Desane Reports $0.02m NPAT with $2.1m Property Revaluation Gain

Profit Plummets Despite Portfolio Gains

Desane Group Holdings Limited (ASX:DGH) delivered a statutory net profit after tax (NPAT) of just $0.02 million for the full year ended 30 June 2026, a dramatic fall from $3.32 million in FY25. This near-flat profit masks a more complex story beneath the surface of the Sydney-based property investment and development company’s results.

Rental income dipped slightly to $2.2 million, down 2.8% year-on-year, while finance costs rose to $0.97 million from $0.68 million, reflecting higher borrowing costs and increased debt utilisation. Despite these headwinds, the Group recorded a net fair value uplift of approximately $2.1 million across its investment property portfolio, notably at 7 Sirius Road, Lane Cove and 16 Industrial Avenue, Wacol, Brisbane.

Balance Sheet Strength Underpins Development Pipeline

Desane closed FY26 with net assets of around $69.1 million, including $10.9 million in cash and financial assets and borrowings of $13.9 million. The Group remains conservatively geared, maintaining financial flexibility to support its development and investment activities. The company paid a special dividend of 2 cents per share (82% franked) during the year but declared no final dividend for FY26.

The Group’s balance sheet strength is critical as it advances key projects. The 44-unit industrial development at 91 Thornton Drive, Penrith, has secured development approval and a construction certificate, with construction targeted for Q4 FY26, subject to funding. Meanwhile, redevelopment works at 322 Norton Street, Leichhardt, anchored by a long-term lease to Petbarn, have progressed through major demolition and excavation stages.

Leases Extended, Providing Income Security

Long-term lease extensions at core properties bolster recurring income. Brisbane’s 16 Industrial Avenue lease has been extended to June 2030, expected to generate approximately $4.5 million in rental income. Similarly, Signature Orthopaedics at 7 Sirius Road, Lane Cove, extended its lease to November 2032, securing an estimated $5 million in rental income over the lease period. These extensions underline Desane’s focus on income stability amid development activity.

Other assets, including 159 Allen Street and multiple properties on Norton Street in Leichhardt, remain fully leased or actively managed to maximise occupancy and recurring income. The Group’s portfolio, spanning New South Wales and Queensland, was valued at $91.3 million at 30 June 2026, slightly down from $91.6 million the previous year, reflecting the sale of 13 Sirius Road, Lane Cove for $8.7 million during FY26.

FY27 Focus on Execution and Income Growth

Looking ahead, Desane’s management prioritises progressing construction at Penrith, completing the Petbarn premises at Leichhardt, improving portfolio occupancy, and pursuing strategic acquisitions to enhance returns and recurring rental income. CEO Rick Montrone emphasised converting the Group’s asset base into stronger recurring earnings and long-term shareholder returns, supported by a robust balance sheet and long-dated income streams.

The Group’s cautious capital management approach includes suspending its Dividend Reinvestment Plan and maintaining conservative gearing. This reflects an emphasis on funding development projects prudently while preserving liquidity to navigate market conditions.