Systems LTD
Systems LTD
Systems LTD
Dear Sir,
This is with reference to the transmission of Annual Report 2021 uploaded via PUCAR on
March 21, 2022. This is to notify that due to the large size of annual report & upload
limit of PUCAR, complete annual report could not be uploaded on March 21, 2022.
Therefore, the re maining part of the annual report is being uploaded.
For high resolution images, you can download full report from the following link:
Yours Sincerely,
Saad Hasan
Company Secretary
CONTENTS
COMPANY PROFILE 02-46 SUSTAINABILITY FRAMEWORK 101-112
COMPANY
INFORMATION
BOARD OF MR. AEZAZ HUSSAIN
Chairman
Non Executive
03
Annual Report 2021
CHIEF
FINANCIAL
OFFICER
MS. ROOHI KHAN
INTERNAL
AUDITORS
UZAIR HAMMAD FAISAL & CO.
TAX
ADVISORS
A.F. FERGUSON & CO
CHARTERED ACCOUTANTS
EXTERNAL
AUDITORS
ERNST & YOUNG FORD RHODES
CHARTERED ACCOUNTANTS LAHORE
LEGAL
ADVISORS
HASSAN & HASAN ADVOCATES
AHMAD & PANSOTA
COMPANY
SECRETARY
MR. SAAD HASAN ASLAM
04
Annual Report 2021
BOARD OF
DIRECTORS
05
Annual Report 2021
MR. AEZAZ
HUSSAIN
CHAIRMAN/NON
EXECUTIVE DIRECTOR
Mr. Aezaz Hussain founded Systems Limited in 1977 as the first software house in Pakistan. His professional acumen
provided the overall direction for turnkey computer projects involving systems design, hardware selection and
installation, and the planning and management of large-scale industrial projects. Within the organization, he has been
responsible for the internal restructuring needed to respond to periodic shifts in the company’s strategy.
Mr. Hussain was also involved in the acquisition of Visionet Systems, Inc. in New Jersey, USA in 1997 and he led that
organization as CEO till 2008. His main role is the development of enterprise strategy. He was a member of Pakistan’s
Information Technology Commission, which advised the President of Pakistan on IT-related matters and national
policies. He has been a member of a number of committees and advisory bodies set up by the government on
Information Technology strategies and on the development of public-sector information systems. He was a founding
member and the founding President of Pakistan Software Houses Association (P@SHA). He served as a member of the
Economic Advisory Board, Government of Pakistan, the Information Technology Commission of Pakistan, and the
Council of Computer Society of Pakistan.
06
Annual Report 2021
Mr. Asif Peer is currently serving as Chief Executive Officer (CEO) and Managing Director (MD) of Systems Limited, the same
company where he began his career as a software developer in 1996, and also serving as a Member of the Board of Directors.
He completed his graduation in Computer Sciences at the National University of Computer and Emerging Sciences (NUCES) in
Karachi. He positioned himself in the lead for a job at Systems Limited soon after graduation. He also completed his MBA in
Marketing and Finance from the Institute of Business Administration (IBA) in Karachi only a year later. He is associated with
Systems Group with more than 25 years in various Senior Management positions executing company growth strategy in line
with the vision and mission.
Under his leadership, the company has won several accolades, including Forbes Asia's Best Under a Billion 2021 and 2022,
Microsoft Business Applications 2021/2022 Inner Circle award, Pakistan Top IT Export Award, Microsoft Country Partner of
the Year, multiple PSEB IT Export Awards since 2016, membership of Microsoft Dynamics President’s Club in 2014 and 2015,
and many more.
MR. ASIF
PEER
CEO & MANAGING DIRECTOR
07
MR. ARSHAD
MASOOD
NON EXECUTIVE DIRECTOR
Mr. Arshad Masood started his career with IBM Corporation in the US and held various professional and managerial positions,
including Sales Manager. He was a consistent top performer and his primary objective was to enhance customer relationships,
protect their revenue base, and identify new revenue opportunities. In 1994, Mr.Arshad Masood founded Visionet Systems, Inc.,
USA, which was acquired by Systems Limited in 1997.
As founder, Mr. Arshad Masood envisioned and executed a strategy to create a general-purpose consulting and solutions
company. As CEO, Mr. Arshad Masood is responsible for long-term strategic planning and providing guidance to operations
across the enterprise. He helped Visionet Systems build a strategy and value proposition for products and services in the
mortgage industry. Mr. Arshad Masood holds a BSc (Engineering) degree from Engineering University, Lahore, an MSc degree
from University of Guelph, Canada, and an MBA degree from Baruch College, New York.
08
Annual Report 2021
Ms. Romana Abdullah is CEO of Highpoint Ventures (Pvt) Ltd and leads Hopscotch, a kids wear brand she co-founded in 2014.
Prior to becoming an entrepreneur, Romana led the strategic planning and transformation functions at MCB Bank and Soneri
Bank. Earlier, Romana spent significant time at The Boston Consulting Group (Management Consulting) and Merrill Lynch
(Investment Banking) in New York, where she focused on strategic, financial, and operational assignments for Fortune 500
financial services and consumer clients.
Romana is also on the board of Karandaaz, a DFID and Gates Foundation funded company that promotes access to capital for
small businesses and digital financial inclusion for individuals in Pakistan. She also mentors young start-ups, incubators, and
accelerators in her free time. Romana has a BSc in Financial Engineering from Princeton University and an MBA from the
Harvard Business School.
MS. ROMANA
ABDULLAH
INDEPENDENT DIRECTOR
09
MR. SHABBAR
ZAIDI
INDEPENDENT DIRECTOR
Mr. Shabbar Zaidi is a graduate with distinction from Hailey college of Commerce , Lahore and a Chartered Accountant. He is
Fellow Member of the Institute of Chartered Accountants of Pakistan (FCA).
Mr. Zaidi has served as the Chairman of Federal Board of Revenue, GOP, for the year 2019 - 2020. Previously, Mr. Zaidi also
served as Caretaker, Ministry of Finance, Board of Revenue, Excise and Taxation, Government of Sindh. In addition, he has
been Territory Senior Partner at AF Ferguson & Co. till 2019. He has also been the Founder Director, Pakistan Institute of
Corporate Governance from 2003-2009.
Mr. Zaidi has been involved in extensive interactions with regulatory authorities on domestic and international levels. In
addition he has also been part of representation to authorities regarding practical issues and suggested measures and
recommendations for reforms.
Further, Mr. Zaidi has also written several books which includes: (a) A journey for clarity – An analysis of some accounting
concepts in taxation matters; (b) Pakistan: Not a failed State; (c) Panama Leaks: A Blessing in disguise – Offshore assets of
Pakistani Citizens; and (d) Rich people Poor Country – The story of fiscal and foreign exchange policies in Pakistan.
10
Annual Report 2021
Mr. Omar Saeed graduated with high honors from Brown University and did his Master’s in Business Administration from
Harvard Business School. Omar has recently been appointed Chief Executive Officer of Service Long March Tyres (Private)
Limited, a Joint Venture between Service Industries Limited and Chaoyang Long March Tyre Co., Ltd. Additionally, Omar serves
as the Chief Executive Officer of Servis Foundation.
Omar has served as the Chief Executive Officer of Service Industries Limited (SIL) from 2011 to 2018. Under his stewardship, SIL
won the highly prestigious Pakistan Stock Exchange Top 25 Companies Award for the years 2011, 2013, 2014 and 2015. Prior to
that, Omar was responsible for building Servis into Pakistan’s largest footwear retailer, with 500 stores and more than PKR 12
Billion in annual revenues. He founded Ovex Technologies (Private) Limited in 2004, which went on to become one of Pakistan’s
leading call center companies before the business was sold in 2011. He has served on the Boards of various private and public
companies in the past. Omar has also been an adjunct faculty member of LUMS where he taught entrepreneurship.
MR. OMAR
SAEED
INDEPENDENT DIRECTOR
01 11
MR. ASIF
JOOMA
INDEPENDENT DIRECTOR
Mr. Asif Jooma started his career in the corporate sector with ICI Pakistan in 1983 and has over 28 years of extensive experience
in senior commercial and leadership roles.
Following early years with ICI Pakistan and subsequently Pakistan PTA Limited, Asif Jooma was appointed Managing Director
of Abbott Laboratories Pakistan Limited in 2007. After serving there for nearly six years, he was appointed Chief Executive of
ICI Pakistan Limited in February 2013. A Bachelor of Arts in Developmental Economics from Boston University, Mr. Asif has
previously served as President, American Business Council (ABC), President of Overseas Investors Chamber of Commerce &
Industry (OICCI) and Chairman of Pharma Bureau. He also serves as a Director on NIB Bank Limited, Systems Limited and Board
of Investment, Government of Pakistan.
12
Annual Report 2021
OUR
LEADERSHIP
These are the seasoned professionals and industry veterans that lead our organization. Systems Limited is driven by the
profound experience and business acumen that these gifted individuals share with us every day.
Asif Peer
Cheif Executive Officer
Zahid Mahmood Janjua Rao Hamid Khan Imran Soofi Muhammad Mairaj
GM Qatar GM Systems Arabia Head of Business Development - Telco Head of Business Development
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Annual Report 2021
Mr. Asif Peer is currently serving as Chief Executive Officer (CEO) and Managing Director
(MD) of Systems Limited, the same company where he began his career as a software
developer in 1996, and also serving as a Member of the Board of Directors.
Under his leadership, the company has won several accolades, including Forbes Asia's
ASIF Best Under a Billion 2021 and 2022, Microsoft Business Applications 2021/2022 Inner
Circle award, Pakistan Top IT Export Award, Microsoft Country Partner of the Year,
PEER multiple PSEB IT Export Awards since 2016, membership of Microsoft Dynamics
CHIEF EXECUTIVE
OFFICER President’s Club in 2014 and 2015, and many more.
Ms. Roohi Khan is currently part of the Business Leadership team and is
responsible for the overall financial health and performance of the group.
ROOHI
KHAN
CHIEF FINANCIAL
OFFICER
14
Annual Report 2021
Ms. Toima Asghar has been associated with the HR fraternity for
approximately two decades and leading the human resource function in large
organizations operating in banking, wholesale, broadband, academia, and IT
industries.
TOIMA
ASGHAR
CHIEF HUMAN
RESOURCE
OFFICER
ASIF
AKRAM
CHIEF OPERATING
OFFICER
15
Annual Report 2021
Over the years, Mr. Zahid has managed multi-million dollar projects, portfolios,
and teams. He has a strong technical and managerial background with
senior-level international (US) experience and cross-sector exposure. Good
strategic vision and ability to implement sophisticated plans with a proven
record of accomplishments explicitly supporting business needs are the
hallmarks of Mr. Zahid’s professional repertoire.
ZAHID
MAHMOOD
JANJUA
GM QATAR
KHURRAM
MAJEED
GM TECHVISTA
SYSTEMS,
DUBAI
16
Annual Report 2021
Mr. Rao Hamid has served in the IT industry for over two decades with
multinational organizations.
RAO
HAMID
KHAN
GM
SYSTEMS ARABIA
Mr. Imran Soofi leads the Telecom business at Systems Limited. By helping our
Telco clients globally in solving their business challenges through technology
solutions that have a high ROI, optimal TCO and efficient TAT, he is responsible
for strategy, revenue and growth of our Telco clients, markets and offerings to
ensure long term, profitable and sustainable business development.
IMRAN
SOOFI
HEAD OF BUSINESS
DEVELOPMENT
TELCO
17
Annual Report 2021
Through his leadership and experience over two decades, he has played a
vital role in transforming the industry specially in BFSI.
M. MAIRAJ
HEAD OF BUSINESS
DEVELOPMENT
18
CHAIRMAN’S
MESSAGE
Creating an organization designed for perpetuity
Dear Shareholders,
I am delighted to present the 2021 annual report. The results exhibit that your company has successfully
executed its strategy in these testing times of Covid. Fortunately, despite the difficult economic conditions, the
demand for IT services has remained robust and your company has taken advantage of this opportunity. We
have grown in revenue, profitability and expanded geographically.
The Covid-19 pandemic has helped strengthen focus on our human resource, and we have dramatically
improved our engagement with employee needs for safety and health and facilitating a hybrid work
environment. It is heartening to note that despite the challenges of working from home our employees have
maintained their productivity.
I am proud that Systems has led with “people first” approach and created employment opportunities as well
as career advancement for our resources. In 2021 we have added a net of over 1800 bright minds to the
company. Most were selected and successfully onboarded virtually and have become productive.
Using the now established work from home opportunity we are working towards improving our gender ratio
by offering work from home on full time or part time basis to women.
Your company has grown manifold in the last 5 years and plans to continue this growth level. To do this the
management structure has been strengthened. This will allow the company to grow both in revenue and
profitability across geographies.
Most importantly the company has maintained our tradition of excellent engineering quality and delivery
management, as witnessed by the repeat business and referrals we get from our clients and partners. Client
retention has been engine for growth as on average over 80% of our new business every year continues to
come from existing clients who are also our best references.
We remain committed to growing our employee ownership by supporting a robust stock option plan. This is
for creating an organization designed for perpetuity.
Your company has won several international recognitions both for skill and governance, and I congratulate the
management and all members of the Systems family for this excellent performance and wish them and their
families a healthy and prosperous 2022.
I am grateful for the able guidance that we have received from our Board and thank them for their commitment
and support of the company.
Finally, we thank all our customers worldwide who have given us the opportunity to service their IT needs and
continue to do so.
Aezaz Hussain
19
CEO’S
MESSAGE
An exceptional year of transformation,
achievements and exciting new opportunities
I am thankful to all my colleagues, board members, clients, partners, and shareholders for their trust in the company and
leadership. I am pleased to present to you a glimpse of Systems during this crucial and transformative time.
This was a hypergrowth year and the Company has more than doubled the revenue and profitability over two years. This
could not have been possible without our leadership and following our core values - Courage, Commitment and Customer
Centricity. We focused on our core, and we delivered value to our customers. Their recognition is evident from recurring and
numerous business opportunities. So, I want to thank our customers for patronage.
Systems’ full-year 2021 revenue was Rs 15.3 billion, a year-over-year growth of 55%, operating margin was 21%. Diluted
EPS was Rs 31.96, and free cash flow was Rs 1.4 billion. Systems experienced strong growth from all regions and returned
approximately 20% of its earnings to shareholders through share dividend payments.
Systems’ performance and achievements received recognition not just locally but globally, by receiving “Forbes Asia Best
Under a billion” award second year in a row. The Company also received an award in the “Outstanding Company” category
from Asia Money. Microsoft recognized Systems with their InnerCircle award as one of the top Global Technology Partners
2020/2021 for Microsoft Business Application. The Company also received recognition locally from Pakistan Software
Houses Association for IT and ITeS (P@SHA), Lahore Chambers of Commerce and Industry (LCCI) and Pakistan Stock
Exchange (PSX)
We made significant progress in our effort to strengthen the company’s position for accelerated revenue growth. We are
constantly looking for avenues for our growth and we will continue to give value to our customers, be their trusted
partners and problem solvers. We intensified our client-centricity, refined our strategy, developed differentiated
capabilities, strategic partnerships, robust delivery, along with disciplined execution and established a itemized cost
structure that give us the capability to deliver transformative outcomes for all our stakeholders.
We have complemented our talented teams with the hiring of resources with diverse skillset and experience as well as
highly skilled leaders which has lifted the engagement levels of our associates to greater heights. Systems is also
nurturing employee ownership in the company which is going to strengthen our leadership for future growth. We are
working on many initiatives to make sure that we have ample supply to fulfill the demand that is being created. This has
been a transformational year for the IT Industry in Pakistan. We are proud to say that Systems has led the way and created
the vibrance in the ecosystem for generating employment by being the leading IT exporter two years in a row. We are
working aggressively in upskilling and reskilling because we believe there is a lot of potential. Going forward, the Company
has laser focus on customers and technology which is in demand. We are aggressively focusing on the growth journey with
this diversification in geographies, technologies and markets with our startups.
This year we also made a strategic investment in Salesflo and Jugnu, the brands owned by Retailistan. This acquisition will
open broader avenues and create greater benefit from the revolution taking place in the retail universe of the country and
the potential it offers.
As I look ahead, I am more optimistic than ever of the enormous opportunity ahead of us. Technology, especially digital,
data and cloud, continue to be at the center of change for large enterprises globally. We believe we are in a new phase of
growth propelled by increased commercial momentum, a portfolio focused on faster-growing market and geographic
segments, a stronger partner ecosystem, a more robust demand environment, a better cost structure and enhanced
government support for the IT sector hyper growth. We are resolved to take Systems as regional industry leader.
Thank you for your support, trust and guidance. Stay Safe and Healthy.
Asif Peer
Chief Executive Officer
20
Annual Report 2021
DIRECTOR’S
REPORT
TO SHARE HOLDERS
THE DIRECTORS OF THE COMPANY TAKE PLEASURE IN PRESENTING
THE ANNUAL REPORT OF YOUR COMPANY, TOGETHER WITH THE
UNCONSOLIDATED AND CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021.
GROUP OVERVIEW:
The Company is a public limited company incorporated in Pakistan under the Companies Act, 2017, and listed on the Pakistan Stock
Exchange. The Company was incorporated in 1977 and is principally engaged in the business of software development, trading of
software and business process outsourcing services.
The Group comprises of Systems Limited (Holding Company) and its subsidiaries – TechVista Systems FZ LLC, SUS (Private) Limited
(incorporated for Baluchistan Land record project), Systems Arabia LLC, Systems Venture (Private) Ltd and an associated company -
E-Processing Systems B.V.
TechVista Systems FZ LLC (TVS), a limited liability Company incorporated in Dubai Technology and Media Free Zone Authority, is
100% owned subsidiary of Systems Limited. TVS is engaged in the business of developing software and providing ancillary services.
Systems Arabia, a limited liability Company incorporated in Saudia Arabia, is 100% owned subsidiary of Systems Limited. Systems
Arabia is engaged in the business of developing software and providing ancilliary services.
Systems Ventures (Private) Limited (SV), a private limited company registered under Companies Act 2017, is a 99.98% owned
subsidiary of Systems Limited. Systems Venture is established in Pakistan to invest in new ventures, start ups and incubate new
ideas. During the year, SV invested Rs. 468 million in Retailistan (Private) Limited acquiring a 20% stake.
Retailistan provides a leading Sales and Distribution Platform called SalesFlo that is trusted by a number of large FMCG
manufacturers. It’s a SaaS B2B platform that allows stores to place orders directly to manufacturers/wholesalers/authorized
distributors on the platform. The platform covers Distribution Management System, Digital Merchandising and Instore Marketing
tool, and Data science solutions (Data Analytics). Currently used by around 15,000 distributor agents through FMCGs. Retailistan has
a wholly owned subsidiary called Jugnu, which is an online marketplace accessible through a mobile app to enable retailers to buy a
variety of products. Jugnu buys from manufacturers and distributors, stores in their warehouses and deliver next day based on
orders received from retailers. So it’s a B2B E-commerce play.
E-Processing Systems B.V. (EPS), a private limited Company registered in Netherlands, is a 44.60% owned associate of Systems
Limited. During the year, the shareholders of E-Processing Systems (Private) Limited, under Paragraph 13B of Chapter 20 of Foreign
Exchange Manual, applied to the State Bank of Pakistan (SBP) to incorporate a holding company outside Pakistan. Accordingly, a
company named E-Processing Systems B.V. was incorporated in Netherlands and Sytems Limited swapped / mirrored its shares with
179,507 fully paid ordinary shares of equal value at USD 0.01/- each, representing 44.60% shares in E-Processing Systems B.V. EPS
is currently engaged in the business of purchase and sale of teleco’s airtime and related services. The product of the Company is
called OneLoad. The Company is in the process of launching OneZap under E-Money license from State Bank of Pakistan (SBP).
The financial statements of the Company and the Group truly reflect the state of Company’s affairs and fair review of their business.
21
Annual Report 2021
ACTIVITIES:
The Company’s revenue comes primarily from Digital Services, Managed Services, Consulting Services, IT outsourcing and
Business Process Outsourcing/Contact Center. The Company generates 80% of it’s revenue from export of Services to various
geographies such as North America, Europe and Middle East and about 20% from domestic market. The Company is well
diverisified into various business verticals such as Telco, Retail, CPG, Pharma, Banking and Public sector. Moreover, the service
offerings are also diversified in the form of Data Integrations, Modern Dev App, Cloud and Digital Services, as well as Business
Process Outsourcing (BPO) and Omni Channel Contact Center.
UNCONSOLIDATED:
The Company’s financial results for FY21 have maintained a strong trajectory. Operating revenues for the year in local currency
were Rs. 11,903.5 million showing an above industry growth of 58% over the previous year. Profit after tax for the year was Rs.
3,320.7 million showing a growth of 51%. Gross profit and operating profit increased by 43% and 38% respectively. Since FY17, the
Company has delivered a Compounded Annual Growth Rate (CAGR) in revenues of 42%. The revenue growth has been mainly driven
by IT services and profitability growth has been driven by demand and growth across all geographies and all verticals. Revenue in
USD also showed a growth of 57% and profit growth of 50%.
The Company derives 80% of its revenues from Digital services and 20% through Managed services. Successful delivery during the
pandemic has strengthened the engagement with clients.
The Company has developed a design studio and engineering garage to provide an engaging customer experience by combining the
best of technology and human interaction, in a personal , instant and easy manner.
Unconsolidated
2,045
7,514
5,349
1,089
3,761
2,911 636
374
2017 2018 2019 2020 2021 2017 2018 2019 2020 2021
22
Annual Report 2021
16.05
2,194
1,364 11.05
1,009
8.19
473 4.24
2017 2018 2019 2020 2021 2017 2018 2019 2020 2021
CONSOLIDATED:
During year ended 31 December 2021, consolidated revenue grew by 55% from Rs. 9,876.8 million to Rs. 15,304.0 million. Gross
profit and operating profit increased by 53% and 50% respectively. Net profit for the period increased by 103% from Rs. 2,164.3
million to Rs. 4,379.6 million which included a one time gain of RS 816.2 million arising from the conversion of EP Systems BV from
a subsidiary to an associate. Basic and diluted earnings per share increased by 100% over the same period last year. Revenue growth
in USD is 54% and operating profit is 50%.
Growth in revenue is contributed by both the Company and its subsidiaries. Majority of the work from our group companies has
moved from onsite to offshore.
Consolidated
* This one-time gain has been recognized in the consolidated financial statements arising from conversion of E-Processing Systems
B.V. from a subsidiary to associate on account of dilution of voting rights resulting from investment of Gates Foundation in
irredeembable preference shares.
** The share of loss is coming from Retailistan and proportionate share of loss from EP Systems B.V..
7,536
1,330
5,324
3,832 727
470
2017 2018 2019 2020 2021 2017 2018 2019 2020 2021
23
Annual Report 2021
16.17
2,164
1,568 12.86
1,061
561 8.72
5.11
2017 2018 2019 2020 2021 2017 2018 2019 2020 2021
7%
19% 15% 19%
10%
32%
16% 7%
7%
7% 42%
19%
Technology BFS Services Health Care/Pharma Public Sector North America Middle East
Telco BPO Others Retail & CPG Pakistan Europe
10% 19%
14%
76% 81%
24
Annual Report 2021
19% 20%
42%
32%
7% 80%
The segment analysis shows a strong growth across all four segments, with Middle East region taking the lead, followed by Pakistan and
North America. Export sales of the Company are approximately 80% of total sales, with the Company’s target being to further increase the
export component going forward. Diversification into new regions and new markets will support this objective as the company is actively
looking to expand in newer areas.
During the year, the Company made significant progress in strengthening it’s position for accelerated revenue growth by intensifying client
centricity, refined business strategy and establishing an itemized cost structure that enabled the Company to make further investments in
growth.
Revenue from contracts with customers 6,423,003,195 4,367,846,372 1,047,044,453 825,305,235 4,999,529,027 2,699,811,070 2,834,460,892 1,983,865,033 15,304,037,567 9,876,827,710
Cost of revenue (3,896,570,096) (2,392,470,816) (658,775,716) (498,779,658) (3,479,703,994) (2,218,084,612) (2,279,316,044) (1,510,305,117) (10,314,365,850) (6,619,640,203)
Gross profit 2,526,433,099 1,975,375,556 388,268,737 326,525,577 1,519,825,033 481,726,458 555,144,848 473,559,916 4,989,671,717 3,257,187,507
Distribution expenses (22,951,806) (17,406,721) (3,642,228) (4,024,698) (6,857,599) (7,462,548) (352,147,834) (172,130,762) (385,600,533) (201,024,729)
Administrative expenses (702,630,379) (324,640,784) (85,681,292) (66,340,926) (500,666,597) (218,841,511) (133,084,344) (112,487,335) (1,426,803,958) (722,310,556)
(725,582,185) (342,047,505) (94,065,932) (70,365,624) (507,524,196) (226,304,059) (485,232,178) (284,618,097) (1,812,404,491) (923,335,285)
Profit / (loss) before taxation and
unallocated income and expenses 1,800,850,914 1,633,328,051 294,202,805 256,159,953 1,012,300,837 255,422,399 69,912,670 188,941,819 3,177,267,226 2,333,852,222
25
Annual Report 2021
The North American market has been very conducive for the technological skills that the Company has to offer on a global basis and
all three service offerings of digital, data and cloud have grown significantly in the market. The Company has invested and created
business solutions that helped the group in acquiring new customers during the year and the Company is confident that these new
customers will play an anchor role in future recurring revenue for the group.
In Europe, the group has started UK operations in the second quarter of the year under review. The Group was able to secure anchor
customers with revenue accruing in the second half of 2021. The Company believes that these customers will continue to generate
revenue for the company in 2022 and will be critical for it’s future growth and strategy. However, the Company has been cchallenged
in the DACH region where due to covid, extensive travel restrictions were imposed for most of the year and travel for business was
significantly impacted which resultantly impacted business development and project execution in the region. Moreover, there is a
serious resoure scarcity in the DACH region. Most companies are language sensitive and the Company was not able to onboard as
many local employees as required.
3,432 1,108
MIDDLE EAST
In the Middle Eastern region, the Company experienced a major growth in business through improvement in quality of revenue by
increasing offshoring mix over previous years which has resulted in higher profits for the group. The Company also invested in
various relevant offerings for the market which helped opening more accounts.
During the year, TVS earned a revenue of AED 101.1 million (2020: AED 58.1 million) and profit of AED 11.1 million (2020: AED 1.8
million) with 18% GP and 11% NP margins.
ME - REVENUE ME - PROFIT
(PKR MILLION) (PKR MILLION)
5,000 1,012
2,337 2,700
274
255
26
Annual Report 2021
PAKISTAN
The Company has been restrategizing its domestic business as a consequence of which in 2021, it was able to reposition the
customer base to private sector large scale enterprises from public sector and SMEs. The Company focused on securing longterm
recurring managed service contracts with Teleco and Financial institutions. The Company has significantly reduced BPO in the
domestic market.
126
1,626
1,452
E-Processing Systems B.V. (EPS) has shown consistent growth with total throughput of Rs. 17.9 billion in transaction value for the
year as compared to Rs. 12.5 billion in the previous year. During the year, EPS built eight regional sales hubs around the country to
effectively target new retail signups and scale up its distribution reach.
17,922
11,347
9,677
5,581
2,233
27
Annual Report 2021
EP SYSTEMS 48,542
ACTIVE RETAILERS
38,077
31,879
21,000
9,859
For the year 2021, the Directors recommend a payment of final cash dividend @ Rs. 5 per share (2020: Rs. 3.5 per share) and a
bonus issue of 100% (2020:10%).
The following appropriation on account of dividend was made during the year:
Basic and diluted earnings per share for the year ended 31 December 2021 for the Company are Rs. 24.12 and Rs. 23.89 (31 December
2021: Rs. 16.05 and Rs. 15.85) per share. Similarly, the basic and diluted earnings per share for the Group are Rs 32.41 and Rs. 32.10 (31
December 2020: Rs.16.17 and Rs. 15.96) per share.
PEOPLE’S UPDATE
The Company invested extensively in hiring, training and development of human resource during the year. Net ~ 1826 employees
were onboarded during the year. Company’s attrition rate for IT employees was 21%, Under the annual Management Trainee
Program, 375 fresh graduates were hired during the year.
The Company partnered with Rausing Executive Development Center (REDC), LUMS to establish the SysVisTech Leadership
University. This is a customized fast-track intervention designed for the future leaders within the organization, where 77 future
leaders have graduated in 3 cohorts. The Company launched Coursera and Cloud Guru to enable sustainable digital learning for the
resources. The Company also partnered with other leading institutes in academia like Edge Training Program, Parwaaz PSDF to
upskill future talent.
The Company advanced employee recognition and engagement by facilitating multiple events, interventions and platforms to raise
the level of engagement with employees. The Company also launched Re-ignite program to offer flexible programs for female
professionals who were forced to take career breaks due to their personal circumstances, to enable and empower them to resume
careers.
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2021
5,320
2020
3,548
2019
3,360
INFRASTRUCTURE
The Company is opening offices in cities where supply is concentrated so that people are not forced to relocate and are able to work
out of their base locations. In line with this, Multan and Faisalabad offices are operational. Next year, the Company is targeting
Peshawar and Hyderabad.
New office has been leased in Karachi which will accommodate additional 900 by Q2 of 2022.
In Lahore office, BPO is relocating to a new facility in early next year. That will create additional capacity for about 1,000 IT resources
in the head office building. Moreover, the Company will start the construction of rear tower in Lahore in the second quarter of 2022
and which will create additional capacity for 600-650 resources. This tower will have a big auditorium as well to conduct inhouse
trainings and meeting sessions. The new tower is expected to be operational by early of 2023.
Moreover, the Company will be considering building a parking tower in the current Lahore facility to accommodate about 400+
additional cars.
The Company has rented another office space in Islamabad to accommodate additional 300 resources.
The Company has also obtained a license for acquisition of 4 acres of land in Islamabad Special Technology Zone that has been
allocated by the Government.
The Company continues to take ownership in building, supporting and elevating the community through several initiatives directed
in three directions, strategically aligned with organization’s sustainable objectives; Education, Health & Climate Change. The
company has spent about Rs. 35m in this regard in the financial year.
Education, skill upliftment and youth development remains at the core of the Company’s CSR strategy. The aim is to develop the
future workforce and improve the literacy by partnering with several institutes for trainings, education, certifications & workshops.
The overall status of health and medical services available to the community is among top corporate social responsibilities. The
Company continues to support, aid and help facilitation of healthcare conveniences to the society through collaborations, donations
and sponsorships for the cause.
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The Company enhanced the ESG commitment by outlining Systems ESG Vison 2030 to increase the focus in shaping and sharing
solutions that serve the business and communities. The Company is compliant with UN sustainability goals and has mapped against
the key pricipals. The Company believes that the happiest people make the happiest customers and people being the integral part of
the Company’s business, Company is investing significantly in the development and training of the employees and in providing a
comfortable work environment for the employees. To protect the planet for future generations, the Company takes Climate Change
as a global challenge and aims to support in sustainable development, utilization of resources and awareness.
The Company has taken the following key steps to on the sustainability pillars:
Governance
• Independent Board and its committees promoting GRC
• Responsible tax practices
• Code of conduct/Business ethics
• Cyber security and data privacy
With the changing market dynamics, the Company is dealing with the challenge of having to reinvent the core offerings, processes
and systems rapidly and position themselves as ‘digitally enabled enterprise’. The current market conditions forced the Company to
enhance the competitve edge and optimize cost structures, through implementing / innovating it’s digital offering and presence. The
Company’s strategy is to help the customers transform their digital landscape by helping transform their offerings and operations
as they ideate, plan and execute on their journey to a digital future. This will enable them to advise and help the customers as they
tackle these market conditions, especially in the areas of digitization of processes, migration to cloud-based technologies, workplace
transformation, business model transformation, data analytics, enhanced cybersecurity controls and cost structure optimization in IT.
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There is a global resource scarity for the key technologies and domains for the verticals that the Company works in and the Company
is heavily focusing in investing in human resource by designing various programs to train, upskill and reskill it’s existing workforce
into modern technology stack which enables them to design better customer experiences and develop enterprise class products and
apps. To achieve this, the Company has partnered with various academic institutions. Vocational training programs have been setup
in partnership with many leading training institutions focusing on digital training to tackle the future resource requirements so that
the Company can scale the supply capbabilities to match the upsurge in the global demand that has been created during the
pandemic. Considering rapid and robust growth in the Middle East region and the need to invest in the language agnostic skillset, the
Company is planning to open supply center in Egypt. This will not only give a resource pool but addresses the issue of the regional
language for growth of markets. In addition to this, the Company is forming various channels where they can recruit resources from
anywhere in the world through the subsidiary in UAE.
• Customer centiricty in order to enhance the customer experience, the Company has changed the structure which will be market
focussed, from delivery to sales. This will enable the Company to cross sell and upsell and enhance recurring revenue share from
existing customers.
• Acquisition of new customers through new and improved solution offerings. The Company is strengthening its relationships
with principals and partners.
• Global expansion: Targeting to strengthen the recently opened KSA market as the Company expects business opportunities in
line with KSA Digital Vision 2030. Moreover, to expand in Asia Pacific region, the Company is considering to open a regionl sales
office in Singapore. Similarly for the African region, feasibility is being carried out for a regional office in South Africa. The Company
believes this will provide future revenue streams in the verticals the Company specializes in.
• Inorganic growth: with the current IT friendly policies recently announced by the Government of Pakistan including 100%
retention of export remittances and investment directly through Authorised Dealers, the Company is positive that it opens up the
opportunities for local and global M&As.
Looking ahead to the year 2022 and beyond, the Company is committed to strengthening the capabilities to accelerate customers’
digital transformation journeys and empower their companies to flourish in the digital economy. Company’s Digital Transformation
Studio (DTS) is a centerpiece of that commitment, bringing together a proprietary platform of tools, assets and expertise in ways that
significantly increase delivery speed and overall efficiency, while significantly reducing the costs of what are now considered
business-critical transformation projects. DTS has proven to be a distinct advantage during these pandemic times, as more and more
customers are prioritizing digital transformation speed while seeking lower cost means of achieving it.
2022 will also bring a continued expansion of Company’s presence in high-growth sectors, including High-Tech and Healthcare, and
increased investments in the domain expertise and targeted sales and marketing programs to drive both current account and new
account opportunities. The Company believes that the integrated plans will enable the Company to grow the revenue in these
attractive industries faster than the company average, while simultaneously reducing the revenue concentration in the Banking and
Financial Services industry, Telco and Retail.
For EP Systems, the endorsement of innovation and scalability of the company was confirmed by recent investments. The company
has received an equity investment from the Bill & Melinda Gates Foundation through its parent company (EPS-BV). This is the first
ever investment by Strategic Investment Fund of Gates Foundation in a company with its primary operations in Pakistan. It was
followed by the first ever commercial investment by International Finance Corporation (IFC), a member of the World Bank Group, in
2020. EPS is engaged for Pilot readiness for its new e-wallet business under the State Bank of Pakistan’s Electronic Money
Institution (EMI) Regulations which will enable the Company to issue e-money for digital payments by taking deposits from retailers
and customers. EPS is making continuous efforts to enable retailers to effectively serve mass market.
Following are some of the risk factors that may impact our business and financial results:
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Annual Report 2021
• Political risk – The current global political environment can impact businesses if the situation gets adverse.
• Risk of Travel advisory – Investors and buyers will not be able to travel to the country in case of any travel advisory.
Though offshoring has increased in the past couple of years, however business travel is still required to onsite centers and
travel restrictions will impact business since resources will not be able to visit foreign clients.
• Pricing Pressures – In case of demand compression, over supply of capacity could result in a price war, potentially
effecting profit margins
CHANGES DURING FINANCIAL YEAR CONCERNING THE NATURE OF THE BUSINESS OF THE
COMPANY OR OF ITS SUBSIDIARIES AND JOINT OPERATION
There has been no change in the nature of business of the company or its subsidiaries. The Company has made new investment in
Retailistan through Systems Ventures. The Company has also incorporated an entity in Saudi Arabia. EP Pakistan incorporated an
entity in Netherlands in line with a circular approved by SBP to mirror shareholding in a foreign entity to attract foreign investment.
MAIN TRENDS AND FACTORS LIKELY TO AFFECT THE FUTURE DEVELOPMENT, PERFORMANCE
AND POSITION OF THE COMPANY BUSINESS
Technology is rapidly changing and demands are on the higher side for disruptive technologies. In order to grow at a faster pace, the
Company has to scale up and nurture talent. Scaling into relevant technologies will have a significant impact on future performance
and position of the Company’s business.
The management of Systems Limited as a Group is responsible for the establishment and maintenance of the Company’s and the
Group’s system of internal control in order to identify and manage risks faced by the Group. The system provides reasonable, though
not absolute, assurance that:
assets are safeguarded against unauthorized use or disposition;
proper and reliable accounting records are available for use within the business;
adequate control mechanisms have been established within the operational businesses and
Internal financial controls deployed within the Company have been satisfactory throughout the year.
As required by the Code of Corporate Governance, the directors are pleased to confirm that:
The financial statements prepared by the management of the Company and the Group, present its state of affairs fairly, the result of its
operations, cash flows and changes in equity
Proper books of accounts of the Company and each of its subsidiaries have been maintained
Appropriately accounting policies have been consistently applied in the preparation of financial statements and accounting estimates
are based on reasonable and prudent judgment
International Financial Reporting Standards, as applicable in Pakistan, have been followed in the preparation of financial statements and
there have been no departures therefrom
The system of internal control is sound in design and has been effectively implemented and monitored
There are no significant doubts about the Company’s ability along with the subsidiaries to continue as a going concern
There has been no material departure from the best practices of corporate governance as detailed in listing regulations
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BOARD OF DIRECTORS
The board comprises of seven (7) directors with one (1) female director. During the year, five (5) board meetings were held.
The names of directors and number of meetings attended by each director is as follows:
Board of Directors
Name of Director Category Meetings Attended
For TechVista Systems FZ LLC, the directors of the Company are Mr. Asif Peer (CEO & Director), Mr. Arshad Masood, Mr. Aezaz
Hussain, and Mr. Jawad Ikram Ullah Khan.
For E-Processing Systems (Private) Limited, the directors of the company are – Mr. Aezaz Hussain, Chairman, Mr. Asif Peer and Mr.
Muhammad Yar Hiraj.
For Systems Ventures (Pvt) Limited, the directors of the company are Mr. Asif Peer, Mr. Aezaz Hussain, Mr. Jawad Ikram Ullah khan
and Mr. Arshad Masood.
For SUS (Pvt) Limited, the directors of the company are Mr. Asif Peer and Mr. Asif Naeem.
BOARD COMMITTEES
The Board of Directors has constituted Audit Committee and Human Resource & Compensation Committee.
The names of members of Board Committees and number of meetings attended by each member is as follows:
Audit Committee:
Audit Committee
Name of Member Meetings Attended
HRC Committee
Name of Member Meetings Attended
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Annual Report 2021
All non-executive and independent directors of the Company are entitled to remuneration for attending Board and Committee
meetings along with reimbursement of expenses incurred in connection with these meetings.
The remuneration levels are commensurate with the level of responsibility and expertise, to attract and retain experienced and
wellqualified directors encouraging value creation for Systems Limited; while ensuring that the compensation packages are not at a
level that could be perceived to compromise the independence of non-executive directors. No director is involved in the determination
of their own remuneration package.
A director may be paid such extra remuneration as the Board may determine, for serving on any Committee or devoting special
attention to the business of the Company or performance of services which, in the opinion of the Board, are outside the scope of
statutory duties of a director.
Key operating and financial data for the last six years is annexed with the annual report.
The value of provident fund operated by the Company, based on the un-audited accounts of the fund as on 31 December 2021
amounts to Rs 931.6 million (31 December 2020: PKR 693.6 million)
PATTERN OF SHAREHOLDING
The Pattern of Shareholding as at 31 December 2021 is annexed with the annual report. The shareholding pattern of TechVista
Systems FZ LLC, Systems Venture (Pvt) Ltd and SUS (Pvt) Ltd as at 31 December 2021 is enclosed, please refer to page
The Company’s Directors, executives and their spouses and minor children did not trade in the Company’s shares during the year
ended 31 December 2021 other than those disclosed on Pakistan Stock Exchange.
In compliance with the Code of Corporate Governance and applicable laws and regulations, details of all related party transactions
are placed before the Audit Committee and upon recommendation of the Audit Committee, the same are placed before the Board for
review and approval. All the directors are required to disclose their interest where such transactions are of interest to them.
The financial statements were duly endorsed by CEO and CFO before approval of the Board. Quarterly financial statements of the
Company, along with consolidated financial statements of the Group, were approved, published and circulated to shareholders within
one month of the closing date, while Half yearly financial statements of the Company and consolidated financial statements of the
Group were reviewed by the external auditors, approved by the Board, published and circulated to shareholders within two months
of the closing date.
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Annual Report 2021
AUDITORS
EY Ford Rhodes has completed its tenure for the year 2021 and retire at the conclusion of the 45th Annual General Meeting.The
Board has recommended the appointment of A.F Fergusan & Co. Chartered Accountants as the external auditors for the financial year
ending 31 December 2022.
Consolidated financial statements of the Company includes the following subsidiaries and associates:
• EP Systems B.V.
• EP Systems (Pvt) Ltd
• Tech Vista Systems FZ LLC
• Systems Ventures (Pvt) Ltd
• SUS (Pvt) Ltd
• Retailistan (Pvt) Ltd
• Systems Arabia for Information Technology
SUBSEQUENT EVENTS
No material changes or commitments affecting the financial position of the Company and the Group have occurred between the end
of the financial year and the date of this report except as disclosed in this report, if any.
ACKNOWLEDGEMENT
The Board takes this opportunity to thank the Company’s and its subsidiaries’ valued customers, bankers and other stakeholders
for their corporation and support. The Board greatly appreciates hard work and dedication of the management and all employees of
the Group.
ASIF PEER
CHIEF EXECUTIVE OFFICER
AEZAZ HUSSAIN
CHAIRMAN
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(8,131,032)
653,030,134
816,226,748
(83,384,503)
(121,404,658)
1,256,336,689
4,433,603,915
(53,944,635)
4,379,659,280
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4,379.6
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46
ABOUT
US
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Annual Report 2021
45+ YEARS,
Systems Limited, Pakistan’s leading global IT services provider, has empowered customers to achieve digital-led business
transformation in every industry, creating long-lasting value across a wide spectrum. With no plans of slowing down, in
ways optimized for today’s challenging digital economy. Our consulting, technology, outsourcing, and next-generation
digital services empowered clients in 4 continents to create and execute strategies for complete transformation.
We tailor our unique strategy and broad expertise to impact leading enterprises channel a personalized experience to
maintaining operations in the US, UK, EU, and the Middle East, we recently expanded our global footprint to KSA and have
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VISION
As an institution, Systems Limited is committed to being the leader of technology-enabled services in region through our
thought leadership, sustained service delivery excellence, customer-focused employees, and long-standing relationships
MISSION
Systems Limited is dedicated to providing the highest quality business solutions and IT and IT-enabled services to our
clients and business partners. We aim to be number-one service provider through our battle-tested methodologies,
optimized processes, future-proof frameworks, and customer-focused resources.
TRANSCENDING GEOGRAPHIES*
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OUR JOURNEY
OF MANY FIRSTS
Launched operations
software of Pakistan in the US. Worked apparel & soft goods
industry. Grew customer
base in the US.
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FOUNDATION
OF INNOVATION
WITH OUR CORE
CAPABILITIES
area of expertise and consistently deliver business value in a few key aspects.
CONSULTING
We help you create a clear digital strategy that optimizes your path to comprehensive, technology-led business
success.
IMPLEMENTATION
Our expertise spans all major technologies and business functions, empowering us to deliver comprehensive
business solutions.
MANAGED SERVICES
end-to-end support.
53
AWARDS &
RECOGNITION
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PARTNERSHIPS
& ALLIANCES
01 47
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WHAT WE DO
56
TECHNOLOGY OFFERINGS
DIGITAL TRANSFORMATION CLOUD
Integration frameworks
Robust information architecture and
real-time insights DATA
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OPENED DOORS
TO INNOVATION
has the right tools and technology at its disposal to bring its breakthrough ideas to fruition. What
you see today is the result of multiple brainstorming sessions, meticulous planning, and tireless
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LOOKING
AHEAD
ENERGIZED FOR
A PURPOSEFUL
TOMORROW
Right technology in capable hands is a striking force that can be used
for true digital transformation. Guided by data and informed by
analytics, we are equipped with the right enterprise-class expertise to
address the need and challenges of time, and accelerate positive
change.
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TRANSFORMATION
HAS GAINED MOMENTUM
With a myriad of IT trends, the
current global pandemic has leverage AI-augmented
made complete digital automation in large enterprises.
transformation an imperative Source: Gartner, Gartner
for businesses across the globe. Predicts the Future of AI
Technologies
forced to speed up their digital
transformation business plans
by at least 5 years.
Source: Gartner, Newsroom,
2021
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A CYNOSURE FOR
IT SERVICES
CONNECTIVITY AND ECOSYSTEM BUSINESS
COMMUNICATIONN INCENTIVES
61
KEY FINANCIAL &
BUSINESS
HIGHLIGHTS
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SYSTEMS AT
A GLANCE
2021
5,320
2020
3,548
2019
3,360
~ 1800
Net addition of IT
professionals during the year
50%
Net YoY addition
REVENUE TRAJECTORY
41% 15,304
9,872
7,536
5,324
3,832
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AT A GLANCE
PKR 15.3 BN 41% 55%
FY’21 REVENUE CAGR REVENUE YOY REVENUE
GROWTH GROWTH
267 17 115
FY’21 TOTAL ACTIVE CUSTOMERS WITH DAYS SALES
CUSTOMERS SERVED OVER $1MN REVENUE OUTSTANDING
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14%
Digital Services
76%
19%
Export
Domestic
81%
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REVENUE BY SECTORS
2021
7%
19% North America
Middle East
Pakistan
32% Europe
42%
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REVENUE
19%
USD
AED
42%
PKR
EURO
32%
7%
COST
20% PKR
AED
80%
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54% 54%
43%
40%
32%
26%
12%
8%
2020 2021
15,304
9,876
2020 2021
$10m + clients - 1
$5m + clients - 2
$3m + clients 2 5
$1m + clients 12 17
$500k + clients 25 38
2020 2021
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KEY FINANCIAL
HIGHLIGHTS
PROFIT AND LOSS SUMMARY FOR THE LAST SIX YEARS (AMOUNTS IN PKR)
STANDALONE
2021 2020 2019 2018 2017 2016
Rupees Rupees Rupees Rupees Rupees Rupees
CONSOLIDATED
2021 2020 2019 2018 2017 2016
Rupees Rupees Rupees Rupees Rupees Rupees
DUPONT ANALYSIS
2021
3,320,691,476 Revenue 11,903,583,911 Total assets 15,240,874,128 ROE
Revenue 11,903,583,911 Total assets 15,240,874,128 Equity 10,473,329,516
28% 78% 146% 32%
2020
2,193,914,942 Revenue 7,513,766,845 Total assets 9,834,639,018 ROE
Revenue 7,513,766,845 Total assets 9,834,639,018 Equity 7,253,686,051
29% 76% 136% 30%
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KEY
RATIOS
S
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FINANCIAL ANALYSIS
CAGR 42 % 11,904
CAGR 41 %
15,304
7,514
9,877
5,349
7,536
3,761 5,324
2,911 3,832
2017 2018 2019 2020 2021 2017 2018 2019 2020 2021
CAGR 63 % CAGR 67 %
3,321
4,380
2,194
2,164
1,364 1,568
1,009 1,061
561
473
2017 2018 2019 2020 2021 2017 2018 2019 2020 2021
CAGR 61 %
CAGR 66 %
2,817 3,169
2,045 2,114
1,089 1,330
636 727
374 470
2017 2018 2019 2020 2021 2017 2018 2019 2020 2021
16.05 16.17
11.05 12.86
8.19 8.72
5.11
4.24
2017 2018 2019 2020 2021 2017 2018 2019 2020 2021
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36%
30% 32%
32%
35%
25% 26% 30%
28% 28%
26%
25%
25%
27%
26%
15% 25%
17%
15%
17%
2017 2018 2019 2020 2021 2017 2018 2019 2020 2021
104,920
759.84
52,239
419.23
12,329
15,354 73.92 109.87 124.30
8,266
2017 2018 2019 2020 2021 2017 2018 2019 2020 2021
31.5
75.85
26.12
24.12
58.21
17.43
13.42
42.23
16.05
36.35 11.25
11.05
28.72 8.19
4.24
2017 2018 2019 2020 2021 2017 2018 2019 2021 2021
E C
50,000 900
49,000 800
48,000
700
47,000
600
46,000
45,000 500
44,000 400
43,000
300
42,000
200
41,000
40,000 100
39,000 0
1-Jan-21 1-Feb-21 1-Mar-21 1-Apr-21 1-May-21 1-Jun-21 1-Jul-21 1-Aug-21 1-Sep-21 1-Oct-21 1-Nov-21 1-Dec-21
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SOCIAL
PRESENCE
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Progressing with our collective global digital vision, we curated strategic campaigns and took
multiple customer and employee-first initiatives. It solidified our brand positioning locally and globally.
DIGITAL AT A GLANCE
increase in content marketing increase in people visiting
52% with total reach of 1.6 Million 60.4% Systems Limited’s website online
Combined earned media value of our Featured in top 300+ print and digital
PR activities and campaigns of publications
2021 was PKR 20 Million
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Techvista was part of the largest technology week GITEX in Dubai as a Microsoft
technology partner.
Organized an interactive session that focused on exploring the benefits of migrating Windows
workloads and making Windows applications faster, secure, and reliable.
THOUGHT LEADERS
We proudly positioned Systems' senior management as key
opinion leaders in the tech world and promoted thought
leadership. We generated positive and meaningful conversations
around the brand and created a favorable perception of Systems
in our audience's minds, along with a deeper level of trust and
authenticity.
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PEOPLE &
CULTURE
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HUMAN
CAPITAL’S
STRATEGIC
PILLARS
TOIMA
ASGHAR TALENT
CHIEF HUMAN RESOURCES OFFICER, ACQUISITION
SYSTEMS LIMITED
DATA ANALYTICS
TOIMA ASGHAR & AUTOMATION
CHIEF HUMAN RESOURCES OFFICER
ACADEMIA LINKAGES,
MARKET RESEARCH &
EMPLOYER BRANDING
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DEVELOPING
THE TALENT AND
RESHAPING CAREERS
THROUGH TALENT MANAGEMENT
AND OD INTERVENTIONS
The continuous effort to develop & manage the best of talent acquired, there were
thousands of man hours invested in learning & development with wholistic focus on
technical, functional and soft skills interventions.
7463
LEARNING HOURS
174
SESSIONS
128
TRAININGS
375
MANAGEMENT TRAINEE OFFICERS
HIRED
3050
EMPLOYEES ONBOARD
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LUMS SYSVISTECH
LEADERSHIP UNIVERSITY
Systems Group partnered with REDC LUMS to establish the SysVisTech Leadership
University. One of it’s kind, a customized fast-tracked intervention designed for the
executives that have the capacity to contribute strategically and lead the organization in
future.
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REIGNITE
DEVELOPING AND EMPOWERING
WOMEN THROUGH CAPACITY
BUILDING INITIATIVES
Reignite a women centric project designed to acquire, elevate, develop and empower
women talent. It has been designed to provide unmatched facilities and opportunities to
welcome women with career breaks to take charge of their professional careers, develop
our existing women workforce to flourish their corporate career with unmatched
development & growth initiatives, eased working hours, a professional environment where
they feel safe, honored and valued. It will enable professional women with passion, talent
and zeal to learn the changing dynamics of corporate world over the past times & develop
their expertise with amazing opportunities at Systems Ltd.
The wholistic framework of this project is not limited to hire women with career breaks,
rather it is for professional development, grooming, enablement and empowerment of
women in Technological world. This project covers different aspects of women
empowerment, development and growth.
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Women at Systems Limited, have been constantly proving to have successful Career path
and ensure taking a step forward and upward to break glass ceiling specially in Technology
Industry. Having a diverse workforce, where our gender diversity is 14% which has women
representation from diversified background, education, experience and social responsibility
roles. We, at Systems Limited have provided our talent to explore the professional avenues
to excel and break the glass ceiling. This can be significantly viewed at women leadership
representation in our C-Suite. From C-Suite to frontline workforce, all women are
empowered equally. We have enabled majority of our workforce to take lead in their
respective work domains, leading to their inter functional and international mobility based
on their achievements and aspirations.
We have introduced Hybrid working model to provide provision and capacity to our female
talent, aid in providing sustainable career and growth along with wellmanaged worklife
balance. This initiative has enabled many of our resources to work remotely, fulfilling their
family duties and keeping their growth at their pace. This working model has enabled us to
attract, retain and develop amazing talent in past year.
With acquiring and developing women talent, comes the responsibility to providing secure
and comfortable working environment; hence, Systems Limited has ensured in every
possible way to provide the comfortable yet dynamic environment to work and flourish,
along with strict policies and procedures to govern the compliance. Alongside, to ensure
the safety of our female workforce working in various working hours to commute through
safe and secure official transportation.
As an initiative and inclusive part of Reignite Project, Systems Limited initiated campaign to
welcome the wonder women to rejoin the corporate world which was given a break due to
their personal commitments with family, study or other social responsibilities. This
campaign has been designed and deployed to create awareness, attract and develop the
pool of talented women on career breaks. They will be hired and professionally developed
to bridge the gap created during the break and enable their inbuilt talent to reignite. The
campaign has successfully made it’s reach to more than 60k collectively and engaged 2000
social media users, where all the engaged participants appreciated and applauded the
initiative. There are certain hirings and onboardings ongoing under the project.
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EDGE TRAINING
PROGRAM
Systems Limited launched one of its kind-training
programs to elevate the skill set of our youth.
This is an open program for the general public
along with our employees to upskill future talent.
PARWAAZ PSDF
Systems Limited joined hands with Parwaaz PSDF
to upskill the youth of Pakistan. We are proud to
announce the first batch offering Java Full Stack
Developer Course has been completed and around
15 resources have graduated.
DIGITAL
LEARNING
To uplift existing patterns of learning,
various digital learning methods were
introduced to enable our talent for their
skills upliftment & career development.
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BRANDING
THE ENTIRETY
OF EMPLOYEE
EXPERIENCES
Human Capital Division introduced Employer Branding Unit in 2021, a function dedicated to
uplift the softer image of Systems Limited, engage employees and simultaneously brand
organizational initiatives related to the people via corporate communication channels and
PR activities. The second half of the year was very crucial in uplifting the brand value of
Systems Limited on Employer Rating Sites such as Glassdoor which experienced a positive
rating shift from
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ENRICHING
EMPLOYEE
EXPERIENCES
EMPLOYEE RETREATS
Systems Limited hosted Engagement Retreats across Pakistan to cherish our success with
our people. The days were jam-packed with engaging group activities, games and
celebrations to ensure maximum employee engagement.
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CEO TALKS
CEO Talks were facilitated among all levels of employees
and CEO Asif Peer to eliminate any communication barrier
and promote open communication culture.
TOWN HALLS
& LEADERSHIP
CONNECT
To ensure both way communication among
leadership and employees we arranged 50+
sessions from Management Connect, CEO
Talks, Senior Global Connectivity, and Human
Resource Business Partners connect.
INDEPENDANCE DAY
CELEBRATIONS
Systems Limited celebrated Independance day with full zeal and festivities. It brings us
together as a nation under the one flag, reminding everyone of the idea: Unity, Faith, and
Discipline.
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Annual Report 2021
WOMEN’S DAY
CELEBRATION
Celebrated International Women's day by
recognizing and appreciating the social,
economic, cultural and corporate achievements
of women. On this platform, Systems Limited’s
women workforce together pledged to create a
collaborative, safer and dynamic workplace for
all women around.
EMPLOYEE
RECOGNITION
To recognize the substantial contribution that resources are making, employee recognition
activities were conducted. The efforts and dedication of team members were appreciated
and applauded across the country through several platforms.
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Annual Report 2021
BREAST CANCER
AWARENESS
Under the employee wellbeing initiatives,
we had collaborated with Shaukat Khanum
Memorial Hospital to spread awareness
among our teams for their well-being and
the women in their families.
HYBRID
WORK MODEL
Encouraged employees to make
the most of the hybrid work
model by managing their work
aligned with their teams, where
their overall wellbeing and
wellness are the focus.
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Annual Report 2021
UPSKILLING AND
RESKILLING THE YOUTH
BY BRIDGING ACADEMIA LINKAGES
Industrial and academic linkages are considered as a major collaborative effort on the part
of academia and industry, sharing their knowledge, skills, and resources to accomplish
mutually compatible goals of training and development of students, innovation, and
commercialization.
FORMAL COLLABORATIONS
Systems Limited has signed MOUs for training and development of students with
NUCES-FAST – Chiniot/Faisalabad Campus and NUCES-FAST – Karachi Campus. Under
these collaborations, we are developing future talent that will serve the industry in its true
spirits.
MOU WITH
FAST - KARACHI
Naureen Anwar, SVP - Special Projects,
Ovais Khan, SVP – Integration
Frameworks and Adeel Ahmed Chatha,
Manager – Industrial and Academia
Linkages discussed various avenues of
collaboration and roadmap for their
execution with Prof. Dr. Muhammad Atif
Tahir, Director and Faculty FAST
Karachi Campus.
MOU WITH
FAST CHINIOT/
FAISALABAD
Toima Asghar, CHRO, Mr. Faisal Tajammal,
SVP – Cloud Application Development and
Maintenance and Adeel Ahmed Chatha,
Manager – Industrial and Academia
Linkages discussed various prospects of
collaboration with Dr. Shahzad Sarfraz,
Director – FAST CFD and Faculty for
creating synergies by offering
scholarships, trainings and workshops to
the students.
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Annual Report 2021
INCLUSION IN UNIVERSITIES’
INDUSTRIAL ADVISORY BOARDS
To guide universities for curriculum enhancement and introduce upcoming technologies in
the curriculum to fulfill the industry’s future talent needs, Systems Limited’s Leaders have
joined Industrial Advisory Boards of Various Universities.
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Annual Report 2021
SESSIONS/WORKSHOPS
AT UNIVERSITIES
In order to provide industrial perspective and disseminate technical knowledge among
students, Systems Limited Experts conducted following sessions at universities:
Khurram Safdar
VP/Head of Customer Experience
Toima Asghar
CHRO
Ovais Khan
SVP - Integration Frameworks
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Annual Report 2021
Naureen Anwar
SVP - Special Projects
Chaudhry Sohail
Head of Data Science
Raheel Siddiqui
VP - Project Management
Faraz Rafique
VP - Infosec
Adil Sikander
AVP – HCD
Virtual career talk on upcoming
Information Security related
career opportunities globally,
required market skills and
technology trends at NUST.
Umer Imtiaz
Managing Consultant
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Annual Report 2021
GIVING
BACK TO
THE SOCIETY
OUR CORPORATE SOCIAL RESPONSIBILITY
EDUCATION
INATITIVES
Systems Limited believes in providing
educational opportunities for children in
order to enable them to significantly
contribute to their families and society in
various aspects and fields, thus creating a
stable and stimulating community.
SECONDARY
SCHOOL
WITH TCF
@ BUREWALA
Systems Limited believes in providing
education to the children with humble
backgrounds. In order to provide fair
opportunity to these children Systems
Limited is building a secondary school for
The Citizen Foundation in Burewala,
Punjab on the direction of Mr. Asif Peer,
CEO and MD Systems Limited. It will help
the children in Burewala and surrounding
areas to fulfill their dream to pursue
education.
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Annual Report 2021
MILLION SMILES
FOUNDATION
Under this project, Systems Limited is
supporting Million Smiles Foundation
through sponsorship of 500+ students
studying in their educational institutes at
Neelum and Kashmir Valley.
EDUCATION
TRUST NASRA
SCHOOL
Systems Limited has sponsored 50 brilliant
students studying in Nasra School Karachi
by bearing their complete educational
expenses for the whole year. Systems
Limited has also provided laptops for the
computer lab of Nasra School.
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Annual Report 2021
SYSTEMS
RECREATIONAL
CLUB
The Systems Recreational Club (SRC)
despite the Pandemic engaged with the
employees and ensured that there were
continuous positive activities in order to
uplift the spirits. The club operates to
provide entertainment throughout the
year. Last year’s activities include a
Musical Night, Systems Olympics, Eidi
Distribution, Winter Hoodies and various
Facebook Competitions.
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Annual Report 2021
SAFETY AND
HEALTH FIRST
- Provided signed SLD forms to resources so that they don’t face any inconveniences on
their way to work.
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Annual Report 2021
CODE OF
CONDUCT
Systems Limited is truly committed to the highest standards of ethics and integrity when
working with different stakeholders every day. We rely on our "Employee Code of Conduct"
in order to guide and align our behaviors while we make business decisions. The principles
stated in our "Employee Code of Conduct" apply to all aspects of our business. It outlines
our values and supports our commitment to ethical and honest conduct and compliance
with all laws, rules and regulations; and our company policies, procedures and standards.
Systems Limited holds all employees responsible for carrying out and monitoring
compliance with this commitment. If any employee becomes aware of any violation of a
legal or ethical obligation, or any unfair or improper treatment of personnel related to the
company, they must immediately report the matter to the Human Resources Department
so that it can be investigated right away. In this manner, we can take all necessary steps to
investigate any potential violations of our policy and can take appropriate action to correct
any violations or incorrect perceptions that are found to exist.
CONFLICT
OF INTEREST
POLICY
Our employees are expected to devote their best efforts and attention to the performance
of their jobs. They are expected to use good judgment and adhere to high ethical standards
and avoid situations that create potential conflict between the employee’s personal
interests and the interests of the Company. The conflict of interest exists when the
employee’s loyalties or actions are divided between the Company’s interests and to those
of another, such as, competitors, suppliers or customers.
Dedication to the company and ensuring that all possible issues that may be considered
conflicts of interest are avoided at all costs by employees and they make sure that they
refrain from engaging with people who may be a red flag in that aspect as well.
As we treat our employees as our ultimate assets , we at Systems Limited require the
utmost commitment of all our employees.
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Annual Report 2021
WHISTLE
BLOWER
POLICY
Systems Limited is committed to creating and maintaining a culture of openness within the
organization so that employees feel encouraged and confident to raise any concerns
relating to suspected misconduct at an early stage.
The objective of this policy is to deal with situations where an individual (the
whistleblower) raises a concern about a risk, malpractice or wrongdoing that affects
employees, the company or public/society’s interest without any fear of retribution and
retaliation such as fear for the loss of job, discrimination, victimization, harassment etc.
about any fraudulent, immoral, unethical or malicious activities, which are against the
policy or may have an adverse impact on the business or goodwill.
100
SUSTAINABILITY
FRAMEWORK
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Annual Report 2021
ENSURE SUSTAINABLE
FINANCIAL GROWTH
Key Indicators:
• 55% increase in revenue
BE KIND WITH THE • 53% increase in gross profit
ENVIRONMENT • 100% increase in EPS
• 36% Return on Equity
Key Indicators: • Consistent dividend payout ratio
• Reduced electricity costs by moving • Continuous development in products and services
data centres to cloud
• Controlled e-waste by donating laptops
and computers
• Policy to reduce printing and use digital
media as much as possible
• Raising employee awareness to control
water wastage and electricity
GIVING BACK TO
THE SOCIETY
Key Indicators:
• Setup schools for underprivileged
children
• Donations to Hospitals
• Donation of laptops and computers to
schools and universities
• Created Dost fund to provide financial
support in case of any emergency
BE KIND TO
EMPLOYEES
Key Indicators:
GOVERNANCE • Creating decent work space and
sustainable income for 5,000+
Key Indicators:
• Independent Board & its committees employees
• Promoting GRC • Work from home policy to provide
• Responsible Tax Practices flexibility
• Code of Conduct / Business Ethics • Spending huge amount on trainings &
• Related Party Transactions certifications
• Cybersecurity and Data priviacy • Provided COVID-19 Vaccinations
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Annual Report 2021
Clean Water and Diversity & inclusion CSR initiatives Independent Board & its Financial &
Sanitation Employee engagement Adding value to economy by committees promoting GRC Operational
Energy Consumption Safety First creating job opportunities Responsible tax practices Shareholders
Employee personal Code of Conduct/Business Transparency & Value
Carbon Emissions
growth and development Ethics Addition
Related party transactions
Cybersecurity and Data
privacy
Code of Conduct, Internal Audit Policy, Code of Corporate Governance 2019, Procurement Policy, Environmental Policy, Information Security
Policies, HR Policy, Health & Safety Policy, Whistle Blowing Policy
Internal and external audits (1, 2), Governance, risk and compliance management (2,3), Sourcing to pay (4),
Supplier self assessment (4), Environmental management process (EMS) ISO14001 (4, 5, 6), ISO27001 (3),
SOC 1 & SOC 2 (3), Information and cyber security audits and assessments (3), HR processes (1, 7, 8), Employee engagement survey (8))
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Annual Report 2021
SUSTAINABILITY
PILLARS
BE KIND TO ENVIRONMENT
Be kind to the Environment is an overall team effort to ensure that our company has minimum impact on environment. As part
of these efforts, Systems aims to develop an ecosystem where all stakeholders work in a collaborative approch towards
honoring the Earth's physical limits and ensuring operations are conducted within the defined parameters developed to
reduce our ennvironmental footprint.
2021 2020
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Annual Report 2021
BE KIND TO EMPLOYEES
At Systems, we aim to create a collaborative and safe work environment that ensures openness, flexibility, stimulate
creativity, job satisfaction, and the well-being of all our Systemers and their families. From this holistic approach, the benefits
linked to compensation are no longer separated from other benefits and experiences; resultantly, Systems aims to conduct
recreational activities and support professional growth which is key in motivating employees leading to a sustainable
competitive edge and ultimately wellbeing of our employees.
2021 2020
2021
105
Annual Report 2021
2021 2020
FAST
HABIB UNIVERSITY
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Annual Report 2021
GOVERNANCE
Growing exponentially brings challenges to meet requirements of all regulators impacting our operations. At Systems we
have a comprehensive framework to ensure that our operations are in line with the applicable laws & regulations. We have
established independent Audit Committee and have adopted internationally accepeted control frameworks to align all our
operational, financial and compliance matters, prevent financial leakages, ensure confidentiality & data privacy and improve
overall governance.
Board Meetings 5
ISO CERTIFICATIONS
- ISO 27000
- ISO 9001
- ISO 20001
- ISO 18295
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Annual Report 2021
2021 2020
108
Annual Report 2021
Be kind to Environment
Efficient Reduce, reuse - Increased emphasis on paper-less Paper consumption PKR 1,914 cost
waste and recycle to operations tracking per employee in
management minimize waste, 2021
- Placement of separate recycle bins Repair & maintenance
including for paper, plastic & others at office of printers
e-waste.
premises
- Emphasis on using double side
printing whenever practical.
- Using more cloud services thus
reducing investment in on-premises
data centers reducing our waste
further.
- Implementation of password control
on use of printers to further reduce
printing.
Clean Water Reduce our water - Emphasis on using less water in Water Consumptions
and footprint and the form of 'save water' signs in reduced
Sanitation enhance water the rest rooms
availability in the
communities - Collecting and using water from
where we air conditioning in non drinking
operate. activities like watering plants.
Energy Reduce our - Hybrid working model. An efficient - Tracking electricity PKR 12,628 cost
Consumption energy mix of working from office and consumption per employee
consumption working from home, thus reducing
energy consumption - Monitoring diesel
consumption in
- Greater emphasis by the generators
administrative team towards
installation of energy efficient
equipments like led lights.
Carbon Reduce green SL gas emissions are tested by a Third party carbon N/A
Emissions house gas third party SGS and the report emission report by SGS
emissions indicates that the CO2 emissions are independent auditor
at acceptable industry standards.
Further, noise test is also conducted
for generators which is also as per
standards.
Be kind to Employees
Diversity & Creating a - Providing a gender equal place to - Ratio of male to female
inclusion gender-diverse work to prevent inequalities and employees
workforce. promoting inclusion of all genders in
all departments. - No. of specially-abled
employees
- Female director nomination on our
- Female employees on
Board of Directors & C-levels grade 1A, 1, 2A, 2, 3A
- Harrassment policy in place - No. of incidents of
- Hiring specially-abled employees harrassment
- Dedicated shuttle
service for female
employees
Employee Ensuring Creating decent work and stable Gather data for
engagement fulfilling careers income for thousands of people. activities
for our
employees.
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Annual Report 2021
ESG
Performance Quantitative
SDG Target Aim Status 2021 Indicator UN sustainability goals
Impact
Be kind to Employees
Safety First Creating a safe - Installation and maintenance for fire - Zero injuries /accidents Insurance
working extinguishers throughout the reported increased from
environment for premises PKR 32M in 2020
our employees - No incident of fire
- Trainings and drills to ensure that during the last three to PKR 44M in
and the
environment as the workforce is prepared to tackle years 2021
whole emergency situations
- Installation of electricity safety
equipments like miniature cicruit
breakers, fuses etc.
- Temperature checks on entry to
employee premises along with
placement of multiple hand
sanitizers across all the floors.
- All employeed have health
and life insurance
- Policy to wear facemask at
all times in office premises.
Employee To improve - Annual resourcewise training 128 Trainings 2021: PKR 26M
personal technical skills of calendar approved by HRCC conducted spent on trainings
growth and resources to and certifications
development ensure - Policy for cost reimbursements for
competitive edge technical/professional certifications.
and familiarisation
with new
disruptive
technologies
Adding value Create sustainable - Significant hiring conducted 2021: 275 new hires N/A
to economy job opportunities during the FY 2021 2020: 50 new hires
by creating for fresh
job graduates and
opportunities experience
employees adding
value to the
ecomony
Governance
Independent Ensuring that the Company currently has Audit and - Audit Report on code N/A
Board & its board Remuneration committee consisting of corporate
committees committees are of indiviuals having relevant governance
promoting autonomous and knowledge/experience.
GRC consist of - Quartaerly internal
individuals who audit performed
have relevant
knowledge/exper
ience
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Annual Report 2021
ESG
Governance
Responsible Ensure that the - Ensuring that the company is - Reduce tax notices and
tax practices company is duly working with vendors and suppliers penalties
discharging its who are registered with tax
tax liability authorities and also responsible tax - Procurement policy in
citizens place to ensure
transparency and
- Engaging good tax consultants to competitive bidding
ensure that the company is
compliant with the tax laws
Code of To ensure that our - The company has a code of conduct No cases reported N/A
Conduct/ business and which covers Conflicts of interest,
Business employees act ethical conduct at workplace
Ethics with honesty and - The company has implemented a
integrity.
complete policy and mechnism of
Whistleblowing.
Related party Disclose all the All related party disclosures are - Quarterly approval of
transactions related party made in quarterly and annual related party
transactions to accounts of the company. transactions
ensure compliance by Audit Committee &
with the applicable the Board
laws.
- Audit report on
compliance with code of
corporate governance
and there is no
non-compliance.
Cybersecurity Ensure the safety The Company is certified under The company is certified N/A
and Data of stakeholder ISO-27000 which is inline with the with the following:
privacy data. ITIL best practice framework over IT - ISO 27000
controls and information retention. - ISO 9001
Further, the company is following - ISO 20001
NIST security protocols for the - ISO 18295
protection of data related to all Further, the company
stakeholders. also have independent
SOC1 and SOC 2 reports.
- Zero incident of breach
of security protocols
- The company has
invested in IBM SIEM
111
Annual Report 2021
STAKEHOLDERS
ENGAGEMENT
Systems engage all its stakeholders through both structured and occasional dialogue and interactions. Our stakeholders
comprise of employees, customers, business partners, regulators, government and wider society.
During the year Systems have conducted both formal and informal conversations with suppliers, business partners,
customers, investors and regulators as part of our daily operations. A summary of our engagements with stakeholders along
with medium used is described below;
CLIENTS
REGULARITY
EMPLOYEES
BODIES
KEY
SHAREHOLDER
GOVERNEMENT INVESTORS
SUPPLIERS
COMMUNITY BUSINESS
PARTNERS
People Career Opportunities, Health & Safety, HR Survey - Intranet portals - SRC Club
Learning & Development Bulletin Boards - Blogs - Retreats
Investors Profitable Growth, Sustainability & Investor Briefings & Calls - Company Website
Transparent Reporting Annual General Meeting - PSX Announcements
Print & Digital Media - Social Media
Suppliers & Alliance Partners Long term partnerships Financial Reports - Collaboration
Conferences - Social Media
Government & Regulatory Bodies Compliance & reporting SECP Filings - PSX Filings - External Reports
Interactions with statutory bodies like PESSI,
FBR Tax returns filing
112
SHARE HOLDER’S
KEY INFORMATION
113
Annual Report 2021
SHAREHOLDING BREAKUP
Foreign
8%
Ex Employees
14%
3% Banks, DFIs, BFSIs, Insurance & Pension Funds
General Public
Mutual Funds
10%
Companies
35%
11%
DIVIDENT PAYOUT
(PKR MILLION)
525 75%
438
207 195
350 138 50%
40% 41%
30% 277
224
175 25%
24% 20% 20% 20%
0 0%
114
Annual Report 2021
115
Annual Report 2021
116
Annual Report 2021
1. MUTUAL FUNDS
51,990,860 37.65%
119
Annual Report 2021
3 10,000 100%
2 10,000 100%
120
Annual Report 2021
NOTICE OF
ANNUAL
GENERAL
MEETING
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Annual Report 2021
ORDINARY BUSINESS:
1. To confirm the minutes of the last Extraordinary General Meeting held on 23rd December 2021.
2. To, receive, consider and adopt the Audited Accounts of the Company for the year ended 31 December 2021
together with the Board of Directors’ and Auditors’ report thereon.
3. To approve and declare cash dividend @ 50 % i.e. PKR 5/ per share, for the year ended 31 December 2021.
4. To approve and declare Bonus Shares in the proportion of 1 share(s) for every 1 share(s) held i.e. 100%, for the
year ended 31 December 2021.
5. To appoint Auditors and fix their remuneration for the year ending 31 December 2022. The Board of Directors
upon recommendation of Audit Committee has recommended A.F Ferguson & Co. Chartered Accountants being
eligible for appointment as auditors of the Company for the year ending 31 December 2022.
SPECIAL BUSINESS
6. To consider and, if thought fit, pass, with or without modification, the following special resolution in terms of
Section 199 of Companies Act, 2017, (a) for renewal of loan to SUS Joint Venture (Private) Limited, a subsidiary of
the Company, of Rs. 50 million; (b) renewal of loan and guarantee in UUS Joint Venture (Private) Limited, an associ-
ated company of the Company, of Rs. 200 million; (c) renewal of loan in E-Processing Systems (Private) Limited,
an associate of the Company, of Rs. 340 million.
“Resolved that Systems Limited (the “Company”) shall renew the loan extended to its subsidiary and associated
companies, (a) SUS Joint Venture (Private) Limited in the form of loan Rs. 50 million; (b) UUS Joint Venture (Private)
Limited, an associated company of the Company, of Rs. 200 million; (c) E-Processing Systems (Private) Limited, an
associate of the Company, of Rs. 340 million, on the terms and conditions to be contained in the agreement to be
executed between the Company and Associated Company in terms of Section 199 of Companies Act, 2017.
“Resolved further that Mr. Muhammad Asif Peer, the Chief Executive of the Company and Ms. Roohi Khan, the
Chief Financial Officer of the Company (the “Authorized Officers”), be and are hereby empowered and authorized
to undertake, execute and implement all the decisions in respect of the transaction and to take and do and/or cause
to be taken or done any/all necessary acts, deeds and things, and to take any or all necessary actions which are or
may be necessary, incidental and/or consequential to give effect to the aforesaid resolution, including signing and
execution of documents and agreements and to complete all necessary legal formalities and to file all necessary
documents as may be necessary or incidental for the purposes of implementing the aforesaid resolution”.
7. To consider and, if thought fit, pass, with or without modification, the following special resolution in terms of
Section 199 of Companies Act, 2017, for the ratification of change of status and subsequent conversion of receiv-
ables balance into equity amounting to Rs 144 million and to further approve an equity investment of ($ 1,000,000)
One Million Dollars in its subsidiary, namely, TechVista Information Technology WLL, Qatar.
“Resolved that Systems Limited (the “Company”) shall ratify the change of status and subsequent conversion of
trade receivable balance into equity investment of Rs 144 million and further equity investment of ($ 1,000,000)
One Million Dollars in its subsidiary, TechVista Information Technology WLL, Qatar, in terms of Section 199 of
Companies Act, 2017.
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Annual Report 2021
“Resolved further that Mr. Muhammad Asif Peer, the Chief Executive of the Company, Ms. Roohi Khan, the Chief
Financial Officer (the “Authorized Officer”), be and is hereby empowered and authorized to undertake, execute
and implement all the decisions in respect of the Investment and to take and do and/or cause to be taken or done
any/all necessary acts, deeds and things, and to take any or all necessary actions which are or may be necessary,
incidental and/or consequential to give effect to the aforesaid resolution, including signing and execution of docu-
ments and agreements and to complete all necessary legal formalities and to file all necessary documents as
may be necessary or incidental for the purposes of implementing the aforesaid resolution”.
8. To consider and, if thought fit, pass, with or without modification, the following special resolution, for the
shareholders ratification of the incorporated holding company in Netherlands for its associate, E-Processing
Systems (Private) Limited, through a special share swap of equal value by-way-of SBP FE Circular No. 1 dated
February 10, 2021.
“Resolved that Systems Limited (the “Company”) incorporation of the holding company in Netherlands for its
associate, E-Processing Systems (Private) Limited through a special share swap of equal value, by-way-of SBP
FE Circular No.1 dated February, 2021 is ratified by the shareholders.”
“Resolved further that Mr. Muhammad Asif Peer, the Chief Executive, Ms. Roohi Khan, the Chief Financial Officer
of the Company (the “Authorized Officer”), be and is hereby empowered and authorized to undertake, execute and
implement all the decisions in respect of the Investment and to take and do and/or cause to be taken or done
any/all necessary acts, deeds and things, and to take any or all necessary actions which are or may be necessary,
incidental and/or consequential to give effect to the aforesaid resolution, including signing and execution of docu-
ments and agreements and to complete all necessary legal formalities and to file all necessary documents as
may be necessary or incidental for the purposes of implementing the aforesaid resolution”.
OTHER BUSINESS:
1. Any other Business with the permission of the Chair.
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Annual Report 2021
NOTES:
1. The Share Transfer books of the Company will be closed from 04 April 2022 to 11 April 2022 (both days inclu-
sive). Transfer received at the address of M/s THK Associates (Pvt.) Limited, Plot No. 32-C, Jami Commercial
Street 2, D.H.A., Phase VII, Karachi-75500. Pakistan at the close of business on 01 April 2022 will be treated in
time for the purpose of above entitlement to the transferees.
2. A member entitled to attend and vote at the meeting may appoint another member as his/her proxy to attend
and vote in his/her place. Proxies completed in all respect, in order to be effective, must be received at the Regis-
tered Office of the Company not less than forty-eight (48) hours before the time of meeting.
3. Pursuant to the directive of the Securities & Exchange Commission of Pakistan, CNIC numbers of shareholders
are mandatorily required to be mentioned on Dividend Warrants. Shareholders are, therefore, requested to
submit a copy of their CNIC (if not already provided) to the Company Share Registrar, M/s THK Associates (Pvt.)
Limited, Plot No. 32-C, Jami Commercial Street 2, D.H.A., Phase VII, Karachi-75500. Pakistan.
4. The Government of Pakistan through Finance Act, 2019 made certain amendments in the Income Tax
Ordinance, 2001 whereby different rates are prescribed for deduction of withholding Tax on the amount of
dividend paid by the companies/banks. These tax rates are as follows:
(a) For filers of income tax returns 15%
(b) For non-filers of income tax returns 30%
To enable the Company to make tax deduction on the amount of cash dividend @15% instead of 30% all share-
holders whose names are not entered into the Active Tax- payers list (ATL) provided on the website of FBR,
despite the fact that they are filers, are advised to make sure that their names are entered into ATL before the
date of payment of the cash dividend, otherwise tax on their cash dividend will be deducted @30% instead of
15%.
The joint shareholders are requested to provide shareholding proportions of principal shareholders & joint
shareholders as withholding tax will be determined separately on Filer/Non-filer status based on their share-
holding proportions otherwise it will be assumed that shares are equally held.
The Corporate shareholders having CDC account are required to have their National Tax Number (NTN) updated
with their respective participants, whereas physical shareholders should send a copy of their NTN Certificate to
the Company or Company’s Share Registrar, M/s. THK Associates (Pvt.) Limited. The shareholders while sending
NTN or NTN Certificate, as the case may be, must quote Company name and their respective folio numbers.
5. SECP through its notification SRO 787(1) /2014 dated September 8, 2014 has allowed the circulations of Audit-
ed Financial Statement along with Notice of Annual General Meeting to the Members through e-mail. Therefore,
all members of the Company who wish to receive soft copy of Annual Report are requested to send their e-mail
addresses. The consent form for electronic transmission could be downloaded from the Company Website:
www.systemsltd.com Audited financial statements & reports are being placed on the aforesaid website.
6. All the account holders whose registration details are uploaded as per CDC Regulations shall authenticate
their identity by showing original CNIC at the time of attending the meeting. In case of corporate entity, a certified
copy of resolution of the Board of Directors / valid Power of Attorney having the name and specimen signature
of the nominee should be produced at the time of meeting.
7. In order to make process of payment of cash dividend more efficient, e-dividend mechanism has been envisaged
where shareholders can get amount of dividend credited into their respective bank accounts electronically with-
out any delay. In this way, dividends may be instantly credited to respective bank accounts and there are no
chances of dividend warrants getting lost in the post, undelivered or delivered to the wrong address, etc. The
Securities and Exchange Commission of Pakistan (SECP) through Notice No. 8(4) SM/CDC 2008 dated 5 April
2013 has advised all Listed Companies to adopt e-dividend mechanism due to the benefits it entails for sharehold-
ers. In view of the above, you are hereby encouraged to provide a dividend mandate in favour of e-dividend by
providing dividend mandate form duly filled in and signed.
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Annual Report 2021
This statement set out the material facts concerning the special business to be transacted at the annual general
meeting of the Company to be held on 11 April 2022.
Revenue 63,021,229
Cost of revenue 37,762,989
Gross profit 25,258,240
Profit for the year 23,224,428
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Annual Report 2021
(II) purpose, benefits likely to accrue to the Purpose: To meet working capital
investing company and its members requirements of SUS Joint Venture
from such investment and period of (Private) Limited.
investment;
Benefit: The completion of project will
results in distribution of profits by SUS
Joint Venture (Pvt.) Limited to Systems
Limited.
(I) justification for investment SUS Joint Venture (Private) Limited is only a
through borrowings; special purpose vehicle for executing LRMIS
project awarded to SUS Joint Venture
(Private) Limited
salient features of the agreement(s), if any, None. Agreement shall be executed in line
(iv)
with associated company or associated with section 199 of Companies Act, 2017 and
undertaking with regards to the proposed resolution of shareholders to be passed in
investment; annual general meeting.
126
Annual Report 2021
(v) direct or indirect interest of directors, Mr. Asif Peer, CEO of Systems Limited is
sponsors, majority shareholders and also member and director in SUS Joint
their relatives, if any, in the associated Venture (Pvt.) Limited.
company or associated undertaking or
the transaction under consideration;
In case of investments in the form of loans, advances and guarantees, following disclosures in addition to
those provided under clause (a) of sub-regulation (1) of regulation 3 shall be made,-
(ii) average borrowing cost of the investing Average borrowing cost of investing
company, the Karachi Inter Bank Offered company is SBP rate plus 0.5%.
Rate (KIBOR) for the relevant period, rate
of return for Shariah compliant products
and rate of return for unfunded facilities,
as the case may be, for the relevant
period
(iii) rate of interest, mark-up, profit, fees or Higher of KIBOR or borrowing cost of
commission etc to be charged by investing company in line with section
investing company 199 of Companies Act 2017.
(vi) repayment schedule and terms and Principal: One (1) year from disbursement.
conditions of loans or advances to be Mark-up: Quarterly basis.
given to the associated company or
associated undertaking;
to the associated company or associated
undertaking;
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Annual Report 2021
Revenue 11,889,214
Cost of revenue 87,244,126
Gross profit -75,354,912
Loss for the year -76,603,621
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Annual Report 2021
(II) purpose, benefits likely to accrue to the Purpose: To meet working capital
investing company and its members requirements of UUS Joint Venture
from such investment and period of (Private) Limited and to give guarantee
investment; to Pakistan Civil Aviation Authority.
(III) sources of funds to be utilized for Loan shall be from own funds while
investment and where the investment is guarantee shall be issued by the banker
intended to be made using borrowed of Systems Limited.
funds,-
(I) justification for investment UUS Joint Venture (Private) Limited is only a
through borrowings; special purpose vehicle for executing
Pakistan Civil Aviation Authority (PCAA)
project awarded to consortium of Systems
Limited and Beijing UniStrong Science &
Technology Co. It is Systems Limited liability
to issue guarantee to (PCAA).
129
(III) cost benefit analysis; N/A
salient features of the agreement(s), if any, None. Agreement shall be executed in line
(iv)
with associated company or associated with section 199 of Companies Act, 2017 and
undertaking with regards to the proposed resolution of shareholders to be passed in
investment; annual general meeting.
(v) direct or indirect interest of directors, Mr. Asif Peer, CEO of Systems Limited is
sponsors, majority shareholders and also member and director in UUS Joint
their relatives, if any, in the associated Venture (Pvt.) Limited.
company or associated undertaking or
the transaction under consideration;
(vi) in case any investment in associated Under the terms of the Project Agree-
company or associated undertaking has ment executed between UUS-JV and Civil
already been made, the performance Aviation Authority (“CAA”), UUS-JV was
review of such investment including entitled to 5 (five) payments in total for
complete information/justification for the provision of services against the
any impairment or write offs; and decided milestones. Till date, UUS-JV has
only received 3 (three) payments and is
yet awaiting the remaining 2 (two)
payments from the CAA against
outstanding milestones. After the
completion of the said milestones, CAA
shall release the performance guaran-
tees provided for the Project. In order to
meet the working capital requirements
for the remaining milestones / stages of
the Project, the Company wishes to
increase the loan guarantee limit from
Rs. 400,000,000/- (Pakistani Rupees
Four Hundred Million only) to Rs.
600,000,000/- (Pakistani Rupees Six
Hundred Million only) till such time that
the milestones are completed by UUS-JV
and the afore-mentioned performance
guarantees are released by
CAA.There is no impairment or write-off.
In case of investments in the form of loans, advances and guarantees, following disclosures in addition to
those provided under clause (a) of sub-regulation (1) of regulation 3 shall be made,-
(ii) average borrowing cost of the investing ERF loan: Average borrowing cost of
company, the Karachi Inter Bank Offered investing company is SBP rate plus 0.5%.
Rate (KIBOR) for the relevant period, rate
of return for Shariah compliant products
and rate of return for unfunded facilities,
as the case may be, for the relevant
period
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Annual Report 2021
(iii) rate of interest, mark-up, profit, fees or Higher of KIBOR or borrowing cost of
commission etc to be charged by investing company in line with section
investing company 199 of companies act 2017.
(vi) repayment schedule and terms and Principal: One (1) year from disbursement.
conditions of loans or advances to be Mark-up: Quarterly basis.
given to the associated company or
associated undertaking;
to the associated company or associated
undertaking;
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Annual Report 2021
Revenue 405,271,026
Cost of revenue (222,314,612)
Gross profit 182,956,414
Loss for the year (203,096,321)
(II) purpose, benefits likely to accrue to the Purpose: To meet increased working
investing company and its members capital requirement of E-Processing
from such investment and period of Systems (Private) Limited arising due to
investment; expansion of operations, expected launch
of new feature its product OneLoad and a
new EMI product.
132
Annual Report 2021
salient features of the agreement(s), if any, Agreement is executed in line with section 199
(iv)
with associated company or associated of Companies Act, 2017.
undertaking with regards to the proposed
investment;
direct or indirect interest of directors, Mr. Aezaz Hussain, Chairman and Mr. Asif
(v)
sponsors, majority shareholders and their Peer, CEO of Systems Limited are also
relatives, if any, in the associated company directors of E-Processing (Private) Limited.
or associated undertaking or the Mr. Aezaz Hussain, Chairman, Mr. Arshad
transaction under consideration; Masood, Director and Mr. Asif Peer, CEO of
Systems Limited are also member in
E-Processing Systems (Private) Limited either
directly or through direct relatives.
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Annual Report 2021
In case of investments in the form of loans, advances and guarantees, following disclosures in addition to
those provided under clause (a) of sub-regulation (1) of regulation 3 shall be made,-
(ii) average borrowing cost of the investing Average borrowing cost of investing
company, the Karachi Inter Bank Offered company is SBP plus 0.5% for ERF Loan
Rate (KIBOR) for the relevant period, rate Facility
of return for Shariah compliant products
and rate of return for unfunded facilities,
as the case may be, for the relevant
period
(iii) rate of interest, mark-up, profit, fees or KIBOR or borrowing cost of company
commission etc to be charged by whichever is higher
investing company
(vi) repayment schedule and terms and Principal: One (1) year from disbursement
conditions of loan or advances to be with rollover option of 1 year.
given to the associated company or Mark-up: Quarterly basis.
associated undertaking
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Annual Report 2021
135
Annual Report 2021
(II) purpose, benefits likely to accrue to the Purpose: To meet working capital
investing company and its members requirements of TechVista Information
from such investment and period of Technology WLL.
investment;
Benefit: To enhance market share of IT
services in the Qatari market.
136
Annual Report 2021
In case of investments in the form of loans, advances and guarantees, following disclosures in addition to
those provided under clause (a) of sub-regulation (1) of regulation 3 shall be made,-
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Annual Report 2021
PURPOSE:
In order to facilitate the resident companies (Start-ups and FinTech’s), having innovative and/or scalable
businesses with a potential for high growth, to raise capital from abroad, State Bank of Pakistan under FE
Manual Chapter 20 Rule 13 (b) allows a company to set up a holding company abroad, whereby shareholding of
the local company is mirrored in the foreign holding company at equal value.
JUSTIFICATION:
The Company took advantage of the FE Manual Chapter 20 Rule 13 (b) to attract foreign investors, primarily the
Gates Foundation and other prospective institutional investors and venture capitalists. Subsequent to the
incorporation of the foreign holding company, the Gates Foundation has invested in the foreign holding company.
1. Mr. Aezaz Hussain, Chairman and Mr. Asif Peer, CEO of Systems Limited are also directors of E-Processing
(Private) Limited.
2. Mr. Aezaz Hussain, Chairman, Mr. Arshad Masood, Director and Mr. Asif Peer, CEO of Systems Limited are also
member in E-Processing Systems (Private) Limited either directly or through direct relatives.
138
Annual Report 2021
SHAREHOLDERS' INFORMATION
REGISTERED OFFICE DIVIDEND REMITTANCE GENERAL MEETINGS &
VOTING RIGHTS
E-1, Sehjpal Near DHA Phase - Ordinary dividend declared and
VIII (Ex.-Air Avenue), Lahore approved at the Annual General Pursuant to section 158 of
Cantt. Meeting will be paid within the repealed Companies Ordinance
T: +92 42 111-797-836 statutory time limit of 15 days. 1984 (now, section 132 of
F: +92 42 3 636 8857 Companies Act, 2017) Systems
(i) For shares held in physical
Limited holds a General Meeting
form: to shareholders
SHARE REGISTRAR of shareholders at least once a
whose names appear in the
year. Every shareholder has a
THK Associates (Private) Register of Members of the
right to attend the General
Limited. Company after entertaining
Meeting. The notice of such
Plot no. 32-C, Jami Commercial, all requests for transfer of
meeting is sent to all the
shares lodged with the
Street 2, DHA Phase VII, Karachi shareholders at least 21 days
T: +92 21 111-000-322 Company on or before the
before the meeting and also
F: +92 21 3 531 0187 book closure date.
advertised in at least one
(ii) For shares held in electronic English and one Urdu
LISTING ON STOCK from: to shareholders newspaper having circulation in
EXCHANGES whose names appear in the Karachi, Lahore and Islamabad.
statement of beneficial Shareholders having holding of
Ordinary shares of Systems ownership furnished by CDC at least 10% of voting rights
Limited are listed on Pakistan as at end of business on may also apply to the Board of
Stock Exchange Limited. book closure date. Directors to call for meeting of
shareholders, and if the Board
STOCK CODE / SYMBOL WITHHOLDING OF TAX & ZAKAT does not take action on such
ON ORDINARY DIVIDEND application within 21 days, the
The stock code / symbol for shareholders may themselves
trading in ordinary shares of As per the provisions of the call the meeting.
Systems Limited at Pakistan Income Tax Ordinance, 2001, All ordinary shares issued by
Stock Exchange in SYS. income tax is deductible at the Company carry equal voting
source by the Company at the rights. Generally, matters at the
STATUTORY COMPLIANCE rate of 15% in case of filer and general meetings are decided by
30% in case on non-filer a show of hands in the first
During the year, the Company wherever applicable. instance. Voting by show of
has complied with all applicable hands operates on the principle
Zakat is also deductible at
provisions, filed all of “One Member-One Vote”. If
source form the ordinary
returns/forms and furnished all majority of shareholders raise
dividend at the rate of 2.5% of
the relevant particulars as their hands in favor of a
the face value of the share,
required under the repealed particular resolution, it is taken
other than corporate holders or
Companies Ordinance, 1984 as passed, unless a poll is
individuals who have provided
(Now, Companies Act, 2017) and demanded.
an undertaking for non-
allied rules, the Securities and Since the fundamental voting
deduction.
Exchange Commission of principle in the Company is “One
Pakistan Regulations and the Share-One Vote”, voting takes
listing requirements. DIVIDEND WARRANTS
place by a poll, if demanded. On
Cash dividends are paid through a poll being taken, the decision
DIVIDEND dividend warrants addressed to arrived by poll is final,
the ordinary shareholders overruling any decision taken on
The Board of Directors in their whose names appear in the a show of hands.
meeting held on 10 March 2022 Register of Shareholders at the
has proposed a dividend on date of book closure. INVESTOR’S GRIEVANCES
ordinary shares at Rs. 5.00 per
ordinary share and 100% bonus To date none of the investors or
shares issue. shareholders has filed any
significant complaint against any
service provided by the Company
BOOK CLOSURE DATES
to its shareholders.
Share Transfer Books of the
Company will remain closed
from 4th April 2022 to 11 April
2022 (both days inclusive).
139
Annual Report 2021
140
Annual Report 2021
CORPORATE
GOVERNANCE
141
Annual Report 2021
142
Annual Report 2021
2021
2021
143
Annual Report 2021
WE HAVE REVIEWED THE ENCLOSED STATEMENT OF COMPLIANCE WITH THE LISTED COMPANIES (CODE
OF CORPORATE GOVERNANCE) REGULATIONS, 2019 (THE REGULATIONS) PREPARED BY THE BOARD OF
DIRECTORS OF SYSTEMS LIMITED (THE COMPANY) FOR THE YEAR ENDED 31 DECEMBER 2021 IN
ACCORDANCE WITH THE REQUIREMENTS OF REGULATION 36 OF THE REGULATIONS.
THE RESPONSIBILITY FOR COMPLIANCE WITH THE REGULATIONS IS THAT OF THE BOARD OF DIRECTORS
OF THE COMPANY. OUR RESPONSIBILITY IS TO REVIEW WHETHER THE STATEMENT OF COMPLIANCE
REFLECTS THE STATUS OF THE COMPANY’S COMPLIANCE WITH THE PROVISIONS OF THE REGULATIONS
AND REPORT IF IT DOES NOT AND TO HIGHLIGHT ANY NON-COMPLIANCE WITH THE REQUIREMENTS OF
THE REGULATIONS. A REVIEW IS LIMITED PRIMARILY TO INQUIRIES OF THE COMPANY’S PERSONNEL AND
REVIEW OF VARIOUS DOCUMENTS PREPARED BY THE COMPANY TO COMPLY WITH THE REGULATIONS.
THE REGULATIONS REQUIRE THE COMPANY TO PLACE BEFORE THE AUDIT COMMITTEE, AND UPON
RECOMMENDATION OF THE AUDIT COMMITTEE, PLACE BEFORE THE BOARD OF DIRECTORS FOR THEIR
REVIEW AND APPROVAL, ITS RELATED PARTY TRANSACTIONS. WE ARE ONLY REQUIRED AND HAVE
ENSURED COMPLIANCE OF THIS REQUIREMENT TO THE EXTENT OF THE APPROVAL OF THE RELATED
PARTY TRANSACTIONS BY THE BOARD OF DIRECTORS UPON RECOMMENDATION OF THE AUDIT
COMMITTEE. WE HAVE NOT CARRIED OUT PROCEDURES TO ASSESS AND DETERMINE THE COMPANY’S
PROCESS FOR IDENTIFICATION OF RELATED PARTIES AND THAT WHETHER THE RELATED PARTY
TRANSACTIONS WERE UNDERTAKEN AT ARM’S LENGTH PRICE OR NOT.
BASED ON OUR REVIEW, NOTHING HAS COME TO OUR ATTENTION WHICH CAUSES US TO BELIEVE THAT
THE STATEMENT OF COMPLIANCE DOES NOT APPROPRIATELY REFLECT THE COMPANY'S COMPLIANCE, IN
ALL MATERIAL RESPECTS, WITH THE REQUIREMENTS CONTAINED IN THE REGULATIONS AS APPLICABLE
TO THE COMPANY FOR THE YEAR ENDED 31 DECEMBER 2021.
CHARTERED ACCOUNTANTS
LAHORE:
19 MARCH 2022
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Annual Report 2021
The company has complied with the requirements of the Regulations in the following manner:-
The company has complied with the requirements of the Regulations in the following manner:
1. The total number of directors are seven (7) as per the following:
a. Male: six (6)
b. Female: one (1)
3. The directors have confirmed that none of them is serving as a director on more than seven listed companies,
including this company;
4. The company has prepared a code of conduct and has ensured that appropriate steps have been taken to dissemi-
nate it throughout the company along with its supporting policies and procedures;
5. The Board has developed a vision/mission statement, overall corporate strategy and significant policies of the
company. The Board has ensured that complete record of particulars of the significant policies along with their date
of approval or updating is maintained by the company;
6. All the powers of the Board have been duly exercised and decisions on relevant matters have been taken by the
Board/ shareholders as empowered by the relevant provisions of the Act and these Regulations;
7. The meetings of the Board were presided over by the Chairman and, in his absence, by a director elected by the
Board for this purpose. The Board has complied with the requirements of Act and the Regulations with respect to
frequency, recording and circulating minutes of meeting of the Board;
8. The Board have a formal policy and transparent procedures for remuneration of directors in accordance with the
Act and these Regulations;
9. The Board has arranged Directors’ Training program for the following:
i. Mr. Asif Jooma
ii. Mr. Arshad Masood
iii. Mr. Muhammad Asif Peer
iv. Mr. Aezaz Hussain
v. Ms. Romana Abdullah
vi. Mr. Omar Saeed
vii. Mr. Shabbar Zaidi
10. The Board has approved appointment of chief financial officer, company secretary and head of internal audit,
including their remuneration and terms and conditions of employment and complied with relevant requirements of
the Regulations;
11. Chief financial officer and chief executive officer duly endorsed the financial statements before approval of the
Board;
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Annual Report 2021
12. The Board has formed committees comprising of members given below.
a. Audit Committee:
i. Mr. Shabbar Zaidi Chairman
ii. Mr. Asif Jooma Member
iii. Ms. Romana Abdullah Member
13. The terms of reference of the aforesaid committees have been formed, documented and advised to the
committee for compliance;
14. The frequency of meetings (quarterly/half yearly/ yearly) of the committee were as per following:
a. Audit Committee: Quarterly
b. HR and Remuneration Committee: Meetings
15. The Board has set up an effective internal audit function/ or has outsourced the internal audit function to who are
considered suitably qualified and experienced for the purpose and are conversant with the policies and procedures
of the company;
16. The statutory auditors of the company have confirmed that they have been given a satisfactory rating under the
Quality Control Review program of the Institute of Chartered Accountants of Pakistan and registered with Audit
Oversight Board of Pakistan, that they and all their partners are in compliance with International Federation of
Accountants (IFAC) guidelines on code of ethics as adopted by the Institute of Chartered Accountants of Pakistan
and that they and the partners of the firm involved in the audit are not a close relative (spouse, parent, dependent
and non-dependent children) of the chief executive officer, chief financial officer, head of internal audit, company
secretary or director of the company;
17. The statutory auditors or the persons associated with them have not been appointed to provide other services
except in accordance with the Act, these Regulations or any other regulatory requirement and the auditors have
confirmed that they have observed IFAC guidelines in this regard;
18. We confirm that all requirements of regulations 3, 6, 7, 8, 27,32, 33 and 36 of the Regulations have been complied
with; and
19. Explanation for non-compliance with requirements, other than regulations 3, 6, 7, 8, 27, 32, 33 and 36 are below
(if applicable):
146
SYSTEMS LIMITED
STANDALONE
FINANCIAL
STATEMENTS
148
Annual Report 2021
We have audited the annexed unconsolidated financial statements of Systems Limited (the Company), which comprise the
unconsolidated statement of financial position as at 31 December 2021, and the unconsolidated statement of profit or loss,
the unconsolidated statement of comprehensive income, the unconsolidated statement of changes in equity, the
unconsolidated statement of cash flows for the year then ended, and notes to the unconsolidated financial statements,
including a summary of significant accounting policies and other explanatory information, and we state that we have
obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the
purposes of the audit.
In our opinion and to the best of our information and according to the explanations given to us, the unconsolidated statement
of financial position, the unconsolidated statement of profit or loss, the unconsolidated statement of comprehensive income,
the unconsolidated statement of changes in equity and the unconsolidated statement of cash flows together with the notes
forming part thereof conform with the accounting and reporting standards as applicable in Pakistan and give the information
required by the Companies Act, 2017 (XIX of 2017), in the manner so required and respectively give a true and fair view of the
state of the Company's affairs as at 31 December 2021 and of the profit, the comprehensive income, the changes in equity
and its cash flows for the year then ended.
We conducted our audit in accordance with International Standards on Auditing (ISAs) as applicable in Pakistan. Our
responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the
unconsolidated Financial Statements section of our report. We are independent of the Company in accordance with the
International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants as adopted by the
Institute of Chartered Accountants of Pakistan (the Code) and we have fulfilled our other ethical responsibilities in
accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
unconsolidated financial statements of the current period. These matters were addressed in the context of our audit of the
unconsolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion
on these matters.
Key Audit Matter How the matter was addressed in our audit
1. Revenue recognition
Our audit procedures, amongst others, included:
The Company’s revenue is derived from multiple revenue Obtaining an understanding and evaluating the
streams, as referred to in Note 27 to the accompanying appropriateness of the Company’s revenue recognition
unconsolidated financial statements, including policies including those relating to assessment of
outsourcing services for business processes and various performance obligations and compliance of those policies
IT services, and software sale in the form of short term with applicable accounting standards;
and long-term projects.
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Annual Report 2021
Key Audit Matter How the matter was addressed in our audit
The Company’s revenue is derived from multiple revenue Obtaining an understanding of and testing the design and
streams, as referred to in Note 27 to the accompanying operating effectiveness of controls over the revenue
unconsolidated financial statements, including recognition process;
outsourcing services for business processes and various
IT services, and software sale in the form of short term Selecting a sample of revenue transactions recognized
and long-term projects. during the year and performing substantive procedures
which include verification of supporting documentation
along with evaluation of the management basis used in
determining the performance obligations in accordance
with accounting policy;
Information Other than the unconsolidated Financial Statements and Auditors’ Report Thereon
Management is responsible for the other information. The other information comprises the information included in the
Annual Report, but does not include the unconsolidated financial statements and our auditor’s report thereon. Our opinion on
the unconsolidated financial statements does not cover the other information and we do not express any form of assurance
conclusion thereon.
In connection with our audit of the unconsolidated financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the unconsolidated financial
statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we
have performed, we conclude that there is a material misstatement of this other information, we are required to report that
fact. We have nothing to report in this regard.
Responsibilities of Management and Board of Directors for the unconsolidated Financial Statements
Management is responsible for the preparation and fair presentation of the unconsolidated financial statements in
accordance with the accounting and reporting standards as applicable in Pakistan and the requirements of Companies Act,
2017 (XIX of 2017) and for such internal control as management determines is necessary to enable the preparation of
unconsolidated financial statements that are free from material misstatement, whether due to fraud or error.
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Annual Report 2021
In preparing the unconsolidated financial statements, management is responsible for assessing the Company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative
but to do so.
Board of directors are responsible for overseeing the Company’s financial reporting process.
Our objectives are to obtain reasonable assurance about whether the unconsolidated financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs as
applicable in Pakistan will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these unconsolidated financial statements.
As part of an audit in accordance with ISAs as applicable in Pakistan, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also:
ï Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a
basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control.
ï Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.
ï Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by management.
ï Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on
the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to
draw attention in our auditors’ report to the related disclosures in the unconsolidated financial statements or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of
our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.
ï Evaluate the overall presentation, structure and content of the unconsolidated financial statements, including the
disclosures, and whether the unconsolidated financial statements represent the underlying transactions and events in a
manner that achieves fair presentation.
We communicate with the Board of Directors regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the Board of Directors with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on
our independence, and where applicable, related safeguards.
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Annual Report 2021
From the matters communicated with the Board of Directors, we determine those matters that were of most significance in
the audit of the unconsolidated financial statements of the current year and are therefore the key audit matters. We describe
these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in
extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor’s report is Sajjad Hussain Gill.
Chartered Accountants
Lahore:19 March 2022
152
Annual Report 2021
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Annual Report 2021
The annexed notes, from 1 to 44, form an integral part of these unconsolidated financial statements.
154
Annual Report 2021
The annexed notes, from 1 to 44, form an integral part of these unconsolidated financial statements.
155
Annual Report 2021
The annexed notes, from 1 to 44, form an integral part of these unconsolidated financial statements.
156
Annual Report 2021
Investing activities
Purchase of property and equipment (811,566,898) (290,033,960)
Development expenditures (30,377,218) (3,677,392)
Sale proceeds from disposal of property and equipment 39,955,227 17,305,636
Short term investments - net (2,106,624,518) (1,857,502,251)
Increase in long term loan (49,480,031) -
Increase in long term investment (1,059,060,531) (99,980)
Dividend income 17,701,867 2,502,253
Profit received on deposit accounts 27,785,398 25,119,146
Profit received on short term investments 92,988,031 94,201,454
Increase / (decrease) in long term deposits (108,458,365) 15,812,635
Net cash used in investing activities (3,987,137,038) (1,996,372,459)
Financing activities
Increase in short term borrowings 1,500,000,000 600,000,000
(Decrease) / increase in long term loan (134,155,808) 210,000,000
Proceeds from exercise of share options 105,737,493 75,284,456
Payment of principal portion of lease liabilities (55,317,983) (50,135,594)
Dividend paid (434,574,310) (278,648,714)
Net cash generated from financing activities 981,689,392 556,500,148
The annexed notes, from 1 to 44, form an integral part of these unconsolidated financial statements.
(17)
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Annual Report 2021
Systems Limited ("the Company") is a public limited company incorporated in Pakistan under the Companies Act,
2017 and is listed on the Pakistan Stock Exchange. The Company is principally engaged in the business of software
development, trading of software and business process outsourcing services. The registered office of the Company
is situated at E-1, Sehjpal Road, Near DHA Phase-VIII (Ex-Air Avenue), Lahore Cantt.
These financial statements are the separate financial statements of the Company, in which investments in the
subsidiary companies namely TechVista Systems FZ- LLC, SUS JV (Private) Limited and Systems Ventures
(Private) Limited and associated company namely E-Processing Systems B.V have been accounted for at cost less
accumulated impairment losses, if any.
1.1
Geographical location and addresses of major business units of the Company are as under:
Head Office Lahore E-1, Sehjpal, Near DHA Phase-VIII (Ex-Air Avenue),
Lahore Cantt.
Regional Office Karachi E-5, Central Commercial Area, Shaheed-e-Millat
Road, Karachi
Regional Office Islamabad Plot No. 21, 1st Floor Fazeelat Arcade, Sector G-11
Markaz, Islamabad
Regional Office Multan Plot No. 842/23 near Northern Bypass Chowk,
Bosan Road, Multan
Regional Office Faisalabad Jahal Khanewal, Main East Canal Road, Old Ehsan
Yousaf Mill, Ali Fatima Science College near Faisal
hospital, Faisalabad.
BPO Office Lahore Commercial building Plaza No 1, Block -CCA, Phase
8C, DHA Lahore Cantt
These unconsolidated financial statements have been prepared in accordance with the accounting and reporting
standards as applicable in Pakistan. The accounting and reporting standards comprise of:
- International Financial Reporting Standard (IFRS) issued by the International Accounting Standard Board (IASB)
as notified under the Companies Act, 2017 (the Act) ; and
Where provisions of and directives issued under the Act, differ from the IFRS, the provisions of and directives
issued under the Act, have been followed.
These unconsolidated financial statements have been prepared under the historical cost convention except, as
otherwise stated in these unconsolidated financial statements.
Items included in the unconsolidated financial statements are measured using the currency of the primary
economic environment in which the Company operates. These unconsolidated financial statements are presented
in Pak Rupees, which is the Company’s functional and presentation currency.
The Company's significant accounting policies are stated in Note 3. Not all of these significant policies require the
management to make difficult, subjective or complex judgments or estimates. The following is intended to
provide
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an understanding of the policies the management considers critical because of their complexity, judgment of
estimation involved in their application and their impact on these unconsolidated financial statements. Estimates
and judgments are continually evaluated and are based on historical experience, including expectation of future
events that are believed to be reasonable under the circumstances. These judgments involve assumptions or
estimates in respect of future events and the actual results may differ from these estimates. The areas involving
higher degree of judgments or complexity or areas where assumptions and estimates are significant to the
unconsolidated financial statements are as follows:
The Company takes into account the current income tax law and the decisions taken by appellate authorities.
Instances where the Company's view differs from the view taken by the income tax department at the assessment
stage and where the Company considers that its views on items of material nature are in accordance with law, the
amounts are shown as contingent liabilities.
2.4.2 Useful lives and residual values of property and equipment and intangibles (Note 3.4)
The Company reviews the useful lives of property and equipment and intangibles at each reporting date. Any
change in estimates in future years might affect the carrying amounts of respective items of property and
equipment with a corresponding effect on the depreciation / amortization charge and impairment.
The Company uses a provision matrix to calculate Expected Credit Losses (ECLs) for trade debts and contract
assets. The provision rates are based on days past due for groupings of various customer segments that have
similar loss patterns (i.e., by geography, product type, and customer type).
The provision matrix is initially based on the Company’s historical observed default rates. The Company calibrates
the matrix to adjust the historical credit loss experience with forward-looking information which includes forecast
economic conditions. At every reporting date, the historical observed default rates are updated and changes in the
forward-looking estimates are analyzed.
The assessment of the correlation between historical observed default rates, forecast economic conditions and
ECLs is a significant estimate. The amount of ECLs is sensitive to changes in circumstances and of forecast
economic conditions. The Company’s historical credit loss experience and forecast of economic conditions may also
not be representative of customer’s actual default in the future.
For contracts with multiple components to be delivered, the Company applies judgement to determine
performance obligations which are distinct; or not distinct, which are aggregated with other performance
obligations until a bundle is identified that is distinct.
The Company determines stand-alone selling prices of all performance obligations in a bundled contract, which
include sale of license, implementation, support, warranty and training. The total transaction price is allocated to all
distinct performance obligations based on estimated cost of completion, plus target margin on each of the
performance obligations.
2.4.4.3 Stage of completion
The Company determines stage of completion on the basis of cost incurred to date as a percentage of total
estimated cost to deliver the performance obligations.
2.4.5 Determining the lease term of contracts with renewal options (Note 3.21)
The Company determines the lease term as the non-cancellable term of the lease, together with any periods
covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an
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option to terminate the lease, if it is reasonably certain not to be exercised. The Company has the option, under
some of its leases to lease the assets for an additional term. The Company applies judgement in evaluating whether
it is reasonably certain to exercise the option to renew i.e. it considers all relevant factors that create an economic
incentive for it to exercise the renewal. After the commencement date, the Company reassesses the lease term if
there is a significant event or change in circumstances that is within its control and affects its ability to exercise (or
not to exercise) the option to renew (e.g., a change in business strategy).
Estimating fair value for share-based payment transactions requires determination of the most appropriate
valuation model, which depends on the terms and conditions of the grant. This estimate also requires determination
of the most appropriate inputs to the valuation model including the expected life of the share option, volatility and
dividend yield and making assumptions about them. The Company measures the fair value of equity-settled
transactions with employees at the grant date using a black Scholes Model. The assumptions and models used for
estimating fair value for share-based payment transactions are disclosed in Note 18.2.5.
3.1 Changes in accounting policies and disclosures resulting from amendments in standards during the year
The Company has adopted the following amendments of IFRS which became effective for the current year:
Interest Rate Benchmark Reform – Phase 2: Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS-16
The amendments provide temporary reliefs which address the financial reporting effects when an interbank
offered rate (IBOR) is replaced with an alternative nearly risk-free interest rate (RFR). The amendments include
the following practical expedients:
- A practical expedient to require contractual changes, or changes to cash flows that are directly required by the
reform, to be treated as changes to a floating interest rate, equivalent to a movement in a market rate of interest
- Permit changes required by IBOR reform to be made to hedge designations and hedge documentation without
the hedging relationship being discontinued
- Provide temporary relief to entities from having to meet the separately identifiable requirement when an RFR
instrument is designated as a hedge of a risk component
The adoption of the above amendments to accounting standards did not have any material effect on the financial
statement.
Covid-19-Related Rent Concessions beyond 30 June 2021 Amendments to IFRS 16
On 28 May 2020, the IASB issued Covid-19-Related Rent Concessions - amendment to IFRS 16 Leases. The
amendments provide relief to lessees from applying IFRS 16 guidance on lease modification accounting for rent
concessions arising as a direct consequence of the Covid-19 pandemic. As a practical expedient, a lessee may elect
not to assess whether a Covid-19 related rent concession from a lessor is a lease modification. A lessee that makes
this election accounts for any change in lease payments resulting from the Covid-19 related rent concession the
same way it would account for the change under IFRS 16, if the change were not a lease modification.
The amendment was intended to apply until 30 June 2021, but as the impact of the Covid-19 pandemic is continuing,
on 31 March 2021, the IASB extended the period of application of the practical expedient to 30 June 2022.The
amendment applies to annual reporting periods beginning on or after 1 April 2021. However, the Company has not
received Covid-19-related rent concessions, but plans to apply the practical expedient if it becomes applicable
within allowed period of application.
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A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights
to the assets, and obligations for the liabilities, relating to the arrangement. Joint control is the contractually
agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require
unanimous consent of the parties sharing control.
When the Company undertakes its activities under joint operations, the Company as a joint operator recognizes in
relation to its interest in a joint operation:
Its revenue from the sale of its share of the output arising from the joint operation;
Its share of the revenue from the sale of the output by the joint operation; and
The Company accounts for the assets, liabilities, revenues and expenses relating to its interest in a joint operation
in accordance with the IFRSs applicable to the particular assets, liabilities, revenues and expenses. When Company
transacts with a joint operation in which a Company is a joint operator, the Company is considered to be conducting
the transaction with the other parties to the joint operation, and gains and losses resulting from the transactions
are recognized in the Company's standalone financial statements only to the extent of other parties' interests in the
joint operation. When Company transacts with a joint operation in which Company is a joint operator, the Company
does not recognize its share of the gains and losses until it resells those assets to a third party.
The Company has interest in joint operation UUS Joint Venture (Private) Limited, a Company set up specifically for
executing multi-year contract “Package 04A – Airport Information Management System (AIMS)”, a turnkey project
for New Islamabad International Airport by Pakistan Civil Aviation Authority.
3.3 Taxation
3.3.1 Current
Provision for current tax is based on the taxable income for the year determined in accordance with the prevailing
law for taxation of income. The charge for current tax is calculated using prevailing tax rates or tax rates expected
to apply to the profit for the year, if enacted. The charge for current tax also includes adjustments, where
considered necessary, to provision for taxation made in previous years arising from assessments framed during the
year for such years.
3.3.2 Deferred
Deferred tax is accounted for using the statement of financial position method in respect of all temporary
differences arising from differences between the carrying amount of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of the taxable profit. Deferred tax liabilities
are generally recognized for all taxable temporary differences and deferred tax assets are recognized to the extent
that it is probable that taxable profits will be available against which the deductible temporary differences, unused
tax losses and tax credits can be utilized.
Deferred tax is calculated at the rates that are expected to apply to the year when the differences reverse based on
tax rates that have been enacted or substantively enacted by the reporting date. Deferred tax is charged or credited
in the unconsolidated statement of profit or loss, except in the case of items credited or charged to other
comprehensive income in which case it is included in other comprehensive income.
Expenses and assets are recognized net of the amount of sales tax, except:
- When the sales tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in
which case, the sales tax is recognized as part of the cost of acquisition of the asset or as part of the expense item,
as applicable.
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- When receivables and payables are stated with the amount of sales tax included the net amount of sales tax
recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the
unconsolidated statement of financial position.
Property and equipment are stated at cost less accumulated depreciation and any identified impairment loss except
for freehold land which is stated at historic cost. Cost of operating fixed assets consist of purchase cost, borrowing
cost pertaining to construction period and directly attributable cost of bringing the asset to working condition.
Subsequent costs are included in the assets carrying amount or recognized as separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the Company and the cost
of the item can be measured reliably. All other repair and maintenance costs are charged to unconsolidated
statement of profit or loss during the period in which they are incurred.
Depreciation on property and equipment is charged to income by applying straight line method on pro rata basis so
as to write off the historical cost of the assets over their estimated useful lives at the rates given in Note 4.1.
Depreciation charge commences from the month in which the asset is available for use and continues until the
month of disposal.
The assets residual values and useful lives are reviewed at each financial year end, and adjusted if impact on
depreciation is significant.
An item of property and equipment is derecognized upon disposal or when no future economic benefits are
expected from its use or disposal. Profit or loss on disposal of operating fixed assets represented by the difference
between the sale proceeds and the carrying amount of the asset is included in income.
Capital work in progress represents expenditure on property and equipment which are in the course of construction
and installation. Transfers are made to relevant property and equipment category as and when assets are available
for use.
Capital work-in-progress is stated at cost less identified impairment loss, if any.
3.5 Intangibles
Intangible assets acquired from the market are carried at cost less accumulated amortization and any impairment
losses.
Expenditure on research (or the research phase of an internal project) is recognized as an expense in the period in
which it is incurred;
Development costs incurred on specific projects are capitalized when all the following conditions are satisfied:
- Completion of the intangible asset is technically feasible so that it will be available for use or sale.
- The Company intends to complete the intangible asset and use or sell it.
- The Company has the ability to use or sell the intangible asset.
- The availability of adequate technical, financial and other resources to complete the development and to use or
sell the intangible asset.
- The Company's ability to measure reliably the expenditure attributable to the intangible asset during its
development.
The cost of an internally generated intangible asset comprises all directly attributable costs necessary to create,
produce and prepare the asset to be capable of operating in the manner intended by the management. Development
costs not meeting the criteria for capitalization are expensed as incurred.
After initial recognition, internally generated intangible assets are carried at cost less accumulated amortization
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and impairment losses, if any. These are amortized using straight line method at the rate given in Note 5. Full month
amortization on additions is charged in the month of acquisition and no amortization is charged in month of
disposal.
The Company assesses at each reporting date whether there is any indication that intangible assets may be
impaired. If such indication exists, the carrying amounts of such assets are reviewed to assess whether they are
recorded in excess of their recoverable amount. Where carrying amounts exceed the respective recoverable
amount, assets are written down to their recoverable amounts and the resulting impairment loss is recognized in
unconsolidated statement of profit or loss. The recoverable amount is the higher of an asset’s fair value less costs
to sell and value in use. Where an impairment loss is recognized, the amortization charge is adjusted in the future
periods to allocate the asset’s revised carrying amount over its estimated useful life.
The carrying amounts of non-financial assets other than inventories and deferred tax asset, are reviewed at each
reporting date to determine whether there is any indication of impairment. If any such indication exists, then the
asset's recoverable amount is estimated. The recoverable amount of an asset or cash-generating unit is the greater
of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects current market assessment of the time
value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be
tested individually are grouped together into the smallest group of assets that generates cash inflows from
continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cash
generating unit, or CGU”).
The Company's corporate assets do not generate separate cash inflows. If there is an indication that a corporate
asset may be impaired, then the recoverable amount is determined for the CGU to which the corporate asset
belongs. An impairment loss is recognized if the carrying amount of an asset or its CGU exceeds its estimated
recoverable amount. Impairment losses are recognized in unconsolidated statement of profit or loss.
Impairment loss recognized in prior periods is assessed at each reporting date for any indications that the loss has
decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to
determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying
amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization,
if no impairment loss had been recognized.
The Company operates a funded recognized provident fund contribution plan which covers all permanent
employees. Equal contributions are made on monthly basis both by the Company and the employees at 10% of
basic pay.
The Company operates an equity settled share based Employees Stock Option Scheme. The compensation
committee of the Board of Directors of the Company evaluates the performance and other criteria of employees
and approves the grant of options. These options vest with employees over a specified period subject to fulfillment
of certain conditions. Upon vesting, employees are eligible to apply and secure allotment of Company's shares at a
price determined on the date of grant of options.
At the grant date of share options to the employees, the Company initially recognizes employee compensation
expense with corresponding credit to equity as employee compensation reserve at the fair value of option at the
grant date. The fair value of options determined at the grant date is recognized as an employee compensation
expense on a straight line basis over the vesting period. Fair value of options is arrived at using Black Scholes
pricing model.
When share options are exercised, the proceeds received, net of any transaction costs, are credited to share capital
(nominal value) and share premium.
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3.8 Investments
The management determines the classification of its investments at the time of purchase depending on the
Company’s business model for managing the financial assets and their contractual cash flow characteristics.
Investments intended to be held for less than twelve months from the statement of financial position date or to be
sold to raise operating capital are included in current assets, all other investments are classified as non-current
assets. (Refer to Note 3.16 for detailed policy of classification, initial and subsequent measurement.)
Investments in subsidiaries and associates where the Company has significant influence are measured at cost in
the Company’s separate financial statements in accordance with IAS-27 'Consolidated and separate financial
statements'.
The Company is required to publish consolidated financial statements along with its separate financial statements,
in accordance with the requirements of IFRS 10 Consolidated Financial Statements and IAS 27 ‘Consolidated and
separate financial statements’. Investments in associates, in the consolidated financial statements, are being
accounted for using the equity method.
Assets and liabilities in foreign currencies are translated into Pak Rupees at the rate of exchange prevailing at the
reporting date. Transactions during the year are converted into Pak Rupees at the exchange rate prevailing at the
date of such transaction. All exchange differences are charged to unconsolidated statement of profit or loss.
Trade debts from local customers are stated at amortized cost less expected credit losses while foreign debtors
are stated at translated amount by applying exchange rate applicable on the reporting date.
Expected credit losses are calculated as a probability weighted estimate of credit losses. Credit losses are
measured as the present value of all cash shortfalls (i.e. the difference between cash flows due to the Company in
accordance with the contract and cash flows that the Company expects to receive). (Refer to note 3.18.4 for detailed
policy for impairment of financial assets)
These are recognized at nominal amount which is fair value of considerations to be received in future.
Liabilities for trade and other payable are carried at cost which is the fair value of the consideration to be paid in
future for goods and services.
Provisions are recognized in the unconsolidated statement of financial position when the Company has a legal or
constructive obligation as a result of past events and it is probable that outflow of resources embodying economic
benefits will be required to settle the obligation and a reliable estimate of the amount can be made. However,
provisions are reviewed at each statement of financial position date and adjusted to reflect current best estimate.
Where outflow of resources embodying economic benefits is not probable, a contingent liability is disclosed, unless
the possibility of outflow is remote.
Government grants are recognized where there is reasonable assurance that the grant will be received and all
attached conditions will be complied with. When the grant relates to an expense item, it is recognized as income on
a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed.
When the grant relates to an asset, it is recognized as income in equal amounts over the expected useful life of the
related asset.
When the Company receives grants of non-monetary assets, the asset and the grant are recorded at nominal
amounts and released to unconsolidated statement of profit or loss over the expected useful life of the asset,
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based on the pattern of consumption of the benefits of the underlying asset by equal annual instalments.
Segment reporting is based on the operating (business) segments of the Company. An operating segment is a
component of the Company that engages in business activities from which it may earn revenues and incur
expenses, including revenues and expenses that relate to transactions with any of the Company’s other
components. An operating segment’s operating results are reviewed regularly by the Chief Executive to make
decisions about resources to be allocated to the segment and assess its performance, and for which discrete
financial information is available.
Segment results that are reported to the Chief Executive include items directly attributable to a segment as well as
those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets, income tax
assets, liabilities and related income and expenditures.
For management purposes, the Systems Limited is organized into business units based on their geographical areas
and has four reportable operating segments namely, North America, Europe, Middle East and Pakistan. No
operating segments have been aggregated to form the above reportable operating segments.
The Executive Management Committee is the Chief Operating Decision Maker (CODM) and monitors the operating
results of its business units separately for the purpose of making decisions about resource allocation and
performance assessment.
Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the
unconsolidated financial statements.
Revenue recognized in any period is based on the delivery of performance obligations and an assessment of when
control is transferred to the customer. For contracts with multiple components to be delivered, management
applies judgement to consider whether those promised goods and services are: (i) distinct – to be accounted for as
separate performance obligations; (ii) not distinct – to be combined with other promised goods or services until a
bundle is identified that is distinct; or (iii) part of a series of distinct goods and services that are substantially the
same and have the same pattern of transfer to the customer.
At contract inception the total transaction price is estimated, which is allocated to the identified performance
obligations in proportion to their relative standalone selling prices and revenue is recognized when (or as) those
performance obligations are satisfied.
For each performance obligation, the Company determines if revenue will be recognized over time or at a point in
time. Where the Company recognizes revenue over time this is due to any of the following reasons: (i) the Company
performing and the customer simultaneously receiving and consuming the benefits provided over the life of the
contract, (ii) the Company’s performance creates or enhances an asset that the customer controls as the asset is
created or enhanced; or (iii) the Company's performance creates an asset with no alternative use, and the Company
has an enforceable right to payment for performance completed to date.
For each performance obligation to be recognized over time, the Company applies a revenue recognition method
that faithfully depicts the Company’s performance in transferring control of the goods or services to the customer.
The Company applies the relevant input method consistently to similar performance obligations in other contracts.
If performance obligations in a contract do not meet the over time criteria, the Company recognizes revenue at a
point in time.
Changes in estimates of measures of progress of performance obligations satisfied over time are recognized on a
cumulative catch-up basis, which recognizes in the current period the cumulative effect of any changes on current
and prior periods based on a performance obligation’s percentage of completion.
The Company disaggregates revenue from contracts with customers by contract type, geographical markets and
timing of revenue recognition, as management believes this best depicts how the nature, amount, timing and
uncertainty of the Company’s revenue and cash flows are affected by economic factors. The revenue recognition
policy relevant to each contract type is as below:
The Company makes judgments in determining whether the software implementation and software license are
distinct and thus separate performance obligations or part of the bundle and thus a single performance obligation
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depending upon the level of customization involved and other key factors surrounding each contract. Revenue is
recognized at a point in time or over time as appropriate.
For contracts where revenue will be recognized over time, the company uses input method for measuring
Percentage of Completion (PoC) by taking into account the cost incurred to date as a percentage of total budgeted
cost.
The Company has assessed that maintenance and support is a performance obligation that can be considered
capable of being distinct and separately identifiable in a contract. These recurring services are substantially the
same as the nature of the promise is for the Company to ‘stand ready’ to perform maintenance and support when
required by the customer. Time-based measure of progress is used for such services since it best reflects the
Company's efforts in satisfying the performance obligation.
Outsourcing services include business process outsourcing services (BPO) and IT services. Revenue is recognized
under each category as below:
a) BPO services
The performance obligation of the Company is to perform the various business activities outsourced by the
customers. Revenue is recognized over time on the basis of activities performed, as the customer simultaneously
receives and consumes the benefits provided by the Company's performance.
b) IT services
The performance obligation of the Company is to make available the resources to perform various IT services as
per the requirement of the customer. Resource efforts are controlled by the customer and revenue is recognized
over time on the basis of hours of resources made available to the customer, as the customer simultaneously
receives and consumes the benefits provided by the Company's performance.
Software trading represents the sale of software licenses and revenue is recognized at the point in time when
obligations under the terms of the contract with the customer are satisfied; generally this occurs when the license
is delivered to the customer.
A contract asset is initially recognized for revenue earned because the receipt of consideration is conditional on
successful completion of the milestones as per contract. Upon completion of the milestone and acceptance by the
customer, the amount recognized as contract assets is reclassified to trade debts.
A contract liability is recognized if a payment is received or a payment is due (whichever is earlier) from a customer
before the related goods or services are transferred. Contract liabilities are recognized as revenue as and when
performance obligations are delivered under the contract.
Profit on deposit account and gain on short term investments and other income is recognized using effective
interest rate.
Unrealized gains / (losses) arising on revaluation of securities classified as " fair value through profit or loss" are
included in unconsolidated statement of profit or loss in the period in which they arise.
All financial assets and liabilities are initially measured at cost which is the fair value of the consideration given or
received. These are subsequently measured at fair value, amortized cost or cost as the case may be.
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Classification
- at amortized cost.
The Company determines the classification of financial assets at initial recognition. The classification of
instruments (other than equity instruments) is driven by the Company’s business model for managing the financial
assets and their contractual cash flow characteristics.
Financial assets that meet the following conditions are subsequently measured at amortized cost:
- the financial asset is held within a business model whose objective is to hold financial assets in order to collect
contractual cash flows; and
- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding.
Financial assets that meet the following conditions are subsequently measured at FVTOCI:
- the financial asset is held within a business model whose objective is achieved by both collecting contractual
cash flows and selling the financial assets; and
- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding.
- at amortized cost.
Financial liabilities are measured at amortized cost, unless they are required to be measured at FVTPL (such as
instruments held for trading or derivatives) or the Company has opted to measure them at FVTPL
Subsequent measurement
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changes in the fair value of the financial assets and liabilities held at FVTPL are included in the unconsolidated
statement of profit or loss in the period in which they arise.
Where management has opted to recognize a financial liability at FVTPL, any changes associated with the
Company’s own credit risk will be recognized in other comprehensive income/(loss). Currently, there are no
financial liabilities designated at FVTPL.
The Company recognizes loss allowance for Expected Credit Loss (ECL) on financial assets measured at amortized
cost at an amount equal to life time ECLs except for the following, which are measured at 12 month ECLs:
- bank balances for which credit risk (the risk of default occurring over the expected life of the financial instrument)
has not increased since inception.
- other short term loans and receivables that have not demonstrated any increase in credit risk since inception.
Loss allowance for trade debts are always measured at an amount equal to life time ECLs. Life time ECLs are the
ECLs that result from all possible defaults events over the expected life of a financial instrument. 12 month ECLs
are portion of ECLs that result from default events that are possible within 12 months after the reporting date.
ECLs are a probability weighted estimate of credit losses. Credit losses are measured as the present value of all
cash shortfalls (i.e. the difference between cash flows due to the Company in accordance with the contract and cash
flows that the Company expects to receive).
The gross carrying amount of a financial asset is written off when the Company has no reasonable expectation of
recovering a financial asset in its entirety or a portion thereof.
3.18.5 Derecognition
i) Financial assets
The Company derecognizes financial assets only when the contractual rights to cash flows from the financial
assets expire or when it transfers the financial assets and substantially all the associated risks and rewards of
ownership to another entity. On derecognition of a financial asset measured at amortized cost, the difference
between the asset’s carrying value and the sum of the consideration received and receivable is recognized in
unconsolidated statement of profit or loss. In addition, on derecognition of an investment in a debt instrument
classified as FVTOCI, the cumulative gain or loss previously accumulated in the investments revaluation reserve is
reclassified to unconsolidated statement of profit or loss. In contrast, on derecognition of an investment in equity
instrument which the Company has elected on initial recognition to measure at FVTOCI, the cumulative gain or loss
previously accumulated in the investments revaluation reserve is reclassified to equity.
The Company derecognizes financial liabilities only when its obligations under the financial liabilities are
discharged, cancelled or expired. The difference between the carrying amount of the financial liability derecognized
and the consideration paid and payable, including any non-cash assets transferred or liabilities assumed, is
recognized in the unconsolidated statement of profit or loss and other comprehensive income.
Financial assets and liabilities are offset and the net amount is reported in the statement of financial position if the
Company has legally enforceable right to offset the recognized amounts and the Company intends to settle either
on a net basis or realize the asset and settle the liability simultaneously.
Finance cost is charged to unconsolidated statement of profit or loss in the year in which it is incurred.
Cash and cash equivalents are stated in the statement of financial position at amortized cost. For the purpose of the
statement of cash flows , cash and cash equivalents comprise of cash in hand, cheques / demand draft in hand and
deposits in the bank.
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3.21 Leases
The Company recognizes right-of-use assets at the commencement date of the lease (i.e. the date the underlying
asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and
impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes
the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at or before the
commencement date less any lease incentives received. Unless the Company is reasonably certain to obtain
ownership of the leased asset at the end of the lease term, the recognized right-of-use assets are depreciated on a
straight-line basis over the shorter of its estimated useful life and the lease term. Right-of-use assets are subject
to impairment.
At the commencement date of the lease, the Company recognizes lease liabilities measured at the present value of
lease payments to be made over the lease term. The lease payments include fixed payments (including
in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index
or a rate, and amounts expected to be paid under residual value guarantees.
In calculating the present value of lease payments, the Company uses the incremental borrowing rate at the lease
commencement date if the interest rate implicit in the lease is not readily determinable. After the commencement
date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease
payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change
in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the
underlying asset.
Dividends and other appropriation to reserves are recognized in the financial statements in the period in which
these are approved. However, if they are approved after the reporting period but before the unconsolidated
financial statements are authorized for issue, they are disclosed in the notes to the unconsolidated financial
statements.
The Company presents basic and diluted earnings per share (EPS). Basic EPS is calculated by dividing the profit
after tax attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares
outstanding during the period. Diluted EPS is calculated by dividing the profit attributable to ordinary equity
holders of the parent (after adjustment) by the weighted average number of ordinary shares outstanding during
the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive
potential ordinary shares into ordinary shares.
3.24 Standards, Interpretations and Amendments to Approved Accounting Standards that are not yet effective
The following standards, amendments and interpretations with respect to the approved accounting standards as
applicable in Pakistan would be effective from the dates mentioned below against the respective standard or
interpretation:
"In May 2017, the IASB issued IFRS 17 Insurance Contracts (IFRS 17), a comprehensive new accounting standard for
insurance contracts covering recognition and measurement, presentation and disclosure. Once effective, IFRS 17
will replace IFRS 4 Insurance Contracts (IFRS 4) that was issued in 2005. IFRS 17 applies to all types of insurance
contracts (i.e., life, non-life, direct insurance and re-insurance), regardless of the type of entities that issue them, as
well as to certain guarantees and financial instruments with discretionary participation features.
A few scope exceptions will apply. The overall objective of IFRS 17 is to provide an accounting model for insurance
contracts that is more useful and consistent for insurers. In contrast to the requirements in IFRS 4, which are
largely based on grandfathering previous local accounting policies, IFRS 17 provides a comprehensive model for
insurance contracts, covering all relevant accounting aspects. The core of IFRS 17 is the general model,
supplemented by:"
- A specific adaptation for contracts with direct participation features (the variable fee approach)
- A simplified approach (the premium allocation approach) mainly for short-duration contracts
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Annual Report 2021
IFRS 17 is effective for reporting periods beginning on or after 1 January 2023, with comparative figures required.
Early application is permitted, provided the entity also applies IFRS 9 and IFRS 15 on or before the date it first
applies IFRS 17. This standard is not applicable to the Company.
In January 2020, the IASB issued amendments to paragraphs 69 to 76 of IAS 1 to specify the requirements for
classifying liabilities as current or non-current. The amendments clarify:
- That a right to defer must exist at the end of the reporting period
- That classification is unaffected by the likelihood that an entity will exercise its deferral right
- That only if an embedded derivative in a convertible liability is itself an equity instrument would the terms of a
liability not impact its classification
The amendments are effective for annual reporting periods beginning on or after 1 January 2023 and must be
applied retrospectively. The Company is currently assessing the impact the amendments will have on current
practice and whether existing loan agreements may require renegotiation.
In May 2020, the IASB issued Amendments to IFRS 3 Business Combinations - Reference to the Conceptual
Framework. The amendments are intended to replace a reference to the Framework for the Preparation and
Presentation of Financial Statements, issued in 1989, with a reference to the Conceptual Framework for Financial
Reporting issued in March 2018 without significantly changing its requirements.
The Board also added an exception to the recognition principle of IFRS 3 to avoid the issue of potential ‘day 2’ gains
or losses arising for liabilities and contingent liabilities that would be within the scope of IAS 37 or IFRIC 21
Levies, if incurred separately.
At the same time, the Board decided to clarify existing guidance in IFRS 3 for contingent assets that would not be
affected by replacing the reference to the Framework for the Preparation and Presentation of Financial
Statements.
The amendments are effective for annual reporting periods beginning on or after 1 January 2022 and apply
prospectively.
Property, Plant and Equipment: Proceeds before Intended Use – Amendments to IAS 16
In May 2020, the IASB issued Property, Plant and Equipment — Proceeds before Intended Use, which prohibits
entities deducting from the cost of an item of property, plant and equipment, any proceeds from selling items
produced while bringing that asset to the location and condition necessary for it to be capable of operating in the
manner intended by management. Instead, an entity recognizes the proceeds from selling such items, and the costs
of producing those items, in profit or loss.
The amendment is effective for annual reporting periods beginning on or after 1 January 2022 and must be applied
retrospectively to items of property, plant and equipment made available for use on or after the beginning of the
earliest period presented when the entity first applies the amendment.
In May 2020, the IASB issued amendments to IAS 37 to specify which costs an entity needs to include when
assessing whether a contract is onerous or loss-making.
The amendments apply a “directly related cost approach”. The costs that relate directly to a contract to provide
goods or services include both incremental costs and an allocation of costs directly related to contract activities.
General and administrative costs do not relate directly to a contract and are excluded unless they are explicitly
chargeable to the counterparty under the contract.
The amendments are effective for annual reporting periods beginning on or after 1 January 2022. The Group will
apply these amendments to contracts for which it has not yet fulfilled all its obligations at the beginning of the
annual reporting period in which it first applies the amendments.
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Annual Report 2021
As part of its 2018-2020 annual improvements to IFRS standards process, the IASB issued an amendment to IFRS
1 First-time Adoption of International Financial Reporting Standards. The amendment permits a subsidiary that
elects to apply paragraph D16(a) of IFRS 1 to measure cumulative translation differences using the amounts
reported by the parent, based on the parent’s date of transition to IFRS. This amendment is also applied to an
associate or joint venture that elects to apply paragraph D16(a) of IFRS 1.
The amendment is effective for annual reporting periods beginning on or after 1 January 2022 with earlier adoption
permitted.
IFRS 9 Financial Instruments – Fees in the ’10 per cent’ test for derecognition of financial liabilities
As part of its 2018-2020 annual improvements to IFRS standards process the IASB issued amendment to IFRS 9.
The amendment clarifies the fees that an entity includes when assessing whether the terms of a new or modified
financial liability are substantially different from the terms of the original financial liability. These fees include only
those paid or received between the borrower and the lender, including fees paid or received by either the borrower
or lender on the other’s behalf. An entity applies the amendment to financial liabilities that are modified or
exchanged on or after the beginning of the annual reporting period in which the entity first applies theamendment.
The amendment is effective for annual reporting periods beginning on or after 1 January 2022 with earlier adoption
permitted. The Group will apply the amendments to financial liabilities that are modified or exchanged on or after
the beginning of the annual reporting period in which the entity first applies the amendment.
As part of its 2018-2020 annual improvements to IFRS standards process the IASB issued amendment to IAS 41
Agriculture. The amendment removes the requirement in paragraph 22 of IAS 41 that entities exclude cash flows
for taxation when measuring the fair value of assets within the scope of IAS 41.
An entity applies the amendment prospectively to fair value measurements on or after the beginning of the first
annual reporting period beginning on or after 1 January 2022 with earlier adoption permitted.
In February 2021, the IASB issued amendments to IAS 8, in which it introduces a definition of ‘accounting estimates’.
The amendments clarify the distinction between changes in accounting estimates and changes in accounting
policies and the correction of errors. Also, they clarify how entities use measurement techniques and inputs to
develop accounting estimates.
The amendments are effective for annual reporting periods beginning on or after 1 January 2023 and apply to
changes in accounting policies and changes in accounting estimates that occur on or after the start of that period.
Earlier application is permitted as long as this fact is disclosed.
In February 2021, the IASB issued amendments to IAS 1 and IFRS Practice Statement 2 Making Materiality
Judgements, in which it provides guidance and examples to help entities apply materiality judgements to
accounting policy disclosures. The amendments aim to help entities provide accounting policy disclosures that are
more useful by replacing the requirement for entities to disclose their ‘significant’ accounting policies with a
requirement to disclose their ‘material’ accounting policies and adding guidance on how entities apply the concept
of materiality in making decisions about accounting policy disclosures.
The amendments to IAS 1 are applicable for annual periods beginning on or after 1 January 2023 with earlier
application permitted. Since the amendments to the Practice Statement 2 provide non-mandatory guidance on the
application of the definition of material to accounting policy information, an effective date for these amendments is
not necessary.
The Company expects that the adoption of the above improvements to the standards will have no material effect
on the Company's financial statements, in the period of initial application.
In addition to the above, the following new standards have been issued by IASB which are yet to be notified by the
SECP for the purpose of applicability in Pakistan:
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The Company expects that the adoption of the above standards will have no material effect on the Company's
financial statements, in the period of initial application.
2021
Cost Accumulated Depreciation
2020
Cost Accumulated Depreciation
4.1.1 The cost of operating fixed assets include assets amounting to Rs. 367.43 (2020: Rs. 293.7) million with nil book
value.
4.1.2 Immovable fixed assets include freehold Land and Building situated at E-1, Sehjpal, Near DHA Phase-VIII (Ex-Air
Avenue), Lahore Cantt. Total area of land is 18.17 kanals.
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Annual Report 2021
4.2.1 The following is the movement in capital work-in-progress during the year:
4.2.2 This represents the ongoing civil work in various offices of the Company.
4.3 Depreciation charge for the year has been allocated as follows:
Details of disposed assets which had a net book value of Rs. 500,000 or more, are as follows:
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Annual Report 2021
2021
Particulars Cost as at Additions Disposals Cost as at Accumulated Amortization Disposals Accumulated Book value Rate
01 January 31 December amortization as charge for amortization as as at (%)
at 01 January the year at 31 December 31 December
------------------------------------------------------------------Rupees---------------------------------------------------------------------------
Computer software 163,008,023 30,377,218 - 193,385,241 152,888,167 16,779,370 - 169,667,537 23,717,704 33%
and licenses
2020
Particulars Cost as at Additions Disposals Cost as at Accumulated Amortization Disposals Accumulated Book value Rate
01 January 31 December amortization as charge for amortization as as at (%)
at 01 January the year at 31 December 31 December
------------------------------------------------------------------Rupees---------------------------------------------------------------------------
5.2 The cost of the intangibles include assets amounting to Rs. 159.60 million (2020: Rs. 130 million) with nil book value.
5.3 Amortization charge for the year has been allocated as follows: Note 2021 2020
Rupees Rupees
6.1 During the year, the shareholders of E-Processing Systems (Private) Limited, under Paragraph 13B of Chapter 20
of Foreign Exchange Manual, applied to the State Bank of Pakistan (SBP) to incorporate a holding company outside
Pakistan. The application was acknowledged by the SBP vide its letter no. SBPHOK-EPD-INVTCR-MBL-82659
dated March 26, 2021 and Meezan Bank Limited (MBL) was appointed as authorized dealer in this regard.
Accordingly, acompanynamed E-Processing Systems B.V. was incorporated in Netherlands and the company
swapped / mirrored their shares with 179,507 fully paid ordinary shares of equal value at USD 0.01/-each,
representing 44.60% shares in E-Processing Systems B.V. However, during the year Bill & Melinda Gates
Foundation has made an investment of USD 2 million in irredeemable preference shares carrying 11.33% voting
rights in E-Processing Systems B.V. The resultant dilution of voting rights has led to loss of control of the Company
over E-Processing Systems B.V.
6.2 This represents 50 fully paid ordinary shares of AED 1,000/- each, representing 100% (2020: 100%) shares in the
Company's subsidiary, TechVista Systems FZ- LLC, a company set up in Dubai Technology and Media Free Zone
Authority engaged in providing a host of services including enterprise application integration and software
development.
6.3 This represents 9,998 fully paid ordinary shares of Rs. 10/- each, representing 99.98% (2020: 99.98%) share in
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Annual Report 2021
Company's subsidiary, Systems Ventures (Private) Limited, a company set up in Pakistan to invest in new ventures,
start ups and incubate new ideas.
6.4 This represents 9,499 full paid ordinary shares of Rs. 10/- each, representing 94.99% (2020: 94.99%) shares in
Company's subsidiary, SUS JV (Private) Limited, a company set up in Pakistan for the Balochistan Land Revenue
Management Information System project. The project is related to digitization of land records and development of
a web-based management information system.
6.5 This represent the advances provided to following Note 2021 2020
entities against issuance of shares: Rupees Rupees
To subsidiaries:
- TechVista Systems FZ- LLC 425,881,340 -
- Systems Ventures (Private) Limited (6.5.1) 488,610,295 -
To associated undertaking
- TechVista Information Technology - Qatar (TVS Qatar) (6.5.1) 144,568,896 -
1,059,060,531 -
6.5.1 The interest has been charged at the rate of one year KIBOR in accordance with the requirement of the Companies
(Investment in Associated Companies or Associated Undertakings) Regulations, 2017.
6.6 During the year, Systems Arabia for Information Technology, a wholly owned subsidiary was incorporated in Saudi
Arabia. As of reporting date, no investment has been transferred in that entity, however the incorporation expense
of this subsidiary were born by the Company as disclosed in Note 12.3.
7. RIGHT-OF-USE ASSETS
Set out below are the carrying amounts of right-of-use assets recognized and the movements during the year:
7.1 The depreciation charge for the year on right-of-use Note 2021 2020
assets has been allocated as follows: Rupees Rupees
8.1 Due from executives Motor Vehicle Other Loans Total Total
8.2 These interest free loans are repayable between 18 to 60 months and are granted to the executives of the
Company, in accordance with their terms of employment. These are secured against post dated cheques. In
accordance with IFRS 9-Financial instruments, these loans were initially recognized at fair value using effective
interest rates ranging from 9.54% to 11.97%. The difference between cash paid and present value of cash inflows
upon initial recognition has been recognized as deferred employee benefits.
10.1.1 This includes amount not yet billed to related parties, Visionet Deutschland GMBH, TechVista Systems FZ - LLC
and Visionet - UK amounting to Rs. 1.32 million (2020: 187.61), Nil (2020: Rs. 177.72) million and Rs. 4.95 (2020: Rs.
Nil) million, respectively. Aging analysis of these balance is as follows:
2021
------------------------------------------------------------------ Rupees ---------------------------------------------------------------------------
2020
------------------------------------------------------------------ Rupees ---------------------------------------------------------------------------
10.1.4 These represent unbilled debtors arising due to recognition of revenue upon delivery of performance obligations as
per contract on the basis of percentage of completion as per IFRS 15 - Revenue from Contracts with Customers.
11.1 These include unsecured receivables from related parties against outsourcing services. As per contracts with
related parties, billing terms range from monthly to quarterly basis and payment is generally due within 30 days
from the date of billing. Detail of related party balances along with aging analysis of the amounts is as follows:
2021
--------------------------------------------------------------- Rupees ---------------------------------------------------------------
2020
--------------------------------------------------------------- Rupees ---------------------------------------------------------------
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Annual Report 2021
11.2 The maximum aggregate amount outstanding by reference to Note 2021 2020
month-end balances was as follows: Rupees Rupees
11.3.1 These include allowance for ECLs against receivables from related party, TechVista Systems FZ - LLC (Dubai) and
TechVista Information Technology (Qatar) amounting to Nil (2020: Rs. 26.65) million and Rs. 51.35 million (2020:
54.20) respectively.
12.1 This represents loan provided to UUS Joint Venture (Private) Limited for meeting working capital requirements.
This amount is unsecured and carries interest at one-year KIBOR on the outstanding loan balance at the end of
each month.
12.2 This includes loans provided to the following related parties: Note 2021 2020
Rupees Rupees
12.2.1 This carries mark-up at one-month KIBOR on the outstanding loan balance at the end of each month.
12.2.2 This carries mark-up at one-year KIBOR on the outstanding loan balance at the end of each month.
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Annual Report 2021
12.3 This represents receivable from related party, Systems Arabia for information technology, on account of
incorporation expenses paid by the Company on its behalf.
Amortized cost
- Term deposit receipts (TDRs) (15.2) 667,000,000 2,085,000,000
4,866,676,912 2,644,845,556
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Annual Report 2021
15.2 The details of investments in TDRs are as follows: Note 2021 2020
Rupees Rupees
15.2.1 These carry markup at rates ranging from 6.45% to 12.75% (2020: 6% to 12.75%) per annum.
16. TAX REFUNDS DUE FROM THE GOVERNMENT Note 2021 2020
Rupees Rupees
Local currency:
Current accounts 781,725,231 508,414,734
Saving accounts (17.1) 765,876,191 395,180,848
1,547,601,422 903,595,582
Foreign currency - current accounts 104,066,346 673,246,127
1,652,613,846 1,577,759,692
17.1 These carry markup at the rate of 4.12% to 6.28% (2020: 3.10% to 11.50%) per annum.
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Annual Report 2021
1,020,484,116 699,654,498
19.1 This reserve shall be utilized only for the purpose as specified in section 81(2) of the Companies Act, 2017.
19.2 This represents balance amount after exercise of share options by the employees under the Employee Stock
Option Scheme approved by the SECP. According to the scheme, 100% options become exercisable after
completion of vesting period from the date of grant. The options have a vesting period of 2 years and an exercise
period of 3 years from the date the option is vested.
19.2.1 The following table illustrates the number and weighted average exercise prices of, and movements in, share
options during the year:
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Annual Report 2021
2021 2020
1. Additional options were awarded to scheme participants as a result of the March 2021 bonus issue. Options were
awarded such that the overall value of options available were unchanged by the bonus issue.
2. The weighted average share price at the date of the exercise of these options was nil (2020: Rs. 96.32).
3. The weighted average share price at the date of the exercise of these options was Rs. 479.91 (2020: Rs. 183.84)
4. The weighted average share price at the date of the exercise of these options was Rs. 461.40.
5. The weighted average share price at the date of the exercise of these options was Rs. 759.84.
19.2.2 The weighted average remaining contractual life for the share options outstanding as at 31 December 2021 is 3.71
years (2020: 3.80 years).
19.2.3 The weighted average fair value of options granted during the year was Rs. 277.67 (2020: Rs. 67.72)
19.2.4 The range of exercise prices for options outstanding at the end of the year is Rs.346.19 to Rs.497.21 (2020:
Rs.72.13 to Rs.122.23)
19.2.5 The following table lists the inputs to the model used for the plan for the years ended 31 December 2021 and
2020, respectively:
2021 2020
Dividend yield 2% 2%
Expected volatility 42% - 43% 32% - 40%
Risk-free interest rate 8.29% & 8.90% 7.30% & 7.80%
Expected life of share options (years) 2.2 2.1
Weighted average share price Rs. 538.58 Rs. 132.47
Model used Black Scholes Black Scholes
The expected life of the share options is based on historical data and current expectations and is not necessarily
indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical
volatility over a period similar to the life of the options is indicative of future trends, which may not necessarily
be the actual outcome.
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Annual Report 2021
20.1 These represent advances received from staff and will be adjusted as per Company's car policy against sale of
vehicles.
21.1 This represents loan of Rs. 210 million obtained under Refinance Scheme for Payment of Wages and Salaries to
Workers and Employees of Business Concerns (the Scheme) offered by State Bank of Pakistan to mitigate the
effect of COVID-19 on employment in Pakistan. The facility has an aggregate sanctioned limit of Rs. 315 million. It
carries mark-up at SBP rate plus 1% per annum and is secured against a pari passu charge of Rs. 1,344 million over
the present and future current assets of the Company and 1st exclusive equitable mortgage and hypothecation
charge of Rs. 1,066.7 million over the non current assets of the Company. The loan is repayable in equal quarterly
installments commencing September 26, 2020 and ending December 26, 2022. The two tranches of loan were
initially recognized at fair value in accordance with IFRS 9 - Financial instruments using effective interest rate of
7.94% and 7.25% (3-month KIBOR) respectively. The difference between fair value of loan and loan proceeds has
been recognized as deferred grant as per requirements of IAS 20 (Accounting for Government grants and disclosure
of Government assistance) and as per Circular 11/2020 issued by the Institute of Chartered Accountants of Pakistan.
2021 2020
22. LEASE LIABILITIES Rupees Rupees
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Annual Report 2021
Set out below are the carrying amounts of lease liabilities and the movements during the year:
2021 2020
Rupees Rupees
The Company had total cash outflows for leases of Rs.95.33 million in 2021 (2020: Rs. 65.14 million ). The Company
also had non-cash additions to right-of-use assets and lease liabilities of Rs. 190.01 million in 2021 (2020: Rs. 99.01
million).
23.1 All investments out of provident fund have been made in the collective investment schemes, listed equity and
listed debt securities in accordance with the provisions of section 218 of the Companies Act, 2017 and the rules
formulated for the purpose.
23.2 These are non-interest bearing and are normally settled on terms of between 30 and 60 days.
24.1 These represent mobilization advances received from the customers against professional / software development
services, licenses, license support services and other fees.
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Annual Report 2021
25.1 This represents export re-finance (ERF) availed against aggregate sanctioned limit of Rs. 1,000 (2020: Rs. 800)
million. The rate of mark up is SBP rate plus 0.5% (2020: SBP rate plus 0.5%) per annum. These borrowings are
secured against Rs. 150 million cash margin, 1st pari passu charge of Rs. 1,344 million over the current assets and
hypothecation and equitable] mortgage charge of Rs. 1,066.67 million over plant and machinery and 203 marla of
land at Sehjpal near DHA Phase VIII (ex-Air Avenue Eden City), respectively.
25.2 This represents islamic export re-finance (IERF) availed against aggregate sanctioned limit of Rs. 1,400 (2020: Rs.
700) million. The rate of mark up is SBP rate plus 0.5% (2020: SBP rate plus 1%). These borrowings are secured
against first pari passu hypothecation charge of Rs. 2,150 million over current assets and equitable mortgage of Rs.
305.99 million over 153.59 marla of land at Sehjpal near DHA Phase VIII (ex-Air Avenue Eden City).
25.3 This represents export re-finance (ERF) availed against aggregate sanctioned limit of Rs. 700 million. The rate of
mark up is SBP rate plus 0.5%. These borrowings are secured against first pari passu hypothecation charge over
current assets of the Company.
25.4 This represents islamic export re-finance (IERF) availed against aggregate sanctioned limit of Rs. 100 million. The
rate of mark up is SBP rate plus 1%. These borrowings are secured against first pari passu hypothecation charge
over current assets of the Company.
25.5 This represents islamic export re-finance (IERF) availed against aggregate sanctioned limit of Rs. 300 million. The
rate of mark up is SBP rate plus 0.5%. These borrowings are secured against first pari passu hypothecation charge
over current assets of the Company.
26.1 Contingencies
Income tax
The Deputy Commissioner Inland Revenue (the “DCIR”) issued order under section 161(1A) of the Income Tax
Ordinance, 2001 (the “Ordinance”) for the tax year 2017 whereby tax amounting to Rs. 6.53 million for
non-deduction of withholding tax was levied. The Company preferred an appeal before Commissioner Inland
Revenue (Appeals) [the “CIR(A)”], which is decided against the Company. Being aggrieved, the Company filed an
appeal before the Appellate Tribunal Inland Revenue (the “ATIR”), which is pending adjudication. The management
expects a favorable outcome in this regard.
The Company filed an undertaking pursuant clause 94 part IV of Second Schedule to the Ordinance, thereby opting
out of minimum tax on services under section 153(1)(b) of the Ordinance in respect of Tax Year 2016. The Additional
Commissioner Inland Revenue (“Addl. CIR”) declined to accept the undertaking against which the Company
preferred an appeal before CIR(A), which has been upheld by the CIR(A). The appeal effect / reassessment may
result in tax liability of Rs. 30.25 million. Being aggrieved, the Company has filed an appeal before the ATIR, which
is pending adjudication. The management expects a favorable outcome in this regard.
The Addl. CIR issued order under section 122(5A) of the Ordinance for tax year 2014, on the basis of wrong proration
of expenses, capital gain etc. and created demand of Rs. 48.59 million. The company preferred an appeal against the
order, before the CIR(A) who decided the case in favor of the company. However, the tax department has filed
second appeal before the ATIR, which is pending adjudication. The management expects a favorable outcome in this
regard.
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Annual Report 2021
The Assistant Commissioner Inland Revenue (“ACIR”) issued an order under section 122(5A) of the Ordinance for tax
year 2012, on the basis of wrong proration of expenses, others etc. and created demand of Rs. 18.46 million. The
company preferred an appeal before the CIR(A) against the impugned order which is partially decided in favor of the
Company. Being aggrieved, the Company filed an appeal before the learned ATIR, which is pending adjudication. The
management expects a favorable outcome in this regard.
Sales tax
26.2 The Company was selected for Sales Tax Audit through computer ballot for the tax period January 2016 to
December 2016 and on the basis of audit proceedings, the DCIR passed order No. 3 dated 30 July 2020 under section
11(2) of the Sales Tax Act, 1990 on various issues including suppression of sales, non-chargeability of sales tax on
advance from customers, other income, late filing of sales tax returns etc. and created impugned sales tax demand
amounting to Rs. 655.84 million. Being aggrieved, the Company preferred an appeal before the CIR(A), which is
pending adjudication.
26.3 During the year, the CIR appeal vide order no. 12 dated January 29, 2021 has annulled the demand of PKR 651 million
with the direction to reassess the matters and quashed the demand to the tune of PKR 441,297. Further the CIR
appeals has confirmed the balance demand of PKR 3.70 million against which company has preferred an appeal
before ATIR.
Commitments
Guarantees issued by the financial institutions on behalf of the Company amount to Rs. 329.11 (2020: Rs. 201.90)
million. This includes guarantees of Nil (2020: Rs. 2.72) million given on behalf of Joint Operation.
Guarantees issued by the Company on behalf of E-Processing Systems (Private) Limited to National Bank of
Pakistan amounts to Rs. 100 million.
Set out below is the disaggregation of the Company's revenue from contracts with customers:
Note 2021
Type of goods or services Export Local Total
---------------- Rupees ----------------
Outsourcing services:
Business process outsourcing 1,308,686,007 153,119,202 1,461,805,209
IT services 8,058,685,862 1,681,590,693 9,740,276,555
Software trading 37,508,432 652,577,352 690,085,784
Software implementation 48,457,482 156,409,952 204,867,434
Less: Sales tax (27.1.1) (193,451,071) (193,451,071)
Total revenue from contracts with customers 9,453,337,783 2,450,246,128 11,903,583,911
Timing of revenue recognition - net
Goods and services transferred at a point in time 37,508,432 604,642,328 642,150,760
Goods and services transferred over time 9,415,829,351 1,845,603,800- 11,261,433,151
Total revenue from contracts with customers 9,453,337,783 2,450,246,128 11,903,583,911
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Annual Report 2021
Note 2020
Type of goods or services
Export Local Total
---------------- Rupees ----------------
Outsourcing services:
Business process outsourcing 1,373,041,005 161,502,986 1,534,543,991
IT services 4,475,873,923 928,497,428 5,404.371,351
Software trading 40,822,932 452,429,638 493,252,570
Software implementation 39,625,379 179,151,688 218,777,067
Less: Sales tax (27.1.1) - (137,178,134) (137,178,134)
Total revenue from contracts with customers 5,929,363,239 1,584,403,606 7,513,766,845
Timing of revenue recognition - net
Goods and services transferred at a point in time 40,822,932.00 416,379,386 457,202,318
Goods and services transferred over time 5,888,540,307 1,168,024,219 7,056,564,527
Total revenue from contracts with customers 5,929,363,239 1,584,403,606 7,513,766,845
27.1.1 This represents sales tax chargeable under Provincial and Federal Sales tax laws on revenue as defined under
relevant laws.
27.1.2 The disaggregated revenue information based on the geographical location has been presented in note 35 to
these unconsolidated financial statements.
Note 2021 2020
Rupees Rupees
27.2.1 These represent the amount of revenue recognized from amounts included in contract liabilities at the beginning
of the year.
The transaction prices allocated to the remaining performance obligations (unsatisfied or partially unsatisfied) as
at 31 December is as follows:
2021 2020
Rupees Rupees
The Company makes sales against credit terms. In case of credit sales, payment is generally due within 30 days
from the date of billing to the customer.
28.1 This includes employees retirement benefit expense amounting to Rs. 299.39 (2020: Rs. 158.39) million.
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Annual Report 2021
29.1 This includes employees retirement benefit expense amounting to Rs. 5.23 (2020: Rs. 3.37) million.
30.1 This includes employees retirement benefit expense amounting to Rs. 22.20 (2020: Rs. 15.27) million.
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Annual Report 2021
34. TAXATION
Statement of profit or loss
Current Income tax:
- Current income tax charge (34.1)&(34.2) 79,825,985 61,886,727
- Adjustments in respect of current income tax of (2,235,782) 11,527,376
previous year
77,590,203 73,414,103
Deferred tax (34.3) (45,716,049)
- Relating to origination and reversal of temporary differences -
Income tax expense reported in statement of profit or loss 31,874,154
73,414,103
Amounts recognized directly in equity
Deferred tax on share based payment (29,344,233)
-
34.1 This represents tax chargeable under Normal Tax Regime on local sale of software and services. The income of the
Company from export of software is subject to tax credit at the rate of 100% under section 65F to the Income Tax
Ordinance, 2001.
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Annual Report 2021
34.2 Reconciliation of tax charge for the year: Note 2021 2020
Rupees Rupees
Reconciliation between accounting profit and tax expense for the current year is meaningless in view of the
minimum tax under section 153 of Income Tax Ordinance, 2001.
Geographical segments
For management purposes, the Systems Limited is organized into business units based on their geographical areas
and has four reportable operating segments as follows:
- North America
- Europe
- Middle East
- Pakistan
No other operating segments have been aggregated to form the above reportable operating segments.
Management monitors the operating results of its operating segments separately for the purpose of performance
assessment. Segment performance is evaluated based on operating profit or loss and is measured consistently with
operating profit or loss in the unconsolidated financial statements.
Revenue from contracts with customers 6,423,003,195 4,367,846,372 1,047,044,453 825,305,235 1,983,290,135 725,170,596 2,450,246,128 1,595,444,642 11,903,583,911 7,513,766,845
Cost of revenue (3,891,570,096) (2,392,470,816) (658,775,716) (498,779,658) (1,292,250,853) (572,919,574) (2,069,845,963) (1,251,615,979) (7,912,442,628) (4,715,786,027)
Gross profit 2,531,433,099 1,975,375,556 388,268,737 326,525,577 691,039,282 152,251,022 380,400,165 343,828,663 3,991,141,283 2,797,980,818
Selling and distribution expenses (22,951,806) (17,406,721) (3,643,294) (4,024,698) (6,857,599) (7,462,548) (155,473,993) (89,900,101) (188,926,692) (118,794,068)
Administrative expenses (702,630,379) (324,640,784) (90,422,638) (66,340,926) (127,574,986) (59,381,802) (60,718,040) (49,484,834) (981,346,043) (499,848,346)
(725,582,185) (342,047,505) (94,065,932) (70,365,624) (134,432,585) (66,844,350) (216,192,033) (139,384,935) (1,170,272,735) (618,642,414)
Profit / (loss) before taxation and
unallocated income and expenses 1,805,850,914 1,633,328,051 294,202,805 256,159,953 556,606,697 85,406,672 164,208,132 204,443,728 2,820,868,548 2,179,338,404
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-----------------------------------------------------------------------------------------------Rupees-----------------------------------------------------------------------------------------------
Segment operating assets
Property and equipment - - - - - - 2,006,791,106 1,507,959,243 2,006,791,106 1,507,959,243
Intangibles - - - - - - 23,717,704 21,345,888 23,717,704 21,345,888
Long term investments - - - - - - 1,331,133,678 272,073,147 1,331,133,678 272,073,147
Right-of-use assets - - - - - - 288,981,476 204,396,352 288,981,476 204,396,352
Long term loan - - - - - - 36,796,454 - 36,796,454 -
Deferred employee benefits - - - - - - 10,344,054 - 10,344,054 -
Long term deposits - - - - - - 141,294,105 36,127,162 141,294,105 36,127,162
Deferred taxation - net 75,060,282 - 75,060,282 -
Contract assets - - 6,263,833 192,018,321 - 177,720,960 327,333,669 164,201,529 333,597,502 533,940,810
Trade debts 1,759,296,163 1,100,980,956 128,690,315 20,255,836 560,642,988 875,614,023 996,892,359 441,586,683 3,445,521,825 2,438,437,498
Loans, advances and other receivables - - - - - - 538,568,661 205,366,771 538,568,661 205,366,771
Trade deposits and short -
term prepayments - - - - - 248,588,820 187,928,945 248,588,820 187,928,945
Current portion of deferred employee
benefits 2,890,139 - 2,890,139 -
Interest accrued - - - - - - 30,922,102 38,450,000 30,922,102 38,450,000
Short term investments - - - - - - 4,866,676,912 2,644,845,556 4,866,676,912 2,644,845,556
Tax refunds due from government - - - - - - 207,375,462 166,007,954 207,375,462 166,007,954
Cash and bank balances - - - - - - 1,652,613,846 1,577,759,692 1,652,613,846 1,577,759,692
-
Total operating assets 1,759,296,163 1,100,980,956 134,954,148 212,274,157 560,642,988 1,053,334,983 12,785,980,829 7,468,048,922 15,240,874,128 9,834,639,018
-----------------------------------------------------------------------------------------------Rupees-----------------------------------------------------------------------------------------------
Segment operating liabilities
Long term advances - - - - - - 81,111,314 53,857,626 81,111,314 53,857,626
Lease liabilities - - - - - - 238,881,185 189,409,537 238,881,185 189,409,537
Long term loan - - - - - - - 98,013,227 - 98,013,227
Deferred grant - - - - - - - 8,338,896 - 8,338,896
Trade and other payables - - - - - - 1,171,327,994 730,270,930 1,171,327,994 730,270,930
Contract liabilities - - - - - - 378,374,906 88,669,355 378,374,906 88,669,355
Mark-up accrued on short term
borrowings - - - - - - 13,702 9,804,346 13,702 9,804,346
Short term borrowings - - - - - - 2,750,000,000 1,250,000,000 2,750,000,000 1,250,000,000
Current portion of lease liabilities - - - - - - 62,195,197 37,983,731 62,195,197 37,983,731
Current portion of long term loan - - - - - - 76,816,085 100,754,617 76,816,085 100,754,617
Current portion of deferred grant - - - - - - 1,958,993 3,095,996 1,958,993 3,095,996
Current portion of long term advances - - - - - - 6,865,236 10,754,706 6,865,236 10,754,706
The related parties of the Company comprise subsidiaries, associated companies, companies in which directors
are interested, staff retirement funds and directors and key management personnel (Note 34). Amounts due from
and to related parties are shown under respective notes to the financial statements. Other significant
transactions with related parties are as follows:
Rupees Rupees
TechVista Systems FZ- LLC - UAE Subsidiary Wholly owned Revenue 1,519,050,434 571,955,582
Reimbursement Licenses and assets 337,995,640 108,692,945
purchased
Advance against issue of share capital 425,881,340 -
E Processing Systems (Private) Limited. Associate* Wholly owned Disbursements against loan (480,753,783) (65,058,415)
by associate: E Receipts against loan 337,091,497 117,526,509
Processing Interest income 19,271,608 19,036,663
Systems B.V.
S US-JV (Private) Limited. Subsidiary 95% owned Disbursements against loan (29,373,068) (34,100,235)
subsidiary Receipts against loan 48,441,521 37,051,227
Interest income 1,263,749 2,419,253
Visionet Systems Incorporation - USA Associate* Common Revenue 6,446,986,130 4,270,475,128
directorship Out of pocket expenses 15,089,316 27,419,070
Visionet Deutschland GMBH Associate* Common Revenue 941,411,512 650,852,370
directorship Out of pocket expenses 732,584 -
Systems Arabia for Information Subsidiary Wholly owned Incorporation expenses 16,350,255 -
Technology
Systems Ventures (Private) Limited Subsidiary Wholly owned Advance against issue of share capital 488,610,295 -
TechVista Pty Limited - Australia Subsidiary Wholly owned Revenue 5,860,680 5,391,955
by subsidiary:
Techvista
Systems FZ LLC
Staff retirement fund Contribution 326,813,846 177,022,960
TechVista Information Technology - Qatar Associate* Common Revenue 182,168,993 95,176,466
directorship Advance against issue of share capital 144,568,896 -
VSI UK Associate* Common Revenue 82,520,056 -
directorship
*This has the same meaning as defined in section 2(4) of the Companies Act 2017.
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36.1 Details of the Company's subsidiaries and associated companies incorporated outside Pakistan are as follows:
Details
Name of Company Country of incorporation Registered Address Basis of Association Percentage of shareholding
Systems Arabia for Kingdom of Saudi Arabia Anas Ibn Malik Road, Al Malqa, Subsidiary 100%
Information Technology Riyadh
TechVista Systems FZ LLC UAE TechVista Systems LLC, Office Subsidiary 100%
603, 6th Floor, Exchange Tower,
Business Bay, Dubai, UAE
TechVista Systems LLC UAE TechVista Systems LLC, Office Sub-Subsidiary -
603, 6th Floor, Exchange Tower,
Business Bay, Dubai, UAE Sub-Subsidiary -
TechVista Systems MP LLC UAE TechVista Systems LLC, Office
603, 6th Floor, Exchange Tower,
Business Bay, Dubai, UAE
Details
Name of Company Country of incorporation Registered Address Basis of Association Percentage of shareholding
The aggregate amounts charged in the financial statements for the year for remuneration including certain benefits to
the Chief Executive Officer, Directors and Executives of the Company are as follows :
---------------------------------------------------------------------(Nos)-------------------------------------------------------------------------
Number of persons 1 1 6 6 987 510
------------------------------------------------------------------- Rupees------------------------------------------------------------------------
37.1 In addition to the above remuneration, the Chief Executive Officer and certain executives are valso provided with company
maintained cars, free medical and mobile phone facilities in accordance with their entitlement.
37.2 Fees represent the amounts paid to Non Executive Directors for attending meetings of the Board and its sub-committees.
37.3 During the year, the Chief Executive Officer and Other Executives were granted 291,319 (2020: 570,034) and 7 2 5 , 6 0 0
(2020: 1,159,000) share options respectively, which have a vesting period of two years. Further, the impact of benefits
available to the Chief Executive Officer and other executives recognized by the Company on account of share-based
payment plans aggregated to Rs. 40.97 (2020: Rs. 25.37) million and Rs. 149.26 (2020: Rs. 21.76) million, respectively.
37.4 During the current year, certain executives of the Company exercised stock option under employee stock option scheme
according to which 1,430,529 (2020: 1,085,715) shares were issued to them.
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Annual Report 2021
38.3 The weighted average number of ordinary shares of 2020 has been restated in accordance with the requirements
of IAS 33 due to issuance of 12,462,369 bonus shares in 2021
The Company's activities expose it to a variety of financial risks: market risk (including currency risk, interest rate
risk and other price risk), credit risk and liquidity risk. The Company's overall risk management policy focuses on
the unpredictability of financial markets and seeks to minimize potential adverse effects on the Company's
financial performance.
The Board of Directors has overall responsibility for establishment and oversight of the Company's risk
management framework. The executive management team is responsible for developing and monitoring the
Company’s risk management policies. The team regularly meets and any changes and compliance issues are
reported to the Board of Directors through the audit committee.
Risk management systems are reviewed regularly by the executive management team to reflect changes in
market conditions and the Company’s activities. The Company, through its training and management standards
and procedures, aims to develop a disciplined and constructive control environment in which all employees
understand their roles and obligations.
The audit committee oversees compliance by management with the Company’s risk management policies and
procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the
Company.
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Annual Report 2021
Monetary items, including financial assets and financial liabilities, denominated in currency other than functional
currency of the Company are periodically restated to Pak rupee equivalent and the associated gain or loss is taken
to the profit and loss account.
The following analysis demonstrates the sensitivity to a reasonably possible change in exchange rates, with all
other variables held constant, of the Company's profit before tax.
Changes in Rate Effect on profit before tax Effect on profit before tax
2021 2020
At the statement of financial position, the interest rate profile of the Company's interest-bearing financial
instruments was:
2021 2020
Financial assets
Financial liabilities
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Annual Report 2021
As at 31 December 2020, had there been increase / decrease in fixed interest rates by 100 basis points, with all
other variables held constant, profit before tax for the year would have been higher / lower by Rs. 14.33 million
(2020: Rs. 30.40 million).
As at 31 December 2020, had there been increase / decrease in SBP rate by 100 basis points, with all other
variables held constant, profit before tax for the year would have been higher / lower by Rs. 28.26 million (2020:
Rs. 14.49 million).
The credit risk on liquid funds is limited because the counter parties are banks and mutual funds with reasonably
high credit ratings. The Company believes that it is not exposed to major concentration of credit risk as its
exposure is spread over a large number of counter parties and subscribers in case of trade debts.
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to
credit risk at the reporting date was as follows:
2021 2020
Rupees Rupees
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Annual Report 2021
As at year end, 47.29% of trade debts (2020: 75%) were represented by five customers (2020: five customers)
amounting to Rs. 2,498.52 (2020: Rs. 2,003.57) million. The management believes that the Company is not exposed
to customer concentration risk as these customers are related parties of the Company.
The Company has applied the IFRS’s simplified approach and has calculated ECLs based on lifetime expected credit
losses. The Company has established a provision matrix that is based on the Company’s historical credit loss
experience, adjusted for forward-looking factors specific to the debtors and the economic environment.
The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to
external credit ratings or to historical information about counterparty default rate. The table below shows the bank
balances and investments held with some major counterparties at the reporting date:
HBL Asset Management Limited Not Available AM2 PACRA 78,840,540 51,444,992
Al-Meezan Asset Management Limited Not Available AM1 PACRA 930,323,209 150,928,758
NBP Fund Management Limited Not Available AM1 PACRA 1,061,464,520 201,778,545
MCB Arif Habeeb Saving and Not Available AM1 PACRA 467,949,478 -
investment
Alfalah GHP Investment Management Not Available AM2+ PACRA 131,098,915 51,291,201
Limited
UBL Fund Managers Limited Not Available AM1 JCR-VIS 415,546,018 51,952,710
4,199,676,912 559,845,556
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The following are the contractual maturities of financial liabilities as at 31 December 2021:
Carrying amount Contractual cash flows Less than one year One to five years More than five years
----------------------------------------------------- Rupees -----------------------------------------------------
Long term loan 76,816,085 76,816,085 76,816,085 - -
Lease Liabilities 301,076,382 301,076,382 62,195,197 183,688,321 55,192,864
Trade and other payables 1,144,906,853 1,144,906,853 1,144,906,853 - -
Short term borrowings 2,750,000,000 2,750,000,000 2,750,000,000 - -
Mark-up accrued on short
term borrowings 13,702 13,702 13,702 - -
4,272,813,022 4,272,813,022 4,033,931,837 183,688,321 55,192,864
The following are the contractual maturities of financial liabilities as at 31 December 2020:
The carrying values of other financial assets and financial liabilities reflected in financial statements approximate
their fair values. Fair value is determined on the basis of objective evidence at each reporting date.
2021
2020
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2021 2020
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are
observable either, directly or indirectly.
Level 3: techniques which use inputs that have a significant effect on the recorded fair value that are not based on
observable market data.
As at 31 December 2020
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a) to safeguard the entity’s ability to continue as a going concern, so that it can continue to provide returns for
shareholders and benefits for other stakeholders; and
In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to
shareholders, return capital to shareholders, or issue new shares.
Consistent with the industry norms, the Company monitors its capital on the basis of gearing ratio. The ratio is
calculated as net debt divided by total capital plus net debt. Net debt is calculated as total borrowings as shown in
the statement of financial position less cash and cash equivalent. Total capital is calculated as ‘equity’ as shown in
the statement of financial position.
The debt-to-equity ratio as of 31 December is as follows:
2021 2020
Rupees Rupees
No changes were made in the objectives, policies or processes for managing capital during the years ended
31 December 2021 and 2020.
2021 2020
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Annual Report 2021
Corresponding figures have been re-arranged, wherever necessary, for better and fair presentation. However, no
significant re-arrangement / reclassifications have been made in these unconsolidated financial statements.
43. GENERAL
Figures have been rounded off to the nearest of rupees, unless otherwise stated.
200
SYSTEMS LIMITED
CONSOLIDATED
FINANCIAL
STATEMENTS
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We have audited the annexed consolidated financial statements of Systems Limited and its subsidiaries (the Group), which
comprise the consolidated statement of financial position as at 31 December 2021, and the consolidated statement of profit
or loss , the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the
statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary
of significant accounting policies and other explanatory information.
In our opinion, consolidated financial statements give a true and fair view of consolidated financial position of the Group as at
31 December 2021 and its consolidated financial performance and its consolidated cash flows for the year ended in
accordance with the accounting and reporting standards as applicable in Pakistan.
We conducted our audit in accordance with International Standards on Auditing (ISAs) as applicable in Pakistan. Our
responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the
Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the
International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants as adopted by the
Institute of the Chartered Accountants of Pakistan / The Institute of Cost and Management Accountants of Pakistan (the
Code), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence
we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
consolidated financial statements of the current period. These matters were addressed in the context of our audit of the
consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion
on these matters.
Key Audit Matter How the matter was addressed in our audit
1. Revenue recognition
The Group’s revenue is derived from multiple revenue Our audit procedures, amongst others, included:
streams, as referred to in Note 27 to the accompanying Obtaining an understanding and evaluating the
consolidated financial statements, including outsourcing appropriateness of the Group’s revenue recognition
services for business processes and various IT services, policies including those relating to assessment of
and software sale in the form of short term and performance obligations and compliance of those
long-term projects. policies with applicable accounting standards;
Revenue is recognized based on performance obligations Obtaining an understanding of and testing the design and
as mentioned in Note 3.13 to the accompanying operating effectiveness of controls over the revenue
consolidated financial statements, which requires recognition process;
significant judgement in relation to assessment of
performance obligations given the diversity in types of Selecting a sample of revenue transactions recognized
the Group’s revenue contracts and the nature of services during the year and performing substantive procedures
provided. which include verification of supporting documentation
along with evaluation of the management basis used in
determining the performance obligations in accordance
with accounting policy;
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Annual Report 2021
Key Audit Matter How the matter was addressed in our audit
Further, as referred to in Note 37 to the accompanying Our audit procedures, amongst others, included:
consolidated financial statements, a significant portion of Performing substantive procedures on related party
the Group’s revenue transactions is with related parties. revenue transactions including reviewing compliance of
Due to complexity of accounting for multiple revenue contractual terms with the Companies (Related Party
streams and the significance of related party Transactions and Maintenance of Related Records)
transactions to the Group’s revenue, we have identified Regulations 2018;
revenue recognition as a key audit matter.
Performing substantive analytical procedures including
monthly trend analysis of revenue by comparing the
trends with our understanding of the business and
external economic environment;
As mentioned in Note 1.2.5 of accompanying consolidated Our audit procedures, amongst others, included:
financial statements, during the year, E-Processing Reviewing the underlying documentation including
Systems (Private) Limited, subsidiary of the Group, has incorporation documents of E-Processing Systems B.V.
been de-consolidated due to loss of control based on and shareholders agreements, to obtain an
revised shareholding structure and related agreements. understanding of the arrangement;
In consideration of loss of control, the Group received Evaluating whether the assessment of loss of control
shares of E-Processing Systems B.V., a Company and the accounting treatment is appropriate as per
registered in Netherland, which is now an associate of the guidance of applicable accounting standards;
Group. The management calculated fair value of this
equity interest using conversion price agreed in Reviewing the fair value methodology with related
shareholders’ agreement, as observable input. inputs used in calculation of fair value of consideration
Accordingly, fair value adjustment on loss of control in received i.e. equity interest in E-Processing Systems B.V.;
subsidiary amounting to Rs. 816 million was recorded, as
mentioned in Note 33 to the accompanying consolidated Testing for appropriateness and mathematical accuracy
financial statements. and reperforming the calculation of fair value
adjustment on loss of control in subsidiary;
Due to the significance of this transaction to the Group’s
consolidated financial statements, and management Reviewing and testing the application of equity method
judgement involved in the estimation of fair value of of accounting for initial recognition and subsequent
consideration received, we have identified this as a key measurement of investment in associate; and
audit matter.
Assessing the adequacy of disclosure made in the
consolidated financial statements in respect of the
transaction.
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Annual Report 2021
Information Other than the Financial Statements and Auditors’ Report Thereon
Management is responsible for the other information. The other information comprises the information included in the
Annual Report, but does not include the financial statements and our auditors’ report thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form
of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or
our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have
performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of Management and Board of Directors for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance
with the accounting and reporting standards as applicable in Pakistan and Companies Act, 2017 and for such internal control
as management determines is necessary to enable the preparation of consolidated financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative
but to do so.
Board of directors are responsible for overseeing the Group’s financial reporting process.
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs as
applicable in Pakistan will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with ISAs as applicable in Pakistan, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is
higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations,
or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on
the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause the Group to cease to continue as a going concern.
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Annual Report 2021
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures,
and whether the financial statements represent the underlying transactions and events in a manner that achieves fair
presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within
the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision
and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with the Board of Directors regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the Board of Directors with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on
our independence, and where applicable, related safeguards.
From the matters communicated with the Board of Directors, we determine those matters that were of most significance in
the audit of the consolidated financial statements of the current year and are therefore the key audit matters. We describe
these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in
extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor’s report is Sajjad Hussain Gill.
Chartered Accountants
Lahore: 19 March 2022
205
Annual Report 2021
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Annual Report 2021
Attributable to:
Equity holders of the parent 4,462,160,721 2,209,645,930
Non-controlling interest (82,501,441) (45,348,247)
4,379,659,280 2,164,297,683
The annexed notes, from 1 to 47, form an integral part of these consolidated financial statements.
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Annual Report 2021
Attributable to:
Equity holders of the parent 4,530,638,392 2,219,750,853
Non-controlling interest (82,501,441) (45,348,247)
4,448,136,951 2,174,402,606
The annexed notes, from 1 to 47, form an integral part of these consolidated financial statements.
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Balance as on 01 January 2020 1,235,202,990 512,149,734 78,970,025 - 49,242,756 3,674,024,548 5,549,590,053 (20,655,613) 5,528,934,440
Profit for the period - - - - - 2,209,645,930 2,209,645,930 (45,348,247) 2,164,297,683
Other comprehensive income - - - - 10,104,923 - 10,104,923 - 10,104,923
Total comprehensive income for the year - - - - 10,104,923 2,209,645,930 2,219,750,853 (45,348,247) 2,174,402,606
Revenue reserve of subsidiary - - - - 19,368,928 19,368,928 - 19,368,928
The annexed notes, from 1 to 47, form an integral part of these consolidated financial statements.
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Annual Report 2021
The annexed notes, from 1 to 47, form an integral part of these consolidated financial statements.
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Annual Report 2021
Systems Limited ("the Company") is a public limited Company incorporated in Pakistan under the Companies Act,
2017 and is listed on the Pakistan Stock Exchange. The Company is principally engaged in the business of software
development, trading of software and business process outsourcing services. The registered office of the Company
is situated at E-1, Sehjpal Road, Near DHA Phase-VIII (Ex-Air Avenue), Lahore Cantt.
1.2.1 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, Pakistan. The Company is engaged in the business of
developing software and providing ancillary services.
1.2.2 TechVista Systems LLC is a Limited Liability Company registered in the Emirate of Dubai under Federal Law No. 2
of 2015, is 100% controlled by TechVista Systems FZ-LLC. The Company is licensed as a software house.
1.2.3 "TechVista Manpower LLC (TechVista MP LLC) , a Sole Establishment, duly licensed by Dubai Economic Depart-
ment, under License No. 800123, is 100% controlled by TechVista Systems FZ-LLC."
1.2.4 SUS JV Private Limited, a private limited company registered under the Companies Act, 2017 is a 95% owned
subsidiary of Systems Limited. The Company is set up for the Balochistan Land Revenue Management Information
Systems project. The project is related to digitization of land records and development of a web-based
management information system.
1.2.5 "E-Processing Systems (Private) Limited, a private limited Company registered under the Companies Act, 2017
incorporated on 06 February 2013, was previously a 44.60% (2020: 44.60%) owned subsidiary of Systems Limited.
During the year, the shareholders of E-Processing Systems (Private) Limited, under Paragraph 13B of Chapter 20
of Foreign Exchange Manual, applied to the State Bank of Pakistan (SBP) to incorporate a holding company outside
Pakistan. The application was acknowledged by the SBP vide its letter no. SBPHOK-EPD-INVTCR-MBL-82659
dated March 26, 2021 and Meezan Bank Limited (MBL) was appointed as authorized dealer in this regard. Accord-
ingly, a company named E-Processing Systems B.V. was incorporated in Netherlands. On 25 October 2021, the
Holding Company swapped / mirrored its shares with 179,507 fully paid ordinary shares of equal value at USD
0.01/- each, representing 44.60% shares in E-Processing Systems B.V.
During the year, Bill & Melinda Gates Foundation has made an investment of USD 2 million in irredeemable prefer-
ence shares carrying 11.33% voting rights in E-Processing Systems B.V. The resultant dilution of voting rights has
led to loss of control of the Company over E-Processing Systems B.V., which is now an associate of the Holding
Company.
The results of E-Processing Systems (Private) Limited have been consolidated till 25 October 2021, based on
management accounts using consistent accounting policies."
1.2.6 Systems Venture (Private) Limited, a private limited Company registered under the Companies Act, 2017 incorpo-
rated on 11 November 2019, is a 99.98% (2020: 99.98%) owned subsidiary of Systems Limited. The Company aims
to invest in new ventures, start-ups and incubate new ideas.
1.2.7 TechVista Systems Pvt Ltd, is a fully owned subsidiary of Techvista Systems FZ LLC and was incorporated in
December 2014 in Australia with the paid up share capital of AUD 1.
1.2.8 During the year, Systems Arabia for Information Technology, a wholly owned subsidiary has been incorporated in
Saudi Arabia. As of reporting date, no investment has been transferred in that entity.
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1.3 Geographical location and addresses of major business units of the Group are as under:
Systems Arabia Kingdom of Saudi Arabia Anas Ibn Malik Road, Al Malqa,
for Information Technology Riyadh
Geographical Location and address of the E-processing Systems (private) Limited and SUS (private) Limited is
same as of the Holding Company.
Retailistan (Private) Limited, a private limited Company registered under the Companies Act, 2017 incorporated on
28 January 2015, is a 20% (2020: nil) owned associate of Systems Limited which provides services of software
designing, development, implementation, maintenance, tesing and benchmarking, and to provide
internet/web-based applications. The Group acquired interest in Retailistan (Private) Limited on 19 July 2021
through its wholly owned subsidiary, Systems Ventures (Private) Limited. Accordingly, the results of Retailistan
(Private) Limited have been accounted for using the equity method of accounting in these consolidated financial
statements.
E-Processing Systems B.V, a private limited Company, incorporated on 08 October 2021 in Netherlands, is a 44.60%
(2020: nil) owned associate of Systems Limited which is primarily aimed at attracting foreign investment (Refer to
Note 1.2.5). The results of E-Processing Systems B.V. have been accounted for using the equity method of
accounting in these consolidated financial statements on the basis of management accounts using consistent
accounting policies of the Holding Company.
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These consolidated financial statements have been prepared in accordance with the accounting and reporting
standards as applicable in Pakistan. The accounting and reporting standards comprise of:
- International Financial Reporting Standard (IFRS Standards) issued by the International Accounting Standard
Board (IASB) as notified under the Companies Act, 2017 (the Act) ; and
Where provisions of and directives issued under the Act, differ from the IFRS Standards, the provisions of and
directives issued under the Act , have been followed.
These consolidated financial statements have been prepared under the historical cost convention.
The consolidated financial statements include the financial statements of Systems Limited and its subsidiary
companies, here-in-after referred to as “the Group”.
2.3.1 Subsidiaries
A Company is a subsidiary, if an entity (the Holding Company) directly or indirectly controls, beneficially owns or
holds more than fifty percent of its voting securities or otherwise has power to elect and appoint more than fifty
percent of its directors.
Subsidiaries are consolidated from the date on which the Holding Company obtains control, and continue to be
consolidated until the date when such control ceases.
The financial statements of the subsidiaries are prepared for the same reporting period as the Holding Company,
using consistent accounting policies.
All inter-Company balances, transactions and unrealized gains and losses resulting from inter-Company
transactions and dividends are eliminated in full.
The assets, liabilities, income and expenses of subsidiary companies are consolidated on a line by line basis and
carrying value of investments held by the Holding Company is eliminated against the subsidiary companies’
shareholders’ equity in the consolidated financial statements.
Non‐controlling interest is that part of net results of operations and of net assets of the subsidiaries which are not
owned by the Group either directly or indirectly. Non-controlling interest is presented as a separate item in the
consolidated financial statements. The Group applies a policy of treating transactions with non‐controlling
interests as transactions with parties external to the Group. Disposals to non‐controlling interest result in gains
and losses for the Group and are recorded in the consolidated statement of changes in equity.
An associate is an entity over which the Group has significant influence. Significant influence is the power to
participate in the financial and operating policy decisions of the investee, but is not control or joint control over
those policies.
The considerations made in determining significant influence or joint control are similar to those necessary to
determine control over subsidiaries. The Group’s investment in its associate and joint venture are accounted for
using the equity method.
Under the equity method, the investment in an associate or a joint venture is initially recognised at cost. The
carrying amount of the investment is adjusted to recognise changes in the Group’s share of net assets of the
associate or joint venture since the acquisition date. Goodwill relating to the associate or joint venture is included in
the carrying amount of the investment and is not tested for impairment separately.
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The statement of profit or loss reflects the Group’s share of the results of operations of the associate or joint
venture. Any change in OCI of those investees is presented as part of the Group’s OCI. In addition, when there has
been a change recognised directly in the equity of the associate or joint venture, the Group recognises its share of
any changes, when applicable, in the statement of changes in equity. Unrealised gains and losses resulting from
transactions between the Group and the associate or joint venture are eliminated to the extent of the interest in the
associate or joint venture.
The aggregate of the Group’s share of profit or loss of an associate and a joint venture is shown on the face of the
statement of profit or loss outside operating profit and represents profit or loss after tax and non-controlling
interests in the subsidiaries of the associate or joint venture.
The financial statements of the associate or joint venture are prepared for the same reporting period as the Group.
When necessary, adjustments are made to bring the accounting policies in line with those of the Group.
After application of the equity method, the Group determines whether it is necessary to recognise an impairment
loss on its investment in its associate or joint venture. At each reporting date, the Group determines whether there
is objective evidence that the investment in the associate or joint venture is impaired. If there is such evidence, the
Group calculates the amount of impairment as the difference between the recoverable amount of the associate or
joint venture and its carrying value, and then recognises the loss within ‘Share of profit of an associate and a joint
venture’ in the statement of profit or loss.
Upon loss of significant influence over the associate or joint control over the joint venture, the Group measures and
recognises any retained investment at its fair value. Any difference between the carrying amount of the associate
or joint venture upon loss of significant influence or joint control and the fair value of the retained investment and
proceeds from disposal is recognised in profit or loss.
Items included in the consolidated financial statements are measured using the currency of the primary economic
environment in which the Group operates. The consolidated financial statements are presented in Pak Rupees,
which is the Group’s functional and presentation currency.
The Group's significant accounting policies are stated in Note 3. Not all of these significant policies require the
management to make difficult, subjective or complex judgments or estimates. The following is intended to provide
an understanding of the policies the management considers critical because of their complexity, judgment of
estimation involved in their application and their impact on these consolidated financial statements. Estimates and
judgments are continually evaluated and are based on historical experience, including expectation of future events
that are believed to be reasonable under the circumstances. These judgments involve assumptions or estimates in
respect of future events and the actual results may differ from these estimates. The areas involving higher degree
of judgments or complexity or areas where assumptions and estimates are significant to the consolidated financial
statements are as follows:
The Group takes into account the current income tax law and the decisions taken by appellate authorities. Instances
where the Group's view differs from the view taken by the income tax department at the assessment stage and
where the Group considers that its views on items of material nature are in accordance with law, the amounts are
shown as contingent liabilities.
2.5.2 Useful life and residual values of property and equipment (Note 3.4)
The Group reviews the useful lives of property and equipment on a regular basis. Any change in estimates in future
years might affect the carrying amounts of respective items of property and equipment with a corresponding effect
on the depreciation charge and impairment.
The Group uses a provision matrix to calculate ECLs for trade receivables and contract assets. The provision rates
are based on days past due for groupings of various customer segments that have similar loss patterns (i.e., by
geography, product type, and customer type).
The provision matrix is initially based on the Group’s historical observed default rates. The Group calibrates the
matrix to adjust the historical credit loss experience with forward-looking information which includes forecast
economic conditions. At every reporting date, the historical observed default rates are updated and changes in the
forward-looking estimates are analyzed.
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The assessment of the correlation between historical observed default rates, forecast economic conditions and
ECLs is a significant estimate. The amount of ECLs is sensitive to changes in circumstances and of forecast
economic conditions. The Group’s historical credit loss experience and forecast of economic conditions may also
not be representative of customer’s actual default in the future.
For contracts with multiple components to be delivered, the Group applies judgement to determine performance
obligations which are distinct; or not distinct, which are aggregated with other performance obligations until a
`bundle is identified that is distinct.
The Group determines stand-alone selling prices of all performance obligations in a bundled contract, which include
sale of license, implementation, support, warranty and training. The total transaction price is allocated to all distinct
performance obligations based on estimated cost of completion, plus target margin on each of the performance
obligations.
2.5.4.3 Stage of completion
The Group determines stage of completion on the basis of cost incurred to date as a percentage of total estimated
cost to deliver the performance obligations.
2.5.5 Determining the lease term of contracts with renewal options (Note 3.17)
The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered
by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to
terminate the lease, if it is reasonably certain not to be exercised.
The Group has the option, under some of its leases to lease the assets for an additional term. The Group applies
judgement in evaluating whether it is reasonably certain to exercise the option to renew i.e. it considers all relevant
factors that create an economic incentive for it to exercise the renewal. After the commencement date, the Group
reassesses the lease term if there is a significant event or change in circumstances that is within its control and
affects its ability to exercise (or not to exercise) the option to renew (e.g., a change in business strategy).
A provision is recognized in the consolidated statement of financial position when the Group has a legal or
constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be
required to settle the obligation and a reliable estimate can be made of the amount of obligation. The amount
recognized as a provision reflects the best estimate of the expenditure required to settle the present obligation at
the end of the reporting period.
2.5.7 Share based payment
Estimating fair value for share-based payment transactions requires determination of the most appropriate
valuation model, which depends on the terms and conditions of the grant. This estimate also requires determination
of the most appropriate inputs to the valuation model including the expected life of the share option, volatility and
dividend yield and making assumptions about them. The Company measures the fair value of equity-settled
transactions with employees at the grant date using a Black Scholes Model. The assumptions and models used for
estimating fair value for share-based payment transactions are disclosed in Note 19.2.5.
The significant accounting policies which have been adopted in the preparation of consolidated financial
statements of the Group are consistent with previous year except as described in Note 3.1, below:
The Group has adopted the following accounting standards, amendments and interpretations of IFRSs which
became effective for the current year and had material impact on the accounting policies and financial statements:
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Interest Rate Benchmark Reform – Phase 2: Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS-16
The amendments provide temporary reliefs which address the financial reporting effects when an interbank
offered rate (IBOR) is replaced with an alternative nearly risk-free interest rate (RFR). The amendments include
the following practical expedients:
- A practical expedient to require contractual changes, or changes to cash flows that are directly required by the
reform, to be treated as changes to a floating interest rate, equivalent to a movement in a market rate of interest
- Permit changes required by IBOR reform to be made to hedge designations and hedge documentation without
the hedging relationship being discontinued
- Provide temporary relief to entities from having to meet the separately identifiable requirement when an RFR
instrument is designated as a hedge of a risk component
The adoption of the above amendments to accounting standards did not have any material effect on the financial
statement.
On 28 May 2020, the IASB issued Covid-19-Related Rent Concessions - amendment to IFRS 16 Leases. The
amendments provide relief to lessees from applying IFRS 16 guidance on lease modification accounting for rent
concessions arising as a direct consequence of the Covid-19 pandemic. As a practical expedient, a lessee may elect
not to assess whether a Covid-19 related rent concession from a lessor is a lease modification. A lessee that makes
this election accounts for any change in lease payments resulting from the Covid-19 related rent concession the
same way it would account for the change under IFRS 16, if the change were not a lease modification.
The amendment was intended to apply until 30 June 2021, but as the impact of the Covid-19 pandemic is
continuing, on 31 March 2021, the IASB extended the period of application of the practical expedient to 30 June
2022.The amendment applies to annual reporting periods beginning on or after 1 April 2021. However, the Group
has not received Covid-19-related rent concessions, but plans to apply the practical expedient if it becomes
applicable within allowed period of application.
A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have
rights to the assets, and obligations for the liabilities, relating to the arrangement. Joint control is the
contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant
activities require unanimous consent of the parties sharing control.
When the Group undertakes its activities under joint operations, the Group as a joint operator recognizes in
relation to its interest in a joint operation:
Its revenue from the sale of its share of the output arising from the joint operation;
Its share of the revenue from the sale of the output by the joint operation; and
"The Group accounts for the assets, liabilities, revenues and expenses relating to its interest in a joint operation in
accordance with the IFRSs applicable to the particular assets, liabilities, revenues and expenses.
When Group transacts with a joint operation in which a Group is a joint operator, the Group is considered to be
conducting the transaction with the other parties to the joint operation, and gains and losses resulting from the
transactions are recognized in the Group's financial statements only to the extent of other parties' interests in the
joint operation.
When Group transacts with a joint operation in which Group is a joint operator, the Group does not recognize its
share of the gains and losses until it resells those assets to a third party.
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The Group has interest in joint operation UUS Joint Venture (Private) Limited, a Group set up specifically for
executing multi-year contract “Package 04A – Airport Information Management System (AIMS)”, a turnkey project
for New Islamabad International Airport by Pakistan Civil Aviation Authority.
3.3 Taxation
3.3.1 Current
Provision for current tax is based on the taxable income for the year determined in accordance with the prevailing
law for taxation of income. The charge for current tax is calculated using prevailing tax rates or tax rates expected
to be applied to the profit for the year, if enacted. The charge for current tax also includes adjustments, where
considered necessary, to provision for taxation made in previous years arising from assessments framed during the
year for such years.
3.3.2 Deferred
Deferred tax is accounted for using the liability method in respect of all temporary differences arising from
differences between the carrying amount of assets and liabilities in the financial statements and the corresponding
tax bases used in the computation of the taxable profit. Deferred tax liabilities are generally recognized for all
taxable temporary differences and deferred tax assets are recognized to the extent that it is probable that taxable
profits will be available against which the deductible temporary differences, unused tax losses and tax credits can
be utilized.
Deferred tax is calculated at the rates that are expected to apply to the year when the differences reverse based on
tax rates that have been enacted or substantively enacted by the reporting date. Deferred tax is charged or credited
in the Statement of profit or loss, except in the case of items credited or charged to other comprehensive
income in which case it is included in other comprehensive income.
Expenses and assets are recognized net of the amount of sales tax, except:
- When the sales tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in
which case, the sales tax is recognized as part of the cost of acquisition of the asset or as part of the expense item,
as applicable.
- When receivables and payables are stated with the amount of sales tax included the net amount of sales tax
recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the
unconsolidated statement of financial position.
Operating fixed assets are stated at cost less accumulated depreciation and any identified impairment loss.
Freehold land is stated at historic cost. Cost of operating fixed assets consists of purchase cost, borrowing cost
pertaining to construction period and directly attributable cost of bringing the asset to working condition.
Subsequent costs are included in the assets' carrying amount or recognized as separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the Group and the cost of
the item can be measured reliably. All other repair and maintenance costs are charged to consolidated Statement
of profit or loss during the period in which they are incurred.
Depreciation on property and equipment is charged to income by applying straight line method on pro-rata basis so
as to write off the historical cost of the assets over their estimated useful lives at the rates given in Note 4.
Depreciation charge commences from the month in which the asset is available for use and continues until the
month of disposal.
The assets residual values and useful lives are reviewed at each financial year end, and adjusted if impact on
depreciation is significant.
An item of property and equipment is derecognized upon disposal or when no future economic benefits are
expected from its use or disposal. Profit or loss on disposal of operating fixed assets represented by the difference
between the sale proceeds and the carrying amount of the asset is included in income.
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Capital work in progress represents expenditure on property and equipment which are in the course of construction
and installation. Transfers are made to relevant property and equipment category as and when assets are available
for use.
3.5 Intangibles
Intangible assets acquired from the market are carried at cost less accumulated amortization and any impairment
losses.
Expenditure on research (or the research phase of an internal project) is recognized as an expense in the period in
which it is incurred;
Development costs incurred on specific projects are capitalized when all the following conditions are satisfied:
- Completion of the intangible asset is technically feasible so that it will be available for use or sale.
- The Group intends to complete the intangible asset and use or sell it.
- The Group has the ability to use or sell the intangible asset.
- The availability of adequate technical, financial and other resources to complete the development and to use or
sell the intangible asset.
- The Group's ability to measure reliably the expenditure attributable to the intangible asset during its
development.
The cost of an internally generated intangible asset comprises all directly attributable costs necessary to create,
produce and prepare the asset to be capable of operating in the manner intended by the management, Development
costs not meeting the criteria for capitalization are expensed as incurred.
After initial recognition, internally generated intangible assets are carried at cost less accumulated amortization
and impairment losses, if any. These are amortized using straight line method at the rate given in note 5. Full month
amortization on additions is charged in the month of acquisition and no amortization is charged in month of
disposal.
The Group assesses at each reporting date whether there is any indication that intangible assets may be impaired.
If such indication exists, the carrying amounts of such assets are reviewed to assess whether they are recorded in
excess of their recoverable amount. Where carrying amounts exceed the respective recoverable amount, assets are
written down to their recoverable amounts and the resulting impairment loss is recognized in consolidated
Statement of profit or loss. The recoverable amount is the higher of an asset’s fair value less costs to sell and value
in use. Where an impairment loss is recognized, the amortization charge is adjusted in the future periods to allocate
the asset’s revised carrying amount over its estimated useful life.
The carrying amounts of non-financial assets other than inventories and deferred tax asset, are reviewed at each
reporting date to determine whether there is any indication of impairment. If any such indication exists, then the
asset's recoverable amount is estimated. The recoverable amount of an asset or cash-generating unit is the greater
of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects current market assessment of the time
value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be
tested individually are grouped together into the smallest group of assets that generates cash inflows from
continuing use that are largely independent of the cash inflows of other assets or group of assets (the “cash
generating unit, or CGU”).
The Group's corporate assets do not generate separate cash inflows. If there is an indication that a corporate asset
may be impaired, then the recoverable amount is determined for the CGU to which the corporate asset belongs. An
impairment loss is recognized if the carrying amount of an asset or its CGU exceeds its estimated recoverable
amount. Impairment losses are recognized in consolidated Statement of profit or loss.
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Impairment loss recognized in prior periods is assessed at each reporting date for any indications that the loss has
decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to
determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying
amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization,
if no impairment loss had been recognized.
The Holding Company operates a funded recognized provident fund contribution plan which covers all its
permanent employees. Equal contributions are made on monthly basis both by the Holding Group and the
employees at 10% of basic pay.
The Holding Company operates an equity settled share based Employees Stock Option Scheme. The compensation
committee of the Board of Directors of the Company evaluates the performance and other criteria of employees
and approves the grant of options. These options vest with employees over a specified period subject to fulfillment
of certain conditions. Upon vesting, employees are eligible to apply and secure allotment of Company's shares at a
price determined on the date of grant of options.
At the grant date of share options to the employees, the Holding Company initially recognizes employee
compensation expense with corresponding credit to equity as employee compensation reserve at the fair value of
option at the grant date. The fair value of options determined at the grant date is recognized as an employee
compensation expense on a straight line basis over the vesting period. Fair value of options is arrived at using Black
Scholes pricing model
When share options are exercised, the proceeds received, net of any transaction costs, are credited to share capital
(nominal value) and share premium.
3.7.3 Gratuity
Provision is made for TechVista (the ''Subsidiary'') employees' end of service benefits in accordance with the UAE
Federal labor laws.
Assets and liabilities in foreign currencies are translated into Pak Rupees at the rate of exchange prevailing at the
reporting date. Transactions during the year are converted into Rupees at the exchange rate prevailing at the date
of such transaction. All exchange differences are charged to consolidated Statement of profit or loss.
On consolidation, the assets and liabilities of foreign operations are translated into Pak Rupees at the rate of
exchange prevailing at the reporting date and their Statement of profit or loss are translated at average rates
prevailing during the year. The exchange differences arising on translation for consolidation are recognized in
consolidated other comprehensive income. On disposal of a foreign operation, the component of consolidated other
comprehensive income relating to that particular foreign operation is recognized in consolidated Statement of
profit or loss.
Trade debts from local customers are stated at amortized cost less expected credit losses while foreign debtors
are stated at translated amount by applying exchange rate applicable on the reporting date.
Expected credit losses are calculated as a probability weighted estimate of credit losses. Credit losses are
measured as the present value of all cash shortfalls (i.e. the difference between cash flows due to the Group in
accordance with the contract and cash flows that the Group expects to receive). (Refer to note 3.14.4 for detailed
policy for impairment of financial assets).
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These are recognized at nominal amount which is fair value, if considerations to be received in future.
Liabilities for trade and other payable are carried at cost which is the fair value of the consideration to be paid in
future for goods and services.
Provisions are recognized in the consolidated statement of financial position when the Group has a legal or
constructive obligation as a result of past events and it is probable that outflow of resources embodying economic
benefits will be required to settle the obligation and a reliable estimate of the amount can be made. However,
provisions are reviewed at each reporting date and adjusted to reflect current best estimate. Where outflow of
resources embodying economic benefits is not probable, a contingent liability is disclosed, unless the possibility of
outflow is remote.
Revenue recognized in any period is based on the delivery of performance obligations and an assessment of when
control is transferred to the customer. For contracts with multiple components to be delivered, management
applies judgement to consider whether those promised goods and services are: (i) distinct – to be accounted for as
separate performance obligations; (ii) not distinct – to be combined with other promised goods or services until a
bundle is identified that is distinct; or (iii) part of a series of distinct goods and services that are substantially the
same and have the same pattern of transfer to the customer.
At contract inception the total transaction price is estimated, which is allocated to the identified performance
obligations in proportion to their relative standalone selling prices and revenue is recognized when (or as) those
performance obligations are satisfied.
For each performance obligation, the Group determines if revenue will be recognized over time or at a point in time.
Where the Group recognizes revenue over time this is due to any of the following reasons: (i) the Group performing
and the customer simultaneously receiving and consuming the benefits provided over the life of the contract, (ii) the
Group's performance creates or enhances an asset that the customer controls as the asset is created or enhanced;
or (iii) the Group's performance creates an asset with no alternative use, and the Group has an enforceable right to
payment for performance completed to date.
For each performance obligation to be recognized over time, the Group applies a revenue recognition method that
faithfully depicts the Group’s performance in transferring control of the goods or services to the customer. The
Group applies the relevant input method consistently to similar performance obligations in other contracts. If
performance obligations in a contract do not meet the over time criteria, the Group recognizes revenue at a point
in time.
Changes in estimates of measures of progress of performance obligations satisfied over time are recognized on a
cumulative catch-up basis, which recognizes in the current period the cumulative effect of any changes on current
and prior periods based on a performance obligation’s percentage of completion.
The Group disaggregates revenue from contracts with customers by contract type, geographical markets and
timing of revenue recognition, as management believes this best depicts how the nature, amount, timing and
uncertainty of the Company’s revenue and cash flows are affected by economic factors. The revenue recognition
policy relevant to each contract type is as below:
The Group makes judgments in determining whether the software implementation and software license are
distinct and thus separate performance obligations or part of the bundle and thus a single performance obligation
depending upon the level of customization involved and other key factors surrounding each contract. Revenue is
recognized at a point in time or over time as appropriate.
For contracts where revenue will be recognized over time, the company uses input method for measuring
Percentage of Completion (PoC) by taking into account the cost incurred to date as a percentage of total budgeted
cost.
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Outsourcing services include business process outsourcing services (BPO) and IT services. Revenue is recognized
under each category as below:
a) BPO services
The performance obligation of the Group is to perform the various business activities outsourced by the customers.
Revenue is recognized over time on the basis of activities performed, as the customer simultaneously receives and
consumes the benefits provided by the Group's performance.
b) IT Services
The performance obligation of the Group is to make available the resources to perform various IT services as per
the requirement of the customer. Resource efforts are controlled by the customer and revenue is recognized over
time on the basis of hours of resources made available to the customer, as the customer simultaneously receives
and consumes the benefits provided by the Group's performance.
Software trading represents the sale of software licenses and revenue is recognized at the point in time when
obligations under the terms of the contract with the customer are satisfied; generally this occurs when the license
is delivered to the customer.
Revenue is measured at fair value of the consideration received or receivable and represents amount received and
receivable from the sale of air time and related services in normal course of business, net of discounts, if any.
Revenue from sale of air time is recognized when air time is transferred to customers.
A contract asset is initially recognized for revenue earned because the receipt of consideration is conditional on
successful completion of the milestones as per contract. Upon completion of the milestone and acceptance by the
customer, the amount recognized as contract assets is reclassified to trade debts.
A contract liability is recognized if a payment is received or a payment is due (whichever is earlier) from a customer
before the related goods or services are transferred. Contract liabilities are recognized as revenue as and when
performance obligations are delivered under the contract.
Profit on deposit account and gain on short term investments and other income is recognized using effective
interest rate method.
Unrealized gains / (losses) arising on revaluation of securities classified as " fair value through profit or loss" are
included in consolidated statement of profit or loss in the period in which they arise.
Government grants are recognized where there is reasonable assurance that the grant will be received and all
attached conditions will be complied with. When the grant relates to an expense item, it is recognized as income on
a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed.
When the grant relates to an asset, it is recognized as income in equal amounts over the expected useful life of the
related asset.
When the Group receives grants of non-monetary assets, the asset and the grant are recorded at nominal amounts
and released to consolidated statement of profit or loss over the expected useful life of the asset, based on the
pattern of consumption of the benefits of the underlying asset by equal annual instalments.
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All financial assets and liabilities are initially measured at cost which is the fair value of the consideration given or
received. These are subsequently measured at fair value, amortized cost or cost as the case may be.
3.16.2 Classification
The Group determines the classification of financial assets at initial recognition. The classification of instruments
(other than equity instruments) is driven by the Group’s business model for managing the financial assets and their
contractual cash flow characteristics.
Financial assets that meet the following conditions are subsequently measured at amortized cost:
- the financial asset is held within a business model whose objective is to hold financial assets in order to collect
contractual cash flows; and
- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding.
Financial assets that meet the following conditions are subsequently measured at FVTOCI:
- the financial asset is held within a business model whose objective is achieved by both collecting contractual cash
flows and selling the financial assets; and
- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding.
Financial liabilities are measured at amortized cost, unless they are required to be measured at FVTPL (such as
instruments held for trading or derivatives) or the Group has opted to measure them at FVTPL.
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Annual Report 2021
Where management has opted to recognize a financial liability at FVTPL, any changes associated with the Group’s
own credit risk will be recognized in other comprehensive income/(loss). Currently, there are no financial liabilities
designated at FVTPL.
The Group recognizes loss allowance for Expected Credit Loss (ECL) on financial assets measured at amortized cost
at an amount equal to life time ECLs except for the following, which are measured at 12 month ECLs:
- bank balances for whom credit risk (the risk of default occurring over the expected life of the financial instrument
has not increased since the inception.)
- other short term loans and receivables that have not demonstrated any increase in credit risk since inception.
Loss allowance for trade receivables are always measured at an amount equal to life time ECLs. Life time ECLs are
the ECLs that result from all possible defaults events over the expected life of a financial instrument. 12 month
ECLs are portion of ECLs that result from default events that are possible within 12 months after the reporting
date.
ECLs are a probability weighted estimate of credit losses. Credit losses are measured as the present value of all
cash shortfalls (i.e. the difference between cash flows due to the Group in accordance with the contract and cash
flows that the Group expects to receive).
The gross carrying amount of a financial asset is written off when the Group has no reasonable expectation of
recovering a financial asset in its entirety or a portion thereof.
3.16.5 Derecognition
i) Financial assets
The Group derecognises financial assets only when the contractual rights to cash flows from the financial assets
expire or when it transfers the financial assets and substantially all the associated risks and rewards of ownership
to another entity. On derecognition of a financial asset measured at amortized cost, the difference between the
asset’s carrying value and the sum of the consideration received and receivable is recognized in profit or loss. In
addition, on derecognition of an investment in a debt instrument classified as FVTOCI, the cumulative gain or loss
previously accumulated in the investments revaluation reserve is reclassified to profit or loss. In contrast, on
derecognition of an investment in equity instrument which the Group has elected on initial recognition to measure
at FVTOCI, the cumulative gain or loss previously accumulated in the investments revaluation reserve.
A financial asset and a financial liability is offset and the net amount is reported in the statement of financial
position if the Group has legal enforceable right to set off the recognized amount and intends either to settle on a
net basis or to realize the assets and settle the liability simultaneously.
Finance cost is charged to consolidated statement of profit or loss in the year in which it is incurred.
Cash and cash equivalents are stated in the consolidated statement of financial position at cost. For the purpose of
the consolidated cash flow statement, cash and cash equivalents are comprised of cash in hand, cheques/demand
drafts in hand and deposits in the bank.
3.19 Leases
The Group recognizes right-of-use assets at the commencement date of the lease (i.e. the date the underlying asset
is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment
losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets
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Annual Report 2021
includes the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at or
before the commencement date less any lease incentives received. Unless the Group is reasonably certain to obtain
ownership of the leased asset at the end of the lease term, the recognized right-of-use assets are depreciated on a
straight-line basis over the shorter of its estimated useful life and the lease term. Right-of-use assets are subject
to impairment.
At the commencement date of the lease, the Group recognizes lease liabilities measured at the present value of
lease payments to be made over the lease term. The lease payments include fixed payments (including
in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index
or a rate, and amounts expected to be paid under residual value guarantees.
In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease
commencement date if the interest rate implicit in the lease is not readily determinable. After the commencement
date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease
payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change
in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the
underlying asset.
Dividends and other appropriation to reserves are recognized in the financial statements in the period in which
these are approved. However, if they are approved after the reporting period but before the financial statements are
authorized for issue, they are disclosed in the notes to the financial statements.
The Group presents basic and diluted earnings per share (EPS). Basic EPS is calculated by dividing the profit after
tax attributable to ordinary shareholders of the Group by the weighted average number of ordinary shares
outstanding during the period. Diluted EPS is calculated by dividing the profit attributable to ordinary equity
holders of the parent (after adjustment) by the weighted average number of ordinary shares outstanding during
the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive
potential ordinary shares into ordinary shares.
Segment reporting is based on the operating (business) segments of the Group. An operating segment is a
component of the Group that engages in business activities from which it may earn revenues and incur expenses,
including revenues and expenses that relate to transactions with any of the Company’s other components. An
operating segment’s operating results are reviewed regularly by the Chief Executive to make decisions about
resources to be allocated to the segment and assess its performance, and for which discrete financial information
is available.
Segment results that are reported to the Chief Executive include items directly attributable to a segment as well as
those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets, income tax
assets, liabilities and related income and expenditures.
For management purposes, the Systems Limited is organized into business units based on their geographical areas
and has four reportable operating segments namely, North America, Europe, Middle East and Pakistan. No
operating segments have been aggregated to form the above reportable operating segments.
The Executive Management Committee is the Chief Operating Decision Maker (CODM) and monitors the operating
results of its business units separately for the purpose of making decisions about resource allocation and
performance assessment.
Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the
unconsolidated financial statements.
3.23 Standards, Interpretations and Amendments to Published Approved Accounting Standards that are not yet
effective
The following standards, amendments and interpretations with respect to the approved accounting standards as
applicable in Pakistan would be effective from the dates mentioned below against the respective standard or
interpretation:
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Annual Report 2021
"In May 2017, the IASB issued IFRS 17 Insurance Contracts (IFRS 17), a comprehensive new accounting standard for insurance
contracts covering recognition and measurement, presentation and disclosure. Once effective, IFRS 17 will replace IFRS 4
Insurance Contracts (IFRS 4) that was issued in 2005. IFRS 17 applies to all types of insurance contracts (i.e., life, non-life,
direct insurance and re-insurance), regardless of the type of entities that issue them, as well as to certain guarantees and
financial instruments with discretionary participation features.
A few scope exceptions will apply. The overall objective of IFRS 17 is to provide an accounting model for insurance contracts
that is more useful and consistent for insurers. In contrast to the requirements in IFRS 4, which are largely based on
grandfathering previous local accounting policies, IFRS 17 provides a comprehensive model for insurance contracts, covering
all relevant accounting aspects. The core of IFRS 17 is the general model, supplemented by:"
- A specific adaptation for contracts with direct participation features (the variable fee approach)
- A simplified approach (the premium allocation approach) mainly for short-duration contracts
IFRS 17 is effective for reporting periods beginning on or after 1 January 2023, with comparative figures required. Early
application is permitted, provided the entity also applies IFRS 9 and IFRS 15 on or before the date it first applies IFRS 17. This
standard is not applicable to the Company.
Amendments to IAS 1: Classification of Liabilities as Current or Non-current
In January 2020, the IASB issued amendments to paragraphs 69 to 76 of IAS 1 to specify the requirements for classifying
liabilities as current or non-current. The amendments clarify:
The amendments are effective for annual reporting periods beginning on or after 1 January 2023 and must be applied
retrospectively. The Company is currently assessing the impact the amendments will have on current practice and whether
existing loan agreements may require renegotiation.
In May 2020, the IASB issued Amendments to IFRS 3 Business Combinations - Reference to the Conceptual Framework. The
amendments are intended to replace a reference to the Framework for the Preparation and Presentation of Financial
Statements, issued in 1989, with a reference to the Conceptual Framework for Financial Reporting issued in March 2018
without significantly changing its requirements.
The Board also added an exception to the recognition principle of IFRS 3 to avoid the issue of potential ‘day 2’ gains or losses
arising for liabilities and contingent liabilities that would be within the scope of IAS 37 or IFRIC 21 Levies, if incurred
separately.
At the same time, the Board decided to clarify existing guidance in IFRS 3 for contingent assets that would not be affected
by replacing the reference to the Framework for the Preparation and Presentation of Financial Statements.
The amendments are effective for annual reporting periods beginning on or after 1 January 2022 and apply prospectively.
Property, Plant and Equipment: Proceeds before Intended Use – Amendments to IAS 16
In May 2020, the IASB issued Property, Plant and Equipment — Proceeds before Intended Use, which prohibits entities
deducting from the cost of an item of property, plant and equipment, any proceeds from selling items produced while
bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by
management. Instead, an entity recognizes the proceeds from selling such items, and the costs of producing those items, in
profit or loss.
The amendment is effective for annual reporting periods beginning on or after 1 January 2022 and must be applied
retrospectively to items of property, plant and equipment made available for use on or after the beginning of the earliest
period presented when the entity first applies the amendment.
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Annual Report 2021
In May 2020, the IASB issued amendments to IAS 37 to specify which costs an entity needs to include when assessing
whether a contract is onerous or loss-making.
The amendments apply a “directly related cost approach”. The costs that relate directly to a contract to provide goods or
services include both incremental costs and an allocation of costs directly related to contract activities. General and
administrative costs do not relate directly to a contract and are excluded unless they are explicitly chargeable to the
counterparty under the contract.
The amendments are effective for annual reporting periods beginning on or after 1 January 2022. The Company will apply
these amendments to contracts for which it has not yet fulfilled all its obligations at the beginning of the annual
reporting period in which it first applies the amendments.
As part of its 2018-2020 annual improvements to IFRS standards process, the IASB issued an amendment to IFRS 1
First-time Adoption of International Financial Reporting Standards. The amendment permits a subsidiary that elects to
apply paragraph D16(a) of IFRS 1 to measure cumulative translation differences using the amounts reported by the
parent, based on the parent’s date of transition to IFRS. This amendment is also applied to an associate or joint venture
that elects to apply paragraph D16(a) of IFRS 1.
The amendment is effective for annual reporting periods beginning on or after 1 January 2022 with earlier adoption
permitted.
IFRS 9 Financial Instruments – Fees in the '10 per cent’ test for derecognition of financial liabilities
As part of its 2018-2020 annual improvements to IFRS standards process the IASB issued amendment to IFRS 9. The
amendment clarifies the fees that an entity includes when assessing whether the terms of a new or modified financial
liability are substantially different from the terms of the original financial liability. These fees include only those paid or
received between the borrower and the lender, including fees paid or received by either the borrower or lender on the
other’s behalf. An entity applies the amendment to financial liabilities that are modified or exchanged on or after the
beginning of the annual reporting period in which the entity first applies the amendment.
The amendment is effective for annual reporting periods beginning on or after 1 January 2022 with earlier adoption
permitted. The Group will apply the amendments to financial liabilities that are modified or exchanged on or after the
beginning of the annual reporting period in which the entity first applies the amendment.
As part of its 2018-2020 annual improvements to IFRS standards process the IASB issued amendment to IAS 41
Agriculture. The amendment removes the requirement in paragraph 22 of IAS 41 that entities exclude cash flows for
taxation when measuring the fair value of assets within the scope of IAS 41.
An entity applies the amendment prospectively to fair value measurements on or after the beginning of the first annual
reporting period beginning on or after 1 January 2022 with earlier adoption permitted.
In February 2021, the IASB issued amendments to IAS 8, in which it introduces a definition of ‘accounting estimates’. The
amendments clarify the distinction between changes in accounting estimates and changes in accounting policies and the
correction of errors. Also, they clarify how entities use measurement techniques and inputs to develop accounting
estimates.
The amendments are effective for annual reporting periods beginning on or after 1 January 2023 and apply to changes in
accounting policies and changes in accounting estimates that occur on or after the start of that period. Earlier application
is permitted as long as this fact is disclosed.
In February 2021, the IASB issued amendments to IAS 1 and IFRS Practice Statement 2 Making Materiality Judgements,
in which it provides guidance and examples to help entities apply materiality judgements to accounting policy
disclosures. The amendments aim to help entities provide accounting policy disclosures that are more useful by
replacing the requirement for entities to disclose their ‘significant’ accounting policies with a requirement to disclose
their ‘material’ accounting policies and adding guidance on how entities apply the concept
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Annual Report 2021
The amendments to IAS 1 are applicable for annual periods beginning on or after 1 January 2023 with earlier
application permitted. Since the amendments to the Practice Statement 2 provide non-mandatory guidance on the
application of the definition of material to accounting policy information, an effective date for these amendments
is not necessary.
The Company expects that the adoption of the above improvements to the standards will have no material effect
on the Company's financial statements, in the period of initial application.
In addition to the above, the following new standards have been issued by IASB which are yet to be notified by the
SECP for the purpose of applicability in Pakistan:
Effective Date
IASB effective date
Standard (Annual periods
beginning on or after)
The Company expects that the adoption of the above standards will have no material effect on the Company's
financial statements, in the period of initial application.
2021
Cost Accumulated Depreciation
DESCRIPTION As at Additions / Disposals Disposal of Exchange As at 31 As at Depreciation Disposals Disposal of Exchange As at 31 Net book Rate
01 January Transfers subsidiary difference December 01 January charge for subsidiary difference December value as at (%)
the year 31 December
------------------------------------------------------------------Rupees---------------------------------------------------------------------------
Land - free hold 394,038,279 - - - - 394,038,279 - - - - - - 394,038,279 -
Building 542,724,710 33,410,848 - - - 576,135,558 41,573,379 13,797,715 - - - 55,371,094 520,764,464 2.5
Computers and mobile sets 464,306,404 460,718,771 (9,643,653) - - 915,680,202 317,365,457 126,485,131 (8,742,507) - - 435,108,081 480,273,441 33
Computer equipment and installations 112,034,139 105,683,842 (1,656,054) (20,520,905) 2,514,642 198,055,664 77,322,927 34,129,420 (1,419,895) (10,190,578) 1,437,276 101,279,150 96,776,514 33
Other equipment and installations 132,698,680 21,007,777 - - - 153,706,457 62,296,390 26,090,206 (99,421) - - 88,287,175 65,419,282 20
Generators 93,928,893 6,606,088 - - - 100,534,981 23,406,375 9,377,043 - - - 32,783,418 67,751,563 10
Furniture and fittings 132,004,372 19,451,442 (2,377,400) - 526,867 149,605,281 64,701,371 10,195,999 (1,213,408) - 297,458 73,981,420 75,623,861 10
Vehicles 281,853,054 163,785,826 (48,530,780) - 3,591,107 400,699,207 110,417,642 65,282,400 (26,326,832) - 1,776,699 151,149,909 249,549,298 20
Office equipment (474,240) 22,976,761 22,960,411 10
45,906,832 734,279 (755,227) - 51,288 45,937,172 2019 4,165,994
19,250,052 - 34,955
Leasehold Improvements 44,690,755 32,682,670 - - - 77,373,425 9,932,283 11,611,163 - - - 21,543,446 55,829,979 24.5
2,244,186,118 844,081,543 (62,963,114) (20,520,905) 6,683,904 3,011,467,546 726,265,876 301,135,071 (38,276,303) (10,190,578) 3,546,388 982,480,454 2,028,987,092
2021
Cost Accumulated Depreciation
DESCRIPTION As at Additions / Disposals Disposal of Exchange As at 31 As at Depreciation Disposals Disposal of Exchange As at 31 Net book Rate
01 January Transfers subsidiary difference December 01 January charge for subsidiary difference December value as at (%)
the year 31 December
------------------------------------------------------------------Rupees---------------------------------------------------------------------------
Land - free hold 345,277,701 48,760,578 - - - 394,038,279 - - - - - - 394,038,279 -
Building 535,883,365 6,841,345 - - - 542,724,710 28,052,455 13,520,924 - - - 41,573,379 501,151,331 2.5
Computers and mobile sets 381,501,813 92,893,636 (10,089,045) - - 464,306,404 241,319,530 85,430,005 (9,384,078) - - 317,365,457 146,940,947 33
Computer equipment and installations 98,531,692 18,732,923 (5,663,368) - 432,892 112,034,139 57,596,086 24,294,618 (4,765,916) - 198,139 77,322,927 34,711,212 33
Other equipment and installations 116,382,926 16,360,054 (44,300) - - 132,698,680 39,820,228 22,520,462 (44,300) - - 62,296,390 70,402,290 20
Generators 49,814,973 44,113,920 - - - 93,928,893 16,667,174 6,740,821 - - (1,620) 23,406,375 70,522,518 10
Furniture and fittings 112,647,514 19,261,360 (57,675) - 153,173 132,004,372 55,369,867 9,324,098 (18,845) - 26,251 64,701,371 67,303,001 10
Vehicles 231,304,821 72,958,264 (22,846,025) - 435,994 281,853,054 70,242,930 49,492,483 (9,641,338) - 323,567 110,417,642 171,435,412 20
Office equipment (2,380) 19,250,052 26,656,780 10
44,205,779 1,700,467 (24,244) - 24,830 45,906,832 2019 4,273,588
14,969,213 - 9,631
Leasehold Improvements 20,119,599 24,571,156 - - - 44,690,755 3,192,964 6,739,319 - - - 9,932,283 34,758,472 24.5
1,935,670,183 346,193,703 (38,724,657) 1,046,889 2,244,186,118 527,230,447 222,336,318 (23,856,857) - 555,968 726,265,876 1,517,920,242
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Annual Report 2021
4.1.1 The cost of owned assets include assets amounting to Rs. 402 (2020: Rs. 319.5) million with nil book value.
4.1.2 Immovable fixed assets include freehold Land and Building situated at E-1, Sehjpal, Near DHA Phase-VIII (Ex-Air
Avenue), Lahore Cantt. Total area of land is 18.17 kanals.
4.2.1 The following is the movement in capital work-in-progress during the year:
4.2.2 This represents the ongoing civil work in various offices of the Company.
4.3 Depreciation charge for the year has been allocated as follows:
Details of disposed assets which had a net book value of Rs. 500,000 or more, are as follows:
228
Annual Report 2021
2021
Particulars Cost as at Additions Disposals Disposal of Cost as at Accumulated Amortization Disposals Disposal of Accumulated Book value Rate
01 January subsidiary 31 December amortization as charge for subsidiary amortization as as at (%)
at 01 January the year at 31 December 31 December
------------------------------------------------------------------Rupees----------------------------------------------------------------------
Computer
software
and licenses 325,817,444 86,920,705 - (219,352,908) 193,385,241 177,228,811 23,779,036 - (31,340,310 169,667,537 23,717,704 33%
2020
Particulars Cost as at Additions Disposals Disposal of Cost as at Accumulated Amortization Disposals Disposal of Accumulated Book value Rate
01 January subsidiary 31 December amortization as charge for subsidiary amortization as as at (%)
at 01 January the year at 31 December 31 December
------------------------------------------------------------------Rupees----------------------------------------------------------------------
Computer
software
and licenses 325,817,444 86,920,705 - - 325,817,444 148,099,517 29,129,294 - - 177,228,811 148,588,633 33%
5.2 The cost of the intangibles include assets amounting to Rs. 159.6 million (2020: Rs. 130 million) with nil book value.
5.3 Amortization charge for the year has been allocated as follows: Note 2021 2020
Rupees Rupees
6.1 The interest has been charged at the rate of one year KIBOR in accordance with the requirement of the Companies
(Investment in Associated Companies or Associated Undertakings) Regulations, 2017.
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Annual Report 2021
Set out below is the summarized financial statement information of Retailistan (Private) Limited which is
accounted for using equity method:
2021 2020
Rupees Rupees
Revenue 2,455,923,427 -
Cost of sales (2,236,230,596) -
Operating expenses (173,600,234) -
Adminsitrative expenses (195,708,429) -
Selling and distribtuon expenses (95,420,065) -
Research expenses (83,680,010) -
Finance costs (1,150,310) -
Other income 10,484,452 -
Loss before tax (319,381,765) -
Taxation (12,027,158) -
(331,408,923) -
Effect of pro-ration 32,468,312 -
Loss for the year (298,940,611) -
Other comprehensive income 292,671 -
Total comprehensive loss (298,647,940) -
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Annual Report 2021
2021 2020
Rupees Rupees
Revenue 84,077,491 -
Cost of sales (46,212,542) -
Distribution cost (43,286,482) -
Administrative expenses (42,828,591) -
Other income 2,262,902 -
Finance costs (6,919,462) -
Loss before tax (52,906,684) -
Taxation - -
Loss for the year (52,906,684) -
Other comprehensive income - -
Total comprehensive loss (52,906,684) -
8. RIGHT-OF-USE ASSETS
Set out below are the carrying amounts of right-of-use assets recognized and the movements during the year:
8.1 The depreciation charge for the year on right-of-use Note 2021 2020
assets has been allocated as follows: Rupees Rupees
231
Annual Report 2021
2021 2020
9. LONG TERM LOANS Rupees Rupees
9.1 These interest free loans are repayable between 18 to 60 months and are granted to the executives of the Holding
Company, in accordance with their terms of employment. These are secured against post dated cheques. In
accordance with IFRS 9 - Financial instruments, these loans were initially recognized at fair value using effective
interest rates ranging from 9.54% to 11.97%. The difference between cash paid and present value of cash inflows
upon initial recognition has been recognized as deferred employee benefits.
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Annual Report 2021
2021
------------------------------------------------Rupees------------------------------------------------
VISIONET VISIONET - UK
DEUTSCHLAND GMBH
- Not more than three months 1,319,204 4,944,629
- More than three months but not more than six months - -
- More than six months but not more than twelve months - -
- More than twelve months -
1,319,204 4,944,629
2020
------------------------------------------------Rupees------------------------------------------------
VISIONET VISIONET - UK
DEUTSCHLAND GMBH
- Not more than three months 135,801,761 -
- More than three months but not more than six months 47,873,522 -
- More than six months but not more than twelve months 3,932,960 -
- More than twelve months - -
187,608,243 -
11.1.2 These represent unbilled debtors arising due to recognition of revenue upon delivery of performance obligations
as per contract on the basis of percentage of completion as per IFRS 15 - Revenue from contracts with customers.
These include unsecured receivables from related parties against outsourcing services. As per contracts with
related parties, billing terms range from monthly to quarterly basis and payment is generally due within 30 days
from the date of billing. Detail of related party balances along with aging analysis of the amounts is as follows:
2021
VISIONET VISIONET - UK VISIONET TECHVISTA
SYSTEMS DEUTSCHLAND INFORMATION
INCORPORATION GMBH TECHNOLOGY
- USA QATAR
--------------------------------------------------Rupees--------------------------------------------------
233
Annual Report 2021
2020
VISIONET VISIONET - UK VISIONET TECHVISTA
SYSTEMS DEUTSCHLAND INFORMATION
INCORPORATION GMBH TECHNOLOGY
- USA QATAR
--------------------------------------------------Rupees--------------------------------------------------
12.2.1 These include allowance for ECL against receivables from related party, TechVista Information Technology
(Qatar) amounting to Rs. 51.35 million (2020: 54.20 million).
13.1 This represents loan provided to UUS Joint Venture (Private) Limited for meeting working capital requirements.
This amount is unsecured and carries interest at one-year KIBOR on the outstanding loan balance at the end of
each month.
13.2 This represents the loan provided to E-Processing Systems (Private) Limited which carries mark-up at one-month
KIBOR on the outstanding loan balance at the end of each month.
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Annual Report 2021
Amortized cost
- Term deposit receipts (TDRs) (15.2) 667,000,000 2,085,000,000
4,866,676,912 2,644,845,556
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Annual Report 2021
15.2 The details of investments in TDRs are as follows: Note 2021 2020
Rupees Rupees
15.2.1 These carry markup at rates ranging from 6.45% to 12.75% (2020: 6% to 12.75%) per annum.
16. TAX REFUNDS DUE FROM THE GOVERNMENT Note 2021 2020
Rupees Rupees
Local currency:
Current accounts 1,636,860,527 1,211,562,880
Saving accounts (17.1)&(17.2) 1,236,990,790 766,496,179
2,873,851,317 1,978,059,059
Foreign currency - current accounts 104,066,346 1,006,127,524
2,978,863,741 2,985,104,566
17.1 These carry markup at the rate of 4.12% to 6.18% (2020: 3.1% to 11.50%) per annum.
17.2 These include margin amount of Rs. 458.27 (2020: Rs. 364.63) million held under lien by the banks against
guarantees issued by them on behalf of the Group.
2021 2020
(Number of shares)
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Annual Report 2021
19.1 This reserve shall be utilized only for the purpose as specified in section 81(2) of the Companies Act, 2017.
19.2 This represents balance amount after exercise of share options by the employees under the Employee Stock
Option Scheme approved by the SECP. According to the scheme, 100% options become exercisable after
completion of vesting period from the date of grant. The options have a vesting period of 2 years and an exercise
period of 3 years from the date the option is vested.
19.2.1 The following table illustrates the number and weighted average exercise prices of, and movements in, share
options during the year:
2021 2020
1. Additional options were awarded to scheme participants as a result of the March 2021 bonus issue. Options were
awarded such that the overall value of options available were unchanged by the bonus issue.
2. The weighted average share price at the date of the exercise of these options was nil (2020: Rs. 96.32).
3. The weighted average share price at the date of the exercise of these options was Rs. 479.91 (2020: Rs. 183.84)
4. The weighted average share price at the date of the exercise of these options was Rs. 461.40.
5. The weighted average share price at the date of the exercise of these options was Rs. 759.84.
19.2.2 The weighted average remaining contractual life for the share options outstanding as at 31 December 2021 is 3.71
years (2020: 3.80 years).
19.2.3 The weighted average fair value of options granted during the year was Rs. 277.67 (2020: Rs. 67.72)
19.2.4 The range of exercise prices for options outstanding at the end of the year is Rs.346.19 to Rs.497.21 (2020:
Rs.72.13 to Rs.122.23)
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Annual Report 2021
19.2.5 The following table lists the inputs to the model used for the plan for the years ended 31 December 2021 and
2020, respectively:
2021 2020
Rupees Rupees
Dividend yield 2% 2%
Expected volatility 42% - 43% 32% - 40%
Risk-free interest rate 8.29% & 8.90% 7.30% & 7.80%
Expected life of share options(years) 2.2 2.1
Weighted average share price Rs. 538.58 Rs. 132.47
Model used Black Scholes Black Scholes
The expected life of the share options is based on historical data and current expectations and is not necessarily
indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical
volatility over a period similar to the life of the options is indicative of future trends, which may not necessarily be
the actual outcome.
20.1 These represent advances received from staff and will be adjusted as per Company's car policy against sale of
vehicles.
21.1 This represents loan of Rs. 210 million obtained under Refinance Scheme for Payment of Wages and Salaries to Workers and
Employees of Business Concerns (the Scheme) offered by State Bank of Pakistan to mitigate the effect of COVID-19 on
employment in Pakistan. The facility has an aggregate sanctioned limit of Rs. 315 million. It carries mark-up at SBP rate plus
1% per annum and is secured against a pari passu charge of Rs. 1,344 million over the present and future current assets of
the Company and 1st exclusive equitable mortgage and hypothecation charge of Rs. 1,066.7 million over the non current
assets of the Company. The loan is repayable in equal quarterly installments commencing September 26, 2020 and ending
December 26, 2022. The two tranches of loan were initially recognized at amortized cost using effective interest rate of
7.94% and 7.25% (3-month KIBOR) respectively. The difference between fair value of loan and loan proceeds has been
recognized as deferred grant as per requirements of IAS 20 (Accounting for Government grants and disclosure of
Government assistance) and as per Circular 11/2020 issued by the Institute of Chartered Accountants of Pakistan.
2021 2020
22. LEASE LIABILITIES Rupees Rupees
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Annual Report 2021
Set out below are the carrying amounts of lease liabilities and the movements during the year:
2021 2020
Rupees Rupees
The Company had total cash outflows for leases of Rs.95.33 million in 2021 (2020: Rs. 65.14 million ). The
Company also had non-cash additions to right-of-use assets and lease liabilities of Rs. 190.01 million in 2021
(2020: Rs. 99.01 million).
23.2 These are non-interest bearing and are normally settled on terms of between 30 and 60 days.
24.1 These represent mobilization advances received from the customers against professional / software development
services, licenses, license support services and other fees.
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Annual Report 2021
25.1 This represents export re-finance (ERF) availed against aggregate sanctioned limit of Rs. 1,000 (2020: Rs. 800) million. The
rate of mark up is SBP rate plus 0.5% (2020: SBP rate plus 0.5%) per annum. These borrowings are secured against Rs. 150
million cash margin, 1st pari passu charge of Rs. 1,344 million over the current assets and hypothecation and equitable
mortgage charge of Rs. 1,066.67 million over plant and machinery and 203 marla of land at Sehjpal near DHA Phase VIII
(ex-Air Avenue Eden City), respectively.
25.2 This represents islamic export re-finance (IERF) availed against aggregate sanctioned limit of Rs. 1,400 (2020: Rs. 700)
million. The rate of mark up is SBP rate plus 0.5% (2020: SBP rate plus 1%). These borrowings are secured against first pari
passu hypothecation charge of Rs. 2,150 million over current assets and equitable mortgage of Rs. 305.99 million over 153.59
marla of land at Sehjpal near DHA Phase VIII (ex-Air Avenue Eden City).
25.3 This represents export re-finance (ERF) availed against aggregate sanctioned limit of Rs. 700 million. The rate of mark up is
SBP rate plus 0.5%. These borrowings are secured against first pari passu hypothecation charge over current assets of the
Company.
25.4 This represents islamic export re-finance (IERF) availed against aggregate sanctioned limit of Rs. 100 million. The rate of
mark up is SBP rate plus 1%. These borrowings are secured against first pari passu hypothecation charge over current assets
of the Company.
25.5 This represents islamic export re-finance (IERF) availed against aggregate sanctioned limit of Rs. 300 million. The rate of
mark up is SBP rate plus 0.5%. These borrowings are secured against first pari passu hypothecation charge over current
assets of the Company.
26.1 Contingencies
Income tax
The Deputy Commissioner Inland Revenue (the “DCIR”) issued order under section 161(1A) of the Income Tax O r d i n a n c e ,
2001 (the “Ordinance”) for the tax year 2017 whereby tax amounting to Rs. 6.53 million for non-deduction of withholding tax
was levied. The Company preferred an appeal before Commissioner Inland Revenue (Appeals) [the “CIR(A)”], which is decided
against the Company. Being aggrieved, the Company filed an appeal before the Appellate Tribunal Inland Revenue (the
“ATIR”), which is pending adjudication. The management expects a favorable outcome in this regard.
Company filed an undertaking pursuant clause 94 part IV of Second Schedule to the Ordinance, thereby opting out of
minimum tax on services under section 153(1)(b) of the Ordinance in respect of Tax Year 2016. The Additional Commissioner
Inland Revenue (“Addl. CIR”) declined to accept the undertaking against which the Company preferred an appeal before
CIR(A), which has been upheld by the CIR(A). The appeal effect / reassessment may result in tax liability of Rs. 30.25 million.
Being aggrieved, the Company has filed an appeal before the ATIR, which is pending adjudication. The management expects
a favorable outcome in this regard.
The Addl. CIR issued order under section 122(5A) of the Ordinance for tax year 2014, on the basis of wrong proration of
expenses, capital gain etc. and created demand of Rs. 48.59 million. The company preferred an appeal against the order,
before the CIR(A) who decided the case in favor of the company. However, the tax department has filed second appeal before
the ATIR, which is pending adjudication. The management expects a favorable outcome in this regard.
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Annual Report 2021
The Assistant Commissioner Inland Revenue (“ACIR”) issued an order under section 122(5A) of the Ordinance for tax
year 2012, on the basis of wrong proration of expenses, others etc. and created demand of Rs. 18.46 million. The
company preferred an appeal before the CIR(A) against the impugned order which is partially decided in favor of the
Company. Being aggrieved, the Company filed an appeal before the learned ATIR, which is pending adjudication. The
management expects a favorable outcome in this regard.
The Company was selected for Sales Tax Audit through computer ballot for the tax period January 2016 to
December 2016 and on the basis of audit proceedings, the DCIR passed order No. 3 dated 30 July 2020 under section
11(2) of the Sales Tax Act, 1990 on various issues including suppression of sales, non-chargeability of sales tax on
advance from customers, other income, late filing of sales tax returns etc. and created impugned sales tax demand
amounting to Rs. 655.84 million. Being aggrieved, the Company preferred an appeal before the CIR(A), which is
pending adjudication.
During the year, the CIR appeal vide order no. 12 dated January 29, 2021 has annulled the demand of PKR 651 million
with the direction to reassess the matters and quashed the demand to the tune of PKR 441,297. Further the CIR
appeals has confirmed the balance demand of PKR 3.70 million against which company has preferred an appeal
before ATIR.
26.3 Commitments
Guarantees issued by the financial institutions on behalf of the Company amount to Rs. 329.11 (2020: Rs. 201.90)
million. This includes guarantees of Nil (2020: Rs. 2.72) million given on behalf of Joint Operation.
Guarantees issued by the Company on behalf of E-Processing Systems (Private) Limited to National Bank of
Pakistan amounts to Rs. 100 million.
Note 2021
Type of goods or services Export Local Total
Outsourcing services: ----------------Rupees----------------
Business process outsourcing 1,308,686,007 153,119,202 1,461,805,209
IT services 9,381,114,850 1,681,590,693 11,062,705,543
Software trading 343,276,936 652,577,352 995,854,288
Software implementation (27.1.1) 1,436,498,882 219,431,181 1,655,930,063
Sale of air-time - 321,193,535 321,193,535
Less: Sales tax - (193,451,071) (193,451,071)
Total revenue from contracts with customers 12,469,576,675 2,834,460,892 15,304,037,567
Timing of revenue recognition - net
Goods and services transferred at a point in time 343,276,936 652,577,352 995,854,288
Goods and services transferred over time 12,126,299,739 2,181,883,540 14,308,183,279
Total revenue from contracts with customers 12,469,576,675 2,834,460,892 15,304,037,567
Note 2020
Type of goods or services Export Local Total
Outsourcing services: ----------------Rupees----------------
Business process outsourcing 1,373,041,005 161,502,986 1,534,543,991
IT services 5,370,923,611 928,497,428 6,299,421,039
Software trading 203,880,450 452,429,638 656,310,088
Software implementation (27.1.1) 956,158,647 210,001,553 1,166,160,200
Sale of air-time - 357,570,526 357,570,526
Less: Sales tax - (137,178,134) (137,178,134)
Total revenue from contracts with customers 7,904,003,713 1,972,823,997 9,876,827,710
Timing of revenue recognition - net
Goods and services transferred at a point in time 203,880,450 452,429,638 656,310,088
Goods and services transferred over time 7,700,123,263 1,520,394,359 9,220,517,622
Total revenue from contracts with customers 7,904,003,713 1,972,823,997 9,876,827,710
241
Annual Report 2021
27.1 This represents sales tax chargeable under Provincial and Federal Sales tax laws on revenue as defined under
relevant laws.
27.2 The disaggregated revenue information based on the geographical location has been presented in Note 36 to
these consolidated financial statements.
Note 2021 2020
Rupees Rupees
27.3.1 These represent the amount of revenue recognized from amounts included in contract liabilities at the
beginning of the year.
The transaction prices allocated to the remaining performance obligations (unsatisfied or partially unsatisfied) as
at 31 December are as follows:
2021 2020
Rupees Rupees
Within one year
1,876,222,970 234,262,085
More than one year
938,111,485 702,786,254
2,814,334,455 937,048,339
The Group makes sales against credit terms. In case of credit sales, payment is generally due within 30 days from
the date of billing to the customer.
28.1 This includes employees retirement benefit expense amounting to Rs. 229.39 (2020: Rs. 158.39) million.
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Annual Report 2021
29.1 This includes employees retirement benefit expense amounting to Rs. 5.23 (2020: Rs. 3.37) million.
30.1 This includes employees retirement benefit expense amounting to Rs. 71.07 (2020: Rs. 42.83) million.
591,348,865 231,023,735
Income from non-financial assets:
As mentioned in Note 1.2.5, E-Processing Systems (Private) Limited has been disposed during the year, accordingly,
fair value adjustment on dilution of control in subsidiary is calculated as per the following details:
2021
Rupees
Net assets
Property and equipment 12,497,423
Intangibles 235,380,681
Long term deposits 18,224,640
Trade debts and other receivables 371,548,493
Short term deposits and prepayments 4,952,523
Tax refunds from Govt. 5,203,122
Cash and bank balances 72,622,760
Trade and other payables (68,113,173)
Contract Liabilities (2,559,324)
Short term borrowings (309,059,787)
Markup Accrued on Loans (7,266,009)
333,431,349
Less:
Fair value of consideration (E-Processing B.V. as an associate) 889,335,703
Gain on dilution of interest 197,609,706
Non controlling interest 62,712,688
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Annual Report 2021
35. TAXATION
Note 2021 2020
Rupees Rupees
Statement of profit or loss
Current Income tax:
- Current income tax charge 88,742,478 90,648,215
- Adjustments in respect of current income tax of previous year 10,918,206 27,312,161
99,660,684 117,960,376
Deferred tax
- Relating to origination and reversal of temporary differences (45,716,049)
-
Income tax expense reported in statement of profit or loss 53,944,635 117,960,376
35.1 This represents tax chargeable under Normal Tax Regime on local sale of software and services. The income of the
Holding Company from export of software is subject to tax credit at the rate of 100% under section 65F to the
Income Tax Ordinance, 2001.
Reconciliation between accounting profit and tax expense for the current year is meaningless in view of the
minimum tax under section 153 of Income Tax Ordinance, 2001.
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Annual Report 2021
Geographical segments
For management purposes, the Group is organized into business units based on their geographical areas and has
four reportable operating segments as follows:
No other operating segments have been aggregated to form the above reportable operating segments.
Management monitors the operating results of its operating segments separately for the purpose of performance
assessment. Segment performance is evaluated based on operating profit or loss and is measured consistently
with operating profit or loss in the consolidated financial statements.
Transfer prices between operating segments are on arm’s length basis in a manner similar to transactions with
third parties.
Revenue from contracts with customers 6,423,003,195 4,367,846,372 1,047,044,453 825,305,235 4,999,529,027 2,699,811,070 2,834,460,892 1,983,865,033 15,304,037,567 9,876,827,710
Cost of revenue (3,896,570,096) (2,392,470,816) (658,775,716) (498,779,658) (3,479,703,994) (2,218,084,612) (2,279,316,044) (1,510,305,117) (10,314,365,850) (6,619,640,203)
Gross profit 2,526,433,099 1,975,375,556 388,268,737 326,525,577 1,519,825,033 481,726,458 555,144,848 473,559,916 4,989,671,717 3,257,187,507
Distribution expenses (22,951,806) (17,406,721) (3,643,294) (4,024,698) (6,857,599) (7,462,548) (352,147,834) (172,130,762) (385,600,533) (201,024,729)
Administrative expenses (702,630,379) (324,640,784) (90,422,638) (66,340,926) (500,666,597) (218,841,511) (133,084,344) (112,487,335) (1,426,803,958) (722,310,556)
(725,582,185) (342,047,505) (94,065,932) (70,365,624) (507,524,196) (226,304,059) (485,232,178) (284,618,097) (1,812,404,491) (923,335,285)
Profit / (loss) before taxation and
z income and expenses 1,800,850,914 1,633,328,051 294,202,805 256,159,953 1,012,300,837 255,422,399 69,912,670 188,941,819 3,177,267,226 2,333,852,222
-----------------------------------------------------------------------------------------------Rupees-----------------------------------------------------------------------------------------------
Segment operating assets 1,518,666,516
Property and equipment - - - - 45,008,932 8,216,212 2,006,791,105 1,510,450,304 2,051,800,037 204,249,277
Intangibles - - - - - - 23,717,704 204,249,277 23,717,704 204,396,352
Right-of-use assets - - - - - - 288,981,475 204,396,352 288,981,475 -
Long term investments - - - - - - 144,568,896 - 144,568,896
Invetment in associates - - 1,274,009,731 1,274,009,731 39,496,070
Long term deposits - - - - - - 141,294,105 39,496,070 141,294,105 -
Long term loans - - - - - - 36,796,454 - 36,796,454 -
Deferred taxation - - - - 75,060,282 - 75,060,282 -
Deferred employee benefits - - 6,263,833 192,018,321 - - 10,344,054 - 10,344,054 642,780,081
Contract assets - - 128,690,315 20,255,836 383,036,454 253,079,192 338,644,113 197,682,568 727,944,400 2,372,716,741
Trade debts 1,766,444,533 1,100,980,956 - - 1,227,195,573 590,695,553 1,003,597,878 660,784,396 4,125,928,299 95,419,182
Loans, advances and other reveivable - - 201,135,157 32,126,945 533,532,607 63,292,237 734,667,764
Trade deposits and short - - - 438,473,347
term prepayments - - 74,561,142 97,647,869 248,588,820 340,825,478 323,149,962 38,450,000
Interest accrued - - - - 11,118,877 38,450,000 11,118,877 119,353,871
Other receivables - - - - - 116,282,300 - 3,071,571 - -
Current portion of deferred employee
benefits - - - - - - 2,890,139 - 2,890,139 2,644,845,556
Short term investments - - - - - - 4,866,676,912 2,644,845,556 4,866,676,912 171,975,691
Tax refunds due from government - - - - - - 213,640,998 171,975,691 213,640,998 2,985,104,566
Cash and bank balances - - - - 1,313,408,388 1,013,436,517 1,665,455,353 1,971,668,049 2,978,863,741
Total operating assets 1,766,444,533 1,100,980,956 134,954,148 212,274,157 3,244,345,646 2,111,484,588 12,885,709,503 8,051,187,549 18,031,453,830 11,475,927,250
-----------------------------------------------------------------------------------------------Rupees-----------------------------------------------------------------------------------------------
Segment operating liabilities
Long term advances - - - - - - 81,111,314 53,857,626 81,111,314 53,857,626
Lease liabilities - - - - - - 238,881,185 189,409,537 238,881,185 189,409,537
Long term loan - - - - - - - 98,013,227 - 98,013,227
Deferred grant - - - - - - - 8,338,896 - 8,338,896
Trade and other payables - - - - 544,214,481 441,404,612 1,162,395,254 744,725,372 1,706,609,735 1,186,129,984
Contract liabilities - - - - 559,442,049 204,626,045 380,693,823 92,928,178 940,135,872 297,554,223
Mark-up accrued on short term -
borrowings - - - - - - 13,702 9,804,362 13,702 9,804,362
Short term borrowings - - - - - - 2,750,000,000 1,449,000,000 2,750,000,000 1,449,000,000
Unclaimed dividend - - - - - - 9,226,244 7,617,635 9,226,244 7,617,635
Provision for gratuity - - - - 94,865,412 47,599,384 - - 94,865,412 47,599,384
Current portion of lease liabilities - - - - - - 62,195,197 37,983,731 62,195,197 37,983,731
Current portion of long term loan - - - - - - 76,816,085 100,754,617 76,816,085 100,754,617
Current portion of deferred grant - - - - - - 1,958,993 3,095,996 1,958,993 3,095,996
Current portion of long term advances - - - - - - 6,865,236 10,754,706 6,865,236 10,754,706
Total operating liabilities - - - - 1,198,521,942 693,630,041 4,770,157,033 2,806,283,883 5,968,678,975 3,499,913,924
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Annual Report 2021
The related parties and associated undertakings comprise subsidiary, associated companies, companies in which
directors are interested, staff retirement funds and directors and key management personnel (Note 33). Amounts
due from and to related parties are shown under respective notes to the consolidated financial statements.
Transactions with subsidiaries have been eliminated and other significant transactions with related parties are as
follows:
Rupees Rupees
E Processing Systems (Private) Limited. Associate* Disbursements against loan (52,296,496) (34,100,235)
Receipts against loan 52,000,000 37,051,227
Interest income 3,951,358 2,419,253
Visionet Systems Incorporation - USA Associate* Revenue (37.1) 6,446,986,130 4,270,475,128
Reimbursement of expenses 15,089,316 27,419,070
TechVista Information Technology Qatar Associate* Revenue (37.2) 182,168,993 95,176,466
Advance against issue of shares 144,568,896 -
Visionet Deutschland GMBH Associate* Revenue (37.3) 664,579,940 664,579,940
Out of pocket expenses 732,584 -
Staff retirement funds Contribution 326,813,846 177,022,960
VSI UK Associate* Revenue (37.4) 82,520,056 -
*This has the same meaning as defined in section 2(4) of the Companies Act 2017.
37.1 Visionet Systems Incorporation - USA (VSI) is associated company of the Group on the basis of common
directorship and incorporated in United States of America (USA). The registered address of VSI is Cedarbrook
Corporate Center, 4 Cedarbrook Drive, Bldg. B Cranbury, NJ 08512-3641.
37.2 TechVista Information Technology Qatar is associated company of the Group on the basis of common directorship
and incorporated in Qatar. The registered address is Palm Towers, floor 41 Westbay, Doha, Qatar.
37.3 Visionet Duetschland GMBH is associated company of the Group on the basis of common directorship and
incorporated in Qatar. The registered address is Maximilian Street 13, 80539, Munchen, Germany.
37.4 Visionet UK is an associated company of the Group on the basis of common directorship and incorporated in United
Kingdom. The registered address is Wellington Way, Brooklands Business Park, Weybridge, Surrey KT13 0TT, GB.
The aggregate amounts charged in the accounts for the year for remuneration including certain benefits to the
Chief Executive Officer, Directors and Executives of the Group are as follows:
---------------------------------------------------------------------(Nos)-------------------------------------------------------------------------
Number of persons 1 1 6 6 993 525
------------------------------------------------------------------- Rupees------------------------------------------------------------------------
38.1 In addition to the above remuneration, the Chief Executive Officer and certain executives are also provided with
Group maintained cars, free medical and mobile phone facilities in accordance with their entitlement.
38.2 Fees represent the amounts paid to Non Executive Directors for attending meetings of the Board and its
sub-committees.
38.3 During the year, the Chief Executive Officer and Other Executives were granted 291,319 (2020: 570,034) and
725,600 (2020: 1,159,000) share options respectively, which have a vesting period of two years. Further, the impact
of benefits available to the Chief Executive and other executives recognized by the Group on account of share-based
payment plans aggregated to Rs. 40.97 (2020: Rs. 25.37) million and Rs. 149.26 (2020: Rs. 21.76) million,
respectively.
38.4 During the current year, certain executives of the Group exercised stock option under employee stock option scheme
according to which 1,430,529 (2020: 1,085,715) shares were issued to them.
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Annual Report 2021
4,462,160,721 2,209,645,930
Profit for the year
(Number of shares)
(Restated)
Weighted-average number of ordinary shares outstanding during the year 137,671,924 136,684,282
39.3 The weighted average number of ordinary shares of 2020 has been restated in accordance with the
requirements of IAS 33 due to issuance of 12,462,369 bonus shares in 2021.
---------------Rupees--------------------
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Annual Report 2021
Financial instruments comprise deposits, unbilled revenue, interest accrued, trade debts, advances to employees
against salaries, loans, other receivables, cash and bank balances and short term investments, trade and other
payables and mark up accrued on short term borrowings.
The Group has exposure to the following risks from its use of financial instruments:
- Market risk
- Credit risk
- Liquidity risk
The Board of Directors has the overall responsibility for the establishment and oversight of Group’s risk
management framework. The Board is also responsible for developing and monitoring the Group's risk
management policies.
This note represents information about the Group’s exposure to each of the above risks, it's objectives, policies
and processes for measuring and managing risk, and it's management of capital.
The Group's risk management policies are established to identify and analyze the risks faced by the Group, to set
appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and
systems are reviewed regularly to react to changes in market conditions and the Group's activities.
Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in foreign exchange rates. Currency risk arises mainly from future commercial transactions or receivables
and payables that exist due to transactions in foreign currencies.
Monetary items, including financial assets and financial liabilities, denominated in currency other than functional
currency of the Group are periodically restated to Pak rupee equivalent and the associated gain or loss is taken to
the statement of profit or loss.
The following analysis demonstrates the sensitivity to a reasonably possible change in exchange rates, with all
other variables held constant, of the Group's profit before tax.
Changes in Rate Effect on profit before tax Effect on profit before tax
2021 2020
249
Annual Report 2021
Other price risk is the risk of changes in the fair value of investment in mutual funds as a result of changes in the
levels of net asset value of units held by the Company. As at 31 December 2021, had there been increase / decrease
in net asset value by 1%, with all other variables held constant, the profit before tax for the year would have been
higher / lower by Rs. 166.41 (2020: Rs. 5.09) million .
The Group is not exposed to other price risk as its investments are fixed with respect to price and maturity.
The Group has no significant long-term interest-bearing assets. The Group's interest rate risk arises from short
term borrowings. Borrowings obtained at variable rates expose the Group to cash flow interest rate risk.
At the reporting date, the interest rate profile of the Group's interest-bearing financial instruments was:
2021 2020
Rupees Rupees
Fixed rate instruments
Financial assets
As at 31 December 2021, had there been increase / decrease in fixed interest rates by 100 basis points, with all other
variables held constant, profit before tax for the year would have been higher / lower by Rs. 19.04 million (2020:
Rs.17.35 million).
As at 31 December 2021, had there been increase / decrease in SBP rate by 100 basis points, with all other variables
held constant, profit before tax for the year would have been higher / lower by Rs. 13.27 million (2020: Rs.1.99
million).
Credit risk represents the accounting loss that would be recognized at the reporting date if counter-parties failed
completely to perform as contracted. The Group does not have significant exposure to any individual third party. To
reduce exposure to credit risk the Group has developed a formal approval process whereby credit limits are applied
to its customers. The management also continuously monitors the credit exposure towards the customers and
makes provision against those balances considered doubtful of recovery. Outstanding customer receivables are
regularly monitored.
The credit risk on liquid funds is limited because the counter parties are banks and mutual funds with reasonably
high credit ratings. The Group believes that it is not exposed to major concentration of credit risk as its exposure is
spread over a large number of counter parties and subscribers in case of trade debts.
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit
risk at the reporting date was as follows:
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Annual Report 2021
2021 2020
Rupees Rupees
As at year end, 50% of trade debts (2020: 47%) was represented by four customer amounting to Rs. 2,232.25 (2020: Rs.
1,236.32) million. The management believes that the Group is not exposed to customer concentration risk as this customer is
related party of the Group.
Based on past experience and policy of the Group, the management believes that an impairment allowance is necessary in
respect of trade receivables past due by one year except if those receivables are recovered subsequent to year end and if
management has sufficient grounds to believe that the amounts will be recovered.
The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit
ratings or to historical information about counterparty default rate. The table below shows the bank balances and
investments held with some major counterparties at the reporting date:
2021 2020
251
Annual Report 2021
2021 2020
Mutual Funds Short term Long term Agency ------------------ Rupees ----------------
HBL Asset Management Limited Not Available AM2 PACRA 78,840,540 51,444,992
Al-Meezan Asset Management Limited Not Available AM1 PACRA 930,323,209 150,928,758
NBP Fund Management Limited Not Available AM1 PACRA 1,061,464,520 201,778,545
MCB Arif Habeeb Saving and investment Not Available AM1 PACRA 467,949,478 -
ABL Asset Management Company Limited Not Available AM22++ PACRA 355,994,104 -
Alfalah GHP Investment Management Limited Not Available AM2+ PACRA 131,098,915 51,291,201
Lakson Investments Limited Not Available AM2+ Not Available 201,003,101 52,449,350
UBL Fund Managers Limited Not Available AM1 JCR-VIS 415,546,018 51,952,710
Faysal Asset Management Limited Not Available AM2+ JCR-VIS 557,457,027 -
4,199,676,912 559,845,556
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group's
approach to managing liquidity is to ensure as far as possible to always have sufficient liquidity to meet its
liabilities when due. The following are the contractual maturities of financial liabilities:
The following are the contractual maturities of financial liabilities as at 31 December 2021:
Carrying amount Contractual cash flows Less than one year One to five years More than five years
The following are the contractual maturities of financial liabilities as at 31 December 2020:
Fair value of available-for-sale financial assets is derived from quoted market prices in active markets, if available.
The carrying values of other financial assets and financial liabilities reflected in financial statements approximate
their fair values. Fair value is determined on the basis of objective evidence at each reporting date.
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Annual Report 2021
2021
Financial assets at fair Financial assets at Total
value through profit or loss amortized cost
2020
2021 2020
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are
observable either, directly or indirectly.
Level 3: techniques which use inputs that have a significant effect on the recorded fair value that are not based on
observable market data.
As at 31 December 2020
Fair value through profit and loss
- Mutual Fund units - 559,845,556 - 559,845,556
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a) to safeguard the group’s ability to continue as a going concern, so that it can continue to provide returns for
shareholders and benefits for other stakeholders; and
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to
shareholders, return capital to shareholders, or issue new shares.
Consistent with the industry norms, the Group monitors its capital on the basis of gearing ratio. The ratio is
calculated as net debt divided by total capital. Net debt is calculated as total borrowings as shown in the balance
sheet less cash and cash equivalent. Total capital is calculated as ‘equity’ as shown in the balance sheet plus net
debt (as defined above).
2021 2020
Rupees Rupees
Long term loan - Note 21 76,816,085 198,767,844
Lease Liabilities - Note 22 301,076,382 227,393,268
Trade and other payables - Note 23 1,706,609,735 1,186,129,984
Short term borrowing - Note 25 2,750,000,000 1,449,000,000
Mark up accrued on borrowings 13,702 9,804,362
Less: Cash and cash equivalents (2,978,863,741) (2,985,104,566)
Net debt 1,855,652,163 85,990,892
Total capital 12,062,774,855 7,976,013,326
Capital and net debt 13,918,427,018 8,062,004,218
31 December 2021
31 December 2020
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44.1 The Board of Directors of Holding Company in their meeting held on 10th March 2022 have proposed a final cash
dividend for the year ended 31 December 2021 of Rs. 5 (2020: Rs. 3.5) per share and 100% bonus (2020: 10%)
issuance for approval of the members at the Annual General Meeting to be held on 11th April 2022. These financial
statements for the year ended 31 December 2021 do not include the effect of these appropriations.
Corresponding figures have been re-arranged, wherever necessary, for better and fair presentation. However, no
significant re-arrangement / reclassifications have been made in these consolidated financial statements.
47. GENERAL
Figures have been rounded off to the nearest of rupees, unless otherwise stated.
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11 April 2022 at Systems Limited Office Lahore & through video link
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Pakistan
Karachi Multan
E-5, Central Commercial Area, Plot No. 842/23 near Northern
Shaheed-e-Millat Road, Karachi, Bypass Chowk, Bosan Road, Multan
Pakistan
Islamabad Faisalabad
Plot No. 21, 1st Floor Fazeelat Arcade, 1st floor Main East Canal Road, Ali Fatima
Sector G-11 Markaz, Islamabad, Science College, Faisalabad
Pakistan