Silverlake Axis posts 3% earnings rise in 4Q to $26 mil

Silverlake Axis has reported earnings of RM77.2 million ($26 million) for 4Q16, a 3% improvement from the earnings of RM74.7 million in 4Q15.

During the quarter, revenue rose 32% to RM166.9 million due to the higher contribution from all of its business segments except the software project services segment, and from the appreciation of the Singapore dollar and the US dollar against the ringgit.

In particular, revenue from maintenance and enhancement services increased 45% to RM98.1 million from the larger numbers of contracts secured, and the consolidation of Symmetri Group’s maintenance and enhancement revenue. Software licensing revenue was 41% higher from higher value software licensing contracts which were completed during the quarter. The group also benefited from a major sale of hardware products.

Gross profit margins rose 5 percentage points to 66% from the higher proportion of higher margin software licensing sold and higher margins achieved from its software project services.

Other income of RM7.4 million was 69% lower, due to the one-off accounting gain of RM19.2 million from the dilution of interest in Global InfoTech Co (GIT) and the fair value adjustment for the acquisition of Merimen recorded in 4QFY15, which were not repeated in the current quarter.

Silverlake says that the cautious business outlook during the year has led to a slowdown in major core IT replacement or upgrades, as financial institutions in South East Asia have started to adopt a more careful approach to large IT expenditure.

However, it is still working its customers to enhance their core IT systems for greater efficiency and to deliver new capabilities, it adds.

For the full year to June, the group posted a 3% dip in earnings to RM 273.8 million.Revenue increased 23% to RM636.3 million.

The group has declared a final dividend of 1 cent for the full year.

Shares of Silverlake Axis closed unchanged at 58.5 cents.

This article first appeared in The Edge Singapore Market Report.

Didn’t make it to the last Silverlake Axis AGM? Read more to find out what was revealed there: 12 Things I Learned from Silverlake Axis’s AGM 2015

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