Eildon Capital Faces Credit and Goodwill Impairments, Eyes New Real Estate Focus

Financial Performance and One-Off Impairments

Eildon Capital Group (ASX – EDC) reported a net loss after tax of $5.7 million for the financial year ended 30 June 2025. This result was significantly impacted by $8 million in one-off adjustments, including a $5.9 million provision against investment loans, a $1.7 million goodwill impairment, and $0.4 million in disposal costs related to property income fund sales. Excluding these non-recurring items, the Group delivered an underlying net profit of $2.3 million, down from $3.6 million in the prior year.

The Group’s income declined to $6.1 million from $8 million in FY2024, reflecting a combination of lower interest income from credit investments and reduced management fees from funds management activities. Distributions to securityholders were maintained at 6.4 cents per stapled security, paid from both the Eildon Capital Trust and Eildon Capital Limited.

Balance Sheet and Asset Composition

Net Asset Value (NAV) per stapled security fell to $0.90 as at 30 June 2025, down from $1.09 a year earlier, mirroring the impact of the one-off impairments. Net Tangible Assets (NTA) per security also declined to $0.90. The Group’s investment portfolio stood at $35.9 million, with cash reserves of $10.9 million representing 90% of net assets. The portfolio remains heavily weighted towards debt investments (85%) with the remainder in equity, including direct equity stakes in Burnley Maltings, an under-construction apartment project in Victoria, and a 19.9% interest in the MNL Property Trust, which holds childcare centres and office space.

Strategic Pivot and New Joint Venture

Post-reporting period, Eildon Capital announced a $20.8 million joint venture with AAG Investment Management Pty Ltd to acquire and convert a sandalwood plantation in Burdekin, North Queensland, into agricultural land suitable for sugarcane farming. Eildon will contribute 90% of the equity capital, with the balance funded by bank debt. AAG will act as Investment Manager for the project. This move signals a strategic pivot towards selective Australian real estate investments sourced primarily through third-party managers, targeting returns exceeding the prevailing cash rate by at least 10%.

The Group outlined its intention to position itself as a low-cost, listed investment platform focusing on a combination of yield and capital growth assets with defined investment terms. Notably, Eildon Capital will not provide earnings or distribution guidance for FY2026, reflecting the evolving nature of its investment approach.

Governance and Leadership Changes

Key management changes during the year included the appointment of Varun Sachdev as CEO in July 2024 and the resignation of long-serving director Mark Avery in June 2025. The Board now comprises a majority of independent directors, with James Davies as Chair. The Group continues to emphasize strong governance, risk management, and alignment of interests with securityholders.

Outlook and Market Positioning

While the FY25 results reflect challenges including credit risk and goodwill impairments, Eildon Capital’s strategic refocus and new joint venture investment suggest a deliberate effort to recalibrate its portfolio towards higher-return, real estate-related opportunities. Investors will be watching closely for execution on this strategy and the impact of the Queensland agricultural land conversion project on future earnings and asset values.