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DXC Australia posts $101M loss as merger costs hit profits

DXC Australia posts $101M loss as merger costs hit profits

Paid $56.5 million for Sable System and System Partners combined

Credit: DXC Technology

The Australian arm of DXC Technology felt the aftershocks of its landmark merger two years ago having posted a loss of $101.8 million for the financial year ending 31 March 2018.

The technology giant attributed the plummet from its previous $377,000 profit to the costs associated with the merger between Computer Sciences Corp (CSC) and the enterprise services business of Hewlett Packard Enterprise (HPE), completed in April 2017. 

The merger saw DXC pay $68.1 million in goodwill charges and restructuring costs of $56.2 million, adding up to $124 million in one-off expenditures and provisions.

According to DXC, the “significant restructuring activities” were undertaken to “simplify the current business model and create synergies across all service lines”. 

Profit before tax would have reached $11.8 million, still a 60 per cent dip from the previous $29 million. The company paid $10.7 million in income tax within the financial period. The company also cited share transfers between XUK Holdco, ES Hague and Continuum Europe as hitting its profits for the financial year. 

The results for the year ended 31 March 2018 revealed a 5.4 per cent dip in revenue from $1.24 billion the year before to $1.17 billion. 

This decrease was attributed to the wider ongoing migration out of legacy infrastructure. However, the decline was offset by growth in cloud infrastructure, enterprise and cloud applications plus digital workspace offerings.

Globally, revenue was $35.8 billion (US$24.55 billion), decreasing by 3.3 per cent from the previous year. 

The company was formed from a US$8.5 billion spin-merger of the CSC and HPE’s Enterprise Services business closed on 3 April 2017.

When the proposed spin-merger was first announced in May 2016, the resulting entity was billed as a “pure-play, global IT services powerhouse,” and was expected to see US$26 billion in annual revenues, while claiming nearly 6,000 clients in over 70 countries.

DXC revealed the the valued paid for the two Australian acquisitions that followed the reported period. The company paid $34.3 million for the Microsoft partner Sable37 and $22.3 million for Salesforce platinum partner System Partners.

The article was updated to reflect DXC Technology Group made $377,000 profit in its 2017 financial year, not $377 million.

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Tags HPEDXC AustraliaComputer Sciences Corp (CSC)Sable SystemSystem Partner

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