DXC returns to profit by banking AU$2.4 million during FY19

http://www.zdnet.com/article/dxc-returns-to-profit-by-banking-au2-4-million-during-fy19/

Image: DXC Technology

DXC Technology Australia is back in the black after recording a profit after tax of AU$2.4 million for the financial year to 31 March 2019, an improvement on the AU$1.16 million net loss after tax during the same restated period last year.

Meanwhile, the company's revenue decreased slightly by 1% from AU$2.35 billion to AU$2.32 billion.

"The decrease in revenue reflects the ongoing migration out of legacy infrastructure environments, partially offset by growth in our cloud infrastructure, enterprise and cloud applications, and digital workplace offerings," the company said.

Income tax expense was AU$6.5 million, following an income tax credit of AU$19.4 million last year. It also had an income tax owing of AU$6.2 million, but a AU$2.5 million adjustment for prior year's tax and AU$800,000 write-off of unrecoverable withholding tax wiped out a deferred tax expense of nearly AU$3 million.

DXC said that during 2019, the group "performed a review of the prior year's tax adjustments and identified that the prior period tax related intercompany entries of AU$6 million created [were] no longer relevant".

"To this effect, the balance in trade and other payables have been adjusted and resulted," the company said.

Deferred tax assets, meanwhile, were nearly AU$119 million as of 31 March 2019, an increase from last year's restated AU$110 million.

The company's latest financial results continued to also account for the cost of restructuring activities following the merger of Computer Sciences Corp (CSC) and the Enterprise Services arm of Hewlett Packard Enterprise (HPE) and the formation of DXC Technology.

"Following the acquisition of DXC United and the global merger with the enterprise services segment of Hewlett Packard Enterprise (HPE), the group executed integration initiatives to simplify the operation model and to drive efficiencies across all service lines," the company said.

"Because of these activities, the group made several one-off expenditures totally nearly AU$77 million, decreased from AU$104 million during the same period last year. Without these non-recurring items, the underlying profit before tax would have been AU$85.6 million, up from AU$83.6 million."

The financial report also revealed how the group did not previously amortise UXC tradenames as intangible assets, but it has since adjusted this for the 2019 financial year.

"During the year this was reviewed and a position was taken to amortise the tradenames over 10 years, consistent with UXC customer relationship intangible asset. The deferred tax liability arising on tradenames balance from prior years of AU$5 million have been adjusted and restated," it said.

DXC also said it deregistered 19 companies during fiscal 2019, including UXC Cloud solutions, Australian Information Technology, and Saltbush Group. Despite this, DXC Technologies Australia still remains the head company of over 50 subsidiaries across globally, with a majority based in Australia.

DXC Technology Australia employed 6,601 staff as of 31 March 2019.