Systems : Transmission of Quarterly Report for the Period Ended 2023-06-30

HALF YEARLY

REPORT JUNE

2023

CONTENTS

COMPANY PROFILE	02-11
Company Information	2
Director's Report	3
Director's Report Urdu	10
Independent Auditor's Review Report to the Members	11

STANDALONE FINANCIAL
12-31
STATEMENTS

Condensed Unconsolidated Interim Statement of Financial Position Condensed Unconsolidated Interim Statement of Profit or Loss Condensed Unconsolidated Interim Statement of Comprehensive Income Condensed Unconsolidated Interim Statement of Changes in Equity Condensed Unconsolidated Interim Statement of Cash Flow

Notes to the Condensed Unconsolidated Interim Financial Statements

CONSOLIDATED FINANCIAL

STATEMENTS

13

14

15

16

17

18

32-45

Consolidated Condensed Interim Statement of Financial Position	33
Consolidated Condensed Interim Statement of Profit or Loss	34
Consolidated Condensed Interim Statement of Comprehensive Income	35
Consolidated Condensed Interim Statement of Changes in Equity	36
Consolidated Condensed Interim Statement of Cash Flow	37
Notes to the Consolidated Condensed Interim Financial Statements	38

COMPANY INFORMATION

Mr. Shabbar Zaidi

Director

Mr. Omar Saeed

Director

Mr. Asif Jooma

Director

Ms. Romana Abdullah

Director

Mr. Shabbar Zaidi

Chairman

Mr. Asif Jooma

Member

Ms. Romana Abdullah

Member

Mr. Asif Jooma

Chairman

Mr. Omar Saeed

Member

Ms. Romana Abdullah

Member

Mr. Arshad Masood

Member

Mr. Ali Ahmed Iftikhar

Head of Internal Audit

Mr. Salman Naveed

A. F Ferguson & Co.

Chartered Accountants

Tax Advisors

A. F Ferguson & Co.

Chartered Accountants

Habib Metropolitan Bank Limited

United Bank Limited

Standard Chartered Bank (Pak Limited)

MCB Bank Limited

Faysal Bank Limited

Bank Alfalah Limited

Bank Islami Limited

Allied Bank Limited

Meezan Bank Limited

Finja Pvt Limited

Habib Bank Limited

THK Associates (Private) Limited Plot no 32-C, Jami Commercial, Street 2 DHA Phase VII, Karachi.

1. [phone]

1. [phone]

Registered Address

Systems Limited

E-1, Sehjpal Near DHA Phase -VIII

(Ex.-Air Avenue), Lahore Cantt

1. [phone]

1. [phone]

2

DIRECTOR'S REPORT

On behalf of the Board of Directors, we are pleased to present the Standalone and Consolidated Financial Statements for the six months period ended 30th June 2023.

FINANCIAL RESULTS

Unconsolidated:

During period under review, standalone revenue grew 62% over same period last year from Rs. 8,791.85 million to Rs. 14,210.44 million. Consequently, Gross profit and Operating profit are 41% and 34% higher than SPLY (same period last year) respectively. Margins remain under stress due to significant inflationary pressures in the domestic market, partially eased by continued devaluation of the Pak Rupee resulting in a revaluation gain of Rs 2,355.52 million compared to the gain in June 2022 of Rs. 664.67 million increasing net profit by 73%, from Rs. 2,792.16 million to Rs.4,821.90 million in this period. Basic and diluted earnings per share increased by 65% in line with profit for the period. The growth in revenue, net of the impact of exchange gain, is 11%.

The increase in revenue has been led by Middle East.

Key Financial Highlights - Unconsolidated

Particulars	June-23 (unaudited)	June-22 (unaudited)	Change
	Rs.	Rs.	%
Revenue	14,210,447,645	8,791,854,416	62
Gross Profit	4,011,486,229	2,835,226,671	41
Operating profit	2,707,023,072	2,023,289,539	34
Profit for the period	4,821,907,671	2,792,160,432	73
Earnings before Interest, Tax & Depreciation*	3,064,140,484	2,286,894,366	34
Earnings per share (basic)	16.59	10.05	65
Earnings per share (diluted)	16.45	10.00	65
*Earnings represent operating prot
Other Income - Unconsolidated
Particulars	June-23 (unaudited)	June-22 (unaudited)
	Rs.	Rs.
Other Income	290,685,500	348,401,808
Exchange Gain / (Loss)	2,355,516,203	664,672,534
	2,646,201,703	1,013,074,34

Unconsolidated - Revenue (PKR Mn.)

				14,210
	CAGR - 55%
			8,792
		4,993
2019	2020	2021	2022	2023

Unconsolidated - Opera�ng Profit (PKR Mn.)

						2,707
	CAGR - 52%			2,023
		1,322
501	819

2019

2020

2021

2022

2023

Unconsolidated - Net Profit(PKR Mn.)

4,822

CAGR - 58%

Unconsolidated - EPS Basic (Rupee)

CAGR - 55%

16.59

779

2,792

1,350

1,029

2.84

10.05

4.92

3.75

2019

2020

2021

2022

2023

2019

2020

2021

2022

2023

3

Consolidated:

In line with the unconsolidated results, consolidated revenue grew by 102% from Rs. 11,463.24 million to Rs. 23,189.16 million versus SPLY.

Gross profit and operating profit increased 71% and 41% respectively. Investment in subsidiaries along with inflationary pressures in the domestic market have impacted margins, however, optimization of revenue and costs has positively impacted margins quarter over quarter. Net profit for the period at Rs. 5,293.86 million is 79% higher than SPLY, including the Rs. 2,546.64 million exchange gain. Basic and diluted earnings per share increased by 71% and 70% respectively in line with profit for the period. Eliminating the currency impact, revenue is up by 39% in US dollar terms.

During the year ended December 31, 2022, the management had acquired 8% 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.

The Company was absorbing a share of loss from another strategic investment in Retailistan which had been adversely impacting the margins. Since it has neutralized the cost of investment, no further adverse impact on profitability is expected.

Key Financial Highlights - Consolidated

Particulars	June-23 (unaudited)	June-22 (unaudited)	Change
	Rs.	Rs.	%
Revenue	23,189,163,398	11,463,245,291	102%
Gross Profit	6,258,627,331	3,654,446,776	71%
Operating profit	3,358,986,012	2,383,281,353	41%
Profit for the period	5,293,861,360	2,965,437,224	79%
Earnings before Interest, Tax & Depreciation	4,192,785,341	2,601,341,215	61%
Earnings per share (basic)	18.21	10.67	71%
Earnings per share (diluted)	18.05	10.62	70%
Other Income - Consolidated
Particulars	June-23 (unaudited)	June-22 (unaudited)
	Rs.	Rs.
Other Income	291,649,051	316,972,820
Exchange Gain / (Loss)	2,546,637,780	664,672,534
	2,838,286,831	981,645,354

Consolidated - Revenue - (PKR Mn.)

23,189

	CAGR - 60%
			11,463
		6,548
3,581	4,559
2019	2020	2021	2022	2023

	Consolidated - Net Profit (PKR Mn.)	5,294
		CAGR - 57%			2,965
			1,515
878		1,068
2019		2020	2021	2022		2023

Performance by Segment (Consolidated):

Consolidated - Opera�ng Profit (PKR Mn.)

					3,359
	CAGR - 53%		2,383
		1,532
619	880
2019	2020	2021	2022	2023
	Consolidated - EPS - Basic (Rupee)	18.21
	CAGR - 54%		10.67
		5.67

3.20 3.89

2019

2020

2021

2022

2023

The Company's has realigned its strategy for growth and has started monitoring performance based on industry verticals along with geographical segments. This helps capture synergies through the cross-selling of technologies and solutions across verticals. This approach allows the Company to leverage its expertise and capabilities more effectively across various sectors, increasing operational efficiency.

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