IEQ Posts Revenue Rise but Deepens Loss Amid Tourism Slump
International Equities Corporation Ltd reported a modest revenue increase for Q1 2025-26 but faced a sharper after-tax loss, pressured by weak tourism and rising costs. Despite challenges, the company maintains a strong liquidity buffer.
- Revenue up 3.43% to A$513k for the quarter
- After-tax loss widened 34.88% to A$224k
- Tourism segment remains weak, impacting profitability
- Net tangible asset backing per security declined to 3.78 cents
- Strong liquidity with over 50 quarters of funding available
Quarterly Financial Overview
International Equities Corporation Ltd (IEQ) has released its quarterly results for the period ending 30 September 2025, revealing a nuanced picture of resilience amid ongoing sector headwinds. The company recorded a 3.43% increase in revenues to A$513,000, driven by its property leasing and tourism-related activities. However, this modest top-line growth was overshadowed by a 34.88% increase in after-tax losses, which deepened to A$224,000 compared to the prior year.
Operational Challenges in Tourism and Property Segments
The company continues to grapple with the lingering effects of a subdued tourism market, which remains a critical revenue driver for its hotel accommodation and property leasing businesses. IEQ’s key assets, including Seasons Heritage Melbourne and Seasons Botanic Gardens, have been particularly affected by high interest rates, inflationary pressures, and cost-of-living challenges that have dampened consumer spending and travel activity.
Management highlighted ongoing lease negotiations with lot owners at Seasons Heritage Melbourne, signaling potential operational adjustments should the current economic environment render existing models unsustainable. Apartment values have also softened post-pandemic, prompting the company to hold off on sales while considering lease rent strategies.
Financial Position and Liquidity
Despite the loss, IEQ’s balance sheet shows strength with net tangible asset backing per security declining to 3.78 cents from 4.66 cents a year earlier, reflecting asset revaluations and operational pressures. The company’s cash flow from operations was negative A$91,000 for the quarter, but it maintains a robust liquidity position with A$1.177 million in cash and A$3.497 million in unused financing facilities, totaling A$4.583 million available funding. This equates to an estimated 50 quarters of operational runway at current burn rates, providing a significant buffer against short-term volatility.
Related Party Transactions and Funding
IEQ continues to engage in related party transactions with Renaissance Assets Pty Ltd, including management fees and cost-sharing arrangements conducted on normal commercial terms. The company’s loan facilities include a zero-interest related party loan and secured bank loans from Bank of Queensland and ING Direct, with interest rates ranging between 6.0% and 6.2% and maturities extending to 2028 and beyond.
Outlook and Strategic Considerations
Looking ahead, IEQ anticipates a gradual recovery in domestic tourism with the onset of spring and associated sporting events potentially boosting occupancy rates. However, management cautions that the return to profitability will be slow and the sector outlook remains challenging. The company is not planning any capital raising in the near term, relying instead on its strong liquidity position to navigate the uncertain environment. Investors will be watching closely how lease negotiations and operational adjustments unfold in the coming quarters.
Bottom Line?
IEQ’s resilience is underpinned by strong liquidity, but its path back to profitability hinges on tourism recovery and lease renewal outcomes.
Questions in the middle?
- Will lease negotiations at Seasons Heritage Melbourne lead to operational restructuring?
- How quickly can domestic tourism rebound to support sustained profitability?
- What impact will rising costs and interest rates have on IEQ’s long-term asset values?
