International Equities Corporation Ltd (ASX:IEQ) returned to a statutory profit in FY2026, but the result was largely supported by discontinued tourism operations while continuing activities remained loss-making. An auditor’s material uncertainty warning and a new secured $1.2 million loan put liquidity at the centre of the investment case.
- Statutory profit of $46,000 after a $1.249 million loss
- Continuing operations remained loss-making at $396,000
- Tourism exit generated a $442,000 discontinued-operations profit
- Operating cash flow remained negative at $879,000
- New $1.2 million loan drawn after year-end at 9.5%
Profit turnaround masks continuing operating loss
International Equities Corporation Ltd (ASX:IEQ) has returned to the black on paper, but the $46,000 FY2026 profit offers little evidence of a settled recovery. The Melbourne property group’s continuing operations produced a $396,000 loss, with the headline result rescued by a $442,000 profit from discontinued tourism operations.
That accounting distinction matters. International Equities terminated its serviced-apartment leases and ceased operations at Seasons Heritage Melbourne in November 2025 after concluding the tourism business was uneconomical. The exit removed a costly operation from the portfolio, but it also means the reported profit cannot be read as evidence that the group’s ongoing businesses are yet sustainably profitable.
Revenue falls as tourism operations wind down
Total revenue declined 15.6% to $2.080 million, according to the annual report. Continuing revenue rose to $1.560 million from $1.326 million, helped by property management fees of $730,000, rental revenue of $574,000 and apartment sales of $223,000. Discontinued operations contributed a further $520,000, down from $1.139 million.
Leasing remains the clearest operating contributor, generating $1.114 million of segment revenue and a reported $555,000 profit. Property development, by contrast, recorded a $955,000 loss after carrying costs and a $77,000 impairment charge. The group says it will focus on its real estate management operation, which has roughly 265 properties under management, while delaying new development activity until funding conditions improve.
Cash burn and refinancing risk remain central
The more immediate pressure is cash rather than accounting profit. Operating activities consumed $879,000 during the year, while cash fell from $1.276 million to $521,000. Year-end borrowings stood at $2.271 million, including $1.663 million classified as current, and the company said it intends to repay debt through loan amortisation and apartment sales where possible.
After year-end, IEC Pacific secured and drew a $1.2 million working-capital loan from Jinjiang Investments, arranged by Regis Capital. The facility carries a fixed 9.5% interest rate, runs for 18 months and is secured by seven apartments and carparks valued by the lender at $2.17 million. The funding improves near-term liquidity, but adds another obligation to a group whose auditor has already identified a material uncertainty related to going concern.
Auditor accepts accounts but highlights funding dependency
Moore Australia issued an unqualified audit opinion, while warning that the group’s ability to continue as a going concern depends on funding outcomes described in the accounts. Those outcomes include refinancing existing loans, selling Melbourne apartment stock, disposing of non-current assets, drawing on approved facilities or raising funds from shareholders or related parties.
The warning is not a finding that the group cannot continue. It is, however, a clear statement that the stated asset values and normal settlement of liabilities depend on management’s funding and disposal plans being achieved. Property valuations are particularly significant: property, plant and equipment was carried at $6.565 million, while completed units held for resale were valued at $757,000. The report notes that market conditions could affect both carrying values and prices ultimately achieved on sale.
Bottom Line?
The tourism exit has simplified the business, but the next test is whether leasing income, property sales and the new loan can fund operations before refinancing pressure tightens.
Questions in the middle?
- Can the leasing business generate enough recurring cash to offset corporate costs and interest?
- Will Melbourne property sales occur quickly enough to meet near-term debt and working-capital needs?
- What funding outcome will support the group once the new 18-month loan and existing facilities come under review?