SYS: higher revenues lift profits by more than twofold

April 29, 2022 (MLN): With the robust growth in topline and other income, Systems Limited earned more than twofold higher net profits of Rs4.4 billion (EPS: 32.41) during 9MFY22, compared to the profits of Rs2.2 billion (EPS: Rs16.17) in the corresponding period last year.

Revenues for the period clocked in at Rs5.3bn, up by 75% YoY, mainly due to increased business from Europe and North America region, higher domestic sales due to automation drive by public/private sectors, increased contribution of maintenance contracts revenue from MEA and North America segment, a note by Foundation Securities cited.

Moreover, despite robust revenue growth, the gross margins decreased to 30% from 35% mainly due to the normalization of business operations and aggressive recruitment drive by the company.

The company booked other income of Rs334.39mn majorly due to higher exchange gains amid sharper PKR devaluation as against a loss of Rs115.9mn realized last year.

Among other major heads, the company’s admin expense increased by 79% YoY in 1QCY22 due to higher salary expenses, Finance cost has increased to Rs33mn, up 57% YoY due to higher short-term borrowings and interest rates. Furthermore, the company also booked a Rs74.5mn share of loss from its investment in associates.

On the taxation front, the effective tax rate clocked in at 2.2% in 1QCY22 vs the effective tax rate of 3.9% in 1QCY21.

Alongside financial results, the company has also notified that its board of directors authorized the management to look for possible opportunities to expand and develop its digital technology business through direct and indirect acquisitions of entities providing IT services locally and internationally, including software development, software maintenance and system integration.

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