=================================================== Meeezan Bank Limited =================================================== (Rs mn) 9MCY11 9MCY10 chg =================================================== Profit earned 13,257 9,038 47% Return on deposit (6,368) (4,696) 36% Net spread earned 6,890 4,342 59% Provisioning (1,159) (848) 37% Net spread after provision 5,731 3,494 64% Other income 1,968 1,518 30% Operating revenues 8,857 5,860 51% Other expenses (4,421) (3,385) 31% Profit before taxation 3,278 1,628 101% Profit after taxation 2,292 995 130% EPS (Rs) 2.85 1.24 ===================================================
Source: Company Accounts NetSol at a loss! The outgoing quarter saw a disappointing start to the ongoing financial year for the leading software house of Pakistan. NetSol Technologies Ltd declared net loss for the first quarter ended September 30, 2011 yesterday, as a sharp slump in overseas sales and ballooning cost of revenue battered the firms traditionally lucrative margins. NetSol is a multi-dimensional technology company which focuses on developing software solutions and providing IT services in areas of finance and leasing. The firms bread and butter remain its overseas sales which accounted for over 90 percent of total revenues during each of the last two years. NetSols top line, which is heavily dependent on sale of software licenses and provision of IT services, declined by 19 percent in the first quarter ended September 30, 2011. In the absence of detailed accounts, it appears that the fall in revenue has come from a slowdown in the exports of IT services and licensing fees. Despite the dip in revenues, the cost of revenue has more than doubled for NetSol in 1QFY12. Such unrestrained growth has led the cost of sales to consume nearly 60 percent of revenues in 1QFY12, almost double the percentage in the same period of last year. The bulk of this cost is expensed in pursuit of overseas sales, mainly on salaries and benefits, travelling, conveyance and software licenses. Negative growth in revenues and sharp spike in cost of revenue led the gross profits to decline by 52.45 percent. Thereby, NetSols gross margins shed 2,821 bps to come down to 40.21 percent in 1QFY12. In keeping with the declining revenues, both the selling and administrative expenses declined during the period by 10.5 percent and 22.2 percent, respectively. Despite a miserable operating performance, the ensuing margins could have been positive for NetSol had the other income - derived from foreign currency translation gains and dividend income - not decreased by Rs.90 million during 1QFY12. Hence, the operating margin was at negative 0.81 in 1QFY12, shedding 5,615 bps over the period under review. Incurring losses is a rarity for the software giant. But that rarity is NetSols reality in 1QFY12, thanks to the significant slide in revenues and the inexplicable spike in the cost of revenue. Though the net loss is very thin, net margin stood at negative 2.95 percent compared to a net profit of 53.18 percent a year earlier. The still-unresolved eurozone sovereign debt crisis and the current adverse geopolitical mood vis-à-vis Pakistan have hurt the countrys IT firms in their overtures to sign up foreign clients. Same goes for NetSol which has been banking on the markets of Asia-Pacific, Middle East and Europe. Going forward, NetSol would have to look for new opportunities abroad. In this regard, NetSol management is optimistic that NFS-R2, the next generation version of their flagship product NetSol Financial Suite, would develop a market of its own and deliver much-needed growth to the top line.
=============================================== NetSol =============================================== Rs (mn) 1QFY12 1QFY11 chg =============================================== Revenues 296 366 -19% Cost of revenue 177 116 53% Gross profit 119 250 -52% Gross margin 40% 68% - Administrative expenses 80 103 -22% Other income 3 93 -96% Operating profit / (loss) (2) 202 Net Profit / (loss) (8) 194 ===============================================
Source: KSE notice