Fronde reports reduced profit off lower revenue

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Challenging trading conditions cited as Fronde Anywhere product improves

By Computerworld staff | Auckland | Tuesday, 22 December, 2009

Wellington based IT services company Fronde Group has reported a half year profit before interest and tax of $0.71 million, down from $1.05 million in the same period of 2008.

For the six months ended 30 September 2009, revenues was $12.6 million, down from $15.7 million for the same period in 2008 (report pdf here).

"This reduced revenue and EBIT reflects the challenging trading conditions that we have experienced since October 2008, due in large part to the credit crunch and consequent reduction in spending by many of our clients," company chairman Wayne Norrie says.

Fronde continues to invest in its Fronde Anywhere mobile payments platform.

"In the 2009 annual report I flagged to shareholders that we anticipated a transaction involving Fronde Anywhere by September 2009. We were unable to secure a transaction on satisfactory terms and have withdrawn the business from the market.

"The business is emerging nicely into a healthy state and the emphasis today is on further building the sales pipeline and sustainable profitability. It is likely that we will seek outside investment to further fund development and global reach at some point in the future."

Norrie says a highlight of the period has been the positioning of Fronde as a cloud solutions provider, particularly in relation to the company's reseller relationship with Google.

"This relationship and the subsequent sale of Google Apps to NZ Post’s Postal Services Group mark a milestone in the transition of Fronde to becoming a product reseller with higher levels of annuity revenue," Norrie says.

Ian Clarke, Fronde's CEO, says the company closed a "very substantial offshore project" which is to be delivered from the Wellington office by July next year.

"This project has ensured a high level of utilisation will exist in Wellington until the middle of next year. We continue to enjoy strong client relationships in this market however spending has been restrained due to the change in government and the recession," he says.