RXP Services to open new agency office in Melbourne

RXP Services to open new agency office in Melbourne

National solutions provider closes 2017 with $140.5 million revenue

RXP Services (ASX:RXP) has unveiled plans to open a new office in Melbourne, designed to accomodate its subsidiary, The Works, by Christmas.

The move comes fresh from the national solutions provider reporting $140.5 million revenue for the 2017 financial year, or 11 per cent growth compared to $127.1 million revenue in 2016.

The publicly-listed company, which acquired Sydney digital agency, The Works, in August, has seen growth across all key metrics as it goes through a digital services transformation.

“Our continued digital services evolution is an important driver in our business and this is being accelerated by the addition of The Works,” RXP Services CEO Ross Fielding told shareholders in a statement on 17 October.

"We have strengthened our end-to-end capabilities and client offering and have positioned ourselves in terms of being a key digital delivery partner for our clients."

At the time of the acquisition, RXP announced a total purchase price capped at $33 million, with a initial $25 million payment, being 70 per cent upfront and 30 per cent in 12 months.

Logistically speaking, the acquisition brought 61 staff to RXP and was expected to add $16.5 million in revenue for FY18.

From a financial perspective, RXP's earnings before interest, tax, depreciation and amortisation (EBITDA) were up by 10 per cent to $18.3 million, and underlying EBITDA of $19.5 million.

Net profit after tax (NPAT) was $11.6 million, 10 per cent up from $11.6 million reported in 2016.

“RXP had another strong year, recording good growth across all key metrics for FY17," RXP chairman John Pittard added. "The team has been able to increase the level of digital services work and have become less reliant on what we regard as ‘commoditised’ work.

"This is changing the way we engage with our clients, both in terms of the type of services we perform as well as the size/scope of engagements."

According to Fielding, the company will scale back on its commoditised work to focus on digital services and projects for 2018.

“The Works have integrated well and it’s pleasing to see the teamwork and collaboration occurring across RXP," Fielding said. "Overall we expect growth in digital services revenue to continue."

Fielding said that the company has flexibility and is well placed to fund future acquisitions.

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