The dual spin-mergers of Hewlett Packard Enterprise’s (HPE) Enterprise Services and software businesses in 2016 and 2017, respectively, have played a part in the company’s net loss last year. Hewlett-Packard Australia, as HPE’s local entity is known, posted a net after-tax loss of just under USD 44.8 million for the financial year ending October 2017, according to documents lodged with Australia’s corporate regulator on 3 May. The year prior, the company reported a net after-tax profit of USD 1.3 million. However, it appears that HPE Australia’s bottom line was somewhat tempered by the sale of its Enterprise Services business and its software business to the respective entities set up to complete spin-mergers with CSC and Micro Focus, respectively. HPE announced the USD 8.5 billion merger of its Enterprise Services business with multinational solutions and services provider CSC in May 2016, with the deal creating a USD 26 billion solutions provider and the third largest in the global market, and giving birth to the DXC Technology brand.
The subsequent USD 8.8 billion deal to spin-off and merger HPE’s software business with Micro Focus was announced in late 2016, with HPE retaining ownership of 50.1 per cent in the post-merged entity.
On 1 December 2016, HPE disposed of the trade, assets and liabilities aligned to its global Enterprise Services business as part of a group-wide separation into two separately-traded companies.
According to the operating cash flow breakdown for the year, HPE Australia pulled in USD 1.16 billion in receipts from customers, while paying out USD 1.20 billion to suppliers and employees. Including other outgoing and incoming finances, net cash flow from operating activities for the year was -USD 45.22 million.
Unsurprisingly, given the spin merger of the Enterprise Services business, wages and salaries for the year dropped dramatically, to USD 199 million. The year prior, wages and salaries came in at USD 551.1 million. Termination benefits also dropped dramatically, coming to less than half of the previous year’s tally, at USD 36.7 million. HPE Australia reported a negative tax rate of -USD 13.1 million at the country’s standard 30 per cent tax rate, due largely to its net loss for the year, and an effective income tax rate of two per cent, equating to just under USD 1 million. The year prior, the company’s effective income tax rate was about four per cent, coming in at USD 59,000. The financial year ending October 2017 also saw HPE globally pick up a raft of new businesses, with the company closing its acquisition of Silicon Graphics International (SGI) in November 2016, wrapping up its acquisition of Simplivity in February 2017 and finalizing its USUSD 1 billion Nimble Storage acquisition in April last year. Locally, HPE Australia and its controlled entities entered into an asset sale and purchase agreement with SGI in November 2016 for a total consideration received of just over USD 1 million. On 1 September 2017, meanwhile, HPE Australia entered into a similar deal with Nimble – a global HPE company by then — in which the storage vendor sold the business for a consideration of USD 14.2 million. In October last year, HPE Australia entered into an asset sale and purchase agreement with Simplivity which, globally, was an HPE company at the time, for a total consideration received of USD 4.1 million.
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