SG Allied Businesses Posts Rs37.4 Million Profit in FY2026, but Core Operations Remain Under Pressure
Karachi: SG Allied Businesses Limited reported a significant improvement in its bottom line for the financial year ended June 30, 2026, posting a profit after taxation of Rs37.43 million, compared with a loss of Rs15.17 million in the previous year. The company’s basic and diluted earnings per share also improved to Rs2.50 from a loss per share of Rs1.01. 2852678
The financial statements show that the company is continuing its efforts to reshape its business around mushroom and herb production, cold storage and rental income. However, the improvement in reported profitability came against continued pressure on its core operating activities.
Revenue declines during the year
SG Allied Businesses recorded sales of Rs76.20 million during FY2026, down from Rs85.22 million a year earlier. Mushroom and herb sales contributed approximately Rs65.28 million, while cold-storage services generated around Rs10.92 million. 2852678
The decline in revenue was accompanied by a reduction in gross profit. Gross profit fell to Rs13.64 million, compared with Rs28.50 million in FY2025. This resulted in a gross margin of roughly 18%, compared with more than 33% in the preceding year.
The company also faced substantial administrative and selling expenses of Rs142.94 million, resulting in an operating loss of Rs129.31 million. 2852678
Rental income provides important support
One of the most important contributors to the company’s financial performance was its investment property portfolio.
SG Allied Businesses generated Rs119.72 million in rental income during FY2026, compared with Rs98.05 million in the previous year. The increase in rental income helped offset a large portion of the operating loss. 2852678
After accounting for financial charges and the minimum tax levy, the company reported a loss before taxation of Rs12.40 million. However, taxation recorded in the accounts amounted to Rs49.83 million, resulting in the reported profit after taxation of Rs37.43 million. 2852678
This means the headline profit should be viewed alongside the company’s underlying operating performance, which remained challenging during the year.
Mushroom and cold-storage businesses remain loss-making
The segment information provides a clearer picture of the company’s operational position.
The Mushroom & Herbs segment generated sales of Rs65.28 million but recorded a segment operating loss of approximately Rs59.79 million. The Cold Storage segment generated Rs10.92 million in sales and reported an operating loss of approximately Rs55.22 million. 2852678
By contrast, the rental segment generated Rs119.72 million in other income, making rental operations a major financial support for the company.
The figures suggest that management still has considerable work ahead to improve the profitability and efficiency of its operating businesses.
Management pursuing a revival strategy
The company has acknowledged financial challenges but says it is pursuing a diversified strategy aimed at improving its prospects.
According to the financial statements, management has expanded its activities to include cold-storage facilities and mushrooms and herbs, while continuing to generate rental income from investment property. Management expects improved economic conditions to support acceleration in business activity and cash generation. 2852678
The company also said sponsor directors have committed to providing continuing financial support for operational obligations over at least the next 12 months. Subordinated loans from directors of approximately Rs348.93 million are expected to remain in place until external liabilities are settled. 2852678
Strong asset base, but liquidity remains a concern
At June 30, 2026, SG Allied Businesses had total assets of approximately Rs1.53 billion, including property, plant and equipment of Rs1.42 billion. Cash and bank balances stood at approximately Rs2.09 million, compared with just Rs0.28 million a year earlier. 2852678
However, the company continues to carry a substantial accumulated loss of approximately Rs749.16 million.
The auditor’s report also highlights a material uncertainty related to going concern. Current liabilities exceeded current assets by approximately Rs148.33 million at the year-end. The auditor noted that these conditions could cast significant doubt on the company’s ability to continue as a going concern. 2852678
Management, however, has prepared the financial statements on a going-concern basis, citing director support, rental cash flows and the company’s asset base as factors supporting its ability to continue operations. The financial statements also disclose an appraisal of unencumbered real estate assets at approximately Rs2.13 billion, providing potential asset backing. 2852678
Cash flow shows modest improvement
The company generated Rs1.96 million in net cash from operating activities during FY2026, compared with an operating cash outflow of Rs7.67 million in FY2025. At the same time, investing activities consumed approximately Rs23.18 million, mainly due to capital expenditure and additions to capital work in progress. 2852678
Financing activities provided approximately Rs23.03 million, primarily through loans from directors. As a result, cash and cash equivalents increased to Rs2.09 million by the end of the year.
Outlook depends on successful business revival
SG Allied Businesses enters the new financial year with a mixed financial picture. The reported return to profit is encouraging, but the company’s core mushroom, herb and cold-storage operations continue to generate operating losses.
The key challenge will therefore be converting the company’s diversified operations into sustainable operating profits while maintaining the rental income that currently provides significant financial support.
For investors and market observers, the company’s progress in expanding cold-storage and vertical-farming activities, improving operating margins and managing liquidity will likely be important indicators of whether the latest improvement represents the beginning of a sustainable turnaround or remains largely dependent on non-operating income and accounting effects.
This article is based on SG Allied Businesses Limited’s financial statements for the year ended June 30, 2026, including the draft independent auditor’s report contained in the submitted document.
