IT services provider RXP Services has closed the 2019 financial year with a $1.4 million loss, or a 117 per cent drop from the previous year when the company posted net profit after tax of $7.8 million.
The publicly-listed provider attributed the loss to the adoption of more "conservative impairment model assumptions" and a $10.8 million non-cash impairment has been made to goodwill.
There is also what the company described as a "doubtful debt" of $1.2 million associated with a client project, however discussions are continuing with the client and the Company remains hopeful of full settlement, the company told shareholders on 15 August.
RXP's revenue remained somewhat stagnant with $141.1 million, same as the previous reporting year which the company listed as being $141,073 million, a $70,000 difference from the previous year.
In 2018 however the company published its revenue as $144.9 million. The difference is due to the write down of the Hong Kong business, the company explained to ARN.
Earnings however were up by 26.2 per cent, or $16.4 million. The positive EBITDA was supported by higher-margin digital service growth and benefits from organisation realignment, the company said.
RXP Services Has decided to exit the Hong Kong operations due to its under-performance and has put the business up for sale. It has already considered redundancy costs of $200,000 and earnings before interest, tax, depreciation and amortisation of $1.1 million.
Total redundancy costs amounted to $925,000 for the year associated with business review. The company stated it aligned costs to reflect the demand in digital work and moved to a regionally focused operation. RXP had more than 720 staff at 30 June.
In February, RXP had flagged that a increase in redundancy costs were due to a restructure of its Hong Kong operation to "better match client demand".
"Having put in place a solid foundation around our digital offering, we look forward to FY20 with confidence," RXP Services CEO Ross Fielding said.
"We remain committed to building on our Making Happier Humans focus and our Expression, Experience and Enablement capabilities. This focus, combined with our end-to-end digital services offering, positions us very well to continue to grow our business thoughtfully.
“We expect the investment we have made in digital to continue to drive higher quality revenue and higher margins, and are forecasting both revenue and earnings growth over FY20, with expectations to achieve double digit earnings growth," Fielding added.