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A Quick Look at the First Quarter Earnings at Silverlake Axis Ltd

Silverlake Axis Ltd (SGX: 5CP) is a technology firm that provides mostly back-end solutions to the banking, insurance, payment, retail and logistics sectors. Yesterday, it released its financial results for the first quarter ended 30 September 2014.

For the quarter, total revenue came in at RM116.3 million, an increase of 15% year-on-year. This was mainly due to better performance from the business activities of software licensing, which grew 84%, and maintenance and enhancement services, which put on 22%. Revenue from maintenance and enhancement services, which is recurring, formed the bulk of total revenue.

Net profit grew 17% year-on-year to RM59.7 million due to lower income tax expenses and increase in share of profit of associates. The share of profit of associates for the quarter was at RM2 million as compared to RM0.8 million last year, due to higher contribution from Global InfoTech Co. Ltd. Silverlake has a 27% stake in the associate, which is a Chinese company that provides Information Technology services to the financial sector.

As of 30 September 2014, the company had total debt of RM3.4 million and a cash balance of RM424.4 million. This is an improvement, as three months prior, the figures stood at RM3.9 million and RM349.8 million, respectively.

Operating cash flow for the quarter was at RM73.2 million, an improvement of 13.6% year-on-year. The firm spent RM0.1 million on capital expenditure in the latest quarter as compared to RM0.3 million last year. This shows that the company has generated copious amounts of free cash flow. Free cash flow is used to reinvest back into the business, pay dividends, pare down debt and for share buybacks.

Silverlake is giving out an interim dividend 0.8 Singapore cent per share, unchanged from last year. Its shares closed at S$1.35 on Monday.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.