Systems Limited, one of Pakistan’s top software firms, has announced a major development in its stock structure by proposing a 5-for-1 stock split, reducing the face value of its shares from Rs. 10 to Rs. 2 each. This decision, approved by the company’s Board of Directors, aligns with Section 85(1)(c) of the Companies Act, 2017, and is subject to shareholder approval. The stock split means that each existing share will now be divided into five, significantly increasing the total number of shares available in the market. According to Arif Habib Limited (AHL), the total number of ordinary shares will increase from 292.9 million to 1.46 billion, a move aimed at making the stock more accessible to investors and improving market liquidity.
Alongside the stock split, Systems Limited also released its financial results for the year ended December 31, 2024. The company reported revenues of Rs. 67,473.02 million, marking an increase from Rs. 53,435.48 million in 2023. Despite this revenue growth, the net profit from ordinary business declined by 14 percent, standing at Rs. 7,460.01 million, primarily due to an exchange loss of Rs. 264.47 million. This contrasts with the previous year’s significant exchange gain of Rs. 2,257.67 million. The operating profit from the ordinary course of business amounted to Rs. 8,149.95 million, reflecting a modest growth of 4 percent.
In the fourth quarter, the company saw an increase in one-off trading, which typically carries lower margins than its core services business, impacting overall profitability. Additionally, the methodology for recording Expected Credit Losses (ECL) was applied more aggressively this year, which could have a favorable impact in 2025 as these balances are recovered. Since the fiscal year 2020, Systems Limited has maintained an impressive Compound Annual Growth Rate (CAGR) of 50 percent in revenues, largely driven by its IT services segment. Despite the margin pressure, the company continues to achieve an EBITDA + Growth rate of 45 percent, outperforming the market average.
The announcement of the stock split and financial results had an immediate impact on trading activity. Systems Limited’s share price closed at Rs. 571.72 on Monday, marking a decline of 1.44 percent or Rs. 8.33, with 1.015 million shares being traded. The stock split is expected to enhance liquidity and attract more investors in the long run, further solidifying the company’s position as a key player in Pakistan’s technology sector.
