SCi halves in value on shock profits warning

SCi Entertainment, the computer games company behind the Carmageddon road rage titles, issued a shock profits warning yesterday, citing a string of unforeseen accounting issues.

SCi Entertainment, the computer games company behind the Carmageddon road rage titles, issued a shock profits warning yesterday, citing a string of unforeseen accounting issues.

The announcement, which came on the day the group should have reported its full-year results, knocked 45 per cent off SCi's share price. The stock closed down 142.5p at 172.5p, reflecting the company's admission that losses for the year ended 30 September 2000 could reach £3m. That compared with earlier analysts' forecasts of a £1.8m pre-tax profit. The shock was compounded by the fact that, just weeks ago, SCi issued a trading statement confirming that "results remain in line with market expectations".

One analyst said: "Something has gone seriously awry with the company if it can say in December that it will produce the figures, then, on the day of the results, reveal that it is £5m adrift." He added: "One has to ask questions about the internal accounting and operations."

SCi said that, in finalising the results for the full-year period, it would need to make "adjustments in respect of revenue recognition and the treatment of provisions relating to the acquisition of Actualize".

About £1m of the shortfall is thought to relate to late payments by one of SCi's customers. The matter has been taken up in the courts, and it is expected that the group will recover part, but not all, of the money.

Another exceptional item relates to an investment by SCi in an unnamed internet company, thought to be Music3W.com - an online ticket booker.

The final portion of the loss will arise because Actualize, publisher of the Rally Championship games series, is not expected to contribute revenue until later this year. SCi agreed to pay between £3m and £10m, depending on performance, to acquire Actualize last year.

Robert Murphy, SCi's finance director and company secretary, said there had been "no discussions" about board changes. He said: "A couple of things have happened at the last minute which have caused us to revise our expectations." SC1 has rescheduled publication of its full-year results until "no later than 26 January".