STOCKHOLM, Sweden, Jan. 24, 2002 (PRIMEZONE) -- Frango:
Twelve Months
-- Revenues for the period January - December rose by 36 per cent to
SEK 268.0 million (196.7m).
-- Earnings net of financial items for the period rose by 68 per cent
to SEK 15.0 million (8.9m)
-- The average number of permanent employees for the year was 209
(171), an increase of 22 per cent compared with the previous year
-- Development expenditure amounted to approximately SEK 35
million (32m).
-- The company reported revenue growth of 51 per cent for the period
January - August. During the following two months, September and
October, revenues fell by 6 per cent, but subsequently grew by 49
per cent during the last two months of the year.
-- The equity ratio at the end of the year was 47 per cent (51%).
Fourth Quarter
-- Revenues for the fourth quarter rose by 30 per cent to
SEK 83.9 million (64.6m).
-- Earnings net of financial items for the fourth quarter of 2001
amounted to SEK 4.0 million (8.4m).
-- In November, Frango launched its new group control system, Frango
Controller, on the Swedish market.
-- Telia signed an agreement in November regarding the delivery and
implementation of the new Frango Controller system for management
reporting and statutory consolidation.
Frango in Brief:
Frango is a leading software company that specializes in the field of corporate financial control for organizations and groups. The company develops and supplies software and services through its international network of subsidiaries and distributors. Frango is headquartered in Stockholm. The Frango share is quoted on the 'O' list of the Stockholm Stock Exchange (Stockholmsborsen).
Significant Events During the Period October - December 2001:
The generally poor developments in economic growth combined with growing concern following the terrorist attacks in New York in September have had a significant impact on license sales, causing customers to postpone or delay their software investments in October. Frango noted a return to its normal rate of revenue growth during the end of the year.
In November, Frango launched its new group control system, Frango Controller, on the Swedish market. The system offers a single point of entry for accessing all functions across the Internet or via corporate networks and has been designed to handle numerous simultaneous users. This will meet the most demanding of requirements made by groups of companies and organizations, whose complex structures demand sophisticated tools for financial controlling. Frango Controller is the latest addition to the company's product portfolio and is a part of the Frango Management Perspective Suite.
In November, Telia signed an agreement with Frango regarding the delivery and implementation of Frango's system solution for management reporting and statutory consolidation. The solution, which was chosen to be able to meet the Telia Group's reporting and analysis requirements - both legal and operational - will be used by all Telia companies. The order initially comprises software licenses for 450 users. Delivery of the order, which is based around Frango Controller, began in November.
At the end of November, it was decided to introduce a new earnings- related, Group-wide stock option programme for Frango employees. For senior executives, exercise of the full number of options is subject to long-term targets being met, namely that the Frango Group no later than 2005 achieves revenues of at least SEK 1,000 million (currently equivalent to about USD 100 million) and, by the same time, earnings net of financial items of at least SEK 100 million.
In October and November, one of the principal shareholders in Frango, board member Guy Davison, sold his stake in Frango AB, comprising 165,000 class A shares and 713,500 class B shares. The stake corresponded to 30.1 per cent of the voting rights and 18.0 per cent of the share capital after full dilution. Tom Lofstedt acquired 165,000 class A shares from Guy Davison and sold 165,000 class B shares. In connection with a board meeting and extraordinary general meeting held on November 29, Guy Davison resigned from his position on the board.
Sales Trends and Earnings: January - December 2001
Demand for the company's products during the year has remained strong. The current uncertainty following the events in September had a significant impact on license sales during September and October. Up to and including the month of August, the company continued to report strong growth. Frango's revenue growth for January - August was around 51 per cent and the earnings trend remained positive. In August, earnings net of financial items calculated on a rolling twelve-month basis reflected a profit margin of almost 13 per cent. The decline in license sales noted in September and October, when revenues fell by 6 per cent in relation to 2000, resulted in a substantial loss of earnings. For the last two months of the year, however, revenue growth was once again high, 49 per cent, and earnings improved. Given the chain of events witnessed during the second half of the year, performance for 2001 on the whole can nevertheless be regarded as satisfactory. Earnings net of financial items for 2001 improved by SEK 6.1 million, amounting to SEK 15.0 million, compared with SEK 8.9 million for 2000.
Revenues during 2001 rose from SEK 196.7 million to SEK 268.0 million, an increase of 36 per cent compared with the corresponding period of the previous year. The proportion of revenues attributable to new licenses during the year was 46 per cent, compared with 54 per cent for 2000. Customers outside Sweden accounted for 82 per cent (79) of overall revenues from software licenses. Sales in Asia indicate strong growth in these markets. Meanwhile, growth in key markets in Europe has remained steady. Revenues from software licenses rose by 14 per cent to SEK 122.7 million (107.4m). Revenues for maintenance and consulting services continued to show strong growth, rising by 65 per cent and 66 per cent respectively.
Operating expenses were up SEK 79.1 million or 42 per cent on the previous year, from SEK 187.7 million to SEK 266.8 million, largely due to an increase in personnel expenses. The company's sales and marketing department was reorganized during the year and a new vice president of sales and marketing was appointed for the Frango Group. In connection with this reorganization, operations at the sales and marketing department formerly located in Brussels have been discontinued and transferred to Stockholm. This has resulted in some non-recurring personnel expenses. Of overall operating expenses, a total of SEK 14.0 million, attributable to the development of the new software, has been reported as capitalized development expenditure in accordance with the Swedish Financial Accounting Standards Council's recommendation (recommendation no. 15) pertaining to Intangible assets (see below).
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