How Did Desane Double Profit and Secure $9.5m in New Lease Income?
Desane Group Holdings Limited reported a strong FY25 with net profit after tax doubling to $3.3 million, supported by a $6.2 million uplift in property valuations and key lease extensions securing future rental income.
- NPAT doubles to $3.3 million in FY25
- Net tangible assets per share rise 5% to $1.70
- $6.2 million valuation uplift on four commercial properties
- Lease extensions with Brisbane City Council and Signature Orthopaedics add $9.5 million in rental income
- Development approval underway for Thornton Penrith Industrial Project
Robust Financial Performance
Desane Group Holdings Limited (ASX – DGH) has delivered a solid financial result for the year ended 30 June 2025, with net profit after tax (NPAT) surging to $3.3 million, more than doubling the previous year's $1.65 million. Earnings before interest and tax (EBIT) reached $5.4 million, reflecting improved operational revenues and disciplined cost management.
The company’s net tangible assets (NTA) per share increased by 5% to $1.70, underscoring steady growth in shareholder value. Total group assets rose 3% to $104.8 million, buoyed by a $6.2 million uplift in the valuation of four key commercial properties.
Strategic Lease Extensions Secure Income
Desane strengthened its recurring rental income through significant lease renewals. Notably, a five-year extension with Brisbane City Council for the Wacol, Brisbane premises will generate approximately $4.5 million in rental income through to 2030. Similarly, a seven-year lease extension with Signature Orthopaedics at Lane Cove, NSW, secures around $5 million in rental revenue through to 2032.
These lease extensions underpin the company’s medium to long-term income stability, supporting the recent valuation uplifts and reflecting strong demand for quality commercial property assets.
Development Pipeline and Future Growth
Desane is progressing its development pipeline, with planning well underway for the Thornton Penrith Industrial Project. The project, comprising 44 industrial units, is expected to receive development approval by late 2025, with construction anticipated to commence in early 2026. This initiative aligns with the company’s strategic focus on enhancing return on equity and expanding recurring rental streams.
Balance Sheet and Capital Management
The Group maintains a strong balance sheet, with $5.5 million in cash and financial assets and manageable debt levels secured against key properties. Borrowings total $12.8 million, with covenants ensuring debt remains below 51% of property values and EBITDA comfortably exceeds interest expenses.
Despite the robust earnings, no dividend was declared for FY25, and the Dividend Reinvestment Plan remains suspended. The Board signals a focus on capital management strategies aimed at sustainable growth and future shareholder returns.
Governance and Outlook
The Board, led by Chairman Prof. John B. Sheehan AM and Managing Director Rick Montrone, remains stable with no significant changes during the year. The company continues to comply with environmental and occupational health and safety regulations, maintaining high standards across its operations.
Looking ahead, Desane plans to pursue strategic acquisitions, advance its development projects, and optimize capital management to enhance shareholder value and secure long-term growth.
Bottom Line?
Desane’s FY25 results set a strong foundation, but investors will watch closely for progress on development projects and dividend policy updates.
Questions in the middle?
- How will the Thornton Penrith Industrial Project impact earnings and cash flow once construction begins?
- What is the timeline for resuming dividends or the Dividend Reinvestment Plan?
- Are there plans for further acquisitions or capital raising to accelerate growth?
