Microsoft deal eases pain of £2.6m loss at Rage

Rage Software, the British games developer, unveiled sizeable losses yesterday but claimed that deals to develop games for Microsoft and to distribute products in the United States would launch a recovery.

Rage Software, the British games developer, unveiled sizeable losses yesterday but claimed that deals to develop games for Microsoft and to distribute products in the United States would launch a recovery.

The Liverpool-based company, which is in the process of turning itself into a games publisher, reported a pre-tax loss of £2.6m for the year to 30 June and said it would not pay a final dividend.

Last year the company made a profit of £3.1m, and turnover was double this year's £4.2m. In August, the company issued a profit warning after losing an important contract with an undisclosed publisher.

Yesterday the shares closed up 0.25p at 23.75p. They have fallen by 70 per cent since March.

Paul Finnegan, chief executive of Rage, said: "The cancelled contract was part of our old business model, where we were developing games for someone else. We have now taken that title across a number of platforms, and nothing has been wasted."

Last week the company, which earlier this year raised£6m in funding, said it had signed a deal to develop three games for Microsoft's Xbox platform, for release next autumn. It has also struck a deal with Interplay to sell games in the US through the Wal-Mart and K-Mart chains, and will launch a Sony PlayStation 2 game this autumn.