Jade Software slashes losses by over $12m

Jade Software's recovery from near death looks on track with the company reporting a $3.2 million loss for 2004, down from a $15.6 million loss the previous year.

Chief executive Rod Carr said shareholders were happy with the result, which saw operating revenue increase 14 per cent to $34.6 million.

"They are happy because it was on plan, we got to 99.3 per cent of planned revenue, we had higher ebitda (earnings before interest, tax, depreciation and amortisation), a smaller than expected loss and we saw things improving through the year," Carr said.

"What shareholders were interested in was that management was in control of the business and there were no surprises."

Around $1.4 million of the loss was interest on debt since paid off, and the other $1.8 million came in the first half of the year.

The company is increasingly selling package applications based around its technology to customers in healthcare, student administration, ports management and other sectors. Yet around half of its revenue is still from designing and building custom systems for companies such as Fonterra, which involve high labour content. The cost of sales went up 7 per cent to $18.4 million.

Operating costs almost halved from $28.6 million to $14.8 million, showing the rewards of the major restructuring Carr undertook shortly after joining the company in late 2003.

At the time, revenues were dropping, debt was piling up and the company was carrying many highly paid staff whose skills were not in the new Jade technology but in the older Linc mainframe language, which had been the basis of the company's first 20 years of existence.

Under Carr, Jade laid off around 100 staff, almost a third of the total, sold property assets, clarified product lines and brought in new shareholders. A $25 million capital raising in December valued the iconic company at just under $50 million.

The results reveal the largest shareholder, British financial services firm Skipton Building Society, has the option to move to 51 per cent this year. The option will be extended to the end of 2006 if reported earnings this year are less than $1 million.

Carr said revenue so far this year was 15.5 per cent ahead of the same time last year and 4.5 per cent ahead of plan.

Jade has also hired former Spectrum Resources chief executive Gavin Mitchell as its head of marketing, sales and channel management, a new number two position to Carr. Spectrum, a former miner turned power billing software developer, is now the vehicle for a backdoor listing by fruit juice company Charlies.

Carr said Mitchell has valuable experience taking New Zealand software to global markets.

"His work selling Spectrum's Kinetiq product into Canada, Singapore and Australia gave him exposure and experience to selling mission critical systems into large buyers with long lead times.

"That is a familiar story with Jade," Carr said.