SYS: Higher exchange gains lift net income

August 26, 2022 (MLN): System Limited (PSX: SYS) has witnessed a robust growth of 96% YoY in its consolidated net profit that clocked in at Rs2.97 billion for the 1HCY22 ended on June 30, 2022, compared to Rs1.51 billion in the same period last year, mainly on the back of upsurge in revenue and exchange gains related to other income.

This translates into basic earnings per share of Rs10.67 during 1HCY22 as compared to Rs5.67 in the corresponding period last year.

According to the financial statement sent to PSX, the topline witnessed a 75% YoY jump amid a higher influx of orders from all regions including Europe, North America and the Middle East along with PKR depreciation. However, higher cost of sales that surged by 81% YoY led gross margins to decrease by 2ppt to 32% in 1HCY22.

On the cost front, SYS’s admin expenses saw a whopping increase of 92% YoY in CY22, while selling and distribution cost went up by 25.4% YoY 1HCY22. The increase in these costs was attributed to exponential growth in operations, a report by Foundation Securities said.  

Notably, the other income of the company stood at Rs982mn in 1HCY22, showing an increase of 13 times YoY. The report noted that the majority of the increase in other income is due to exchange gain on translation of foreign currency-denominated assets as the rupee depreciated during the said period.

Further, the finance costs went up by 73.6% to Rs84mn in the said period on the back of higher interest rate.

On the tax front, the effective tax rate clocked in at 5% as compared to 3% in 1HCY21.

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