SINGAPORE (May 15): Silverlake Axis saw earnings in the third quarter ended March increase by more than six fold to RM398.4 million ($128.7 million), compared to RM61.5 million a year ago.

This increase was mainly attributed to a one-off gain of RM477.7 million on the disposal of 34.9 million shares in Global InfoTech Co (GIT) during the quarter.

Group revenue in 3Q17 fell 21% to RM124.4 million, from RM157.0 million a year ago.

Revenue from its software licensing segment fell 95% to RM1.8 million due to reduced capital expenditure on projects by customers and lower value of software licensing contracts delivered during the quarter.

Silverlake’s software project services segment saw revenue fall 85% to RM3.8 million due to the deferment and slowdown of customers’ capital expenditures on projects and the completion of significantly higher value contracts.

Revenue from the sale of software and hardware products fell 83% to RM189,204.

The decline is revenue was partially mitigated by a 25% increase in revenue to RM106.6 million from its maintenance and enhancement services segment.

This was mainly due to more contracts secured from the customers in Malaysia, Singapore and Ghana following the completion of their software implementation contracts as well as European and Middle Eastern customers from Silverlake Symmetri (Singapore).

Silverlake says customers have been deferring their capital expenditures on IT projects since 2H16, and instead have been shifting their spending to enhance their IT systems, which also contributed to the growth of the segment.

Cash and cash equivalents stood at RM271.7 million as at March 31, 2017.

Maintaining its trend of quarterly dividends, Silverlake’s Board has proposed a third interim dividend of 0.7 cents per ordinary share.

“For the rest of FY2017, project related revenues are likely to gradually improve as customers are starting to prioritise IT capital expenditures for digital banking and deferred core system upgrades,” says Silverlake managing director Raymond Kwong.

Notwithstanding the challenging business climate, Silverlake says it will continue to explore acquisition opportunities to expand its portfolio of fintech and insuretech software products and services to address a larger base of customers.

Shares of Silverlake Axis closed flat at 54.5 cents on Monday.

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