Fronde Delivers 26% Increase in Profit for FY18

On Wed, 20 Jun 2018

Fronde Delivers 26% Increase in Profit for FY18

Performance highlights

Profit before tax improved by 26% ($1,795m compared with $1,425m for the prior year).

Gross margins dropped to 29%, from 31% in the prior year, reflecting some lower margin license sales during the year.

As a percentage of income, profit before tax increased from 2.9% to 3.6% this year.

Equity increased to $6.946m.

Strong cash reserves and no bank debt.

Fully imputed dividend of 4c per share

WELLINGTON, Wednesday 20 June 2018 - Fronde Systems Group (FSG) today reports its full-year earnings to 31 March 2018, delivering a 26% increase in profit despite flat revenue growth.

Through disciplined execution, Fronde has continued to deliver on its strategy to refine and leverage their differentiated market position with new and existing customers in Australia and New Zealand, while improving financial outcomes through streamlining their operations.

Fronde Chief Executive Officer, Anthony Belsham said: “Fronde has delivered another solid full-year result as we pivot the business across all regions. Our increase in profit despite flat revenue growth shows our excellent operating discipline, reflecting the strength of our value proposition and business model.”

“We are well positioned to build upon and grow our diversified technology and services offering. The Fronde team is focused on delivering a scalable, world-class customer experience as we expand further into new and existing markets. Our strategy, and our challenge, is to pivot fast enough to grow premium consulting services, whilst simultaneously managing the decline in traditional revenue streams.

“As part of our ongoing focus on improving profitability and building our platform for future growth, we have accelerated our investment in the development of intellectual property, and in our sales and marketing capability. As the pressure of market dynamics accelerates, continuing to execute on our strategy requires ongoing investment and our strong cash position will be an asset as we make this pivot. ”

Fronde’s strategy and focus for the coming year remains consistent. Key areas of focus include:

Refining and leveraging our market position within Australia and New Zealand

Building out our unique repeatable intellectual property

Maximising results from investment in our sales and marketing capability

Optimising our service capacity to match demand, and optimising our internal indirect costs

Fronde Chairman, The Hon. David Bartlett stated, “As we continue to highlight, revenue and profitability from the traditional areas of our business remain under pressure and the business has forecasted the need for continued investment. However we are seeing encouraging growth from our premium consulting services which are delivering great business outcomes for our customers. In the short term this does not yet fully compensate for the reduction in revenue and margin from maintaining legacy bespoke software and related services. We continue to reduce our reliance on traditional revenue streams, and we are seeing pleasing growth taking our differentiated proposition to market in both New Zealand and Australia.”

Fronde is now managing their business as one unit this year, rather than the previous country specific approach, in doing so they are also leveraging areas of excellence, creating efficiency and improving delivery effectiveness and that this approach is having the desired effect on the bottom line.

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