SCi GROUP ANNOUNCES INTERIM RESULTS
Copyright 2007 Eidos plc Press Release

[ March 29th 2007 ]

SCi Entertainment Group has reported a loss of £17.9 million in the six months to December compared with £19.9 million during the same period a year before. Revenue rose to £74.5 million against £50.1 million and earnings before interest, tax, depreciation and amortisation improved to a loss of £10.6 million from a loss of £11.2 million in the same period last time.

Commenting on these results, Jane Cavanagh, Chief Executive of SCi said: "During the first six months of the financial year we have continued the successful growth of SCi and consolidated our position as one of the world's leading computer and video game developers.

"The strength of our franchises, the quality of our development studios, our global distribution infrastructure and our investment in New Media means that the Group is set to benefit from the continued growth in the games market.

"In recent months we have announced and completed three agreements with Warner Bros. Entertainment, one of the world's leading media companies. Under these arrangements, Warner Bros. has made a significant investment in the Group - strengthening our already strong balance sheet and cash resources by £44.5 million (before costs), We have entered into a series of licensing arrangements with Warner Bros. to create and publish games based on a series of their properties - including Batman, Looney Tunes and the Hanna Barbera catalogue.

"This helps the Group achieve its objective of developing games for a broader audience with more family appeal. In addition we will benefit from working with Warner Bros. primary distribution services in North America.

"We have increased our portfolio of valuable intellectual property with two new titles, Just Cause and Battlestations Midway. These titles immediately reached the number one chart position in the UK and have the potential to be long term franchises. It is particularly pleasing that Battlestations Midway was completed by our new development studio in Budapest.

"The Group has made significant investment in technologies with the objective of making game development as efficient and cost effective as possible. This investment involves the creation of technology engines, the creation of re-usable technology and the establishment of more effective technology sharing. In addition the Group is establishing new studios in low cost locations, such as Montreal.

"The Group has substantially completed the development of two game engines. CDC (developed by Crystal Dynamics) and Glacier 2 (developed by IO Interactive) to the stage where the engine technology can be used both within those studios on multiple projects, and also by other studios. The CDC engine will form the basis of the Group's new studio in Montreal. The CDC and Glacier 2 engines will be further developed to the stage where they may be licensed to third parties providing a potential new revenue stream for the Group.

"Under the leadership of our Chief Technology Officer, Julien Merceron, the Group has established a worldwide asset sharing system, supported by an Academy of Experts and a worldwide technology website. Within each development studio, re-usable technology provides the basis for efficiently producing successive versions of franchises such as Tomb Raider, Hitman and Championship Manager.

"As the Group develops its technology strategy it will continue to review the application of our capitalisation and amortisation policy to ensure that it accurately reflects the timescales over which engines and re-usable technology are amortised.

"The Group has a strong portfolio of future new releases, including Tomb Raider Anniversary, Diner Dash, Pony Friends, Crossfire: Search and Destroy and Kane & Lynch. In the second half of the year we plan to publish 7 new products on 19 formats across all platforms bringing the total new published releases to 11 compared to 9 in 2006.

"In total we plan 25 new releases for the 2007 financial year compared to 9 in 2006 The Group also continues to increase its third party distribution business. Our global distribution products in the second half of the financial year will include a PSP version of 300: March to Glory, based on the recently released Warner Bros. film, and Escape from Bug Island on Nintendo Wii."