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SCI Entertainment (EID)

  Print      Mail a friend       Annual reports

Thursday 29 March, 2007

SCI Entertainment

Interim Results

SCI Entertainment Group PLC
29 March 2007


29 March 2007

                          SCi Entertainment Group Plc

         Interim results for the six months ended 31 December 2006

SCi Entertainment Group Plc ('SCi) is one of the world's leading publishers of 
computer and video games. Its brands, published under the Eidos label, include 
Tomb Raider, Hitman, Championship Manager, Just Cause and Battlestations 
Midway.

                                               6 months to 31         6 months to 31     12 months to 30
                                                December 2006          December 2005           June 2006
                                                           £m                     £m                  £m

Revenue                                                  74.5                   50.1               179.1
Profit (loss) from operations                          (17.9)                 (19.9)                 7.8
EBITDA* (see note 2)                                   (10.6)                 (11.2)                28.8
                                                        =====                  =====               =====
EPS (pence)                                           (17.0)p                (17.0)p               18.5p
                                                        =====                  =====               =====

*EBITDA is stated before exceptional items and share based payment charges.

Highlights

  • As in 2006, the Group's release schedule is geared to the second half.First 
    half loss lower than in comparative period.

  • Completion of Warner Bros. Entertainment transaction in March 2007,
    resulting in £44.5 million investment, primary US distribution
    arrangements and licensing agreements for a package of Warner Bros.
    properties, including Batman, Looney Tunes and the Hanna Barbera
    catalogue.

  • Two new number one products (Just Cause and Battlestations Midway) launched 
    since June 2006, adding to the Group's portfolio of valuable intellectual 
    property.

  • Revenue growth primarily arising from increased strength of the Group's 
    distribution business.

  • New Media business continuing to expand with recent acquisitions of wireless 
    developer and content provider, Rockpool Games and online distribution 
    company, Bluefish Media.

  • First products from new Casual Games division to be launched in second half 
    of financial year.

  • Continued investment in development capacity, reflected in announcement of 
    new development studio in Montreal.

  • Board strengthened with the appointment of Don Johnston (Managing Director 
    and Chairman of Deutsche Bank's European Mergers and Acquisitions business) 
    as Non-executive director.


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.'



Enquiries

Madano Partnership
Matthew Moth                                                 020 7593 4000

SCi Entertainment Group Plc
Jane Cavanagh - Chief Executive                              020 8636 3000

Rob Murphy - Chief Financial Officer                         020 8636 3000


About SCi

SCi Entertainment Group is one of the world's leading publishers and developers 
of entertainment software. Its publishing label Eidos has publishing operations 
across Europe and the US and a number of high quality development studios 
including Crystal Dynamics, Io Interactive, Beautiful Game Studios, Eidos
Studios  Hungary, Eidos Studios Sweden and Pivotal Games.

The Group has a valuable portfolio of intellectual property including: Tomb
Raider,  Hitman, Deus Ex, Championship Manager, Carmageddon, the Conflict
series, Just  Cause and Battlestations: Midway.  Titles currently in development
include:  Kane & Lynch: Dead Men, Crossfire: Search and Destroy and Highlander.


Chairman's statement

During the first half of the financial year the Group made further progress in 
building our position as one of the world's leading publishers of computer and 
video games.

Results

The Group made an EBITDA loss (before exceptional items and share based payment 
charges) of £10.6m in the 6 months to 31 December 2006 (6 months to 31 December 
2005 - loss of £11.2 million). This loss, in line with our plans, reflects the 
pattern of product releases for the full 12 months.

Strategic actions

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 previously indicated that part of the Warner Bros. investment will be 
used to grow our New Media division. We announced the strategic acquisitions of 
Rockpool Games in February 2007 and Bluefish Media in March 2007. We are 
continuing to explore further opportunities in this area.

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.

During the first half of the year we also grew our distribution business, 
providing a profitable and low risk base to Group revenues.

Our investment in new products and technology leaves us well placed to benefit 
from the strong market conditions expected in the 2008 financial year onwards as
 the installed base of new generation consoles such as Sony PlayStation 3, 
Microsoft Xbox 360 and Nintendo Wii rises.

We continue to invest in new business areas, reflecting both the broadening 
demographics of our games audience and new media for delivering products
directly  to our customer.

Further Board strengthening

We have taken steps to extend and strengthen the Board. In September 2006 Roger 
Ames joined SCi as a non-executive director and I am delighted to also welcome 
Don Johnston to the Board as a non-executive director. Don has a wealth of 
experience working with international, fast growing companies, which will be of 
great value to the business.

Dividend

Bearing in mind the wide growth opportunities available to the Group, there are
no  current plans to pay a dividend. We will keep this policy under review.

Tim Ryan

29 March 2007



                            Chief Executive's statement

Results to 31 December 2006

The Group made an EBITDA loss (before exceptional items and share based payment 
charges) of £10.6m in the 6 months to 31 December 2006 (6 months to 31 December 
2005 - loss of £11.2 million). This loss, in line with our plans, reflects the 
pattern of anticipated product releases for the full 12 months. As last year, 
our major product releases are planned for the second half of the financial
year.


Group revenues for the period arose from the following sources:

                           6 months to 31   6 months to 31      12 months to
                            December 2006    December 2005      30 June 2006
                                
                                      £m                £m                £m
Published products                  31.2              23.1             145.3
Distribution                        41.3              25.5              28.6
Licensing and New Media              2.0               1.5               5.2
                          --------------------------------------------------
                                    74.5              50.1             179.1
                          ==================================================

These revenues arose from the following unit sales:
Unit sales (m)

Published products                   4.0               1.8               9.4
Distribution                         4.3               1.5               2.5
                          --------------------------------------------------
                                     8.3               3.3              11.9
                          ==================================================

Published products

The principal new product launches in the first half of the year were Just Cause, 
Who Wants to be a Millionaire?, Championship Manager and Reservoir Dogs. These 
titles, together with back catalogue sales, resulted in sales of 4 million units.

Our most successful product in the first half was Just Cause. Just Cause was 
released in September 2006 on Xbox 360, Xbox, PlayStation 2 and PC. It 
immediately entered the UK charts at No. 1 in the Xbox 360 charts and No. 2 in 
the All Formats charts. We expect Just Cause to sell over a million units in the 
current year, providing the basis of a strong franchise. A sequel to Just Cause 
is in development.

Who Wants to be a Millionaire? was released in the UK November 2006 and 
performed as planned, reflecting the value of a high profile licence with broad 
demographic appeal. Who Wants to be a Millionaire? is expected to sell steadily 
over time, with additional German and Italian versions launching in Spring 2007.

Back catalogue sales, particularly on PlayStation 2 and Xbox, have been made at 
reduced margins as retailers lower price points in anticipation of next 
generation hardware. Accordingly the Group has increased its provisions on sales 
of games on these platforms.

After the period end, in February 2007, we released Battlestations Midway on PC 
and Xbox 360. This product immediately entered the UK charts at No1 in both the 
Xbox 360 and All Formats charts. We are continuing to build this franchise and 
have a sequel in development.

Distribution

The Group distributed a number of third party titles in the first half of the 
year, including Justice League Heroes from Warner Bros. and Bionicle Heroes from 
Travellers Tales. In addition, the Group continued to receive strong revenue 
from sales of Lego Star Wars. Lego Star Wars, first launched in April 2005, had 
sold 5.6m units by 31 December 2006. Total distribution sales in the period were 
4.3 million units.

Third party distribution provides a low risk, profitable source of revenue that 
makes most effective use of the Group's global sales and distribution 
infrastructure. We will continue to look for opportunities to distribute strong 
third party product.


Licensing and New Media

The Group derives licensing income by exploiting the non-game rights to its 
franchises. The timing of these revenues tends to be weighted to the second half 
of the financial year. In the second half of the year we expect to receive 
further licensing revenues from the film version of Hitman. It has been reported 
that Deadwood star, Timothy Olyphant will star as Agent 47 in 20th Century Fox's 
production of the Hitman film. The film will co-star Dougray Scott and will be 
produced by Luc Besson.

New Media mainly consists of games developed for mobile phones. Games are also 
increasingly sold through other forms of digital distribution, such as Xbox Live 
Arcade and the direct download of PC games. The Group expects revenues from New 
Media to become a much more significant proportion of total revenues over the 
next three to five years. Margins on digitally distributed products are expected 
to be significantly higher than on retail based products.

In February 2007 the Group completed the acquisition of Rockpool Games. The 
consideration for this acquisition was £1.2 million rising to a maximum of £7.7 
million depending upon Rockpool's performance over three years. The acquisition 
provides the Group with internal capacity to develop mobile games, enabling us 
to cost effectively increase our portfolio of mobile games. In addition, the 
Rockpool acquisition gives us access to valuable licensed content, including the 
Top Trumps franchise.

Earlier this week the Group completed the acquisition of Bluefish Media for a 
consideration of Euro 1.25m rising to a maximum consideration of Euro 3 million. 
Bluefish provides the Group with valuable technology and expertise in the area 
of online distribution.


Casual Games

The Group has established a Casual Games division. The Casual Games Association 
has estimated that this rapidly growing market segment was worth $713 million in 
North America in 2005. During the second half we expect to launch up to ten 
casual games, including Diner Dash, Cubis 2 and Jewel Quest. The Casual Games 
team will also work closely with the New Media division to sell casual products 
via digital distribution.


Development

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.


Product pipeline

The following table shows the planned number of releases for the 2007 financial 
year as a whole.


                                                FY 2007                FY 2006

New Published Products                               11                      9
New Distributed Products                              4                      -
Casual Games Products                                10                      -

Total                                                25                      9 

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.


Market and future outlook

There have been significant changes in the console hardware market over the last 
18 months.

Over the last 10 years Sony has held the largest share of the console market 
through the successful PlayStation and PlayStation 2 platforms. Sony launched 
PlayStation 3 in North America in November 2006 and in Europe on 23 March 2007. 
We believe that PlayStation 3 will be a successful platform, and are developing 
technology and products for this console. However, as we do not believe that the
 installed base will be high enough until the second half of our 2008 financial 
year, most of our major product releases on the PlayStation 3 platform are not 
scheduled before that date.

Sony's principal competitors, Microsoft and Nintendo, launched their next 
generation platforms earlier (November 2005 in the case of the Microsoft Xbox 
360 and November 2006 in the case of the Nintendo Wii). The Board believes that 
both of these platforms will be successful. We have already launched a number of
products in the Xbox 360 and plan to release our first Wii products in Spring 
2007.

The board believes that the introduction of new consoles will drive strong 
demand and pricing over the next five years.

In addition, the increasing opportunities for digital sales to consumers, 
through PC downloads as well as the Xbox 360 and PlayStation 3 platforms, 
provide the basis for improved margins.





Jane Cavanagh

29 March 2007


Consolidated income statement for the six months ended 31 December 2006

                                 Notes          6 months to 31       6 months to 31 12 months to 30 June
                                                 December 2006        December 2005                 2006
                                                     Unaudited            Unaudited              Audited
                                                            £m                   £m                   £m
Revenue                                                   74.5                 50.1                179.1
Cost of sales                                           (50.1)               (30.1)               (75.3)
                                                    ----------           ----------           ----------
Gross Profit                                              24.4                 20.0                103.8
Development costs                                       (11.8)               (13.5)               (27.0)
Exceptional development costs                                -                    -                (1.1)
Advertising                                              (8.3)                (4.6)               (19.4)
Administrative costs                                    (22.2)               (21.8)               (47.8)
Exceptional administrative                                   -                    -                (0.7)
costs
Administrative expenses                                 (42.3)               (39.9)               (96.0)
                                                    ----------           ----------           ----------
(Loss) profit from operations                           (17.9)               (19.9)                  7.8
Finance income                                             0.5                  0.3                  0.7
Finance costs                                            (0.5)                (0.1)                (0.3)
Profit on disposal of                                      0.7                    -                    -
associate
Share of (loss) of associates                                -                (0.5)                (0.1)
                                                    ----------           ----------           ----------
(Loss) profit before taxation                           (17.2)               (20.2)                  8.1
Tax credit                         3                       4.2                  8.0                  5.4
                                                    ----------           ----------           ----------
(Loss) profit for the period                            (13.0)               (12.2)                 13.5
                                                    ==========           ==========           ==========


Attributable to:
Equity holders of the parent                            (13.0)               (12.3)                 13.4
Minority Interest                                            -                  0.1                  0.1
                                                    ----------           ----------           ----------
                                                        (13.0)               (12.2)                 13.5
                                                    ==========           ==========           ==========

Earnings(loss) per share                                 Pence                Pence                Pence
Basic                              4                    (17.0)               (17.0)                 18.5
Diluted                            4                    (17.0)               (17.0)                 17.7
                                                    ==========           ==========           ==========







Consolidated balance sheet at 31 December 2006

                                          31 December 2006   31 December 2005         30 June 2006
                                                 Unaudited          Unaudited              Audited
                                                        £m                 £m                   £m
Non current assets
Property plant and equipment                           3.7                2.8                  3.2
Goodwill                                               5.1                1.4                  4.7
Intangible assets                                    100.0              111.1                105.7
Capitalised development costs                         64.4               27.7                 46.1
Investment in associates                               0.4                0.4                  0.4
Deferred tax assets                                    4.8                  -                  2.1
                                                   -------            -------              -------
                                                     178.4              143.4                162.2
Current assets
Inventory                                              5.8                6.9                  5.2
Trade and other receivables                           48.8               14.5                 57.5
Cash and cash equivalents                             10.4               21.2                 37.2
                                                      65.0               42.6                 99.9
Assets classified as held for sale                       -                  -                  0.2
                                                   -------            -------              -------
Total assets                                         243.4              186.0                262.3
                                                   =======            =======              =======
Non current liabilities
Finance leases                                           -                0.5                    -
Deferred tax liabilities                              12.6                  -                 15.4
                                                   -------            -------              -------
                                                      12.6                0.5                 15.4
Current liabilities
Trade and other payables                              23.3               22.2                 29.8
Tax liabilities                                        5.9               11.4                  7.3
Accruals and deferred income                          10.7               10.9                  8.0
Provisions                                            18.4                2.2                 15.0
                                                   -------            -------              -------
                                                      58.3               46.7                 60.1
                                                   -------            -------              -------
Total liabilities                                     70.9               47.2                 75.5
Equity
Share capital                                          4.0                3.6                  3.8
Share premium                                         76.2               68.9                 74.6
Merger reserve                                        81.3               69.9                 81.3
Capital reserve                                        6.3                6.3                  6.3
Foreign currency translation reserve                 (0.3)                  -                  0.5
Share based compensation                               4.0                1.9                  4.7
Employee benefit trust share reserve                 (0.9)              (0.9)                (0.9)
Retained profits                                       1.9             (12.4)                 14.9
Equity attributable to equity holders                172.5              137.3                185.2
of the parent company
Minority interests                                       -                1.5                  1.6
Total equity                                         172.5              138.8                186.8
                                                   -------            -------              -------
Total liabilities and equities                       243.4              186.0                262.3
                                                   =======            =======              =======



Consolidated Cash Flow Statement for the six months ended 31 December 2006

                                                  6 months to 31    6 months to 31  12 months to 30
                                                   December 2006     December 2005        June 2006
                                                       Unaudited         Unaudited          Audited
                                                              £m                £m               £m
Operating activities
Net (loss) profit before taxation                         (17.2)            (20.2)              8.1
Share based payment charge                                   1.1               1.6              4.4
Depreciation on plant, property and equipment              
and software amortisation charged to the
income statement                                             0.9               2.7              1.8
Amortisation of brands and technology                        5.3               4.2             10.6
Impairment of goodwill                                         -                 -              2.4
Net financing income                                       (0.3)             (0.2)            (0.4)
Net loss (profit) made by associates                           -               0.5              0.1
Profit on disposal of associate                            (0.7)                 -                -
                                                        --------           -------          -------
                                                          (10.9)            (11.4)             27.0
Decrease / (increase) in trade and other                     8.7              16.7           (26.6)
receivables
(Increase) / decrease in inventories                       (0.6)               3.2            (1.4)
(Decrease) / increase in trade and other                   (2.4)            (20.3)              6.3
payables and accruals and deferred income
Release of capitalised development costs                    11.9               4.3             28.1
                                                        --------           -------          -------
Cash generated from operations                               6.7             (7.5)             33.4

Interest paid                                                  -             (0.1)                -
Income taxes paid                                          (2.0)             (0.1)            (0.5)
                                                        --------           -------          -------
Cash flows from operating activities                         4.7             (7.7)             32.9


Investing activities
Payment for subsidiary                                     (2.0)                 -                -
Purchase of property, plant and equipment and              
intangible software                                        (1.4)             (2.2)            (2.2)
Interest received                                            0.3               0.3              0.7
Expenditure on capitalised development costs              (30.2)            (15.2)           (57.4)
                                                        --------           -------          -------
Net cash used in investing activities                     (33.3)            (17.1)           (58.9)

Financing activities
Proceeds from issue of share capital                         1.8                 -             17.6
Share issue expenses                                           -                 -            (0.2)
Interest paid                                                  -                 -            (0.3)
Payment of finance lease liabilities                           -             (0.1)                -
                                                        --------           -------          -------
Net cash generated by financing activities                   1.8             (0.1)             17.1

Net (decrease) in net cash and cash                      
equivalents                                               (26.8)            (24.9)            (8.9)
Cash and cash equivalents at beginning of                
period                                                      37.2              46.1             46.1
Cash and cash equivalents at end of period                  10.4              21.2             37.2



Consolidated statement of changes in equity for the six months ended 31 December 2006

                 Share     Share   Merger  Capital       Foreign    Share based     Employee  Retained     Total
               capital   premium  reserve  reserve      Currency   compensation      benefit    Profit
                                                     translation                 trust share
                                                         reserve                     reserve




30 June 2006        3.8      74.6     81.3      6.3         0.5           4.7        (0.9)      14.9     185.2

Loss for the      
period                -         -        -        -           -             -            -    (13.0)    (13.0)

Charged to
equity
New shares       
issued              0.2       1.6        -        -           -             -            -         -       1.8
Share based      
compensation          -         -        -        -           -           1.3            -         -       1.3
Share based     
compensation        
transferred to
liabilities*          -         -        -        -           -         (2.0)            -         -     (2.0)
Foreign          
exchange              -         -        -        -       (0.8)             -            -         -     (0.8)
                 ------    ------   ------   ------      ------        ------       ------    ------    ------
Total charged    
to equity           0.2       1.6        -        -       (0.8)         (0.7)            -         -       0.3

Total income     
and expense
for the period      0.2       1.6        -        -       (0.8)         (0.7)            -    (13.0)    (12.7)
                 ------    ------   ------   ------      ------        ------       ------    ------    ------
31 December    
2006                4.0      76.2     81.3      6.3       (0.3)           4.0        (0.9)       1.9     172.5
                 ======    ======   ======   ======      ======        ======       ======    ======    ======


* Transfer to liabilities of amounts in respect of cash settled overseas staff 
equity schemes previously classified within reserves.

Notes:

1.       Basis of preparation.

The interim statements have been prepared in accordance with the accounting 
policies and presentation required by International Financial Reporting 
Standards, incorporating International Accounting Standards ('IAS') and 
Interpretations (collectively 'IFRS').

A copy of the statutory accounts for the year ended 30 June 2006 has been 
delivered to the Registrar of Companies. The comparative numbers for the year 
ended 30 June 2006 have been extracted from these accounts. The auditors' report 
on those accounts was unqualified and did not contain a statement under section 
237(2)-(3) of the Companies Act 1985.

The comparative numbers for the six months to 31 December 2005 are in accordance 
with those announced to the London Stock Exchange on 31 March 2006.



2. Non GAAP measures of performance

EBITDA before exceptional items and share based compensation


                                            6 months to                6 months to           12 months to
                                       31 December 2006           31 December 2005           30 June 2006

Operating (loss) profit                          (17.9)                     (19.9)                    7.8
before exceptional items
Depreciation and                                    6.2                        7.1                   14.8
amortisation
Exceptional items                                     -                          -                    1.8
Share based payment charge                          1.1                        1.6                    4.4
                                                 ------                     ------                 ------
EBITDA before exceptional       
items and share based
payment charge                                   (10.6)                     (11.2)                   28.8
                                                 ======                     ======                 ======


3. Taxation


                                6 months to 31 December    6 months to 31 December   12 months to 30 June
                                                   2006                       2005                   2006
                                                     £m                         £m                     £m
Current tax
UK corporation tax at 30%                         (0.2)                          -                  (0.2)
Overseas taxation                                 (0.5)                          -                  (2.6)
                                                  -----                      -----                  -----
                                                  (0.7)                        0.0                  (2.8)
Deferred Tax
Origination and reversal of                         4.9                        8.0                    8.2
timing differences
                                                   ----                       ----                    ---
Taxation credit                                     4.2                        8.0                    5.4
                                                  =====                      =====                    ===




At 31 December 2006 the Group had substantial tax losses carried forward subject
to the agreement of the tax authorities in various jurisdictions.




4. Earnings (loss) per share


               6 months to 31                6 months to 31                  12 months to
                December 2006                 December 2005                  30 June 2006
                         Loss       Weighted           Loss       Weighted       Earnings       Weighted
                              average number                average number                average number
                                   of shares                     of shares                     of shares
                           £m        Million             £m        Million             £m        Million

Basic                  (13.0)           76.5         (12.2)           71.6           13.5           72.9
Diluted                (13.0)           76.5         (12.2)           71.6           13.5           76.4


The weighted average number of shares has not been diluted for loss making
periods.



5. Post balance sheet events

Warner Bros. agreements

On 19 March 2007 the Group completed three agreements with Warner Bros. 
Entertainment for (a) a £44.5 million share subscription by Warner Bros. 
Entertainment, (b) eleven licensing agreements with Warner Bros. Interactive 
Entertainment and (c) a US primary distribution agreement with Warner Bros. Home 
Entertainment Group.

Under the terms of the share subscription Warner Bros. Entertainment has 
invested £44.5 million in SCi by subscribing at £5.02 per share for 8,860,897 
new SCi shares, representing 10.3 per cent of SCi's 
enlarged issued share capital.

Under the terms of the Licence agreements Warner Bros. Interactive Entertainment 
has licensed to Eidos (SCi's publishing label) (i) selected intellectual 
properties for video game development, including Batman, Looney Tunes, 
properties from the Hanna-Barbera catalogue and current television series 
Loonatics Unleashed, Legion of Super Heroes and The OC, and (ii) the right to 
develop, publish and distribute worldwide up to twenty games based on the 
licensed properties over various hardware platforms including Sony PS3, PS2 PSP, 
Microsoft Xbox 360, Nintendo Wii, DS, Gamecube, GBA and PC.

Under the terms of the Primary distribution agreement Warner Bros. Home 
Entertainment Group will provide certain primary distribution and media buying 
services to Eidos in the United States.


Acquisition of Rockpool

On 26 February 2007 the Group completed the acquisition of Rockpool Games, one 
of Europe's leading developers of games and content for wireless devices, and 
Rockpool's two sister companies: Ironstone Partners and SoGoPlay.

Rockpool Games has built a commendable reputation as an independent mobile 
content developer.   Ironstone Partners is a licensing company with an extensive 
portfolio of intellectual property rights and has operated primarily in the 
computer and video games, toy, electronics and mobile media markets. Ironstone 
has licensing relationships across many sectors and manages the Epyx back 
catalogue of classic video games alongside some of the world's most-recognised 
brands including Top Trumps, Withit and Commodore.  SoGoPlay develops and 
publishes compelling games for the casual gaming market whose primary target is 
distinctly different to that of the hardcore computer and video game sector.

The total consideration will be satisfied by the payment of initial 
consideration of £1.2 million, payable as £0.7 million in cash and £0.5 million 
by the issue of new ordinary shares in SCi, and by deferred consideration, 
conditional on profit performance, of up to £6.5 million payable in three
tranches of £2 million, £3.5 million and £1 million payable between 2007 and 
2010.


Acquisition of Bluefish

On 26 March 2007 the Group completed the acquisition of Bluefish Media, a 
specialist in online distribution of video games.

The total consideration will be satisfied by the payment of initial 
consideration of Euros 1.25 million, payable in cash, and by deferred 
consideration in four tranches of up to Euros 1.75 million between 2007 and 2010. 
Each deferred consideration tranche will be satisfied as to 43.4% in cash and 
56.6% in new ordinary shares of SCi.




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