Stable group revenue at RM164.4 million in Q1 FY2020, a marginal 1% decline from Q1 FY2019
Encouraging growth in recurring revenue segments representing 74% of total revenue for the period
- Maintenance and enhancement services grew 15% to RM112.6 million
- Software-as-a-Service for insurance processing rose 22% to RM9.7 million
EBITDA for Q1 FY2020 RM72.6 million, an 8% decline from Q1 FY2019
Dividend proposed of Singapore 0.3 cents per ordinary share
Singapore, 14 November 2019 – Singapore Exchange Mainboard listed Silverlake Axis Ltd (“SAL” or the “Group”), a leading provider of Digital Economy Solutions and Services to major organisations in Banking, Insurance, Retail, Government, Payment and Logistics industries, today announced its results for the first quarter ended 30 September 2019.
Q1 FY2020 Results Review
The Group recorded a revenue of RM164.4 million in Q1 FY2020.
The recurring revenue from maintenance services, enhancement services and insurance processing rose 15% to RM122.2 million, increasing its share of group revenue to 74% in Q1 FY2020. Revenue from maintenance and enhancement services grew 15% to RM112.6 million for the quarter, contributed by the addition of new maintenance and enhancement contracts from a number of countries. Revenue from Software-as-a-Service for insurance processing increased by 22% from RM7.9 million in Q1 FY2019 to RM9.7 million in Q1 FY2020. This business benefited from a new pricing structure introduced in key markets for insurance processing activities, as well as additional revenue contribution from new products and services.
Project related revenue comprising software licensing and software project services totalling RM38.9 million in Q1 FY2020 declined 29% as compared to Q1 FY2019. This decline resulted largely from a number of core banking projects having reached the advance stages of completion. These are mainly projects from Thailand and Malaysia. Depending on the percentage of completion, revenue recognition fluctuates quarter to quarter on these contracts.
The Group recorded stable gross profit of RM105.2 million in Q1 FY2020, and the gross profit margin improved slightly to 64% from 63% due to higher margin achieved especially for recurring revenue segments compared to Q1 FY2019.
Overall expenses were higher by RM11.7 million (29%) compared to Q1 FY2019, contributed by administrative expenses (RM9.5 million) and to a lesser extent finance costs (RM2.2 million).
A large component on the increase in administrative expenses resulted from the incorporation of SIA X Infotech Group’s (“XIT Group”) expenses for the first time in Q1 FY2020 as well as foreign currency exchange losses for the quarter.
The increase in finance costs resulted from the unwinding of the discount allocated to the earn-out consideration recognised for the acquisition of Silverlake Investment Ltd. Group and XIT Group, and interest expense for a revolving credit facility.
Due to the higher aforementioned expenses, the Group recorded a lower profit before tax of RM56.8 million in Q1 FY2020, a 16% reduction from Q1 FY2019. Consequently, the Group's earnings before interest, taxes, depreciation, and amortisation (“EBITDA”) of RM72.6 million in Q1 FY2020 was 8% lower compared to RM78.7 million achieved in Q1 FY2019 and this resulted in a decline of 3% in EBITDA margin to 44%.
The Group’s effective tax rate rose from 14% in Q1 FY2019 to 17% in Q1 FY2020, mainly due to higher taxable income from certain subsidiaries and the expiry of pioneer status of a Malaysian subsidiary during Q1 FY2020.
As a result, the profit after tax attributable to shareholders declined 19% to RM47.2 million in Q1 FY2020.