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UK's Skipton Building Society buys out Jade Software shareholders

Monday 10th July 2017

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UK non-bank lender Skipton Building Society has bought out minority shareholders in Jade Software as the Christchurch-based tech company targets an early return to profit. 

Documents lodged with the Companies Office today show Skipton Investments Holdings increased its stake to 99.92 percent from 56 percent, acquiring 61 share allocations including a 26 percent stake held by USA Health Investors and founder Gil Simpson 2.2 percent stake, and leaving just five other shareholders on the register with minimal holdings.

The filings also show chief executive David Lindsay and USA Health representative Roger Bhole left Jade's board on June 30, leaving Skipton's Alex Robinson and Henry Varney and independent directors Julia Raue and chair Sue Suckling, who also chairs government innovation sponsor Callaghan Innovation. 

No price was disclosed and Jade didn't immediately put up someone to discuss the deal. 

Suckling only joined Jade's board in October, replacing long-serving chair Ruth Richardson who stepped down in May. Raue was also a recent addition to the board, joining in April last year. 

Jade filed its annual report last month showing a narrower loss of $942,000 in calendar 2016 from the $3.5 million deficit in 2015 on a 24 percent increase in revenue to $37 million. The company has been targeting an early return to profitability on the strength of its port management software. 

The accounts valued Jade's total equity at $14 million as at Dec. 31, with $25.6 million of assets and $11.7 million of liabilities. The software developer burned through $4.6 million of cash in 2016, mainly due to a $3.6 million of investment in buying and developing software. That left Jade with cash and equivalents of $5.2 million at the balance date. 

Skipton noted "encouraging year-on-year sales growth" from Jade in its 2016 annual report, and recognised a 15 million pound loss on its stake in Wynyard, the former NZX-listed intelligence software developer spun out of Jade. Wynyard went into voluntary administration in October last year after failing to secure emergency funds to keep it going from Skipton and liquidators were appointed in February of this year.

Wynyard's failure also spilt over into Jade's accounts with $912,000 of debt written off from the voluntary administration. 

Jade spun out Wynyard as a separate entity in early 2013 to free the intelligence software developer to pursue what had been rapid growth for the subsidiary. An initial public offering raised $65 million for Wynyard, though the company only kept $26 million to fund its growth ambitions, with the remainder paying out Jade for the intellectual property and covering outstanding debt. 

The split also included a services agreement where Wynyard would pay Jade for the sale and support of licences, managed services, development, consulting services and administrative support. The other leg of the deal would see Jade buy development services from Wynyard.

(BusinessDesk receives assistance from Callaghan Innovation to cover the commercialisation of innovation.)


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