SG Allied Businesses Limited (SGABL) closed FY2026 with a reported profit, but the headline reversal does not represent an operating turnaround. For the year ended June 30, 2026, the company earned PKR 37.43 million after tax versus a PKR 15.17 million loss in FY2025. That profit was created by a PKR 49.83 million deferred-tax credit. Before tax, SGABL still lost PKR 12.40 million, while its operating loss widened to PKR 129.31 million.
The cleanest reading is therefore mixed: rental income and operating cash flow improved, the pre-tax loss narrowed, and cold-storage revenue edged higher. Against that, sales from mushrooms and herbs fell, gross profit nearly halved, liquidity remained tight, and the auditor drew attention to a material uncertainty related to going concern. SGABL’s asset backing is substantial, but its small operating businesses still do not cover the company’s administrative cost base.
Results at a glance
Reporting basis: audited, company-only financial statements for the year ended June 30, 2026, presented in Pakistani rupees. SGABL reported sales of PKR 76.20 million, down 10.6% from PKR 85.22 million. Gross profit fell 52.2% to PKR 13.64 million, and gross margin compressed to 17.9% from 33.4%.
Administrative and selling expenses were broadly flat at PKR 142.94 million, up 1.2%. Because those expenses were almost eleven times gross profit, the operating loss widened 14.7% to PKR 129.31 million from PKR 112.75 million. Rental income rose 22.1% to PKR 119.72 million and absorbed most—but not all—of that operating deficit.
Loss before levy and taxation narrowed to PKR 9.95 million from PKR 14.94 million. After a PKR 2.45 million minimum-tax levy, loss before taxation was PKR 12.40 million. The PKR 49.83 million deferred-tax credit then lifted the result to a PKR 37.43 million profit. Basic and diluted EPS was PKR 2.50 versus a loss per share of PKR 1.01 in FY2025.
AlphaGen model scores
These are AlphaGen model outputs, not figures reported by SGABL: Alpha QoQ Score 69.1; TTM Performance Score 59.99; 3Y Business Perf Score 52.61; Sector Leadership Score 49.18. They should be read as model signals alongside—not in place of—the audited accounts, particularly because FY2026 profit was tax-credit driven.
What improved
Rental income was the clearest positive. It increased to PKR 119.72 million from PKR 98.05 million, a PKR 21.67 million uplift. The notes identify this entirely as income from investment property. The rental segment generated PKR 105.42 million before levy and tax after its allocated administrative costs, making it the only segment with a positive pre-levy result.
Cold-storage service income rose 3.6% to PKR 10.92 million. Disclosed use was 355 tonnes against 450 tonnes of capacity, or about 78.9%. That leaves room for higher throughput, although management did not disclose pricing, customer retention, or how much incremental cost would accompany fuller utilization.
Cash generation also improved. Net cash from operating activities was PKR 1.96 million versus a PKR 7.67 million outflow in FY2025. Working capital contributed PKR 2.46 million, mainly because loans, advances, prepayments and other receivables declined. This was a modest positive rather than a transformation: capital expenditure and work in progress consumed PKR 23.18 million, and PKR 23.03 million of net director-loan inflow funded that investment. Cash ended the year at only PKR 2.09 million.
The company’s loss before levy and tax improved by PKR 4.99 million despite the weaker gross result. Arithmetically, the PKR 21.67 million increase in rental income more than offset the PKR 14.86 million widening in operating loss. That is the principal recurring bridge disclosed in the accounts.
What weakened / needs attention
The core sales line contracted. Mushroom and herb sales fell 12.6% to PKR 65.28 million from PKR 74.68 million. Cold-storage revenue rose slightly, but not enough to prevent total sales from declining. Cost of sales increased 10.3% to PKR 62.56 million even as revenue fell. Electricity, gas, steam and water costs rose to PKR 8.34 million; supplies and materials to PKR 13.29 million; packaging to PKR 3.13 million; and freight to PKR 4.44 million.
Management says its controlled-environment products are being accepted by restaurants and marts, but the filing does not split the mushroom-and-herb revenue change into volume, price, customer mix or product mix. It would be speculation to assign the decline to any one cause. The verified result is that this segment’s gross profit fell to PKR 11.68 million from PKR 24.97 million.
The administrative burden remains the central operating problem. Administrative and selling expenses of PKR 142.94 million dwarfed gross profit of PKR 13.64 million. Both disclosed operating businesses remained loss-making after allocated overhead: mushrooms and herbs lost PKR 60.10 million before levy and tax, while cold storage lost PKR 55.27 million. Rental income is therefore carrying the reported economics.
Liquidity is strained. Current assets were PKR 51.51 million against current liabilities of PKR 199.84 million, leaving a PKR 148.33 million shortfall and a current ratio of about 0.26. The auditor highlighted this mismatch, together with accumulated losses of PKR 749.16 million, as a material uncertainty that may cast significant doubt on the company’s ability to continue as a going concern. The audit opinion itself was not modified.
Funding is also highly sponsor-dependent. Director loans increased to PKR 348.93 million and the notes say sponsoring directors have committed support for at least the next 12 months. A further PKR 147.30 million was due to SG Power Limited, including an old loan, other payables and accrued markup net of a receivable. Sponsor support reduces immediate refinancing pressure, but it is not a substitute for a self-funding operating model.
Why the reported profit needs adjustment
The PKR 49.83 million tax credit is the decisive reason SGABL moved from a pre-tax loss to an after-tax profit. The credit arose from the release of deferred-tax liability attributable to the revaluation surplus. It was not cash income, did not improve sales, and did not make the operating business profitable. Without it, the audited statement shows a PKR 12.40 million loss before taxation, after the minimum-tax levy.
This distinction also explains why EPS of PKR 2.50 should not be read as an earnings run-rate. Rental income is recurring to the extent tenants and terms persist, but the deferred-tax credit is an accounting item tied to the balance sheet. A more useful operating checkpoint is whether gross profit plus rental income can cover administrative costs and other charges without another non-cash credit.
Balance sheet, asset backing and cash flow
Total assets were PKR 1.53 billion, dominated by PKR 1.42 billion of property, plant and equipment. Equity was PKR 959.52 million, including a PKR 1.22 billion revaluation surplus offset by accumulated losses. The accounts also disclosed post-year-end independent appraisals of land and buildings and of investment property as non-adjusting events. These values support the balance sheet, but they are not cash and do not remove the company’s current-liability gap.
Investment property had a carrying amount of PKR 55.86 million and produced PKR 119.72 million of rental income. That unusually high relationship deserves continued scrutiny: the accounts state that only part of the building is classified as investment property, while rental activity and administrative allocations sit across the broader asset base. Readers should avoid treating the simple income-to-carrying-value ratio as a conventional property yield.
Operating cash flow turned positive, but free cash flow was negative after PKR 23.18 million of investing outflows. Director financing almost exactly bridged that gap. This makes future cash conversion, capex discipline and sponsor support more important than the after-tax profit headline.
Governance and disclosure risk
PSX currently labels SGABL non-compliant. The annual-report governance review gives concrete reasons for caution: the positions of chief financial officer, company secretary and head of internal audit were vacant, and the company said financial constraints had prevented it from engaging an internal-audit function. These gaps matter more for a small issuer with material going-concern uncertainty, old legal disputes and a result heavily shaped by accounting allocations.
The statements also contain drafting and labeling imperfections, although the audited annual report and PSX result summary agree on the core FY2026 figures. This analysis therefore relies on the audited statement lines and notes, and avoids unsupported quarterly cash-conversion or management-guidance claims.
What to monitor next
First, watch whether mushroom-and-herb sales stabilize and whether gross margin can recover from 17.9%. Revenue growth alone would be insufficient if direct input costs continue rising faster.
Second, monitor cold-storage utilization above the disclosed 355 tonnes and whether receivables convert to cash. Cold-storage receivables rose sharply to PKR 17.24 million from PKR 1.70 million, so revenue quality matters.
Third, test the sustainability of rental income and tenant concentration. Rental income is now the principal economic support for the company, yet the filing does not provide a tenant-by-tenant maturity profile.
Fourth, monitor the PKR 148.33 million working-capital deficit, cash balances and further director funding. A durable recovery requires internal cash generation, not merely asset revaluation or sponsor advances.
Finally, governance remediation should be visible: appointments to the vacant finance, secretarial and internal-audit roles, clearer reporting, and progress on PSX compliance would materially improve confidence in the turnaround narrative.
Verdict
FY2026 was an accounting profit, not yet an operating recovery. Higher rental income narrowed the pre-tax loss and operating cash flow turned slightly positive, but the core businesses remained loss-making after overhead, sales declined, liquidity stayed weak, and the auditor retained a going-concern emphasis. The tax credit made the reported profit possible; future results will be more convincing only when gross profit and recurring rental income cover the cost base while cash generation funds investment without incremental sponsor support.