Karachi October 30 2024: TRG Pakistan income statement is primarily driven by the changes in value of our share in TRGIL, stated by company in its report.
Company share of the net profit in equity accounted investee (i.e. TRGIL) was Rupees 3 billion, before taxation. This is primarily due to the mark-to-market gain booked on Ibex shares held by TRGIL.
TRG portfolio company Ibex Limited (“Ibex”) continues to focus on investment in its technology capabilities, operational efficiencies, margin enhancement and revenue growth. During this prior quarter, Ibex established partnerships with multiple technology providers to power its automation and generative AI solutions, for which it has been successful in closing new revenue opportunities with both existing and new logos. Ibex has also invested in an expansion of its operating platform both in its nearshore (Central America) and offshore (Asia) operations. We expect Ibex to leverage its strong balance sheet to continue structural improvements in the business and accelerate wins in new verticals, as sales cycles pick up pace again.
TRG indirect portfolio company that provides Artificial Intelligence Enterprise Software (the “AI Software Business” or the “Business”) announced in September 2024 that it has agreed to a financial restructuring and recapitalization transaction with its senior lenders, who will become the majority shareholders of the post-restructuring entity. Other shareholders will include existing preferred shareholders, including The Resource Group International Limited (“TRGIL”), and the management team of the Business. This restructuring addresses the debt maturity of the Business as well as its unsustainable senior leverage, which was incurred primarily between 2019 and 2021. This restructuring continues to be on track to close by the end of the calendar year, with the Bermuda court process initiated for the transfer of its assets to a new holding company in the United States. Upon the closing of the restructuring and all its related transactions, the Company’s indirect economic stake in the Business is expected to be substantially retained in percentage terms, on a fully diluted basis. With a restructured balance sheet, the Business will be able to better focus on the resumption of growth as well as sharpening its go-to-market strategy in line with its diversifying product base.
The most significant item on company’s balance sheet is the value of the Company’s share in TRGIL, our sole operating asset. As of September 30, 2024, the value of our share in TRGIL is Rupees 43.4 billion, representing an increase of Rupees 2.9 billion compared to Rupees 40.5 billion on June 30, 2024. This increase is due to a net profit incurred by TRGIL during the financial period, due to reasons explained in the ensuing paragraph. In addition to the Company’s stake in TRGIL, it also has other assets of Rupees 0.03 billion and liabilities of Rupees 7.9 billion (primarily relating to deferred taxes) resulting in net assets of Rupees 35.6 billion.
The Company recognized interest income of Rupees 0.5 million and incurred expenses of Rupees 135.7 million. Tax amounting to Rupees 450 million was booked during the year, mainly on account of deferred taxes. Overall, the Company posted a net profit of Rupees 2.4 billion for the period ending September 30, 2024.
The earnings per share of the Company was Rupees 4.4 per share for the quarter ended September 30, 2024.
