Karachi September 3 2023: Avanceon Limited post lowest ever margin of PKR 4.8 million for the second quarter as revenue drops 28.3 percent primarily because of lower export sales, according to company filing to the exchange.
“The revenue remains suppressed in comparison to last year which is mainly attributed to timing of projects revenue recognition lagged to next quarter. However, the management is confident and projects successful achievement of the corporate plan” states company reports.
Revenue from export of services dropped 39.4 percent to PKR 92 million for the quarter from PKR 153.6 million last year. Company did not receive any revenue against IT enabled back-office support, IT enabled engineering and Management fee from export of sales and services.
Local revenue of the company decreased 23 percent to PKR 254 million for the quarter against PKR 330 million last year.
Moreover, company incurred selling and distribution expense of PKR 971 million for the quarter which includes expected credit losses on long term receivables, trade debts and contract assets amounting to PKR 939.2 million. Consequently, company booked operating loss of PKR 966 million
However, company booked other operating revenue of PKR 1.2 billion primarily originating from exchange gain.
“The profit after tax (PAT) primarily includes the exchange gains (other than operational income) recorded as of the reporting date. This gain can be attributed to the notable increase in the disparity between the US dollar exchange rate, which rose from PKR 210 to PKR 275 per US dollar between December 2022 and June 2023” declared in company report.
This prevailing trend appears to continue, potentially leading to a further widening of this gap till December 2023. This, in turn, may result in additional gains from exchange rate fluctuations on our international revenue receivables by the end of the year.
“Looking ahead, the management foresees a robust trajectory of incoming orders, particularly in the Middle East region. As a result, we anticipate that this year will conclude as one of the most remarkable financial year” says Chief Executive Officer Bakhtiar Hameed Wain.
During the period reported, the company executed the disposal of its long-term investment in Avanceon LP, an associated undertaking in which it held a 26% stake. This strategic move was carried out through its subsidiary, Octopus Digital Inc. consequently, the Company proceeded to withdraw, sell, and transfer its Partnership Interest to Avanceon LP, whereas the Company has been assigned Trademark “Avanceon”, in the territory of United Arab Emirates, with the goodwill associated therewith as part of the transaction. The said transaction has been recognized in the group accounts in line with members approval obtained in Annual General Meeting (AGM) conducted on 29 May 2023
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