Netsol Technologies Pakistan Limited (Netsol) improved significantly on its financial performance in the 4QFY12 over the previous quarter, as the full year profits for FY12 improved by an impressive 16 percent year-on-year. The software providers strong earnings mainly stemmed from a strong top line performance with the core business generating sizeable revenue growth of 21 percent year-on-year. The company, despite tough global economic scenario, has done a commendable job in generating business. More than 90 percent of the revenue constitutes of exports sales, spread across Europe, North America and some Far Eastern countries. Of late, the local business has slowed down as a few contracts have been delayed as local customers have opted to cut back on IT spending. The NetSol Financial Suite continues to be the companys flagship product and is going strong in demand in leasing and asset financing industry. Recall that during 3QFY12, Netsols revenue had dipped significantly, owing to the conundrum faced by the company linked with the realisation of revenues in Pakistan. The Chief Executive of Netsol had hinted earlier that due to reluctance of clients to sign contracts in Pakistan, there was a dip in revenue and it seems likely that the revival in revenues is a result of reversal of the understated revenue in the previous quarter as Netsol was working on billing the clients through overseas subsidiaries. The companys gross profit margins have stayed healthy, and have rebounded back from a dip in previous quarter due to the reason stated above. Netsol has done a commendable job on cutting on its promotion and administrative expenses, ably supporting the bottom line growth. The other income disappointingly was reduced to less than half the amount made in the same period last year. It appears that Netsol suffered losses in foreign exchange which led to a significant decline in other income for the period. With the slowdown in European and American markets, the management is focussed on pursuing more business opportunities in Middle East and Asia Pacific. With prudent cost control and strong core business growth, Netsol seems nicely poised to continue its smooth journey in the future.
========================================================= Netsol Technologies ========================================================= (Rs mn) FY12 FY11 chg ========================================================= Revenue 2,190 1,811 21% Cost of revenue 834 674 24% Gross profit 1,356 1,137 19% Gross margin 61.9% 62.8% Selling & promotion expenses 137 143 -5% Administrative expenses 342 338 1% Other income 81 181 -55% Operating profit 925 821 13% Finance cost 15 25 -42% PAT 921 794 16% EPS (Rs) 12 10 =========================================================
Source: KSE notice
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