TRG Pakistan reported a huge loss of Rs. 12.6 billion for the period July-December 2021. The company had reported a profit of Rs. 4.42 billion in the same period last year.
The loss per share of the company stood at Rs. 23.06 per share as compared to earnings per share of Rs. 8.11, according to the latest financial report.
TRG Pakistan’s income statement is primarily driven by the changes in the value of its share in TRG International Limited. Its share of the net loss in equity accounted investee (i.e.,TRGIL) stood at Rs. 14.8 billion. Out of this loss from associates, Rs. 6.8 billion was on account of a mark-to-market loss booked on IBEX shares held by TRGIL. IBEX’s share price on NASDAQ declined by almost 34 percent during the period under review.
The decrease in share value is primarily related to two drivers:
(1) a decrease in the share price of IBEX between June 30, 2021, and December 31, 2021.
(2) a partial redemption of certain TRGIL shareholders in December 2021 that resulted in a finance charge.
In addition to the company’s stake in TRGIL, it also has other assets of Rs. 0.1 billion and liabilities of Rs. 6.8 billion (primarily relating to deferred taxes), resulting in net assets of Rs. 33.5 billion.
The value of TRG Pakistan’s share in TRG International Limited stood at Rs. 40.2 billion, representing a decrease of Rs. 9.4 billion compared to Rs. 49.6 billion on June 30, 2021, which affected the overall balance sheet of the company, showing a huge loss on the bottom line.
The remaining loss was primarily on account of the redemption of certain preference shares in December 2021. These preference shares were originally classified as debt owed to their holders at the amount of their original investment, as the investors had the ability to have their preference shares purchased back at the higher of the original issue price or their pro-rated share of the underlying net assets, including their share of a preference amount.
As the redemption value of these preference shares was more than the original issue price because of the high value of the underlying monetization, the difference between the redemption amount and the original issue price was reflected as a one-time finance charge.
The company recognized interest income of Rs. 7.1 million in its income statement, whereas it incurred expenses of Rs. 16.8 million. Deferred tax amounting to Rs 2.2 billion was reversed during the period.
