RXP Services reveals challenging FY18

Net profit drops 33 per cent

RXP Services had a challenging 2018 financial year with net profit after tax (NPAT) dropping 33 per cent to $7.8 million.

"Although our result was impacted by a faster than anticipated decline in traditional consulting work, particularly in the first eight months across two major clients, we were able to successfully position the business to take advantage of the promising growth in our digital work," RXP CEO Ross Fielding told shareholders on 16 August.

"With a strong Q4, we have set the scene for an improved FY19."

The revenue for the fourth quarter of the publicly-listed company was $39 million, with earnings before interest, tax, depreciation and amortisation (EBITDA) of $5.5 million.

Underlying EBITDA for the full year was $15.2 million, a 22 per cent fall from the previous year $19.4 million results.

Total revenue saw a slight decrease of 3 per cent, with RXP posting $144.9 million revenue for the 2018 financial year.

“As we previously disclosed, reduction in traditional consulting work in the first 8 months of the year across two major clients significantly impacted our financial results," Fielding added.

"This has now been effectively managed, through rebalancing of resources and exiting commercially unviable work.

"Pleasingly, we finished off FY18 with a very strong fourth quarter, driven by high utilisation, solid headcount, and new project wins. We expect these utilisation levels to hold as we move into FY19, and also expect the positive momentum from our digital capabilities to continue to generate new project wins."

In May, the company had said that the 2018 full financial year revenue is expected to be in the range of $145 million to $146 million, which saw RXP drop its revenue forecast by up to $5 million from its previously stated guidance of around $150 million in revenue for the year.

RXP has taken a review of the business which revealed a number of of operational process improvements that are being implemented; and already impacting positively according to the company.

Some organisational changes have been identified and implemented to accelerate the execution of its digital strategy including the expansion of the role of group executive digital and delivery to drive margin expansion and acceleration of digital growth and the introduction of two new regional group executive roles to help streamline overall decision making and drive alignment to digital strategy.