The adoption of US GAAP also meant that the previous year’s profits of Pounds 6.6m had to be restated as a Pounds 2.1m loss, despite an increase in UK revenues by 61% to Pounds 39.7m. Turnover fell from Pounds 110m to Pounds 73.2m.
And Merrill Lynch, the Surrey-based company’s broker, decided to downgrade Cedar’s forecasted turnover for the year from Pounds 180m to Pounds 155m and profits down to Pounds 14m from Pounds 20.7m.
Mike Harrison, managing director of Cedar, said the company’s move to US GAAP had the effect of ‘moving revenue between years’ in the short term, but in the medium and long-term would be of benefit to shareholders, and would not undermine cashflow at Cedar.
But, he said, Cedar’s ‘conservative revenue recognition policies’ would soon be adopted by other software companies and described the last financial year as one of ‘considerable progress’.
The market seemed to be in agreement with Harrison’s comments, as Cedar’s share price climbed 16p yesterday to 162.5p. Today the share was trading even better, up 13p to 176.5.
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