Fronde sees profits trimmed at half-time FY17

Fronde sees profits trimmed at half-time FY17

Reduction of $42k in half-yearly profits compared to last year

Fronde chief executive, Anthony Belsham

Fronde chief executive, Anthony Belsham

Cloud advisory and IT services provider, Fronde, has revealed it suffered a slight reduction in profits during the first half of FY17.

According to Fronde's half-yearly financials, the company reported pre-tax profits of $736,000 - a slight reduction of $42,000 compared to the same period the prior year.

However, gross margin in the period grew from 27 per cent of 32 per cent, due to “improvement in capacity management” and a shift to “higher-margin revenue streams”, according to Fronde chief executive, Anthony Belsham.

“Fronde is currently undergoing substantial change to become significantly more customer focused while improving profitability,” he said.

“As a result some parts of the business are growing, while we reduce our focus on unprofitable areas. Our mix of recurring services, licences, and project services is increasingly less reliant on one-off large projects, and despite the reduction in revenue of 16 per cent versus the same period last year, the company generated an increase in gross profit,” he added.

Belsham said Fronde experienced success following a reduction in general overhead costs by four per cent.

Additionally, he noted that the New Zealand-headquartered company invested significantly in growth initiatives in the Australian market, following a strong 2015 as its Australian revenues contributed to improved profitability.

At the time, Belsham said Fronde’s Australian business was profitable for the first time, with revenue growing by 19 per cent to $12.48 million in the period.

“Our cash and cash equivalents balances continue to increase, and after adjusting for foreign currency translation reserve and share-based payment reserve, total equity increased by $980,000,” he added.

“We are pleased with the progress we are making. We are expanding our focus in Australia, and have the strategies and skilled personnel in place to support ongoing profitability and growth in the A/NZ region.”

Looking forward, Belsham said the company will continue to focus on profitability and building a strong base for future growth.

“We will continue to work to establish our differentiated market position, optimise operations, increase our share of business with key customers, and increase recurring revenue streams,” he added.

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