Business

Corporate results: NetSol posts loss of Rs618 million

Increase in cost of sales dents earnings in FY14.

Our Correspondent September 12, 2014

KARACHI:

In a disappointing performance, NetSol Technologies Limited, a Lahore-based software company, switched from profit to loss in financial year 2013-14 (FY14), according to the company’s financial results released on Friday.

NetSol Technologies – which is also listed on the National Association of Securities Dealers Automated Quotations (Nasdaq) – reported an after-tax loss of Rs618 million or Rs6.99 per share for FY14 compared to FY13, when it had a stellar performance, earning over Rs1 billion or Rs13.37 per share in profits.

The major dent to the earnings came from the increase in cost of sales, which exceeded net sales. Revenues fell 30% to Rs1.83 billion compared to Rs2.6 billion it grossed in FY13. Cost of sales for FY14 amounted to Rs1.84 billion.

The company had reported a 17% year-on-year decrease in revenues in the first half and the management attributed that to the slowdown in sales of NetSol Financial Suite (NFS), its flagship product, in the overseas market, according to a report published on April 29 in Business Recorder.

Its clientele mainly constitute the financial services sector including some of the Fortune 500 companies.

The report stated that the company, in October 2013, had announced the launch of NetSol Ascent to replace the NFS; the declining revenues therefore reflected lower sales of NFS and marketing of a new product to potential customers.

For FY14, the company’s selling and promotion costs were up by a staggering 52% to Rs183 million over the previous financial year, a strong indication that the trend continued well into the second half of FY14.

Given the company was transitioning from NFS to an advanced and more developed financial service solution, the report then said the management was hopeful about its prospects in key markets.

Published in The Express Tribune, September 13^th, 2014.

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