Silverlake Axis Q4 profit falls 58%; declares final and special dividends

SILVERLAKE Axis Ltd (SAL) on Friday said Q4 FY2017 profit fell 58 per cent to RM32.7 million (S$10.4 million) from a year ago as customers deferred and reduced IT capital expenditures amid uncertainties in the region.

The software provider to financial institutions said group revenue was 25 per cent lower at RM124.9 million.

As expected, the group also declared final and special dividends of 0.3 Singapore cent per share and 1.0 Singapore cent per share respectively to return a portion of gains from the sale of shares in Global Infotech Co Ltd (GIT).

Together with the interim dividends, total dividends for FY2017 amounted to 4.5 Singapore cents per share, an increase of 50 per cent over FY2016.

During the year, it disposed of 34.9 million shares in GIT and recorded a gain of RM480.4 million. Following SAL's cessation of significant influence over GIT, the reclassification of the remaining 9 per cent interest in GIT from investment in associate to available-for-sale financial assets resulted in a mark-to-market accounting gain of RM294.8 million in FY2017.

The reduction in the group's stake in GIT from 20.01 per cent to 9.24 per cent raised about RM502.8 million in proceeds, net of capital gain tax. The group expects the majority of these proceeds to be repatriated from China in FY2018, and will deploy the proceeds towards payment of special dividends as well as acquisitions to expand its portfolio of fintech and insuretech software products and services to address the growing demand for transformational digital banking and insurance offerings.

In a review of FY2017 and Q4 results, SAL said it operated under challenging business conditions in FY2017 as customers deferred and reduced IT capital expenditures amid uncertainties in the regional economies.

"This resulted in lower value of project related revenues booked during the year. The decrease in project related revenues was partially moderated by higher contributions from the recurrent revenue segments which continued to grow in FY2017."

But SAL is beginning to see an improvement in demand for software projects in 2017.

As customers start to prioritise IT capital expenditures for digital banking, the group is likely to benefit from higher demand for project related services, it said.

"Since the beginning of the year, we have been more active in responding to requests for proposals and is engaging existing and potential customers for core IT replacements and digital banking upgrades. Based on our current order books for projects, we expect to see an improvement in project related licensing and services revenue in FY2018," said Raymond Kwong, SAL managing director.

SAL closed at S$0.605, up S$0.005.