Accounting software house Coda Plc beat expectations for its year to October 31 due to better than anticipated sales in the Netherlands and US, especially for its AS/400 product. Pre-tax profits for the year ending October 31 rose 14.9% to UKP3.2m, while turnover increased 40.6% to UKP17.9m. And according to managing director Rodney Potts, this was achieved despite heavy investment in overseas expansion and in developing a new Posix-compliant product, Open Accounting, which was launched last year. Open Accounting was originally developed on Hewlett-Packard Co’s HP 9000 range, but has since been implemented for the RS/6000, Sequent Computer Systems Corp boxes and Digital Equipment Corp’s Alpha running OSF/1. Publicity manager David Turner, said that Open Accounting took two years to develop because the Harrogate, Yorkshire company writes software from scratch for each new architecture. This, he said, is in contrast to many of its competitors – they simply convert software for different environments, and it often doesn’t run very well. Another reason for the success of Coda’s software, he reckons, is that its CODA-IAS integrated accounting system is an on-line, real-time system. All ledgers are kept on one database, and are automatically updated when new information is added. Such a system has become increasingly popular, Turner says, because companies are becoming increasingly interested in management accounting, and so need to have information at their fingertips at all times. Conversely, most of the group’s competitors offer modular software that has to processed in batch, generally overnight. Apart from the above mentioned hardware, Coda’s software also runs on Hewlett-Packard Co’s HP 3000, DEC VAXes and IBM Corp AS/400s. Revenues generated from VAXes grew 22% to UKP11.1m, and although Turner said that licence sales have really slowed because people aren’t buying the machines much any more, a high proportion of the UKP11.1m came from maintenance and services to the group’s existing 500 or so VAX customers.
Japan another possibility
In 1992, VAX-related revenues made up 70% of total group turnover, but Turner expects this to drop to 60% in 1993 as AS/400 business continues to grow. This year, sales here increased 133% to UKP5.6m, and made up 45% of all new licence sales. Although Coda has offered AS/400 software since the box was launched in 1988, Turner says that sales have only taken off over the past two years, and it is now the group’s fastest-growing market. He expects a similar situation with Alpha, but says the company has just signed its first large contract in the US. Coda’s business is split between new licence sales, which generated UKP11.2m in 1992, professional services, including consultancy and training, which brought in UKP2.9m, and maintenance, worth UKP3.8m last year. According to Turner, it is basing its strategy for growth on further expansion into the international arena, a necessary tactic as so many of its customers are multinationals, and require global support. Coda Inc currently has seven offices in the US, and saw sales increase 49% to $10.6m, which, Turner reckons, makes it one of the few UK companies to have succeeded in such a notoriously dangerous market. Holland is another major market for the company. Turnover from this region grew 260% to UKP1.3m, because, Turner says, it seems to have been less affected by recession than other parts of Europe, and a lot of multinationals are based there. This year, Coda also opened offices in Germany, Hungary, Singapore, Australia, and Hong Kong, and is in the process of opening more in Belgium and Sweden. And by the end of the year, it expects further sites to be fully operational in Spain and Italy. Japan is another possibility. Meanwhile, business in Hungary and the Czech and Slovak republics is going very well, Turner says, because their respective governments have told firms they must get their financial systems up to Western standards. Although the deadline was the end of last year, many companies still haven’t done so, so there is still m
uch potential for growth, especially as these countries have far less foreign debt than any of their Eastern European neighbours. While Russia is an area of interest, he doesn’t believe Coda will set up shop there over the next couple of years at least, until economic stability is re-established. Coda has published its report and accounts each year since 1987 because, Turner says, its products are generally sold to the financial directors of large corporations and they always want the security of knowing how a firm is doing and if it will still be around in a few years. But, he says, Coda has no intention of going public in the foreseeable future – it likes its independence too much. The majority of shares are held by Rodney Potts and co-founder and financial director Chris Lennox, the rest by staff.
