Rank #7 in Modarabas
First Tri-Star Modaraba (FTSM) returned to profit in the audited year ended June 30, 2026, but the quality of that recovery was mixed. Profit after tax was Rs4.91 million, versus a restated loss of Rs15.03 million in FY2025. The turnaround came despite a 38.6% fall in academic income, because dividend income rose to Rs28.14 million and more than offset the continuing deficit in the education operation.
That profit should not be read in isolation. FTSM recorded a Rs193.84 million after-tax deficit on revaluation of investments in other comprehensive income, producing a total comprehensive loss of Rs188.93 million. The main investment, 42.6 million units of Image REIT, fell in carrying value to Rs342.50 million from Rs555.93 million. In other words, recurring operating evidence weakened even as reported earnings crossed back into profit.
The statements are for First Tri-Star Modaraba on a standalone basis, expressed in Pakistani rupees and audited by Crowe Hussain Chaudhury & Co. The auditor issued an unmodified opinion. FY2025 balance-sheet and other-comprehensive-income comparatives were restated for a deferred-tax measurement error; management states that the restatement did not affect profit or loss, cash flow, or the underlying investment carrying amounts.
These are AlphaGen model outputs, not figures reported by FTSM and not investment recommendations. They should be read alongside the audited accounts and the concentration and cash-flow risks discussed below.
The clearest improvement was the Rs19.94 million swing in net earnings. Reported operating profit improved by Rs25.27 million, moving from a Rs13.61 million loss to Rs11.65 million profit. This arithmetic was driven by two items: lower administrative costs and much higher investment income.
Administrative expenses fell by Rs17.54 million. Salaries and benefits declined to Rs13.62 million from Rs21.24 million; electricity expense fell to Rs1.59 million from Rs5.08 million; and FY2025 costs for penalties, the education endowment fund, and advance-tax provision did not recur. Advertising also fell sharply. These savings helped narrow the deficit between academic income and administrative expense by Rs3.06 million, even though the education topline contracted.
Other income increased by Rs21.22 million to Rs28.92 million. Dividend income contributed Rs28.14 million, up from Rs7.47 million, while a Rs0.78 million gain on disposal of a fixed asset also helped. Finance cost fell to Rs1.11 million from Rs2.11 million as the lease liability ran down; the balance was nil at year-end.
FTSM also exited the year without conventional borrowings in the statement of financial position. The right-of-use asset and lease liability were both fully depreciated or settled by June 30, 2026. Management reported no contingencies or commitments, and the auditor did not identify a material uncertainty related to going concern.
The academic business weakened materially. Tuition fee income fell to Rs21.50 million from Rs34.67 million. Admission fees declined to Rs0.89 million from Rs1.17 million, and associate-degree certificate fees fell to Rs0.13 million from Rs1.39 million. Short-course fees improved to Rs0.57 million from Rs0.35 million, but were too small to offset the declines. The filing does not provide student numbers, enrolment, pricing, course mix, or retention data, so the revenue fall cannot be divided reliably between volume and pricing.
Management says Imperial Tutorial College received Higher Education Commission approval to operate under Foreign Collaboration (Type-I) and offer an HND in Fashion & Textiles with Pearson, UK. That is strategically relevant, but the filing does not quantify enrolment, fee potential, or the launch timetable. It is therefore an opportunity to monitor, not evidence that academic revenue has already stabilized.
The profit recovery was dependent on dividend income. Academic income less administrative expenses remained negative by Rs16.15 million; dividend income alone was 1.74 times that deficit. If investment distributions normalize while academic economics remain weak, reported earnings could reverse. The accounts do not provide forward dividend guidance from the underlying investments.
The larger warning sits below profit after tax. Long-term investments fell to Rs342.56 million from Rs555.98 million, almost entirely because the fair value of Image REIT units dropped to Rs342.50 million from Rs555.93 million. The position represented about 95% of FTSM’s total assets at year-end. Because it is classified at fair value through other comprehensive income, the Rs193.84 million net revaluation deficit bypassed profit after tax but still reduced economic equity.
This distinction matters: the Rs4.91 million accounting profit increased accumulated profit, yet total comprehensive loss was Rs188.93 million. Certificate holders’ equity before the separate revaluation reserve rose modestly to Rs359.25 million, but the revaluation reserve moved from a Rs107.23 million surplus to an Rs86.61 million deficit. FTSM therefore ended the year with far less net asset support despite reporting positive earnings.
Operating cash flow was negative Rs13.42 million, compared with positive Rs64.02 million in FY2025. The principal operating outflows included a Rs7.60 million increase in advances, deposits and other receivables, a Rs2.55 million reduction in accrued liabilities, and Rs4.23 million of tax paid. Dividend receipts of Rs28.14 million and Rs3.50 million from a fixed-asset disposal generated Rs31.64 million of investing cash inflow, while Rs20.17 million of lease rentals absorbed cash in financing activities.
Cash and bank balances consequently fell 65.0% to Rs1.05 million. Current assets rose to Rs16.02 million from Rs7.61 million, but current liabilities were still Rs84.51 million. The resulting current ratio was only about 0.19 times, although better than roughly 0.07 times a year earlier. Current liabilities included Rs39.54 million of unclaimed dividends and Rs40.46 million of accrued and other liabilities, so the absence of bank debt does not mean liquidity pressure is absent.
Total assets fell 38.5% to Rs360.68 million, closely tracking the investment revaluation. There were no new units acquired in Image REIT: the holding remained 42.6 million units, while its carrying value fell by Rs213.43 million. That makes asset concentration and fair-value sensitivity central to any assessment of FTSM’s balance sheet.
The audited profit-or-loss statement and note 19 both report FY2025 academic income of Rs37.57 million. A summary table in the directors’ report shows Rs35.57 million, an internal inconsistency in the annual report. This analysis uses Rs37.57 million because it is the figure repeated in the primary audited statement and supporting note. The difference does not affect the direction of the FY2026 decline.
FY2025 comparatives are restated for deferred tax on the investment revaluation reserve. The correction reduced the June 2025 deferred-tax liability by Rs18.19 million and increased the revaluation surplus by the same amount; it increased FY2025 other comprehensive income by Rs10.58 million. It did not change FY2025 profit after tax or cash flow. Comparisons in this article use the restated figures where the filing provides them.
The filing is sufficient to verify earnings, investment values, liquidity, and cash flow, but it does not disclose student counts, utilization, tuition pricing, detailed academic KPIs, or management’s expected dividend stream. No causal claim about enrolment, pricing, or course mix is made beyond what the filing states.
Audited annual report for the year ended June 30, 2026: PSX document 284751
Official financial-result announcement: PSX document 284251
Issuer announcements and profile: FTSM on Pakistan Stock Exchange