SYS: Financial Results - Year Ended 31 December 2023
However, a notable increase in financial charges and the slight decline in gross margin as well.
Sales Growth: SYS reported a remarkable 55% increase in sales revenue, reaching Rs 32,037.9 million in 2023.
“The Company’s revenue comes primarily from Digital/Data/Cloud Services, Managed Services, Consulting Services, IT outsourcing and Business Process Outsourcing/Contact Center. The Company generates over 80% of its revenue from export of Services to various geographies such as North America, Europe, Asia Pacific and Middle East and less than 20% from domestic market. The Company is well diversified into various business verticals such as Banking and Finance, Telco, Retail, CPG, Pharma, and Public sector.”
Profitability Metrics: Gross profit and operating profit experienced significant growth rates of 42% and 46%, respectively, underscoring the company's operational efficiency and ability to capitalize on revenue opportunities. The reported operating profit includes one off impairment loss on remeasurement of investment in Jomo Technologies (Pvt) Limited amounting to Rs. 154 million.
Other Income: The company's other income increased by 34%, showcasing diversification in income streams, which could contribute to overall profitability stability.
Financial Charges: A substantial surge of 196% in financial charges, reaching Rs 664.17 million.
Profitability Before Tax : SYS achieved a impressive 36% growth in PBT, reaching Rs 9,008.77 million. This is in line with its historic trend.
Taxation: The Company just pays a 5% tax on income. This represents tax chargeable under Minimum Tax Regime on local sale of software and services, tax chargeable under Final Tax Regime on export sale of services and dividend income in accordance with the provisions of the Income Tax Ordinance, 2001.
Dividend Announcement: The SYS announced a cash dividend of Rs 6/- per share.
During the year ended December 31, 2022, the management had acquired 9% stake in the fastest growing fashion e-commerce brand of Pakistan, JOMO, as a strategic investment. However, considering the economic downturn in the country and delay in anticipated funding resulting in deteriorating liquidity and financial performance of the brand, the management believes that the carrying value of investment amounting to Rs 154. 46 million does not truly reflect its fair value. Hence the management, in the interest of prudence has taken requisite impairment of the investment.
Directors further report: The Company will continue to use geographical segments as well in addition to vertical segments. However, the four primary segments now revolve around industry verticals, reflecting the company's strategic shift:
• Banking Financial Services & Insurance (BFSI): This segment likely includes activities related to banking, financial services, and insurance.
• Retail & CPG (Consumer Packaged Goods): This segment encompasses retail operations and consumer goods.
• Telco (Telecommunications): This segment involves telecommunications services and technologies.
• Technology: This segment includes technology related solutions, products and services.
• Others: This catch-all category may include any remaining segments that don't fall into the specific verticals mentioned above.
Geographical Segment: The Company is showing a strong growth across all four segments, with Middle East region taking the lead, followed by Pakistan and North America. Export sales of the Company are approximately 83% of total sales, taking another 2% from the domestic sales, with the Company’s target being to further increase the export component going forward.
Diversification into new regions and new markets will support this objective as the company is actively looking to expand in the new markets. During the year, the Company made significant progress in getting repeat business from existing customers and also increased its business through cross selling and upselling to new customers, and customers acquired through the two acquisitions.
Systems Limited is a public limited company incorporated in Pakistan under the Companies Act, 2017. The Company is principally engaged in the business of software development, trading of software and business process outsourcing services.
The Company has a number of subsidiaries; TechVista Systems FZ- LLC, Systems Ventures (Private) Limited, TechVista Information Technology W.L.L., Systems Arabia for Information Technoloy, Systems International IT Pte. Ltd, Systems APAC for Information Technology Pte. Ltd., SYS Egypt for Information Technology Services, SUS-JV (Private) Limited, National Data Consultant (Private) Limited and Systems Africa for Information Technologies Pty. Ltd. and associated company namely E-Processing Systems B.V.
