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SCi shares tumble as losses widen

03 марта 2008

Shares in SCi Entertainment fell 26 per cent on Friday after the UK’s largest computer games publisher revealed sharply wider interim losses, announced plans to cut 25 per cent of its staff and warned that it might need a rights issue to raise up to £55m in extra working capital.

Phil Rogers, chief executive, on Friday announced a sweeping restructuring plan, reducing headcount from 1,075 to 800 to save up to £14m. Most cuts will be made in the UK.

Fourteen games under development are to be scrapped to allow the company to focus on its larger franchises, such as Lara Croft: Tomb Raider, Championship Manager, Hitman and Deus Ex.

“We have been bringing out a lot of average games, which are tying up resources. We haven’t been ruthless enough in canning projects in the past,” Mr Rogers said. “In today’s environment of lengthening development cycles and increasing costs, we need to focus on this more.”

Mr Rogers took over as chief executive in January when Jane Cavanagh, who founded SCi 20 years ago, stepped down. Shareholders had put pressure on her to leave after a profits warning and the ending of talks about a possible bid for the company.

SCi said in January it was expecting a loss for the full year after delaying the release of four games, including the next instalment of the Tomb Raider series.

As well as restructuring, SCi wants to raise £45m-£55m for new working capital. It hopes to launch a rights issue within the next month, but is also in discussions with potential commercial partners who may be interested in taking a stake in the company.

As part of the cost-saving plan the company is also moving part of its production services group to Montreal, where the government is offering generous tax breaks to companies.

A number of games companies have been relocating some operations to Canada recently, raising concerns within the UK games industry that Britain might lose key expertise abroad. About a quarter of SCi staff will be located in Montreal following this move.

The company is also creating a separate division for casual games, which are one of the fastest-growing segments of the market.

Mr Rogers is also moving the company’s focus away from its distribution business. “It will not be a core theme for us,” he said.

Many analysts have suggested SCi should divest the business, which struggles to compete with much larger foreign rivals. However, Mr Rogers indicated he was not aiming to sell the division at present.

SCi is to be tightly focused on its four key studios in the UK, California, Denmark and Montreal, with each responsible for the creation, marketing and sale of their games. Mr Rogers sees this as a way of increasing accountability and keeping down costs.

Pre-tax losses for the six months to the end of December widened to £81.4m, from £17.9m, as games development costs rose to £79.6m. Revenues fell from £74.5m to £73m. Losses per share were 96.2p against 17p in the corresponding period.

Shares in SCi have now lost more than 90 per cent of their value over the past year.


Источник: Financial Times

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