v2 Report - Additional Information Supplement
FSG.ul Fronde Systems Group Limited
Press releases
Fronde Anywhere and CC Pace Partner to Deliver Two Factor Authentication Via the Cell Phone
24 September 2007
San Francisco, September 24, 2007 – Digital ID World:
Fronde Anywhere, a provider of mobile banking, payment and multi-factor authentication solutions will partner with US-based CC Pace, a provider of secure risk management and mitigation services, to resell and implement its mobile two factor authentication solution in the U.S. financial services sector.The TwoSecure product line is suited for organizations seeking a two factor authentication solution that is cost-effective to support and distribute. These organizations include banks looking to provide additional security for online banking customers and to secure network access by remote workers. CC Pace’s leadership in this industry provides a complementary U.S. offering for TwoSecure, which is currently being deployed by leading financial institutions in Western Europe, South Africa and Asia Pacific.
“With federal regulators putting increasing pressure on financial institutions to deploy two factor authentication, we are finally seeing organizations taking this more seriously,” said Nick Holland, senior analyst at Aite Group. “However, they must keep in mind that those behind online fraud are constantly finding new ways to infiltrate networks and online services. As a result, solutions that eliminate the risk of man-in-the-middle attacks are a more secure option.”
The high performance TwoSecure solution has recently been independently assessed by Deloitte against Federal Financial Institutions Examination Council (FFIEC) guidelines for multi-factor authentication. It has also been performance benchmarked in IBM Innovation Labs and has completed independent device testing by SQS, a global testing organization.
"Fronde's TwoSecure is an innovative approach to solving the challenge of providing broad access to two factor authentication technology,” said Al Funk, director, Application Development & Integration Retail Banking Practice at CC Pace. “The use of a cell phone rather than the distribution of hardware tokens will enable broad-based deployment at significantly lower cost than competing technologies. We expect strong uptake of this product as organizations, including financial institutions, look for ways to protect their networks and reduce fraud."
“TwoSecure is an industrial strength security platform, which brings the cell phone one step closer to becoming the Swiss Army knife of the future,” said Caroline Dewe, executive vice president for products and marketing at Fronde Anywhere. “It provides a flexible, easy to use solution to today’s security headaches.”
Combining static and transient credentials, TwoSecure exponentially increases the level of difficulty for unauthorized third parties to assume a user’s identity – protecting the organization’s data and systems from malicious damage. A user-friendly Java application is deployed to the cell phone, which then generates a one time password (OTP). Users must know not only their user name and password to access the network or service, but they must also be in possession of the mobile phone with that unique OTP. Additional layers of security can be added through pin protection of the OTP and transaction signing, which ties the OTP to a specific transaction – preventing man in the middle attacks. Banking and corporate clients can also conveniently brand the mobile Java application with their own custom logo, colours and font styles.
Quick and cost-effective to implement, TwoSecure boasts high availability and integrates easily with existing systems and security measures. Users benefit from having no additional devices to carry and no extra passwords to remember, while organizations benefit from an additional layer of security with minimal cost.
About Fronde Anywhere
Fronde Anywhere offers mobile banking, payment and multi-factor authentication solutions for retail banks and the wider financial services industry. Its portfolio of user-friendly solutions enable customers to make payments and bank transactions via their mobile device from any location. Fronde Anywhere’s mobile technology provides enhanced security for authenticated access to online banking or remote networks.
The company has built its reputation on the proven delivery and implementation of first to market mobile products and solutions that deliver real business benefits to its clients. Fronde Anywhere is part of Fronde Systems Group, which serves clients in Europe, North America, Australasia and South East Asia from its offices in London, New York, Singapore and New Zealand.
Further information on Fronde Anywhere and Fronde Anywhere products
About CC Pace
CC Pace is a business and technology services consulting firm whose clients include leading organisations in the mortgage and financial industries. Founded in 1980, CC Pace is national, privately owned and headquartered in Fairfax, Virginia. It brings together a 27-year history of application development and industry-specific expertise to create solutions that deliver measurable business value. Its financial services solutions streamline processes, improve customer relationships, increase capacity, and positively impact clients’ bottom line.Its clients include members of the Fortune 100, as well as industry entrants and mid-size firms. They include Credit Suisse, Freddie Mac, The Municipal Securities Rulemaking Board, and The Carlyle Group.
Further information on CC Pace
Press contactsCharlotte Crivelli
Metia
Tel: 917 320 6452
Email: charlotte.crivelli@metia.com
Fronde Anywhere and RSSS partner to provide identity verification via the mobile
18 September 2007
Durban, London and Wellington:
Fronde Anywhere, a leading provider of mobile banking, payment and multi factor authentication solutions, has announced a new strategic alliance with specialist in fraud management, RSSS. This move will see RSSS use Fronde Anywhere’s mobile two factor authentication solutions to prevent fraud and identity theft in South Africa – one of the country’s fastest growing crimes.The Fronde Anywhere-RSSS partnership will introduce the use of one time passwords (OTPs) for access to corporate networks, business systems and online services. As the exclusive distribution partner of Fronde Anywhere’s TwoSecure™ two factor authentication product portfolio in South Africa, RSSS will target financial institutions, large enterprises and government agencies.
TwoSecure™ is particularly suited for organisations seeking a secure identity verification solution that is easy to support and to distribute to large numbers of customers or staff. RSSS will sell and implement TwoSecure™, which generates OTPs through an easy-to-use java application that can be downloaded to the users’ mobile phone.
“With threats to network security at an all time high, it’s vital that organisations get smarter about their security measures,” said Grant Weideman, Director (Technology) at RSSS. “This partnership was a logical move for us – Fronde’s technology provides the ideal solution to enable authentication via the mobile phone. Our clients can now cost-effectively protect their networks, their staff, and their customers from fraud without having to provide or replace hardware tokens.”
“Using our technology to provide identity verification to the South African market further establishes RSSS as a leader in fraud prevention,” said Caroline Dewe, executive vice president of products and marketing at Fronde Anywhere. “Deployments of TwoSecure™ should prove highly beneficial for businesses in South Africa, where there is good mobile network coverage yet high levels of fraud.”
Further information on RSSS
Press contacts
Natalie Shamshoum or George Hayley Metia
Tel: +44 (0) 20 3100 3655
Email: natalie.shamshoum@metia.com
or george.hayley@metia.com
Chairman's report
Stronger operating results have enabled major investment in new opportunities.
Overview
The trading result for the year ending 31 March 2007 was strong and enabled the Board to make significant strategic investments. This reduced the year end financial result, but a fully imputed dividend of 4 cents will be paid again this year.
Strategic Initiatives
The Board agreed to a new strategic direction in early 2006. This included the name change to Fronde and the branding of our three lines of business: Fronde Synergy, Fronde Always, and Fronde Anywhere. The pleasing progress in the implementation of this strategy is discussed in more detail in our CEO’s Report.
Our New Zealand business produced a much improved trading result in both Auckland and Wellington, which enabled the Board to invest $2m in Fronde Anywhere, a new mobile software products business. We have set it up as a stand-alone business unit so that we can seek additional development capital for its expansion.
This year, the group’s international activities are focused on Fronde Anywhere, operating from our offices in Wellington, London and now New York. We will offer Fronde Synergy’s professional services from our New Zealand and UK offices, and Fronde Always remains a New Zealand based managed services operation.
During the year, the group 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. This move ensures that we retain 100% of the benefits of Fronde Anywhere’s expansion in Europe. Our relationship with SQS remains positive, and its UK CEO is a non-executive director of Fronde Great Britain.
Financial performance
During the financial year ending 31st March 2007, revenue 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, as can be seen from the lift in the parent company’s operating surplus to $1.69 million (from $0.28 million). This, together with increased borrowings, enabled us to invest $2 million in Fronde Anywhere, implemented by a transfer of independently valued assets just before year-end. Its pre-transfer non-tangible business development expenditure was expensed in the group accounts, but held as goodwill in Fronde Anywhere.
That business development expenditure (largely management and marketing) reduced the group operating surplus to $0.48 million ($0.78 million). After taxes and minority interests, the consolidated profit after tax was $0.20 million ($0.40 million).
The parent company’s net equity at year-end was $5.46 million ($4.05 million). Group accounting rules require the elimination of goodwill in subsidiaries, which explains the group equity being lower than the parent at $4.21 million.
The group moved into overdraft of $1.46 million (versus $1.15 million cash at bank). Operating cash flow was -$0.10 million (-$0.16 million), and total nett cashflow was -$2.62 million (-$1.37 million), following investments in subsidiaries and fixed assets, dividends to subsidiary minority interests, and payment of a fully imputed shareholder dividend of 4.0 cents per share (last year 4.0 cents).
Investor activity
During the first quarter of the year, a committee of independent directors explored the possibility of enabling existing shareholders to liquidate some of their investment in the Company, while encouraging the senior management team to acquire a sizeable stake. This exercise did not reach fruition, and so, to enable some improved liquidity and a degree of price discovery, the Company registered its shares on the Unlisted share trading facility. While not a registered stock exchange, Unlisted has enabled several trades to take place easily. The Board will continue to explore options for maximising shareholder value and liquidity.
Chairman’s Report continued
Dividend
I am pleased to report that, despite a heavy investment load, the Company was in a position on 9 July 2007 to declare a fully imputed dividend of 4.0 cents a share for the third year in a row, with payment on 7 August 2007 to all shareholders on the register at the close of business on 31 July 2007.
Governance
The board of 5 non-executive directors has functioned well, and I take this opportunity to acknowledge my co-directors and thank them for their continued commitment and contribution.
Congratulations
The improvement in the main New Zealand business is pleasing, and the early signs for Fronde Anywhere are very encouraging.
On behalf of the board and shareholders, I would like to thank all our staff for working hard to implement such significant change.
Philip Shewell
Chairman
CEO Report
Implementing the strategy
In early 2006, we announced a new strategic direction, which would drive improved and growing shareholder value through a clearer client value proposition, more distinctive competitive positioning, and a sharper business focus. This would see what was then known as Synergy begin a shift away from generalist IT services, towards industrial-strength business transaction and payment systems and services, delivered through three lines of business: professional IT services, managed IT services, and transaction solutions.
During the last financial year, we began implementing that strategy in earnest. There were many initiatives, of which the most visible was our change of name to Fronde - a name we can use overseas as well as in New Zealand.
Fronde Synergy - professional IT services
The Synergy name lives on in the name of our professional IT services business - the bulk of our revenues, earnings, and people. Fronde Synergy has added new depth to its already strong reputation for technical excellence, reliable delivery and effective people relationships, to meet evolving client needs.
Generic technical expertise and programming is still very important, but on its own is not enough, especially when blending new technologies with new business needs. Our clients increasingly look to IT to enable new market offers, new business channels, and to deal with ever-changing regulatory requirements. These new IT projects call for high-touch teams (i.e. close to the business, and not easily off-shored) – project managers, consultants, analysts, architects, integrators and user interface specialists - with business sector knowledge, local market knowledge, communication skills and facilitation skills.
Fronde is well placed for this new era, with our focus on the way businesses transact with the world and our acknowledged leadership in designing, building and integrating server-based solutions, mobile solutions and software-as-a-service solutions, delivered by agile teams working closely with our enterprise clients in the finance, utility, ICT and government sectors.
Fronde Always - managed IT services
Historically, our managed services business has delivered a wide variety of one-off services to whoever we could persuade to pay for them. Under new leadership, we have set Fronde Always the challenge to evolve into a specialist managed services business with repeatable, profitable services and a clear place within our overall group strategy and market offer.
Our mobile transactions gateway is one such service. Another is our monitoring and management service, for mission-critical live operations. We have also introduced industrial-strength applications development and testing environments for both external and internal clients. This year we will explore new significant opportunities, which will complement our leadership position in other areas.
Fronde Anywhere - mobile banking and ID security
Fronde’s long experience with mobile transactions has seen us design, build and operate mobile banking and security solutions for several financial institutions. This led to the establishment of Fronde Anywhere, which we have set up as a specialist software product business, with two main product families – a suite of mobile banking applications and an innovative 2-factor security application which eliminates the logistical and physical problems associated with previous offerings.
Fronde Anywhere has attracted global interest, and is pursuing rapid expansion in Australasia, Europe, and North America. Other markets will be served through independent resellers.
The Fronde group is not in the venture capital business. The software product business is a high risk/high reward one, and is very different from Fronde’s services business. Establishing Fronde Anywhere as a stand-alone business unit means we can seek separate venture funding to support Fronde Anywhere’s development, while continuing to have a stake in its potential.
Our name change marked the point where the wider IT market noticed that something special was happening at Fronde. This positions us well to face the IT industry’s biggest challenge - the looming talent shortage.
Chief Executive’s Report continued
The developed world (especially the English-speaking countries, Nordic countries and Japan) is increasingly worried about the greying and shrinking of its skilled workforce, and is looking to IT to solve the problem. However, the IT sector - both client side and vendor side - faces those same labour-force challenges, made worse by a major falloff in IT undergraduate intake post-Y2k and post-tech-wreck. The IT industry faces a crisis when that undersized cohort is needed to fill its IT leadership and senior technical roles.
Who is in the best position to win from all this? Who can get the best leverage from scarce talent? It is the IT services industry, in all its forms, but especially professional services, managed services, and software-as-a-service. Why? Partly, the economics are better, but importantly, it will attract the best people, drawn by the variety of work with many clients, the pace of the vendor side, the career progression and personal development opportunities.
Our growing reputation is attracting some of New Zealand’s brightest IT technical and business talent to join the already impressive team at Fronde. We are the future of business.
Jim Donovan
CEO
