Digital services provider, RXP Services Limited (ASX: RXP) plunged heavily by 29.3% on February 22, 2018 as the group announced its results for the six months ended 31 December 2017 wherein revenue of $70.2 million was slightly below H1 FY17 figure of $70.6 million while there was a drop in Earnings Before Interest, Tax, Depreciation & Amortisation (EBITDA) to $6.5 million from H1 FY17 figure of $9.2 million at the back of many one-offs. As anticipated, decline in commoditised work led the underlying EBITDA of $7.6 million against H1 FY17 figure of $9.3 million. NPAT of $4.2 million was down from H1 FY17 NPAT of $5.9 million.

On the other hand, solid cashflow generation and balance sheet helped the group and it maintained its interim dividend of 1.5 cps fully franked (H1 FY17 figure of 1.5 cps). As at 31 December 2017, the cash balance was $12.3 million, and the net debt position was $2.7 million.

It is worth noting that the first half was transformative for the group and strong client wins (with 20 new clients) and the achievement of key project milestones were reported although partially masked by the faster than anticipated decline in revenue associated with commoditised work. Nonetheless, acquisition of The Works (Australia’s independent digital and creative agencies) and its on-track integration is delivering financial results in line with forecasts. The group has also been able to retain its existing client Master Service Agreements in first half.

With some factors seen to impact the second half, RXP expects FY18 revenue to be $150m+ with an EBITDA margin of 13.3%+ while growth opportunities in digital remain intact.
 

Revenue Outlook (Source: Company Reports)

Disclaimer
 
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.