Friday 24th October 2014
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Jade Software, which took its intelligence software developer Wynyard Group public last year, is chasing annual growth of between 30 and 50 percent from its Master Terminal port management software business, which is latching on to a global upswing in transport and logistics and could be a candidate for a public share offer.
The Christchurch-based software developer added 19 new terminals to its customer list in the three months ended Sept. 30 across the Middle East, Europe and Africa, taking its total to 64 units, as a growing number of ports look to upgrade outdated paper-based modes of handling port management. Chief executive David Lindsay told BusinessDesk the company is continuing to chase growth, and that sales growth is up by a third in the first nine months of its financial year from the same period a year earlier.
"It's natural that growth is going to cost, and there will be losses in the interim, which we're happy for. We're willing to forgo profits for the sort of growth we're enjoying" Lindsay said. "If we can manage 30 to 50 percent growth and really keep an eye on our business model, I think we'll have a really strong business."
Jade was back in the black in calendar 2013, reporting a net profit of $7.5 million, although that included the proceeds of the Wynyard float. The continuing operations, which including the Master Terminal and Jade Solutions businesses, reported a loss of $8.5 million. Group revenue, which wasn't broken down by unit, rose 14 percent in 2013 to $26.5 million, with the Master Terminal unit posting sales growth of 26 percent.
Increased global activity in transport and logistics since the global financial crisis has encouraged Jade to bring forward its aspirations for Master Terminal, which in April was said to be a three to five year project for it to develop into a broader logistics company.
Lindsay said Jade's balance sheet is strong enough to allow for faster growth over the coming 12 to 18 months, but will need to make some capital choices after that to shift the product along the supply chain.
That could include going to its existing shareholders, raising money from later stage investors, or looking at listing opportunities, depending on the environment at the time, he said.
"There is a growing desire to see high-growth companies that have a business model which will see them turning a profit within a limited period of time, so there's a far greater degree of due diligence being placed on the business model now rather than just growth," Lindsay said. "That's one of the things that we're pretty aware of as we're growing, is to just keep the business model really tight so we can turn a profit within 18 months, two years."
Jade spends between 22 and 25 percent of Master Terminal's revenue on research and development, and has a low staff turnover rate at just 7 percent, with about 70 to 80 percent of its human resources budget spent on retaining staff.
The solutions business, its digital and enterprise unit, is picking up with the majority of IT spend, focused on end-to-end solutions, and is working with a major local electricity retailer and a large Australian life insurer, providing innovation services, Lindsay said.
"That's a really high-growth market, but it's a pretty busy market as well," he said.
Jade's innovation programme, which looks to develop new products such as the successful Wynyard spin-off in collaboration with its customers, has several ideas at an early stage, and aims to push through five or six new products a year, Lindsay said.
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