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A strong run continues for one of Pakistan’s leading IT exporters. The half-yearly data reported to the bourse yesterday by Systems Limited (PSX: SYS) for the period ended June 30, 2021 show some strong financial gains relative to the same period last year. At this pace, SYS consolidated financials will easily beat the record Rs10 billion topline and Rs2 billion bottomline scored in CY20.

The 44 percent topline growth in 1HCY21 was achieved with contributions from the holding company Systems Limited as well as its two subsidiaries. The holding company, which provides IT services like software development and business process outsourcing in Middle Eastern and North American markets, grew its half-yearly topline by 47 percent to Rs5 billion, accounting for 76 percent of group topline.

The holding company has clearly driven the consolidated performance in the period, as its revenues grew in all the geographic regions where it operates. Besides, measures related to cost optimization and efficient management of working capital helped the profit margins down the line.

As a result, the standalone results by Systems Limited accounted for 81 percent of the half-yearly gains in consolidated topline, 77 percent of gains in consolidated operating profits and 72 percent of the gains in consolidated net profits during 1HCY21. This is despite the firm suffering an exchange loss of Rs32.5 million due to PKR volatility.

The two subsidiaries collectively reached net sales of Rs1.5 billion in the period, growing by 33 percent year-on-year. EP Systems, which is based in Pakistan and is a leading provider of digital airtime recharge platform OneLoad, is presumably leading the growth in subsidiary financials. Meanwhile, TechVista, which is based in Dubai and provides software development services in that region, has to catch up.

The subsidiaries are also showing improvement in their own way. While their share in consolidated revenues has gone down from 26 percent in 1HCY20 to 24 percent in 1HCY21, their share in consolidated operating profits has doubled to 14 percent and their contribution to consolidated net profits has nearly tripled to 11 percent.

Over at the stock market, SYS is apparently much in demand. The stock price has more than tripled over the past 12 months to remain well above the Rs600 mark. Let’s see what the holding company and the subsidiaries have in store for rest of the year.

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