| Tue 23 Apr 2002, 0:00 | | Frontrange Limited - Quarterly Market Update For J |
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Frontrange Limited
(Incorporated in the Republic of South Africa)
(Registration number 1997/09928/06)
("FrontRange")
Share code : FRO
ISIN : ZAE000035325
Quarterly market update for January to March 2002
FrontRange Solutions Inc. ("FrontRange Solutions"), the 84%-owned, US-based
subsidiary of FrontRange is a global leader in customer management
applications for the mainstream business market. The company employs 540
people in nine countries and has a user base of more than 1 million people
at more than 120,000 companies worldwide.
The company's core and integrated mid-market CRM products include HEATTM, a
leader in customer service and support software, and GoldMineTM, a leader in
business contact management and sales and marketing automation software.
HEAT and GoldMine are well established and strong brands in their global
markets
Unaudited financial performance for the third quarter
In continued depressed world markets, FrontRange Solutions, recorded revenue
of $20,0-million for its third quarter ended 31 March 2002. This was 3%
below revenue for the same period in 2001. Although the third quarter has
historically been a weak quarter for FrontRange Solutions, this performance
was in line with the revenue recorded in the second quarter of the financial
year ending 30 June 2002 ("fiscal 2002").
FrontRange Solutions previously stated an expectation to break even for the
third quarter of fiscal 2002, and was within reach by making an operating
loss of $177 000. This was a $4,0-million improvement on the second quarter
operating loss on similar revenue, and a $6,8-million improvement on the
third quarter of fiscal 2001 on $0,6-million lower revenue.
Importantly, cash was managed ahead of projections. Aggressive working
capital management combined with the improved operating performance resulted
in increased cash reserves of $12,9-million at 31 March 2002 compared to
$10,1-million at 31 December 2001.
The balance sheet at March 2002 showed an overall improvement from December
2001. Current assets exceeded current liabilities (excluding deferred
revenue) by a factor of 2,2 times, and FrontRange Solutions has no long-term
debt.
Deferred revenue closed at $13,2-million at 31 March, compared to $11,5-
million at December 2001, evidence of the continued loyalty of customers
towards FrontRange Solutions' products.
In terms of revenue split, compared to the third quarter of fiscal 2001,
license sales declined by 13%, but recurring maintenance revenue grew by
21%. Service revenue fell by 5% as expected, due to the continued shift of
professional services to FrontRange Solutions' channel partners.
Regionally, the US operations performed strongly and achieved its revenue
targets. The South African operation, while less than 2% of total revenues,
continued to improve under new management, beating its operating profit
targets and generating healthy cash flows. However, the rest of EMEA and
APAC fell slightly short of expectations.
The reduction in expenditure came largely from a strong focus on
discretionary spending, especially in the sales and marketing areas.
FrontRange Solutions continued to invest in research and development with
the intention of building a solid base to leverage future growth. The new
Microsoft .NET based product set is still on track for release in the latter
part of calendar 2002.
Product and customer highlights for Quarter 3 of fiscal 2002
* GoldMine FrontOffice with HEAT was recognised for exemplary
contributions to the CRM industry when it received the product of the year
award from Communications Solutions, a leading industry journal. The
Communication Solutions award is designed to honour innovative industry
products and services that have furthered voice/data convergence.
* Microsoft invited Patrick Bultema, president and CEO of FrontRange
Solutions Inc, to be one of the key speakers at its Tech Ed 2002 conference,
an annual gathering of thousands of technical people from around the world
where Microsoft highlights and shares information on its technology and
developments. For FrontRange Solutions, the event was another milestone
towards becoming a technology leader in addition to being a market leader.
Bultema demonstrated FrontRange Solutions' next version of its customer
relationship management (CRM) application built on the Microsoft .NET
Framework.
* FrontRange Solutions launched GoldMine Plus Accounting for use with
QuickBooks 2002 products, which provides sales teams with access to customer
credit history in real time, while accounting departments retain control of
the financial data. Independent research firm Current Analysis noted that
this is the most far-reaching back-office integration to date for GoldMine
Business Contact Manager software.
* Aberdeen Group, a leading US-based consulting and research firm in the
technology sector, named an implementation of HEAT for the city
administration of Des Moines, Iowa in the US in the group's list of Top Ten
CRM Implementations of 2001. The announcement was another milestone in the
implementation of FrontRange Solutions' strategy of securing and holding its
position as the leading independent provider of CRM applications for the mid-
market.
* Influential US publication, PC Magazine, rated the latest version of
GoldMine Business Contact Manager (BCM) a perfect five out of five. GoldMine
had previously received the PC Magazine Editors Choice award five
consecutive times.
* In South Africa, FrontRange Solutions' implementation of the HEAT
customer service and support solution helped Nissan achieve strong gains in
customer satisfaction and help desk efficiency.
* Santam, South Africa's leading short-term insurer, chose HEAT to power
its customer and IT helpdesks.
Additional capital
Although FrontRange Solutions considers its cash reserves to be sufficient
to see itself through to continued profitability, it continues to
investigate means of securing additional finance, and will communicate to
FrontRange shareholders when appropriate.
Outlook for Quarter 4 for fiscal 2002
The world economy remains tough. FrontRange Solutions still expects to make
a modest profit in the fourth quarter and overall for the second half of
fiscal 2002 as revenue improves and expenses continue to be stringently
managed. The company's medium term strategy is to grow revenue through high
quality channel partners and to continue to contain costs.
The final quarter will also be boosted by new product releases of GoldMine
FrontOffice, with Microsoft Exchange and Outlook integration, and HEAT Asset
Tracker, while new French, German, Spanish and Italian versions of GoldMine
and HEAT are expected to boost prospects in those regions.
