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Innovation to your BusinessBringing Technology
Interim Financial Reportfor the quarter ended
31 March 2016
Corporate Information
Director’s Review
Condensed Interim Balance Sheet
Condensed Interim Profit and Loss Account
Condensed Interim Statement of Comprehensive Income
Condensed Interim Cash Flow Statement
Condensed Interim Statement of Changes in Equity
Notes to the Condensed Interim Financial Information
Condensed Interim Consolidated Balance Sheet
Condensed Interim Consolidated Profit and Loss Account
Condensed Interim Consolidated Statement of Comprehensive Income
Condensed Interim Consolidated Cash Flow Statement
Condensed Interim Consolidated Statement of Changes in Equity
Notes to the Condensed Interim Consolidated Financial Information
Condensed Interim Financial Statements
Condensed Interim Consolidated Financial Statements
Contents02
03
06
08
09
10
11
12
20
22
23
24
25
26
Corporate Information
Director’s Review
Condensed Interim Balance Sheet
Condensed Interim Profit and Loss Account
Condensed Interim Statement of Comprehensive Income
Condensed Interim Cash Flow Statement
Condensed Interim Statement of Changes in Equity
Notes to the Condensed Interim Financial Information
Condensed Interim Consolidated Balance Sheet
Condensed Interim Consolidated Profit and Loss Account
Condensed Interim Consolidated Statement of Comprehensive Income
Condensed Interim Consolidated Cash Flow Statement
Condensed Interim Consolidated Statement of Changes in Equity
Notes to the Condensed Interim Consolidated Financial Information
Condensed Interim Financial Statements
Condensed Interim Consolidated Financial Statements
Contents02
03
06
08
09
10
11
12
20
22
23
24
25
26
Systems Limited | Interim Financial Report quarter ended 31 March 2016 03
DIRECTOR’S REVIEWOn behalf of the Board of Directors we are pleased to present the Financial Statements together with the Consolidated Financial Statements for the quarter ended March 31, 2016.
MARKET OUTLOOK
We have seen growth and demand of skilled resources and services in US Market, our strategy to align ourselves with various competency centers has paid off and we have received good recurring revenue stream from our customers. We have invested heavily in developing accelerators, frameworks, and solution templates for Apparel and Retail Segment. We have also developed Retail Business Intelligence tool. In BPO Services we have invested in the accuracy of our OCR/ICR solution through Machine Learning and Artificial Intelligence. We have been using our Technology Platform to sell our BPO services and this has been instrumental in the growth of our business. Our Onsite BPO Center (Visionet Lender Services) has now 100+ resources onsite, this has allowed us to open up new business opportunities where hybrid resource model is essential requirement. Visionet Systems Inc. added number of new relationships in various new technologies, business processes and industries. We believe this will help the group in enhancing the growth of the company and we will have a solid base for repeatable and diversified business and clients across the globe.
We have expanded our base in MEA Region, we have changed our business strategy from selling through local partners to direct selling through our own relationship and sales force, we have invested and hired top notch local sales, presales and project management resources to expand and solidify our foot print in the region. We have signed up many large public and private sector accounts in both ME and Qatar. We are still well aligned with our regional partners to support us in generating indirect business as well. During the first quarter of 2016, public sector IT spending has been sluggish in GCC region due to significant decline in oil prices, we are expecting IT spending will be picking up again during the second half of 2016.
On the Domestic Front, we have seen growth in IT Spending from Public and Private Sector. We have signed up large public sector projects, which has provided us significant top line growth, in addition to the growth we have also been able to groom our resources for Enterprise Class Application Delivery and Customer Handling experience, which is the key for our growth and success globally.
FINANCIAL RESULTS
In the first quarter of 2016, company's revenues grew by 20% as compared to the first quarter of 2015. Cost of sales for the quarter were recorded at Rs. 456.84 million with an increase of 29% from the corresponding quarter of 2015 mainly due to expansion and capacity building in local and Middle East region. Resultantly, company achieved profit after taxation of Rs. 116.97 million, 7% above the corresponding quarter. Company posted Earnings per share of PKR 1.06 as compared to PKR 1.04 in the corresponding quarter last year.
Revenue
Gross Profit
Profit Before Taxation
Profit After Taxation
Earnings Per share (Rs)
Quarter ended31 March 2015
Quarter ended31 March 2015
Change%
645,393,255
188,549,964
118,966,229
116,966,229
1.06
20.42%
4.47%
5.23%
6.55%
1.92%
535,969,750
180,482,547
113,055,253
109,776,912
1.04
Unconsolidated
Revenue
Gross Profit
Profit Before Taxation
Profit After Taxation
Earnings Per share (Rs)
Quarter ended31 March 2015
Quarter ended31 March 2015
Change%
754,083,165
201,540,004
101,353,380
99,353,380
0.91
37.96%
13.89%
(4.41)%
(3.31)%
(7.14)%
546,607,119
176,961,200
106,032,391
102,754,050
0.98
Consolidated
www.systemsltd.com02
CORPORATE INFORMATION
BOARD OF DIRECTORS
AUDIT COMMITTEE
HUMAN RESOURCE & REMUNERATION COMMITTEE
CHIEF FINANCIAL OFFICER & COMPANY SECRETARY
AUDITORS
LEGAL ADVISOR
Mr. Aezaz Hussain Non-executiveChairman
Mr. Asif Peer ExecutiveCEO and Managing Director
Mr. Arshad Masood Non-executiveDirector
Mr. Omar Saeed IndependentDirector
Mr. Ayaz Dawood IndependentDirector
Mr. Asif Jooma IndependentDirector
Mr. Tahir Masaud IndependentDirector
Mr. Ayaz DawoodChairman
Mr. Omer SaeedMember
Mr. Tahir MasaudMember
Mr. Omar SaeedChairman
Mr. Asif JoomaMember
Mr. Tahir MasaudMember
Mr. Affan Sajjad
Ernst & Young Ford Rhodes Sidat HyderChartered Accountants Lahore.
Hassan & Hassan Advocates
BANKERS
SHARES REGISTRAR
REGISTERED OFFICE
KARACHI OFFICE
DUBAI OFFICE
WEB PRESENCE
Habib Metropolitan Bank LimitedUnited Bank LimitedStandard Chartered Bank (Pakistan)Limited Albaraka Bank LimitedBank Alfalah LimitedBank Islami LimitedMeezan Bank LimitedDubai Islamic BankFaysal Bank LimitedDeutsche Bank AG
THK Associates (Private) Limited. 2nd Floor, State Life Building-3,Dr. Ziauddin Ahmed Road,Karachi.T: +92 21 111-000-322F: +92 21 35655595
Chamber of Commerce Building,11 Sharae Aiwane Tijarat,Lahore, Pakistan.T: +92 42 36304825-35F: +92 42 36368857
E-5, Central Commercial Area,Shaheed-e-Millat Road,Karachi, PakistanT: +92 21 34549385-87F: +92 21 34549389
TechVista Systems FZ-LLCOffice 105, Building 11Dubai Internet City,PO Box 500497,Dubai, UAET: + 9714 3693525F: +9714 456 3761
www.systemsltd.com
Systems Limited | Interim Financial Report quarter ended 31 March 2016 03
DIRECTOR’S REVIEWOn behalf of the Board of Directors we are pleased to present the Financial Statements together with the Consolidated Financial Statements for the quarter ended March 31, 2016.
MARKET OUTLOOK
We have seen growth and demand of skilled resources and services in US Market, our strategy to align ourselves with various competency centers has paid off and we have received good recurring revenue stream from our customers. We have invested heavily in developing accelerators, frameworks, and solution templates for Apparel and Retail Segment. We have also developed Retail Business Intelligence tool. In BPO Services we have invested in the accuracy of our OCR/ICR solution through Machine Learning and Artificial Intelligence. We have been using our Technology Platform to sell our BPO services and this has been instrumental in the growth of our business. Our Onsite BPO Center (Visionet Lender Services) has now 100+ resources onsite, this has allowed us to open up new business opportunities where hybrid resource model is essential requirement. Visionet Systems Inc. added number of new relationships in various new technologies, business processes and industries. We believe this will help the group in enhancing the growth of the company and we will have a solid base for repeatable and diversified business and clients across the globe.
We have expanded our base in MEA Region, we have changed our business strategy from selling through local partners to direct selling through our own relationship and sales force, we have invested and hired top notch local sales, presales and project management resources to expand and solidify our foot print in the region. We have signed up many large public and private sector accounts in both ME and Qatar. We are still well aligned with our regional partners to support us in generating indirect business as well. During the first quarter of 2016, public sector IT spending has been sluggish in GCC region due to significant decline in oil prices, we are expecting IT spending will be picking up again during the second half of 2016.
On the Domestic Front, we have seen growth in IT Spending from Public and Private Sector. We have signed up large public sector projects, which has provided us significant top line growth, in addition to the growth we have also been able to groom our resources for Enterprise Class Application Delivery and Customer Handling experience, which is the key for our growth and success globally.
FINANCIAL RESULTS
In the first quarter of 2016, company's revenues grew by 20% as compared to the first quarter of 2015. Cost of sales for the quarter were recorded at Rs. 456.84 million with an increase of 29% from the corresponding quarter of 2015 mainly due to expansion and capacity building in local and Middle East region. Resultantly, company achieved profit after taxation of Rs. 116.97 million, 7% above the corresponding quarter. Company posted Earnings per share of PKR 1.06 as compared to PKR 1.04 in the corresponding quarter last year.
Revenue
Gross Profit
Profit Before Taxation
Profit After Taxation
Earnings Per share (Rs)
Quarter ended31 March 2015
Quarter ended31 March 2015
Change%
645,393,255
188,549,964
118,966,229
116,966,229
1.06
20.42%
4.47%
5.23%
6.55%
1.92%
535,969,750
180,482,547
113,055,253
109,776,912
1.04
Unconsolidated
Revenue
Gross Profit
Profit Before Taxation
Profit After Taxation
Earnings Per share (Rs)
Quarter ended31 March 2015
Quarter ended31 March 2015
Change%
754,083,165
201,540,004
101,353,380
99,353,380
0.91
37.96%
13.89%
(4.41)%
(3.31)%
(7.14)%
546,607,119
176,961,200
106,032,391
102,754,050
0.98
Consolidated
www.systemsltd.com02
CORPORATE INFORMATION
BOARD OF DIRECTORS
AUDIT COMMITTEE
HUMAN RESOURCE & REMUNERATION COMMITTEE
CHIEF FINANCIAL OFFICER & COMPANY SECRETARY
AUDITORS
LEGAL ADVISOR
Mr. Aezaz Hussain Non-executiveChairman
Mr. Asif Peer ExecutiveCEO and Managing Director
Mr. Arshad Masood Non-executiveDirector
Mr. Omar Saeed IndependentDirector
Mr. Ayaz Dawood IndependentDirector
Mr. Asif Jooma IndependentDirector
Mr. Tahir Masaud IndependentDirector
Mr. Ayaz DawoodChairman
Mr. Omer SaeedMember
Mr. Tahir MasaudMember
Mr. Omar SaeedChairman
Mr. Asif JoomaMember
Mr. Tahir MasaudMember
Mr. Affan Sajjad
Ernst & Young Ford Rhodes Sidat HyderChartered Accountants Lahore.
Hassan & Hassan Advocates
BANKERS
SHARES REGISTRAR
REGISTERED OFFICE
KARACHI OFFICE
DUBAI OFFICE
WEB PRESENCE
Habib Metropolitan Bank LimitedUnited Bank LimitedStandard Chartered Bank (Pakistan)Limited Albaraka Bank LimitedBank Alfalah LimitedBank Islami LimitedMeezan Bank LimitedDubai Islamic BankFaysal Bank LimitedDeutsche Bank AG
THK Associates (Private) Limited. 2nd Floor, State Life Building-3,Dr. Ziauddin Ahmed Road,Karachi.T: +92 21 111-000-322F: +92 21 35655595
Chamber of Commerce Building,11 Sharae Aiwane Tijarat,Lahore, Pakistan.T: +92 42 36304825-35F: +92 42 36368857
E-5, Central Commercial Area,Shaheed-e-Millat Road,Karachi, PakistanT: +92 21 34549385-87F: +92 21 34549389
TechVista Systems FZ-LLCOffice 105, Building 11Dubai Internet City,PO Box 500497,Dubai, UAET: + 9714 3693525F: +9714 456 3761
www.systemsltd.com
Condensed InterimFinancial Information
Asif PeerChief Executive
On behalf of the Board
27 April 2016Lahore
www.systemsltd.com04
FUTURE OUTLOOK
2016 Plans
The 2016 budget is targeted towards achieving historical growth trend. This growth is attributed to the following factors:
Ÿ Our relationship with most of our existing customers is of recurring nature and through our laser focused efforts and engagement management approach we are confident that majority of our customers will carry along with us and contribute to our growth.
Ÿ We are well poised to take advantage this year from our investment in innovation and solution development for Apparel/Retail, Business Process Automation and Business Intelligence.
Ÿ We have invested and aligned our resources to practice based structure and this is strengthening our market positioning to be a more specialized player versus generic player in the market.
Ÿ Our Geographic Diversification Strategy will play vital role in our growth this year.
Ÿ In Pakistan, Public Sector has been investing heavily in Information Technology Enabled Services and we are well poised to get good chunk of business due to our positioning and successful track record in Pakistan.
Ÿ Our relationship with Principals (IBM, Microsoft) have been solidified over past few years and we are getting good business references, leads and support globally.
Ÿ We are focusing on Sustainable growth this year and critically focused on signing new business which has desired margin.
Ÿ We are committed to continuously invest in innovation for our better future.
Ÿ With Pakistan Law and Order getting better we envision significant opportunities in our business, as our foreign customers/prospects will feel comfortable in visiting us and this will spur the growth in Pakistan IT Sector.
Ÿ We are expecting about 80% of our business from Export Services and hence dollar based, our expenses are in PKR and any dollar devaluation will help us in improving our overall profitability.
Ÿ OneLoad product development has been completed and now we are working aggressively towards launch and commercialization.
Ÿ Our Export Tax Exemption will most likely be extended for next 5 years and this will provide further confidence to the sector.
Ÿ Our new Office Building in Lahore will be operational towards end of this year and this will bring efficiency and savings by combining our four rental office locations to our own premise.
ACKNOWLEDGEMENT
The Board takes this opportunity to thank the Company's valued customers, bankers and other stakeholders for their corporation and support. The Board greatly appreciates hard work and dedication of all employees of the Company.
Condensed InterimFinancial Information
Asif PeerChief Executive
On behalf of the Board
27 April 2016Lahore
www.systemsltd.com04
FUTURE OUTLOOK
2016 Plans
The 2016 budget is targeted towards achieving historical growth trend. This growth is attributed to the following factors:
Ÿ Our relationship with most of our existing customers is of recurring nature and through our laser focused efforts and engagement management approach we are confident that majority of our customers will carry along with us and contribute to our growth.
Ÿ We are well poised to take advantage this year from our investment in innovation and solution development for Apparel/Retail, Business Process Automation and Business Intelligence.
Ÿ We have invested and aligned our resources to practice based structure and this is strengthening our market positioning to be a more specialized player versus generic player in the market.
Ÿ Our Geographic Diversification Strategy will play vital role in our growth this year.
Ÿ In Pakistan, Public Sector has been investing heavily in Information Technology Enabled Services and we are well poised to get good chunk of business due to our positioning and successful track record in Pakistan.
Ÿ Our relationship with Principals (IBM, Microsoft) have been solidified over past few years and we are getting good business references, leads and support globally.
Ÿ We are focusing on Sustainable growth this year and critically focused on signing new business which has desired margin.
Ÿ We are committed to continuously invest in innovation for our better future.
Ÿ With Pakistan Law and Order getting better we envision significant opportunities in our business, as our foreign customers/prospects will feel comfortable in visiting us and this will spur the growth in Pakistan IT Sector.
Ÿ We are expecting about 80% of our business from Export Services and hence dollar based, our expenses are in PKR and any dollar devaluation will help us in improving our overall profitability.
Ÿ OneLoad product development has been completed and now we are working aggressively towards launch and commercialization.
Ÿ Our Export Tax Exemption will most likely be extended for next 5 years and this will provide further confidence to the sector.
Ÿ Our new Office Building in Lahore will be operational towards end of this year and this will bring efficiency and savings by combining our four rental office locations to our own premise.
ACKNOWLEDGEMENT
The Board takes this opportunity to thank the Company's valued customers, bankers and other stakeholders for their corporation and support. The Board greatly appreciates hard work and dedication of all employees of the Company.
ASSETS
Non current assets
Property and equipment 8 405,946,208 359,204,912
Intangibles 9 41,871,097 42,247,518
Long term investments 51,077,980 51,077,980
Long term deposits 9,895,100 9,895,100
Deferred taxation 809,510 809,510
509,599,895 463,235,020
Current assets
Unbilled revenue 255,792,388 244,214,338
Trade debts-unsecured, considered good 1,120,187,110 1,096,796,692
Advances 94,070,839 68,055,610
Trade deposits and short term prepayments 117,098,664 48,101,585
Interest accrued 8,126,280 12,585,928
Receivable from related parties
-unsecured, considered good 220,915,493 164,572,856
Tax refunds due from the Government 70,432,537 55,143,956
Short term investments 240,000,000 557,799,398
Cash and bank balances 112,017,339 144,644,586
2,238,640,650 2,391,914,949
2,748,240,545
2,855,149,969
ASIF PEERChief Executive
Un-audited Audited
31 March 31 December
2016 2015NoteAmount in Rupees
Systems Limited | Interim Financial Report quarter ended 31 March 2016 07
Un-audited Audited
31 March 31 December
2016 2015NoteAmount in Rupees
EQUITY AND LIABILITIES
Share capital and reserves
150,000,000 (2015: 150,000,000) ordinary
shares of Rs.10 each 1,500,000,000 1,500,000,000
Issued, subscribed and paid-up share capital 5 1,106,808,760 1,106,808,760
Reserves 6 423,479,450 420,558,053
Un-appropriated profit 1,085,226,853 968,260,624
2,615,515,063 2,495,627,437
Non current liabilities
Long term advances 15,061,390 12,669,395
Current liabilities
Trade and other payables 117,664,092 237,042,067
Unearned revenue - 109,811,070
117,664,092 346,853,137
Contingencies and commitments 7
2,748,240,545 2,855,149,969
The annexed notes 1 to 16 form an integral part of this condensed interim financial information.
CONDENSED INTERIM BALANCE SHEET
LAHOREAEZAZ HUSSAIN
Chairman
as at 31 March 2016
www.systemsltd.com06
ASSETS
Non current assets
Property and equipment 8 405,946,208 359,204,912
Intangibles 9 41,871,097 42,247,518
Long term investments 51,077,980 51,077,980
Long term deposits 9,895,100 9,895,100
Deferred taxation 809,510 809,510
509,599,895 463,235,020
Current assets
Unbilled revenue 255,792,388 244,214,338
Trade debts-unsecured, considered good 1,120,187,110 1,096,796,692
Advances 94,070,839 68,055,610
Trade deposits and short term prepayments 117,098,664 48,101,585
Interest accrued 8,126,280 12,585,928
Receivable from related parties
-unsecured, considered good 220,915,493 164,572,856
Tax refunds due from the Government 70,432,537 55,143,956
Short term investments 240,000,000 557,799,398
Cash and bank balances 112,017,339 144,644,586
2,238,640,650 2,391,914,949
2,748,240,545
2,855,149,969
ASIF PEERChief Executive
Un-audited Audited
31 March 31 December
2016 2015NoteAmount in Rupees
Systems Limited | Interim Financial Report quarter ended 31 March 2016 07
Un-audited Audited
31 March 31 December
2016 2015NoteAmount in Rupees
EQUITY AND LIABILITIES
Share capital and reserves
150,000,000 (2015: 150,000,000) ordinary
shares of Rs.10 each 1,500,000,000 1,500,000,000
Issued, subscribed and paid-up share capital 5 1,106,808,760 1,106,808,760
Reserves 6 423,479,450 420,558,053
Un-appropriated profit 1,085,226,853 968,260,624
2,615,515,063 2,495,627,437
Non current liabilities
Long term advances 15,061,390 12,669,395
Current liabilities
Trade and other payables 117,664,092 237,042,067
Unearned revenue - 109,811,070
117,664,092 346,853,137
Contingencies and commitments 7
2,748,240,545 2,855,149,969
The annexed notes 1 to 16 form an integral part of this condensed interim financial information.
CONDENSED INTERIM BALANCE SHEET
LAHOREAEZAZ HUSSAIN
Chairman
as at 31 March 2016
www.systemsltd.com06
CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOMEfor the quarter ended 31 March 2016
AEZAZ HUSSAINChairman
ASIF PEERChief ExecutiveLAHORE
31 March 31 March
2016 2015Amount in Rupees
Profit after taxation
Other comprehensive income for the period
Total comprehensive income for the period
116,966,229
-
116,966,229
109,776,912
-
109,776,912
The annexed notes 1 to 16 form an integral part of this condensed interim financial information.
Systems Limited | Interim Financial Report quarter ended 31 March 2016 09
CONDENSED INTERIM PROFIT AND LOSS ACCOUNTfor the quarter ended 31 March 2016
31 March 31 March
2016 2015NoteAmount in Rupees
AEZAZ HUSSAINChairman
ASIF PEERChief ExecutiveLAHORE
www.systemsltd.com08
Revenue 10 645,393,255 535,969,750
Cost of sales (456,843,291) (355,487,203)
Gross profit 188,549,964 180,482,547
Distribution cost (17,083,286) (19,803,495)
Administrative expenses (58,777,301) (57,677,560)
Research and development expenses (4,469,511) (9,790,424)
(80,330,098) (87,271,479)
Operating profit 108,219,866 93,211,068
Other income 11,108,861 20,514,147
Finance cost (362,498) (669,962)
10,746,363 19,844,185
Profit before taxation 118,966,229 113,055,253
Taxation (2,000,000) (3,278,341)
Profit after taxation 116,966,229 109,776,912
Restated
Earnings per share
Basic earnings per share (Rupees) 11 1.06 1.04
Diluted earnings per share (Rupees) 11 1.05 1.03
The annexed notes 1 to 16 form an integral part of this condensed interim financial information.
Un-audited Un-audited Un-audited Un-audited
CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOMEfor the quarter ended 31 March 2016
AEZAZ HUSSAINChairman
ASIF PEERChief ExecutiveLAHORE
31 March 31 March
2016 2015Amount in Rupees
Profit after taxation
Other comprehensive income for the period
Total comprehensive income for the period
116,966,229
-
116,966,229
109,776,912
-
109,776,912
The annexed notes 1 to 16 form an integral part of this condensed interim financial information.
Systems Limited | Interim Financial Report quarter ended 31 March 2016 09
CONDENSED INTERIM PROFIT AND LOSS ACCOUNTfor the quarter ended 31 March 2016
31 March 31 March
2016 2015NoteAmount in Rupees
AEZAZ HUSSAINChairman
ASIF PEERChief ExecutiveLAHORE
www.systemsltd.com08
Revenue 10 645,393,255 535,969,750
Cost of sales (456,843,291) (355,487,203)
Gross profit 188,549,964 180,482,547
Distribution cost (17,083,286) (19,803,495)
Administrative expenses (58,777,301) (57,677,560)
Research and development expenses (4,469,511) (9,790,424)
(80,330,098) (87,271,479)
Operating profit 108,219,866 93,211,068
Other income 11,108,861 20,514,147
Finance cost (362,498) (669,962)
10,746,363 19,844,185
Profit before taxation 118,966,229 113,055,253
Taxation (2,000,000) (3,278,341)
Profit after taxation 116,966,229 109,776,912
Restated
Earnings per share
Basic earnings per share (Rupees) 11 1.06 1.04
Diluted earnings per share (Rupees) 11 1.05 1.03
The annexed notes 1 to 16 form an integral part of this condensed interim financial information.
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Systems Limited | Interim Financial Report quarter ended 31 March 2016 11
CONDENSED INTERIM CASH FLOW STATEMENTfor the quarter ended 31 March 2016
31 March
2016
31 March
2015NoteAmount in Rupees
AEZAZ HUSSAINChairman
ASIF PEERChief ExecutiveLAHORE
Cash flows from operating activities
Cash generated from operations 12
Finance cost paid
Taxes paid
Net cash outflow from operating activities
Cash flows from investing activities
Purchase of property and equipment
Development expenditures
Sale proceeds from disposal of property and equipment
Disposal / (purchase) of short term investments
Profit received on short term investments
Profit received on bank deposits
Net cash inflow / (outflow) from investing activities
Cash flows from financing activities
Proceeds from issue of share capital
Advance against issue of shares
Increase in long term advances
Net cash inflow from financing activities
Decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at the end of period
(276,878,764)
(362,498)
(17,288,581)
(17,651,079)
(294,529,843)
(65,341,933)
(4,282,908)
-
323,788,990
4,459,648
886,804
259,510,601
-
-
2,391,995
2,391,995
(32,627,247)
144,644,586
112,017,339
(219,462,630)
(550,000)
(6,568,413)
(7,118,413)
(226,581,043)
(8,449,213)
-
53,000
(510,375,797)
-
5,823,320
(512,948,690)
130,000,000
(130,000,000)
1,654,476
1,654,476
(737,875,257)
983,230,255
245,354,998
The annexed notes 1 to 16 form an integral part of this condensed interim financial information.
www.systemsltd.com10
Un-audited Un-audited
CO
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Systems Limited | Interim Financial Report quarter ended 31 March 2016 11
CONDENSED INTERIM CASH FLOW STATEMENTfor the quarter ended 31 March 2016
31 March
2016
31 March
2015NoteAmount in Rupees
AEZAZ HUSSAINChairman
ASIF PEERChief ExecutiveLAHORE
Cash flows from operating activities
Cash generated from operations 12
Finance cost paid
Taxes paid
Net cash outflow from operating activities
Cash flows from investing activities
Purchase of property and equipment
Development expenditures
Sale proceeds from disposal of property and equipment
Disposal / (purchase) of short term investments
Profit received on short term investments
Profit received on bank deposits
Net cash inflow / (outflow) from investing activities
Cash flows from financing activities
Proceeds from issue of share capital
Advance against issue of shares
Increase in long term advances
Net cash inflow from financing activities
Decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at the end of period
(276,878,764)
(362,498)
(17,288,581)
(17,651,079)
(294,529,843)
(65,341,933)
(4,282,908)
-
323,788,990
4,459,648
886,804
259,510,601
-
-
2,391,995
2,391,995
(32,627,247)
144,644,586
112,017,339
(219,462,630)
(550,000)
(6,568,413)
(7,118,413)
(226,581,043)
(8,449,213)
-
53,000
(510,375,797)
-
5,823,320
(512,948,690)
130,000,000
(130,000,000)
1,654,476
1,654,476
(737,875,257)
983,230,255
245,354,998
The annexed notes 1 to 16 form an integral part of this condensed interim financial information.
www.systemsltd.com10
Un-audited Un-audited
judgments, estimates and assumptions that affect the application of policies and the reported amounts of assets and liabilities, income and expenses.
In preparation of this condensed interim financial information, the judgments, estimates and assumptions made by the management were the same as those that were applied in the preparation of the preceding annual published financial statements of the Company for the year ended 31 December 2015.
5 Issued, subscribed and paid-up share capital
5.1 Reconciliation of ordinary shares
6 Reserves
Share premium reserve
Deferred employee compensation reserve
31 March 31 December
2016 2015
No. of shares
21,829,311
21,829,311 Ordinary shares of Rs. 10/-
each fully paid in cash
88,851,565 88,851,565
Ordinary shares of Rs. 10/- each
issued as fully paid bonus shares
110,680,876
110,680,876
110,680,876
87,165,302
Opening balance
-
13,000,000
Initial Public Offer (IPO)
-
453,676
Stock options exercised
-
10,061,898
Bonus shares issued
110,680,876
110,680,876
Closing balance
Un-audited Audited
31 March 31 December
2016 2015
218,293,110
218,293,110
888,515,650 888,515,650
1,106,808,760
1,106,808,760
1,106,808,760
871,653,020
-
130,000,000
-
4,536,760
-
100,618,980
1,106,808,760
1,106,808,760
411,302,586 411,302,586
12,176,864 9,255,467
423,479,450 420,558,053
Amount in Rupees
31 March 31 December
2016 2015
No. of shares
Un-audited Audited
31 March 31 December
2016 2015
Amount in Rupees
Un-audited Audited
31 March 31 December
2016 2015Amount in Rupees
Systems Limited | Interim Financial Report quarter ended 31 March 2016 13
NOTES TO THE CONDENSED INTERIM FINANCIAL INFORMATION
1 Legal status and nature of business
2 Basis of preparation
3 Accounting policies
4 Use of estimates and judgments
The Company is a public limited company incorporated in Pakistan under the Companies Ordinance 1984, and is listed on the Pakistan Stock Exchange (formerly Karachi, Islamabad and Lahore Stock Exchanges). The Company is principally engaged in the business of software development, trading of software and business process outsourcing services. The head office of the Company is situated at Chamber of Commerce building, 11 - Shahra-e-Aiwan-e-Tijarat, Lahore.
This condensed interim financial information is not audited and has been prepared in condensed form and does not include all the information as is required to be provided in full set of annual financial statements. This condensed interim financial information should be read in conjunction with the audited financial statements of the Company for the year ended 31 December 2015.
2.1 Separate financial statements
This condensed interim financial information comprises the financial information of Systems Limited only. Condensed interim consolidated financial information comprising financial information of Systems Limited and its subsidiaries has been prepared and presented separately.
2.2 Statement of compliance
This condensed interim financial information of the Company for the quarter ended 31 March 2016 has been prepared in accordance with the requirements of International Accounting Standard (IAS) 34 - Interim Financial Reporting and provisions of and directives issued under the Companies Ordinance, 1984. In case where requirements differ, the provisions of or directives issued under the Companies Ordinance, 1984 have been followed.
2.3 Basis of measurement
This condensed interim financial information has been prepared under the historical cost convention, except for revaluation of certain financial instruments at fair value.
The accounting policies adopted for the preparation of this condensed interim financial information are consistent with those applied in the preparation of the preceding annual published financial statements of the Company for the year ended 31 December 2015.
The preparation of condensed interim financial information in conformity with approved accounting standards, as applicable in Pakistan, requires the management to make
for the quarter ended 31 March 2016 (Un-audited)
www.systemsltd.com12
judgments, estimates and assumptions that affect the application of policies and the reported amounts of assets and liabilities, income and expenses.
In preparation of this condensed interim financial information, the judgments, estimates and assumptions made by the management were the same as those that were applied in the preparation of the preceding annual published financial statements of the Company for the year ended 31 December 2015.
5 Issued, subscribed and paid-up share capital
5.1 Reconciliation of ordinary shares
6 Reserves
Share premium reserve
Deferred employee compensation reserve
31 March 31 December
2016 2015
No. of shares
21,829,311
21,829,311 Ordinary shares of Rs. 10/-
each fully paid in cash
88,851,565 88,851,565
Ordinary shares of Rs. 10/- each
issued as fully paid bonus shares
110,680,876
110,680,876
110,680,876
87,165,302
Opening balance
-
13,000,000
Initial Public Offer (IPO)
-
453,676
Stock options exercised
-
10,061,898
Bonus shares issued
110,680,876
110,680,876
Closing balance
Un-audited Audited
31 March 31 December
2016 2015
218,293,110
218,293,110
888,515,650 888,515,650
1,106,808,760
1,106,808,760
1,106,808,760
871,653,020
-
130,000,000
-
4,536,760
-
100,618,980
1,106,808,760
1,106,808,760
411,302,586 411,302,586
12,176,864 9,255,467
423,479,450 420,558,053
Amount in Rupees
31 March 31 December
2016 2015
No. of shares
Un-audited Audited
31 March 31 December
2016 2015
Amount in Rupees
Un-audited Audited
31 March 31 December
2016 2015Amount in Rupees
Systems Limited | Interim Financial Report quarter ended 31 March 2016 13
NOTES TO THE CONDENSED INTERIM FINANCIAL INFORMATION
1 Legal status and nature of business
2 Basis of preparation
3 Accounting policies
4 Use of estimates and judgments
The Company is a public limited company incorporated in Pakistan under the Companies Ordinance 1984, and is listed on the Pakistan Stock Exchange (formerly Karachi, Islamabad and Lahore Stock Exchanges). The Company is principally engaged in the business of software development, trading of software and business process outsourcing services. The head office of the Company is situated at Chamber of Commerce building, 11 - Shahra-e-Aiwan-e-Tijarat, Lahore.
This condensed interim financial information is not audited and has been prepared in condensed form and does not include all the information as is required to be provided in full set of annual financial statements. This condensed interim financial information should be read in conjunction with the audited financial statements of the Company for the year ended 31 December 2015.
2.1 Separate financial statements
This condensed interim financial information comprises the financial information of Systems Limited only. Condensed interim consolidated financial information comprising financial information of Systems Limited and its subsidiaries has been prepared and presented separately.
2.2 Statement of compliance
This condensed interim financial information of the Company for the quarter ended 31 March 2016 has been prepared in accordance with the requirements of International Accounting Standard (IAS) 34 - Interim Financial Reporting and provisions of and directives issued under the Companies Ordinance, 1984. In case where requirements differ, the provisions of or directives issued under the Companies Ordinance, 1984 have been followed.
2.3 Basis of measurement
This condensed interim financial information has been prepared under the historical cost convention, except for revaluation of certain financial instruments at fair value.
The accounting policies adopted for the preparation of this condensed interim financial information are consistent with those applied in the preparation of the preceding annual published financial statements of the Company for the year ended 31 December 2015.
The preparation of condensed interim financial information in conformity with approved accounting standards, as applicable in Pakistan, requires the management to make
for the quarter ended 31 March 2016 (Un-audited)
www.systemsltd.com12
439,133,455 86,827,772
525,961,227
-
10,008,523 10,008,523
535,969,750
470,791,214 115,554,956 586,346,170
1,569,750
57,477,335 59,047,085
645,393,255
Un-audited Audited
31 March 31 December
2016 2015Amount in Rupees
8 Property and equipment
Operating fixed assets
Capital work in progress
Opening balance - net book value
Additions
Disposals - net book value
Depreciation
Closing balance - net book value
9 Intangibles
Opening balance - net book value
Additions
Amortization
Closing balance - net book value
216,143,419
189,802,789
405,946,208
192,395,087
42,348,969
234,744,056
-
(18,600,637)
216,143,419
42,247,518
4,282,908
46,530,426
(4,659,329)
41,871,097
192,395,087
166,809,825
359,204,912
162,393,875
102,798,995
265,192,870
(2,075,752)
(70,722,031)
192,395,087
34,101,951
23,281,560
57,383,511
(15,135,993)
42,247,518
10 Revenue - net
Development and other services
Export
Local
Trading income
Software sale - export
Software sale - local
31 March31 March
2016 2015Amount in Rupees
Systems Limited | Interim Financial Report quarter ended 31 March 2016 15
7 Contingencies and commitments
Commitments
7.1 Guarantees issued by the financial institutions on behalf of the Company amount to Rs. 118.22 million (2015: Rs. 129.12 million).
7.2 Commitments include capital commitments for construction of building of the Company amounting to Rs. 521.55 million (2015: 344 million) out of which Rs. 221.99 million have been invoiced.
Contingencies
7.3 The Deputy Commissioner Inland Revenue has issued withholding tax assessment orders u/s 161/205 of the Income Tax Ordinance 2001 (the Ordinance) for the tax year 2010 and 2012 whereby tax amounting to Rs. 779,513 and Rs. 13,540,966 respectively has been levied. The company preferred appeals against the orders which are pending adjudications.
7.4 The Company filed an undertaking pursuant to Income Tax (Second Amendment) Ordinance, 2015, thereby opting out of minimum tax on services under section 153(1)(b) of the Ordinance. The Additional Commissioner, Inland Revenue has declined to accept the undertaking against which the Company has preferred an appeal before Commissioner Inland Revenue (Appeals) which is pending adjudication, which might result in tax liability of Rs. 30.25 million.
7.5 The Company has filed appeals before the Commissioner Inland Revenue (Appeals) against the orders passed under section 122(5A) of the Ordinance by the Additional Commissioner Inland Revenue for payment of additional amount of Rs. 10.6 million and Rs. 9 million in respect of tax years 2010 and 2011 respectively.
Pending adjudication of the above matters, the tax consultants and management of the Company expect favorable outcome of the appeals and anticipate no outflow of economic benefits.
www.systemsltd.com14
Un-audited Un-audited
439,133,455 86,827,772
525,961,227
-
10,008,523 10,008,523
535,969,750
470,791,214 115,554,956 586,346,170
1,569,750
57,477,335 59,047,085
645,393,255
Un-audited Audited
31 March 31 December
2016 2015Amount in Rupees
8 Property and equipment
Operating fixed assets
Capital work in progress
Opening balance - net book value
Additions
Disposals - net book value
Depreciation
Closing balance - net book value
9 Intangibles
Opening balance - net book value
Additions
Amortization
Closing balance - net book value
216,143,419
189,802,789
405,946,208
192,395,087
42,348,969
234,744,056
-
(18,600,637)
216,143,419
42,247,518
4,282,908
46,530,426
(4,659,329)
41,871,097
192,395,087
166,809,825
359,204,912
162,393,875
102,798,995
265,192,870
(2,075,752)
(70,722,031)
192,395,087
34,101,951
23,281,560
57,383,511
(15,135,993)
42,247,518
10 Revenue - net
Development and other services
Export
Local
Trading income
Software sale - export
Software sale - local
31 March31 March
2016 2015Amount in Rupees
Systems Limited | Interim Financial Report quarter ended 31 March 2016 15
7 Contingencies and commitments
Commitments
7.1 Guarantees issued by the financial institutions on behalf of the Company amount to Rs. 118.22 million (2015: Rs. 129.12 million).
7.2 Commitments include capital commitments for construction of building of the Company amounting to Rs. 521.55 million (2015: 344 million) out of which Rs. 221.99 million have been invoiced.
Contingencies
7.3 The Deputy Commissioner Inland Revenue has issued withholding tax assessment orders u/s 161/205 of the Income Tax Ordinance 2001 (the Ordinance) for the tax year 2010 and 2012 whereby tax amounting to Rs. 779,513 and Rs. 13,540,966 respectively has been levied. The company preferred appeals against the orders which are pending adjudications.
7.4 The Company filed an undertaking pursuant to Income Tax (Second Amendment) Ordinance, 2015, thereby opting out of minimum tax on services under section 153(1)(b) of the Ordinance. The Additional Commissioner, Inland Revenue has declined to accept the undertaking against which the Company has preferred an appeal before Commissioner Inland Revenue (Appeals) which is pending adjudication, which might result in tax liability of Rs. 30.25 million.
7.5 The Company has filed appeals before the Commissioner Inland Revenue (Appeals) against the orders passed under section 122(5A) of the Ordinance by the Additional Commissioner Inland Revenue for payment of additional amount of Rs. 10.6 million and Rs. 9 million in respect of tax years 2010 and 2011 respectively.
Pending adjudication of the above matters, the tax consultants and management of the Company expect favorable outcome of the appeals and anticipate no outflow of economic benefits.
www.systemsltd.com14
Un-audited Un-audited
12 Cash generated from operations
Profit before taxation
Adjustment for:
Depreciation on property and equipment
Amortization of intangibles
Provision for bad debts
Share based payment expense
Finance cost
Exchange gain on translation of export debts
Gain on short term investments
Profit on bank deposits
Gain on disposal of property and equipment
Profit before working capital changes
Effect on cash flow due toworking capital changes
(Increase)/decrease in current assets:
Unbilled revenue - net
Trade debts
Receivable from related parties
Advances
Trade deposits and short term prepayments
Increase/(decrease) in current liabilities:
Trade and other payables
Cash generated from operations
118,966,229
18,600,637
4,659,329
- 2,921,397
362,498 (3,597,052) (5,989,592)
(886,804) -
16,070,413 135,036,642
(121,389,120)
(19,793,366)
(56,342,637)
(26,015,229)
(68,997,079) (292,537,431)
(119,377,975) (411,915,406)
(276,878,764)
113,055,253
15,506,653
3,376,627
5,719,683 -
604,750 -
(9,416,642) (5,823,320)
(53,000) 9,914,751
122,970,004
(47,127,985) (15,961,293)
(31,199,875)
(13,375,325)
(64,825,134)
(172,489,612)
(169,943,022) (342,432,634)
(219,462,630)
31 March 31 March
2016 2015Amount in Rupees
Systems Limited | Interim Financial Report quarter ended 31 March 2016 17
Amount in Rupees
31 March 31 March
2016 2015
11 Earnings per share- basic and diluted
Basic earnings per share
Profit for the period attributable to equity
holders of the Company 116,966,229
109,776,912
Average number of ordinary shares in issue
during the period 110,680,876
105,893,867
Diluted earnings per share
Profit for the period attributable to equity
holders of the Company 116,966,229 109,776,912
Average number of ordinary shares in issue
during the period 111,923,261 106,778,428
www.systemsltd.com16
Un-audited Un-audited Un-audited Un-audited
12 Cash generated from operations
Profit before taxation
Adjustment for:
Depreciation on property and equipment
Amortization of intangibles
Provision for bad debts
Share based payment expense
Finance cost
Exchange gain on translation of export debts
Gain on short term investments
Profit on bank deposits
Gain on disposal of property and equipment
Profit before working capital changes
Effect on cash flow due toworking capital changes
(Increase)/decrease in current assets:
Unbilled revenue - net
Trade debts
Receivable from related parties
Advances
Trade deposits and short term prepayments
Increase/(decrease) in current liabilities:
Trade and other payables
Cash generated from operations
118,966,229
18,600,637
4,659,329
- 2,921,397
362,498 (3,597,052) (5,989,592)
(886,804) -
16,070,413 135,036,642
(121,389,120)
(19,793,366)
(56,342,637)
(26,015,229)
(68,997,079) (292,537,431)
(119,377,975) (411,915,406)
(276,878,764)
113,055,253
15,506,653
3,376,627
5,719,683 -
604,750 -
(9,416,642) (5,823,320)
(53,000) 9,914,751
122,970,004
(47,127,985) (15,961,293)
(31,199,875)
(13,375,325)
(64,825,134)
(172,489,612)
(169,943,022) (342,432,634)
(219,462,630)
31 March 31 March
2016 2015Amount in Rupees
Systems Limited | Interim Financial Report quarter ended 31 March 2016 17
Amount in Rupees
31 March 31 March
2016 2015
11 Earnings per share- basic and diluted
Basic earnings per share
Profit for the period attributable to equity
holders of the Company 116,966,229
109,776,912
Average number of ordinary shares in issue
during the period 110,680,876
105,893,867
Diluted earnings per share
Profit for the period attributable to equity
holders of the Company 116,966,229 109,776,912
Average number of ordinary shares in issue
during the period 111,923,261 106,778,428
www.systemsltd.com16
Un-audited Un-audited Un-audited Un-audited
13 Transactions with related parties
Related parties comprises of associated companies, staff retirement fund, directors and key management personnel. Significant transactions with related parties are as follows:
31 March
2016
31 March
2015Amount in Rupees
E-Processing Systems (Private) Limited 7,200,000
250,302
7,450,302
Tech Vista Systems FZ LLC - UAE 63,173,377
36,696,520
99,869,897
Visionet Systems Incorporation - USA 387,945,096
Provident fund 9,212,967
Name
Interest income
Nature of transactions
Contributions
Payment for expenses
Sales
Payment for expenses
Sales
Relationship
Employee benefit plan
Subsidiary
Common directorship
Subsidiary 3,100,000
-
3,100,000
10,577,685
17,720,678
28,298,363
310,884,176
11,643,494
14 Date of authorization for issue
15 Corresponding figures
16 General
This condensed interim financial information was authorized for issue in the Board of Directors meeting held on 27 April 2016.
Corresponding figures have been re-arranged, wherever necessary, for the purpose of comparison. However, no significant re-arrangement have been made.
Figures have been rounded off to the nearest rupee.
AEZAZ HUSSAINChairman
ASIF PEERChief ExecutiveLAHORE
www.systemsltd.com18
Un-audited Un-audited
Condensed InterimConsolidated Financial Information
13 Transactions with related parties
Related parties comprises of associated companies, staff retirement fund, directors and key management personnel. Significant transactions with related parties are as follows:
31 March
2016
31 March
2015Amount in Rupees
E-Processing Systems (Private) Limited 7,200,000
250,302
7,450,302
Tech Vista Systems FZ LLC - UAE 63,173,377
36,696,520
99,869,897
Visionet Systems Incorporation - USA 387,945,096
Provident fund 9,212,967
Name
Interest income
Nature of transactions
Contributions
Payment for expenses
Sales
Payment for expenses
Sales
Relationship
Employee benefit plan
Subsidiary
Common directorship
Subsidiary 3,100,000
-
3,100,000
10,577,685
17,720,678
28,298,363
310,884,176
11,643,494
14 Date of authorization for issue
15 Corresponding figures
16 General
This condensed interim financial information was authorized for issue in the Board of Directors meeting held on 27 April 2016.
Corresponding figures have been re-arranged, wherever necessary, for the purpose of comparison. However, no significant re-arrangement have been made.
Figures have been rounded off to the nearest rupee.
AEZAZ HUSSAINChairman
ASIF PEERChief ExecutiveLAHORE
www.systemsltd.com18
Un-audited Un-audited
Condensed InterimConsolidated Financial Information
ASIF PEERChief Executive
Un-audited Audited
31 March 31 December
2016 2015NoteAmount in Rupees
ASSETS
Non current assets
Property and equipment 8 411,252,257 362,703,298
Intangibles 9 90,995,809 83,233,400
Long term deposits 55,965,708 11,901,100
Deferred taxation 809,510 809,510
559,023,284 458,647,308
Current assets
Unbilled revenue 399,344,689 369,960,316
Trade debts-unsecured, considered good 1,003,833,555 961,694,628
Advances 97,205,814 72,877,563
Trade deposits and short term prepayments 121,328,998 114,239,639
Interest accrued 8,126,280 5,058,561
Receivable from related parties
-unsecured, considered good 10,702,873 11,536,311
Tax refunds due from the Government 70,433,237 55,143,956
Short term investments 240,000,000 557,799,398
Cash and bank balances 152,838,039 193,593,856
2,103,813,485 2,341,904,228
2,662,836,769 2,800,551,536
Systems Limited | Interim Financial Report quarter ended 31 March 2016 21
Un-audited Audited
31 March 31 December)
2016 2015NoteAmount in Rupees
CONDENSED INTERIM CONSOLIDATED BALANCE SHEET
LAHOREAEZAZ HUSSAIN
Chairman
as at 31 March 2016
EQUITY AND LIABILITIES
Share capital and reserves
150,000,000 (2015: 150,000,000) ordinary
shares of Rs.10 each
Issued, subscribed and paid-up share capital 5
Reserves 6
Un-appropriated profit
Non-controlling interest
Non current liabilities
Long term advances
Provision for gratuity
Current liabilities
Trade and other payables
Unearned revenue
Contingencies and commitments 7
1,500,000,000
1,106,808,760
423,537,486
996,380,453
2,526,726,699
(10,852,767)
2,515,873,932
15,061,390
1,615,272
16,676,662
130,286,175
-
130,286,175
2,662,836,769
(9,746,736)
1,500,000,000
1,106,808,760
420,591,135
895,921,042
2,423,320,937
2,413,574,201
12,669,395
1,616,973
14,286,368
262,879,897
109,811,070
372,690,967
2,800,551,536
The annexed notes 1 to 16 form an integral part of this condensed interim consolidated financial information.
www.systemsltd.com20
ASIF PEERChief Executive
Un-audited Audited
31 March 31 December
2016 2015NoteAmount in Rupees
ASSETS
Non current assets
Property and equipment 8 411,252,257 362,703,298
Intangibles 9 90,995,809 83,233,400
Long term deposits 55,965,708 11,901,100
Deferred taxation 809,510 809,510
559,023,284 458,647,308
Current assets
Unbilled revenue 399,344,689 369,960,316
Trade debts-unsecured, considered good 1,003,833,555 961,694,628
Advances 97,205,814 72,877,563
Trade deposits and short term prepayments 121,328,998 114,239,639
Interest accrued 8,126,280 5,058,561
Receivable from related parties
-unsecured, considered good 10,702,873 11,536,311
Tax refunds due from the Government 70,433,237 55,143,956
Short term investments 240,000,000 557,799,398
Cash and bank balances 152,838,039 193,593,856
2,103,813,485 2,341,904,228
2,662,836,769 2,800,551,536
Systems Limited | Interim Financial Report quarter ended 31 March 2016 21
Un-audited Audited
31 March 31 December)
2016 2015NoteAmount in Rupees
CONDENSED INTERIM CONSOLIDATED BALANCE SHEET
LAHOREAEZAZ HUSSAIN
Chairman
as at 31 March 2016
EQUITY AND LIABILITIES
Share capital and reserves
150,000,000 (2015: 150,000,000) ordinary
shares of Rs.10 each
Issued, subscribed and paid-up share capital 5
Reserves 6
Un-appropriated profit
Non-controlling interest
Non current liabilities
Long term advances
Provision for gratuity
Current liabilities
Trade and other payables
Unearned revenue
Contingencies and commitments 7
1,500,000,000
1,106,808,760
423,537,486
996,380,453
2,526,726,699
(10,852,767)
2,515,873,932
15,061,390
1,615,272
16,676,662
130,286,175
-
130,286,175
2,662,836,769
(9,746,736)
1,500,000,000
1,106,808,760
420,591,135
895,921,042
2,423,320,937
2,413,574,201
12,669,395
1,616,973
14,286,368
262,879,897
109,811,070
372,690,967
2,800,551,536
The annexed notes 1 to 16 form an integral part of this condensed interim consolidated financial information.
www.systemsltd.com20
CONDENSED INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEfor the quarter ended 31 March 2016
AEZAZ HUSSAINChairman
ASIF PEERChief ExecutiveLAHORE
31 March 31 March
2016 2015Amount in Rupees
Profit after taxation
Other comprehensive income for the period:
Translation reserve on foreign operations
Total comprehensive income for the period
Attributable to:
Equity holders of the parent Non-controlling interest
99,353,380
24,954
99,378,334
100,484,365 (1,106,031) 99,378,334
102,754,050
(83,943)
102,670,107
103,843,881 (1,173,774)
102,670,107
The annexed notes 1 to 16 form an integral part of this condensed interim consolidated financial information.
Systems Limited | Interim Financial Report quarter ended 31 March 2016 23
CONDENSED INTERIM CONSOLIDATED PROFIT AND LOSS ACCOUNTfor the quarter ended 31 March 2016
31 March 31 March
2016 2015NoteAmount in Rupees
AEZAZ HUSSAINChairman
ASIF PEERChief ExecutiveLAHORE
Revenue 10 754,083,165 546,607,119
Cost of sales (552,543,161) (369,645,919)
Gross profit 201,540,004 176,961,200
Distribution cost (40,525,504) (20,444,618)
Administrative expenses (64,990,409) (59,249,691)
Research and development expenses (4,469,511) (9,790,424)
(109,985,424) (89,484,733)
Operating profit 91,554,580 87,476,467
Other income 10,681,584 20,516,242
Finance cost (882,784) (1,960,318)
9,798,800 18,555,924
Profit before taxation 101,353,380 106,032,391
Taxation (2,000,000) (3,278,341)
Profit after taxation 99,353,380 102,754,050
Attributable to:
Equity holders of the parent 100,459,411 103,927,824
Non-controlling interest (1,106,031) (1,173,774)
99,353,380 102,754,050
RestatedEarnings per share
Basic earnings per share (Rupees) 11 0.91 0.98
Diluted earnings per share (Rupees) 11 0.90 0.97
The annexed notes 1 to 16 form an integral part of this condensed interim consolidated financial information.
www.systemsltd.com22
Un-audited Un-audited Un-auditedUn-audited
CONDENSED INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEfor the quarter ended 31 March 2016
AEZAZ HUSSAINChairman
ASIF PEERChief ExecutiveLAHORE
31 March 31 March
2016 2015Amount in Rupees
Profit after taxation
Other comprehensive income for the period:
Translation reserve on foreign operations
Total comprehensive income for the period
Attributable to:
Equity holders of the parent Non-controlling interest
99,353,380
24,954
99,378,334
100,484,365 (1,106,031) 99,378,334
102,754,050
(83,943)
102,670,107
103,843,881 (1,173,774)
102,670,107
The annexed notes 1 to 16 form an integral part of this condensed interim consolidated financial information.
Systems Limited | Interim Financial Report quarter ended 31 March 2016 23
CONDENSED INTERIM CONSOLIDATED PROFIT AND LOSS ACCOUNTfor the quarter ended 31 March 2016
31 March 31 March
2016 2015NoteAmount in Rupees
AEZAZ HUSSAINChairman
ASIF PEERChief ExecutiveLAHORE
Revenue 10 754,083,165 546,607,119
Cost of sales (552,543,161) (369,645,919)
Gross profit 201,540,004 176,961,200
Distribution cost (40,525,504) (20,444,618)
Administrative expenses (64,990,409) (59,249,691)
Research and development expenses (4,469,511) (9,790,424)
(109,985,424) (89,484,733)
Operating profit 91,554,580 87,476,467
Other income 10,681,584 20,516,242
Finance cost (882,784) (1,960,318)
9,798,800 18,555,924
Profit before taxation 101,353,380 106,032,391
Taxation (2,000,000) (3,278,341)
Profit after taxation 99,353,380 102,754,050
Attributable to:
Equity holders of the parent 100,459,411 103,927,824
Non-controlling interest (1,106,031) (1,173,774)
99,353,380 102,754,050
RestatedEarnings per share
Basic earnings per share (Rupees) 11 0.91 0.98
Diluted earnings per share (Rupees) 11 0.90 0.97
The annexed notes 1 to 16 form an integral part of this condensed interim consolidated financial information.
www.systemsltd.com22
Un-audited Un-audited Un-auditedUn-audited
CO
ND
ENSE
D IN
TERI
M C
ON
SOLI
DA
TED
STA
TEM
ENT
OF
CH
AN
GES
IN E
QU
ITY
for
the
qu
art
er
en
de
d 3
1 M
arc
h 2
01
6
AEZA
Z H
USSA
INC
ha
irm
an
ASIF
PEER
Ch
ief
Exe
cu
tiv
eLA
HO
RE
2,1
13
,02
4,5
72
10
2,6
70
,10
7 -
2,2
15
,69
4,6
79
2,4
13
,57
4,2
01
99
,37
8,3
34
2,9
21
,39
7
2,5
15
,87
3,9
32
Tota
l
687,2
63,3
44
103,9
27,8
24
-
79
1,1
91
,16
8
895,9
21,0
42
100,4
59,4
11
-
99
6,3
80
,45
3
Un
-ap
pro
pri
ate
dp
rofit
2,1
18,1
24,4
58
103,8
43,8
81
-
2,2
21
,96
8,3
39
2,4
23,3
20,9
37
100,4
84,3
65
2,9
21,3
97
2,5
26
,72
6,6
99
To
tal Eq
uity
att
rib
uta
ble
to
sha
reh
old
ers
of
pa
ren
t c
om
pa
ny
Issu
ed
, su
bsc
rib
ed
an
d p
aid
-up
sh
are
ca
pita
l
871,6
53,0
20
-
130,0
00,0
00
1,0
01
,65
3,0
20
1,1
06,8
08,7
60
- -
1,1
06
,80
8,7
60
520,0
00,0
00
-
(520,0
00,0
00)
- - - - -
Ad
va
nc
e
ag
ain
st iss
ue
of
sha
res
39,1
19,7
84
-
390,0
00,0
00
42
9,1
19
,78
4
411,3
02,5
86
- -
41
1,3
02
,58
6
Sh
are
ca
pita
l
pre
miu
m
4,3
67
- -
4,3
67
9,2
55,4
67
-
2,9
21,3
97
12
,17
6,8
64
Em
plo
ye
e
co
mp
en
satio
n
rese
rve
83
,94
3
(83
,94
3)
- -
33
,08
2
24
,95
4
-
58,0
36
Fo
reig
n
cu
rre
nc
y
tra
nsl
atio
n
rese
rve
No
n-c
on
tro
llin
g
Inte
rest
(5,0
99,8
86)
(1,1
73,7
74)
-
(6,2
73
,66
0)
(9,7
46,7
36)
(1,1
06,0
31)
-
(10
,85
2,7
67
)
Re
ve
nu
e r
ese
rve
Ca
pita
l re
serv
es
Ba
lan
ce
as
on
01
Ja
nu
ary
20
15
(A
ud
ite
d)
Tota
l co
mp
reh
en
sive
inc
om
e f
or
the
pe
rio
d (
Un
-au
dite
d)
Issu
an
ce
of
Sha
res
(IP
O)
Ba
lan
ce
as
on
31
Ma
rch
20
15
(U
n-a
ud
ite
d)
Ba
lan
ce
as
on
01
Ja
nu
ary
20
16
(A
ud
ite
d)
Tota
l co
mp
reh
en
sive
inc
om
e f
or
the
pe
rio
d (
Un
-au
dite
d)
Sha
re b
ase
d p
aym
en
ts
Ba
lan
ce
as
on
31
Ma
rch
20
16
(U
n-a
ud
ite
d)
The
an
ne
xed
no
tes
1 t
o 1
6 f
orm
an
inte
gra
l pa
rt o
f th
is c
on
de
nse
d in
terim
co
nso
lida
ted
fin
an
cia
l in
form
atio
n.
Am
ou
nt
in R
up
ee
s
Systems Limited | Interim Financial Report quarter ended 31 March 2016 25
CONDENSED INTERIM CONSOLIDATED CASH FLOW STATEMENTfor the quarter ended 31 March 2016
31 March
2016
31 March
2015NoteAmount in Rupees
AEZAZ HUSSAINChairman
ASIF PEERChief ExecutiveLAHORE
Cash flows from operating activities
Cash generated from operations 12
Finance cost paid
Taxes paid
Net cash outflow from operating activities
Cash flows from investing activities
Purchase of property and equipment
Development expenditures
Sale proceeds from disposal of property and equipment
Disposal / (purchase) of short term investments
Profit received on bank deposits
Increase in long term deposits
Net cash inflow / (outflow) from investing activities
Cash flows from financing activities
Proceeds from issue of share capital
Advance against issue of shares
Increase in long term advances
Net cash inflow from financing activities
Decrease in cash and cash equivalents
Effect of exchange translation reserve
Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at the end of period
(219,648,177)
(882,784) (17,288,581) (18,171,365)
(237,819,542)
(67,553,080)
(12,421,738) - 317,799,398
886,804
(44,064,608)
194,646,776
-
-
2,391,995
2,391,995
(40,780,771)
24,954
193,593,856
152,838,039
(211,670,376)
(550,000) -
(550,000) (212,220,376)
(9,011,528)
(3,065,700) 53,000 (510,375,797)
-
(4,209,612)
(526,609,637)
130,000,000
(130,000,000)
1,654,476
1,654,476
(737,175,537)
(83,943)
987,092,798
249,833,318
The annexed notes 1 to 16 form an integral part of this condensed interim consolidated financial information.
www.systemsltd.com24
Un-audited Un-audited
CO
ND
ENSE
D IN
TERI
M C
ON
SOLI
DA
TED
STA
TEM
ENT
OF
CH
AN
GES
IN E
QU
ITY
for
the
qu
art
er
en
de
d 3
1 M
arc
h 2
01
6
AEZA
Z H
USSA
INC
ha
irm
an
ASIF
PEER
Ch
ief
Exe
cu
tiv
eLA
HO
RE
2,1
13
,02
4,5
72
10
2,6
70
,10
7 -
2,2
15
,69
4,6
79
2,4
13
,57
4,2
01
99
,37
8,3
34
2,9
21
,39
7
2,5
15
,87
3,9
32
Tota
l
687,2
63,3
44
103,9
27,8
24
-
79
1,1
91
,16
8
895,9
21,0
42
100,4
59,4
11
-
99
6,3
80
,45
3
Un
-ap
pro
pri
ate
dp
rofit
2,1
18,1
24,4
58
103,8
43,8
81
-
2,2
21
,96
8,3
39
2,4
23,3
20,9
37
100,4
84,3
65
2,9
21,3
97
2,5
26
,72
6,6
99
To
tal Eq
uity
att
rib
uta
ble
to
sha
reh
old
ers
of
pa
ren
t c
om
pa
ny
Issu
ed
, su
bsc
rib
ed
an
d p
aid
-up
sh
are
ca
pita
l
871,6
53,0
20
-
130,0
00,0
00
1,0
01
,65
3,0
20
1,1
06,8
08,7
60
- -
1,1
06
,80
8,7
60
520,0
00,0
00
-
(520,0
00,0
00)
- - - - -
Ad
va
nc
e
ag
ain
st iss
ue
of
sha
res
39,1
19,7
84
-
390,0
00,0
00
42
9,1
19
,78
4
411,3
02,5
86
- -
41
1,3
02
,58
6
Sh
are
ca
pita
l
pre
miu
m
4,3
67
- -
4,3
67
9,2
55,4
67
-
2,9
21,3
97
12
,17
6,8
64
Em
plo
ye
e
co
mp
en
satio
n
rese
rve
83
,94
3
(83
,94
3)
- -
33
,08
2
24
,95
4
-
58,0
36
Fo
reig
n
cu
rre
nc
y
tra
nsl
atio
n
rese
rve
No
n-c
on
tro
llin
g
Inte
rest
(5,0
99,8
86)
(1,1
73,7
74)
-
(6,2
73
,66
0)
(9,7
46,7
36)
(1,1
06,0
31)
-
(10
,85
2,7
67
)
Re
ve
nu
e r
ese
rve
Ca
pita
l re
serv
es
Ba
lan
ce
as
on
01
Ja
nu
ary
20
15
(A
ud
ite
d)
Tota
l co
mp
reh
en
sive
inc
om
e f
or
the
pe
rio
d (
Un
-au
dite
d)
Issu
an
ce
of
Sha
res
(IP
O)
Ba
lan
ce
as
on
31
Ma
rch
20
15
(U
n-a
ud
ite
d)
Ba
lan
ce
as
on
01
Ja
nu
ary
20
16
(A
ud
ite
d)
Tota
l co
mp
reh
en
sive
inc
om
e f
or
the
pe
rio
d (
Un
-au
dite
d)
Sha
re b
ase
d p
aym
en
ts
Ba
lan
ce
as
on
31
Ma
rch
20
16
(U
n-a
ud
ite
d)
The
an
ne
xed
no
tes
1 t
o 1
6 f
orm
an
inte
gra
l pa
rt o
f th
is c
on
de
nse
d in
terim
co
nso
lida
ted
fin
an
cia
l in
form
atio
n.
Am
ou
nt
in R
up
ee
s
Systems Limited | Interim Financial Report quarter ended 31 March 2016 25
CONDENSED INTERIM CONSOLIDATED CASH FLOW STATEMENTfor the quarter ended 31 March 2016
31 March
2016
31 March
2015NoteAmount in Rupees
AEZAZ HUSSAINChairman
ASIF PEERChief ExecutiveLAHORE
Cash flows from operating activities
Cash generated from operations 12
Finance cost paid
Taxes paid
Net cash outflow from operating activities
Cash flows from investing activities
Purchase of property and equipment
Development expenditures
Sale proceeds from disposal of property and equipment
Disposal / (purchase) of short term investments
Profit received on bank deposits
Increase in long term deposits
Net cash inflow / (outflow) from investing activities
Cash flows from financing activities
Proceeds from issue of share capital
Advance against issue of shares
Increase in long term advances
Net cash inflow from financing activities
Decrease in cash and cash equivalents
Effect of exchange translation reserve
Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at the end of period
(219,648,177)
(882,784) (17,288,581) (18,171,365)
(237,819,542)
(67,553,080)
(12,421,738) - 317,799,398
886,804
(44,064,608)
194,646,776
-
-
2,391,995
2,391,995
(40,780,771)
24,954
193,593,856
152,838,039
(211,670,376)
(550,000) -
(550,000) (212,220,376)
(9,011,528)
(3,065,700) 53,000 (510,375,797)
-
(4,209,612)
(526,609,637)
130,000,000
(130,000,000)
1,654,476
1,654,476
(737,175,537)
(83,943)
987,092,798
249,833,318
The annexed notes 1 to 16 form an integral part of this condensed interim consolidated financial information.
www.systemsltd.com24
Un-audited Un-audited
5 Issued, subscribed and paid-up share capital
31 March 31 December
2016 2015
No. of shares
21,829,311
21,829,311 Ordinary shares of Rs. 10/-
each fully paid in cash
88,851,565 88,851,565
Ordinary shares of Rs. 10/- each
issued as fully paid bonus shares
110,680,876
110,680,876
Un-audited Audited
31 March 31 December
2016 2015
218,293,110
218,293,110
888,515,650 888,515,650
1,106,808,760
1,106,808,760
Amount in Rupees
2.3 Basis of measurement
This condensed interim consolidated financial information has been prepared under the historical cost convention, except for revaluation of certain financial instruments at fair value.
The accounting policies adopted for the preparation of this condensed interim consolidated financial information are consistent with those applied in the preparation of the preceding annual published financial statements of the Group for the year ended 31 December 2015.
The preparation of condensed interim consolidated financial information in conformity with approved accounting standards, as applicable in Pakistan, requires the management to make judgments, estimates and assumptions that affect the application of policies and the reported amounts of assets and liabilities, income and expenses.
In preparation of this condensed interim consolidated financial information, the judgments, estimates and assumptions made by the management were the same as those that were applied in the preparation of the preceding annual published financial statements of the Group for the year ended 31 December 2015.
3 Accounting policies
4 Use of estimates and judgments
Systems Limited | Interim Financial Report quarter ended 31 March 2016 27
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL INFORMATIONfor the quarter ended 31 March 2016 (Un-audited)
1 The group and its operations
Holding company
Systems Limited (the Company) is a public limited company incorporated in Pakistan under the Companies Ordinance 1984, and is listed on the Pakistan Stock Exchange (formerly Karachi, Islamabad and Lahore Stock Exchanges). The Company is principally engaged in the business of software development, trading of software and business process outsourcing services. The head office of the Company is situated at Chamber of Commerce building, 11- Shahra-e-Aiwan-e-Tijarat, Lahore.
Subsidiary companies
TechVista Systems FZ - LLC, a limited liability company incorporated in Dubai Technology and Media Free Zone Authority, is a 100% owned subsidiary of Systems Limited. The Company is principally engaged in software development and providing business process outsourcing solutions.
E-Processing Systems (Private) Limited, a private limited company registered under Companies Ordinance, 1984 incorporated on 06 February 2013, is a 70% owned subsidiary of Systems Limited. The Company is principally engaged in the business of purchase and sale of airtime and software development including the development of systems and infrastructure.
2 Basis of preparation
This condensed interim consolidated financial information is not audited and has been prepared in condensed form and does not include all the information as is required to be provided in full set of annual financial statements. This condensed interim consolidated financial information should be read in conjunction with the audited financial statements of the Group for the year ended 31 December 2015.
2.1 Separate financial statements
This condensed interim consolidated financial information comprises the financial information of Systems Limited and its subsidiaries, here-in-after referred to as "the Group".
2.2 Statement of compliance
This condensed interim consolidated financial information of the Group for the quarter ended 31 March 2016 has been prepared in accordance with the requirements of International Accounting Standard (IAS) 34 - Interim Financial Reporting and provisions of and directives issued under the Companies Ordinance, 1984. In case where requirements differ, the provisions of or directives issued under the Companies Ordinance, 1984 have been followed.
www.systemsltd.com26
5 Issued, subscribed and paid-up share capital
31 March 31 December
2016 2015
No. of shares
21,829,311
21,829,311 Ordinary shares of Rs. 10/-
each fully paid in cash
88,851,565 88,851,565
Ordinary shares of Rs. 10/- each
issued as fully paid bonus shares
110,680,876
110,680,876
Un-audited Audited
31 March 31 December
2016 2015
218,293,110
218,293,110
888,515,650 888,515,650
1,106,808,760
1,106,808,760
Amount in Rupees
2.3 Basis of measurement
This condensed interim consolidated financial information has been prepared under the historical cost convention, except for revaluation of certain financial instruments at fair value.
The accounting policies adopted for the preparation of this condensed interim consolidated financial information are consistent with those applied in the preparation of the preceding annual published financial statements of the Group for the year ended 31 December 2015.
The preparation of condensed interim consolidated financial information in conformity with approved accounting standards, as applicable in Pakistan, requires the management to make judgments, estimates and assumptions that affect the application of policies and the reported amounts of assets and liabilities, income and expenses.
In preparation of this condensed interim consolidated financial information, the judgments, estimates and assumptions made by the management were the same as those that were applied in the preparation of the preceding annual published financial statements of the Group for the year ended 31 December 2015.
3 Accounting policies
4 Use of estimates and judgments
Systems Limited | Interim Financial Report quarter ended 31 March 2016 27
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL INFORMATIONfor the quarter ended 31 March 2016 (Un-audited)
1 The group and its operations
Holding company
Systems Limited (the Company) is a public limited company incorporated in Pakistan under the Companies Ordinance 1984, and is listed on the Pakistan Stock Exchange (formerly Karachi, Islamabad and Lahore Stock Exchanges). The Company is principally engaged in the business of software development, trading of software and business process outsourcing services. The head office of the Company is situated at Chamber of Commerce building, 11- Shahra-e-Aiwan-e-Tijarat, Lahore.
Subsidiary companies
TechVista Systems FZ - LLC, a limited liability company incorporated in Dubai Technology and Media Free Zone Authority, is a 100% owned subsidiary of Systems Limited. The Company is principally engaged in software development and providing business process outsourcing solutions.
E-Processing Systems (Private) Limited, a private limited company registered under Companies Ordinance, 1984 incorporated on 06 February 2013, is a 70% owned subsidiary of Systems Limited. The Company is principally engaged in the business of purchase and sale of airtime and software development including the development of systems and infrastructure.
2 Basis of preparation
This condensed interim consolidated financial information is not audited and has been prepared in condensed form and does not include all the information as is required to be provided in full set of annual financial statements. This condensed interim consolidated financial information should be read in conjunction with the audited financial statements of the Group for the year ended 31 December 2015.
2.1 Separate financial statements
This condensed interim consolidated financial information comprises the financial information of Systems Limited and its subsidiaries, here-in-after referred to as "the Group".
2.2 Statement of compliance
This condensed interim consolidated financial information of the Group for the quarter ended 31 March 2016 has been prepared in accordance with the requirements of International Accounting Standard (IAS) 34 - Interim Financial Reporting and provisions of and directives issued under the Companies Ordinance, 1984. In case where requirements differ, the provisions of or directives issued under the Companies Ordinance, 1984 have been followed.
www.systemsltd.com26
7.4 The Holding Company filed an undertaking pursuant to Income Tax (Second Amendment) Ordinance, 2015, thereby opting out of minimum tax on services under section 153(1)(b) of the Ordinance. The Additional Commissioner, Inland Revenue has declined to accept the undertaking against which the Holding Company has preferred an appeal before Commissioner Inland Revenue (Appeals) which is pending adjudication, which might result in tax liability of Rs. 30.25 million.
7.5 The Holding Company has filed appeals before the Commissioner Inland Revenue (Appeals) against the orders passed under section 122(5A) of the Ordinance by the Additional Commissioner Inland Revenue for payment of additional amount of Rs. 10.6 million and Rs. 9 million in respect of tax years 2010 and 2011 respectively.
Pending adjudication of the above matters, the tax consultants and management of the Group expect favorable outcome of the appeals and anticipate no outflow of economic benefits.
8 Property and equipment
Operating fixed assets
Capital work in progress
Opening balance - net book value
Additions
Disposals - net book value
Depreciation
Closing balance - net book value
221,449,468
189,802,789
411,252,257
195,893,473
44,560,116
240,453,589
-
(19,004,121)
221,449,468
195,893,473
166,809,825
362,703,298
163,735,721
106,021,330
269,757,051
(2,106,737)
(71,756,841)
195,893,473
9
Intangibles
Opening balance - net book value
Additions
Amortization
Closing balance - net book value
83,233,400
12,421,738
95,655,138
(4,659,329)
90,995,809
54,210,428
44,158,965
98,369,393
(15,135,993)
83,233,400
Un-audited Audited
31 March 31 December
2016 2015Amount in Rupees
Systems Limited | Interim Financial Report quarter ended 31 March 2016 29
6 Reserves
Un-audited Audited
31 March 31 December
2016 2015Amount in Rupees
Share premium reserve 411,302,586 411,302,586
Deferred employee compensation reserve 12,176,864 9,255,467
Foreign currency translation reserve 58,036 33,082
423,537,486 420,591,135
5.1 Reconciliation of ordinary shares
110,680,876
87,165,302
Opening balance
-
13,000,000
Initial Public Offer (IPO)
-
453,676
Stock options exercised
-
10,061,898
Bonus shares issued
110,680,876
110,680,876
Closing balance
1,106,808,760
871,653,020 -
130,000,000
-
4,536,760
-
100,618,980
1,106,808,760
1,106,808,760
31 March 31 December
2016 2015
No. of shares
Un-audited Audited
31 March 31 December
2016 2015
Amount in Rupees
7 Contingencies and commitments
Commitments
7.1 Guarantees issued by the financial institutions on behalf of the Group amount to Rs. 118.22 million (2015: Rs. 129.12 million).
7.2 Commitments include capital commitments for construction of building of the Group amounting to Rs. 521.55 million (2015: 344 million) out of which Rs. 221.99 million have been invoiced.
Contingencies
7.3 The Deputy Commissioner Inland Revenue has issued withholding tax assessment orders u/s 161/205 of the Income Tax Ordinance 2001 (the Ordinance) for the tax year 2010 and 2012 whereby tax amounting to Rs. 779,513 and Rs. 13,540,966 respectively has been levied. The Holding Company preferred appeals against the orders which are pending adjudications.
www.systemsltd.com28
7.4 The Holding Company filed an undertaking pursuant to Income Tax (Second Amendment) Ordinance, 2015, thereby opting out of minimum tax on services under section 153(1)(b) of the Ordinance. The Additional Commissioner, Inland Revenue has declined to accept the undertaking against which the Holding Company has preferred an appeal before Commissioner Inland Revenue (Appeals) which is pending adjudication, which might result in tax liability of Rs. 30.25 million.
7.5 The Holding Company has filed appeals before the Commissioner Inland Revenue (Appeals) against the orders passed under section 122(5A) of the Ordinance by the Additional Commissioner Inland Revenue for payment of additional amount of Rs. 10.6 million and Rs. 9 million in respect of tax years 2010 and 2011 respectively.
Pending adjudication of the above matters, the tax consultants and management of the Group expect favorable outcome of the appeals and anticipate no outflow of economic benefits.
8 Property and equipment
Operating fixed assets
Capital work in progress
Opening balance - net book value
Additions
Disposals - net book value
Depreciation
Closing balance - net book value
221,449,468
189,802,789
411,252,257
195,893,473
44,560,116
240,453,589
-
(19,004,121)
221,449,468
195,893,473
166,809,825
362,703,298
163,735,721
106,021,330
269,757,051
(2,106,737)
(71,756,841)
195,893,473
9
Intangibles
Opening balance - net book value
Additions
Amortization
Closing balance - net book value
83,233,400
12,421,738
95,655,138
(4,659,329)
90,995,809
54,210,428
44,158,965
98,369,393
(15,135,993)
83,233,400
Un-audited Audited
31 March 31 December
2016 2015Amount in Rupees
Systems Limited | Interim Financial Report quarter ended 31 March 2016 29
6 Reserves
Un-audited Audited
31 March 31 December
2016 2015Amount in Rupees
Share premium reserve 411,302,586 411,302,586
Deferred employee compensation reserve 12,176,864 9,255,467
Foreign currency translation reserve 58,036 33,082
423,537,486 420,591,135
5.1 Reconciliation of ordinary shares
110,680,876
87,165,302
Opening balance
-
13,000,000
Initial Public Offer (IPO)
-
453,676
Stock options exercised
-
10,061,898
Bonus shares issued
110,680,876
110,680,876
Closing balance
1,106,808,760
871,653,020 -
130,000,000
-
4,536,760
-
100,618,980
1,106,808,760
1,106,808,760
31 March 31 December
2016 2015
No. of shares
Un-audited Audited
31 March 31 December
2016 2015
Amount in Rupees
7 Contingencies and commitments
Commitments
7.1 Guarantees issued by the financial institutions on behalf of the Group amount to Rs. 118.22 million (2015: Rs. 129.12 million).
7.2 Commitments include capital commitments for construction of building of the Group amounting to Rs. 521.55 million (2015: 344 million) out of which Rs. 221.99 million have been invoiced.
Contingencies
7.3 The Deputy Commissioner Inland Revenue has issued withholding tax assessment orders u/s 161/205 of the Income Tax Ordinance 2001 (the Ordinance) for the tax year 2010 and 2012 whereby tax amounting to Rs. 779,513 and Rs. 13,540,966 respectively has been levied. The Holding Company preferred appeals against the orders which are pending adjudications.
www.systemsltd.com28
12 Cash generated from operations
Profit before taxation
Adjustment for:
Depreciation on property and equipment
Amortization of intangibles
Provision for bad debts
Share based payment expense
Provision for gratuity
Finance cost
Exchange gain on translation of export debts
Gain on short term investments
Profit on bank deposits
Gain on disposal of property and equipment
Profit before working capital changes
Effect on cash flow due to working capital changes
(Increase)/decrease in current assets:
Unbilled revenue
Trade debts
Receivable from related parties
Advances
Trade deposits and short term prepayments
Increase/(decrease) in current liabilities:
Trade and other payables
Cash generated from operations
106,032,391
15,672,126
3,376,627
5,719,683
-
13,291
1,960,318
604,750
(9,416,642)
(5,825,415)
(53,000)
12,051,738
118,084,129
-
27,394,079
(4,914,946)
(13,375,325)
(136,021,609)
(126,917,801)
(202,836,704)
(329,754,505)
(211,670,376)
101,353,380
19,004,121
4,659,329
-
2,921,397
(1,701)
882,784
(3,454,835)
(3,067,719)
(886,804)
-
20,056,572
121,409,952
(139,195,443)
(38,684,792)
833,438
(24,328,251)
(7,089,359)
(208,464,407)
(132,593,722)
(341,058,129)
(219,648,177)
31 March 31 March
2016 2015Amount in Rupees
Systems Limited | Interim Financial Report quarter ended 31 March 2016 31
10 Revenue - net
Development and other services
Export
Local
Trading income
Software sale - export
Software sale - local
492,716,576
202,319,504
695,036,080
1,569,750
57,477,335
59,047,085
754,083,165
449,770,824
86,827,772
536,598,596
-
10,008,523
10,008,523
546,607,119
31 March 31 March
2016 2015Amount in Rupees
11 Earnings per share- basic and diluted
Basic earnings per share
Profit for the period attributable to equity
holders of the Parent
Average number of ordinary shares in issue
during the period
Diluted earnings per share
Profit for the period attributable to equity
holders of the Parent
Average number of ordinary shares in issue
during the period
100,459,411
110,680,876
100,459,411
111,923,261
103,927,824
105,893,867
103,927,824
106,778,428
www.systemsltd.com30
Un-auditedUn-audited Un-audited Un-audited
12 Cash generated from operations
Profit before taxation
Adjustment for:
Depreciation on property and equipment
Amortization of intangibles
Provision for bad debts
Share based payment expense
Provision for gratuity
Finance cost
Exchange gain on translation of export debts
Gain on short term investments
Profit on bank deposits
Gain on disposal of property and equipment
Profit before working capital changes
Effect on cash flow due to working capital changes
(Increase)/decrease in current assets:
Unbilled revenue
Trade debts
Receivable from related parties
Advances
Trade deposits and short term prepayments
Increase/(decrease) in current liabilities:
Trade and other payables
Cash generated from operations
106,032,391
15,672,126
3,376,627
5,719,683
-
13,291
1,960,318
604,750
(9,416,642)
(5,825,415)
(53,000)
12,051,738
118,084,129
-
27,394,079
(4,914,946)
(13,375,325)
(136,021,609)
(126,917,801)
(202,836,704)
(329,754,505)
(211,670,376)
101,353,380
19,004,121
4,659,329
-
2,921,397
(1,701)
882,784
(3,454,835)
(3,067,719)
(886,804)
-
20,056,572
121,409,952
(139,195,443)
(38,684,792)
833,438
(24,328,251)
(7,089,359)
(208,464,407)
(132,593,722)
(341,058,129)
(219,648,177)
31 March 31 March
2016 2015Amount in Rupees
Systems Limited | Interim Financial Report quarter ended 31 March 2016 31
10 Revenue - net
Development and other services
Export
Local
Trading income
Software sale - export
Software sale - local
492,716,576
202,319,504
695,036,080
1,569,750
57,477,335
59,047,085
754,083,165
449,770,824
86,827,772
536,598,596
-
10,008,523
10,008,523
546,607,119
31 March 31 March
2016 2015Amount in Rupees
11 Earnings per share- basic and diluted
Basic earnings per share
Profit for the period attributable to equity
holders of the Parent
Average number of ordinary shares in issue
during the period
Diluted earnings per share
Profit for the period attributable to equity
holders of the Parent
Average number of ordinary shares in issue
during the period
100,459,411
110,680,876
100,459,411
111,923,261
103,927,824
105,893,867
103,927,824
106,778,428
www.systemsltd.com30
Un-auditedUn-audited Un-audited Un-audited
Lahore - Head Office Karachi Dubai
Chamber of Commerce Building,11 Sharae Aiwane Tijarat,Lahore, PakistanT: +92 42 36304825-35F: +92 42 36368857
E-5, Central Commercial Area,Shaheed-e-Millat Road,Karachi, PakistanT: +92 21 34549385-87F: +92 21 34549389
TechVista Systems FZ-LLCOffice 105, Building 11 Dubai Internet City,PO Box 500497, Dubai, UAET: + 9714 369 3525F: +9714 456 3761
Des
ign
ed &
Pro
du
ced
by
AEZAZ HUSSAINChairman
ASIF PEERChief ExecutiveLAHORE
13 Transactions with related parties
Related parties comprises of associated companies, staff retirement fund, directors and key management personnel. Significant transactions with related parties are as follows:
31 March
2016
31 March
2015Amount in Rupees
Visionet Systems Incorporation - USA 387,945,096
Provident fund 9,212,967
Name Nature of transactions
Contributions
Sales
Relationship
Employee benefit plan
Common directorship 310,884,176
11,643,494
14 Date of authorization for issue
15 Corresponding figures
16 General
This condensed interim consolidated financial information was authorized for issue in the Board of Directors meeting held on 27 April 2016.
Corresponding figures have been re-arranged, wherever necessary, for the purpose of comparison. However, no significant re-arrangement have been made.
Figures have been rounded off to the nearest rupee.
www.systemsltd.com32
Un-audited Un-audited
Lahore - Head Office Karachi Dubai
Chamber of Commerce Building,11 Sharae Aiwane Tijarat,Lahore, PakistanT: +92 42 36304825-35F: +92 42 36368857
E-5, Central Commercial Area,Shaheed-e-Millat Road,Karachi, PakistanT: +92 21 34549385-87F: +92 21 34549389
TechVista Systems FZ-LLCOffice 105, Building 11 Dubai Internet City,PO Box 500497, Dubai, UAET: + 9714 369 3525F: +9714 456 3761
Des
ign
ed &
Pro
du
ced
by
AEZAZ HUSSAINChairman
ASIF PEERChief ExecutiveLAHORE
13 Transactions with related parties
Related parties comprises of associated companies, staff retirement fund, directors and key management personnel. Significant transactions with related parties are as follows:
31 March
2016
31 March
2015Amount in Rupees
Visionet Systems Incorporation - USA 387,945,096
Provident fund 9,212,967
Name Nature of transactions
Contributions
Sales
Relationship
Employee benefit plan
Common directorship 310,884,176
11,643,494
14 Date of authorization for issue
15 Corresponding figures
16 General
This condensed interim consolidated financial information was authorized for issue in the Board of Directors meeting held on 27 April 2016.
Corresponding figures have been re-arranged, wherever necessary, for the purpose of comparison. However, no significant re-arrangement have been made.
Figures have been rounded off to the nearest rupee.
www.systemsltd.com32
Un-audited Un-audited