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Global diversity fuels Systems Limited’s growth

Global diversity fuels Systems Limited’s growth
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March 29, 2024 (MLN): The predominant share of Systems Limited's (PSX: SYS) revenue, totaling 95%, is denominated in foreign currency (FCY), with a mere 5% attributed in Pakistani rupees (PKR), the management of the company highlighted during investor briefing session on Thursday.

Conversely, on the expenditure front, 60% of costs are in PKR, while the remaining 40% are in FCY.

Geographically, the Middle East & Africa region constituted the largest portion of the company’s revenue at 55% in 2023, followed by North America with 23%, Pakistan with 16%, Europe with 4%, and Asia Pacific with 2%.

Systems Limited’s talent pool is characterized by its global diversity and inclusivity. This fuels its commitment to nurturing a collective of highly educated IT professionals that is not only diverse and inclusive but also continually expanding.

Over the past couple of years, the company has made significant investment in expanding into new markets and geographies.

It is now working on maximizing the return on those investments.

To recall, SYS recorded an increase of 31% YoY in its profits in 2023, worth Rs8.69 billion [EPS: Rs29.86], compared to a profit of Rs6.63bn [EPS: Rs23.61] in the previous year.

Along with the results, the company had also announced a final cash dividend for the year ended December 31, 2023 at Rs6 per share.

Operating revenues of the company were Rs53.44bn in 2023 compared to Rs31.76bn in 2022.

The growth in revenue was contributed by both the company and its subsidiaries.

Gross profit grew by 58% to Rs13.66bn in 2023.

The gross margins, however, worsened to 25.56% as compared to 27.19% in 2022. This was due to inflationary adjustments in compensations, increased energy prices, currency devaluation, and high amortization costs.

The net addition in IT resources increased to 1,251 since 2022, leading to higher salary costs.

Operating profit from ordinary course of business amounted to Rs7.89bn showing a growth of 47%.

The operating margins fell to 14% in 2023 compared to 17% a year earlier. This was due to a one-off impairment adjustment of investment in JOMO, higher IFRS9 adjustment on receivables with current macro-economic conditions and future inflation projections from International Monteary Fund (IMF).

Share of loss coming from Jugnu has already offset investment, while EP Systems will continue.

The expenses increased in 2023 due to additional cost of newly incorporated subsidiaries and NDC, and upfront investment in infrastructure and business development.

The company earned other income worth Rs3.19bn in 2023, a growth of 43.2.

Out of total other income, Rs2.3bn (71% ) was exchange gain.

The remaining came from one off gain from Jugnu and disposal of assets.

Meanwhile, acknowledging the Generative AI technology's potential to revolutionize work and reshape the business landscape, the company is strongly focusing on building AI competency by building and developing a resource pool.

Systems is also developing AI offerings for the BFS, Telco, and Retail/CPG verticals.

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Posted on: 2024-03-29T12:05:18+05:00