Software group plans to come to market with pounds 50m price tag

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The Independent Online
CODA, the software group based in Harrogate, plans to join the stock market early next year.

The flotation, probably through a share placing, is being sponsored by SG Warburg, the merchant bank, and is expected to value the company at about pounds 50m on launch.

Coda, set up by Rodney Potts, chairman, in 1979, specialises in developing accounting and financial software for mid-range computer systems. Its most important product is Integrated Accounting System, which runs under the Unix computer operating system and costs up to pounds 400,000.

The company originally designed products for use on Hewlett Packard hardware, but later diversified into Digital Equipment computers. In the past two years, however, it has grown rapidly by entering the IBM market.

Taxable profits have grown from pounds 2.2m in 1990 to pounds 3.25m in the year ending 31 October 1992, on doubled group turnover to pounds 18m.

But profits fell 60 per cent to pounds 430,000 in the first half to last April, despite sales up by a third to pounds 9m. The decline was blamed on high costs of developing new products and markets. The full-year result, due shortly, is expected to show a second-half recovery.

Most of the company's shares are owned by Mr Potts, fellow directors and about 100 staff. County NatWest Ventures, its sole institutional investor, owns about 6 per cent.

A key reason for the flotation is to facilitate growth. 'We are looking at the possibility of a listing next year and are close to making a final decision. The flotation is being considered for all the traditional reasons, such as to expand and raise share capital,' Robert Brown, finance director, said.

Coda's nearest quoted rival is Quality Software Products, in which IBM holds a 10 per cent stake. Placed at 380p a share, equivalent to 24 times historic earnings, they climbed to a first-day premium of 157p. They closed at 394p last Friday.

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