| Thu 13 Feb 2003, 9:13 | | FRONTRANGE - INTERIM REVIEWED RESULTS FOR THE SIX |
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Frontrange Limited
(Incorporated in the Republic of South Africa)
(Registration number 1997/009928/06)
("FrontRange")
Share code : FRO ISIN : ZAE000035325
Interim reviewed results for the six months ended 31 December 2002
FrontRange Limited Half Year Half Year Year ended
ended ended
Dec-31 Dec-31 Jun-30
Consolidated Income Statement 2002 2001 2002
R`000 Reviewed Reviewed Audited
Revenue 386,537 373,040 819,301
- Continuing operations 386,537 360,521 806,907
- Discontinued operations - 12,519 12,394
Profit/ (loss) from operations 4,592 (144,401) (149,418)
- Continuing operations 4,592 (135,205) (139,324)
- Discontinued operations - (9,196) (10,094)
Goodwill amortisation (10,707) (15,261) (34,267)
Net finance (expense)/ income (890) 8,210 16,394
Exceptional loss (8,470) (53,879) (83,422)
- Capital (5,366) (12,672) (24,198)
- Non-capital (3,104) (41,207) (59,224)
Loss before taxation (15,475) (205,331) (250,713)
Taxation charge - (4,213) (1,379)
Loss after taxation (15,475) (209,544) (252,092)
Outside shareholders` interest 509 27,663 31,527
Loss attributable to ordinary (14,966) (181,881) (220,565)
shareholders
Add:
Headline adjustments (after tax 15,133 26,571 56,098
and outside shareholders`
interest)
- Goodwill amortisation 10,333 14,124 31,950
- Net capital exceptional 4,800 12,447 24,148
items
Headline earnings/ (loss) 167 (155,310) (164,467)
Number of shares in issue (000`s) 157,988 157,590 157,705
Weighted average number of shares
on which
LPS & HEPS is based (000`s) 157,776 157,323 157,557
Loss per share (cents) "LPS" (9.5) (115.6) (140.0)
Headline earnings/ (loss) per 0.1 (98.7) (104.4)
share (cents) "HEPS"
Weighted average number of shares
on which diluted
headline earnings per share is 167,873 167,759 168,923
based (000`s)
Diluted headline earnings/ (loss) 0.1 (92.6) (97.4)
per share (cents)
Amortisation and depreciation for 32,400 30,657 76,459
the period
FrontRange Limited
Consolidated Balance Sheet Dec-31 Dec-31 Jun-30
R`000 2002 2001 2002
Reviewed Reviewed Audited
Equities & Liabilities
Ordinary shareholders` interest 143,196 243,551 180,178
Outside shareholders` interest 22,232 34,145 26,904
Long-term liabilities 3,184 442 1,697
Current Liabilities 239,864 366,508 279,285
Deferred revenue 125,659 145,327 123,960
Trade payables 14,015 39,593 31,463
Accruals & other payables 100,190 181,588 123,862
408,476 644,646 488,064
Assets
Non-current assets
Goodwill 64,215 101,390 78,757
Property and equipment 58,752 119,119 87,783
Other long-term assets 5,238 5,430 5,237
Current assets 280,271 418,707 316,287
Inventories 2,066 2,992 2,577
Accounts receivable 136,968 231,886 171,533
Prepayments and other current 16,440 51,214 16,751
assets
Taxes receivable 1,899 508 2,304
Cash & cash equivalents 122,898 132,107 123,122
408,476 644,646 488,064
FrontRange Limited Half year Half year Year ended
ended ended
Dec-31 Dec-31 Jun-30
Consolidated Cash Flow Statement 2002 2001 2002
R`000 Reviewed Reviewed Audited
Cash generated/ (utilised) by 29,123 (99,994) (73,975)
operations
- Continuing operations 29,123 (82,424) (54,437)
- Discontinued operations - (17,570) (19,538)
Cash (utilised for)/ generated (3,113) 12,959 (4,307)
from investing activities
- Continuing operations (3,113) 10,228 (6,855)
- Discontinued operations - 2,731 2,548
Cash (utilised for)/ generated (2,688) 10,302 8,220
from financing activities
- Continuing operations (2,688) 10,368 8,286
- Discontinued operations - (66) (66)
Net movement in cash position for 23,322 (76,733) (70,062)
the period
Cash & cash equivalents - 123,122 166,232 166,232
beginning of the period
(subtract)/ add: Foreign exchange (23,546) 42,608 26,952
effect on cash and cash
equivalents
Cash & cash equivalents - end of 122,898 132,107 123,122
the period
FrontRange Limited
Statement of changes in equity - Share Accumulated Foreign Total
reviewed capital currency
R`000 and loss translation
premium reserve
Balance at 30 June 2001 192,838 (523) 153,654 345,969
Issue of shares during the year (35) - - (35)
(net of issue expenses)
Write-off of share issue expenses 38 - (38) -
Foreign currency translation - - 54,809 54,809
reserve
Net loss attributable to ordinary - (220,565) -
shareholders (220,565)
Balance at 30 June 2002 192,841 (221,088) 208,425 180,178
Issue of shares during the period (10) - - (10)
(net of issue expenses)
Foreign currency translation - - (22,006) (22,006)
reserve
Net loss attributable to ordinary - (14,966) - (14,966)
shareholders
Balance at 31 December 2002 192,831 (236,054) 186,419 143,196
FrontRange Limited
Primary Americas United Continen- Asia Total Head Total
Segmental tal operating
Report -
reviewed *
R`000 Kingdom Europe & Pacific companies office
Africa
Revenue - 261,631 80,040 24,113 20,753 386,537 - 386,537
period
ended 31
December
2002
Revenue - 238,561 71,630 28,940 21,390 360,521 - 360,521
period
ended 31
December
2001
Operating 15,157 8,499 (13,643) (4,152) 5,861 (1,269) 4,592
profit/
(loss) -
period
ended 31
December
2002
Operating (86,568) (7,183) (26,942) (11,999) (132,693) (2,512) (135,205)
profit/
(loss) -
period
ended 31
December
2001
* From
continuing
operations
FrontRange Limited interim reviewed results for the six months ended 31 December
2002
FrontRange Limited, the JSE-listed holding company owning 84% of US-based
FrontRange Solutions, Inc., is a global leader in business relationship software
for the mainstream business market employing 463 people in nine countries, with
a base of more than 130,000 customers 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. In addition, the company launched the first industry specific solutions
developed on top of its CustomerIQ architecture during November 2002.
Highlights in the six months to December 2002
FrontRange continued to improve significantly on the results seen in previous
periods. Compared with the equivalent period ended December 2001, it generated:
Operating profit of R4,6-million compared with an operating loss from continuing
operations of R135,2-million;
Headline earnings of R0,2-million compared with a headline loss of R155,3-
million;
Operating cash inflows of R29,1-million compared with operating cash outflows
from continuing operations of R82,4-million.
Financial performance for the six months to December 2002
The overall trading performance was also a continuation of the improvement seen
in the results for the six months to June 2002, despite including the July to
September quarter, which is traditionally the group`s weakest. This has been
achieved not only by managing costs, but more positively by maintaining
investment in research and development and by continuing to deliver a compelling
product set that has a fine balance between complexity, functionality and price.
Revenue from continuing operations - up 7% over the previous period to R387-
million: As a result of the operations discontinued in the previous financial
year, continuing operations are represented entirely by the results of
FrontRange Solutions, Inc. and various associated holding company expenses.
In continued tough economic conditions, revenue from continuing operations was
R386,5-million ($38,5-million), representing an approximate 1% US dollar decline
from the comparable period ended December 2001. Despite the slight decline in
revenues, the company continued to outperform its peer group in the global
markets.
Revenue from licences was R196,6-million (11% down in dollars to $19,5-million)
and services revenue was flat at R34,4-million ($3,4-million). However as a
testament to high levels of customer satisfaction and retention, FrontRange`s
recurring maintenance revenue streams grew to R155,5-million (up 18% in dollars
to $15,5-million).
Of the total R386,5-million in revenue, only 2% was generated in South Africa
with 68% of revenue coming from North America, 25% from Europe and 5% from the
Asia-Pacific region.
FrontRange moves into profitability: The group overall made an operating profit
of R4,6-million, after losing R144,4-million in the equivalent period in the
prior year and R5,0-million in the six months to June 2002.
Exceptional items: FrontRange wrote off R8,5-million in the period as
exceptional items. Of this, R1,2-million relates to residual restructuring of
the South African head office infrastructure and R2,3-million was impairment of
goodwill. Severance costs associated with bringing the group`s cost base in
line with market conditions were R3,6-million and other net capital and non-
capital exceptional items totalled R1,4-million.
Balance sheet
FrontRange`s balance sheet remains clean with virtually no long-term debt.
Property and equipment consists entirely of tangible assets; no development
costs are capitalised. Current assets at period end exceeded current
liabilities (excluding the non-cash deferred revenue liability) by more than
140%.
Cash
Cashflow continued to be managed ahead of the cash management plan`s best-case
scenario. FrontRange generated positive operating cash flows of R29,1-million
($2,9-million) in the period, to result in closing cash balances of R122,9-
million ($14,2-million). This compares favourably with the $11,9-million held
at June 2002 and $10,9-million at 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 R10,05 = $1
for the income statement, and R8,66 for the balance sheet. The comparable
period income statement was converted at R9,28 = $1 while the comparable balance
sheets were converted at R12,11 = $1 at 31 December 2001 and R10,37 = $1 at 30
June 2002.
Accounting policies and independent review
These unaudited financial statements have been prepared in accordance with the
South African statement of Generally Accepted Accounting Practice applicable to
interim financial reporting and have been reviewed but not audited by Deloitte
and Touche, whose report is available for inspection at the company`s registered
office. The accounting policies used in the preparation of the unaudited
interim results announcement are consistent with those applied in the annual
financial statements for the year ended 30 June 2002.
New products released
Despite weak market conditions, FrontRange continued to develop its product
sets, and released several significant new products in the period, including
HEAT 7.0, HEAT Plus Knowledge, GoldMine 6.0, HEAT Asset Tracker 2.0 and GoldMine
Plus Accounting OEM Edition. Most significant of all was the release of
Customer IQ, the long-awaited next generation solutions framework designed and
developed entirely on the Microsoft .NET platform. The CustomerIQ technology is
expected to serve the company`s product set for the next decade. These products
will provide a strong base for FrontRange`s growth going forward.
Outlook for the fiscal 2003
FrontRange management expects the world economy to remain tough, with little or
no improvement seen during this year. It is also not possible to quantify the
potential effects of a war in the Middle East. FrontRange does, however, expect
to continue to be profitable for the remainder of the year ending 30 June 2003.
Christo Nel Dana Buys
Chairman, FrontRange Limited Chief Executive Officer, FrontRange Limited
13 February 2003
Date: 13/02/2003 08:00:00 AM Produced by the JSE SENS Department
