​Fronde returns to profit, but NZ challenges remain

Fronde has returned to profit - releasing its interim financial results for the six months ended 30 September - but challenges remain for the technology company.

Financials released this week reports profit before tax of $1,211k, a $2,336k turn around on the prior comparable period.

In addition, revenue remained flat period-on-period from 30 Sept 2015 ($31,583k) to 30 Sept 2014 ($31,589k), with the company reporting $897k period-on-period improvement in gross profit.

Fronde Chairman Jon Mayson - fresh from appointing new CEO Anthony Belsham - says the action taken by the company to improve its financial performance has “paid off”.

“Fronde has turned its financial performance around during a period of challenging trading conditions, improving profit before tax by $2,336k compared to the same period last year,” he says.

“This was achieved through strong cost control, better matching of capacity to workflow, and a 12 per cent improvement in operating margins.

“We’ve also made changes internally in terms of staffing and business focus to be able to effectively meet the changing needs of the market and our customers who are more and more looking to us for cloud and digital solutions.

“We are forecasting a more challenging second half, and will continue to keep a close eye on costs and take action to ensure Fronde remains profitable over the balance of the year.”

While New Zealand revenue contracted, Mayson says Fronde Australia grew by six percent for the six month period.

Growth continues in Australia where the business will concentrate efforts on its Google and NetSuite practice areas, adds Fronde Chief Financial Officer, Emma Watson.

“Consistency of operating margins is improving as Fronde earns a greater proportion of recurring revenue, with the business positioned to deliver a net profit for the full year,” Watson adds.

“In New Zealand many of the company’s business units are performing strongly.

“Fronde is working on increasing recurring revenue in the large and mid-tier enterprise markets, as changing Government procurement practices and investment priorities have impacted the number and profitability of opportunities for custom software development.”

Looking ahead, Watson says Fronde is looking for growth opportunities in the Auckland and Wellington enterprise markets and has been “successful in winning platform development work for large established clients”, with a strong pipeline for Salesforce, Google and Amazon sales and implementations.