InterimFinancialReport...Corporate Information Director’s Review Condensed Interim Financial Statements Condensed Interim Balance Sheet Condensed Interim Profit and Loss Account

Innovation�to�your�BusinessBringing�Technology

Interim�Financial�Reportfor�the�quarter�ended

31�March�2016

Corporate Information

Director’s Review

Condensed Interim Financial Statements

Condensed Interim Balance Sheet

Condensed Interim Profit and Loss Account

Condensed Interim Statement of Comprehensive Income

Condensed Interim Cash Flow Statement

Condensed Interim Statement of Changes in Equity

Notes to the Condensed Interim Financial Information

Condensed Interim Consolidated Financial Statements

Condensed Interim Consolidated Balance Sheet

Condensed Interim Consolidated Profit and Loss Account

Condensed Interim Consolidated Statement of Comprehensive Income

Condensed Interim Consolidated Cash Flow Statement

Condensed Interim Consolidated Statement of Changes in Equity

Notes to the Condensed Interim Consolidated Financial Information

Contents02

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08

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26

Corporate Information

Director’s Review

Condensed Interim Financial Statements

Condensed Interim Balance Sheet

Condensed Interim Profit and Loss Account

Condensed Interim Statement of Comprehensive Income

Condensed Interim Cash Flow Statement

Condensed Interim Statement of Changes in Equity

Notes to the Condensed Interim Financial Information

Condensed Interim Consolidated Financial Statements

Condensed Interim Consolidated Balance Sheet

Condensed Interim Consolidated Profit and Loss Account

Condensed Interim Consolidated Statement of Comprehensive Income

Condensed Interim Consolidated Cash Flow Statement

Condensed Interim Consolidated Statement of Changes in Equity

Notes to the Condensed Interim Consolidated Financial Information

Contents02

03

06

08

09

10

11

12

20

22

23

24

25

26

Systems Limited | Interim Financial Report quarter ended 31 March 2016 03

DIRECTOR’S REVIEWOn behalf of the Board of Directors we are pleased to present the Financial Statements together with the Consolidated Financial Statements for the quarter ended March 31, 2016.

MARKET OUTLOOK

We have seen growth and demand of skilled resources and services in US Market, our strategy to align ourselves with various competency centers has paid off and we have received good recurring revenue stream from our customers. We have invested heavily in developing accelerators, frameworks, and solution templates for Apparel and Retail Segment. We have also developed Retail Business Intelligence tool. In BPO Services we have invested in the accuracy of our OCR/ICR solution through Machine Learning and Artificial Intelligence. We have been using our Technology Platform to sell our BPO services and this has been instrumental in the growth of our business. Our Onsite BPO Center (Visionet Lender Services) has now 100+ resources onsite, this has allowed us to open up new business opportunities where hybrid resource model is essential requirement. Visionet Systems Inc. added number of new relationships in various new technologies, business processes and industries. We believe this will help the group in enhancing the growth of the company and we will have a solid base for repeatable and diversified business and clients across the globe.

We have expanded our base in MEA Region, we have changed our business strategy from selling through local partners to direct selling through our own relationship and sales force, we have invested and hired top notch local sales, presales and project management resources to expand and solidify our foot print in the region. We have signed up many large public and private sector accounts in both ME and Qatar. We are still well aligned with our regional partners to support us in generating indirect business as well. During the first quarter of 2016, public sector IT spending has been sluggish in GCC region due to significant decline in oil prices, we are expecting IT spending will be picking up again during the second half of 2016.

On the Domestic Front, we have seen growth in IT Spending from Public and Private Sector. We have signed up large public sector projects, which has provided us significant top line growth, in addition to the growth we have also been able to groom our resources for Enterprise Class Application Delivery and Customer Handling experience, which is the key for our growth and success globally.

FINANCIAL RESULTS

In the first quarter of 2016, company's revenues grew by 20% as compared to the first quarter of 2015. Cost of sales for the quarter were recorded at Rs. 456.84 million with an increase of 29% from the corresponding quarter of 2015 mainly due to expansion and capacity building in local and Middle East region. Resultantly, company achieved profit after taxation of Rs. 116.97 million, 7% above the corresponding quarter. Company posted Earnings per share of PKR 1.06 as compared to PKR 1.04 in the corresponding quarter last year.

Revenue

Gross Profit

Profit Before Taxation

Profit After Taxation

Earnings Per share (Rs)

Quarter ended31 March 2015


Change%

645,393,255

188,549,964

118,966,229

116,966,229

1.06

20.42%

4.47%

5.23%

6.55%

1.92%

535,969,750

180,482,547

113,055,253

109,776,912

1.04

Unconsolidated

Revenue

Gross Profit






Change%

754,083,165

201,540,004

101,353,380

99,353,380

0.91

37.96%

13.89%

(4.41)%

(3.31)%

(7.14)%

546,607,119

176,961,200

106,032,391

102,754,050

0.98

Consolidated

www.systemsltd.com02

CORPORATE INFORMATION

BOARD OF DIRECTORS

Mr. Aezaz Hussain Non-executiveChairman

Mr. Asif Peer ExecutiveCEO and Managing Director

Mr. Arshad Masood Non-executiveDirector

Mr. Omar Saeed IndependentDirector

Mr. Ayaz Dawood IndependentDirector

Mr. Asif Jooma IndependentDirector

Mr. Tahir Masaud IndependentDirector

AUDIT COMMITTEE

Mr. Ayaz DawoodChairman

Mr. Omer SaeedMember

Mr. Tahir MasaudMember

HUMAN RESOURCE & REMUNERATION COMMITTEE

Mr. Omar SaeedChairman

Mr. Asif JoomaMember


CHIEF FINANCIAL OFFICER & COMPANY SECRETARY

Mr. Affan Sajjad

AUDITORS

Ernst & Young Ford Rhodes Sidat HyderChartered Accountants Lahore.

LEGAL ADVISOR

Hassan & Hassan Advocates

BANKERS

Habib Metropolitan Bank LimitedUnited Bank LimitedStandard Chartered Bank (Pakistan)Limited Albaraka Bank LimitedBank Alfalah LimitedBank Islami LimitedMeezan Bank LimitedDubai Islamic BankFaysal Bank LimitedDeutsche Bank AG

SHARES REGISTRAR

THK Associates (Private) Limited. 2nd Floor, State Life Building-3,Dr. Ziauddin Ahmed Road,Karachi.T: +92 21 111-000-322F: +92 21 35655595

REGISTERED OFFICE

Chamber of Commerce Building,11 Sharae Aiwane Tijarat,Lahore, Pakistan.T: +92 42 36304825-35F: +92 42 36368857

KARACHI OFFICE

E-5, Central Commercial Area,Shaheed-e-Millat Road,Karachi, PakistanT: +92 21 34549385-87F: +92 21 34549389

DUBAI OFFICE

TechVista Systems FZ-LLCOffice 105, Building 11Dubai Internet City,PO Box 500497,Dubai, UAET: + 9714 3693525F: +9714 456 3761

WEB PRESENCE

www.systemsltd.com


DIRECTOR’S REVIEWOn behalf of the Board of Directors we are pleased to present the Financial Statements together with the Consolidated Financial Statements for the quarter ended March 31, 2016.

MARKET OUTLOOK

We have seen growth and demand of skilled resources and services in US Market, our strategy to align ourselves with various competency centers has paid off and we have received good recurring revenue stream from our customers. We have invested heavily in developing accelerators, frameworks, and solution templates for Apparel and Retail Segment. We have also developed Retail Business Intelligence tool. In BPO Services we have invested in the accuracy of our OCR/ICR solution through Machine Learning and Artificial Intelligence. We have been using our Technology Platform to sell our BPO services and this has been instrumental in the growth of our business. Our Onsite BPO Center (Visionet Lender Services) has now 100+ resources onsite, this has allowed us to open up new business opportunities where hybrid resource model is essential requirement. Visionet Systems Inc. added number of new relationships in various new technologies, business processes and industries. We believe this will help the group in enhancing the growth of the company and we will have a solid base for repeatable and diversified business and clients across the globe.

We have expanded our base in MEA Region, we have changed our business strategy from selling through local partners to direct selling through our own relationship and sales force, we have invested and hired top notch local sales, presales and project management resources to expand and solidify our foot print in the region. We have signed up many large public and private sector accounts in both ME and Qatar. We are still well aligned with our regional partners to support us in generating indirect business as well. During the first quarter of 2016, public sector IT spending has been sluggish in GCC region due to significant decline in oil prices, we are expecting IT spending will be picking up again during the second half of 2016.

On the Domestic Front, we have seen growth in IT Spending from Public and Private Sector. We have signed up large public sector projects, which has provided us significant top line growth, in addition to the growth we have also been able to groom our resources for Enterprise Class Application Delivery and Customer Handling experience, which is the key for our growth and success globally.

FINANCIAL RESULTS

In the first quarter of 2016, company's revenues grew by 20% as compared to the first quarter of 2015. Cost of sales for the quarter were recorded at Rs. 456.84 million with an increase of 29% from the corresponding quarter of 2015 mainly due to expansion and capacity building in local and Middle East region. Resultantly, company achieved profit after taxation of Rs. 116.97 million, 7% above the corresponding quarter. Company posted Earnings per share of PKR 1.06 as compared to PKR 1.04 in the corresponding quarter last year.

Revenue

Gross Profit






Change%

645,393,255

188,549,964

118,966,229

116,966,229

1.06

20.42%

4.47%

5.23%

6.55%

1.92%

535,969,750

180,482,547

113,055,253

109,776,912

1.04

Unconsolidated

Revenue

Gross Profit






Change%

754,083,165

201,540,004

101,353,380

99,353,380

0.91

37.96%

13.89%

(4.41)%

(3.31)%

(7.14)%

546,607,119

176,961,200

106,032,391

102,754,050

0.98

Consolidated


CORPORATE INFORMATION

BOARD OF DIRECTORS

Mr. Aezaz Hussain Non-executiveChairman

Mr. Asif Peer ExecutiveCEO and Managing Director

Mr. Arshad Masood Non-executiveDirector

Mr. Omar Saeed IndependentDirector

Mr. Ayaz Dawood IndependentDirector

Mr. Asif Jooma IndependentDirector

Mr. Tahir Masaud IndependentDirector

AUDIT COMMITTEE

Mr. Ayaz DawoodChairman

Mr. Omer SaeedMember


HUMAN RESOURCE & REMUNERATION COMMITTEE

Mr. Omar SaeedChairman

Mr. Asif JoomaMember


CHIEF FINANCIAL OFFICER & COMPANY SECRETARY

Mr. Affan Sajjad

AUDITORS

Ernst & Young Ford Rhodes Sidat HyderChartered Accountants Lahore.

LEGAL ADVISOR

Hassan & Hassan Advocates

BANKERS

Habib Metropolitan Bank LimitedUnited Bank LimitedStandard Chartered Bank (Pakistan)Limited Albaraka Bank LimitedBank Alfalah LimitedBank Islami LimitedMeezan Bank LimitedDubai Islamic BankFaysal Bank LimitedDeutsche Bank AG

SHARES REGISTRAR

THK Associates (Private) Limited. 2nd Floor, State Life Building-3,Dr. Ziauddin Ahmed Road,Karachi.T: +92 21 111-000-322F: +92 21 35655595

REGISTERED OFFICE

Chamber of Commerce Building,11 Sharae Aiwane Tijarat,Lahore, Pakistan.T: +92 42 36304825-35F: +92 42 36368857

KARACHI OFFICE


DUBAI OFFICE

TechVista Systems FZ-LLCOffice 105, Building 11Dubai Internet City,PO Box 500497,Dubai, UAET: + 9714 3693525F: +9714 456 3761

WEB PRESENCE

www.systemsltd.com

Condensed InterimFinancial Information

Asif PeerChief Executive

On behalf of the Board

27 April 2016Lahore


FUTURE OUTLOOK

2016 Plans

The 2016 budget is targeted towards achieving historical growth trend. This growth is attributed to the following factors:

Our relationship with most of our existing customers is of recurring nature and through our laser focused efforts and engagement management approach we are confident that majority of our customers will carry along with us and contribute to our growth.

We are well poised to take advantage this year from our investment in innovation and solution development for Apparel/Retail, Business Process Automation and Business Intelligence.

We have invested and aligned our resources to practice based structure and this is strengthening our market positioning to be a more specialized player versus generic player in the market.

Our Geographic Diversification Strategy will play vital role in our growth this year.

In Pakistan, Public Sector has been investing heavily in Information Technology Enabled Services and we are well poised to get good chunk of business due to our positioning and successful track record in Pakistan.

Our relationship with Principals (IBM, Microsoft) have been solidified over past few years and we are getting good business references, leads and support globally.

We are focusing on Sustainable growth this year and critically focused on signing new business which has desired margin.

We are committed to continuously invest in innovation for our better future.

With Pakistan Law and Order getting better we envision significant opportunities in our business, as our foreign customers/prospects will feel comfortable in visiting us and this will spur the growth in Pakistan IT Sector.

We are expecting about 80% of our business from Export Services and hence dollar based, our expenses are in PKR and any dollar devaluation will help us in improving our overall profitability.

OneLoad product development has been completed and now we are working aggressively towards launch and commercialization.

Our Export Tax Exemption will most likely be extended for next 5 years and this will provide further confidence to the sector.

Our new Office Building in Lahore will be operational towards end of this year and this will bring efficiency and savings by combining our four rental office locations to our own premise.

ACKNOWLEDGEMENT

The Board takes this opportunity to thank the Company's valued customers, bankers and other stakeholders for their corporation and support. The Board greatly appreciates hard work and dedication of all employees of the Company.

Condensed InterimFinancial Information

Asif PeerChief Executive

On behalf of the Board

27 April 2016Lahore


FUTURE OUTLOOK

2016 Plans

The 2016 budget is targeted towards achieving historical growth trend. This growth is attributed to the following factors:

Our relationship with most of our existing customers is of recurring nature and through our laser focused efforts and engagement management approach we are confident that majority of our customers will carry along with us and contribute to our growth.

We are well poised to take advantage this year from our investment in innovation and solution development for Apparel/Retail, Business Process Automation and Business Intelligence.

We have invested and aligned our resources to practice based structure and this is strengthening our market positioning to be a more specialized player versus generic player in the market.

Our Geographic Diversification Strategy will play vital role in our growth this year.

In Pakistan, Public Sector has been investing heavily in Information Technology Enabled Services and we are well poised to get good chunk of business due to our positioning and successful track record in Pakistan.

Our relationship with Principals (IBM, Microsoft) have been solidified over past few years and we are getting good business references, leads and support globally.

We are focusing on Sustainable growth this year and critically focused on signing new business which has desired margin.

We are committed to continuously invest in innovation for our better future.

With Pakistan Law and Order getting better we envision significant opportunities in our business, as our foreign customers/prospects will feel comfortable in visiting us and this will spur the growth in Pakistan IT Sector.

We are expecting about 80% of our business from Export Services and hence dollar based, our expenses are in PKR and any dollar devaluation will help us in improving our overall profitability.

OneLoad product development has been completed and now we are working aggressively towards launch and commercialization.

Our Export Tax Exemption will most likely be extended for next 5 years and this will provide further confidence to the sector.

Our new Office Building in Lahore will be operational towards end of this year and this will bring efficiency and savings by combining our four rental office locations to our own premise.

ACKNOWLEDGEMENT

The Board takes this opportunity to thank the Company's valued customers, bankers and other stakeholders for their corporation and support. The Board greatly appreciates hard work and dedication of all employees of the Company.

ASSETS

Non current assets

Property and equipment 8 405,946,208 359,204,912

Intangibles 9 41,871,097 42,247,518

Long term investments 51,077,980 51,077,980

Long term deposits 9,895,100 9,895,100

Deferred taxation 809,510 809,510

509,599,895 463,235,020

Current assets

Unbilled revenue 255,792,388 244,214,338

Trade debts-unsecured, considered good 1,120,187,110 1,096,796,692

Advances 94,070,839 68,055,610

Trade deposits and short term prepayments 117,098,664 48,101,585

Interest accrued 8,126,280 12,585,928

Receivable from related parties

-unsecured, considered good 220,915,493 164,572,856

Tax refunds due from the Government 70,432,537 55,143,956

Short term investments 240,000,000 557,799,398

Cash and bank balances 112,017,339 144,644,586

2,238,640,650 2,391,914,949

2,748,240,545

2,855,149,969

ASIF PEERChief Executive

Un-audited Audited

31 March 31 December

2016 2015NoteAmount in Rupees


Un-audited Audited



EQUITY AND LIABILITIES

Share capital and reserves

150,000,000 (2015: 150,000,000) ordinary

shares of Rs.10 each 1,500,000,000 1,500,000,000

Issued, subscribed and paid-up share capital 5 1,106,808,760 1,106,808,760

Reserves 6 423,479,450 420,558,053

Un-appropriated profit 1,085,226,853 968,260,624

2,615,515,063 2,495,627,437

Non current liabilities

Long term advances 15,061,390 12,669,395

Current liabilities

Trade and other payables 117,664,092 237,042,067

Unearned revenue - 109,811,070

117,664,092 346,853,137

Contingencies and commitments 7

2,748,240,545 2,855,149,969

The annexed notes 1 to 16 form an integral part of this condensed interim financial information.

CONDENSED INTERIM BALANCE SHEET

LAHOREAEZAZ HUSSAIN

Chairman

as at 31 March 2016


ASSETS

Non current assets


Intangibles 9 41,871,097 42,247,518

Long term investments 51,077,980 51,077,980



509,599,895 463,235,020

Current assets


Trade debts-unsecured, considered good 1,120,187,110 1,096,796,692

Advances 94,070,839 68,055,610








2,238,640,650 2,391,914,949

2,748,240,545

2,855,149,969


Un-audited Audited




Un-audited Audited





150,000,000 (2015: 150,000,000) ordinary

shares of Rs.10 each 1,500,000,000 1,500,000,000

Issued, subscribed and paid-up share capital 5 1,106,808,760 1,106,808,760

Reserves 6 423,479,450 420,558,053

Un-appropriated profit 1,085,226,853 968,260,624

2,615,515,063 2,495,627,437


Long term advances 15,061,390 12,669,395

Current liabilities

Trade and other payables 117,664,092 237,042,067

Unearned revenue - 109,811,070

117,664,092 346,853,137


2,748,240,545 2,855,149,969


CONDENSED INTERIM BALANCE SHEET

LAHOREAEZAZ HUSSAIN

Chairman

as at 31 March 2016


CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOMEfor the quarter ended 31 March 2016

AEZAZ HUSSAINChairman

ASIF PEERChief ExecutiveLAHORE

31 March 31 March

2016 2015Amount in Rupees

Profit after taxation

Other comprehensive income for the period

Total comprehensive income for the period

116,966,229

-

116,966,229

109,776,912

-

109,776,912



CONDENSED INTERIM PROFIT AND LOSS ACCOUNTfor the quarter ended 31 March 2016

31 March 31 March





Revenue 10 645,393,255 535,969,750

Cost of sales (456,843,291) (355,487,203)

Gross profit 188,549,964 180,482,547

Distribution cost (17,083,286) (19,803,495)

Administrative expenses (58,777,301) (57,677,560)

Research and development expenses (4,469,511) (9,790,424)

(80,330,098) (87,271,479)

Operating profit 108,219,866 93,211,068

Other income 11,108,861 20,514,147

Finance cost (362,498) (669,962)

10,746,363 19,844,185

Profit before taxation 118,966,229 113,055,253

Taxation (2,000,000) (3,278,341)

Profit after taxation 116,966,229 109,776,912

Restated

Earnings per share

Basic earnings per share (Rupees) 11 1.06 1.04

Diluted earnings per share (Rupees) 11 1.05 1.03


Un-audited Un-audited Un-audited Un-audited

CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOMEfor the quarter ended 31 March 2016



31 March 31 March



Other comprehensive income for the period


116,966,229

-

116,966,229

109,776,912

-

109,776,912



CONDENSED INTERIM PROFIT AND LOSS ACCOUNTfor the quarter ended 31 March 2016

31 March 31 March





Revenue 10 645,393,255 535,969,750

Cost of sales (456,843,291) (355,487,203)

Gross profit 188,549,964 180,482,547




(80,330,098) (87,271,479)


Other income 11,108,861 20,514,147

Finance cost (362,498) (669,962)

10,746,363 19,844,185


Taxation (2,000,000) (3,278,341)


Restated

Earnings per share





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CONDENSED INTERIM CASH FLOW STATEMENTfor the quarter ended 31 March 2016

31 March

2016

31 March

2015NoteAmount in Rupees



Cash flows from operating activities

Cash generated from operations 12

Finance cost paid

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Net cash outflow from operating activities

Cash flows from investing activities

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Net cash inflow / (outflow) from investing activities

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Cash and cash equivalents at the beginning of the period

Cash and cash equivalents at the end of period

(276,878,764)

(362,498)

(17,288,581)

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(65,341,933)

(4,282,908)

-

323,788,990

4,459,648

886,804

259,510,601

-

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2,391,995

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144,644,586

112,017,339

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(550,000)

(6,568,413)

(7,118,413)

(226,581,043)

(8,449,213)

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130,000,000

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1,654,476

1,654,476

(737,875,257)

983,230,255

245,354,998



Un-audited Un-audited

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--

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52

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6

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96

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42

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5,6

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--

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91

16

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-

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CONDENSED INTERIM CASH FLOW STATEMENTfor the quarter ended 31 March 2016

31 March

2016

31 March






Finance cost paid

Taxes paid







Profit received on short term investments











(276,878,764)

(362,498)

(17,288,581)

(17,651,079)

(294,529,843)

(65,341,933)

(4,282,908)

-

323,788,990

4,459,648

886,804

259,510,601

-

-

2,391,995

2,391,995

(32,627,247)

144,644,586

112,017,339

(219,462,630)

(550,000)

(6,568,413)

(7,118,413)

(226,581,043)

(8,449,213)

-

53,000

(510,375,797)

-

5,823,320

(512,948,690)

130,000,000

(130,000,000)

1,654,476

1,654,476

(737,875,257)

983,230,255

245,354,998




judgments, estimates and assumptions that affect the application of policies and the reported amounts of assets and liabilities, income and expenses.

In preparation of this condensed interim financial information, the judgments, estimates and assumptions made by the management were the same as those that were applied in the preparation of the preceding annual published financial statements of the Company for the year ended 31 December 2015.

5 Issued, subscribed and paid-up share capital

5.1 Reconciliation of ordinary shares

6 Reserves

Share premium reserve

Deferred employee compensation reserve


2016 2015

No. of shares

21,829,311

21,829,311 Ordinary shares of Rs. 10/-

each fully paid in cash

88,851,565 88,851,565

Ordinary shares of Rs. 10/- each

issued as fully paid bonus shares

110,680,876

110,680,876

110,680,876

87,165,302

Opening balance

-

13,000,000

Initial Public Offer (IPO)

-

453,676

Stock options exercised

-

10,061,898

Bonus shares issued

110,680,876

110,680,876

Closing balance

Un-audited Audited


2016 2015

218,293,110

218,293,110

888,515,650 888,515,650

1,106,808,760

1,106,808,760

1,106,808,760

871,653,020

-

130,000,000

-

4,536,760

-

100,618,980

1,106,808,760

1,106,808,760

411,302,586 411,302,586

12,176,864 9,255,467

423,479,450 420,558,053

Amount in Rupees


2016 2015

No. of shares

Un-audited Audited


2016 2015

Amount in Rupees

Un-audited Audited




NOTES TO THE CONDENSED INTERIM FINANCIAL INFORMATION

1 Legal status and nature of business

The Company is a public limited company incorporated in Pakistan under the Companies Ordinance 1984, and is listed on the Pakistan Stock Exchange (formerly Karachi, Islamabad and Lahore Stock Exchanges). The Company is principally engaged in the business of software development, trading of software and business process outsourcing services. The head office of the Company is situated at Chamber of Commerce building, 11 - Shahra-e-Aiwan-e-Tijarat, Lahore.

2 Basis of preparation

This condensed interim financial information is not audited and has been prepared in condensed form and does not include all the information as is required to be provided in full set of annual financial statements. This condensed interim financial information should be read in conjunction with the audited financial statements of the Company for the year ended 31 December 2015.

2.1 Separate financial statements

This condensed interim financial information comprises the financial information of Systems Limited only. Condensed interim consolidated financial information comprising financial information of Systems Limited and its subsidiaries has been prepared and presented separately.

2.2 Statement of compliance

This condensed interim financial information of the Company for the quarter ended 31 March 2016 has been prepared in accordance with the requirements of International Accounting Standard (IAS) 34 - Interim Financial Reporting and provisions of and directives issued under the Companies Ordinance, 1984. In case where requirements differ, the provisions of or directives issued under the Companies Ordinance, 1984 have been followed.

2.3 Basis of measurement

This condensed interim financial information has been prepared under the historical cost convention, except for revaluation of certain financial instruments at fair value.

3 Accounting policies

The accounting policies adopted for the preparation of this condensed interim financial information are consistent with those applied in the preparation of the preceding annual published financial statements of the Company for the year ended 31 December 2015.

4 Use of estimates and judgments

The preparation of condensed interim financial information in conformity with approved accounting standards, as applicable in Pakistan, requires the management to make

for the quarter ended 31 March 2016 (Un-audited)


judgments, estimates and assumptions that affect the application of policies and the reported amounts of assets and liabilities, income and expenses.

In preparation of this condensed interim financial information, the judgments, estimates and assumptions made by the management were the same as those that were applied in the preparation of the preceding annual published financial statements of the Company for the year ended 31 December 2015.



6 Reserves

Share premium reserve

Deferred employee compensation reserve


2016 2015

No. of shares

21,829,311



88,851,565 88,851,565



110,680,876

110,680,876

110,680,876

87,165,302

Opening balance

-

13,000,000


-

453,676


-

10,061,898

Bonus shares issued

110,680,876

110,680,876

Closing balance

Un-audited Audited


2016 2015

218,293,110

218,293,110

888,515,650 888,515,650

1,106,808,760

1,106,808,760

1,106,808,760

871,653,020

-

130,000,000

-

4,536,760

-

100,618,980

1,106,808,760

1,106,808,760

411,302,586 411,302,586

12,176,864 9,255,467

423,479,450 420,558,053

Amount in Rupees


2016 2015

No. of shares

Un-audited Audited


2016 2015

Amount in Rupees

Un-audited Audited




NOTES TO THE CONDENSED INTERIM FINANCIAL INFORMATION

1 Legal status and nature of business

The Company is a public limited company incorporated in Pakistan under the Companies Ordinance 1984, and is listed on the Pakistan Stock Exchange (formerly Karachi, Islamabad and Lahore Stock Exchanges). The Company is principally engaged in the business of software development, trading of software and business process outsourcing services. The head office of the Company is situated at Chamber of Commerce building, 11 - Shahra-e-Aiwan-e-Tijarat, Lahore.


This condensed interim financial information is not audited and has been prepared in condensed form and does not include all the information as is required to be provided in full set of annual financial statements. This condensed interim financial information should be read in conjunction with the audited financial statements of the Company for the year ended 31 December 2015.


This condensed interim financial information comprises the financial information of Systems Limited only. Condensed interim consolidated financial information comprising financial information of Systems Limited and its subsidiaries has been prepared and presented separately.


This condensed interim financial information of the Company for the quarter ended 31 March 2016 has been prepared in accordance with the requirements of International Accounting Standard (IAS) 34 - Interim Financial Reporting and provisions of and directives issued under the Companies Ordinance, 1984. In case where requirements differ, the provisions of or directives issued under the Companies Ordinance, 1984 have been followed.


This condensed interim financial information has been prepared under the historical cost convention, except for revaluation of certain financial instruments at fair value.


The accounting policies adopted for the preparation of this condensed interim financial information are consistent with those applied in the preparation of the preceding annual published financial statements of the Company for the year ended 31 December 2015.


The preparation of condensed interim financial information in conformity with approved accounting standards, as applicable in Pakistan, requires the management to make

for the quarter ended 31 March 2016 (Un-audited)


439,133,455 86,827,772

525,961,227

-

10,008,523 10,008,523

535,969,750

470,791,214 115,554,956 586,346,170

1,569,750

57,477,335 59,047,085

645,393,255

Un-audited Audited



8 Property and equipment

Operating fixed assets

Capital work in progress

Opening balance - net book value

Additions

Disposals - net book value

Depreciation

Closing balance - net book value

9 Intangibles


Additions

Amortization


216,143,419

189,802,789

405,946,208

192,395,087

42,348,969

234,744,056

-

(18,600,637)

216,143,419

42,247,518

4,282,908

46,530,426

(4,659,329)

41,871,097

192,395,087

166,809,825

359,204,912

162,393,875

102,798,995

265,192,870

(2,075,752)

(70,722,031)

192,395,087

34,101,951

23,281,560

57,383,511

(15,135,993)

42,247,518

10 Revenue - net

Development and other services

Export

Local

Trading income

Software sale - export

Software sale - local

31 March31 March



7 Contingencies and commitments

Commitments

7.1 Guarantees issued by the financial institutions on behalf of the Company amount to Rs. 118.22 million (2015: Rs. 129.12 million).

7.2 Commitments include capital commitments for construction of building of the Company amounting to Rs. 521.55 million (2015: 344 million) out of which Rs. 221.99 million have been invoiced.

Contingencies

7.3 The Deputy Commissioner Inland Revenue has issued withholding tax assessment orders u/s 161/205 of the Income Tax Ordinance 2001 (the Ordinance) for the tax year 2010 and 2012 whereby tax amounting to Rs. 779,513 and Rs. 13,540,966 respectively has been levied. The company preferred appeals against the orders which are pending adjudications.

7.4 The Company filed an undertaking pursuant to Income Tax (Second Amendment) Ordinance, 2015, thereby opting out of minimum tax on services under section 153(1)(b) of the Ordinance. The Additional Commissioner, Inland Revenue has declined to accept the undertaking against which the Company has preferred an appeal before Commissioner Inland Revenue (Appeals) which is pending adjudication, which might result in tax liability of Rs. 30.25 million.

7.5 The Company has filed appeals before the Commissioner Inland Revenue (Appeals) against the orders passed under section 122(5A) of the Ordinance by the Additional Commissioner Inland Revenue for payment of additional amount of Rs. 10.6 million and Rs. 9 million in respect of tax years 2010 and 2011 respectively.

Pending adjudication of the above matters, the tax consultants and management of the Company expect favorable outcome of the appeals and anticipate no outflow of economic benefits.



439,133,455 86,827,772

525,961,227

-

10,008,523 10,008,523

535,969,750

470,791,214 115,554,956 586,346,170

1,569,750

57,477,335 59,047,085

645,393,255

Un-audited Audited







Additions


Depreciation


9 Intangibles


Additions

Amortization


216,143,419

189,802,789

405,946,208

192,395,087

42,348,969

234,744,056

-

(18,600,637)

216,143,419

42,247,518

4,282,908

46,530,426

(4,659,329)

41,871,097

192,395,087

166,809,825

359,204,912

162,393,875

102,798,995

265,192,870

(2,075,752)

(70,722,031)

192,395,087

34,101,951

23,281,560

57,383,511

(15,135,993)

42,247,518

10 Revenue - net


Export

Local

Trading income



31 March31 March




Commitments

7.1 Guarantees issued by the financial institutions on behalf of the Company amount to Rs. 118.22 million (2015: Rs. 129.12 million).

7.2 Commitments include capital commitments for construction of building of the Company amounting to Rs. 521.55 million (2015: 344 million) out of which Rs. 221.99 million have been invoiced.

Contingencies

7.3 The Deputy Commissioner Inland Revenue has issued withholding tax assessment orders u/s 161/205 of the Income Tax Ordinance 2001 (the Ordinance) for the tax year 2010 and 2012 whereby tax amounting to Rs. 779,513 and Rs. 13,540,966 respectively has been levied. The company preferred appeals against the orders which are pending adjudications.

7.4 The Company filed an undertaking pursuant to Income Tax (Second Amendment) Ordinance, 2015, thereby opting out of minimum tax on services under section 153(1)(b) of the Ordinance. The Additional Commissioner, Inland Revenue has declined to accept the undertaking against which the Company has preferred an appeal before Commissioner Inland Revenue (Appeals) which is pending adjudication, which might result in tax liability of Rs. 30.25 million.

7.5 The Company has filed appeals before the Commissioner Inland Revenue (Appeals) against the orders passed under section 122(5A) of the Ordinance by the Additional Commissioner Inland Revenue for payment of additional amount of Rs. 10.6 million and Rs. 9 million in respect of tax years 2010 and 2011 respectively.

Pending adjudication of the above matters, the tax consultants and management of the Company expect favorable outcome of the appeals and anticipate no outflow of economic benefits.



12 Cash generated from operations

Profit before taxation

Adjustment for:

Depreciation on property and equipment

Amortization of intangibles

Provision for bad debts

Share based payment expense

Finance cost

Exchange gain on translation of export debts

Gain on short term investments

Profit on bank deposits

Gain on disposal of property and equipment

Profit before working capital changes

Effect on cash flow due toworking capital changes

(Increase)/decrease in current assets:

Unbilled revenue - net

Trade debts


Advances

Trade deposits and short term prepayments

Increase/(decrease) in current liabilities:

Trade and other payables

Cash generated from operations

118,966,229

18,600,637

4,659,329

- 2,921,397

362,498 (3,597,052) (5,989,592)

(886,804) -

16,070,413 135,036,642

(121,389,120)

(19,793,366)

(56,342,637)

(26,015,229)

(68,997,079) (292,537,431)

(119,377,975) (411,915,406)

(276,878,764)

113,055,253

15,506,653

3,376,627

5,719,683 -

604,750 -

(9,416,642) (5,823,320)

(53,000) 9,914,751

122,970,004

(47,127,985) (15,961,293)

(31,199,875)

(13,375,325)

(64,825,134)

(172,489,612)

(169,943,022) (342,432,634)

(219,462,630)

31 March 31 March



Amount in Rupees

31 March 31 March

2016 2015

11 Earnings per share- basic and diluted

Basic earnings per share

Profit for the period attributable to equity

holders of the Company 116,966,229

109,776,912

Average number of ordinary shares in issue

during the period 110,680,876

105,893,867

Diluted earnings per share


holders of the Company 116,966,229 109,776,912


during the period 111,923,261 106,778,428



Basic earnings per share 1.06

1.04

Diluted earnings per share 1.05

1.03



Adjustment for:





Finance cost






Effect on cash flow due toworking capital changes


Unbilled revenue - net

Trade debts


Advances





118,966,229

18,600,637

4,659,329

- 2,921,397

362,498 (3,597,052) (5,989,592)

(886,804) -

16,070,413 135,036,642

(121,389,120)

(19,793,366)

(56,342,637)

(26,015,229)

(68,997,079) (292,537,431)

(119,377,975) (411,915,406)

(276,878,764)

113,055,253

15,506,653

3,376,627

5,719,683 -

604,750 -

(9,416,642) (5,823,320)

(53,000) 9,914,751

122,970,004

(47,127,985) (15,961,293)

(31,199,875)

(13,375,325)

(64,825,134)

(172,489,612)

(169,943,022) (342,432,634)

(219,462,630)

31 March 31 March



Amount in Rupees

31 March 31 March

2016 2015




holders of the Company 116,966,229

109,776,912


during the period 110,680,876

105,893,867



holders of the Company 116,966,229 109,776,912





Basic earnings per share 1.06

1.04

Diluted earnings per share 1.05

1.03

13 Transactions with related parties

Related parties comprises of associated companies, staff retirement fund, directors and key management personnel. Significant transactions with related parties are as follows:

31 March

2016

31 March

2015Amount in Rupees

E-Processing Systems (Private) Limited 7,200,000

250,302

7,450,302

Tech Vista Systems FZ LLC - UAE 63,173,377

36,696,520

99,869,897

Visionet Systems Incorporation - USA 387,945,096

Provident fund 9,212,967

Name

Interest income

Nature of transactions

Contributions

Payment for expenses

Sales


Sales

Relationship

Employee benefit plan

Subsidiary

Common directorship

Subsidiary 3,100,000

-

3,100,000

10,577,685

17,720,678

28,298,363

310,884,176

11,643,494

14 Date of authorization for issue

This condensed interim financial information was authorized for issue in the Board of Directors meeting held on 27 April 2016.

15 Corresponding figures

Corresponding figures have been re-arranged, wherever necessary, for the purpose of comparison. However, no significant re-arrangement have been made.

16 General

Figures have been rounded off to the nearest rupee.





Condensed InterimConsolidated Financial Information



31 March

2016

31 March


E-Processing Systems (Private) Limited 7,200,000

250,302

7,450,302

Tech Vista Systems FZ LLC - UAE 63,173,377

36,696,520

99,869,897



Name

Interest income

Nature of transactions

Contributions


Sales


Sales

Relationship


Subsidiary

Common directorship

Subsidiary 3,100,000

-

3,100,000

10,577,685

17,720,678

28,298,363

310,884,176

11,643,494


This condensed interim financial information was authorized for issue in the Board of Directors meeting held on 27 April 2016.



16 General






Condensed InterimConsolidated Financial Information


Un-audited Audited



ASSETS

Non current assets


Intangibles 9 90,995,809 83,233,400



559,023,284 458,647,308

Current assets


Trade debts-unsecured, considered good 1,003,833,555 961,694,628

Advances 97,205,814 72,877,563








2,103,813,485 2,341,904,228

2,662,836,769 2,800,551,536


Un-audited Audited

31 March 31 December)


CONDENSED INTERIM CONSOLIDATED BALANCE SHEET

LAHOREAEZAZ HUSSAIN

Chairman

as at 31 March 2016



150,000,000 (2015: 150,000,000) ordinary

shares of Rs.10 each

Issued, subscribed and paid-up share capital 5

Reserves 6

Un-appropriated profit

Non-controlling interest


Long term advances

Provision for gratuity

Current liabilities


Unearned revenue


1,500,000,000

1,106,808,760

423,537,486

996,380,453

2,526,726,699

(10,852,767)

2,515,873,932

15,061,390

1,615,272

16,676,662

130,286,175

-

130,286,175

2,662,836,769

(9,746,736)

1,500,000,000

1,106,808,760

420,591,135

895,921,042

2,423,320,937

2,413,574,201

12,669,395

1,616,973

14,286,368

262,879,897

109,811,070

372,690,967

2,800,551,536

The annexed notes 1 to 16 form an integral part of this condensed interim consolidated financial information.



Un-audited Audited



ASSETS

Non current assets


Intangibles 9 90,995,809 83,233,400



559,023,284 458,647,308

Current assets


Trade debts-unsecured, considered good 1,003,833,555 961,694,628

Advances 97,205,814 72,877,563








2,103,813,485 2,341,904,228

2,662,836,769 2,800,551,536


Un-audited Audited

31 March 31 December)


CONDENSED INTERIM CONSOLIDATED BALANCE SHEET

LAHOREAEZAZ HUSSAIN

Chairman

as at 31 March 2016



150,000,000 (2015: 150,000,000) ordinary

shares of Rs.10 each

Issued, subscribed and paid-up share capital 5

Reserves 6

Un-appropriated profit

Non-controlling interest


Long term advances


Current liabilities


Unearned revenue


1,500,000,000

1,106,808,760

423,537,486

996,380,453

2,526,726,699

(10,852,767)

2,515,873,932

15,061,390

1,615,272

16,676,662

130,286,175

-

130,286,175

2,662,836,769

(9,746,736)

1,500,000,000

1,106,808,760

420,591,135

895,921,042

2,423,320,937

2,413,574,201

12,669,395

1,616,973

14,286,368

262,879,897

109,811,070

372,690,967

2,800,551,536



CONDENSED INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEfor the quarter ended 31 March 2016



31 March 31 March



Other comprehensive income for the period:

Translation reserve on foreign operations


Attributable to:

Equity holders of the parent Non-controlling interest

99,353,380

24,954

99,378,334

100,484,365 (1,106,031) 99,378,334

102,754,050

(83,943)

102,670,107

103,843,881 (1,173,774)

102,670,107



CONDENSED INTERIM CONSOLIDATED PROFIT AND LOSS ACCOUNTfor the quarter ended 31 March 2016

31 March 31 March




Revenue 10 754,083,165 546,607,119

Cost of sales (552,543,161) (369,645,919)

Gross profit 201,540,004 176,961,200




(109,985,424) (89,484,733)


Other income 10,681,584 20,516,242

Finance cost (882,784) (1,960,318)

9,798,800 18,555,924


Taxation (2,000,000) (3,278,341)


Attributable to:

Equity holders of the parent 100,459,411 103,927,824

Non-controlling interest (1,106,031) (1,173,774)

99,353,380 102,754,050

RestatedEarnings per share





Un-audited Un-audited Un-auditedUn-audited

CONDENSED INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEfor the quarter ended 31 March 2016



31 March 31 March



Other comprehensive income for the period:

Translation reserve on foreign operations


Attributable to:

Equity holders of the parent Non-controlling interest

99,353,380

24,954

99,378,334

100,484,365 (1,106,031) 99,378,334

102,754,050

(83,943)

102,670,107

103,843,881 (1,173,774)

102,670,107



CONDENSED INTERIM CONSOLIDATED PROFIT AND LOSS ACCOUNTfor the quarter ended 31 March 2016

31 March 31 March




Revenue 10 754,083,165 546,607,119

Cost of sales (552,543,161) (369,645,919)

Gross profit 201,540,004 176,961,200




(109,985,424) (89,484,733)


Other income 10,681,584 20,516,242

Finance cost (882,784) (1,960,318)

9,798,800 18,555,924


Taxation (2,000,000) (3,278,341)


Attributable to:

Equity holders of the parent 100,459,411 103,927,824

Non-controlling interest (1,106,031) (1,173,774)

99,353,380 102,754,050

RestatedEarnings per share





Un-audited Un-audited Un-auditedUn-audited

CO

ND

ENSE

D IN

TERI

M C

ON

SOLI

DA

TED

STA

TEM

ENT

OF

CH

AN

GES

IN E

QU

ITY

for

the

qu

art

er

en

de

d 3

1 M

arc

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01

6

AEZA

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Ch

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cu

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2,1

13

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4,5

72

10

2,6

70

,10

7 -

2,2

15

,69

4,6

79

2,4

13

,57

4,2

01

99

,37

8,3

34

2,9

21

,39

7

2,5

15

,87

3,9

32

Tota

l

687,2

63,3

44

103,9

27,8

24

-

79

1,1

91

,16

8

895,9

21,0

42

100,4

59,4

11

-

99

6,3

80

,45

3

Un

-ap

pro

pri

ate

dp

rofit

2,1

18,1

24,4

58

103,8

43,8

81

-

2,2

21

,96

8,3

39

2,4

23,3

20,9

37

100,4

84,3

65

2,9

21,3

97

2,5

26

,72

6,6

99

To

tal Eq

uity

att

rib

uta

ble

to

sha

reh

old

ers

of

pa

ren

t c

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pa

ny

Issu

ed

, su

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sh

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871,6

53,0

20

-

130,0

00,0

00

1,0

01

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3,0

20

1,1

06,8

08,7

60

- -

1,1

06

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8,7

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520,0

00,0

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-

(520,0

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- - - - -

Ad

va

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e

ag

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st iss

ue

of

sha

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39,1

19,7

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-

390,0

00,0

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9,1

19

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4

411,3

02,5

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- -

41

1,3

02

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6

Sh

are

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pre

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m

4,3

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- -

4,3

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9,2

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-

2,9

21,3

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12

,17

6,8

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Em

plo

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83

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3

(83

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- -

33

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2

24

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4

-

58,0

36

Fo

reig

n

cu

rre

nc

y

tra

nsl

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n

rese

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No

n-c

on

tro

llin

g

Inte

rest

(5,0

99,8

86)

(1,1

73,7

74)

-

(6,2

73

,66

0)

(9,7

46,7

36)

(1,1

06,0

31)

-

(10

,85

2,7

67

)

Re

ve

nu

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ese

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Ca

pita

l re

serv

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Ba

lan

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as

on

01

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Un

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Sha

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(IP

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Ba

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31

Ma

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20

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(U

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Ba

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20

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Sha

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ts

Ba

lan

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as

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31

Ma

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20

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(U

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The

an

ne

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no

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1 t

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fin

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form

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Am

ou

nt

in R

up

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s


CONDENSED INTERIM CONSOLIDATED CASH FLOW STATEMENTfor the quarter ended 31 March 2016

31 March

2016

31 March






Finance cost paid

Taxes paid








Increase in long term deposits








Effect of exchange translation reserve



(219,648,177)

(882,784) (17,288,581) (18,171,365)

(237,819,542)

(67,553,080)

(12,421,738) - 317,799,398

886,804

(44,064,608)

194,646,776

-

-

2,391,995

2,391,995

(40,780,771)

24,954

193,593,856

152,838,039

(211,670,376)

(550,000) -

(550,000) (212,220,376)

(9,011,528)

(3,065,700) 53,000 (510,375,797)

-

(4,209,612)

(526,609,637)

130,000,000

(130,000,000)

1,654,476

1,654,476

(737,175,537)

(83,943)

987,092,798

249,833,318




CO

ND

ENSE

D IN

TERI

M C

ON

SOLI

DA

TED

STA

TEM

ENT

OF

CH

AN

GES

IN E

QU

ITY

for

the

qu

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de

d 3

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h 2

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6

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Ch

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2,1

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4,5

72

10

2,6

70

,10

7 -

2,2

15

,69

4,6

79

2,4

13

,57

4,2

01

99

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8,3

34

2,9

21

,39

7

2,5

15

,87

3,9

32

Tota

l

687,2

63,3

44

103,9

27,8

24

-

79

1,1

91

,16

8

895,9

21,0

42

100,4

59,4

11

-

99

6,3

80

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3

Un

-ap

pro

pri

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2,1

18,1

24,4

58

103,8

43,8

81

-

2,2

21

,96

8,3

39

2,4

23,3

20,9

37

100,4

84,3

65

2,9

21,3

97

2,5

26

,72

6,6

99

To

tal Eq

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att

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ble

to

sha

reh

old

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of

pa

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t c

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ny

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, su

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871,6

53,0

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-

130,0

00,0

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1,0

01

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3,0

20

1,1

06,8

08,7

60

- -

1,1

06

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8,7

60

520,0

00,0

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-

(520,0

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- - - - -

Ad

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sha

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39,1

19,7

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-

390,0

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9,1

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02,5

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41

1,3

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Sh

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pre

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4,3

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4,3

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55,4

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2,9

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97

12

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6,8

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Em

plo

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83

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3

(83

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- -

33

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2

24

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4

-

58,0

36

Fo

reig

n

cu

rre

nc

y

tra

nsl

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No

n-c

on

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llin

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Inte

rest

(5,0

99,8

86)

(1,1

73,7

74)

-

(6,2

73

,66

0)

(9,7

46,7

36)

(1,1

06,0

31)

-

(10

,85

2,7

67

)

Re

ve

nu

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ese

rve

Ca

pita

l re

serv

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Ba

lan

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as

on

01

Ja

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20

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an

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of

Sha

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(IP

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Ba

lan

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as

on

31

Ma

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20

15

(U

n-a

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Ba

lan

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01

Ja

nu

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20

16

(A

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Tota

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inc

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the

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Un

-au

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Sha

re b

ase

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ts

Ba

lan

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as

on

31

Ma

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20

16

(U

n-a

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The

an

ne

xed

no

tes

1 t

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6 f

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f th

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fin

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l in

form

atio

n.

Am

ou

nt

in R

up

ee

s


CONDENSED INTERIM CONSOLIDATED CASH FLOW STATEMENTfor the quarter ended 31 March 2016

31 March

2016

31 March






Finance cost paid

Taxes paid








Increase in long term deposits








Effect of exchange translation reserve



(219,648,177)

(882,784) (17,288,581) (18,171,365)

(237,819,542)

(67,553,080)

(12,421,738) - 317,799,398

886,804

(44,064,608)

194,646,776

-

-

2,391,995

2,391,995

(40,780,771)

24,954

193,593,856

152,838,039

(211,670,376)

(550,000) -

(550,000) (212,220,376)

(9,011,528)

(3,065,700) 53,000 (510,375,797)

-

(4,209,612)

(526,609,637)

130,000,000

(130,000,000)

1,654,476

1,654,476

(737,175,537)

(83,943)

987,092,798

249,833,318






2016 2015

No. of shares

21,829,311



88,851,565 88,851,565



110,680,876

110,680,876

Un-audited Audited


2016 2015

218,293,110

218,293,110

888,515,650 888,515,650

1,106,808,760

1,106,808,760

Amount in Rupees


This condensed interim consolidated financial information has been prepared under the historical cost convention, except for revaluation of certain financial instruments at fair value.


The accounting policies adopted for the preparation of this condensed interim consolidated financial information are consistent with those applied in the preparation of the preceding annual published financial statements of the Group for the year ended 31 December 2015.


The preparation of condensed interim consolidated financial information in conformity with approved accounting standards, as applicable in Pakistan, requires the management to make judgments, estimates and assumptions that affect the application of policies and the reported amounts of assets and liabilities, income and expenses.

In preparation of this condensed interim consolidated financial information, the judgments, estimates and assumptions made by the management were the same as those that were applied in the preparation of the preceding annual published financial statements of the Group for the year ended 31 December 2015.


NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL INFORMATIONfor the quarter ended 31 March 2016 (Un-audited)

1 The group and its operations

Holding company

Systems Limited (the Company) is a public limited company incorporated in Pakistan under the Companies Ordinance 1984, and is listed on the Pakistan Stock Exchange (formerly Karachi, Islamabad and Lahore Stock Exchanges). The Company is principally engaged in the business of software development, trading of software and business process outsourcing services. The head office of the Company is situated at Chamber of Commerce building, 11- Shahra-e-Aiwan-e-Tijarat, Lahore.

Subsidiary companies

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. The Company is principally engaged in software development and providing business process outsourcing solutions.

E-Processing Systems (Private) Limited, a private limited company registered under Companies Ordinance, 1984 incorporated on 06 February 2013, is a 70% owned subsidiary of Systems Limited. The Company is principally engaged in the business of purchase and sale of airtime and software development including the development of systems and infrastructure.


This condensed interim consolidated financial information is not audited and has been prepared in condensed form and does not include all the information as is required to be provided in full set of annual financial statements. This condensed interim consolidated financial information should be read in conjunction with the audited financial statements of the Group for the year ended 31 December 2015.


This condensed interim consolidated financial information comprises the financial information of Systems Limited and its subsidiaries, here-in-after referred to as "the Group".


This condensed interim consolidated financial information of the Group for the quarter ended 31 March 2016 has been prepared in accordance with the requirements of International Accounting Standard (IAS) 34 - Interim Financial Reporting and provisions of and directives issued under the Companies Ordinance, 1984. In case where requirements differ, the provisions of or directives issued under the Companies Ordinance, 1984 have been followed.




2016 2015

No. of shares

21,829,311



88,851,565 88,851,565



110,680,876

110,680,876

Un-audited Audited


2016 2015

218,293,110

218,293,110

888,515,650 888,515,650

1,106,808,760

1,106,808,760

Amount in Rupees


This condensed interim consolidated financial information has been prepared under the historical cost convention, except for revaluation of certain financial instruments at fair value.


The accounting policies adopted for the preparation of this condensed interim consolidated financial information are consistent with those applied in the preparation of the preceding annual published financial statements of the Group for the year ended 31 December 2015.


The preparation of condensed interim consolidated financial information in conformity with approved accounting standards, as applicable in Pakistan, requires the management to make judgments, estimates and assumptions that affect the application of policies and the reported amounts of assets and liabilities, income and expenses.

In preparation of this condensed interim consolidated financial information, the judgments, estimates and assumptions made by the management were the same as those that were applied in the preparation of the preceding annual published financial statements of the Group for the year ended 31 December 2015.


NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL INFORMATIONfor the quarter ended 31 March 2016 (Un-audited)

1 The group and its operations

Holding company

Systems Limited (the Company) is a public limited company incorporated in Pakistan under the Companies Ordinance 1984, and is listed on the Pakistan Stock Exchange (formerly Karachi, Islamabad and Lahore Stock Exchanges). The Company is principally engaged in the business of software development, trading of software and business process outsourcing services. The head office of the Company is situated at Chamber of Commerce building, 11- Shahra-e-Aiwan-e-Tijarat, Lahore.

Subsidiary companies

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. The Company is principally engaged in software development and providing business process outsourcing solutions.

E-Processing Systems (Private) Limited, a private limited company registered under Companies Ordinance, 1984 incorporated on 06 February 2013, is a 70% owned subsidiary of Systems Limited. The Company is principally engaged in the business of purchase and sale of airtime and software development including the development of systems and infrastructure.


This condensed interim consolidated financial information is not audited and has been prepared in condensed form and does not include all the information as is required to be provided in full set of annual financial statements. This condensed interim consolidated financial information should be read in conjunction with the audited financial statements of the Group for the year ended 31 December 2015.


This condensed interim consolidated financial information comprises the financial information of Systems Limited and its subsidiaries, here-in-after referred to as "the Group".


This condensed interim consolidated financial information of the Group for the quarter ended 31 March 2016 has been prepared in accordance with the requirements of International Accounting Standard (IAS) 34 - Interim Financial Reporting and provisions of and directives issued under the Companies Ordinance, 1984. In case where requirements differ, the provisions of or directives issued under the Companies Ordinance, 1984 have been followed.


7.4 The Holding Company filed an undertaking pursuant to Income Tax (Second Amendment) Ordinance, 2015, thereby opting out of minimum tax on services under section 153(1)(b) of the Ordinance. The Additional Commissioner, Inland Revenue has declined to accept the undertaking against which the Holding Company has preferred an appeal before Commissioner Inland Revenue (Appeals) which is pending adjudication, which might result in tax liability of Rs. 30.25 million.

7.5 The Holding Company has filed appeals before the Commissioner Inland Revenue (Appeals) against the orders passed under section 122(5A) of the Ordinance by the Additional Commissioner Inland Revenue for payment of additional amount of Rs. 10.6 million and Rs. 9 million in respect of tax years 2010 and 2011 respectively.

Pending adjudication of the above matters, the tax consultants and management of the Group expect favorable outcome of the appeals and anticipate no outflow of economic benefits.





Additions


Depreciation


221,449,468

189,802,789

411,252,257

195,893,473

44,560,116

240,453,589

-

(19,004,121)

221,449,468

195,893,473

166,809,825

362,703,298

163,735,721

106,021,330

269,757,051

(2,106,737)

(71,756,841)

195,893,473

9

Intangibles


Additions

Amortization


83,233,400

12,421,738

95,655,138

(4,659,329)

90,995,809

54,210,428

44,158,965

98,369,393

(15,135,993)

83,233,400

Un-audited Audited




6 Reserves

Un-audited Audited



Share premium reserve 411,302,586 411,302,586

Deferred employee compensation reserve 12,176,864 9,255,467

Foreign currency translation reserve 58,036 33,082

423,537,486 420,591,135


110,680,876

87,165,302

Opening balance

-

13,000,000


-

453,676


-

10,061,898

Bonus shares issued

110,680,876

110,680,876

Closing balance

1,106,808,760

871,653,020 -

130,000,000

-

4,536,760

-

100,618,980

1,106,808,760

1,106,808,760


2016 2015

No. of shares

Un-audited Audited


2016 2015

Amount in Rupees


Commitments

7.1 Guarantees issued by the financial institutions on behalf of the Group amount to Rs. 118.22 million (2015: Rs. 129.12 million).

7.2 Commitments include capital commitments for construction of building of the Group amounting to Rs. 521.55 million (2015: 344 million) out of which Rs. 221.99 million have been invoiced.

Contingencies

7.3 The Deputy Commissioner Inland Revenue has issued withholding tax assessment orders u/s 161/205 of the Income Tax Ordinance 2001 (the Ordinance) for the tax year 2010 and 2012 whereby tax amounting to Rs. 779,513 and Rs. 13,540,966 respectively has been levied. The Holding Company preferred appeals against the orders which are pending adjudications.


7.4 The Holding Company filed an undertaking pursuant to Income Tax (Second Amendment) Ordinance, 2015, thereby opting out of minimum tax on services under section 153(1)(b) of the Ordinance. The Additional Commissioner, Inland Revenue has declined to accept the undertaking against which the Holding Company has preferred an appeal before Commissioner Inland Revenue (Appeals) which is pending adjudication, which might result in tax liability of Rs. 30.25 million.

7.5 The Holding Company has filed appeals before the Commissioner Inland Revenue (Appeals) against the orders passed under section 122(5A) of the Ordinance by the Additional Commissioner Inland Revenue for payment of additional amount of Rs. 10.6 million and Rs. 9 million in respect of tax years 2010 and 2011 respectively.

Pending adjudication of the above matters, the tax consultants and management of the Group expect favorable outcome of the appeals and anticipate no outflow of economic benefits.





Additions


Depreciation


221,449,468

189,802,789

411,252,257

195,893,473

44,560,116

240,453,589

-

(19,004,121)

221,449,468

195,893,473

166,809,825

362,703,298

163,735,721

106,021,330

269,757,051

(2,106,737)

(71,756,841)

195,893,473

9

Intangibles


Additions

Amortization


83,233,400

12,421,738

95,655,138

(4,659,329)

90,995,809

54,210,428

44,158,965

98,369,393

(15,135,993)

83,233,400

Un-audited Audited




6 Reserves

Un-audited Audited



Share premium reserve 411,302,586 411,302,586

Deferred employee compensation reserve 12,176,864 9,255,467

Foreign currency translation reserve 58,036 33,082

423,537,486 420,591,135


110,680,876

87,165,302

Opening balance

-

13,000,000


-

453,676


-

10,061,898

Bonus shares issued

110,680,876

110,680,876

Closing balance

1,106,808,760

871,653,020 -

130,000,000

-

4,536,760

-

100,618,980

1,106,808,760

1,106,808,760


2016 2015

No. of shares

Un-audited Audited


2016 2015

Amount in Rupees


Commitments

7.1 Guarantees issued by the financial institutions on behalf of the Group amount to Rs. 118.22 million (2015: Rs. 129.12 million).

7.2 Commitments include capital commitments for construction of building of the Group amounting to Rs. 521.55 million (2015: 344 million) out of which Rs. 221.99 million have been invoiced.

Contingencies

7.3 The Deputy Commissioner Inland Revenue has issued withholding tax assessment orders u/s 161/205 of the Income Tax Ordinance 2001 (the Ordinance) for the tax year 2010 and 2012 whereby tax amounting to Rs. 779,513 and Rs. 13,540,966 respectively has been levied. The Holding Company preferred appeals against the orders which are pending adjudications.




Adjustment for:






Finance cost






Effect on cash flow due to working capital changes


Unbilled revenue

Trade debts


Advances





106,032,391

15,672,126

3,376,627

5,719,683

-

13,291

1,960,318

604,750

(9,416,642)

(5,825,415)

(53,000)

12,051,738

118,084,129

-

27,394,079

(4,914,946)

(13,375,325)

(136,021,609)

(126,917,801)

(202,836,704)

(329,754,505)

(211,670,376)

101,353,380

19,004,121

4,659,329

-

2,921,397

(1,701)

882,784

(3,454,835)

(3,067,719)

(886,804)

-

20,056,572

121,409,952

(139,195,443)

(38,684,792)

833,438

(24,328,251)

(7,089,359)

(208,464,407)

(132,593,722)

(341,058,129)

(219,648,177)

31 March 31 March



10 Revenue - net


Export

Local

Trading income



492,716,576

202,319,504

695,036,080

1,569,750

57,477,335

59,047,085

754,083,165

449,770,824

86,827,772

536,598,596

-

10,008,523

10,008,523

546,607,119

31 March 31 March





holders of the Parent 100,459,411 103,927,824



Basic earnings per share 0.91 0.98


100,459,411

103,927,824


holders of the Parent

111,923,261 106,778,428


during the period


Un-auditedUn-audited Un-audited Un-audited

Diluted earnings per share 0.90 0.97



Adjustment for:






Finance cost






Effect on cash flow due to working capital changes


Unbilled revenue

Trade debts


Advances





106,032,391

15,672,126

3,376,627

5,719,683

-

13,291

1,960,318

604,750

(9,416,642)

(5,825,415)

(53,000)

12,051,738

118,084,129

-

27,394,079

(4,914,946)

(13,375,325)

(136,021,609)

(126,917,801)

(202,836,704)

(329,754,505)

(211,670,376)

101,353,380

19,004,121

4,659,329

-

2,921,397

(1,701)

882,784

(3,454,835)

(3,067,719)

(886,804)

-

20,056,572

121,409,952

(139,195,443)

(38,684,792)

833,438

(24,328,251)

(7,089,359)

(208,464,407)

(132,593,722)

(341,058,129)

(219,648,177)

31 March 31 March



10 Revenue - net


Export

Local

Trading income



492,716,576

202,319,504

695,036,080

1,569,750

57,477,335

59,047,085

754,083,165

449,770,824

86,827,772

536,598,596

-

10,008,523

10,008,523

546,607,119

31 March 31 March





holders of the Parent 100,459,411 103,927,824



Basic earnings per share 0.91 0.98


100,459,411

103,927,824


holders of the Parent

111,923,261 106,778,428


during the period


Un-auditedUn-audited Un-audited Un-audited

Diluted earnings per share 0.90 0.97

Lahore - Head Office Karachi Dubai

Chamber of Commerce Building,11 Sharae Aiwane Tijarat,Lahore, PakistanT: +92 42 36304825-35F: +92 42 36368857


TechVista Systems FZ-LLCOffice 105, Building 11 Dubai Internet City,PO Box 500497, Dubai, UAET: + 9714 369 3525F: +9714 456 3761

Des

ign

ed &

Pro

du

ced

by





31 March

2016

31 March




Name Nature of transactions

Contributions

Sales

Relationship


Common directorship 310,884,176

11,643,494


This condensed interim consolidated financial information was authorized for issue in the Board of Directors meeting held on 27 April 2016.



16 General




Lahore - Head Office Karachi Dubai

Chamber of Commerce Building,11 Sharae Aiwane Tijarat,Lahore, PakistanT: +92 42 36304825-35F: +92 42 36368857


TechVista Systems FZ-LLCOffice 105, Building 11 Dubai Internet City,PO Box 500497, Dubai, UAET: + 9714 369 3525F: +9714 456 3761

Des

ign

ed &

Pro

du

ced

by





31 March

2016

31 March




Name Nature of transactions

Contributions

Sales

Relationship


Common directorship 310,884,176

11,643,494


This condensed interim consolidated financial information was authorized for issue in the Board of Directors meeting held on 27 April 2016.



16 General




Documents

InterimFinancialReport...Corporate Information Director’s Review Condensed Interim Financial Statements Condensed Interim Balance Sheet Condensed Interim Profit and Loss Account