SINGAPORE (Nov 10): Silverlake Axis announced that 1Q18 earnings dropped 81% to RM31.7 million ($10.2 million) from RM168.6 million in 1Q17.
Revenue for the quarter decreased 10% to RM114.0 million compared to RM126.7 million last year.
This was due to lower contributions from project related revenue segments such as software licensing, software project services and sale of software and hardware products whereas the recurrent revenue segments, comprising maintenance and enhancement services and insurance processing, making up approximately 89% of group revenue for the period, continued to grow at 7% and 8% respectively.
Revenue from software licensing declined 86% to RM2.3 million from RM16.2 million in 1Q17, mainly due to timing of contracts delivery, whereby most were won in late FY17.
Software project services revenue decreased 50% to RM5.36 million from RM10.7 million last year, due to the completion of contracts secured and implemented in Vietnam, Malaysia and Indonesia during FY17 and lower progressive revenue recognised in 1Q18 from ongoing implementation contracts secured from new and existing customers in 4Q17.
Revenue from maintenance and enhancement services of RM94.4 million in 1Q18 was 7% higher compared with RM88.4 million in the previous corresponding quarter, due to new enhancement contracts secured in Pakistan and Europe and higher progressive revenue recognised from maintenance and enhancement contracts secured from Ghana, Malaysia and Indonesia after the completion of software implementation contracts in the previous year.
Cost of sales increased by 4% to RM55.0 million from RM53.1 million a year ago.
Hence, gross profit for the first quarter ended September came in at RM59.1 million, 20% lower than RM73.6 million in the previous year, while gross profit margin dropped to 52% from 58% last year.
This was mainly due to the change in revenue mix, with a lower proportion of revenue recorded from higher margin project related revenue segments.
Finance income increased more than fourfold to RM1.56 million from RM0.35 million in 1Q17, due to higher deposits placement with financial institutions.
The administrative expenses of RM25.4 million in 1Q18 was 26% higher compared with RM20.2 million in 1Q17, mainly due to higher realised foreign currency exchange loss from translation of loans, receivables and bank balances denominated in foreign currencies, higher professional fees incurred for the proposed acquisition of three Silverlake Private Entities and other potential acquisition and the recognition of an impairment loss on trade receivables in 1Q18.
However, other income was down 96% to RM6.53 million compared to RM145.9 million a year ago.
In 1Q18, the group recorded share of profit of a joint venture and associates of RM0.21 million from a loss of RM2.08 million last year, this was contributed by the group’s joint venture, Silverlake HGH, which recorded higher 1Q18 profit.
Raymond Kwong, managing director of Silverlake says, “Based on our current order book for projects, we expect to see an improvement in project related licensing and services revenue in the second half of FY2018.”
Shares in Silverlake Axis closed at 57 cents on Friday.
