Systems Limited (PSX: SYS) had another good run with a 51.4 percent year-on-year (YoY) profit growth during the year ended 31 December 2022.
According to the company’s consolidated financial results, the profit for the period increased from Rs. 4.38 billion to Rs. 6.63 billion.
Along with the result, SYS announced a final cash dividend of Rs. 5 per share (50 percent) for the calendar year (CY) 2022.
Consolidated revenue grew by 108 percent from Rs. 15.3 billion to Rs. 31.76 billion. Gross profit and operating profit increased by 73 percent and 69 percent respectively.
Consolidated revenue includes one-off revenue from the sale of the license of CLOS, a product developed by NDC and sold for an upfront payment of $8 million and subsequent royalty of ~ $7 million over five years, which has been recognized at present value. The cost of $15 million has been adjusted against the revalued intangibles at the time of acquisition neutralizing the P&L.
This one-time gain has been recognized in last year’s consolidated financial statements arising from the conversion of EProcessing Systems B.V. from a subsidiary to an associate on account of the dilution of voting rights resulting from the investment of Gates Foundation in irredeemable preference shares.
Other income of the company jumped by 241 percent from Rs. 653 million to Rs. 2.23 billion in CY22. Meanwhile, the finance costs of SYS increased by 137 percent to Rs. 287 million during the period in review.
Administrative expenses during CY22 spiked by 74 percent from Rs. 1.42 billion to Rs. 2.48 billion. Additionally, the company paid Rs. 351.5 million in taxes, compared to Rs. 53.9 million in CY21.
Basic and diluted earnings per share increased by 46 percent over the same period last year including one time gain of Rs. 816.2 million arising from the conversion of E-Processing Systems BV from a subsidiary to an associate, growth in profit after tax (PAT) excluding this gain is 88 percent from Rs. 3.56 billion to 6.63 billion.
Revenue growth in USD is 65 percent and operating profit is 34 percent. Growth in revenue is contributed by both the Company and its subsidiaries. The majority of the work from its group companies has moved from onsite to offshore.
In Pakistan, the Company has been restrategizing its domestic business and has repositioned the customer base to private sector large-scale enterprises from the public sector and SMEs. The Company is focused on securing long-term recurring managed service contracts with Teleco and Financial institutions.
The basic and diluted earnings per share for the Company are Rs. 22.44 and Rs. 22.29 (31 December 2021: Rs. 12.06 and Rs. 11.98) per share. Similarly, the basic and diluted earnings per share for the Group are Rs. 23.61 and Rs. 23.45 (31 December 2021: Rs.16.21 and Rs. 16.10) per share.
At the time of filing, the company’s scrip at the bourse was Rs. 464.28, down 3.34 percent or Rs. 16.07 with a turnover of 791,530 shares on Wednesday.
