23/01/06 Trading update
SCi has provided a trading update for the 6 month period to 31/12/05. Sales have exceeded £40m during the period, ahead of the £25m sales the Company claims to have budgeted for the period. The Company attributed the improved sales to the performance of one product, Lego Star Wars , a title which has now clocked up 3m units in worldwide sales. Lego Star Wars will deliver a considerably lower margin for the Company as it was a one-off distribution deal with micro-publisher Giant Entertainment (who own the Lego licence). A Lego Star Wars sequel has already been announced by Giant although SCi will not be distributing it (LucasArts will). SCi has secured a co-publishing deal with Giant for another Lego-based product, based on the Bionicle brand, due for launch in FY07.
Despite the considerably better-than-expected first half performance, SCi has chosen not to alter its guidance for the full-year, an indication of both its conservative approach to forecasting as well as the potential for further product slippages for key FY06 releases. SCi also revealed that it had completed its integration of Eidos although investors will only know whether this has been achieved successfully following the successful launch of the key Eidos franchise products still in development.

15/02/06 Offer talks ended
SCi has terminated the offer talks originally announced in October 2005. No reason was stated for the collapse of the talks although, as pointed out in previous new analyses, we believe the recent SCi share price movement presented a significant valuation barrier to any offer materialising.

31/03/06 Interim results

SCi's results for the six months to the end of calendar 05 are the first to adhere to the international reporting standard, IFRS. As such, a number of changes have been made to the way in which SCi's performance during the period is accounted for. The most significant change is the treatment of Spanish distributor Proein (in which SCi has a 75% stake) whose figures are now fully consolidated into SCi's and contributed £7.8m of the £50.1m total sales for the period and a modest £0.1m in post-tax profit.

24/04/06 SCi raises network gaming warchest
SCi announced that it has raised an additional £17.4m via a fully subscribed placing which is intended primarily for growing its fledgling network gaming business. Specifically, the Company is targeting the money for casual games (a largely online market), massively multiplayer online games (MMOGs) and mobile gaming markets. The Company already has a division focused on network gaming opportunities but they have yet to make a move into either the casual games market or the MMOG market. Microsoft's Xbox Live Arcade casual games download service has proven particularly popular although there is a danger that the service will become inundated with content such is the level of interest expressed by the industry in both Arcade and Sony's equivalent eDistribution service for PS3. The MMOG market is also crowded and full participation is a major financial risk with typical MMOG development costs of over $10m/title and launch costs potentially as high. We believe that SCi will be opportunistic in its approach towards the MMOG market and will seek to license completed titles from overseas for European and North American operation although it will need to establish its own infrastructure if it intends to remain in this fast-growing market. Investors should not, therefore, expect any short-term returns on this investment.      

19/05/06 Trading update
With sales of 2.6m units across all platforms in its first five weeks, the new Tomb Raider title has beaten the market's original forecasts already (of 2m units for the FY to 30/06/06) and sales continue to prove strong and will even be bolstered by the launch of the PSP SKU in June and further handheld SKUs later in the year. The other major release during SCi's FY06, Hitman: Blood Money, has begun to receive positive pre-release feedback including pre-order levels described by the Company as "particularly strong". Hitman: Blood Money looks set to emulate Tomb Raider: Legend in beating its predecessor's sales levels. SCi has also begun to build on its Lego Star Wars co-publishing success with other co-publishing and distribution deals announced including those for Warner Bros.' Justice League Heroes and Tom and Jerry. Interestingly, despite this success, the Company did not suggest it would beat the market's forecasts, only that it is "on track" for "profitability" during the year. Although the Company is undoubtedly being prudent, and rightly so given the consistent failed targets of the previous Eidos administration, it also hides the slippage of one or two FY06 titles (such as Battlestations: Midway which has now become a next-gen only title for 2007) and the poor performance of others (Rogue Trooper, Commandos Strike Force, Zero Tolerance).         

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