Rather like a voyeuristic spectator at a bungee jump, those watching Coda Group Plc were waiting to see if the accounting software company would hit its head on the ground, or only get close before being yanked back up to relative safety. As the bungee jumper would bounce up and down a few more times, so might Coda but will probably never come as close to disaster as it did in 1994. Coda is back in the black after turning in the first loss in its history a year ago (CI No 2,580), having floated in February 1994. Pre-tax profits in the year to October 31 were ú1.0m, against ú8.0m losses last time. The company intends to hang on to the profits for working capital, so no dividend will be paid. Chairman Rodney Potts is at the vanguard of the campaign to persuade companies in the sector to write off research and development costs as incurred, and this year they came to ú6.3m, up from ú5.0m a year ago. Finance director Ian Shay said they would increase this year, but decline as a percentage of turnover. This time, turnover was up 40% to ú32.8m. The Harrogate, Yorkshire company had predicted the outturn back in November (CI No 2,791), so the market was largely unmoved by the figures. Marketing costs were high, at ú2.3m, as the company launched the products in the UK and US under a new banner, the ominous-sounding Liberation Systems for Enterprise Accounting. Shay reckoned the costs would be 20% higher this year. The increase in revenues was almost entirely due to a huge jump in sales of the Coda-OAS, now renamed Coda-Financials, the open client-server version of the core product. Sales were up to ú13.7m from ú3.5m, of which ú10.2m was for new licences. With these new licences comes new sources of maintenance revenues in the future. There are now more than 100 customers for Coda-Finanacials. Overall, licence revenues were up 60% to ú16.5m. The decline in Digital Equipment Corp VAX revenues, which hit the company so hard in 1994, was not as sharp as predicted this time: it slipped 9% at ú10.5m. Sales on IBM Corp’s AS/400 machines have probably peaked, according to Shay. They were up 6% at ú7.6m this time. But the company stressed that it was still an important market, since IBM intends to make the system slightly more open. Hewlett-Packard Co’s HP 3000’s revenues fell 13% to just ú935,000. The main push in terms of markets during the year was in the US, and that will continue. Costs were cut there and a new president and chief executive, Steve Wright was appointed. US revenues were up 40% to ú11.7m, with an especially strong final quarter. European revenues were up 42% to ú19.7m and Asia Pacific rose 16% to ú1.4m. Again, Coda-Financials was the main driver. This year the push behind the client-server product, in both research and marketing, will continue, as it will in the US. This will result in limited short-term profitability, according to Potts, and probably no dividend, but he expects to see an improvement by 1997.
