AlphaGen
Access AlphaGen
Company Narratives

Jubilee Spinning Q3 FY26: Rental Cash Holds Up, but Tax Changes Turn Profit into Loss

Jubilee Spinning remained profitable before tax in Q3 FY26, but weaker service revenue and a new restriction on business-loss offsets pushed the quarter into a net loss.

Sep 23, 2026

Verdict

Jubilee Spinning & Weaving Mills Ltd’s Q3 FY26 result is less a textile story than a property-and-tenant-services story. Textile production has been halted since 2014. The company now earns service revenue from tenants using its solar-power equipment and transmission lines, while rental income from its premises sits in other income. In the quarter ended March 31, 2026, service revenue fell 33.0% year on year to Rs2.41 million and gross profit fell 67.1% to Rs0.26 million. Other income rose 8.0% to Rs22.36 million, keeping the company profitable before tax at Rs4.60 million.

The bottom line nevertheless swung to a Rs0.55 million loss from a Rs4.90 million profit because the tax charge rose to Rs5.15 million, exceeding quarterly pre-tax profit. The same pattern is clearer over nine months: profit before tax was still Rs10.57 million, but a Rs12.22 million tax charge produced a Rs1.65 million net loss. Management directly links this to the Finance Act 2025 change that prevents business losses from being adjusted against income from property. The current FBR text of section 56 confirms that restriction.

That makes the core issue for the next result cycle unusually specific: can recurring rental and tenant-service cash generation comfortably absorb administrative costs and taxes under the new treatment, while the company resolves its long-running going-concern and listing-compliance issues? The quarter does not show a collapse in rental economics, but it does show that the old relationship between property income, business losses and reported net profit has changed materially.

Company and reporting basis

Company Name: Jubilee Spinning & Weaving Mills Ltd

Ticker: JUBS

Reporting period: third quarter and nine months ended March 31, 2026.

Basis: company-level condensed interim financial statements prepared under applicable Pakistani interim-reporting standards including IAS 34. The filing is unaudited; the March 2026 balance sheet is compared with audited June 30, 2025 figures, while profit-and-loss and cash-flow comparatives are unaudited March 2025 figures. The Board authorized the Q3 accounts on April 29, 2026. The prior FY2025 annual statements carried an adverse audit opinion, which is important context when using the June 2025 audited balances and historical comparisons.

AlphaGen model outputs

Alpha QoQ Score: 24.13

TTM Performance Score: 22.5

3Y Business Perf Score: 41.27

Sector Leadership Score: 10.9257

These four values are AlphaGen model outputs, not company-reported figures.

Results at a glance

  • Q3 service revenue fell 33.0% to Rs2.41 million from Rs3.59 million.
  • Q3 gross profit fell 67.1% to Rs0.26 million; gross margin compressed to 10.9% from 22.2%.
  • Administrative and general expenses increased 19.6% to Rs18.01 million, while other income rose 8.0% to Rs22.36 million.
  • Q3 operating profit fell 28.5% to Rs4.62 million and pre-tax profit fell 28.7% to Rs4.60 million.
  • The quarterly tax charge rose to Rs5.15 million from Rs1.55 million, turning pre-tax profit into a Rs0.55 million net loss versus Rs4.90 million profit a year earlier.
  • For 9MFY26, service revenue fell 22.2% to Rs8.94 million, gross profit fell 43.0% to Rs2.38 million and profit before tax fell 37.3% to Rs10.57 million.
  • Nine-month other income was Rs63.98 million; the cash-flow statement identifies Rs63.07 million of rental income received, showing that property rent remains the dominant income stream outside reported service revenue.
  • Net cash used in operating activities improved to a Rs57.05 million outflow from Rs62.18 million, but Rs63.07 million of rental receipts were classified in investing cash flow rather than operating cash flow.
  • Current liabilities exceeded current assets by Rs7.54 million at March 2026 versus Rs6.29 million at June 2025; the short-term financing balance remained Rs72.34 million.

What improved

The most encouraging feature is that rental receipts remained substantial and cash-backed. Nine-month rental income received was Rs63.07 million, up from Rs58.01 million in the comparable period, an increase of about 8.7%. This matters because reported service revenue is now only a small part of the company’s economics. Rental receipts alone were roughly seven times the Rs8.94 million of nine-month service revenue.

The cash position also improved modestly. Closing cash and bank balances rose 63.3% from June to Rs6.74 million. After a Rs57.05 million operating cash outflow, investing activities generated Rs59.66 million, mainly because rental cash receipts more than offset increases in long-term deposits and employee loans. With no net financing cash flow reported during the nine months, total cash increased by Rs2.61 million.

Finance cost remained economically minor at only Rs0.04 million for nine months. That means the deterioration in the bottom line was not a debt-service story. The company’s result was instead driven by the interaction between weaker tenant-service margins, higher administrative cost and a much larger tax burden.

What weakened / needs attention

Service economics weakened materially. Q3 service revenue fell 33.0%, while cost of revenue declined only 23.2%. Gross margin therefore more than halved to 10.9%. The cost note shows that depreciation remained the largest component of cost of revenue, while salaries and repair costs also contributed. Because revenue represents tenant charges for solar-power equipment and transmission lines rather than textile sales, the margin compression should be interpreted as weaker economics in the tenant-service activity, not as a cotton or spinning-margin event.

Administrative cost is also running ahead of the smaller service business. Nine-month administrative and general expenses rose 12.0% to Rs55.75 million even as service revenue fell 22.2%. Other income still covered that cost base, but the spread narrowed: operating profit fell 37.2% to Rs10.61 million. This makes the stability and collectability of rental income increasingly important.

Working capital did not strengthen. Trade debts increased 10.9% from June to Rs35.24 million, while the current-asset deficit widened slightly to Rs7.54 million. The company still carries Rs72.34 million of short-term financing, which the related-party note identifies as a loan from directors. The balance did not increase during the period, but it remains an important source of liquidity support.

The business model has changed, even if the company name has not

JUBS is still classified and named like a textile manufacturer, but that is no longer the economic reality of the reported business. The Q3 notes state that textile production has been halted since 2014 because of raw-material availability, working-capital shortages and recurring losses. The company now rents out premises and earns service income from tenant use of solar-power equipment and transmission infrastructure.

This is why a conventional textile-peer comparison would be misleading. A spinning or composite-textile peer is exposed to cotton, yarn pricing, utilization and export demand; JUBS’s current reported economics are dominated by investment property, rent and tenant utility services. Investment property stood at Rs991.64 million at March 2026, unchanged from June and equal to roughly 74% of total assets. The relevant analytical questions are therefore occupancy and rental cash generation, service margins, property-related tax treatment, receivable quality and regulatory status.

The company passed a special resolution in 2020 to add property renting to its formal objects and to change its name to Jubilee Services Limited. The March 2026 filing says SECP approval of the amended memorandum remained pending at the reporting date because observations still needed to be resolved. That mismatch between legal objects, listing classification and actual operating activity remains material rather than cosmetic.

Why tax, not finance cost, flipped the result

The tax charge is the decisive change in this period. Nine-month pre-tax profit was Rs10.57 million, but tax expense was Rs12.22 million, or about 116% of pre-tax profit. In Q3 alone, the tax charge of Rs5.15 million was about 112% of pre-tax profit. Management says the after-tax loss resulted from the Finance Act 2025 change under which a business loss can no longer be set off against rental income.

FBR’s Income Tax Ordinance, amended through February 2026, independently confirms this treatment in section 56: the Finance Act 2025 added a proviso preventing adjustment of business losses against income from property. For JUBS, that rule is economically significant because rental income is the dominant earnings stream while the tenant-service activity and administrative cost base can generate business losses or deductions. The restriction can therefore raise tax even when combined accounting profit is modest.

This tax effect is structural unless the law or the company’s income mix changes. It should not be treated as a one-off accounting charge simply because the year-on-year increase is large. The exact quarterly tax burden can still move with taxable income, but investors should now separate pre-tax operating performance from post-tax earnings more carefully than in prior years.

Cash flow: the classification matters

At first glance, a Rs57.05 million nine-month operating cash outflow looks severe relative to the company’s small reported revenue. But the cash-flow statement classifies rental income as investing cash flow. It subtracts Rs63.07 million of rental income when reconciling pre-tax profit to operating cash flow, then shows the same Rs63.07 million as rental cash received in investing activities.

The economically useful reading is therefore two-part. The tenant-service and administrative operating structure consumed cash, while the property portfolio generated recurring rental cash that largely offset that outflow. This does not make the operating outflow irrelevant: it shows why rental continuity is essential. If rental receipts weaken, the underlying cost base would become much more visible in cash terms.

Working-capital movements were also a drag. Trade debts absorbed Rs3.45 million, other receivables absorbed Rs1.20 million and loans and advances absorbed a small amount. Trade and other payables released Rs2.29 million of cash. The resulting cash used in operations before finance cost, tax and gratuity was Rs50.11 million, only modestly better than Rs54.51 million a year earlier.

Balance sheet and going-concern risk

The balance sheet is asset-heavy but not conventionally liquid. Investment property of Rs991.64 million and property, plant and equipment of Rs163.29 million dominate the Rs1.35 billion asset base. Current assets were Rs167.76 million against current liabilities of Rs175.30 million, leaving a Rs7.54 million deficit. That deficit was slightly worse than the Rs6.29 million gap at June 2025.

The Q3 notes explicitly continue to identify material uncertainty that casts significant doubt on the company’s ability to continue as a going concern. They cite the long halt in textile production, working-capital constraints, recurring historical losses and PSX non-compliance. The PSX company page also currently carries a risk warning that the company remains in continuous violation of relevant listing clauses and faces potential suspension or delisting consequences.

The audit context raises the level of caution further. The FY2025 independent auditor issued an adverse opinion, stating that because of the significance of the matters in its basis-for-adverse-opinion section, the annual statements did not give a true and fair view in the required manner. The Q3 numbers are unaudited. That does not make the interim filing unusable, but it means headline asset values, receivables and going-concern conclusions deserve more scrutiny than a normal unqualified reporting set.

Recurring versus less recurring drivers

  • Recurring core support: rental cash from investment property and service income from tenant power infrastructure, assuming occupancy and collection remain stable.
  • Recurring pressure: administrative costs that are large relative to service revenue, plus the new restriction on offsetting business losses against property income.
  • Balance-sheet dependency: Rs72.34 million of director financing remains part of current liabilities even though no additional financing cash was drawn in 9MFY26.
  • Less repeatable historical support: FY2025 management said a large part of annual profit reflected investment-property revaluation. Investment property was unchanged through March 2026, so the current nine-month result is not benefiting from a fresh reported uplift in that carrying value.
  • Accounting-volatility item: the company recorded a Rs2.17 million nine-month unrealized gain on financial assets through other comprehensive income. That lifted total comprehensive income but did not repair the reported net loss.

What changed versus the historical pattern

FY2025 looked much stronger at the headline level: the annual report showed Rs137.62 million of profit after tax, versus Rs184.35 million in FY2024. But those annual earnings were not generated by textile manufacturing. Other income was Rs205.73 million in FY2025 against only Rs12.75 million of service revenue, and management said a large portion of profit reflected an investment-property revaluation surplus.

Nine-month FY2026 is structurally different. Other income is far lower at Rs63.98 million and is closely matched by cash rental receipts of Rs63.07 million, while the investment-property balance has not changed from June. The company is therefore relying more visibly on actual rent and tenant-service economics rather than a large fresh property-valuation contribution. At the same time, the Finance Act change has made post-tax profit materially harder to achieve when the service side is loss-making.

The result should consequently not be read as a sudden collapse from a healthy textile company into loss. It is a property-led company with suspended textile operations, substantial investment property, thin service revenue, high administrative costs and longstanding audit/listing issues. Q3 FY26 simply makes that structure more visible because the tax system no longer allows the same offset between business losses and property income.

What to monitor next

  • Rental receipts: whether quarterly and full-year rent remains at or above the current run rate, because rental cash is the main economic counterweight to the operating cost base.
  • Tenant-service revenue and margin: service revenue fell sharply and Q3 gross margin dropped to 10.9%; stabilization here would reduce reliance on rental income alone.
  • Tax burden: compare pre-tax profit with tax expense under the Finance Act 2025 rule. A positive pre-tax result can still translate into a net loss.
  • Administrative cost: nine-month expenses rose 12.0% despite lower service revenue. Cost containment is necessary for the post-tax model to work.
  • Receivables and liquidity: trade debts rose and the current-liability deficit widened slightly. Watch whether tenant collections improve and whether director financing remains stable.
  • SECP and PSX status: progress on the amended business objects/name change and resolution of non-compliance would materially reduce structural uncertainty.
  • Audit quality at FY2026: the next annual audit opinion will be crucial given the FY2025 adverse opinion and the unresolved going-concern and receivables matters.

Sources

Explore more research

All articles