global strategy
and policy for the Group was developed and implemented. Responsibilities were
assigned to ensure timeliness of response and co-ordination of effort at all
levels.

The Company's systems. Testing and replacement of hardware at all sites
proceeded as planned and all business critical systems are now believed to be
compliant. Financial and operational software was inventoried, certified by
<PAGE>

the suppliers and tested internally. The Company believes that game related
development software and tools, which comprise the majority of Eidos' systems,
are not adversely affected by Year 2000 problems. In addition the hardware used
is updated frequently because of rapid changes in technology and the computer
games industry.

The main financial and logistic system used in the U.K. and U.S. offices has
been fully tested internally. In addition the supplier has provided
certification of the system's compliance, and compliant Microsoft service packs
have been applied. Systems used within the other offices have been upgraded and
it is believed that they are now compliant.

However comprehensive, no program of testing can provide absolute assurance that
problems will not be encountered, especially given the many inter-dependencies
on suppliers and developers. Eidos has made best endeavors to gain assurances
from key companies in the supply chain.

The Company's products. Eidos' products do not contain date-related processes
and therefore the Company believes that they do not pose significant Year 2000
problems. However the Company may be adversely affected if there are significant
problems with hardware used to run its products (in particular video games
consoles). Due to the broad range and location of personal computer vendors, the
Company does not believe that the supply of personal computers will be
significantly affected.

Third party compliance. Eidos began to contact all its major customers and
suppliers in order to ascertain the steps they had taken to minimise Year 2000
problems. In general the Company has limited control over the actions taken by
these third parties and not all have actually provided written guarantees that
they addressed all potential Year 2000 issues. However the Company has been in
regular contact with a number of key suppliers, including the fulfilment
warehouses used by the main manufacturing locations which have supplied written
confirmation of compliance. The Company uses a number of different suppliers for
its PC product and printed material and could switch suppliers at relatively
short notice if necessary. However the Company is entirely dependent on Sony for
the manufacture of its PlayStation products as are all other game developers for
this platform. The final phase of compliance checks will follow up with major
suppliers to collate their final Year 2000 positions.

Costs to the Company

To date the costs of implementing the Year 2000 compliance program have been
indistinguishable from the normal costs incurred by Eidos in the regular
maintenance and upgrading of all computer hardware and software. Some additional
marginal costs have been incurred (for example, purchasing specific testing
software and Year 2000 literature, travel expenses) but these have been
negligible (less than (pound)50,000).

The only further cost envisaged will be from the results of Business Continuity
Planning . This may highlight the need for standby arrangements to be made in
the event of loss of facilities (power, light etc.) See contingency plans below.

Risks to the Company

Eidos believes it has taken reasonable steps to ensure it is not adversely
affected by the Year 2000 problems however it would be impossible to give full
assurance that operations will be unaffected considering the supply chain it
operates within. Eidos is a very seasonal business and the majority of the
Company's sales occur in period leading up to Thanksgiving and Christmas.
Therefore a disruption in business in January would not normally have a
significant impact on the Company's annual results. However the Company's
current release schedule has a relatively large number of titles due for release
in the first few months of 2000. Consequently delays in development completion,
manufacturing or despatch caused by Year 2000 problems (internal or third party)
may have an impact on the results for the year ended March 31, 2000. It is
likely that this would only be a timing difference unless there were found to be
irrevocable problems with any of the business critical systems or equipment. In
addition, at January 1, 2000 most of Eidos' customers will not have paid for the
stock they bought for the Christmas season and hence any Year 2000 problems they
experience may have an adverse affect on Eidos' cash flow in the early part of
2000.

Contingency plans

Eidos is currently developing a Business Continuity Plan with the help of an
external consultant. This includes risk management, physical security and
disaster recovery planning. This will also provide alternative resources should
the main Eidos Head Office in Wimbledon be unable to operate or experience any
loss of IT capability or data. It is

<PAGE>

planned to extend this to offices in Europe and the U.S. Although it is possible
that a completely comprehensive plan will not be in place in Europe and the U.S.
before the year 2000, a number of steps will be taken to ensure any disruption
caused by the year 2000 is minimised.

The Euro

The Board is currently assessing the implications for the European operations of
the introduction of a common European currency ("The Euro"). The Euro was
launched on January 1, 1999 and now runs in parallel with the French Franc,
German Mark and other participating currencies until the local currencies are
phased out by January 1, 2001.

The financial information systems used in the European offices are all capable
of operating in multiple currencies including the Euro.

There have been negligible external costs relating to the introduction of the
Euro to date (less than (pound)10,000). It is anticipated that once the Euro is
implemented there will be some costs involved in changing to the new currency
(for example, staff training and minor software and hardware changes). These are
not expected to be material.

One of the main issues for the Company is the possible erosion of margin
resulting from changes in the retail price point. As existing price points are
translated to the Euro they may be rounded down by the retailer who may pass
this reduction on to the Company. At this stage it is not possible to predict
the impact of this but Eidos will seek to maintain its margin wherever it can.
In addition, price transparency may erode margins in certain countries; however,
the fact that most games are translated to the local language should help to
reduce "gray imports" (games bought in one territory and sold in another with a
higher retail price) and minimize this risk.

Currently the offices in France and Germany remit Euros back to the Head Office
in the U.K. These receipts are translated to Sterling and the currency risk is
hedged in accordance with Company policies. Should the U.K. convert to the Euro
this currency risk will be eliminated and the U.S. dollar will become the only
significant currency exposure.

<PAGE>

ITEM 9A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Eidos is exposed to certain market risks arising from transactions in the
normal course of business and financial instruments used to finance the
Group's operations.

The main risks arising are foreign currency risk and interest rate risk. The
Board reviews and agrees policies for managing each of these risks and they are
summarized below.

The Group also enters into derivatives transactions (principally forward foreign
currency contracts and currency option contracts). The purpose of such
transactions is to manage the currency risks arising from the Group's operations
and its sources of finance.

It is, and has been throughout the period under review, the Group's policy that
no trading in financial instruments shall be undertaken.

Foreign currency risk

The Group has overseas subsidiaries in France, Germany, U.S., Singapore and
Japan. The latter two were set up during the year to March 31, 1999 and do not
as yet impact materially on the results of the Group.

At present therefore the Group's Sterling profit and loss account can be
significantly affected by movements in the Sterling exchange rate with the
French franc, Deutschmark, Euro and U.S. dollar.

The Group raised U.S.$50 million by issuing a 6.25% convertible bond in April
1997. The bond is convertible after August 31, 1997 and on or prior to July 24,
2002 into ordinary shares of 10p each of Eidos at an initial conversion price of
(pound)10.95 per share and with a fixed rate of exchange on conversion of
U.S.$1.5965=(pound)1.00. During the year to March 31, 1998 $100,000 of bonds
were converted. In the year to March 31, 1999 no further bonds were converted,
however a further $16.3 million have been converted since the year end.

The proceeds of the bond were used to meet working capital requirements and
finance acquisitions.

The bond is stated in the accounts at its book value of (pound)31.0 million at
March 31, 1999 (1998: (pound)29.0 million). The fair value at March 31, 1999 was
(pound)58.6 million (1998: (pound)33.4 million).

The Group's Sterling balance sheet is partially protected from the movements
in the U.S. dollar exchange rate by a natural hedge. As noted above the Group
has a $50 million bond liability. Dollar assets comprising cash and
intercompany balances are matched against the bond liability. This means, for
example, that an exchange gain on the bond is offset by an exchange loss on
the dollar assets.

About 45% of the Group's sales are to customers in continental Europe and
transactions are predominantly in French francs, Deutschmarks and Euros. The
Group's policy is to hedge 50% of the cash in these currencies which is
forecast to be repatriated to the U.K. The Group hedges only up to three
months ahead due to the uncertainty of cashflows beyond that date. This is
achieved through forward currency contracts, foreign currency options and
currency swaps. At March 31, 1999 no European currency hedges were in place
due to the relatively low levels of cash expected in April to June as a
result of the seasonality of the business.

The only currency contract open at March 31, 1999 was a U.S. dollar 7.5 million
swap. This matured in June 1999. At March 31, 1999 the loss on this contract was
(pound)29,000 based on a comparison of the spot rate to the contracted rate. The
estimated fair value of the contract at March 31, 1999 was therefore
(pound)(29,000).

Interest rate risk

In general, the Company's policy is to use short term banking facilities to
finance working capital requirements and longer term sources of finance such as
fixed rate debt and equity to finance investments unless the Company has surplus
cash resources.

The Group raised U.S.$50 million by issuing a 6.25% convertible bond in April
1997. The bond is convertible after August 31, 1997 and on or prior to July 24,
2002 into ordinary shares of 10p each of Eidos at an initial conversion price of
(pound)10.95 per share and with a fixed rate of exchange on conversion of
U.S.$1.5965=(pound)1.00. During the year to March 31, 1998 $100,000 of bonds
were converted. In the year to March 31, 1999 no further bonds were converted,
however a further $16.3 million have been converted since the year end.

<PAGE>

The proceeds of the bond were used to meet working capital requirements and
finance acquisitions.

The bond is stated in the accounts at its book value of (pound)31.0 million at
March 31, 1999 (1998: (pound)29.0 million). The fair value at March 31, 1999 was
(pound)58.6 million (1998: (pound)33.4 million).

Short-term flexibility is achieved by an overdraft facility of (pound)5.5
million from the Group's U.K. bankers. In the period up to Christmas 1998 when
cashflow was at its lowest the facility was increased to (pound)20 million. In
the U.S. a facility of $15 million was obtained for the period from October 1,
1998 to February 28, 1999 and reduced to $5m from March 1, 1999 to September 30,
1999. This facility is due to be increased to $15 million again between October
1999 and February 2000.

The Group's overdraft facilities tend only to be used for a few months of the
year and hence interest charges are minimal. Surplus cash balances are managed
by the Group Treasurer to ensure returns are maximised whilst retaining
flexibility to meet short term demands.
<PAGE>

ITEM 10 - DIRECTORS AND OFFICERS OF THE REGISTRANT

Directors and Executive Officers of the Company

The business address of the directors and executive officers of the Company
is Wimbledon Bridge House, 1 Hartfield Road, Wimbledon, London SW19 3RU. The
Company's directors and executive officers and their ages as at June 30, 1999
are as follows:

Name                    Age                   Position
----                    ---                   --------

Directors

Ian Livingstone          49     Chairman of the Board and Director
Charles H. D. Cornwall   36     Chief Executive Officer and Director
Michael P. McGarvey      33     Chief Operating Officer and Director
Jeremy M.J. Lewis        36     Chief Financial Officer and Director
Simon R. Protheroe       35     Technical Director and Director
Jeremy Heath-Smith       38     Managing Director of Core Design Limited and
                                  Director
Victor J. Steel(1)       60     Non-executive Director
Allen L. Thomas(1)       59     Non-executive Director

Other executive officers

Charlotte I. Eastwood    47     Company Secretary
Jonathan Kemp            33     Managing Director of Eidos Interactive Limited
Hector R. B. Macleod     35     Managing Director of Glassworks Productions
                                  Limited
Nicholas A.M. Davies     37     Director of Eidoscope Limited
Robert K. Dyer           36     President of Eidos Interactive, Inc.
Patrick Melchior         40     Managing Director of Eidos Interactive, France
Rolf Duhnke              41     Managing Director of Eidos Interactive, Germany
Satoshi Honda            51     Managing Director, Eidos Interactive, Japan
Erik Ford                27     General Manager, Eidos Interactive, Singapore

----------
(1)   Member of the Audit Committee and of the Remuneration Committee. There is
      no arrangement or understanding between any director or executive officer
      and any other person pursuant to which he or she was elected as a director
      or executive officer of the Company.

Ian Livingstone has served as Chairman of the Company's Board of Directors since
October 1995. From May 1994 to October 1995, Mr. Livingstone served as Managing
Director of Domark. Since 1982, he has authored and co-authored the "Fighting
Fantasy" series of interactive game books, which have sold in excess of 14
million copies worldwide. In 1975, he co-founded Games Workshop Limited, a
role-playing game company, where he served as Managing Director and subsequently
Chairman of the Board until 1991.

Charles H. D. Cornwall has served as Chief Executive Officer of the Company
since October 1995 and as a director since May 1993. From July 1994 to October
1995, Mr. Cornwall served as Chairman of the Company's Board of Directors. From
November 1992 to December 1994, he was involved in the consolidation of and
investment in a number of gold mining companies in South Africa, including Rand
Leases Limited, Durban Deep Limited and Rand Gold & Exploration Limited. From
1989 to 1992, he worked for Chartered WestLB (predecessor to West Merchant
Bank), an Anglo-German merchant bank, in London, where he was involved in
mergers and acquisitions and corporate finance, consulting for a broad range of
public and private clients.

Michael P. McGarvey has served as Chief Operating Officer of the Company and as
a director of the Company since October 1997. From May 1996 to October 1997, Mr.
McGarvey served as Chief Executive Officer of Eidos Interactive, Inc., a wholly
owned subsidiary of the Company. From November 1994 to May 1996, he served as
Vice President of Sales and Marketing of Domark Software, Inc. From February
1994 to November 1994, he served as Director of Sales of Domark Software, Inc.
From May 1990 to February 1994, he served as Director of Sales for Diceon
Electronics, a manufacturer of printed circuit boards.

Jeremy M.J. Lewis has served as Chief Financial Officer of the Company and as a
director since October 1998. From September 1994 to September 1998, Mr. Lewis
served Robert Fleming & Co. Limited as a Director of
<PAGE>

Corporate Finance in the Investment Banking Division, working both in London and
Frankfurt. From July 1989 to August 1994, Mr. Lewis served with West Merchant
Bank (WestLB Banking Group), responsible for European mergers and acquisitions.
Mr. Lewis qualified as a Chartered Accountant with KPMG Peat Marwick McLintock,
working there for three and a half years.

Simon R. Protheroe has served as Technical Director of the Company and as a
director since June 1994. From July 1993 to December 1993, Mr. Protheroe served
as a consultant to Eidos. He joined the Company as a full-time employee in
December 1993. From October 1986 to November 1993, he conducted post-graduate
studies and subsequent research in the field of image processing at King's
College, London. He has published works in the fields of image sequence
analysis, machine vision and neural networks and has developed software for the
Joint European Torus and the Defence Research Agency.

Jeremy Heath-Smith has served as an Executive Director of the Company since
April 1996. From November 1994 to April 1996, Mr. Heath-Smith served as a main
Board Director of CentreGold plc in addition to his role as Managing Director of
U.S. Gold Limited. In July 1988, he founded Core Design Limited, an interactive
software developer and publisher that was acquired by CentreGold plc in 1994,
where he continues to serve as Managing Director.

Victor J. Steel has served as a Non-Executive Director of the Company since
September 1998 and currently holds three non-executive directorships, Mansfield
Brewery, NAFFI and European Leisure, where he serves as Non-Executive Chairman.
Mr. Steel also has a number of entrepreneurial interests. Previous appointments
include executive directorships at Kingfisher Plc, Guinness Plc, Beecham Group
Plc and Consumers Distributing Inc (Canada). A fellow of the Institute of
Marketing, he has wide experience of international business.

Allen L. Thomas a lawyer qualified in England and America, has served as a
Non-Executive Director of the Company since September 1998. Mr. Thomas currently
also serves as Chairman of Ockham Holdings Plc, a director of Penna Holding Plc
and as Deputy Non-Executive Chairman of Dialog Corporation Plc. Mr. Thomas
served as a partner at international law firm Paul, Weiss, Rifkind, Wharton &
Garrison from 1973 to 1992, and the founding partner of the firm's Hong Kong
office. During his time in practice he was involved in the financial rescue of
New York City as General Counsel to the Municipal Assistance Corporation.

Charlotte I. Eastwood has served as Company Secretary of the Company since
October 1996. From February 1989 to September 1996 Mrs. Eastwood owned and
managed her own language school and conference center in Normandy, France. Mrs.
Eastwood qualified as a solicitor in 1977 and practised for several years in the
U.K. and the Middle East before moving to France in 1984.

Jonathan Kemp has served as Managing Director of Eidos Interactive Limited, a
wholly owned subsidiary of the Company since November 1998. From October 1997 to
November 1998, Mr. Kemp served as Sales Director of Eidos Interactive Limited.
From March 1994 to October 1997, Mr. Kemp served as Director of Sales of
Microprose Software Limited. From June 1988 to March 1994, he served in various
sales positions within Microprose Software Limited and Electronic Zoo Limited,
and prior to that with Digital Electronics.

Hector R. B. Macleod has served as Managing Director of Glassworks since its
formation in early 1996. From December 1994 to December 1995, Mr. Macleod served
as Joint Managing Director of Complete Video Facilities Limited, a video
post-production facility. In July 1993, he founded Click 3X, a video
post-production facility, where he served as President/General Manager until
December 1994. From November 1989 to July 1993, he served as facilities manager
and a member of the board of directors of Complete Video Facilities Limited, a
video post-production facility.

Nicholas A.M. Davies is a founding member of the Company and has served as a
Director of Eidoscope Limited since the end of 1997 and is currently responsible
for co-ordinating the Company's internet strategy.

Robert K. Dyer has served as President of Eidos Interactive, Inc., a
wholly-owned subsidiary of the Company, since November 1998. From February 1994
to October 1998, Mr. Dyer worked at Crystal Dynamics, Inc. and in his most
recent position, was President. Prior to joining Crystal Dynamics, Mr. Dyer
worked for Disney Home Video International as Director of Sales and Business
Development from December 1991 through January 1994.

Patrick Melchior has served as Managing Director of Eidos Interactive France
SARL, a wholly owned subsidiary of the Company since October 1996. From January
1995 to September 1996, Mr. Melchior served as European Sales and Marketing
Director of EMME. From September 1993 to December 1994, Mr. Melchior served as
Sales
<PAGE>

Director at EURO-CD. From January 1991 to August 1993, Mr. Melchior was General
Manager, Microprose, France. Prior to that he spent six years in the food
industry in the U.S.

Rolf Duhnke has served as Managing Director of Eidos Interactive (Deutschland)
GmbH, a wholly owned subsidiary of the Company since March 1995. From 1988 to
1995 Mr. Duhnke served as Logistics Director of Sega, Germany. Prior to that he
served as a Label Manager of Bertelmann-Daughter Ariolasoft.

Satoshi Honda has served as Managing Director of Eidos Interactive KK (Japan), a
wholly owned subsidiary of the Company since June 1998. From 1992 to April 1998,
he served as President and Chief Executive Officer of Electronic Arts, Japan.
From 1982 to 1992, he served in various senior positions for Victor
Entertainment Inc. and Victor Musical Industries Inc.

Erik Ford has served as General Manager of Eidos Interactive PLC Limited
(Singapore), a wholly owned subsidiary of the Company since November 1998. Mr.
Ford helped established this office to oversee sales and marketing in the Asia
Pacific region. From March 1996 to October 1998, Mr. Ford served as the Sales
and Marketing Manager for Virgin Interactive Entertainment (Asia Pacific). Prior
to his work with Virgin Interactive, Mr. Ford was a consultant with AEON based
in Tokyo, Japan.
<PAGE>

ITEM 11 - COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

The Company paid an aggregate of (pound)7,828,000 to its directors and other
officers for services rendered in all capacities to the Company and its
subsidiaries for the year ended March 31, 1999. See "-- Employment Contracts"
and Note 5 of the Notes to the Consolidated Financial Statements of the Company.

The terms of the employment contracts as at March 31, 1999, of the directors and
officers of the Company, can be summarized as follows:

Employment Contracts

Mr. Livingstone and the Company are parties to a Service Agreement pursuant to
which Mr. Livingstone serves as Chairman of the Board of the Company. The
initial salary payable under the agreement was (pound)70,000 per year,
reviewable from time to time. Mr. Livingstone's salary was subsequently
increased by the Board of Directors to (pound)225,000 per year. Either party may
terminate the agreement with six months' notice. Mr. Livingstone is also
entitled to bonuses as determined by the Board of Directors of the Company and
for the year ended March 31, 1999 was paid a bonus of (pound)150,000.

Mr. Cornwall and the Company are parties to a Service Agreement pursuant to
which Mr. Cornwall serves as Chief Executive Officer of the Company. The initial
salary payable under the Agreement was (pound)45,000 per year, reviewable from
time to time. Mr. Cornwall's salary was subsequently increased by the Board of
Directors to (pound)500,000 per year. Either party may terminate the agreement
with six months' notice. Mr. Cornwall is also entitled to bonuses as determined
by the Board of Directors of the Company and for the year ended March 31, 1999
was paid a bonus of (pound)600,000.

Mr. McGarvey and the Company are parties to a Service Agreement pursuant to
which Mr. McGarvey serves as Chief Operating Officer of the Company. The initial
salary payable under the Agreement was (pound)150,000 per year, reviewable from
time to time. Mr. McGarvey's salary was subsequently increased by the Board of
Directors to (pound)250,000 per year. The Agreement is terminable by either
party with twelve months' notice. Mr. McGarvey is also entitled to bonuses as
determined by the Board of Directors of the Company and for the year ended March
31, 1999 was paid a bonus of (pound)250,000.

Mr. Lewis and the Company are parties to a Service Agreement pursuant to which
Mr. Lewis serves as Chief Financial Officer of the Company. The initial salary
payable under the agreement is (pound)150,000 per year, reviewable from time to
time. Either party may terminate the agreement with twelve months' notice. Mr.
Lewis is also entitled to bonuses as determined by the Board of Directors of the
Company and for the year ended March 31, 1999 was paid a bonus of
(pound)225,000.

Mr. Streater and the Company were parties to a Service Agreement pursuant to
which Mr. Streater served as Director of Video Technology of the Company. The
initial salary payable under the agreement was (pound)45,000 per year,
reviewable from time to time. Mr. Streater's salary was subsequently increased
by the Board of Directors to (pound)84,000 per year. Mr. Streater resigned on
June 10, 1999.

Mr. Protheroe and the Company are parties to a Service Agreement pursuant to
which Mr. Protheroe serves as Technical Director of the Company. The initial
salary payable under the Agreement was (pound)30,000 per year, reviewable from
time to time. Mr. Protheroe's salary was subsequently increased by the Board of
Directors to (pound)52,500 per year. Either party may terminate the agreement
with six months' notice. Mr. Protheroe is also entitled to bonuses as determined
by the Board of Directors of the Company.

Mr. Heath-Smith, the Company and Core Design are parties to a Service Agreement
pursuant to which Mr. Heath-Smith serves as Games Development Director of the
Company. The initial salary payable under the agreement is (pound)150,000 per
year, reviewable from time to time. Mr. Heath-Smith's salary was subsequently
increased by the Board of Directors to (pound)200,000 per year. Either party may
terminate the agreement with six months' notice. Mr. Heath-Smith is also
entitled to bonuses as determined by the Board of Directors of the Company and
for the year ended March 31, 1999 was paid a bonus of (pound)3,700,000.

Mrs. Eastwood and the Company are parties to a Service Agreement pursuant to
which Mrs. Eastwood serves as Company Secretary. The initial salary payable
under the agreement was (pound)42,000 reviewable annually. Mrs. Eastwood's
salary was subsequently increased by the Board of Directors to (pound)55,000 per
year. Either party may
<PAGE>

terminate the agreement with three months' notice. Mrs. Eastwood is also
entitled to bonuses as determined by the Board of Directors of the Company and
for the year ended March 31, 1999 was paid a bonus of (pound)5,000.

Mr. Kemp and Eidos Interactive Limited are parties to a Service Agreement
pursuant to which Mr. Kemp serves as Managing Director. The initial salary
payable under the agreement was (pound)73,000 per year, reviewable annually. Mr.
Kemp's salary was subsequently increased by the Board of Directors to
(pound)100,000 per year. Either party may terminate the agreement with three
months' notice. Mr. Kemp is also entitled to other bonuses as determined by the
Board of Directors of the Company and for the year ended March 31, 1999 was paid
a bonus of (pound)25,000.

Mr. Dyer and Eidos Interactive Limited are parties to a Service Agreement
pursuant to which Mr. Dyer serves as President of Eidos Interactive, Inc. The
initial salary payable is $180,000 per year, reviewable from time to time.
Either party may terminate the agreement with six months' notice. Mr. Dyer is
also entitled to bonuses as determined by the Board of Directors of the Company.

Mr. Melchior and Eidos Interactive Limited are parties to a Service Agreement
pursuant to which Mr. Melchior serves as Managing Director of Eidos Interactive
France SARL. The initial salary payable was FF 600,000 per year, reviewable from
time to time. Mr. Melchior's salary was subsequently increased by the Board of
Directors to FF 804,000. Either party may terminate the agreement with three
months' notice. Mr. Melchior is also entitled to bonuses as determined by the
Board of Directors of the Company and for the year ended March 31, 1999 was paid
a bonus of FF 201,000.

Mr. Duhnke and Eidos Interactive Limited are parties to a Service Agreement
pursuant to which Mr. Duhnke serves as Managing Director of Eidos Interactive
(Deutschland) GmbH. The initial salary payable was DM160,000 per year,
reviewable from time to time. Mr. Duhnke's salary was subsequently increased by
the Board of Directors to DM 300,000. Either party may terminate the agreement
with six months' notice. Mr. Duhnke is also entitled to bonuses as determined by
the Board of Directors of the Company and for the year ended March 31, 1999 was
paid a bonus of DM 100,000.

Mr. Macleod, the Company and Glassworks are parties to a Service Agreement
pursuant to which Mr. Macleod serves as Managing Director of Glassworks. The
initial salary payable under the agreement is (pound)80,000 per year, reviewable
from time to time. Either party may terminate the agreement with six months'
notice. Mr. Macleod is also entitled to bonuses as determined by the Board of
Directors of the Company.

Mr. Davies and the Company are currently negotiating a Service Agreement
pursuant to which Mr. Davies serves as a Director of Eidos Technologies Limited.
The proposed terms of such an agreement include an initial salary of
(pound)80,000 per year, reviewable from time to time. The proposed agreement
will be terminable by either party with twelve months' notice. Mr. Davies is
also entitled to bonuses as determined by the Board of Directors of the Company.

Satoshi Honda and Eidos Interactive Limited are parties to a Service Agreement
pursuant to which he serves as Managing Director of Eidos Interactive KK. The
initial salary payable is (Y)26,000,000 per year, reviewable from time to time.
Either party may terminate the agreement with six months' notice. Satoshi Honda
is also entitled to bonuses as determined by the Board of Directors of the
Company.

Mr. Ford and Eidos Interactive Limited are parties to a Service Agreement
pursuant to which Mr. Ford serves as General Manager of Eidos Interactive Pte
Limited (Singapore). The initial salary payable was U.S.$ 57,035 per year,
reviewable from time to time. Mr. Ford's salary was subsequently increased by
the Board of Directors to U.S.$ 65,000. Either party may terminate the agreement
with three months' notice. Mr. Ford is also entitled to bonuses as determined by
the Board of Directors of the Company.

There is not at present any formal bonus plan for directors and officers of the
Company. As is stated in the above descriptions of employment contracts, bonuses
are being paid entirely at the discretion of the Board of Directors of the
Company. Directors' remuneration and bonuses are based on recommendations made
by the Remuneration Committee (which comprises the two independent non-executive
directors).
<PAGE>

ITEM 12 - OPTIONS TO PURCHASE SECURITIES FROM REGISTRANT OR SUBSIDIARIES

Pursuant to the Eidos Approved Share Option Scheme, the following options for
Ordinary Shares were outstanding at June 30, 1999:

                                               Exercise
                                               price per
                                                Ordinary         Expiry dates
Options outstanding                              Share            of options
-------------------                            ---------       -----------------
155,790                                      115p-857.50p      10/02/99-09/10/08

Pursuant to the Eidos Unapproved Share Option Scheme, the following options for
Ordinary Shares of the Company were outstanding at June 30, 1999:

                                               Exercise
                                               price per
                                                Ordinary         Expiry dates
Options outstanding                              Share            of options
-------------------                            ---------       -----------------
900,792                                     343.33p-857.50p    12/29/99-10/13/05

Pursuant to the Crystal Dynamics Stock Option Plan, the following options for
Ordinary Shares of the Company were outstanding at June 30, 1999:

                                               Exercise
                                               price per
                                                Ordinary         Expiry dates
Options outstanding                              Share            of options
-------------------                            ---------       -----------------
7,246                                        $5.51-$6.89       10/11/04-07/15/07

Pursuant to the Eidos Interactive, Inc. Stock Option Plan, the following options
for Ordinary Shares of the Company were outstanding at June 30, 1999:

                                               Exercise
                                               price per
                                                Ordinary         Expiry dates
Options outstanding                              Share            of options
-------------------                            ---------       -----------------
74,211                                       $13.08-$14.16     04/01/03-01/19/04
<PAGE>

As at June 30, 1999, options over Ordinary Shares had been granted to the
following directors and officers of the Company pursuant to the Eidos share
option schemes:

                                                                      Exercise
                                                                      Price per
                                    Options     Option Exercise       Ordinary
Name                              Outstanding        Period            Share
----                              -----------        ------            -----

Approved Scheme
I. Livingstone                         3,787    04/03/99-04/01/06        792p
J. M. J. Lewis                         3,829    09/11/01-09/10/08     783.33p
S. R. Protheroe                       10,000    07/21/97-07/19/04     343.33p
                                      20,000    03/11/98-03/09/05        350p
J. Heath-Smith                         3,826    04/26/99-04/24/06        784p
H. R. B. Macleod                       3,498    01/21/00-01/19/07      857.5p

Unapproved Scheme
I. Livingstone                        44,213    04/03/99-04/01/03        792p
J. M. J. Lewis                       149,362    09/11/01-09/10/05     783.33p
S. R. Protheroe                       14,000    04/03/99-04/01/03        792p
C. H. D. Cornwall                     11,400    04/03/99-04/01/03        792p
                                     215,000    10/14/01-10/13/05        585p
J. Heath-Smith                        36,174    04/26/99-04/24/03        784p
M. P. McGarvey                        25,104    10/16/00-10/14/04      857.5p
                                     200,000    10/14/01-10/13/05        585p
H. R. B. Mcleod                       11,502    01/21/00-01/19/04      857.5p
R. Dunke                               5,000    01/21/00-01/19/04      857.5p
                                      25,000    09/11/01-09/10/05     783.33p
P. Melchior                            5,000    01/21/00-01/19/04      857.5p
                                      25,000    09/11/01-09/10/05     783.33p
                                    --------
All directors and executive
officers as a group                  811,695
                                    ========

Eidos Interactive Options

Ian Livingstone (the "Optionholder"), Chairman of the Board of the Company,
holds an option to purchase 3,636 Eidos Interactive Limited (formerly Domark
Group Limited) ordinary shares (the "Option") at (pound)105.03 per share. The
Company may require the Optionholder to sell, and he may require the Company to
purchase, the Eidos Interactive ordinary shares at a rate of 15.56 Ordinary
Shares for each Eidos Interactive ordinary share. Effectively, the Option gives
the Optionholder the right to purchase 56,576 Ordinary Shares at a price of
(pound)6.75 per Ordinary Share. The exercise period of the Option is at the
discretion of the Board of Directors.

The Option is freely assignable and carries no rights on the liquidation of
Eidos Interactive. Upon a variation of the issued share capital of Eidos
Interactive the number of Eidos Interactive ordinary shares subject to the
Option and/or the subscription price shall be adjusted in such manner as shall
place the Optionholder in the same position as regards the percentage of the
issued share capital of Eidos Interactive which he shall be entitled to acquire
upon full exercise of his Option. Upon an offer or invitation (whether by rights
issue or otherwise) to holders of Ordinary Shares, the Company shall procure
that at the same time the same offer or invitation is made to the Optionholder
as if his Option had been exercised, provided that the Optionholder may elect to
have the number of Ordinary Shares subject to the Option and/or the subscription
price adjusted in such manner as the auditors of the Company shall determine.
<PAGE>

ITEM 13 - INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS

Jeremy Heath-Smith, a director and Executive Officer of the Company, is a member
of the Core Design Pension Fund (the "Fund"). One of the Fund's assets is the
sole ownership of the premises occupied by Core Design Limited. During the 1999
fiscal year rent of (pound)40,000 was paid to the Pension Fund.

On February 4, 1997, the Company sold Silicon Dreams, a wholly-owned
development studio of the Company, to a new company controlled by Geoff
Brown, a former non-executive director of the Company, called Silicon Dreams
Studio Limited ("SDSL"). SDSL purchased Silicon Dreams for (pound)666,666
satisfied by a cash payment of (pound)500,000 and the issue of 166,666 shares
equaling 25% of the post-issuance share capital of SDSL. An additional
payment will also be made equal to 50% of the amount by which the aggregate
gross profits of SDSL exceed (pound)5 million in the three fiscal years
ending September 30, 2000, up to a maximum of (pound)2.5 million in
contingent payments. In addition, the Company has exclusive, worldwide
publishing rights (excluding Japan and the Far East) for various games
currently being developed by Silicon Dreams. The Company has financed part of
the development costs of these games as an advance against the royalties
which are payable to SDSL on the sale of the games. On completion of the
transaction, Mr. Brown resigned as an executive officer of the Company but
remained a non-executive director. On September 11, 1998 he resigned as a
non-executive director. In October 1998 the Company signed publishing and
licensing contracts with Attention to Detail Limited (ATD) and International
Sports Management Limited (ISM), both of which are controlled by Mr. Brown.
In the year to March 31, 1999 total royalties and advances of (pound)2.0
million were paid to SDSL and (pound)2.5 million to ATD and ISM.

Between April 1, 1997 and June 6, 1997 Eidos acquired a total of 1,476,052
shares, representing approximately 15% of the outstanding share capital of
Opticom ASA, a Norwegian listed company. The total consideration paid was
(pound)11,179,044. Subsequently, the Company paid Opticom U.S.$5 million for 50%
of joint venture to develop a device, based upon Opticom's storage and
processing technologies which can be used to store and operate computer games
software. Eidos is funding over a two year period up to U.S.$5 million. At March
31, 1999 $3.3 million had been paid. Robert Keith, a former non-executive
director of the Company, was the managing director of Opticom ASA during the
period and holds approximately 18% of the outstanding share capital of Opticom
ASA. Mr. Keith took no part in the decision of Eidos to acquire shares in
Opticom ASA.

Following his resignation as a non-executive director, Mr Keith has continued to
work for the Company on a consultancy basis. No fees have been paid to date but
it is anticipated that the annual fees will not exceed (pound)30,000. An accrual
has been made in the accounts for (pound)16,000 relating to the period from
September 11, 1998 to March 31, 1999. In addition, Mr Keith has continued to
have the use of a company car and mobile telephone.

The Group has signed a license agreement with Ian Livingstone Limited, a company
controlled by the Chairman of the Company, for the exploitation of his
intellectual property rights in "Deathtrap Dungeon" under which the Group has
contracted to pay the company a royalty based on net sales. During the 1999
fiscal year, royalties of (pound)295,276 have been paid under this agreement.

During the year the Company acquired the remaining 25% in its subsidiary,
Eidoscope Limited for (pound)120,000 from Kuka Limited. Kuka Limited is
controlled by Nicholas Davies who is also a director of Eidoscope Limited.
<PAGE>

During the year the Company made the following loans to Mr Cornwall and Mr
Livingstone:

                                                        Maximum
                                                         amount
                                                       during the   At March 31,
                                                          year          1999
                                                       -----------  -----------
                                                       (pound)'000  (pound)'000
                                                       -----------  -----------
CHD Cornwall                                                 21          21
I Livingstone                                                 5           5

All loans, which arose as a result of credit card transactions and personal
expenditure, were unsecured, interest free and repayable on demand, the balances
being regularly cleared during the year. The balances owing at March 31, 1999
have subsequently been repaid in full.
<PAGE>

                                    PART III

ITEM 15 - DEFAULTS UPON SENIOR SECURITIES

None
<PAGE>

ITEM 16 - CHANGES IN SECURITIES AND CHANGES IN SECURITY FOR REGISTERED
SECURITIES

None

<PAGE>

                                     PART IV

ITEM 18 - FINANCIAL STATEMENTS

See pages F-2 through F-46 incorporated herein by reference.

ITEM 19 - FINANCIAL STATEMENTS AND EXHIBITS

(a) Financial Statements

The following financial statements, are filed as part of this annual report:

                                                                          Page
                                                                          ----
Eidos plc
 Statement of Directors' Responsibilities.                                F-1
 Report of Independent Auditor                                            F-2
 Consolidated Balance Sheets as of March 31, 1998 and March 31, 1999.     F-3
 Consolidated Statements of Operations for the Years Ended March 31,
   1997, 1998 and 1999.                                                   F-4
 Consolidated Statements of Total Recognized Gains and Losses.            F-5
 Consolidated Statements of Changes in Shareholders' Equity for the
Years Ended March 31, 1997, 1998 and 1999.                                F-6
 Consolidated Statements of Cashflow for the Years Ended March 31,
   1997, 1998 and 1999.                                                   F-7
 Notes to Consolidated Financial Statements                               F-8

(b) Exhibits

The following documents are filed as part of this annual report:

                                                                         Page
                                                                         ----
U.K. Press release dated May 27, 1999                                   E-2.1
U.S. Press release dated May 27, 1999                                   E-2.2
Press release dated June 10, 1999                                       E-2.3
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the Registrant certifies that it meets all of the requirements for filing
on Form 20-F and has duly caused this annual report to be signed on its behalf
by the undersigned, thereunto duly authorized.

                                                                       Eidos plc
                                                                    (Registrant)

Dated: July 27, 1999                                      /s/ Jeremy M. J. Lewis
                                                          ----------------------
                                                              Jeremy M. J. Lewis
                                                      (Chief Financial Officer)
<PAGE>

                           EIDOS PLC AND SUBSIDIARIES

                    STATEMENT OF DIRECTORS' RESPONSIBILITIES

The following statement, which should be read in conjunction with the report of
the Independent Auditor set out on page F-2, is made with a view to
distinguishing for shareholders the respective responsibilities of the directors
and of the auditors in relation to the consolidated financial statements.

Company law in the U.K. requires the directors to prepare financial statements
for each financial year which give a true and fair view of the state of affairs
of the Company and Group and of the profit or loss of the Group for that period.
In preparing those financial statements, the directors are required to

a)    select suitable accounting policies and then apply them consistently;

b)    make judgements and estimates that are reasonable and prudent;

c)    state whether applicable accounting standards have been followed, subject
      to any material departures disclosed and explained in the financial
      statements;

d)    prepare the financial statements on the going concern basis unless it is
      inappropriate to presume that the company and group will continue in
      business.

The directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
Company and the Group and to enable them to ensure that the financial statements
comply with the Companies Act 1985. They have responsibility for taking such
steps as are reasonably open to them to safeguard the assets of the Group and to
prevent and detect fraud and other irregularities.
<PAGE>

                          REPORT OF INDEPENDENT AUDITOR

The Board of Directors and Stockholders
Eidos plc

We have audited the accompanying consolidated balance sheets of Eidos plc and
subsidiaries as of March 31, 1999 and 1998, and the related consolidated
statements of operations, statements of total recognised gains and losses, cash
flows, and changes in stockholders' equity for each of the years in the
three-year period ended March 31, 1999. These consolidated financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United Kingdom, which are substantially equivalent to auditing standards
generally accepted in the United States. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Eidos plc and
subsidiaries as of March 31, 1999 and 1998, and the results of their operations
and their cash flows for each of the years in the three-year period ended March
31, 1999, in conformity with generally accepted accounting principles in the
United Kingdom.

Accounting principles generally accepted in the United Kingdom vary in certain
significant respects from accounting principles generally accepted in the United
States. Application of accounting principles generally accepted in the United
States would have affected results of operations for each of the years in the
three-year period ended March 31, 1999 and stockholders' equity as of March 31,
1999 and 1998, to the extent summarized in Note 28 to the Consolidated Financial
Statements.

London, England                                                   KPMG Audit Plc
May 26, 1999                                               Chartered Accountants
                                                         and Registered Auditor
<PAGE>

                           EIDOS PLC AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                                                          March 31,    March 31,
                                              Note          1998         1999
                                             ------       --------     --------
                                                       (pound)'000  (pound)'000
Fixed assets
Intangible assets                              11              --        25,939
Tangible assets                                12           6,734         5,668
Investments                                    13          11,582        12,164
                                                         --------       -------
                                                           18,316        43,771
                                                         --------       -------
Current assets
Stocks                                         14           5,118         5,666
Debtors                                        15          30,770        57,737
Cash at bank and in hand                                   42,513        48,220
                                                         --------       -------
                                                           78,401       111,623
Creditors: amounts falling due within
one year                                       16         (26,327)      (58,049)
                                                         --------       -------
Net current assets                                         52,074        53,574
                                                         --------       -------
Total assets less current liabilities                      70,390        97,345
Creditors: amounts falling due after
more than one year
 U.S.$ convertible bonds                                  (28,995)      (30,333)
 Other creditors                                             (459)         (480)
                                                         --------       -------
                                               17         (29,454)      (30,813)
                                                         --------       -------
Net assets                                                 40,936        66,532
                                                         ========       =======
Capital and reserves
Called up share capital                        20           1,711         1,728
Share premium account                          24          49,349        50,165
Other reserves                                 24             167           707
Profit and loss account                        24          13,932
                                                         --------       -------
Equity shareholders' funds                     24          40,936        66,532
                                                         ========       =======

              The accompanying notes are an integral part of these
                       consolidated financial statements.

----------

(1)   The capital and reserves as at March 31, 1998 have been restated to
      reflect the re-classification required by Financial Reporting Standard No.
      10.
<PAGE>

                           EIDOS PLC AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                 Year Ended   Year Ended    Year Ended
                                                 March 31,     March 31,     March 31,
                                         Notes      1997         1998           1999
                                       -------  ------------  -----------   -----------
                                                (pound)'000   (pound)'000   (pound)'000
<S>                                    <C>      <C>           <C>           <C>
Turnover                                     3       75,531       137,234       226,284
Cost of sales                                       (27,989)      (47,263)      (81,628)
                                                    -------       -------       -------
Gross profit                                         47,542        89,971       144,656
Selling and marketing expenses                      (13,178)      (23,697)      (37,096)
Research and development                            (26,809)      (29,898)      (39,619)
 Goodwill amortization                                   --            --        (4,070)
 Other general and administrative                   (11,951)      (16,902)      (24,701)
Total general and administrative                    (11,951)      (16,902)      (28,771)
Other operating expenses                             (2,045)          (21)           --
                                                    -------       -------       -------
Income/(loss) from operations                        (6,441)       19,453        39,170
Exceptional income/(loss) on sale or
termination of operations                    7          130        (1,852)           --
Interest receivable                                     309         1,281         1,769
Interest payable                             8         (829)       (2,375)       (3,019)
                                                    -------       -------       -------
Income/(loss) on ordinary activities
before tax                                   4       (6,831)       16,507        37,920
Tax on income/(loss) on ordinary
activities                                   9       (1,450)       (5,642)      (13,670)
                                                    -------       -------       -------
Net income/(loss) for the period                     (8,281)       10,865        24,250
                                                    =======       =======       =======
Earnings/(loss) per share                   10       (59.5p)        64.1p        141.5p
Earnings/(loss) per share before goodwill   10       (59.5p)        64.1p        165.2p
Diluted earnings/(loss) per share
(restated)                                  10       (60.4p)        61.2p        125.2p
Diluted earnings/(loss) per share before
goodwill                                    10       (60.4p)        61.2p        145.1p
</TABLE>

                 The accompanying notes are an integral part of
                    these consolidated financial statements.

----------

(1)   The results for the year ended March 31, 1997 have been restated to
      reflect the new accounting policy for software development costs as
      discussed in Note 2 on page F-8.

(2)   The diluted earnings per share numbers for the year ended March 31, 1997
      have been restated as required by Financial Reporting Standard No. 14.
<PAGE>

                           EIDOS PLC AND SUBSIDIARIES

         CONSOLIDATED STATEMENTS OF TOTAL RECOGNISED GAINS AND LOSSES

<TABLE>
<CAPTION>
                                                  Year Ended    Year Ended    Year Ended
                                                   March 31,     March 31,     March 31,
                                                     1997          1998           1999
                                                  -----------   -----------   -----------
                                                  (pound)'000   (pound)'000   (pound)'000

<S>                                                    <C>           <C>          <C>
Net income/(loss) for the period                       (8,281)       10,865       24,250
Consolidation translation differences on foreign
currency net investments                                  389            26         (589)
                                                       ------        ------       ------
Total recognized gains/(losses) relating to the
period                                                 (7,892)       10,891       23,661
                                                       ------        ------       ------
Prior period adjustment:
 relating to the period ended March 31, 1996               --        (1,149)          --
 relating to the period ended March 31, 1997               --       (14,457)          --
                                                       ------        ------       ------
Total gains and losses recognized since last
report                                                 (7,892)       (4,715)      23,661
                                                       ======        ======       ======
</TABLE>

                 The accompanying notes are an integral part of
                    these consolidated financial statements.

Cumulative translation differences

                                                March 31,  March 31,   March 31,
                                                   1997       1998        1999
                                                   ----       ----        ----

Balance brought forward                             (25)       364         390
Before tax translation differences                  217         40        (921)
Tax benefit/(expense)                               172        (14)        332
                                                   ----       ----        ----
After tax translation differences                   389         26        (589)
                                                   ----       ----        ----
Balance carried forward                             364        390        (199)
                                                   ====       ====        ====
<PAGE>

                           EIDOS PLC AND SUBSIDIARIES

           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                     Ordinary Shares     Additional                            Goodwill     Profit and
                                    -------------------    paid up     Other       Merger      write-off       loss
                                    Shares(#)    Amount    capital    reserves     reserve      reserve       account       Total
                                    ---------    ------    -------    --------     -------      -------       -------       -----
                                            (pound)'000 (pound)'000 (pound)'000  (pound)'000  (pound)'000  (pound)'000  (pound)'000

<S>                                 <C>            <C>       <C>           <C>       <C>          <C>          <C>           <C>
Balances as of March 31, 1996       7,365,662       736       5,647         199           --       (3,698)      (2,710)         174
Loss for year                              --        --          --          --           --           --       (8,281)      (8,281)
Exchange differences                       --        --          --          --           --          389          389
Issue of new ordinary shares        8,973,816       898      46,888          --           --           --           --       47,786
Share issue expenses                       --        --      (5,415)         --           --           --           --       (5,415)
Exercise of warrants and
options                               516,930        52       1,281         (32)          --           --           --        1,301
Arising on acquisitions                    --        --          --          --       16,968           --           --       16,968
Goodwill written
off on subsidiaries                        --        --          --          --      (16,968)      (3,273)          --      (20,241)
Goodwill written
off on associates                          --        --          --          --           --       (2,299)          --       (2,299)
                                   ----------     -----     -------        ----      -------      -------      -------      -------
Balances as of March 31, 1997      16,856,408     1,686      48,401         167           --       (9,270)     (10,602)      30,382
Profit for the year                        --        --          --          --           --           --       10,865       10,865
Exchange differences                       --        --          --          --           --           --           26           26
Issue of new ordinary shares           84,639         8         713          --           --           --           --          721
Share issue expenses                       --        --        (140)         --           --           --           --         (140)
Exercise of warrants and
options                               163,306        16         313          --           --           --           --          329
Arising on conversion of the
bond                                    5,720         1          62          --           --           --           --           63
Goodwill arising on acquisitions           --        --          --          --           --       (4,036)          --       (4,036)
Goodwill written
off on subsidiaries                        --        --          --          --           --        2,362           --        2,362
Goodwill written
off on associates                          --        --          --          --           --          364           --          364
Merger relief released on
disposal of subsidiary                     --        --          --          --           --       (1,752)       1,752           --
                                   ----------     -----     -------        ----      -------      -------      -------      -------
Balances as of March 31, 1998      17,110,073     1,711      49,349         167           --      (12,332)       2,041       40,936
Reclassifirequired
by FRS 10 cation                           --        --          --          --           --       12,332      (12,332)
                                   ----------     -----     -------        ----      -------      -------      -------      -------
Restated balances
as of March 31, 1998               17,110,073     1,711      49,349         167           --           --      (10,291)      40,936
Profit for the year                        --        --          --          --           --           --       24,250       24,250
Exchange differences                       --        --          --          --           --           --         (589)        (589)
Options issued
during the year                            --        --          --         540           --           --           --          540
Issue of new
ordinary shares                         9,950         1          58          --           --           --           --           59
Exercise of
warrants and options                  162,257        16         758          --           --           --           --          774
Goodwill written
off on subsidiaries                        --        --          --          --           --           --          395          395
Goodwill written
off on associates                          --        --          --          --           --           --          167          167
                                   ----------     -----     -------        ----      -------      -------      -------      -------
Balances as of
March 31, 1999                     17,282,280     1,728      50,165         707           --         --         13,932       66,532
                                   ==========     =====      ======        ====      =======      =======      =======      ========
</TABLE>

                 The accompanying notes are an integral part of
                    these consolidated financial statements.
<PAGE>

At March 31, 1999 (pound)199,000 had been debited directly to the profit and
loss account reserve in respect cumulative exchange differences (1998:
(pound)390,000 credit, 1997: (pound)364,000 credit).
<PAGE>

                           EIDOS PLC AND SUBSIDIARIES

                       CONSOLIDATED STATEMENTS OF CASHFLOW

<TABLE>
<CAPTION>
                                                 Year Ended   Year Ended    Year Ended
                                                  March 31,    March 31,     March 31,
                                                     1997         1998         1999
                                                 -----------  -----------   -----------
                                                 (pound)'000  (pound)'000   (pound)'000
<S>                                                  <C>           <C>          <C>
Operating (loss)/income                               (6,441)      19,453        39,170
Depreciation of tangible fixed assets                  2,111        2,830         3,539
Amortization of goodwill                                  --           --         4,632
Loss on disposal of tangible fixed assets                183           47            16
(Increase)/decrease in stocks                            182       (2,906)         (373)
Increase in debtors                                  (11,320)      (3,664)      (28,644)
Increase in creditors                                  7,826          104        11,728
                                                     -------      -------       -------
Net cash inflow/(outflow) from operating
activities                                            (7,459)      15,864        30,068
                                                     -------      -------       -------
Returns on investment and servicing of finance:
Interest received                                        306        1,275         1,773
Interest paid on bond                                     --       (1,527)       (1,897)
Interest paid on finance leases                         (258)        (154)         (211)
Expenses paid in connection with bond issue               --       (1,026)           --
Other interest paid                                     (571)        (171)         (420)
                                                     -------      -------       -------
                                                        (523)      (1,603)         (755)
                                                     -------      -------       -------
Taxation
UK taxation paid                                          --         (509)       (1,867)
Overseas taxation paid                                  (276)        (111)       (8,299)
Overseas taxation repaid                                  --           --         3,681
                                                     -------      -------       -------
                                                        (276)        (620)       (6,485)
                                                     -------      -------       -------
Capital expenditure and financial investment:
Purchase of other investments                             --      (11,746)         (570)
Purchase of tangible fixed assets                     (2,352)      (4,229)       (2,175)
Sale of tangible fixed assets                            285           16            75
                                                     -------      -------       -------
                                                      (2,067)     (15,959)       (2,670)
                                                     -------      -------       -------
Acquisitions and disposals
Sale of businesses                                     8,000          500            --
Purchase of subsidiary companies                        (375)          --       (15,378)
Net cash/(overdrafts) acquired with subsidiaries     (18,865)          --           459
Purchase of associates                                  (650)      (3,208)           --
                                                     -------      -------       -------
                                                     (11,890)      (2,708)      (14,919)
                                                     -------      -------       -------
Net cash outflow before financing                    (22,215)      (5,026)        5,239
Financing:
Issue of new ordinary shares                          47,268          330           833
Expenses paid in connection with share issue          (5,415)        (218)           --
Proceeds from bond issue                                  --       30,864            --
Repayment of principal under finance leases           (1,662)        (810)         (761)
                                                     -------      -------       -------
                                                      40,191       30,166            72
                                                     -------      -------       -------
Increase in cash in the period                        17,976       25,140         5,311
                                                     =======      =======       =======
</TABLE>

                 The accompanying notes are an integral part of
                    these consolidated financial statements.
<PAGE>

                           EIDOS PLC AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1 Nature of Business and Organization

The activities of Eidos plc and subsidiaries ("Eidos," "the Company" or "the
Group") during the periods presented herein were the developing and publishing
of interactive software titles for MPC and certain games consoles (under licence
with the console manufacturer) the design, manufacture and sale of video
compression and video editing software, post-production video editing and new
media design and consultancy.

Currently the principal markets for the Group's products, all of which are
similar in size based on turnover, are the United States, United Kingdom and
Continental Europe. Asia and the rest of the World makes up a small but growing
part of the Group revenue. Computer software titles are sold primarily to
wholesale and retail distributors.

The computer games industry is characterized by the dominance of "hit titles";
consequently a relatively small number of titles (or franchises) will often make
up a significant proportion of turnover and net income. Eidos' stated policy is
to concentrate on quality titles and consequently titles which management
believe to be marginal are often terminated or sub-licensed.

2 Summary of Significant Accounting Policies

The financial statements have been prepared in accordance with applicable
Accounting Standards in the United Kingdom. A summary of the more important
Group accounting policies, which have been applied consistently, is set out
below.

The most significant differences between the accounting policies followed by the
Group and generally accepted accounting principles in the United States (U.S.
GAAP) are described in Note 28.

Change of accounting policy

With effect from April 1, 1997, Eidos has implemented a change in its accounting
policy in respect of software development expenditure. In previous accounting
periods, these costs were capitalized where technological feasibility and the
ultimate commercial viability were evaluated as reasonably certain. The
complexity and rate of change of the underlying technology together with
increased competitiveness within the market place have brought increased
difficulty to this evaluation process: this applies to both internal and
external development. Consequently all software development expenditure is now
being charged to the profit and loss account in the period in which it is
incurred. The comparatives for fiscal 1997 were restated to reflect the effect
of this change. The effect (in the year of implementation) was a reduction of
(pound)6.1 million (1997: (pound)14.5 million) in the profit before tax for
fiscal 1998.

Basis of accounting

The financial statements are prepared in accordance with the historical cost
convention.

Basis of consolidation

The consolidated financial statements include the financial statements of the
Company and its subsidiary undertakings. The results of subsidiaries sold or
acquired are included in the consolidated income statement up to, or from, the
date control passes. Intra-group sales and profits are eliminated fully on
consolidation. The results of CentreGold plc are included for the period from
April 22, 1996, excluding, however, the results of the disposed distribution
subsidiaries of CentreGold plc. The results of Crystal Dynamics are included for
the period from November 5, 1998.

2 Summary of Significant Accounting Policies (Continued)

On acquisition of a subsidiary, all of the subsidiary's assets and liabilities
that exist at the date of acquisition are recorded at their fair values
reflecting their condition at that date. All changes to those assets and
liabilities, and the resulting gains and losses, that arise after the Group has
gained control of the subsidiary are charged to the post acquisition statements
of operations.

Where the Company has the ability to exercise significant influence, it accounts
for investments as associated undertakings using the equity method. Other fixed
assets investments are recorded at cost.
<PAGE>

Associated undertakings and joint arrangements

Associated undertakings are undertakings in which the Group holds a long
term interest and over which it actually exercises significant influence. The
Group's share of profits less losses from associated undertakings is included
in the profit and loss account on the equity accounting basis. The holding
value of associated undertakings is based upon the Group's equity in net
assets of such undertakings, as shown by the most recent accounts available.
Interests in joint arrangements that are not entities are included directly
in the accounts of the invested entity, in accordance with the terms of
agreement governing the arrangement.

Goodwill

Goodwill in respect of acquisitions represents the excess of the fair value
of the consideration given over the fair value of the identifiable net assets
acquired. Goodwill arising prior to April 1, 1998 has been written off
immediately against reserves. Goodwill arising after April 1, 1998 has been
capitalized and is being amortized in the profit and loss account over
appropriate periods in accordance with Financial Reporting Standard No. 10
(FRS 10).

A charge is recognized in income in respect of any permanent diminution in the
value of goodwill. Goodwill written off directly to reserves and not previously
charged to income is included in determining the income or loss on disposal of a
subsidiary.

Goodwill previously written off to reserves was not reinstated in the balance
sheet when FRS 10 was adopted. It has been set off against the merger reserve
with the balance being set off against the profit and loss account reserve. The
balance sheet at March 31, 1998 has been restated to reflect this presentational
change.

Given the nature of the industry, the useful economic life of goodwill arising
during the year was estimated to be three years and the intangible asset is
being amortized over this period.

Turnover

Turnover, which excludes sales between Group companies and trade discounts,
represents the invoiced amounts of goods sold, net of provisions for returns and
value added tax. Revenue from royalty agreements is recognized upon reaching
specific dates set out in royalty contracts. In the case of minimum royalty
agreements revenue is recognized when the amounts are contractually due and are
non-refundable.
<PAGE>

2 Summary of Significant Accounting Policies (Continued)

Tangible fixed assets

The cost of fixed assets is their purchase cost, together with any incidental
costs of acquisition. Provision is made for depreciation on all tangible fixed
assets at rates calculated to write off the cost less residual value of each
asset over its expected useful life as follows:

Leasehold improvements        Over the life of the lease
     Fixture and fittings     20% per annum straight line
     Computer equipment       33% per annum straight line
     Motor vehicles           25% per annum straight line

Research and development

All research and development expenditure is charged to income as incurred. This
includes all software development expenditure on individual titles and includes
advance royalties paid under publishing agreements to external developers and
advance royalties paid under licensing arrangements.

Investments

Investments held as fixed assets are stated at cost less provision for any
permanent diminution in value.

Cash at bank and in hand

This comprises cash and cash on deposit.

Licence fees

Licence fees payable to celebrities and professional sports organisations for
use of their name over a number of years or for a range of products (a
franchise), including sub-licence arrangements and fees payable through
intermediaries, are charged to income as sales and marketing expenditure over
the life of the licence. Licence fees are classified as current and non-current
assets based on the remaining life of the licence. Management regularly reviews
the carrying value of such licences and will accelerate the amortisation should
circumstances require it.

Deferred taxation

Provision is made for deferred taxation at the anticipated tax rate, using the
liability method, on all material timing differences to the extent that it is
probable that a liability or asset will crystallize in the near future.

Foreign currencies

Assets and liabilities of subsidiaries in foreign currencies are translated into
sterling at rates of exchange ruling at the end of the financial year. The
results and cash flows of foreign subsidiaries are translated at the average
rate of exchange for the year. Gains and losses on exchange arising from the
re-translation of the opening net investment in subsidiary companies and from
the translation of the results of those companies are taken to reserves and are
reported in the statement of total recognized gains and losses. Exchange
differences arising from the re-translation of long-term foreign currency
borrowings used to finance foreign currency investments are also taken to
reserves. All other foreign exchange differences are taken to income in the year
in which they arise.

2 Summary of Significant Accounting Policies (Continued)

Stocks

Stocks are valued at the lower of cost and net realizable value. In general,
cost is determined on a first, in first out basis and includes transport and
handling costs.

Finance and operating leases

Costs in respect of operating leases are charged on a straight line basis over
the lease term. Leasing agreements which transfer to the Group substantially all
the benefits and risks of ownership of an asset are treated as if the asset has
been purchased outright. These assets are included in fixed assets and the
capital element of the leasing commitments is shown as obligations under finance
leases. The capital element of lease payments is applied to
<PAGE>

reduce the outstanding obligations and the interest element is charged to income
so as to give a constant periodic rate of charge on the remaining balance
outstanding at each accounting period. Assets held under finance leases are
depreciated over the shorter of the lease terms and the useful lives of
equivalent owned assets.

Pensions

The Group operates various defined contribution pension schemes. Contributions
are charged to income as they become payable in accordance with the rules of the
schemes.

Advertising costs

Advertising costs are expensed on first showing of the advertisement.
Advertising costs in fiscal 1999 were (pound)20.7 million (1998: (pound)13.8
million).

Derivative financial instruments

The Group uses derivative financial instruments to reduce exposure to foreign
exchange risk. The Group does not hold or issue derivative financial instruments
for speculative purposes.

For a forward foreign exchange contract to be treated as a hedge, the instrument
must be related to actual foreign currency assets or liabilities or to a
probable commitment. It must involve the same currency or similar currencies as
the hedged item and must also reduce the risk of foreign currency exchange
movements on the Group's operations. Gains and losses arising on these contracts
are deferred and recognized in the profit and loss account, or as adjustments to
the carrying amount of fixed assets, only when the hedged transaction has itself
been reflected in the Group's accounts.

If an instrument ceases to be accounted for as a hedge, for example, because the
underlying hedge position is eliminated, the instrument is marked to market and
any resulting profit or loss recognized at that time.

Convertible bond

The bond was initially stated at the amount of the net proceeds after deduction
of issue costs. The issue costs are being amortized over the life of the bond
(five years). Exchange gains or losses on the bond are taken to the profit and
loss account. No gain or loss is recognized on conversion.

2 Summary of Significant Accounting Policies (Continued)

Concentration of credit risk

Financial instruments potentially subject to concentration of credit risk
consist principally of accounts receivable with customers. The Company performs
ongoing credit evaluations of its customers as it considers necessary, and makes
provisions for potential credit losses as required.

Use of estimates

The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting periods.
Actual results could differ from those estimates.

3 Segmental Analysis

Turnover by destination

The Company has offices in the United Kingdom, United States, France, Germany,
Japan and Singapore. The latter two do not generate significant income in
relation to the remainder of the Group and are included within the 'Rest of
World' segment. The French and German offices sell to other French and German
speaking European countries (namely Belgium, Austria and Switzerland). For
reporting purposes these territories are included within 'France' and 'Germany'
rather than the 'Rest of Europe'.

The turnover is attributable to the Company's principal activities and arose in
the following geographical areas:
<PAGE>

                                     Year Ended      Year Ended      Year Ended
                                      March 31,       March 31,       March 31,
                                         1997            1998            1999
                                     -----------     -----------     -----------
                                     (pound)'000     (pound)'000     (pound)'000

United Kingdom                            25,499          26,287          36,442
Continental Europe                        23,940          53,124          99,868
U.S.                                      23,298          49,456          78,476
Rest of World                              2,794           8,367          11,498
                                         -------         -------         -------
                                          75,531         137,234         226,284
                                         =======         =======         =======

Sales to Continental Europe can be divided further as follows:

                                                                     March 31,
                                                                       1999
                                                                    ----------
                                                                   (pound)'000

Germany                                                                45,578
France                                                                 32,949
Rest of Europe                                                         21,341
                                                                      -------
                                                                       99,868
                                                                      =======

This analysis is not available for earlier years.
<PAGE>

3 Segmental Analysis (Continued)

Turnover by origination

                               Year Ended       Year Ended       Year Ended
                                March 31,        March 31,        March 31,
                                  1997             1998             1999
                              -----------      -----------      -----------
                              (pound)'000      (pound)'000      (pound)'000

United Kingdom                     32,408           46,134           63,081
Germany                            10,384           17,917           45,563
France                              9,620           22,129           33,496
U.S.                               23,119           51,054           82,185
Rest of World                          --               --            1,959
                                  -------          -------          -------
                                   75,531          137,234          226,284
                                  =======          =======          =======

Inter-segment sales

<TABLE>
<CAPTION>
                         By origination                         By destination
                ------------------------------------   -------------------------------------
                Year Ended   Year Ended   Year Ended   Year Ended   Year Ended   Year Ended
                 March 31,    March 31,    March 31,    March 31,    March 31,    March 31,
                    1997         1998         1999         1997        1998         1999
                -----------  -----------  -----------  -----------  -----------  -----------
                (pound)'000  (pound)'000  (pound)'000  (pound)'000  (pound)'000  (pound)'000

<S>                  <C>          <C>          <C>          <C>          <C>          <C>
United Kingdom       24,058       45,748       77,989           --        6,408       11,068
Germany                  --           --           --        8,166       14,661       27,949
France                   --           19           --        7,482       11,052       21,953
U.S.                     --           --        4,604        8,410       13,646       20,519
Rest of World            --           --           19           --           --        1,123
                     ------       ------       ------       ------       ------       ------
                     24,058       45,767       82,612       24,058       45,767       82,612
                     ======       ======       ======       ======       ======       ======
</TABLE>

Turnover to unaffiliated customers

<TABLE>
<CAPTION>
                Year ended March 31,       Year ended March 31,       Year ended March 31,
                        1997                      1998                        1999
                ------------------------  ------------------------  -------------------------
                    Home        Export       Home         Export       Home         Export
                   Sales        Sales        Sales        Sales        Sales        Sales
                -----------  -----------  -----------  -----------  -----------  -----------
                (pound)'000  (pound)'000  (pound)'000  (pound)'000  (pound)'000  (pound)'000
<S>                  <C>           <C>         <C>          <C>          <C>          <C>
United Kingdom       25,499        6,909       26,306       19,828       36,442       26,639
Germany              10,384           --       17,917           --       45,563           --
France                9,620           --       22,129           --       32,946          550
U.S.                 23,089           30       48,436        2,618       76,541        5,644
Rest of World            --           --           --           --        1,959           --
                     ------        -----      -------       ------      -------       ------
                     68,592        6,939      114,788       22,446      193,451       32,833
                     ======        =====      =======       ======      =======       ======
</TABLE>
<PAGE>

3 Segmental Analysis (Continued)

A further breakdown of the export sales by the United Kingdom are:

                                    Year Ended       Year Ended       Year Ended
                                     March 31,        March 31,        March 31,
                                       1997             1998             1999
                                   -----------      -----------      -----------
                                   (pound)'000      (pound)'000      (pound)'000

Europe                                   3,936           13,178           20,879
U.S.                                       209              903            1,935
Rest of World                            2,764            5,747            3,825
                                         -----            -----            -----
                                         6,909           19,828           26,639
                                         =====           ======           ======

The acquisition of Crystal Dynamics added (pound)2.2 million external
revenue, of which (pound)1.7 million is attributable to the U.S. and
(pound)0.5 million to Europe. In addition the company received (pound)3.7
million inter-segment royalties.

Income/(loss) on ordinary activities before tax

                                    Year Ended       Year Ended       Year Ended
                                     March 31,        March 31,        March 31,
                                       1997             1998             1999
                                   -----------      -----------      -----------
                                   (pound)'000      (pound)'000      (pound)'000
Geographical segment
United Kingdom                         (3,583)          11,064           29,425
Germany                                   148            1,258            5,858
France                                    249            1,577            4,097

U.S.                                   (3,645)           2,608           (1,444)
Rest of World                              --               --              (16)
                                       ------           ------           ------
                                       (6,831)          16,507           37,920
                                       ======           ======           ======

Assets

                                  Gross assets              Long-lived assets
                          --------------------------   -------------------------
                            March 31,     March 31,     March 31,     March 31,
                                1998          1999         1998          1999
                          (pound)'000    (pound)'000   (pound)'000   (pound)'000
Geographical segment
United Kingdom                 59,000         63,441        17,553        16,569
Germany                         5,950         17,102            89           124
France                          5,914          8,576            68           132
U.S.                           25,853         64,471           724        26,862
Rest of World                      --          1,803            --            84
                              -------        -------        ------        ------
                               96,717        155,393        18,434        43,771
                              =======        =======        ======        ======
<PAGE>

3 Segmental Analysis (Continued)

The analysis by class of business of the Company's turnover, income before
taxation and assets for the years ended March 31, 1999, March 31, 1998 and March
31, 1997 is set out below.

Turnover

                                    Restated
                                    Year Ended       Year Ended       Year Ended
                                     March 31,        March 31,        March 31,
                                       1997             1998             1999
                                   -----------     -----------      -----------
                                   (pound)'000     (pound)'000      (pound)'000
Class of business
Computer software                       73,316         134,078          222,775
Video editing                            2,215           3,145            3,667
Record company                              --              41               --
                                       -------        --------         --------
                                        75,531         137,264          226,442
Inter-segment revenue                       --             (30)            (158)
                                       -------        --------         --------
                                        75,531         137,234          226,284
                                       =======        ========         ========

Income/(loss) on ordinary activities before tax

                                    Restated
                                    Year Ended       Year Ended       Year Ended
                                     March 31,        March 31,        March 31,
                                       1997             1998             1999
                                   -----------     -----------      -----------
                                   (pound)'000     (pound)'000      (pound)'000
Class of business
Computer software                      (6,285)          18,738           38,702
Video editing                            (208)            (620)            (782)
Record company                           (338)          (1,611)              --
                                       ------           ------           ------
                                       (6,831)          16,507           37,920
                                       ======           ======           ======

Assets

                                   Gross Assets             Long-Lived assets
                             -------------------------  ------------------------
                             Year Ended     Year Ended  Year Ended   Year Ended
                              March 31,     March 31,    March 31,    March 31,
                                 1998          1999         1998         1999
                             -----------   -----------  -----------  -----------
                             (pound)'000   (pound)'000  (pound)'000  (pound)'000
Class of business
Computer software                 93,304       152,393       16,375       42,434
Video editing                      3,413         3,000        2,059        1,337
Record company                        --            --           --           --
                                 -------       -------       ------       ------
                                  96,717       155,393       18,434       43,771
                                 =======       =======       ======       ======
<PAGE>

4 Income/(Loss) on Ordinary Activities Before Tax

<TABLE>
<CAPTION>
                                                 Year Ended   Year Ended   Year Ended
                                                  March 31,    March 31,    March 31,
                                                    1997         1998          1999
                                                 -----------  -----------  -----------
                                                 (pound)'000  (pound)'000  (pound)'000
<S>                                                    <C>         <C>          <C>
This is stated after charging:
Auditors' remuneration for audit                          95          151          205
Other fees paid to the auditors and their
associates*                                               --          395          569
Loss on disposal of tangible fixed assets                183           47           16
Depreciation of tangible fixed assets held under
finance leases                                           560          824          790
Depreciation of tangible owned fixed assets            1,534        2,006        2,747
Write off of goodwill:
Included within normal operating costs                    --          364          562
Included within exceptional non-operating costs           --        2,362           --
Hire of plant and machinery - operating leases            90          308          439
Hire of other assets - operating leases                  240        1,088        1,269
Exceptional provision against loan to a
television company                                       279           --           --
</TABLE>

----------

* This includes (pound)40,000 paid to the previous auditor in the year ended
March 31, 1999 (1998: (pound)165,000). In addition fees of (pound)507,000 were
paid to the current auditor and capitalized as acquisition costs.

5 Directors' Emoluments and Related Party Transactions

                                           Year Ended    Year Ended  Year Ended
                                             March 31,   March 31,    March 31,
Directors' emoluments                          1997        1998          1999
                                           -----------  -----------  -----------
                                           (pound)'000  (pound)'000  (pound)'000


Salary payments                                    764        2,910        6,460
Fees                                                94          150          104
Compensation for loss of office                     79           --           --
Company pension contributions                       35           98           94
Other benefits                                      58          147          201
                                                 -----        -----        -----
                                                 1,030        3,305        6,859
                                                 =====        =====        =====

Retirement benefits are accruing to 6 (1998:6) directors under the Group's main
pension plan. In addition 1 director (1998: 1) has benefits accruing under the
Core Design Pension Plan.
<PAGE>

5 Directors' Emoluments and Related Party Transactions (Continued)

Interests in share options

Details of options held by directors are set out below:

<TABLE>
<CAPTION>
                       April 1,
                         1998                                                      Date from
                      or date of   Granted in   Exercised   March 31,  Exercise      which
                      appointment    period     in period     1999      price      exercisable  Expiry Date
                       --------     --------    ---------   --------   --------    -----------  ---------
<S>                      <C>         <C>            <C>      <C>        <C>          <C>         <C>
C. H. D. Cornwall.....    18,700           --        --        18,700    343.33p      07/21/97    07/19/01
                          32,700           --        --        32,700    350.00p      03/11/09    03/09/02
                          35,000           --        --        35,000    792.00p      04/03/99    04/01/03
                              --      215,000        --       215,000    585.00p      10/14/01    10/13/05
S. B. Streater(4).....    48,000           --        --        48,000    343.33p      07/21/97    07/19/01
                           3,400           --        --         3,400    350.00p      03/11/09    03/09/02
                          20,000           --        --        20,000    792.00p      04/03/99    04/01/03
S. R. Protheroe.......    10,000           --        --        10,000    343.33p      07/21/97    07/19/04
                          20,000           --        --        20,000    350.00p      03/11/98    03/09/05
                          14,000           --        --        14,000    792.00p      04/03/99    04/01/03
I. Livingstone........     3,787           --        --         3,787    792.00p      04/03/99    04/01/06
                          44,213           --        --        44,213    792.00p      04/03/99    04/01/03
                          56,576(1)        --        --        56,576    675.00p            --          --
J. Heath-Smith........     3,826           --        --         3,826    784.00p      04/26/99    04/24/06
                          36,174           --        --        36,174    784.00p      04/26/99    04/24/03
M. McGarvey...........     5,460           --        --         5,460    115.00p      04/05/96    04/04/05
                          25,104           --        --        25,104    857.50p      10/16/00    10/14/04
                           3,787           --        --         3,787    812.42p(2)   04/03/99    04/01/03
                          15,649           --        --        15,649    812.42p(2)   04/03/99    04/01/03
                              --      200,000        --       200,000    585.00p      10/14/01    10/13/05
J.M.J Lewis...........     3,829(3)        --        --         3,829    783.33p      09/11/01    09/10/08
                         149,362(3)        --        --       149,362    783.33p      09/11/01    09/10/05
</TABLE>

(1)   Effective holding shown. Mr Livingstone holds an option to purchase shares
      in Eidos Interactive Limited which upon exercise are exchangeable for
      shares in the Company. The exercise period is at the discretion of the
      Board of Directors.

(2)   The exercise price is $13.08 which has been translated at the year end
      U.S.$ exchange rate of $1.61=(pound)1.

(3)   Mr Lewis was granted these options on joining the Company in September
      1998 but prior to his being appointed as a director in October 1998.

(4)   Mr Streater resigned on June 10, 1999. The market price of shares in Eidos
      plc was 2,035p on March 31, 1999. The highest price during the year was
      2,035p and the lowest was 555p.

All options give the holders the rights to acquire shares on a one for one
basis.

Related party disclosures

(a) Jeremy Heath-Smith, a director and Executive Officer of the Company, is a
member of the Core Design Pension Fund (the "Fund"). One of the Fund's assets is
the sole ownership of the premises occupied by Core Design Limited. During the
year rent of (pound)40,000 was paid to the Pension Fund.

(b) On February 4, 1997, the Company sold Silicon Dreams, a wholly-owned
development studio of the Company, to a new company controlled by Geoff Brown, a
former non-executive director of the Company, called Silicon Dreams Studio
Limited ("SDSL"). SDSL purchased Silicon Dreams for (pound)666,666 satisfied by
a cash payment of
<PAGE>

5 Directors' Emoluments and Related Party Transactions (Continued)

(pound)500,000 and the issue of 166,666 shares equaling 25% of the
post-issuance share capital of SDSL. An additional payment will also be made
equal to 50% of the amount by which the aggregate gross profits of SDSL
exceed (pound)5 million in the threefiscal years ending September 30, 2000,
up to a maximum of (pound)2.5 million in contingent payments. In addition,
the Company has exclusive, worldwide publishing rights (excluding Japan and
the Far East) for various games currently being developed by Silicon Dreams.
The Company has financed part of the development costs of these games as an
advance against the royalties which are payable to SDSL on the sale of the
games. On completion of the transaction, Mr. Brown resigned as an executive
officer of the Company but remained a non-executive director. On September
11, 1998 he resigned as a non-executive director. In October 1998 the Company
signed publishing and licensing contracts with Attention to Detail Limited
(ATD) and International Sports Management Limited (ISM), both of which are
controlled by Mr. Brown. In the year to March 31, 1999 total royalties and
advances of (pound)2.0 million were paid to SDSL and (pound)2.5 million to
ATD and ISM.

(c) Between April 1, 1997 and June 6, 1997 Eidos acquired a total of 1,476,052
shares, representing approximately 15% of the outstanding share capital of
Opticom ASA, a Norwegian listed company. The total consideration paid was
(pound)11,179,044. Subsequently, the Company paid Opticom U.S.$5 million for 50%
of a joint venture to develop a device, based upon Opticom's storage and
processing technologies which can be used to store and operate computer games
software. Eidos is funding this development over a two year period up to U.S.$5
million. At March 31, 1999 $3.3 million had been paid. Robert Keith, a former
non-executive director of the Company, was the managing director of Opticom ASA
during the period and holds approximately 18% of the outstanding share capital
of Opticom ASA. Mr. Keith took no part in the decision of Eidos to acquire
shares in Opticom ASA.

(d) Following his resignation as a non-executive director, Mr Keith has
continued to work for the Company on a consultancy basis. No fees have been paid
to date but it is anticipated that the annual fees will not exceed
(pound)30,000. An accrual has been made in the accounts for (pound)16,000
relating to the period from September 11, 1998 to March 31, 1999. In addition,
Mr Keith has continued to have the use of a company car and mobile telephone.

(e) The Group has signed a license agreement with Ian Livingstone Limited, a
company controlled by the Chairman of the Company, for the exploitation of his
intellectual property rights in "Deathtrap Dungeon" under which the Group has
contracted to pay the company a royalty based on net sales. During the year
royalties of (pound)295,276 have been paid under this agreement.

(f) During the year the Company made the following loans to Mr Cornwall and Mr
Livingstone:

                                                       Maximum
                                                        amount           At
                                                        during        March 31,
                                                       the year          1999
                                                      -----------    -----------
                                                      (pound)'000    (pound)'000

CHD Cornwall                                               21             21
I Livingstone                                               5              5

All loans, which arose as a result of credit card transactions and personal
expenditure, were unsecured, interest free and repayable on demand, the balances
being regularly cleared during the year. The balances owing at March 31, 1999
have subsequently been repaid in full.

5 Directors' Emoluments and Related Party Transactions (Continued)

(g) During the year the Company acquired the remaining 25% in its subsidiary,
Eidoscope Limited for (pound)120,000 from Kuka Limited. Kuka Limited is
controlled by Nicholas Davies who is also a director of Eidoscope Limited.

(h) During the current year the Group advanced (pound)6.1 million to its
associated companies (including SDSL discussed above) as royalties and advances
on games being developed for the Group.

The Group has taken advantage of the exemption in Financial Reporting Standard
No. 8 in respect of subsidiaries which are greater than 90% subsidiaries.
<PAGE>

All inter-company transactions are required to be on an arm's length basis.

6 Employee Information

The average weekly number of persons (including executive directors) employed by
the Company and total costs during the periods indicated below were:


                                             Year Ended  Year Ended   Year Ended
                                              March 31,    March 31,   March 31,
By activity                                      1997         1998          1999
                                                 ----         ----          ----

Corporate                                         16            17            18
Computer software                                354           378           484
Video editing                                     28            39            42
Record company                                     3             2            --
                                                 ---           ---           ---
                                                 401           436           544
                                                 ===           ===           ===

                                       (pound)'000    (pound)'000    (pound)'000
Staff costs
Wages and salaries                          12,111         18,048         27,006
Social security costs                        1,145          1,747          3,185
Pension costs                                  130            459            584
                                            ------         ------         ------
                                            13,386         20,254         30,775
                                            ======         ======         ======

7 Exceptional Items

Included within general and administrative expenses for the year ended March 31,
1999 is (pound)3.8 million attributable to abortive acquisitions with related
funding costs.

Exceptional non-operating items in 1998 related to the sale of Simis Limited, a
software development studio ((pound)2.1 million loss), the termination of the
activities of the record company ((pound)0.3 million loss) and additional
deferred consideration from the sale of Centresoft Limited in 1996 ((pound)0.5
million profit).
<PAGE>

8 Interest Payable and Similar Charges

                                           Year Ended   Year Ended   Year Ended
                                            March 31,    March 31,    March 31,
Other loans                                   1997          1998         1999
                                           -----------  -----------  -----------
                                           (pound)'000  (pound)'000  (pound)'000

Bank loans and overdrafts                          565          171          665
Convertible bond                                    --        1,830        1,923
Finance leases                                     264          154          211
Amortization of bond issue costs                    --          220          220
                                                 -----        -----        -----
                                                   829        2,375        3,019
                                                 =====        =====        =====

9 Tax on Income/(Loss) on Ordinary Activities

                                         Year Ended   Year Ended    Year Ended
                                          March 31,    March 31,     March 31,
                                             1997         1998          1999
                                         -----------  -----------   ------------
                                         (pound)'000  (pound)'000   (pound)'000

UK Corporation tax at 31%
(1998: 31%, 1997: 33%)                            510        3,293        8,759
Less: Double taxation relief                     (133)        (166)        (130)
                                               ------      -------      -------
                                                  377        3,127        8,629
Overseas taxation                               1,073        2,515        5,405
Deferred taxation                                  --           --          339
                                               ------      -------      -------
                                                1,450        5,642       14,373
Adjustment in respect of prior years
Overseas taxation                                  --           --         (703)
                                               ------      -------      -------
                                                1,450        5,642       13,670
                                               ======      =======      =======
<PAGE>

9 Tax on Income/(Loss) on Ordinary Activities (continued)

Income taxes

Total income tax expense differs from the amounts computed by applying the U.K.
statutory income tax rate of 31% to income/(loss) before taxes, as a result of
the following:

<TABLE>
<CAPTION>
                                                Restated
                                               Year Ended    Year Ended   Year Ended
                                                March 31,     March 31,    March 31,
                                                   1997         1998         1999
                                               -----------   -----------  -----------
                                               (pound)'000   (pound)'000  (pound)'000
In thousands

<S>                                                 <C>            <C>         <C>
U.K. statutory rate                                 (2,254)        5,117       11,755
Difference between overseas and U.K. tax rate           --           405        3,210
Permanent disallowables                                250           334          192
Deferred tax asset not recognized, net               3,206         1,329         (102)
Utilization of U.K. brought forward losses              --        (2,083)      (2,092)
Non-U.K. taxes                                         248            --           --
Non-recognition of U.K. capital losses carried
forward                                                 --           540           --
Other differences                                       --            --          707
                                              ------------        ------      -------
Provision                                     (pound)1,450         5,642       13,670
                                              ============        ======      =======
</TABLE>

As of March 31, 1999 the Company had net operating loss carry forwards of
approximately (pound)17.5 million available to relieve taxable income in future
periods. This includes (pound)16 million acquired tax losses which arose during
the year on the acquisition of Crystal Dynamics. The majority of the losses will
be available for the next twelve to fourteen years.

10 Earnings/(loss) Per Share

Earnings in the year ended March 31, 1999 are stated after goodwill amortization
charges. Since there was no goodwill amortization in prior years, earnings per
share before goodwill have been supplied to improve comparability between the
years.

The calculations of earnings per share are based on the following information:

Weighted average number of shares:

                                         Year Ended    Year Ended    Year Ended
                                          March 31,     March 31,     March 31,
                                             1997          1998          1999
                                           --------      --------      --------
                                            Number        Number        Number
                                              of            of            of
                                            shares        shares        shares

For basic earnings per share              13,921,162    16,943,461    17,137,829
Conversion of convertible debt                    --     2,621,793     2,854,418
Exercise of share options                         --       245,487       442,809
                                          ----------    ----------    ----------
For diluted earnings per share            13,921,161    19,810,741    20,435,056
                                          ==========    ==========    ==========
<PAGE>

10 Earnings/(loss) Per Share (Continued)

<TABLE>
<CAPTION>
                                            Basic                                         Diluted
                           -----------------------------------------      ------------------------------------------
                             Restated        Year           Year            Restated        Year            Year
                            Year ended       ended         ended           Year ended       ended           ended
                             March 31,     March 31,      March 31          March 31,     March 31,        March 31
                               1997          1998           1998              1997          1998             1998
                           -----------    -----------    -----------      -----------    -----------     -----------
                           (pound)'000    (pound)'000    (pound)'000      (pound)'000    (pound)'000     (pound)'000
<S>                        <C>            <C>            <C>              <C>            <C>             <C>
Net income/(loss) for
the year                      (8,281)        10,865         24,250           (8,281)        10,865          24,250
Interest saved on
conversion of debt                --             --             --               --          1,263           1,327
                              ------         ------         ------           ------         ------          ------
Earnings/(loss)               (8,281)        10,865         24,250           (8,281)        12,128          25,577
Goodwill amortization             --             --          4,070               --             --           4,070
                              ------         ------         ------           ------         ------          ------
Earnings/(loss) before
goodwill amortization         (8,281)        10,865         28,320           (8,281)        12,128          29,647
                              ======         ======         ======           ======         ======          ======
</TABLE>

                                     Pence   Pence  Pence   Pence   Pence  Pence
                                      per     per    per     per     per    per
                                     share   share  share   share   share  share

Earnings/(loss)                      (59.5)   64.1  141.5   (59.5)   61.2  125.2
Goodwill amortization                   --      --   23.7      --      --   19.9
                                     -----    ----  -----   -----    ----  -----
Earnings/(loss) before
goodwill                             (59.5)   64.1  165.2   (59.5)   61.2  145.1
                                     =====    ====  =====   =====    ====  =====

The diluted earnings per share for the year ended March 31, 1999 has been
restated in accordance with Financial Reporting Standard No. 14. The number
previously reported was 59.8p based on 21,000,879 diluted shares.

<PAGE>

11 Intangible Assets

                                                             Total
                                                          -----------
                                                          (pound)'000
Goodwill
Cost
At April 1, 1998                                                 --
Additions                                                    29,308
Exchange adjustments                                            701
                                                             ------
At March 31, 1999                                            30,009
                                                             ------
Amortization
At April 1, 1998                                                 --
Charge for the period                                         4,070
                                                             ------
At March 31, 1999                                             4,070
                                                             ------
Net book value
At March 31, 1999                                            25,939
                                                             ======

12 Tangible Assets

                                           Fixtures
                               Leasehold     and     Computer   Motor
                              improvements fittings  equipment vehicles  Total
                              ------------ --------  --------- --------  -----
                                 (pound)   (pound)    (pound)  (pound)   (pound)
                                  '000      '000       '000     '000      '000
Cost
At April 1, 1998                  1,957     1,832      6,096     301     10,186
Additions                           109       238      1,764     239      2,350
In respect of new subsidiaries       --       174        990      --      1,164
Disposals                            (1)       (9)      (416)    (68)      (494)
                                  -----     -----      -----     ---      -----
At March 31, 1999                 2,065     2,235      8,434     472     13,206
                                  -----     -----      -----     ---      -----
Depreciation
At April 1, 1998                    203       542      2,608      99      3,452
In respect of new subsidiaries       --       159        776      --        935
Charge for the period               313       520      2,598     108      3,539
Eliminated in respect of
disposals                            --        (6)      (350)    (32)      (388)
                                  -----     -----      -----     ---      -----
At March 31, 1999                   516     1,215      5,632     175      7,538
                                  -----     -----      -----     ---      -----
Net book value
At March 31, 1999                 1,549     1,020      2,802     297      5,668
                                  =====     =====      =====     ===      =====
                                                                        =======
Net book value
At March 31, 1998                 1,754     1,290      3,488     202      6,734
                                  =====     =====      =====     ===      =====

<PAGE>

12 Tangible Assets (Continued)

The net book value of tangible fixed assets includes an amount of (pound)490,000
(1998: (pound)1,310,000) in respect of assets held under finance leases.

13 Investments

                                                   Associated
                                     Investments   undertakings    Total
                                     -----------   ------------    -----
                                       (pound)      (pound)      (pound)
                                        '000         '000         '000
Cost
At April 1, 1998                        11,578         4         11,582
Additions in the period                    582         -            582
                                        ------        --         ------
At March 31, 1999                       12,160         4         12,164
                                        ======        ==         ======

Eidos has made a series of investments in Opticom ASA ("Opticom") for a total of
(pound)11.2 million. Opticom is a Norwegian based company listed on the
Norwegian Stock Exchange. Eidos owns 1,476,052 shares in Opticom representing
approximately 15% of that company's share capital, valued at (pound)24.2
million, based on the closing price on March 31, 1999. Opticom is a leader in
the research and development of polymer based storage and processing devices and
has significant interests in internet technologies. The Group is not able to
exercise significant influence on the company and accordingly the investment is
recorded at cost. Other equity investments amounted to (pound)0.9 million.

During the year the Company acquired 100% of Crystal Dynamics, Inc., a developer
of computer software. Details of the acquisition are given in Note 22.

<PAGE>

13 Investments (Continued)

Interests in Group undertakings

The directors consider that to give full particulars of all subsidiary
undertakings would lead to a statement of excessive length. The following
information relates to those subsidiary undertakings whose results or financial
position, in the opinion of the directors, principally affected the figures of
the Group:

<TABLE>
<CAPTION>
Subsidiary undertakings               Country of incorporation                              Nature of business
-----------------------               ------------------------                              ------------------
<S>                                   <C>                         <C>
Eidos Interactive Limited                    England and Wales    Developer and Publisher of computer software
Eidos Interactive Inc                                      USA    Developer and Publisher of computer software
Crystal Dynamics Inc                                       USA                  Developer of computer software
Core Design Limited                          England and Wales                  Developer of computer software
Eidos Interactive France SARL                           France                  Publisher of computer software
Eidos Interactive (Deutschland) GmbH                   Germany                  Publisher of computer software
Eidos Interactive KK                                     Japan                  Publisher of computer software
Eidos Interactive Pte Limited                        Singapore                  Publisher of computer software
Glassworks Productions Limited               England and Wales                                   Video editing
Eidos Technologies Limited                   England and Wales                  Developer of computer software
Eidoscope Limited                            England and Wales                                       New media

<CAPTION>
Subsidiary undertakings                  Description of shares held                            Group %       Company %
-----------------------                  --------------------------                            -------       ---------
<S>                                      <C>                                                   <C>           <C>
Eidos Interactive Limited                Ordinary (pound)1 shares each and `A' ordinary            --           100%
                                         (pound)0.05 shares each
Eidos Interactive Inc                    Common stock $0.001 par value                            100%           --
Crystal Dynamics Inc                     Common stock no par value                                100%           --
Core Design Limited                      Ordinary (pound)1 shares                                 100%           --
Eidos Interactive France SARL            Ordinary Shares of 100FFr                                100%           --
Eidos Interactive (Deutschland) GmbH     DM 50,000                                                100%           --
Eidos Interactive KK                     100 million Yen                                           --           100%
Eidos Interactive Pte Limited            Ordinary S$1 shares                                       --           100%
Glassworks Productions Limited           "A" Ordinary shares of (pound)0.01 each and               --            85%
                                         "B" Ordinary Shares of (pound)0.01 each
Eidos Technologies Limited               Ordinary (pound)1 shares                                  --           100%
Eidoscope Limited                        Ordinary (pound)1 shares                                  --           100%
</TABLE>


<TABLE>
<CAPTION>
Associated undertakings                  Country of                                        Description of
Name of undertaking                   incorporation                Nature of business         Shares held    Group %     Company %
-----------------------               -------------                ------------------      --------------    -------     ---------
<S>                                   <C>              <C>                                <C>                <C>         <C>
Eidopt AS                                    Norway          Research and development     Ordinary shares       --            50%
Innerloop Technologies AS                    Norway    Developer of computer software     Ordinary shares       --         39.54%
Hothouse Holdings Limited                   England    Developer of computer software     Ordinary shares       --            25%
(formerly Clockwork Holdings Limited)
Pure Entertainment Games Limited            England    Developer of computer software     Ordinary shares       --            26%
Tigon Software Limited                      England    Developer of computer software     Ordinary shares       --            30%
Silicon Dreams Studio Limited               England    Developer of computer software     Ordinary shares       --            25%
Sports Interactive Limited                  England    Developer of computer software     Ordinary shares       25%           --
Lankhor (France) SARL                        France    Developer of computer software     Ordinary shares       26%           --
</TABLE>

All the above companies operated principally in their country of incorporation.

<PAGE>

14 Stocks

                                                         March 31,    March 31,
                                                           1998         1999
                                                         ---------    ---------
                                                          (pound)      (pound)
                                                           '000         '000

Raw materials and consumables                                109           371
Finished goods                                             5,009         5,295
                                                           -----         -----
Stocks (net of provisions of
(pound)764,000, 1998:(pound)527,000)                       5,118         5,666
                                                           =====         =====

15 Debtors

                                                         March 31,    March 31,
                                                           1998         1999
                                                         ---------    ---------
                                                          (pound)      (pound)
                                                           '000         '000
Amounts falling due within one year:
Trade debtors                                             22,290        44,271
Prepaid licences                                              --         6,532
Deferred tax asset                                         4,052         1,896
Other debtors                                              2,433         2,226
Prepayments and accrued income                             1,995         2,812
                                                          ------        ------
                                                          30,770        57,737
                                                          ======        ======

Trade debtors are shown net of provisions for returns and doubtful accounts as
follows:

                                                                    (pound)'000

Provisions brought forward at April 1, 1998                            11,470
Provisions usage                                                      (41,370)
New provisions posted                                                  44,406
                                                                      -------
Provisions carried forward at March 31, 1999                           14,506
                                                                      =======

Included within prepaid licences is (pound)2,639,000 in respect of periods that
extend beyond one year (1998: (pound)nil)

16 Creditors, Amounts Falling Due Within One Year

                                                         March 31,    March 31,
                                                           1998         1999
                                                         ---------    ---------
                                                          (pound)      (pound)
                                                           '000         '000

Trade creditors                                             9,407       9,692
Royalty creditors                                             990       4,968
Obligations under finance leases                              757         363
Other taxes and social security costs                       1,082       3,815
Other creditors                                             1,151      16,556
Accruals and deferred income                                3,165       8,967
Corporation tax                                             9,775      13,688
                                                           ------      ------
                                                           26,327      58,049
                                                           ======      ======

At March 31, 1999 the Group had unused overdraft facilities of (pound)5.5
million in the U.K. and U.S.$5 million in the U.S. Both are secured on assets of
the Group.

<PAGE>

17 Creditors, Amounts Falling Due After More Than One Year

                                                         March 31,    March 31,
                                                           1998         1999
                                                         ---------    ---------
                                                          (pound)      (pound)
                                                           '000         '000

U.S.$ 6.25% Convertible Bonds                              28,995       30,333
Obligations under finance leases:
 Due between one and two years                                342          137
 Due between two and five years                               117           15
Other creditors                                                --          328
                                                           ------       ------
                                                           29,454       30,813
                                                           ======       ======

In April 1997 the Group issued U.S.$50 million of 6.25% convertible bonds. The
bonds are convertible after August 31, 1997 and on or prior to July 24, 2002
into ordinary shares of 10p each of Eidos at an initial conversion price of
(pound)10.95 per share and with a fixed rate of exchange on conversion of
U.S.$1.5965 = (pound)1.00. Convertible bonds are stated net of issue costs.
During 1998 U.S.$100,000 of bonds were converted. No bonds were converted during
1999.

The bonds are redeemable at the option of the Company on or after August 14,
1999 on achievement of certain share performance criteria or in certain other
limited circumstances.

The bonds contain certain covenants that, among other things, limit the ability
of the Company and its subsidiaries to create liens over its assets, transfer or
lease substantial portions of assets and to enter into certain consolidations or
mergers.

18 Fair Values of Financial Instruments

U.S. GAAP requires disclosure of an estimate of the fair values of certain
financial instruments, whether or not recognized in the balance sheet. Fair
value estimates are made at a specific point in time, based on relevant market
information and information about the financial instrument. These estimates are
subjective in nature and involve uncertainties and matters of significant
judgment, and therefore cannot be determined precisely. Changes in assumptions
could significantly affect the estimates.

Fair values have been estimated using the following methods and assumptions:

Long term investments (excluding equity investments in associated companies) --
The fair value of listed investments is based on year end quoted market prices.
For other investments for which there are no quoted market prices, it is assumed
that the carrying value is approximately equal to the fair value. The standard
does not require an estimate of the fair values of equity investments in
associated companies.

Current assets and liabilities -- Financial instruments included within current
assets and liabilities (excluding borrowings) are generally short term in nature
and accordingly their fair values approximate to their book values.

Long term receivables and liabilities -- The fair values of financial
instruments included within long term receivables and liabilities (excluding
borrowings) were based on discounted cash flow models using appropriate market
interest rates. Amounts payable under finance leases are exempt from U.S. GAAP
fair value disclosure requirements.

<PAGE>

18 Fair Values of Financial Instruments (Continued)

Convertible bonds -- The fair values of quoted long term borrowings are based on
year end mid-market quoted prices.

Foreign exchange forward contracts and options -- The Company enters into
foreign exchange contracts and options in order to manage its foreign currency
exposure to its DM, FFr and U.S.$ receivables. The fair value of these financial
instruments was estimated using year end exchange rates.

The carrying amounts and estimated fair values of the Group's outstanding
financial instruments, where there is a difference between the net carrying
amount and estimated fair value, are as follows:

<TABLE>
<CAPTION>
                                                March 31, 1998        March 31, 1999
                                            ---------------------  ---------------------
                                               Net      Estimated     Net      Estimated
                                            carrying       fair    carrying       fair
                                             amount       value     amount       value
                                            --------    ---------  --------    ---------
                                             (pound)     (pound)    (pound)     (pound)
                                              '000        '000       '000        '000
<S>                                          <C>          <C>       <C>          <C>
Long term investments excluding
investments in associated companies          11,578       24,112    12,160       25,165
Borrowings                                  (28,995)     (33,425)  (30,994)     (58,597)
Foreign exchange forward contracts,
options and swaps                                --           99        --          (29)
</TABLE>

At March 31, 1999 a currency swap to sell U.S.$ 7.5 million was open. The
contract matures within three months of the year end.

19 Deferred Taxation

                                                     March 31,    March 31,
                                                       1998         1999
                                                     ---------    ---------
                                                      (pound)      (pound)
                                                       '000         '000
Unrecognized
Excess of tax allowances over book
depreciation of fixed assets                            (401)         (760)
Other timing differences                              (5,642)       (6,581)
Tax effect of losses carried forward                  (1,187)       (1,002)
                                                      ------        ------
Unrecognized deferred tax asset                       (7,230)       (8,343)
                                                      ======        ======

                                                     March 31,    March 31,
                                                       1998         1999
                                                     ---------    ---------
                                                      (pound)      (pound)
                                                       '000         '000
Recognized
Other timing differences                              (4,052)       (1,277)
Tax effect of losses carried forward                      --          (619)
                                                       -----         -----
                                                      (4,052)       (1,896)
                                                      ======        ======
<PAGE>

20 Share Capital

                                          March 31,     March 31,
                                            1998          1999
                                          ---------     ---------
                                        (pounds)'000  (pounds)'000
Authorized
March 31, 1998 : 28,500,000
March 31, 1999 : 28,500,000
Ordinary Shares of 10p each                   2,850         2,850
                                          =========     =========

Allotted, called up and fully paid
March 31, 1998 : 17,110,073
March 31, 1999 : 17,282,280
Ordinary Shares of 10p each                   1,711         1,728
                                          =========     =========

During the year 162,257 ordinary shares were allotted following the exercise of
Eidos options and 9,950 were allotted in conjunction with the U.S. stock
purchase plan.

On April 1, 1997, 29,639 shares were allotted to acquire a minority state in
Black Dragon Productions, Inc. and on April 21, 1997 55,000 shares were allotted
to acquire a minority stake in Sports Interactive Limited. During 1998 163,306
shares were allotted following the exercise of Eidos options and 5,720 following
the conversion of $100,000 of bonds.

On April 22, 1996, 5,739,088 shares were placed on the market following the
acquisition of CentreGold plc. On December 12, 1996, 3,000,000 shares were
placed on the market, following the ADR issue and Nasdaq listing. On August 30,
1996 30,850 shares were allotted to acquire 85% of Naked Records Limited. In
addition, between August 8, 1996 and March 14, 1997, 203,878 shares were
allotted to acquire minority stakes in Hothouse Holdings Limited, Pure
Entertainment Limited, Innerloop Technologies and Tigon Software Limited and
between April 25, 1996 and February 26, 1997, 516,929 shares were allotted
following the exercise of Eidos Interactive share options and warrants, and
Eidos options and warrants.

On October 18, 1995, 1,680,000 shares were placed on the market and 2,933,162
shares were issued as consideration for the acquisition of Domark Group Limited,
Simis Limited and the Big Red Software Company Limited. On November 17, 1995,
85,000 shares were issued in consideration for future royalties at 538p per
share.
<PAGE>

21 Stock Options

The Eidos stock option schemes provide for the granting of options to purchase
shares to directors and employees of the Company and its subsidiaries up to a
maximum of 10% of the issued share capital of the Company immediately prior to
the day any options are granted. The option price may not be less than the
higher of the nominal value of one Eidos share or the fair market value of an
Eidos share on the date the option is granted.

In general the periods of the Approved and Unapproved Scheme options are ten
years and seven years respectively. In addition, certain U.S. employees have
been granted options under the U.S. Stock Option Plan and the Crystal Dynamics
Stock Option Plan. These also have a seven year and ten year term respectively.

Options are generally exercisable three years after being granted and are on a
one for one basis with no specific performance criteria. Options held under the
Crystal Dynamics Stock Option Plan were are vested on November 5, 1998 (date of
the acquisition).

The following options for 10p ordinary shares were open at March 31, 1999:

<TABLE>
<CAPTION>
                                       Number of
                                   shares over which  Option exercise
                                    options granted        price        Option exercise period
                                    ---------------        -----        ----------------------
<S>                                    <C>                <C>             <C>
Approved Scheme                         13,505               115p         04/05/96 - 04/04/05
                                        10,000            343.33p         07/21/97 - 07/19/04
                                        21,000               350p         03/11/98 - 03/09/05
                                         3,829            783.33p         09/11/01 - 09/10/08
                                         3,826               784p         04/25/99 - 04/25/06
                                         3,826               784p         04/25/99 - 10/24/99
                                         1,200               792p         04/03/99 - 10/02/99
                                        34,220               792p         04/03/99 - 04/01/06
                                       102,556             857.5p         01/21/00 - 01/19/07
                                         3,074             857.5p         01/21/00 - 07/20/00
Unapproved Scheme                       66,700            343.33p         07/21/97 - 07/19/01
                                        36,100               350p         03/11/98 - 03/09/02
                                       415,000               585p         10/14/01 - 10/13/05
                                       199,362            783.33p         09/11/01 - 09/10/05
                                        36,174               784p         04/25/99 - 04/24/03
                                        36,174               784p         04/25/99 - 10/24/99
                                       187,774               792p         04/03/99 - 04/01/03
                                         1,426             857.5p         01/21/00 - 07/20/00
                                        92,743             857.5p         01/21/00 - 01/19/04
                                        25,104             857.5p         10/16/00 - 10/14/04
U.S. Stock Option Plan                  31,342             $13.08         04/03/99 - 04/01/03
                                        67,305             $14.16         01/21/00 - 01/19/04
Crystal Dynamics Stock Option Plan       1,100              $5.51         11/05/98 - 12/15/04*
                                        86,796              $6.89         11/05/98 - 12/15/07*
</TABLE>

* Latest end date shown (range of end dates for each price band).
<PAGE>

21 Stock Options (Continued)

These options include those granted to directors of the Company which are also
detailed in Note 5.

The table below summarizes the movements in stocks under options:

<TABLE>
<CAPTION>
                                                  Eidos stock              Domark stock
                                                     option      Eidos       options         Domark
                                                    schemes     warrants     schemes        warrants
                                                    -------     --------     -------        --------
<S>                                               <C>          <C>           <C>         <C>
Shares under option:
Outstanding at March 31, 1996                        243,166     166,973       39,850            18,414
 Granted                                             930,818      80,145           --             8,838
 Exercised                                           (19,471)   (247,118)      (2,890)          (15,968)
 Cancelled                                           (64,029)         --      (36,960)              (73)
                                                  ----------   ---------     --------    --------------
Outstanding at March 31, 1997                      1,090,484          --           --            11,211
 Granted                                              56,446          --           --                --
 Exercised                                           (30,710)         --           --            (7,575)
 Cancelled                                          (237,796)         --           --                --
                                                  ----------   ---------     --------    --------------
Outstanding at March 31, 1998                        878,424          --           --             3,636
 Granted                                             778,469          --           --                --
 Exercised                                          (162,257)         --           --                --
 Cancelled                                           (14,500)         --           --                --
                                                  ----------   ---------     --------    --------------
Outstanding at March 31, 1999                      1,480,136          --           --             3,636

As if converted to Eidos Ordinary Shares           1,480,136          --           --            56,576
                                                  ==========   =========     ========    ==============
Options available to grant at March 31, 1999          65,654          --           --                --
                                                  ==========   =========     ========    ==============
Options exercisable:
 At March 31, 1997                                    99,182          --           --            11,211
 At March 31, 1998                                   237,180          --           --             3,636
 At March 31, 1999                                   235,201          --           --             3,636
Weighted average price of options exercisable:
 At March 31, 1997                                   530.34p          --           --     (pounds)45.21
 At March 31, 1998                                   404.41p          --           --    (pounds)105.03
 At March 31, 1999                                   363.06p          --           --    (pounds)105.03
</TABLE>
<PAGE>

21 Stock Options (Continued)

<TABLE>
<CAPTION>
                                                  Eidos stock              Domark stock
                                                     option      Eidos       options         Domark
                                                    schemes     warrants     schemes        warrants
                                                    -------     --------     -------        --------
<S>                                               <C>          <C>           <C>         <C>
Average option price per share granted:
 Year ended March 31, 1997                           804.13p        675p           --    (pounds)105.03
 Year ended March 31, 1998                           821.53p          --           --                --
 Year ended March 31, 1999                           598.30p          --           --                --
Average price of options exercised:
 Year ended March 31, 1997                           282.54p     290.56p          70p     (pounds)16.50
 Year ended March 31, 1998                           284.87p          --           --     (pounds)16.50
 Year ended March 31, 1999                           482.06p          --           --                --
Average price of options lapsed:
 Year ended March 31, 1997                           792.00p          --          70p    (pounds)105.03
 Year ended March 31, 1998                           745.38p          --           --                --
 Year ended March 31, 1999                           848.47p          --           --                --
Average price of options open:
 At March 31, 1996                                   346.11p     106.04p          70p     (pounds)16.50
 At March 31, 1997                                   697.98p          --           --     (pounds)45.21
 At March 31, 1998                                   712.80p          --           --    (pounds)105.03
 At March 31, 1999                                   678.54p          --           --    (pounds)105.03
</TABLE>

In summary, the following options to acquire shares in the Company were open at
March 31, 1999:

<TABLE>
<CAPTION>
                                        Weighted average remaining   Weighted average
Range of exercise prices       Number         contractual life        exercise price
------------------------       ------         ----------------        --------------
      <S>                   <C>                  <C>                      <C>
      101p - 150p              13,505            6.0 years                115.00p
      301p - 350p             134,900            3.3 years                346.14p
      401p - 450p              86,796            7.6 years                427.95p
      551p - 600p             415,000            6.5 years                585.00p
      751p - 800p             506,385            5.0 years                787.26p
      851p - 900p             323,550            5.7 years                857.71p
      -----------           ---------            ---------                -------
      101p - 900p           1,480,136            5.6 years                678.54p
      ===========           =========            =========                =======
</TABLE>
<PAGE>

22 Acquisition of Subsidiary Undertaking

On November 5, 1998 Eidos acquired Crystal Dynamics, Inc., a software
development company, for a total consideration of $49.1 million (including
acquisition costs).

The acquisition has been accounted for using acquisition accounting (the
purchase method for U.S. GAAP).

The assets and liabilities of Crystal Dynamics, Inc. are set out below:

<TABLE>
<CAPTION>
                                                                                           Sterling
                                                                                          equivalent
                                                 Accounting   Other fair                      at
                                                   policy       value                      November
                                     Book value  alignments  adjustments   Fair value      5, 1998
                                     ----------  ----------  -----------   ----------      -------
                                       $'000       $'000        $'000        $'000       (pounds)'000
<S>                                     <C>           <C>      <C>           <C>             <C>
Fixed assets                              378          --          --           378             229
Current assets
Debtors                                   953          --       1,556         2,509           1,521
Cash                                      758          --          --           758             459
                                      -------      ------      ------       -------         -------
Total assets                            2,089          --       1,556         3,645           2,209
Creditors                                (956)        272      (2,000)       (2,684)         (1,627)
                                      -------      ------      ------       -------         -------
Net assets                              1,133         272        (444)          961             582
                                      =======      ======      ======
Goodwill                                                                     48,160          29,188
                                                                            -------         -------
                                                                             49,121          29,770
                                                                            =======         =======

Satisfied by
Cash                                                                         23,054          13,972
Deferred cash consideration                                                  23,055          13,973
Options allotted                                                                891             540
Acquisition expenses                                                          2,121           1,285
                                                                            -------         -------
                                                                             49,121          29,770
                                                                            =======         =======
</TABLE>

The accounting policy alignment related to the reversal of a vacation pay
accrual.

The fair value adjustments comprised accruals for guaranteed royalties and
acquisition costs of $1.8 million, the reversal of accrued dividends of $0.2
million, the reversal of pre-acquisition funding of $0.4 million and the
establishment of a deferred tax asset of $1.6 million for brought forward tax
losses.

The deferred consideration was paid on April 1, 1999.
<PAGE>

22 Acquisition of Subsidiary Undertaking (Continued)

Analysis of the net outflow of cash and cash equivalents in respect of the
purchase of Crystal Dynamics, Inc.

<TABLE>
<CAPTION>
                                                                                     Sterling
                                                                                    equivalent
                                                                                        at
                                                                                     November
                                                                                        5,
                                                                                       1998
                                                                                   ------------
                                                                         $'000     (pounds)'000
<S>                                                                     <C>           <C>
Cash consideration including acquisition expenses                       (25,175)      (15,257)
Cash at hand and in bank acquired                                           758           459
                                                                        -------      --------
Net out flow of cash and cash equivalents in respect of the purchase    (24,417)      (14,798)
                                                                        =======      ========
</TABLE>

During the period April 1, 1998 to November 5, 1998 Crystal Dynamics reported a
net loss of U.S.$5,569,000 on turnover of U.S.$4,037,000. The net loss for the
year ended March 31, 1998 was U.S.$1,575,000.

The unaudited pro-forma condensed consolidated Statements of Operations for the
years ended March 31, 1999 and 1998 shown below give effect to the acquisition
of Crystal as if it had occurred on April 1, 1997. This is based on the
historical results of operations of the Company and of Crystal for the years
ended March 31, 1999 and 1998. They should be read in conjunction with and are
qualified by the historical financial statements of the Company, Crystal and
notes thereto.

The pro-forma financial information has been prepared in accordance with
generally accepted accounting principles in the United Kingdom ("U.K. GAAP") and
gives effect to the acquisition of Crystal using the purchase method of
accounting.

The pro-forma financial information is intended for informational purposes only
and is not necessarily indicative of the future financial position or future
results of operations of the consolidated Company after the acquisition of
Crystal, or of the financial position or results of operations of the
consolidated company that would have actually occurred had the acquisition of
Crystal been effected as of the date or on the first date of the period
presented.

                                                Year ended         Year ended
                                                 March 31,          March 31,
                                                   1998               1999
                                                 ---------          ---------
                                                 Unaudited          Unaudited
                                                 Pro-forma          Pro-forma
                                                 ---------          --------
                                                (pounds)'000      (pounds)'000
Turnover - continuing operations                   144,960           227,200
                                                  --------         ---------
Gross profit                                        97,558           145,430
Net operating expenses                             (89,192)         (115,442)
                                                  --------         ---------
Profit on ordinary activities before interest        8,366            29,988
Loss on sale/termination of operations              (1,852)               --
Net interest and similar charges                      (718)           (1,223)
                                                  --------         ---------
Profit on ordinary activities before taxation        5,796            28,765
                                                  --------         ---------
Net profit/(loss) after tax                            181            15,095
                                                  --------         ---------
Basic earnings per share                              1.1p             88.1p
Diluted earnings per share                            1.1p             80.4p

<PAGE>

Notes:

1. The results of Crystal Dynamics, Inc. have been translated at a fixed
convenience exchange rate of $1.65=(pounds)1.
2. In September 1998 the Company entered into a software distribution
agreement with Crystal in which the Company agreed to distribute one of
Crystal's software titles. During the period September 1, 1998 to November 5,
1998 the Company paid approximately (pounds)1.5 million to Crystal under the
terms of this agreement. The pro-forma adjustment reflects the combined
operations in which inter-company revenue and expense are eliminated.
3. The pro-forma adjustments reflect amortization of goodwill as if the
transaction had occurred on April 1, 1997. This additional amortization
expense is (pounds)15.5 million ((pounds)9.7 million in fiscal year 1998 and
(pounds)5.8 million in fiscal year 1999).

23 Analysis of Net Funds

<TABLE>
<CAPTION>
                        March 31,     Change in      March 31,      Change in      March 31,      Change in     March 31,
                           1996         period          1997          period          1998          period         1999
                        ---------     ---------      ---------      ---------      ---------      ---------     ---------
                      (pounds)'000   (pounds)'000   (pounds)'000   (pounds)'000   (pounds)'000  (pounds)'000  (pounds)'000
<S>                      <C>            <C>            <C>            <C>            <C>            <C>           <C>
Net cash:
Cash at bank and in         470         17,055         17,525         24,988         42,513         5,707         48,220
hand
Bank overdraft             (921)           921             --             --             --            --             --
                        -------        -------        -------        -------        -------       -------      ---------
                           (451)        17,976         17,525         24,988         42,513         5,707         48,220
Debt:
Finance leases             (940)          (186)        (1,126)           (90)        (1,216)          701           (515)
Convertible bonds            --             --             --        (29,877)       (29,877)       (1,117)       (30,994)
                        -------        -------        -------        -------        -------       -------      ---------
                         (1,391)        17,790         16,399         (4,979)        11,420         5,291         16,711
                        =======        =======        =======        =======        =======       =======      =========
</TABLE>
<PAGE>

23 Analysis of Net Funds (Continued)

Reconciliation of Net Cash Flow to Movement in Net Funds

<TABLE>
<CAPTION>
                                                  Year ended       Year ended      Year ended
                                                   March 31,        March 31,       March 31,
                                                     1997             1998            1999
                                                  ----------       ----------      ----------
                                                 (pounds)'000     (pounds)'000    (pounds)'000
<S>                                                 <C>             <C>              <C>
Increase in cash in period                          17,976           25,140           5,311
Cash inflow from bond issue                             --          (30,864)             --
Cash outflow from decrease in lease financing        1,662              810             761
Change in net funds resulting from cash flows       19,638           (4,914)          6,072
Conversion of bonds                                     --               63              --
New finance leases                                  (1,848)            (900)            (60)
Exchange rate movements                                 --              772            (721)
Movement in net funds in period                     17,790           (4,979)          5,291
Net funds at beginning of period                    (1,391)          16,399          11,420
                                                   -------          -------         -------
Net funds at end of period                          16,399           11,420          16,711
                                                   =======          =======         =======
</TABLE>

24 Share Premium Account, Reserves and Reconciliation of Movements in
Shareholders' Funds

The balances as at each balance sheet date and the movements in the periods
are set out in the Consolidated Statements of Changes in Shareholders' Equity
on page F-6.

The merger reserve in the Group was created on the issue of shares in Eidos
to acquire Domark Group Limited, Simis Limited, The Big Red Software Company
Limited and CentreGold plc. The Company has recorded the investments at the
nominal value of shares issued together with the cash and the expenses
incurred on the acquisition.

25 Contingent Liabilities and Capital Commitments

The Company, together with certain other companies within the Group, had
given a guarantee secured on its assets in respect of the Group's U.K. and
U.S. bank overdraft facilities at March 31, 1999.

In addition, the Company has given guarantees in respect of leasehold
liabilities of Hothouse Holdings Limited to a maximum of (pounds)36,000 per
annum until September 2006.

Royalty, licensing and development costs

As at March 31, 1999 the Group had contracted to make payments totaling
(pounds)8.1 million to various licensors and developers involved in providing
games software for the Group's use. (pounds)7.0 million is payable within one
year and the remaining (pounds)1.1 million is due within one to two years. All
development contracts can be terminated at any time without any penalties.
<PAGE>

26 Lease Commitments

The Group had the following annual commitments under non-cancelable operating
leases, analyzed into leases which expire as follows:

                                                      Plant, machinery, motor
                                                       vehicles and computer
                            Land and buildings               equipment
                            ------------------               ---------
                         March 31,      March 31,     March 31,      March 31,
                           1998           1999          1998           1999
                         ---------      ---------     ---------      ---------
                       (pounds)'000   (pounds)'000  (pounds)'000   (pounds)'000
Within one year              99             67            82            163
In two to five years        444            478           358            376
After five years            395          1,296             6             --
                           ----          -----          ----           ----
                            938          1,841           446            539
                           ====          =====          ====           ====

Leases

The Company leases plant and machinery, motor vehicles, and land and building
under various non-cancelable operating lease agreements. In addition, the
Company has entered into various capital lease agreements for computer equipment
and motor vehicles. The following table presents future obligations under such
leases.

Future minimum lease commitments at March 31, 1999 are as follows:

Years ending March 31,                               Capital      Operating
                                                     leases         leases
                                                     -------      ---------
                                                  (pounds)'000  (pounds)'000
2000                                                    402         2,380
2001                                                    146         2,150
2002                                                     20         1,820
2003                                                     --         1,617
Thereafter                                               --         1,339
                                                      -----
Total future minimum lease payments                     568
Less: amounts representing interest                     (53)
                                                      -----
Present value of future minimum lease payments          515
Less: amount due within one year                       (363)
                                                      -----
Long-term portion                                       152
                                                      =====

Rental expenses under operating leases totaled (pounds)330,000 for the year
ended March 31, 1997 and (pounds)1,396,000 for the year ended March 31, 1998 and
(pounds)1,708,000 for the year ended March 31, 1999.
<PAGE>

27 Pension Commitments

Effective from January 1, 1997 the Group has operated a defined contribution
private pension plan. The assets of the plan are held separately from those of
the Group in an independently administered fund. Defined contributions are paid
to the plan and charged to income account so as to spread the cost of pensions
over the employees' and directors' working lives within the Group. Contributions
paid by the Group during the current year were (pounds)403,000 (1998:
(pounds)380,000, 1997: (pounds)38,082). At the year end no contributions were
outstanding.

In addition one director is a member of the Core Design Pension Scheme. This is
also a defined contribution scheme. Contributions paid by the Group during the
current year were (pounds)20,500 (1998: (pounds)19,000 1997: (pounds)15,000). No
contributions were outstanding at the year end.

All overseas pension arrangements are also of a defined contribution nature.
Contributions for the year were (pounds)160,000 (1998: (pounds)60,000).

28 Summary of Major Differences between Generally Accepted Accounting Principles
in the United Kingdom and the United States

The consolidated financial statements are prepared in accordance with accounting
principles generally accepted in the United Kingdom. Such principles differ in
certain respects from U.S. GAAP. A summary of the most significant differences
applicable to the Group is set out below.

(1) Business combinations

Under U.S. GAAP, goodwill arising on acquisitions accounted for under the
purchase method is amortized over the estimated useful life of the goodwill,
with amortized amounts being included in general and administrative expenses.
Each of the Company's acquisitions has been accounted for using the purchase
method for U.S. GAAP purposes. Each of the businesses acquired by the Company
was involved in the development of computer games software. The Company acquired
such businesses for their established names in the computer games software
market, for the experience of their personnel in the development of computer
game software, and for an aggregate of in excess of 25 games (together with
underlying technologies) which were under development by or on behalf of such
businesses. Upon review of the acquired companies' technology, the Company
determined that a portion of such technology had neither reached technological
feasibility nor had alternative future uses and that completion of the games
under development would require substantial additional effort and expenditure by
the Company. Accordingly, for U.S. GAAP purposes, the Company treated an
aggregate of (pounds)24.4 million as in-process research and development, all of
which was expensed in the periods in which the related acquisitions were
completed (1996: (pounds)8.2 million, 1997: (pounds)13.8 million and 1999:
(pounds)2.4 million). The Company also has recorded (pounds)49.4 million of
goodwill for U.S. GAAP purposes in connection with acquisitions (1996:
(pounds)7.4 million, 1997: (pounds)11.1 million, 1998: (pounds)4.0 million and
1999: (pounds)26.9 million). The Company recognizes the fast changing industry
in which it is involved and believes the remaining goodwill has a useful life of
3 years.

Under U.K. GAAP, goodwill arising on consolidation of acquisitions (which
represents the excess of the fair value of the consideration paid in the
acquisition over the fair value of the identifiable net assets acquired) prior
to April 1, 1998 was written-off immediately against related reserves, and had
no impact upon the Company's statement of operations until disposal. Goodwill
arising after April 1, 1998 is being capitalized and amortized in a method
similar to U.S. GAAP however there is no charge for in-process research and
development. The Company is therefore recording different amounts of capitalized
goodwill and amortization under U.K. GAAP than it is under U.S. GAAP. Currently
the amortization charge under U.S. GAAP exceeds that under U.K. GAAP because of
the charges for companies acquired prior to April 1, 1998. It is anticipated
that in
<PAGE>

28 Summary of Major Differences between Generally Accepted Accounting Principles
in the United Kingdom and the United States (Continued)

the future the difference will decrease and eventually the U.K. GAAP charge will
exceed the U.S. GAAP charge because of the one-off in-process research and
development charges.

Additionally U.K. GAAP requires that on subsequent disposal or closure of a
previously acquired business, any goodwill previously taken directly to
shareholders' equity is reflected in the income or loss on disposal. Under U.S.
GAAP the appropriate balance to be written off on the disposal of the business
is the remaining unamortized balance of goodwill.

For acquisitions prior to April 1, 1998, the benefit of acquired tax losses, as
they are recognised in periods subsequent to the acquisition, are credited to
goodwill for U.S. GAAP purposes and credited to income under U.K.
GAAP. There is no difference in treatment for acquisitions after April 1, 1998.

(2) Computer games software

Under U.K. GAAP, prior to the change in accounting policy on April 1, 1997,
certain software development costs were capitalized as intangible assets.

In these prior periods in accordance with U.S. GAAP, development expenditure
relating to computer games software to be sold was expensed in the period in
which incurred until the specific project had reached technological feasibility.
Development costs incurred after establishing technological feasibility were
capitalized and amortized on a product by product basis over the estimated life
of the product (generally three months).

In prior periods, under U.S. and U.K. GAAP royalty advances to third party
developers and licensors were treated as prepaid royalties and classified under
receivables. Royalty advances were expensed at the contractual royalty rate as
cost of sales based on actual net product sales. Management evaluated the future
realization of royalty advances quarterly, and charged to cost of sales any
amounts management deemed unlikely to be recovered at the contractual royalty
rate through product sales.

Following the accounting changes there is no longer any difference between the
U.K. and U.S. GAAP treatment of research and development costs and royalty
advances as all internal and external development costs and royalty advances are
expensed as incurred.

Under U.K. GAAP the results for 1997 and earlier have been restated to expense
all development expenditure and royalty advances as incurred .

Change in U.S. GAAP accounting principle and estimate

In 1998 Eidos changed its accounting principle for royalty advances to third
party developers and licensors concurrently with a change in the accounting
estimate of the amounts recoverable in respect of the royalty advance asset
recorded at March 31, 1997. In prior periods Eidos capitalized royalty advances
to third party developers as a prepayment in current assets and evaluated the
realization of these royalty advances on a quarterly basis. The complexity and
rate of change of the underlying technology and consequent difficulty in
evaluating the achievement of technological feasibility together with increased
competitiveness within the market place, have brought increased difficulty to
this evaluation process and given the recent significant increase in the amounts
advanced to third party developers, management have decided to change this
accounting principle and expense all royalty advances to third party developers
until technological feasibility and net realizable value is confirmed, at which
time royalty advances will be capitalized.
<PAGE>

28 Summary of Major Differences between Generally Accepted Accounting Principles
in the United Kingdom and the United States (Continued)

Because the effect of this change in accounting principle was inseparable from
the effect of the change in accounting estimate Eidos recorded in fiscal 1998 a
cumulative charge to operating income of (pounds)15.8 million ((pounds)0.93 per
share) of which (pounds)10.1 million related to prior periods.

(3) Deferred taxation

U.K. GAAP requires that no provision for deferred taxation should be made if
there is reasonable evidence that such taxation will not be payable within the
foreseeable future. U.S. GAAP requires full provision for deferred taxation
liabilities, and permits deferred tax assets to be recognized if their
realization is considered to be more likely than not.

Application of U.S. GAAP as described above has the following effect on the
Group's consolidated net loss and shareholders' equity:

<TABLE>
<CAPTION>
                                                                              Year ended     Year ended     Year ended
                                                                              March 31,       March 31,      March 31,
                                                                                 1997           1998           1999
                                                                                 ----           ----           ----
                                                                            (pounds)'000    (pounds)'000   (pounds)'000
<S>                                                                        <C>             <C>             <C>
Net income/(loss) according to the consolidated statements of operations          (8,281)         10,865         24,250
(prepared under U.K. GAAP)
Reverse prior period adjustments                                                  14,457              --             --
                                                                           -------------   -------------   ------------
                                                                                   6,176          10,865         24,250
Business combinations:
 Amortization of goodwill                                                         (4,907)         (8,060)        (4,072)
 In-process R&D                                                                  (13,826)             --         (2,368)
 Stock compensation expense                                                           --              --           (247)
 Loss on sale or termination of operations                                            --           1,800             --
Computer games software:
 Research and development costs                                                     (991)             --             --
 Change in accounting principle/estimate                                              --         (10,125)            --
                                                                           -------------   -------------   ------------
Net income/(loss) in accordance with U.S. GAAP                                   (13,548)         (5,520)        17,563
                                                                           =============   =============   ============
Earnings/(loss) per share in accordance with U.S. GAAP
 Basic                                                                     (pounds)(0.97)  (pounds)(0.33)  (pounds)1.03
 Diluted                                                                   (pounds)(0.97)  (pounds)(0.33)  (pounds)0.92
</TABLE>
<PAGE>

28 Summary of Major Differences between Generally Accepted Accounting Principles
in the United Kingdom and the United States (Continued)

<TABLE>
<CAPTION>
                                                                                          March 31,      March 31,
                                                                                            1998           1999
                                                                                          ---------      ---------
                                                                                        (pounds)'000   (pounds)'000
<S>                                                                                     <C>            <C>
Shareholders' equity according to the consolidated balance sheet (prepared under U.K.       40,936         66,532
GAAP)
Goodwill                                                                                    19,605         19,449
Less: amortization                                                                         (12,388)       (16,856)
Less: In-process R&D                                                                            --         (2,368)
Deferred tax                                                                                 2,003          1,993
                                                                                          --------       --------
Shareholders' equity in accordance with U.S. GAAP                                           50,156         68,750
                                                                                          ========       ========
</TABLE>

The tax effects of temporary differences which give rise to deferred taxes are:

<TABLE>
<CAPTION>
                                                                                        (pounds)'000   (pounds)'000
<S>                                                                                     <C>            <C>
Net operating loss carry forward                                                               648          6,513
Other timing differences                                                                    10,634          7,858
Valuation allowance                                                                         (5,227)       (10,482)
                                                                                          --------       --------
Net deferred tax asset (U.S. GAAP)                                                           6,055          3,889
Additional valuation allowance                                                              (2,003)        (1,993)
                                                                                          --------       --------
Net deferred tax asset (U.K. GAAP)                                                           4,052          1,896
                                                                                          ========       ========
</TABLE>

As of March 31, 1999, management of the Company has evaluated the positive
and negative evidence as required by U.S. GAAP, impacting the realizability
of the deferred tax assets. Accordingly, the deferred tax assets have been
partially reserved. Management believes that it is more likely than not that
the net deferred tax asset will be realized.

Consolidated Statements of Cashflow

The consolidated statements of cashflow prepared in accordance with Financial
Reporting Standard No. 1 (revised) on page F-7 present substantially the same
information as that required under U.S. GAAP. Under U.S. GAAP, however, there
are certain differences from U.K. GAAP with regard to classification of items
within the cashflow statement and with regard to the definition of cash and
cash equivalents.

<PAGE>

28 Summary of Major Differences between Generally Accepted Accounting Principles
in the United Kingdom and the United States (Continued)

Under U.K. GAAP, cashflow is presented separately for operating activities,
returns on investments and servicing of finance, taxation, capital expenditure
and financial investment, acquisitions and disposals, and financing activities.
Under U.S. GAAP cashflow is presented separately for operating activities,
investing activities and financing activities. Cashflow from taxation and
returns on investments and servicing of finance would, with the exception of
dividends paid and costs of financing, be included as operating activities under
U.S. GAAP. The payments of dividends and costs of financing would be included
under financing activities under U.S. GAAP.

Under U.S. GAAP, cash and cash equivalents do not include bank overdrafts as is
the case under U.K. GAAP. Under U.S. GAAP such bank overdrafts are presented
within financing activities.

Under U.S. GAAP, capital expenditure and financial investment and acquisitions
and disposals are included in investing activities.

Set out below, for illustrative purposes, is a summary consolidated statement of
cashflow under U.S. GAAP.

<TABLE>
<CAPTION>
                                                           Year          Year          Year
                                                          ended         ended         ended
                                                         March 31,     March 31,     March 31,
                                                           1997          1998          1999
                                                         ---------     ---------     ---------
                                                       (pounds)'000  (pounds)'000  (pounds)'000
<S>                                                       <C>           <C>           <C>
Net cash provided by/(used in) operating activities         4,181        16,519        25,356
Net cash used in investing activities                     (26,396)      (18,667)      (17,589)
Net cash provided by/(used in) financing activities        40,191        27,288        (2,456)
                                                         --------      --------      --------
Net increase/(decrease) in cash and cash equivalents       17,976        25,140         5,311
                                                         ========      ========      ========
</TABLE>

Accounting for stock-based compensation

The Group has adopted only the disclosures required by SFAS No. 123, Accounting
for Stock-Based Compensation, and will continue to recognize stock-based
compensation expenses under APB Opinion No. 25. Accounting for Stock Issued to
Employees. As required, pro-forma net loss, loss per share and weighted-average
grant-date fair value of options granted, based on SFAS 123's fair value
methodology are disclosed below. The fair values of options were determined
assuming an expected average life of five years and risk-free interests ranging
from 5.5% to 9%. Furthermore, volatility of 64% (1998: 68% 1997: 74%) and
dividend yield of nil were assumed. The stock-based compensation expense is
recognized over the vesting period which is generally three years.
<PAGE>

28 Summary of Major Differences between Generally Accepted Accounting Principles
in the United Kingdom and the United States (Continued)

<TABLE>
<CAPTION>
                                                                   Year            Year          Year
                                                                  ended           ended          ended
                                                                March 31,       March 31,      March 31,
                                                                  1997            1998           1999
                                                                ---------       ---------      ---------
In thousands, except per share data                           (pounds)'000    (pounds)'000   (pounds)'000
<S>                                                          <C>             <C>             <C>
Income/(loss) for the period under U.S. GAAP                       (13,548)         (5,520)        17,563
Adjustment:
Stock-based compensation expense under SFAS 123                     (1,483)         (1,974)        (2,325)
                                                             -------------   -------------   ------------
Pro forma income/(loss) for the period                             (15,031)         (7,494)        15,238
                                                             =============   =============   ============
Pro forma earnings/(loss) per share                          (pounds)(1.08)  (pounds)(0.44)  (pounds)0.89
                                                             =============   =============   ============

<CAPTION>
                                                                                              Eidos stock
                                                                                                option
                                                                                                schemes
                                                                                                -------
                                                                                                (pounds)
<S>                                                                                               <C>
Weighted-average grant-date fair value of options granted:
Year ended March 31, 1997                                                                         7.30
Year ended March 31, 1998                                                                         4.73
Year ended March 31, 1999                                                                         4.32
</TABLE>

29 Companies Act 1985

The consolidated financial statements do not constitute "statutory accounts"
within the meaning of the Companies Act 1985 of Great Britain for any of the
periods presented. Statutory accounts for the periods ended March 31, 1998 and
1997 have been filed with the United Kingdom's Registrar of Companies and
statutory accounts for the year ended March 31, 1999 will be filed in due
course. The auditor has reported on these accounts. The reports were unqualified
and did not contain statements under Section 237 (2) or (3) of the Act.

These consolidated financial statements exclude certain parent company
statements and other information required by the Companies Act 1985, however,
they include all material disclosures required by generally accepted accounting
principles in the United Kingdom including those Companies Act 1985 disclosures
relating to the statement of income and balance sheet items.
<PAGE>

30 New Accounting Standards

New U.S. Accounting Standards and Pronouncements Applicable to the Group

SFAS No. 130 - Reporting Comprehensive Income was issued in June 1997 and is
effective for fiscal years beginning after December 15, 1997. Reclassification
of financial statements for earlier periods provided for comparative purposes is
required. It requires that all items that are recognized under the accounting
standard as components of comprehensive income be reported in a financial
statement that is displayed with the same prominence as other financial
statements. It requires that an enterprise (a) classify items of other
comprehensive income by their nature in a financial statement and (b) display
the accumulated balance of other comprehensive income separately from retained
earnings and additional paid-in capital in the equity section of a statement of
financial position. The Company implemented the standard during the year and has
modified its disclosures accordingly.

SFAS No. 131 - Disclosure about Segments of an Enterprise and Related
Information: SFAS No. 131 was issued in June 1997 and is effective for fiscal
years beginning after December 15, 1997. In the initial year of application,
comparative information for earlier years is to be restated. It requires that
companies disclose segment data based on how management makes decisions about
allocating resources to segments and measuring their performance. It also
requires entity wide disclosures about the products and services the entity
provides, the material countries in which it holds assets and reports revenues
and its major customers. The Company has implemented the standard during the
year and has modified its disclosures accordingly.

Statement of Position (SOP) 97-2. Software Revenue Recognition, is effective for
transactions entered into in fiscal years beginning after December 15, 1997
(April 1, 1998 for the Company). SOP 97-2 indicates that revenue for
non-customized software should be recognized when persuasive evidence of an
arrangement exists, the software has been delivered, the Company's selling price
is fixed or determinable and collectibility of the resulting receivable is
probable. The implementation of SOP 97-2 has not had any material impact on the
Company's results of operations.

During January 1998, the American Institute of Certified Public Accountants
(AICPA) issued Statement of Position 98-1 Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use ("SOP 98-1"). SOP 98-1 becomes
effective for all fiscal years beginning after December 15, 1998. The adoption
of SOP 98-1 has not had a material impact on the Company's financial statements.

The AICPA issued Statement of Position 98-5, Reporting on the Costs of Start-Up
Activities ("SOP 98-5") in April 1998 and is effective for fiscal periods
beginning after December 15, 1998. SOP 98-5 provides guidance on the financial
reporting of start-up costs and organization costs. It requires costs of
start-up activities and organization costs to be expensed as incurred. The
adoption of SOP 98-5 has not had a material impact on the Company's financial
statements.

New U.K. Accounting Standards Applicable to the Group

FRS 9 - Associates and Joint Ventures: In December 1997, the Accounting
Standards Board in the United Kingdom issued Financial Reporting Standard No. 9
Associates and Joint Ventures (FRS 9). FRS 9 sets out the definitions and
accounting treatments for associated companies, joint ventures and joint
arrangements. It requires the Group's share of results of associated companies
to be analysed between operating income, interest, exceptional items and
taxation. FRS 9 requires the sales of joint ventures to be separately disclosed,
though the underlying accounting is the same as for associated companies. FRS 9
was effective for accounting periods ending on or after June 23, 1998. This
standard was adopted by the Company during 1999 however it has not had any
significant impact.

FRS 10 - Goodwill and Intangible Assets: In December 1997, the Accounting
Standards Board in the United Kingdom issued Financial Reporting Standard No.
10 Goodwill and Intangible Assets (FRS 10). FRS 10 required that purchased
goodwill and intangible assets, with an estimated useful life of twenty years
or less, should be capitalized as assets and amortized over their life. FRS
10 was effective for accounting periods ending on or after December 23, 1998
and the Company adopted it during 1999. Accordingly goodwill arising on the
acquisition of Crystal Dynamics was capitalized and is being amortized over
the estimated useful economic life of three years. As a result an
amortization charge of (pounds)4.1 million was recorded in the year ended
March 31, 1999. The standard allowed for, but did not require, reinstatement
of goodwill previously eliminated against retained surplus and the Company
decided not to reinstate its past goodwill. This goodwill will remain in
reserves until such time as it becomes

<PAGE>

necessary to charge it to income (usually in connection with the sale or
closure of the related business). It has, however, been netted off against
the profit and loss reserve rather than being shown separately within
reserves.

In addition, the Group has adopted FRS 14 - Earnings per Share, which was
effective for accounting periods ending on or after December 23, 1998 and
changed the way in which earnings per share and diluted earnings per share were
calculated (for U.K. GAAP purposes). The Group's diluted earnings per share has
now been calculated using the Treasury Stock method. The comparative figure for
the year ended March 31, 1998 had to be recalculated and restated.

FRS 15 - Tangible Fixed Assets: The Accounting Standards Board in the United
Kingdom has recently issued Financial Reporting Standard No.15 Tangible Fixed
Assets which focuses on initial measurement, valuation and depreciation of
all tangible fixed assets. The standard is effective for all accounting
periods ending on or after March 23, 2000 and hence will apply to the
Company's March 31, 2000 accounting period. It is not anticipated, however,
that this standard will have a significant impact on the Group's results
since the treatment of computer equipment and fixtures and fittings, which
comprise the majority of the Group's tangible fixed assets, is largely
unchanged.

<PAGE>

                        REGISTERED OFFICE OF THE COMPANY
                             Wimbledon Bridge House
                                1, Hartfield Road
                                    Wimbledon
                                 London SW19 3RU

                          LEGAL ADVISERS TO THE COMPANY

in respect of United States law             in respect of English law
      Cooley Godward LLP          Manches & Co            Taylor Joynson Garrett
     Five Palo Alto Square        Aldwych House                  Carmelite
      3000 El Camino Real          81 Aldwych             50 Victoria Embankment
           Palo Alto             London WC2B 4RP                Blackfriars
           CA 94306                                           London EC4Y 0DX
             USA.

                             AUDITORS TO THE COMPANY
                                 KPMG Audit Plc
                               8 Salisbury Square
                                 London EC4Y 8BB
<PAGE>

For Immediate Release                                               10 June 1999

                                   Eidos plc
                                   ---------
                                  Board Change

Eidos plc ("Eidos"), one of the world's leading publishers and developers of
entertainment software, announces that Stephen Streater has resigned as a
director.

Charles Cornwall, Chief Executive, said:

"On behalf of Eidos I would like to thank Stephen for his contribution to Eidos
over the years. Stephen helped found Eidos in 1990 as a company involved in
video compression technology. Video compression has remained the principal focus
of his work and he now feels he can best continue this within a dedicated new
start-up venture. We wish him all the best for the future."

 ...ends...

Contact:
Charles Cornwall, CEO:                                             0181 636 3000
Jeremy Lewis, CFO:                                                 0181 636 3000
Neil Camp, Binns & Co:                                             0171 786 9600
Ryan Barr, Brainerd Communicators:                              001 212 986 6667

                       Issued by Binns & Co: 0171-786 9600
<PAGE>

This press release is not intended for and may not be distributed
in the United States, or to US persons.
For Immediate Release                                                27 May 1999

                                    Eidos plc
                                    ---------
                      Fourth Quarter and Full Year Results

          Fourth quarter revenues increase 67% to (pounds)57.2 million
          Fourth quarter profit before tax and goodwill increases 130%
                             to (pounds)8.1 million

            Full year revenues increase 65% to (pounds)226.3 million
 Full year profit before tax and goodwill increases 154% to (pounds)42.0 million

Eidos plc ("Eidos"), one of the world's leading publishers and developers of
entertainment software, announces results for the quarter and year ended 31
March 1999.

Mr Charles Cornwall, Chief Executive Officer, says:

"A strong fourth quarter rounds off our best full year results to date, with
revenues for the year up from (pounds)137.2m to (pounds)226.3m and operating
profits up from (pounds)19.5m to (pounds)39.2m. We believe the strength of the
results reflect our disciplined approach to publishing coupled with a broad
portfolio of high quality releases. We set ourselves the highest standards of
publishing excellence and content acquisition in the firm belief that this will
translate into continued long-term growth and profitability for the Group."

Highlights of the Chairman's Statement

o     Fourth quarter turnover up 67% to (pounds)57.2 million from (pounds)34.2
      million
o     Full year turnover up 65% to (pounds)226.3 million from (pounds)137.2
      million
o     Nineteen new titles launched in the year
o     Eight titles including catalogue achieved sales in excess of 350,000 units
o     Championship Manager 3 launched on 26 March to become the UK's fastest
      ever selling PC CD title
o     Fourth quarter profit before tax and goodwill up 130% to (pounds)8.1
      million from (pounds)3.5 million
o     Full year profit before tax and goodwill up 154% to (pounds)42.0 million
      from (pounds)16.5 million
o     Publishing deals signed with Free Radical Design and Michael Crichton's
      Timeline Studios
o     Sequel rights to Thief: The Dark Project signed with Looking Glass Studios
o     Long term publishing deal signed with Capcom for European and Australian
      rights to the Resident Evil series of games

Results Highlights (for the year to 31 March 1999)

<TABLE>
<S>                                                 <C>              <C>
o     Turnover:                                     (pounds)226.3m   (1998: (pounds)137.2m)
o     EBITDA:                                        (pounds)46.8m   (1998: (pounds)22.3m)
o     Profit before tax and goodwill:                (pounds)42.0m   (1998: (pounds)16.5m)
o     Profit before tax:                             (pounds)37.9m   (1998: (pounds)16.5m)
o     Earnings per share:                                   141.5p   (1998: 64.1p)
o     Earnings per share before goodwill:                   165.2p   (1998: 64.1p)
o     Diluted earnings per share:                           125.2p   (1998: 61.2p)
o     Diluted earnings per share before goodwill:           145.1p   (1998: 61.2p)
</TABLE>

Note 1: Eidos prepares financial statements in accordance with applicable UK
        accounting standards (UK GAAP). The reconciliation to US GAAP is
        available from Eidos on request.
<PAGE>

                           Eidos/Fourth Quarter and Full Year Results.... Page 2


Regarding prospects and current trading Mr Ian Livingstone, Chairman, says:

"Closing the year we are delighted with the publishing achievements that have
enabled us to post our most impressive trading results to date. The past year
has seen the continued successful development of existing franchise properties
such as Tomb Raider, Gex and Championship Manager. Launched on 26 March,
Championship Manager 3 became the UK's fastest ever selling PC CD title. We have
also been very pleased with the performance of other new titles such as Thief:
The Dark Project, Gangsters and Commandos, all of which we believe have the
strong potential to develop as valuable franchises into the future.

We enter what are traditionally the quieter trading months of the year with a
robust release schedule and a heavy, but carefully targeted, program of
investment. Releases for the current quarter include the PSX version of Warzone
2100, Official Formula 1 Racing, FA Manager, Legacy of Kain: Soul Reaver from
Crystal Dynamics and Braveheart, based on the award winning film starring Mel
Gibson. Future releases for this year include Daikatana, Omikron, Urban Chaos,
Deus Ex, Commandos 2, Resident Evil III, UEFA 2000, Championship Manager 2000
and a new episode in the Tomb Raider series.

Building on the exceptional progress of recent years, we continue to pursue
aggressively the best new content deals. We are delighted to have signed
recently publishing agreements with Free Radical Design and TimeLine Studios;
the latter will develop titles based on original material by the company's
co-founder Michael Crichton.

We also extended our agreement with Looking Glass Studios concerning the Thief
franchise. In addition, a long term publishing deal with Capcom secured the
European and Australian rights for the Resident Evil series of games.

Our unwavering commitment to product investment is the cornerstone of our future
plans and the means by which we will continue to bring titles with outstanding
gameplay and lasting appeal to the mass market and so drive our growth."

Contact:
--------
Charles Cornwall, CEO:                                             0181 636 3000
Jeremy Lewis, CFO:                                                 0181 636 3000
Neil Camp/Lisa Kramer, Binns & Co:                                 0171 786 9600
Ryan Barr, Brainerd Communicators:                              001 212 986 6667

                       Issued by Binns & Co: 0171 786 9600

                                                                        more.../
<PAGE>

                           Eidos/Fourth Quarter and Full Year Results.... Page 3


CHAIRMAN'S STATEMENT

Results and Trading Review

Eidos made a profit after tax of (pounds)5.0 million for the three months ended
31 March 1999 compared to (pounds)2.4 million in the corresponding period last
year. Turnover increased 67% from (pounds)34.2 million to (pounds)57.2 million.
This gives an earnings per share of 29.2p compared to 13.9p in the same period
last year based on a weighted average number of shares outstanding in the period
of 17,205,200 (1998:16,962,187). The diluted earnings per share was 25.7p (1998:
13.3p).

Eidos reported a profit after tax of (pounds)24.3 million for the year ended 31
March 1999 compared to (pounds)10.9 million for the corresponding period last
year. Turnover increased 65% from (pounds)137.2 million to (pounds)226.3
million. The earnings per share was 141.5p compared to 64.1p last year. The
diluted earnings per share was 125.2p compared to 61.2p for the corresponding
period last year (this number has been restated in accordance with Financial
Reporting Standard No.14).

Net cash inflow from operating activities was (pounds)30.1 million (1998:
(pounds)15.9 million) for the year ended 31 March 1999. The second and final
instalment of the consideration payable for Crystal Dynamics of (pounds)14.3m
was paid on 1 April 1999 and consequently is not reflected in the cash flow for
the year ended 31 March 1999.

Six new titles were launched in the final quarter, being Akuji: The Heartless,
Championship Manager 3, Commandos: Beyond the Call of Duty, Gex III: Deep Cover
Gecko, UEFA Champions League and Warzone 2100 on PC CD. There were nineteen
(1998: nineteen) new games released in the year ended 31 March 1999.

Gross margin for the fourth quarter was 61.8% compared to 69.4% last year. The
decrease is mainly due to a higher proportion of catalogue and budget sales in
the quarter compared to last year. Gross margin for the full year was 63.9%
compared to 65.6% last year. Cost of sales includes royalties paid to developers
in excess of development advances paid. A successful game can earn considerable
excess royalties. Royalty costs in the year were (pounds)15.7 million compared
to (pounds)6.2 million last year, reflecting the increasing success of titles
from associate and external studios.

Selling and Marketing

Advertising costs for the three months ended 31 March 1999 were (pounds)5.7
million (10.0% of revenues) compared to (pounds)3.2 million (9.4% of revenues)
in the corresponding period. Advertising costs for the year were (pounds)20.7
million (9.2% of revenues) compared to (pounds)13.8 million (10.1% of revenues)
in 1998. The increase in expenditure reflects the growing use of TV, print and
on-line advertising to promote Eidos' existing and emerging franchises.

The fixed element of selling and marketing costs was (pounds)5.5 million (1998:
(pounds)3.0 million) and (pounds)16.4 million (1998: (pounds)9.9 million) for
the three months and year ended 31 March 1999 respectively. The increase is a
result of both the increased costs of licensing and additional headcount in new
and existing offices.

Research and Development

Research and development spend represents the Company's investment in product
development of (pounds)9.0 million for the three months ended 31 March 1999
(1998: (pounds)6.0 million) and (pounds)36.8 million for the full year (1998:
(pounds)28.1 million). Also included in the category is pure research and
development of (pounds)0.7 million (1998: (pounds)0.8 million) and (pounds)2.8
million (1998: (pounds)1.8
<PAGE>

                           Eidos/Fourth Quarter and Full Year Results.... Page 4


million) for the three months and year to 31 March 1999 respectively. The
product development charge for the year includes (pounds)20.7 million invested
in a pipeline of 38 titles which have yet to be released.

General and Administrative

General and administrative costs were (pounds)11.4 million or 20% of revenues
(1998: (pounds)4.4 million or 12.9%) and (pounds)28.8 million or 12.7% of
revenues (1998: (pounds)16.9 million or 12.3%) for the three months and year
ended 31 March 1999 respectively. The total excluding goodwill was (pounds)8.9
million (15.5%) and (pounds)24.7 million (10.9%) for the quarter and full year
respectively. The full year's charge includes (pounds)3.8m attributable to
abortive acquisitions with related funding costs. Excluding this one off charge
and goodwill, general and administrative costs represented 9.2% of revenue
compared to 12.3% last year.

Taxation

The effective tax rate for the full year is 36% which is marginally lower than
the rate used in the period to 31 December 1998. The principal cause of the rate
being in excess of the UK standard rate is the overseas profits being taxed at
higher rates. These overseas profits represented a higher proportion of total
Group profit this year and hence the effective tax rate is higher than the 34%
reported last year. Significant tax losses ((pounds)6.7 million) have been
utilised during the year, leaving tax losses of up to (pounds)17.5 million
available in the future.

Investments

Eidos holds approximately 15% of the share capital of Opticom ASA, a Norwegian
listed company and a leader in the research and development of polymer based
storage and processing devices and internet technologies. Following the recovery
of the share price of Opticom, the market value of Eidos' holding in the company
at 31 March 1999 was (pounds)24.2 million, which was significantly above cost.
Consequently the (pounds)3.0 million non operating charge taken at 31 December
1998 in respect of this holding has been reversed in the three months ended 31
March 1999, and the investment is shown at cost at the year end.

Current Trading and Future Prospects

Closing the year we are delighted with the publishing achievements that have
enabled us to post our most impressive trading results to date. The past year
has seen the continued successful development of existing franchise properties
such as Tomb Raider, Gex and Championship Manager. Launched on 26 March,
Championship Manager 3 became the UK's fastest ever selling PC CD title. We have
also been very pleased with the performance of other new titles such as Thief:
The Dark Project, Gangsters and Commandos, all of which we believe have the
strong potential to develop as valuable franchises into the future.

We enter what are traditionally the quieter trading months of the year with a
robust release schedule and a heavy, but carefully targeted, program of
investment. Releases for the current quarter include the PSX version of Warzone
2100, Official Formula 1 Racing, FA Manager, Legacy of Kain: Soul Reaver from
Crystal Dynamics and Braveheart, based on the award winning film starring Mel
Gibson. Future releases for this year include Daikatana, Omikron, Urban Chaos,
Deus Ex, Commandos 2, Resident Evil III, UEFA 2000, Championship Manager 2000
and a new episode in the Tomb Raider series.

Building on the exceptional progress of recent years, we continue to pursue
aggressively the best new content deals. We are delighted to have signed
recently publishing agreements with Free Radical Design and TimeLine Studios;
the latter will develop titles based on original material by the company's
co-founder Michael Crichton.
<PAGE>

                           Eidos/Fourth Quarter and Full Year Results.... Page 5


We also extended our agreement with Looking Glass Studios concerning the Thief
franchise. In addition, a long term publishing deal with Capcom secured the
European and Australian rights for the Resident Evil series of games.

Our unwavering commitment to product investment is the cornerstone of our future
plans and the means by which we will continue to bring titles with outstanding
gameplay and lasting appeal to the mass market and so drive our growth.


Ian Livingstone
Chairman
27 May 1999
<PAGE>

                           Eidos/Fourth Quarter and Full Year Results.... Page 6


EIDOS plc
Consolidated Profit and Loss Account

                                                Year ended 31     Year ended 31
                                                        March             March
                                                         1999              1998
                                                  (pounds)000       (pounds)000
Turnover -
continuing operations                                 226,284           137,234
Cost of goods sold                                    (81,628)          (47,263)
                                                     --------          --------
Gross profit                                          144,656            89,971

Selling and marketing                                 (37,096)          (23,697)
Research and development                              (39,619)          (29,898)
General and administrative
   Goodwill amortisation                               (4,070)               --
   Other                                              (24,701)          (16,923)
                                                     --------          --------
Operating expenses                                   (105,486)          (70,518)
                                                     --------          --------
Operating profit                                       39,170            19,453

Loss from sale of operations                               --            (1,852)
Net interest and similar charges                       (1,250)           (1,094)
                                                     --------          --------
Profit on ordinary activities before tax               37,920            16,507

Taxation                                              (13,670)           (5,642)
                                                     --------          --------
Net profit after tax                                   24,250            10,865
                                                     --------          --------
Earnings per share                                     141.5p             64.1p
Earnings per share before goodwill                     165.2p             64.1p
Diluted earnings per share                             125.2p             61.2p
Diluted earnings per share before goodwill             145.1p             61.2p
                                                     --------          --------

Notes:

1.    The earnings per share is based on a weighted average number of ordinary
      shares in issue of 17,137,829 (1998: 16,943,461) for the year ended 31
      March 1999. The fully diluted earnings per share is based on a weighted
      average number of ordinary shares in issue of 20,435,056 (1998:
      19,810,741) for the year ended 31 March 1999.
2.    The fully diluted earnings per share for the year ended 31 March 1998 has
      been restated in accordance with Financial Reporting Standard No.14.

                                                                         more../
<PAGE>

                           Eidos/Fourth Quarter and Full Year Results.... Page 7


EIDOS plc
Consolidated Balance Sheet

                                                       31 March        31 March
                                                           1999            1998
                                                                      (restated)
                                                    (pounds)000     (pounds)000
Fixed assets
Intangible assets                                        25,939              --
Tangible assets                                           5,668           6,734
Investments                                              12,164          11,582
                                                       --------         -------
Total fixed assets                                       43,771          18,316
                                                       --------         -------
Current assets
Stocks                                                    5,666           5,118
Debtors                                                  57,737          30,770
Cash at bank and in hand                                 48,220          42,513
                                                       --------         -------
Total current assets                                    111,623          78,401

Creditors: amount falling due within one year           (58,049)        (26,327)
                                                       --------         -------
Net current assets                                       53,574          52,074
                                                       --------         -------
Total assets less current liabilities                    97,345          70,390
                                                       --------         -------
Creditors due after more than one year:
US $50 million convertible bonds                        (30,333)        (28,995)
Other creditors                                            (480)           (459)
                                                       --------         -------
                                                        (30,813)        (29,454)
                                                       --------         -------
Net assets                                               66,532          40,936
                                                       ========         =======

Capital and reserves
Called up share capital                                   1,728           1,711
Share premium account                                    50,165          49,349
Other reserves                                              707             167
Profit and Loss account                                  13,932         (10,291)
                                                       --------         -------
Equity shareholders' funds                               66,532          40,936
                                                       ========         =======

Notes:

1.    Eidos plc is registered in England and Wales (number 2501949) and its
      registered office is Wimbledon Bridge House, 1 Hartfield Road, Wimbledon,
      London SW19 3RU.
2.    The balance sheet at 31 March 1998 has been restated to reflect the
      reclassification of the goodwill reserve required by Financial Reporting
      Standard No. 10.

                                                                        more ../
<PAGE>

                           Eidos/Fourth Quarter and Full Year Results.... Page 8


EIDOS plc
Consolidated Statements of Cash Flow

                                                     Year ended      Year ended
                                                  31 March 1999   31 March 1998
                                                    (pounds)000     (pounds)000
                                                    -----------     -----------
Net cash inflow from operating activities                30,068          15,864
                                                    -----------     -----------
Returns on investments and servicing of finance
Interest received                                         1,773           1,275
Expenses paid in connection with bond issue                  --          (1,026)
Bond interest paid                                       (1,897)         (1,527)
Other interest paid                                        (420)           (171)
Interest paid on finance leases                            (211)           (154)
                                                    -----------     -----------
                                                           (755)         (1,603)
                                                    -----------     -----------
Taxation
UK tax paid                                              (1,867)           (111)
Overseas tax paid                                        (8,299)           (509)
Overseas tax repaid                                       3,681              --
                                                    -----------     -----------
                                                         (6,485)           (620)
                                                    -----------     -----------
Capital expenditure and financial investment
Purchase of tangible fixed assets                        (2,175)         (4,229)
Sale of tangible fixed assets                                75              16
Purchase of other investments                              (570)        (11,746)
                                                    -----------     -----------
                                                         (2,670)        (15,959)
                                                    -----------     -----------
Acquisitions and disposals
Purchase of subsidiary undertakings                     (15,378)             --
Investments in associated undertakings                       --          (3,208)
Cash acquired with subsidiary undertakings                  459              --
Sale of businesses                                           --             500
                                                    -----------     -----------
                                                        (14,919)         (2,708)
                                                    -----------     -----------

Net cash inflow/(outflow) before financing                5,239          (5,026)

Financing
Issue of ordinary share capital                             833             330
Expenses paid in connection with share issue                 --            (218)
Proceeds from bond issue                                     --          30,864
Repayment of principal under finance leases                (761)           (810)
                                                    -----------     -----------
                                                             72          30,166
                                                    -----------     -----------
Increase in cash in the year                              5,311          25,140
                                                    ===========     ===========

Notes:

1.    Net cash inflow from operating activities is derived from operating profit
      of (pounds)39,170,000 (1998: (pounds)19,453,000) adjusted for depreciation
      of (pounds)3,539,000 (1998: (pounds)2,830,000), loss on disposal of fixed
      assets of (pounds)16,000 (1998: (pounds)47,000), goodwill amortisation and
      write offs of (pounds)4,632,000 (1998: (pounds)nil) and an increase in
      working capital of (pounds)17,287,000 (1998: (pounds)6,466,000).

                                                                         ..ends.
<PAGE>

FOR IMMEDIATE RELEASE

           EIDOS PLC ANNOUNCES FINANCIAL RESULTS FOR THE THREE MONTHS
                          AND YEAR ENDED MARCH 31, 1999

  Fourth quarter revenues increase 67% to (pounds)57.2 million ($92.0 million)

   Fourth quarter profit before tax and goodwill increases 130% to (pounds)8.1
                             million ($13.0 million)

    Full year revenues increase 65% to (pounds)226.3 million ($364.3 million)
    Full year profit before tax and goodwill increases 154% to (pounds)42.0
                            million ($67.6 million)

LONDON, May 27, 1999 -- Eidos plc (NASDAQ: EIDSY), one of the world's leading
publishers and developers of entertainment software, announced today results for
the quarter and year ended March 31, 1999. Revenues were (pounds)57.2 million
($92.0m) for the quarter and (pounds)226.3 million ($364.3m) for the full year,
an increase of 65% on the previous year. On a US GAAP basis the Company's profit
before tax for the quarter ended March 31, 1999 was (pounds)2.1 million ($3.3m)
bringing the total for the year to (pounds)31.2 million ($50.3m) compared to
(pounds)0.1 million in 1998. This resulted in earnings per share of 9.1p (14.7c)
for the quarter and 102.5p (165.0c) for the full year compared to a loss of
32.6p last year.

Commenting on Eidos' current trading and future prospects, Ian Livingstone,
Chairman, stated, "Closing the year we are delighted with the publishing
achievements that have enabled us to post our most impressive trading results to
date. The past year has seen the continued successful development of existing
franchise properties such as Tomb Raider, Gex and Championship Manager. Launched
on March 26, Championship Manager 3 became the UK's fastest ever selling PC CD
title. We have also been very pleased with the performance of other new titles
such as Thief: The Dark Project, Gangsters and Commandos, all of which we
believe have the strong potential to develop as valuable franchises into the
future.

We enter what are traditionally the quieter trading months of the year with a
robust release schedule and a heavy, but carefully targeted, program of
investment. Releases for the current quarter include the PSX version of Warzone
2100, Official Formula 1 Racing, FA Manager, Legacy of Kain: Soul Reaver from
Crystal Dynamics and Braveheart, based on the award winning film starring Mel
Gibson. Future releases for this year include Daikatana, Omikron, Urban Chaos,
Deus Ex, Commandos 2, Resident Evil III, UEFA 2000, Championship Manager 2000
and a new episode in the Tomb Raider series.

Building on the exceptional progress of recent years, we continue to pursue
aggressively the best new content deals. We are delighted to have signed
recently publishing agreements with Free Radical Design and TimeLine Studios;
the latter will develop titles based on original material by the company's
co-founder Michael Crichton.

We also extended our agreement with Looking Glass Studios concerning the Thief
franchise. In addition, a long term publishing deal with Capcom secured the
European and Australian rights for the Resident Evil series of games.

Our unwavering commitment to product investment is the cornerstone of our future
plans and the means by which we will continue to bring titles with outstanding
gameplay and lasting appeal to the mass market and so drive our growth."
<PAGE>

Eidos plc: Announces Fourth Quarter Results                               Page 2


Charles Cornwall, Chief Executive Officer, added, "A strong fourth quarter
rounds off our best full year results to date, with revenues for the year up
from (pounds)137.2m to (pounds)226.3m and operating profits up from
(pounds)19.5m to (pounds)39.2m. We believe the strength of the results reflect
our disciplined approach to publishing coupled with a broad portfolio of high
quality releases. We set ourselves the highest standards of publishing
excellence and content acquisition in the firm belief that this will translate
into continued long-term growth and profitability for the Group."

<TABLE>
<CAPTION>
                             -------------------------------------------------------------------------
                                          US GAAP                                US GAAP
                                   Quarter Ended March 31                  Year Ended March 31
                             -------------------------------------------------------------------------
                                      1999             1998                1999                1998
------------------------------------------------------------------------------------------------------
                              $000*    (pounds)000  (pounds)000    $000*      (pounds)000  (pounds)000
------------------------------------------------------------------------------------------------------
<S>                          <C>          <C>          <C>        <C>           <C>          <C>
Net Sales                    92,049       57,173       34,165     364,317       226,284      137,234
------------------------------------------------------------------------------------------------------
EBITDA                       10,600        6,584        7,086      71,740        44,559       12,158
------------------------------------------------------------------------------------------------------
Profit before tax             3,331        2,069        3,322      50,285        31,233          122
------------------------------------------------------------------------------------------------------
Net Income                    2,508        1,558        2,162      28,276        17,563       (5,520)
------------------------------------------------------------------------------------------------------
Earnings Per Share            14.7c         9.1p        12.7p      165.0c        102.5p      (32.6p)
------------------------------------------------------------------------------------------------------
Earnings Per Share before
------------------------------------------------------------------------------------------------------
Goodwill                      42.5c        26.4p        24.5p      245.2c        152.3p        15.0p
------------------------------------------------------------------------------------------------------
Diluted Earnings Per Share    13.8c         8.6p        12.3p      148.8c         92.4p      (32.6p)
------------------------------------------------------------------------------------------------------
Diluted Earnings Per Share
before Goodwill               37.5c        23.3p        22.2p      216.1c        134.2p        14.8p
------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
------------------------------------------------------------------------------------------------------
<S>                           <C>                 <C>                 <C>                 <C>
Weighted Average Shares       17,205,200          16,962,187          17,137,829          16,943,461
------------------------------------------------------------------------------------------------------
Weighted Average
Diluted Shares                18,018,785          20,176,299          20,435,056          19,810,741
------------------------------------------------------------------------------------------------------
</TABLE>

* The Company's financial statements are expressed in Pounds Sterling.
References to 'Pounds Sterling' or '(pounds)' are to the currency of the United
Kingdom and references to '$', 'US dollars' or 'US$' are to United States
currency. Solely for convenience this press release contains translations of
certain Pounds Sterling amounts into US dollars at specified rates. These
translations should not be construed as representations that the Pounds Sterling
amounts actually represent such US dollar amounts or could be converted into US
dollars at the rate indicated or any other rate. Unless otherwise indicated, the
translations of Pounds Sterling amounts into US dollars have been made at the
rate of $1.61 to (pounds)1.00, the exchange rate published by Datastream for
March 31, 1999.

      Recent developments

      o     Fourth quarter turnover up 67% to (pounds)57.2 million ($92.0
            million) from (pounds)34.2 million
      o     Full year turnover up 65% to (pounds)226.3 million ($364.3 million)
            from (pounds)137.2 million
      o     Nineteen new titles launched in the year
      o     Eight titles including catalogue achieved sales in excess of 350,000
            units
      o     Championship Manager 3 launched on March 26, to become the UK's
            fastest ever selling PC CD title
      o     Fourth quarter profit before tax and goodwill up 130% to (pounds)8.1
            million ($13.0 million) from (pounds)3.5 million
      o     Full year profit before tax and goodwill up 154% to (pounds)42.0
            million ($67.6 million) from (pounds)16.5 million
      o     Publishing deals signed with Free Radical Design and Michael
            Crichton's Timeline Studios
      o     Sequel rights to Thief: The Dark Project signed with Looking Glass
            Studios
      o     Long term publishing deal signed with Capcom for European and
            Australian rights to the Resident Evil series of games
<PAGE>

Eidos plc: Announces Fourth Quarter Results                               Page 3


Investments

Eidos holds approximately 15% of the share capital of Opticom ASA, a Norwegian
listed company and a leader in the research and development of polymer based
storage and processing devices and internet technologies. Following the recovery
of the share price of Opticom ASA, the market value of Eidos' holding in the
company at March 31, 1999 was (pounds)24.2 million, which was significantly
above cost. Consequently the (pounds)3.0 million non operating charge taken at
December 31, 1998 in respect of this holding has been reversed in the three
months ended March 31, 1999, and the investment is shown at cost at the year
end.

Under US GAAP both the original charge and the subsequent write back were taken
directly to equity in the year.

UK GAAP Financial Summary

Eidos made a profit after tax of (pounds)5.0 million for the three months ended
March 31, 1999 compared to (pounds)2.4 million in the corresponding period last
year. Turnover increased 67% from (pounds)34.2 million to (pounds)57.2 million.
This gives an earnings per share of 29.2p compared to 13.9p in the same period
last year based on a weighted average number of shares outstanding in the period
of 17,205,200 (1998:16,962,187). The diluted earnings per share was 25.7p (1998:
13.3p).

Eidos reported a profit after tax of (pounds)24.3 million for the year ended
March 31, 1999 compared to (pounds)10.9 million for the corresponding period
last year. Turnover increased 65% from (pounds)137.2 million to (pounds)226.3
million. The earnings per share was 141.5p compared to 64.1p last year. The
diluted earnings per share was 125.2p compared to 61.2p for the corresponding
period last year (this number has been restated in accordance with Financial
Reporting Standard No.14).

Net cash inflow from operating activities was (pounds)30.1 million (1998:
(pounds)15.9 million) for the year ended March 31, 1999. The second and final
instalment of the consideration payable for Crystal Dynamics of (pounds)14.3m
was paid on April 1, 1999 and consequently is not reflected in the cash flow for
the year ended March 31, 1999.

Six new titles were launched in the final quarter, being Akuji: The Heartless,
Championship Manager 3, Commandos: Beyond the Call of Duty, Gex III: Deep Cover
Gecko, UEFA Champions League and Warzone 2100 on PC CD. There were nineteen
(1998: nineteen) new games released in the year ended March 31, 1999.

Gross margin for the fourth quarter was 61.8% compared to 69.4% last year. The
decrease is mainly due to a higher proportion of catalogue and budget sales in
the quarter compared to last year. Gross margin for the full year was 63.9%
compared to 65.6% last year. Cost of sales includes royalties paid to developers
in excess of development advances paid. A successful game can earn considerable
excess royalties. Royalty costs in the year were (pounds)15.7 million compared
to (pounds)6.2 million last year, reflecting the increasing success of titles
from associate and external studios.

Selling and Marketing

Advertising costs for the three months ended March 31, 1999 were (pounds)5.7
million (10.0% of revenues) compared to (pounds)3.2 million (9.4% of revenues)
in the corresponding period. Advertising costs for the year were (pounds)20.7
million (9.2% of revenues) compared to (pounds)13.8 million (10.1% of revenues)
in 1998. The increase in expenditure reflects the growing use of TV, print and
on-line advertising to promote Eidos' existing and emerging franchises.

The fixed element of selling and marketing costs was (pounds)5.5 million (1998:
(pounds)3.0 million) and (pounds)16.4 million (1998: (pounds)9.9 million) for
the three months and year ended March 31, 1999
<PAGE>

Eidos plc: Announces Fourth Quarter Results                               Page 4


respectively. The increase is a result of both the increased costs of licensing
and additional headcount in new and existing offices.

Research and Development

Research and development spend represents the Company's investment in product
development of (pounds)9.0 million for the three months ended March 31, 1999
(1998: (pounds)6.0 million) and (pounds)36.8 million for the full year (1998:
(pounds)28.1 million). Also included in the category is pure research and
development of (pounds)0.7 million (1998: (pounds)0.8 million) and (pounds)2.8
million (1998: (pounds)1.8 million) for the three months and year to March 31,
1999 respectively. The product development charge for the year includes
(pounds)20.7 million invested in a pipeline of 38 titles which have yet to be
released.

General and Administrative

General and administrative costs were (pounds)11.4 million or 20% of revenues
(1998: (pounds)4.4 million or 12.9%) and (pounds)28.8 million or 12.7% of
revenues (1998: (pounds)16.9 million or 12.3%) for the three months and year
ended March 31, 1999 respectively. The total excluding goodwill was (pounds)8.9
million (15.5%) and (pounds)24.7 million (10.9%) for the quarter and full year
respectively. The full year's charge includes (pounds)3.8m attributable to
abortive acquisitions with related funding costs. Excluding this one off charge
and goodwill, general and administrative costs represented 9.2% of revenue
compared to 12.3% last year.

Taxation

The effective tax rate for the full year is 36% which is marginally lower than
the rate used in the period to December 31, 1998. The principal cause of the
rate being in excess of the UK standard rate is the overseas profits being taxed
at higher rates. These overseas profits represented a higher proportion of total
Group profit this year and hence the effective tax rate is higher than the 34%
reported last year. Significant tax losses ((pounds)6.7 million) have been
utilised during the year, leaving tax losses of up to (pounds)17.5 million
available in the future.

Eidos plc is one of the world's leading publishers and developers of
entertainment software. The Company develops and publishes a diverse mix of
titles for the Sony PlayStation and multimedia PC markets in the US, the UK,
Europe and Asia.
The Company's shares are traded on the NASDAQ Stock Market under the symbol
EIDSY.

Certain statements contained in this press release may be deemed
forward-looking, and involve a number of risks and uncertainties. The Company's
actual results may differ materially from the expectations expressed in such
forward looking statements. Among the factors that could cause actual results to
differ materially are world-wide business and industry conditions, including
consumer buying and retailer ordering patterns, product delays, changes in
research and development spending, company consumer relations, in particular,
levels of sales to mass merchants, retail acceptance of the company's published
and third party titles, competitive conditions and other risks detailed, from
time to time, in the company's SEC filings, including, but not limited to, the
Company's form 20-F for the period ended March 31, 1998.

                                      # # #

Contact:
Charles Cornwall, CEO:                               011 44 181 636 3000
Jeremy Lewis, CFO:                                   011 44 181 636 3000
Ryan Barr/Chris Plunkett, Brainerd Communicators:    212 986 6667
Neil Camp/ Lisa Kramer, Binns & Co:                  011 44 171 786 9600
<PAGE>

                                                                          Page 5


EIDOS plc

Consolidated Statements of Operations Reconciled to US GAAP for the quarter and
year ended March 31, 1999

<TABLE>
<CAPTION>
                                            Quarter ended March 31,                   Year ended March 31,
                                     ------------------------------------    --------------------------------------
UK GAAP                                 1999          1999          1998         1999           1999           1998
                                        $000   (pounds)000   (pounds)000         $000    (pounds)000    (pounds)000
<S>                                  <C>           <C>           <C>         <C>            <C>            <C>
Turnover ..continuing operations      92,049        57,173        34,165      364,317        226,284        137,234
Cost of goods sold                   (35,201)      (21,864)      (10,461)    (131,421)       (81,628)       (47,263)
                                     -------       -------       -------     --------       --------       --------
Gross profit                          56,848        35,309        23,704      232,896        144,656         89,971

Selling and marketing                (18,022)      (11,194)       (6,268)     (59,725)       (37,096)       (23,697)
Research and development             (15,582)       (9,678)       (6,826)     (63,787)       (39,619)       (29,898)
General and administrative
   Goodwill amortisation              (4,117)       (2,557)           --       (6,552)        (4,070)            --
   Other                             (14,271)       (8,864)       (4,410)     (39,769)       (24,701)       (16,923)
                                     -------       -------       -------     --------       --------       --------
Operating expenses                   (51,992)      (32,293)      (17,504)    (169,833)      (105,486)       (70,518)
                                     -------       -------       -------     --------       --------       --------
Operating profit                       4,856         3,016         6,200       63,063         39,170         19,453

Amounts written off investments        4,830         3,000            --           --             --             --
Loss on sale of operations                --            --        (2,352)          --             --         (1,852)
Net interest and similar charges        (773)         (480)         (327)      (2,012)        (1,250)        (1,094)
                                     -------       -------       -------     --------       --------       --------
Profit on ordinary activities
before tax                             8,913         5,536         3,521       61,051         37,920         16,507

Taxation                                (823)         (511)       (1,160)     (22,009)       (13,670)        (5,642)
                                     -------       -------       -------     --------       --------       --------
Net profit after tax (prepared
under UK GAAP)                         8,090         5,025         2,361       39,042         24,250         10,865
                                     -------       -------       -------     --------       --------       --------
Earnings per share                     47.0c         29.2p         13.9p       227.8c         141.5p          64.1p
Diluted earnings per share             41.4c         25.7p         13.3p       201.6c         125.2p          61.2p

Reconciliation to US GAAP

Net profit after tax (prepared
under UK GAAP)                         8,090         5,025         2,361       39,042         24,250         10,865
Amortisation of goodwill                 (40)          (25)       (1,999)      (6,556)        (4,072)        (8,060)
In process research and development     (314)         (195)           --       (3,812)        (2,368)            --
Amounts written off investments       (4,830)       (3,000)           --           --             --             --
Stock compensation expense              (398)         (247)           --         (398)          (247)            --
Computer games software                   --            --            --           --             --        (10,125)
Loss on sale of operations                --            --         1,800           --             --          1,800
                                     -------       -------       -------     --------       --------       --------
Net income/(loss) in accordance
with US GAAP                           2,508         1,558         2,162       28,276         17,563         (5,520)
                                     -------       -------       -------     --------       --------       --------
Earnings/(loss) per share in
 accordance with US GAAP
Basic                                  14.7c          9.1p         12.7p       165.0c         102.5p        (32.6p)
Diluted                                13.8c          8.6p         12.3p       148.8c          92.4p        (32.6p)
                                     -------                                 --------
</TABLE>

Notes:
1.    The UK GAAP fully diluted earnings per share for the quarter and year
      ended March 31, 1998 has been restated in accordance with Financial
      Reporting Standard No.14.
2.    The Company's financial statements are expressed in Pounds Sterling.
      References to 'Pounds Sterling' or '(pounds)' are to the currency of the
      United Kingdom and references to '$', 'US dollars' or 'US$' are to United
      States currency. Solely for convenience this press release contains
      translations of certain Pounds Sterling amounts into US dollars at
      specified rates. These translations should not be construed as
      representations that the Pounds Sterling amounts actually represent such
      US dollar amounts or could be converted into US dollars at the rate
      indicated or any other rate. Unless otherwise indicated, the translations
      of Pounds Sterling amounts into US dollars have been made at the rate of
      $1.61 to(pounds)1.00, the exchange rate published by Datastream for March
      31, 1999.
<PAGE>

                                                                          Page 6


EIDOS plc
Consolidated Balance Sheets Reconciled to US GAAP

<TABLE>
<CAPTION>
                                                                                       March 31,
                                                                                            1998
UK GAAP                                                          March 31, 1999        restated)

                                                                 $000   (pounds)000  (pounds)000
<S>                                                          <C>           <C>           <C>
Fixed assets
Intangible assets (net of amortisation of(pounds)4,070,000)    41,762        25,939           --
Tangible assets                                                 9,125         5,668        6,734
Investments                                                    19,584        12,164       11,582
                                                             --------      --------      -------
Total fixed assets                                             70,471        43,771       18,316
                                                             --------      --------      -------
Current assets
Stocks                                                          9,122         5,666        5,118
Debtors                                                        92,957        57,737       30,770
Cash at bank and in hand                                       77,634        48,220       42,513
                                                             --------      --------      -------
Total current assets                                          179,713       111,623       78,401

Creditors: amount falling due within one year                 (93,459)      (58,049)     (26,327)
                                                             --------      --------      -------
Net current assets                                             86,254        53,574       52,074
                                                             --------      --------      -------
Total assets less current liabilities                         156,725        97,345       70,390
                                                             --------      --------      -------
Creditors due after more than one year:
US $50 million convertible bonds                              (48,836)      (30,333)     (28,995)
Other creditors                                                  (773)         (480)        (459)
                                                             --------      --------      -------
                                                              (49,609)      (30,813)     (29,454)
                                                             --------      --------      -------
Net assets                                                    107,116        66,532       40,936
                                                             ========      ========      =======

Capital and reserves

Called up share capital                                         2,782         1,728        1,711
Share premium account                                          80,766        50,165       49,349
Other reserves                                                  1,138           707          167
Profit and Loss account                                        22,430        13,932      (10,291)
                                                             --------      --------      -------
Shareholders' funds                                           107,116        66,532       40,936
                                                             ========      ========      =======

Reconciliation to US GAAP

Shareholders' funds (prepared under UK GAAP)                  107,116        66,532       40,936
Goodwill                                                       31,313        19,449       19,605
Less in process research and development                       (3,812)       (2,368)          --
Less amortisation                                             (27,138)      (16,856)     (12,388)
Deferred tax                                                    3,208         1,993        2,003
                                                             --------      --------      -------
Shareholders' funds in accordance with
US GAAP                                                       110,687        68,750       50,156
                                                             ========      ========      =======
</TABLE>

Notes:
1.    Eidos plc is registered in England and Wales (number 2501949) and its
      registered office is Wimbledon Bridge House, 1 Hartfield Road, Wimbledon,
      London SW19 3RU.
2.    The balance sheet at March 31, 1998 has been restated to reflect the
      reclassification of the goodwill reserve required by Financial Reporting
      Standard No. 10.
<PAGE>

                                                                          Page 7


EIDOS plc
Consolidated Statements of Cash Flow

<TABLE>
<CAPTION>
                                                                               Year ended
                                                           Year ended           March 31,
                                                        March 31, 1999               1998
                                                       $000    (pounds)000    (pounds)000
                                                    -------    -----------    -----------
<S>                                                 <C>        <C>            <C>
Net cash inflow from operating activities            48,409         30,068         15,864
                                                    -------    -----------    -----------
Returns on investments and servicing of finance
Interest received                                     2,855          1,773          1,275
Expenses paid in connection with bond issue              --             --         (1,026)
Bond interest paid                                   (3,054)        (1,897)        (1,527)
Other interest paid                                    (676)          (420)          (171)
Interest paid on finance leases                        (340)          (211)          (154)
                                                    -------    -----------    -----------
                                                     (1,215)          (755)        (1,603)
                                                    -------    -----------    -----------
Taxation
UK tax paid                                          (3,006)        (1,867)          (111)
Overseas tax paid                                   (13,361)        (8,299)          (509)
Overseas tax repaid                                   5,926          3,681             --
                                                    -------    -----------    -----------
                                                    (10,441)        (6,485)          (620)
                                                    -------    -----------    -----------
Capital expenditure and financial investment
Purchase of tangible fixed assets                    (3,502)        (2,175)        (4,229)
Sale of tangible fixed assets                           121             75             16
Purchase of other investments                          (918)          (570)       (11,746)
                                                    -------    -----------    -----------
                                                     (4,299)        (2,670)       (15,959)
                                                    -------    -----------    -----------
Acquisitions and disposals
Purchase of subsidiary undertakings                 (24,758)       (15,378)            --
Purchase of associated undertakings                      --             --         (3,208)
Cash acquired with subsidiary undertakings              739            459             --
Sale of business held for resale                         --             --            500
                                                    -------    -----------    -----------
                                                    (24,019)       (14,919)        (2,708)
                                                    -------    -----------    -----------

Net cash inflow/(outflow) before financing            8,435          5,239         (5,026)

Financing
Issue of ordinary share capital                       1,341            833            330
Expenses paid in connection with share issue             --             --           (218)
Proceeds from bond issue                                 --             --         30,864
Repayment of principal under finance leases          (1,225)          (761)          (810)
                                                    -------    -----------    -----------
                                                        116             72         30,166
                                                    -------    -----------    -----------
Increase in cash in the year                          8,551          5,311         25,140
                                                    =======    ===========    ===========
</TABLE>

Notes:
1.    Net cash inflow from operating activities is derived from operating profit
      of (pounds)39,170,000 (1998: (pounds)19,453,000) adjusted for depreciation
      of (pounds)3,539,000 (1998: (pounds)2,830,000), loss on disposal of fixed
      assets of (pounds)16,000 (1998: (pounds)47,000), goodwill amortisation and
      write offs of (pounds)4,632,000 (1998: (pounds)nil) and an increase in
      working capital of (pounds)17,287,000 (1998: (pounds)6,466,000).
<PAGE>

                                                                          Page 8


      Eidos plc Statistical Information for the Period Ended March 31, 1999

                            Geographical Revenue Mix
                                   (Unaudited)

                                     Quarter

                              March 31, 1999               March 31, 1998
                        (pounds)000s    % of Total   (pounds)000s     % of Total
North America                 17,906         31.3%         11,778          34.5%
UK/Europe                     36,188         63.3%         18,842          55.1%
Rest of World                  3,079          5.4%          3,545          10.4%
                            --------      --------       --------        -------
Total net revenues            57,173        100.0%         34,165         100.0%
                            --------      --------       --------        -------

                                      Year

                             March 31, 1999                March 31, 1998
                        (pounds)000s    % of Total   (pounds)000s     % of Total
North America                 78,476         34.7%         49,456          36.0%
UK/Europe                    136,310         60.2%         79,411          57.9%
Rest of World                 11,498          5.1%          8,367           6.1%
                            --------      --------       --------        -------
Total net revenues           226,284        100.0%        137,234         100.0%
                            --------      --------       --------        -------

                       Percentage Increase       Percentage Increase
                             Quarter                    Year
North America                 52.0%                     58.7%
UK/Europe                     92.1%                     71.7%
Rest of World                -13.1%                     37.4%
                             ------                    ------
Total net revenue             67.3%                     64.9%
                             ------                    ------

                    Platform Revenue Mix (Games Revenue only)
                                   (Unaudited)
                                     Quarter

                             March 31, 1999                March 31, 1998
                        (pounds)000s    % of Total   (pounds)000s     % of Total
Console                       37,480         66.7%         23,322          69.2%
PC                            18,677         33.3%         10,387          30.8%
                            --------      --------       --------        -------
Total net revenues            56,157        100.0%         33,709         100.0%
                            --------      --------       --------        -------

                                      Year

                             March 31, 1999                March 31, 1998
                        (pounds)000s    % of Total   (pounds)000s     % of Total
Console                      137,790         61.9%         86,696          64.7%
PC                            84,811         38.1%         47,382          35.3%
                            --------      --------       --------        -------
     Total net revenues      222,601        100.0%        134,078         100.0%
                            --------      --------       --------        -------

                       Percentage Increase       Percentage Increase
                             Quarter                    Year
Console                       60.7%                     58.9%
PC                            79.8%                     79.0%
                             ------                    ------
Total net revenues            66.6%                     66.0%
                             ------                    ------