Coda Group Plc has turned in the first loss in its 16-year history, and of course it had to be in the year in which it became a public quoted company. The Leeds-based accounting software company made a pre-tax loss of ú8.0m on turnover that was virtually static, down 0.3% to ú23.4m. This was attributed mainly to a significant loss from its US arm due to the quicker-than-expected move from proprietary VAX business to open systems. Another contributing factor was a 67% increase in spending on research and development, which now accounts for around 20% of the company’s turnover. Such a large amount is deemed necessary if the company is not to miss the client-server boat altogether, as most of the money was spent on developing Coda’s Open Accounting System. Coda’s shares closed last night down 4.5 pence at 85 pence. On the day following the company’s first day of trading they closed at 262 pence. Presumably the company is now bumping along the bottom, and views its ungeared balanced sheet as ideally placed to become a world leader in the open systems business. Immediate aim of chairman Rodney Potts and his board, however is to return the company to profitability by tightly managing the inevitable decline in revenues from its Digital Equipment Corp VAX software, which still accounts for 49.5% of turnover. The company views its prospects for growth in AS/400 software with caution, preferring to aim for an increase in its open systems business at least as good, if not better than the 147% that was achieved this year, bringing its contribution to turnover to ú3.5m, 15.2% of the total. The company proposes to pay no dividend.
