Karachi August 29 2023: System Limited, the largest IT listed company of Pakistan, booked full impairment of its investment in startups JOMO and Jugnu, according to company filing to the exchange.
Share price of the company drop PKR 34.9 or 7.5 percent after the result announcement at Pakistan Stock Exchange.
During the year ended December 31, 2022, the management had acquired 9 percent stake in the fastest growing fashion e-commerce brand of Pakistan, JOMO, as a strategic investment. However, considering the economic downturn in the country and delay in anticipated funding resulting in deteriorating liquidity and financial performance of the brand, the management believes that the carrying value of investment amounting to PKR 154. 46 million does not truly reflect its fair value. Hence the management, in the interest of prudence has taken requisite impairment of the investment.
The Company was absorbing a share of loss from another strategic investment in Retailistan/Jugnu which had been adversely impacting the margins. Since it has neutralized the cost of investment, no further adverse impact on profitability is expected.
The consolidated revenue grew by 102 percent from Rs. 11,463.24 million to Rs. 23,189.16 million versus SPLY.
Gross profit and operating profit increased 71 percent and 41 percent respectively. Investment in subsidiaries along with inflationary pressures in the domestic market have impacted margins, however, optimization of revenue and costs has positively impacted margins quarter over quarter. Net profit for the period at PKR 5,293.86 million is 79 percent higher than SPLY, including the PKR 2,546.64 million exchange gain. Basic and diluted earnings per share increased by 71 percent and 70 percent respectively in line with profit for the period. Eliminating the currency impact, revenue is up by 39 percent in US dollar terms.