Cedardata confounds forecast as profits soar

STOCK market newcomer Cedardata reported a 53 per cent rise in pre-tax profits to pounds 2.7m for the year to 31 March, above the pre-flotation forecast, writes Diane Coyle.

Leon Fattal, managing director of the accounting software company, said sales prospects were significantly ahead of last year. Cedardata was receiving an invitation to tender for a new contract every day, on average.

Turnover rose 16 per cent to pounds 6.1m. The company made half its sales to public sector or ex-public sector bodies. It is already strong in the local authority and further education markets, and forsees big growth in sales to the healthcare sector. In February, it announced contracts with four NHS trusts.

Recurring revenues, from maintenance and service fees, made up more than a quarter of the total. Mr Fattal said these revenues, at pounds 1.6m, continued to exceed operating costs. New product launches are planned for early 1995, but development spending will stay below 10 per cent of total expenditure.

Cedardata had pounds 2.7m in cash at the end of March and is considering acquisitions. It is also looking at a joint venture to distribute its products in the US, with the support of the software giant Oracle, its US partner. Oracle has granted Cedardata perpetual licences to use and operate some of its software.

Mr Fattal said an interim dividend would be paid this year. An institutional shareholder said: 'I have checked its mouth, and Cedardata is a genuine gift horse.' The shares fell 2p to 105p.