Jade foresees better times

By RICHARD WOOD

Jade Software revenues dipped to $40.5 million last year during radical restructuring as its income from Linc dried up.

Chief executive Sir Gil Simpson confirmed that revenue for the year to December was down from last year's $47 million. In previous years it has been more than $60 million.

But he predicts that turnover for the Christchurch company, formerly Aoraki Corporation, will be $50 million this year.

At the heart of the recovery is a 38 per cent rise in income from its Jade software business for the first six months of this year.

A Jade Direct network of wholly owned distributors has been set up in Australia, Britain and the United States, and the company has 40 local and international partners who create and sell software packages developed in Jade.

Jade has become so export-focused that its New Zealand client business is now managed out of Jade Direct in Melbourne, although it has 100 staff in Christchurch.

Simpson said the New Zealand market was conservative and still oriented towards enterprise resource planning software.

He had not given up on New Zealand, but Jade would have to wait until the local market caught up with it.



Jade's figures highlight the difficult time the company has had in restructuring as it prepares for listing next year on the NZSE.

Last year, Jade switched its focus entirely to its up-and-coming Jade development system after dumping support for, and services around, its long-time money-spinner, Linc. Last year Linc contributed 13 per cent of Jade's income.

The 30-year-old company was built on Linc, which it sold early on to international mainframe vendor Burroughs, now part of Unisys. As Aoraki Corporation it received a development contract for Linc that expired in 1999.

Burroughs/Unisys took Linc software all over the world and it is still used at an estimated 3500 mainframe sites worldwide.

Jade, launched in 1996 and developed at a cost of $15 million, works on mass-produced PC hardware running on standard PC operating systems such as Windows, Linux, and Unix.



Simpson said that last year was a low point for the business, which felt the effect of the loss of Linc revenue.

"You've got this phenomena of a whole business going away, and although you're making great strides on the other side of the business, it's just absorbing the losses you are suffering," said Simpson.

"Hence the real growth rate of Jade is very important to us because if it doesn't grow fast enough, we can't offset the loss of Linc business. It's quite a challenge."

Simpson said the total bottom-line cost to the company of the transition would be around $30 million.

The company has 350 staff, compared to 400 in 1995.

Simpson said most of the people who had left recently were sales staff associated with Linc and turnover of technical staff had been lower then 2 per cent.

The latters' skills represented a sizeable block of enterprise software development experience, and would also come in handy as Jade attempted to convert global Linc users to Jade. Although some Linc customers are moving to Jade, others, such as The Warehouse, have chosen not to.

With the public float intended for the first quarter of next year, Jade's financial state will be critical. Last year, the company raised $12.2 million in a convertible notes issue that will be around 30 per cent of the company when it lists.

Simpson's share will drop from 90 per cent to 60 per cent as a result and it may dip below majority control. Ten per cent of shares are owned by staff.

Simpson, a multi-millionaire, said the float was important for credibility when dealing with large customers, for getting market feedback on management performance and for raising capital for expansion.