Australian recruitment firm Ignite (IGN:ASX) announced that its subsidiary Lloyd Morgan will sell 100% of Lloyd Morgan Hong Kong.

Lloyd Morgan stated that it has agreed to sell Lloyd Morgan’s Hong Kong business to current Chief Executive Officer of Lloyd Morgan China, Denis Rigon.

Lloyd Morgan recruits for roles in sales, marketing, retail, HR, finance, legal, IT, engineering, procurement, supply chain, manufacturing and operations across different industries and locations in China.

In a statement, Ignite said, “The share sale was entered into for a nominal cash consideration and based on the acquisition of the business as a going concern on an “as is, where is” basis, with all faults and without any warranties or representations by the seller and without any future recourse to the seller in respect of the business sold.

Ignite, through its related entities, has had majority ownership and control of the Lloyd Morgan business, which provides permanent recruitment services in China, for more than twelve years and said it has experienced mixed results and numerous challenges in its performance during that period.

In its 2019 Annual Report, the group said Lloyd Morgan had a very challenging year as it continued to rebuild under the leadership of its CEO Rigon who was appointed in November 2018.

In recent years, following strong revenue growth in fiscal 2018 and a profit of AUD 125,000 (USD 85,160), the business fell into loss in fiscal 2019 losing AUD 966,000 (USD 650,070). The year to date performance in fiscal 2020 saw the business losing AUD 895,000 USD 609,800) for the first four months and the Board has formed the view that the prospects of a rebound to profitability are unlikely in the current fiscal year.

“China is a complex regulatory environment and Lloyd Morgan China also operates in a highly competitive industry for both clients and staff,” Ignite stated. “It is constantly challenged in attracting and retaining both. Over the last five years, the China operations, which have been self-funding and self-sufficient during that period, have consumed a disproportionate amount of the time of the Board and the senior leadership team relative to the scale of operations and contribution to revenue and profitability.

“Following a review of the options available to it the Board determined not to invest further capital in the China business and that together with the ongoing risks and challenges facing the business, the Board considered that LMC, its clients, candidates and staff were best served by local ownership with a locally focussed and experienced leadership team,” Ignite stated.

With approximately 200 employees, Ignite operates in 12 offices across Australia as well as in China where it trades under its Lloyd Morgan brand.

Further financial details were not disclosed.