Systems Limited to Undergo 5-for-1 Stock Split to Enhance Liquidity

Systems Limited, one of Pakistan’s leading software firms, has announced a proposed 5-for-1 stock split, reducing the face value of its shares from Rs. 10 to Rs. 2 each. The decision was approved by the company’s Board of Directors and aligns with Section 85(1)(c) of the Companies Act, 2017. The subdivision of shares remains subject to shareholder approval. This basically means the stocks will be split in the ratio of 5 shares for every 1 share held. According to Arif Habib Limited (AHL), the total number of ordinary shares will increase from 292.9 million to 1.46 billion. This move aims to enhance investor accessibility and improve market liquidity. Alongside the stock split, SYS announced its financial results for the year ended December 31, 2024. During the year ended 31 December 2024, the Revenues of the Company were Rs 67,473.02 million in 2024 compared to Rs. 53,435.48 million in 2023. Operating profit from the ordinary course of business amounts to Rs. 8,149.95 million showing a growth of 4 percent. The net profit from ordinary business stands at Rs. 7,460.01 million showing a decline of 14 percent from last year mainly due to an exchange loss of Rs. 264.47 million as compared to a significant exchange gain amounting to Rs. 2,257.67 million in FY 2023. In Q4, there is higher one-off trading where margins are lower as compared to services business which has impacted the overall average margins. Moreover, the methodology in recording Expected Credit Losses (ECL) was more aggressive this year which will have a favorable impact in 2025 once these balances are collected. Since FY 2020, the Company has delivered a Compound Annual Growth Rate (CAGR) in revenues of 50 percent. The revenue growth has been mainly driven by IT services. Despite the pressure on margins, the Company is still achieving an EBITDA + Growth rate of 45 percent which is higher than the market average. The company’s scrip at the bourse closed at Rs. 571.72, down 1.44 percent or Rs. 8.33 with 1.015 million shares on Monday.