Ann: RXP Earnings Update, page-31

Watched this thread with interest...nearly added a comment last week...thank God I didn't.....

Some observations (and a bit to add...)

RXP peaked around December last year and at the time they placed 20 million shares at $0.80. I think this pissed the sharemarket off due to the dilution effect. The 1H 2014 result had a little blemish with a comment that the Hong Kong business had a cost control problem. Other than that management had not put a foot wrong all year until the Nov 5 AGM Profit Update and, of course, today's announcement.

In 2013 I bought RXP on the basis of the acquisitions and the "locked in" revenue/profit growth. This had worked for me in 2013 and I sold after the dilution share issue. I bought in again recently in the $0.60's after Centrum, Aptis and Insight 4 acquisitions.

Now? Smacked hard!! I bought the AGM announcement at face value. After today's announcement I was so pissed off that I contacted the company and had personal responses from all of Ross and Paul Fielding and the Investment Relations guy!! Off the top they all said it is a cost/timing issue, not a revenue issue - projects planned and staffed for this Q starting in next Q (but starting!!).

My analysis? The 1H14 EBIT Margin was 14% and the 2H14 EBIT Margin was 18% (I looked at the 2013 Margins but can't get a perspective).

The market does not like IT companies; their fixed costs are 100% when the revenue dries up; this evident from the general smashing from early October and it impacted RXP particularly.

So what from here?? I'm not sure I'll get my money back from the purchases I made in the $.60's but I feel confident about the purchases I made today in the $0.30's (P.E. around 6!!).

Please note that I'm not ramping (am hurting like you all) but trying to verbalise my own perspective.

I hope this helps.

(Gutsiest move I ever saw man!!! Hollywood to Maverick!!! - Top Gun 1986!!!)