This article is from the Australian Property Journal archive
INTERNATIONAL Equities Corporation is still waiting on the results of a review by Bank of Melbourne after having failed to meet payments.
The real estate and hotels investment group’s preliminary annual results showed a $242,000 net loss for the 2017 financial year as it continues to sell down residential stock for the coming year to repay loans, having sought to take advantage of lower borrowing costs over FY17, it said.
Revenue was mostly derived from its hotels in New South Wales and Victoria, whilst its Seasons of Perth hotel struggled amidst the state’s continued sluggish economic conditions, and its carrying value has an impairment of $6 million.
Lower profits from its hotel, tourism and leasing activities were mainly responsible for the overall loss, and offset the $19.536 million in revenue, down from $20.432 million, generated by sales of property and hotel accommodation.
Total equity slipped to $13.98 million, and cash up modestly to $2.816 million.
IEC said the report had been prepared on the going concern basis, although it had not met “the requirement to meet certain financial covenants”.
“At the time of this report, a review was being conducted by Bank of Melbourne who was unable to provide an indication as to whether it would be taking any action. Therefore, the bank borrowings payable to the Bank of Melbourne have been classified as a current liability.
“As a result, current liabilities exceed current assets as at 30 June 2017 by $17.8 million. Going forward, the directors will endeavour to meet these obligations, or agree some form of accommodation from its financier. In the event these obligations are not met, the debts may become due and payable,” it said.
Hotel costs and costs of goods sold were down slightly to $12.673 million, and along with administration costs of $5.24 million headed expenses.
IEC said apartment sales remains uncertain and “greatly dependent” on interest rates, with sales revenue down from $1.088 million to $295,000, although leasing remains strong.
The group’s tourism segment posted an after tax loss of $145,000, a further drop from FY16’s loss of $71,000. Its property development segment’s loss came in by $63,000 to $487,000, and the leasing segment’s profit of $390,000 was down from $450,000.
Earnings per security was at a loss of 19c, further back from a loss of 13c, and net tangible asset backing was down from 10.96c to 10.73c.
Australian Property Journal
