Pakistan’s oldest software house Systems Limited has announced its financial results for the first half of 2020.
Systems continued its growth as its consolidated profits soared by 20.75% for the period under review. The company reported a profit of Rs. 1.06 billion as compared with a profit of Rs. 878 million in the same period last year.
The company’s profitability increased due to rupee’s depreciation during the period with higher domestic sales due to automation drive by public/private sectors, growing business, increased contribution of maintenance contracts revenue from MEA and North America segment, and better gross margins.
Systems Limited’s financial health is continuously improving due to the rupee devaluation and the export rebate which has positively impacted the revenue growth as most of its revenue comes from exports.
The company reported higher sales and a reduction in other operating expenses.
Sales landed at Rs. 4.55 billion, translating into a 27.09% increase as compared with Rs. 3.58 billion in the same period last year.
The majority of the sales growth was primarily driven by the rupee’s depreciation against the US Dollar as Systems’ majority exports are denominated in US$ or currencies pegged with US$.
The company’s sales were also up due to exponential growth in revenue from Europe, E-Processing Systems, and TechVista Systems FZ.
However, the cost of sales of the company was posted at Rs. 3.13 billion, up by 26.75% in the half-year as compared to Rs. 2.47 billion in the same period last year. This took the gross profits to Rs. 1.42 billion as compared with Rs. 1.10 billion, showing an increase of 29.10%.
The company’s results were above market expectations due to lower other operating expenses and above expectation decline in traveling cost due to the outbreak of COVID-19.
Other income of the company dropped by 20% to Rs. 235.73 million as compared with Rs. 294 million in the same period last year.
The finance cost saw an increase of 22.64% to Rs. 24.27 million as compared with Rs. 19.79 million in H1 2019. On the other hand, the company saw a 10.6% and 28.7% rise in distribution expenses and administrative expenses, respectively.
Earnings per share of the company increased to Rs. 8.73 from Rs. 7.17.
At the end of the day, System’s shares at the bourse closed at Rs. 210, up by 7.50% or Rs. 14.67, with a turnover of 794,300 shares on Wednesday.
The company is getting traction and high demand has been generated for offshore and remote work for BPO contact center, support, and managed services, and also in digital businesses. Systems considers it a positive sign and accordingly aligned its strategy to pitch digital services to customers, for example, E-commerce.
Systems is globally diversified from a geographical location perspective and are not dependent on one market, the company is expecting to retain customers from Europe, Middle East, Pakistan, and North America despite the current crisis situation.