Warthog, the software company behind the Harry Potter computer games, has swung back in to the red after having to pay out £2m on projects that were cancelled or delayed.
But despite this setback, shares in the company doubled yesterday after Warthog said it would reduce the risks involved with launching new games by sharing development costs with the owners of rights to films and characters.
Iain Macdonald, the chairman of Warthog, said the past six months had been "an extremely difficult" period. "The practice of a publisher making a royalty advance sufficient to fund the development of a game has all but gone," he said. "We have been working on projects only to find games have been shelved due to uncertainty over the rights to the intellectual property on which they are based."
To address this problem, Warthog will look to establish joint ventures with intellectual property owners, which will fund and develop games in the early stages. It will later turn to a publisher to secure a sales and royalty deal.
The company, which also makes games such Loony Tunes and Wolverine's Revenge, has also been hit by the fall in the US dollar. The impact has been a £450,000 fall in earnings.
The group made a loss of £2.6m over the past six months, compared with a profit of £134,000 in the same period last year. The shares closed 2.75p higher at 5.5p.