IT services company Fronde is still looking for an investor for Fronde Anywhere, its mobile banking software arm, after the company moved back into profit this year.
The $2.9 million loss recorded for the six months ended 30 September last year was largely due to high investments put into Fronde Anywhere, says Fronde’s chief executive, Ian Clarke.
“The investments were planned but we had also planned to have another investor at the time,” he says.
Clarke slowed the expansion plans for Fronde Anywhere and the company is still actively looking for that investor, he says.
Other reasons for the loss were that some of the local businesses had lower than budgeted operating margins, in addition to a high cash demand from work in progress, he says.
While Fronde Anywhere has set Fronde up well internationally as a mobile payments specialist, this is not the future direction clients and staff are seeing for the business, he says.
The company, shares in which are traded on the Unlisted market, is pushing hard to get investment into Fronde Anywhere. When the business is fully funded, it plans to increase its sales and marketing efforts, primarily in the UK and Europe, but also in the US, he says.
“We are probably not going to be the majority owner of [Fronde Anywhere],” says Clarke. “The strategy for the rest of the group does not need to be broad enough to embrace that company.”
The strategy going forward is very much about being a New Zealand-focused company, delivering business technology services, he says.
Former CEO Jim Donovan resigned in October and Clarke, then general manager, took the wheel. He was formally appointed as CEO in March. The company recorded a $700,000 profit for the six months ended 31 March.
The profit was on the back of cost control and quality delivery, he says. The company could also recognise a lot of work in progress prior to the date, which had significant tax implications, he adds.
When Clarke took the chief executive post, it was “certainly a challenge”, he says. “But by that time, we had done most of the hard work,” he adds. “The recovery plan was put into place in October, and was largely executed by Christmas.”
The recovery plan included making nine positions redundant, he says. These were in operations and internal IT, in addition to natural attrition in marketing, finance and internal IT.
Across the board, Fronde is putting a lot of effort into simplifying the business, he says. For example, Clarke’s previous role as general manager in Wellington won’t be filled. There is also going to be a reduction in the number of brands the company operates, he says.
He plans to develop the business around three themes — simplicity, focus and teamwork. This encompasses simplifying company structure, creating clarity around company policies, improving the way Fronde’s businesses work together, and that all staff work for a common purpose, he says.