Karachi September 3 2023: Octopus Limited profit plunged 78.5 percent to PKR 29 million for the second quarter primarily because of higher cost of sales, according to company filing to the exchange.
Revenue from export of services jumped 87.8 percent to PKR 163 million for the second quarter from PKR 86.8 million last year.
In contrast to parent, local revenue of the company plunged 67.8 percent to PKR 33 million for the quarter against PKR 103 million for the same period last year.
“Revenues for the half year dropped in comparison to the last year due to the timing gap of recognition of service revenue in particular for Service Level Agreements (SLA) in the territory of Middle East. The re-negotiations of certain projects have lagged to start at the end of the year. The Company is confident to fill the gap of decrease in revenues by the end of the year through subscriptions revenue of its internally developed intellectual properties (Software) to industry, and closing spares & services orders in the Middle East region” states company reports.
Moreover, company cost of sales increased by 33.8 percent to PKR 95 million for the quarter which mainly attributed to the hiring of senior sales and technical / software team required for the fulfillment of IPs development as was disclosed in the corporate plan / IPO fund utilization. Consequently, company booked operating profit plunged by 91.8 percent to PKR 5 million
However, company booked other operating revenue of PKR 28 million primarily originating from exchange gain. This prevailing trend appears to continue, potentially leading to a further widening of this gap till December 2023. This, in turn, may result in additional gains from exchange rate fluctuations on our international revenue receivables by the end of the year.
“Management is confident to achieve the aggressive targeted PO generation for the subscription business and aftermarket support business both in Pakistan and abroad” says company Chief Executive Officer Tanveer Karamat.
“Looking ahead, the management foresees a robust trajectory of incoming orders, particularly in the Middle East region. As a result, we anticipate that this year will conclude as one of the most remarkable financial year” says Chief Executive Officer Bakhtiar Hameed Wain.
During the period reported, the company executed the disposal of its long-term investment in Avanceon LP, an associated undertaking in which it held a 26% stake. This strategic move was carried out through its subsidiary, Octopus Digital Inc. consequently, the Company proceeded to withdraw, sell, and transfer its Partnership Interest to Avanceon LP, whereas the Company has been assigned Trademark “Avanceon”, in the territory of United Arab Emirates, with the goodwill associated therewith as part of the transaction. The said transaction has been recognized in the group accounts in line with members approval obtained in Annual General Meeting (AGM) conducted on 29 May 2023
