SCI Entertainment, the developer behind gaming adventuress Lara Croft, will slash 25 per cent of its workforce as part of a revised strategy that could cost up to £75 million to implement after interim losses leapt by 78 per cent.

The computer games group now expects to make a loss for the full year after losses for the six months to December 31, 2007 slumped from £17.9 million to £81.4 million on sales down from £74.5 million to £73 million.

The loss widened mainly due to a £79.6 million charge which includes the cost of aborted projects, research and development on new projects and costs being booked as development instead of research.

SCI, now operating under new management since an extensive board clear out in January, said this morning it will scrap 14 of its ongoing projects to concentrate on its "cornerstone" games including Tomb Raider, Hitman and Championship Manager.

SCI's workforce will be reduced to 800 as part of the company's new strategy that will cost up to £75 million to rollout.

The company is currently in negotiations with its main lending bank, Lloyds TSB, to extend its £20 million overdraft facility, with the remainder of the new strategy costs to be financed through issuing new shares as well as seeking investment from third parties.

Last year, SCI was in talks about an outright sale of the business. Although these discussions did not result in a takeover of SCI, it is understood that some parties who previously engaged in discussions may be interested in investing in the group.

Phil Rogers, previously chief financial officer at SCI who was appointed chief executive in January, denied the group was in danger of breaching its banking covenants. He said: "We have a great relationship with our banks. That is not a risk I see right now."

In a statement this morning, Mr Rogers said: "As illustrated by today's interim results...our quality has slipped below acceptable standards and, through disappointing game development and working within an ineffective operating structure, we are failing to realise the commercial return our creative ability and our shareholders demand.

"Our infrastructure is too big and expensive for the scale of the business."

Mr Rogers said SCI's business will be refocused on game development in its studios, with production, branding and PR all working together "in one time zone", while its product testing facility will now be based in Canada. SCI said that while it is no longer in takeover talks, it would not rule out a deal in the future.

Shares in SCI fell by 14.2 per cent to 45.25p - a 93 per cent fall from a five-high of 615p in January 2006.

In January, SCI replaced its top management team after takeover talks last year collapsed.

Jane Cavanagh, chief executive, Bill Ennis, managing director of publishing and Rob Murray, in charge of studios, all left the business with immediate effect after chairman, Tim Ryan, spoke with SCI's top 20 investors who represented 50 per cent of the group.

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