British developer Warthog has announced its final results for the year ended March 31st, revealing a 50 per cent drop in turnover and a pre-tax loss of UKP 9.2 million in what is described as the firm's "most difficult" year.
Turnover fell to UKP 5.7 million for the year from UKP 11.4 million in the previous year, as the company's work for hire business fell off (including the cancellation of two work for hire projects) and the dollar exchange rate negatively impacted income.
Exceptional items of UKP 4.4 million were also included in the figures, including write-offs for a number of projects which were cancelled or remain unsigned, bad debts related to "troubled" publishers, and redundancy costs from staff lay-offs.
However, despite the weak results for the financial year, which chief executive Ashley Hall describes as "the most difficult in my seven year history at Warthog," the firm actually enjoyed major success with its shipped products last year - releasing five games, four of which sold over half a million units.
"The contrast is stark," according to Hall. "We have developed the games we were working on to the timescales required and they have sold better than ever before in our history. Our technology has improved and our development process has continued to be honed. Yet new business is more difficult to find than ever and the costs of tendering are higher than ever before."
Warthog's response to these difficulties has been to streamline its operations and to begin focusing increasingly on the creation of original IP rather than on work for hire projects, with a number of original products currently in development at the company's studios.
"This strategy is not without risks," admits Hall. "These risks however are no more than we have been facing through standard 'work for hire' but the benefits for success are far more attractive. It would only take a single hit developed on the back of our IP partnering deals or self generated IP to propel the company forward and transform our fortunes."
As well as its original IP products, Warthog does currently have a number of other projects in development - including an unannounced IP partnering project with a Hollywood movie studio, and another unannounced title, this time for SCi, which is being worked on at the firm's Swedish studio.