xReality Group has identified unaudited adjustments that deepen its FY26 loss by $5.79 million and cut net assets from $14.0 million to $6.7 million. Customer revenue and cash flow are unchanged, but trading is suspended until the audit and amended accounts are completed.
- $5.79 million aggregate reduction to FY26 profit or loss
- Government grant income deferred under AASB 120
- $1.06 million impairment booked against Gold Coast facility
- Net assets revised down to $6.7 million
- Trading suspended while the audit remains incomplete
Trading suspension follows $5.79 million FY26 adjustment
xReality Group Limited (ASX:XRG) has suspended trading after identifying a $5.79 million aggregate reduction to its FY26 profit or loss, with the company still unable to lodge amended results. The figures remain unaudited, and XRG says further material adjustments cannot be ruled out.
The revised numbers would turn the previously reported $0.1 million loss after tax into a $5.9 million loss. EBITDA would move from $3.8 million to a loss of $1.3 million, while net assets would fall from $14.0 million to $6.7 million. Basic earnings per share would shift from a loss of 0.02 cents to a loss of 0.79 cents.
Government grants drive the largest accounting change
The biggest item is a $3.94 million deferral of government grant income. Grants received under the Research and Development Tax Incentive and Industry Growth Program that relate to capitalised development expenditure are now proposed to be recognised over the life of the related intangible assets, consistent with AASB 120, rather than being recognised immediately.
XRG said the change affects the timing of income recognition rather than the cash received. Deferred grant income of $5.4 million would sit as a liability at 30 June 2026, although the company said it is not repayable because the relevant grant conditions have been satisfied. Revenue from customers remains $15.1 million, grants received remain $3.0 million and net operating cash inflow remains $5.5 million.
Impairment and amortisation add pressure to reported assets
The proposed accounts also include a $1.06 million impairment against the Gold Coast facility on a value-in-use basis. Additional amortisation contributes a further $637,668, after the company corrected the commencement dates for certain capitalised development assets and reduced the estimated useful life of Operator XR software releases from 10 years to five years.
Other adjustments, including an inventory write-down, additional expenses and development costs expensed, total $150,996. XRG also expects to restate the FY25 loss by $893,838 and reduce opening accumulated losses at 1 July 2024 by $634,623. Those comparative figures remain unaudited.
Audit completion becomes the immediate catalyst
The board commissioned a review of key accounting judgements after the original Appendix 4E was released on 31 August, taking independent accounting advice on grant accounting, intangible-asset amortisation and the carrying value of the wind tunnel assets. The auditor has not yet provided an opinion on the adjustments or the FY26 accounts.
XRG’s securities are suspended from quotation until the audited FY26 accounts are lodged. The next decisive disclosure is therefore not a trading update but the completed audit: it will determine whether these proposed adjustments stand, whether further changes emerge and when the company can seek to restore a quoted market.
Bottom Line?
The unchanged cash position limits the immediate liquidity read-through, but the unresolved audit and sharply lower asset base leave the market without a reliable FY26 reference point.
Questions in the middle?
- Will the auditor accept the proposed grant deferral and other adjustments without further material changes?
- How will the lower net asset base affect XRG’s financial position and future reporting periods?
- When will the audited accounts be lodged and trading resumption become possible?