Income Asset Management reports a 34% rise in Q1 FY2026 revenue despite uncovering a $3 million fraud involving a former employee, maintaining positive EBITDA and strong client engagement.
- Q1 FY2026 operating revenue up 34% to $5.35 million
- Estimated $3 million total loss and costs from fraud and theft
- Positive normalised EBITDA of $294,000 excluding fraud-related costs
- Cash reserves fell by $2.85 million, largely due to fraud impact
- No client losses or complaints reported amid ongoing investigations
Robust Revenue Growth Despite Setback
Income Asset Management Group Limited (ASX – IAM) has delivered a strong start to FY2026 with operating revenue for the first quarter rising 34% year-on-year to $5.35 million. This growth underscores the resilience of the business amid challenging circumstances, including the recent discovery of fraudulent activity by a former employee.
Unpacking the Fraud Impact
The group disclosed a combined estimated loss and associated costs of approximately $3 million related to theft and fraud. The direct theft amounted to about $1.4 million, with additional liabilities and investigation expenses pushing the total impact higher. Despite this, IAM reported a positive normalised EBITDA of $294,000 for the quarter when excluding these fraud-related costs, a notable improvement from the prior quarter’s loss.
Cash Flow and Financial Position
Cash reserves declined by $2.85 million compared to the previous quarter, primarily due to the fraud and investigation costs. At quarter-end, total cash stood at $3.44 million, supplemented by liquid resources including bonds, bringing available funding to $8.44 million. The company maintains sufficient liquidity with over three quarters of funding available, supported by secured and unsecured financing facilities.
Client Confidence and Market Activity
Importantly, IAM reports no client losses or complaints arising from the fraud incident. Client engagement remains strong, with growth in bond and loan funds under advice reaching $2.7 billion. The debt capital markets team executed several significant syndicated loan transactions during the quarter, including deals with A-Mart, Australian Venue Co, and Foxtel, reflecting ongoing demand for quality debt instruments.
Ongoing Investigation and Insurance Coverage
The group continues to collaborate closely with FTI Consulting to fully reconcile and quantify the fraud’s impact. IAM’s insurers have been kept informed and the losses and costs remain within the company’s insurance policy limits. The transition of custody and administration of client bonds and loans to Perpetual Corporate Trust prior to the fraud incident provides an additional layer of asset security moving forward.
Bottom Line?
IAM’s ability to sustain revenue growth and client trust amid a costly fraud investigation will be critical to watch as the story unfolds.
Questions in the middle?
- How will the ongoing fraud investigation affect IAM’s future financial results and reputation?
- What measures is IAM implementing to prevent similar incidents going forward?
- Will the insurance claims fully cover the fraud-related losses and costs?