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Stronger Fronde operating results enable major investments

10 July 2007

Leading IT services business Fronde Systems Group Ltd has announced an improved operating surplus, which enabled it to invest in major development opportunities. Although this reduced the year-end financial result, the company is able to pay its shareholders a dividend again this year.

Revenue in the financial year ending 31st March 2007 grew to $33.66 million (previous year $32.97 million), as well as withdrawing from some unprofitable client relationships. The first half saw strong revenues from overseas, while the second half saw a significant lift in billings to New Zealand clients.

New Zealand operations delivered a major improvement in profitability, with an increase in the parent company’s Operating Surplus to $1.69 million (from $0.28 million). This, together with increased borrowings, enabled a $2 million investment in mobile banking and security subsidiary Fronde Anywhere.

During the year, Fronde also moved to full ownership of its British subsidiary, by acquiring the 33% stake held by SQS UK (formerly Cresta), following Cresta’s acquisition by SQS.

The Fronde Anywhere investment was implemented by a transfer of independently valued assets just before year-end. Its pre-transfer non-tangible business development expenditure were expensed in the group accounts, but held as goodwill in Fronde Anywhere. That business development expenditure (largely management and marketing) reduced the group consolidated profit to $0.20 million ($0.40 million) after taxes and minority interests.

The fully imputed dividend of 4 cents per share will be paid on 7th August to shareholders on the register at the close of business on 31st July 2007. The Annual General Meeting will be held at 12 noon on Thursday, 2nd August, 2007 at Fronde's Wellington office.