| Wed 27 Feb 2002, 0:00 | | Frontrange Limited - Interim Results For The |
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FrontRange Limited
(formerly Ixchange Technology Holdings Limited)
Half Half
year ended year ended Year ended
31 December 31 December 30 June
2001 2000 Change 2001
Consolidated Income Audit Audit % Audited
Statement (R'000) reviewed reviewed
Revenue 373 040 351 343 6,2 750 532
- Continuing operations 360 521 303 060 19,0 661 625
- Discontinuing
operations 12 519 48 283 88 907
Loss from operations (144 401) (161 011) (324 489)
- Continuing operations (135 205) (102 526) (206 428)
- Discontinuing
operations (9 196) (58 485) (118 061)
Goodwill amortisation (15 261) (43 895) (38 893)
Net finance income 8 210 19 437 23 768
Exceptional loss (53 879) - (138 420)
- Capital (12 672) - (113 824)
- Non-capital (41 207) - (24 596)
Loss before taxation (205 331) (185 469) 10,7 (478 034)
Taxation charge (4 213) - (129 419)
Loss after taxation (209 544) (185 469) 13,0 (607 453)
Outside shareholders'
interest 27 663 37 110 (25,5) 142 763
Loss attributable to
ordinary shareholders (181 881) (148 359) 22,6 (464 690)
Add:
Headline adjustments
(after outside
shareholders' interest) 27 933 43 895 196 604
- Goodwill amortisation 15 261 43 895 27 448
- Write-off of deferred
tax asset - - 85 687
- Exceptional items -
capital 12 672 - 83 469
Headline loss (153 948) (104 464) (268 086)
Number of shares in
issue (000's) 157 590 157 265 157 401
Weighted average number
of shares on which LPS
& HLPS is based (000's) 157 323 157 172 157 198
Loss per share (cents)
"LPS" (115,61) (94,39) (295,61)
Headline loss per share
(cents) "HLPS" (97,85) (66,46) (170,54)
Weighted average number
of shares on which
diluted headline
earnings per share
is based (000's) 167 759 167 419 163 881
Diluted headline loss
per share (cents) (91,77) (62,40) (163,59)
Amortisation and
depreciation for
the period 30 657 62 651 69 578
CONSOLIDATED BALANCESHEET (R'000)
Equities and liabilities
Ordinary shareholders'
interest 243 551 674 404 345 969
Outside shareholders'
interest 34 145 238 503 51 107
Deferred taxation - 23 102 -
Long-term liabilities 442 1 510 768
Current liabilities 366 508 227 794 250 006
Deferred revenue 145 327 77 315 76 361
Trade payables 39 593 40 715 52 962
Accruals and other
payables 181 588 109 764 120 683
644 646 1 165 313 647 850
Assets
Non-current assets
Goodwill 101 390 124 100 102 248
Property, plant and
equipment 119 119 80 157 91 295
Other long-term assets 5 430 38 124 23 385
Deferred taxation - 212 922 -
Investments - 2 554 1 324
Current assets 418 707 707 456 429 598
Inventories 2 992 5 093 10 011
Accounts receivable 231 886 143 280 163 401
Prepayments and other
current assets 50 386 44 284 46 720
Deferred costs 828 871 734
Taxes receivable 508 33 784 42 500
Cash and cash
equivalents 132 107 480 144 166 232
644 646 1 165 313 647 850
Net tangible asset value
per share (cents) 90,21 349,92 154,84
CONSOLIDATEDCASHFLOWSTATEMENT (R'000)
Cash utilised by
operations (57 386) (70 368) (217 652)
- Continuing operations (39 816) (15 470) (89 209)
- Discontinuing
operations (17 570) (54 898) (128 443)
Cash utilised for
investing activities 12 959 (80 391) (180 936)
- Continuing operations 10 228 (77 393) (180 248)
- Discontinuing
operations 2 731 (2 998) (688)
Cash utilised for
financing activities 10 302 (10 127) (76 209)
- Continuing operations 10 368 (9 084) (75 159)
- Discontinuing
operations (66) (1 043) (1 050)
Net movement in cash
position for the year (34 125) (160 886) (474 797)
Cash and cash equivalents
- beginning of the year 166 232 641 029 641 029
Add: Net movement in cash
position for the year (34 125) (160 886) (474 797)
Cash and cash equivalents
- end of the year 132 107 480 143 166 232
STATEMENT OF CHANGES IN EQUITY (R'000)
Balance at beginning
of period 345 969 719 778 719 778
Issue of shares (73) 1 322 1 323
Net loss attributable to
ordinary shareholders (181 881) (148 359) (464 690)
Increase in foreign
currency translation
reserve 79 536 66 991 97 860
Movement in other
non-distributable
reserves - 34 672 (8 302)
Closing balance at end
of period 243 551 674 404 345 969
COMMENTS
FrontRange Limited, the JSE-listed holding company owning 84% of US-based
FrontRange Solutions, Inc., is a global leader in customer management
applications for the mainstream business market employing nearly 600 people
in nine countries, with a base of one million-plus users at more than 100000
companies worldwide.
The group's core and integrated mid-market CRM product sets include HEATTM,
a leader in Customer Service & Support software, and GoldMineTM, a leader in
Business Contact Management and Sales & Marketing Automation software. HEAT
and GoldMine are well-established products and strong brands in their global
markets.
NAME CHANGE
FrontRange Limited, previously known as Ixchange Technology Holdings
Limited, received approval to change its name to FrontRange Limited and has
been trading under this name on the JSE Securities Exchange South Africa
since 14 January 2002. The name change reflects the company's total focus on
the CRM solutions provided by FrontRange Solutions, Inc., headquartered in
the US.
FINANCIAL PERFORMANCE
Discontinuing operations: In the six months to 31 December 2001, FrontRange
Limited finalised agreements to dispose of its non-core operations, ensuring
that loss making, non-core operations do not consume any more resources from
the operations of FrontRange Solutions, Inc. These disposals raised a total
of approximately R16-million.
Revenue from continuing operations - up 19% over the previous year to R361-
million: As a result of the discontinuing operations, continuing operations
are represented by the results of FrontRange Solutions, Inc. as well as
associated holding company expenses.
In continued tough economic conditions, revenue from continuing operations
was R361-million ($38,8-million), representing an approximate 6% US dollar
decline from the comparable period in the prior year. Markets have remained
depressed following the 11 September attacks, with longer than anticipated
selling cycles being experienced in the US, United Kingdom and Australia.
The exception to this was continental Europe where targets were achieved and
growth of more than 100% over the prior year recorded. Despite the decline
in revenues experienced, the company continued to outperform its peer group
in the global markets.
As a testament to high levels of customer satisfaction and retention,
FrontRange's recurring revenue streams grew by 28% in US dollar terms over
the prior year period. Deferred revenue grew from R77-million a year earlier
to R145-million at December 2001.
Of the total R361-million in revenue, almost 98% was generated outside of
South Africa with 66% of revenue coming from North America and 32% from
Europe and the Asia-Pacific region.
Operating loss from continuing operations - R135-million: The group produced
an operating loss from continuing operations of R135-million for the period,
including noteworthy non-recurring charges of R20-million.
Profitable December: FrontRange in December 2001 produced a pro-forma
operating profit of R10-million ($900000 at December's exchange rates). This
was the first monthly operational profit in 21 months.
Exceptional items: Following detailed scrutiny, FrontRange has written off
approximately R54-million in the period as exceptional items. Approximately
70% of the write-off is comprised of non-cash items.
Cash: Cash flow was managed ahead of the cash management plan's best case
scenario and the group reported cash reserves of more than R132-million at
end of December 2001.
Exchange rate for conversion: FrontRange's results and financial position
have been converted respectively at the average and closing exchange rates
of the period. These were R9,28 = $1 for the income statement and R12,11 for
the balance sheet.
ACCOUNTING POLICIES
The accounting policies used in the preparation of the interim results
announcement are consistent with those applied in the previous year ended 30
June 2001 and comply with South African statements of Generally Accepted
Accounting Practice.
INDEPENDENT REVIEW
The interim financial statements have been reviewed but not audited by
Deloitte & Touche whose report is available to members for inspection at
FrontRange's registered office. Attention has been drawn to the directors'
statement on going concern.
GOING CONCERN
The Board has continued to take steps to restore the group to profitability,
resulting in monthly cost savings of $3-million achieved by January 2002
compared with the period 12 months' earlier. Based on the expense savings,
the R132-million cash on hand at December 2001 and the plan, detailed below,
to raise additional funds to boost its currently ungeared balance sheet, the
board is satisfied that FrontRange will continue as a going concern for the
foreseeable future.
OUTLOOK FOR THE SECOND HALF OF FISCAL 2002
Raising additional capital: FrontRange regards it as prudent to raise
additional cash so that it is well positioned to take advantage of market
opportunities and a potential economic upturn predicted for the latter part
of 2002.
In this regard, a US-based investment banker, focused on the CRM software
market, has been retained to manage the process of raising additional
capital and it is anticipated that raising such additional funding would be
best accomplished in the US market. Further information regarding such
capital raising will be made available as progress is made.
Profits expected: FrontRange expects the world economy to remain tough
during the rest of current fiscal year. It has thus been reducing expenses
and is budgeting for operational breakeven in the third quarter ending 31
March 2002 and a full quarter's profit in the fourth quarter ending 30 June
2002. This should result in an overall operational profit for the second
half of the fiscal year.
Executive direction: Patrick Bultema has succeeded Dana Buys as CEO and
President of FrontRange Solutions, Inc. and Buys will be returning to South
Africa as Managing Director of FrontRange Limited at the end of June 2002.
The board is very satisfied with Bultema's leadership and the transition,
which has been completed as planned.
Bultema's main focus is on a return to profitability, market recognition for
the company's strong leadership position in an important global growth
market, and the establishment of a new long-term technology platform that
will be shared across the company's product set. FrontRange is on track to
release the first version of its Microsoft .NET based next generation
product set in the second half of 2002.
FURTHER INFORMATION
Further information, including details of the strong performance of
FrontRange relative to its peers, new products released and notable customer
wins in the period, can be found on FrontRange's website at
www.frontrange.com/corporate under the section Investor Relations.
Christo Nel Dana Buys
Chairman, FrontRange Limited Managing Director, FrontRange Limited
Johannesburg
26 February 2002
Directors: C Nel (non-executive Chairman); DJ Buys (CEO); P Bultema*; D
Carruthers (non-executive); AE Gear; JW Hillyard*; DC Kreunen (non-
executive); AJ Pienaar. *US Citizen.
Company secretary: AJ Pienaar.
Sponsor: Nedbank Investment Bank Limited
Company registration No. 1997/009928/06
ISINNo. ZAE000016879. Share code No. FRO
