Desane Group Holdings Limited Annual Report 2023

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FY2023 Annual Report · Desane Group Holdings Limited

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D E S A N E G R O U P H O L D I N G S L I M I T E D

2 0 2 3 A N N U A L R E P O R T

Contents

01.

Chairman’s Report
pg.4

03.

Directors’ Report
pg.26

05.

Financial Statements
pg.42

02.

Chief Executive’s Report
pg.8

04.

Auditor’s Independence Declaration
pg.38

06.

Independent Auditor’s Report
pg.86

07.

Shareholder Information
pg.94

08.

Corporate Directory
pg.100

D E S A N E G R O U P H O L D I N G S L I M I T E D

C h a i r m a n ’ s R e p o r t

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01.
Chairman’s Report

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1 5 9 A L L E N S T

D E S A N E G R O U P H O L D I N G S L I M I T E D

C h a i r m a n ’ s R e p o r t

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Prof. John Sheehan AM
CHAIRMAN

It gives me great pleasure to introduce
the Annual Report of Desane Group
Holdings Limited for 2023.

I can report to shareholders that the Group’s earnings
before interest and tax, for the financial year ending 30
June 2023, was $2.6m and the Group’s total assets are
$98.8m. The Group’s net tangible assets (NTA) now
stand at $1.58 per security, an increase of 2% over the
previous corresponding year.

Given that the consequences of COVID-19 appear to
be ameliorating from a health standpoint, nevertheless,
it is clear that the financial consequences are now
working through the broader Australian economy. In
this environment, the Group has pleasingly achieved
a healthy financial result, notably with further asset
revaluations. The continuing focus of the Group on
maintaining its substantial cash reserves and prudent
management of existing property assets has resulted in
a continuing strength of the overall Group. I am pleased
to note that the current cash and financial assets
stand at a significant $13.6m, enabling the Group to
accommodate opportunities over the next financial year
as they doubtless arise.

As mentioned in my report last year, the Group’s traditional
base of industrial and logistic property assets continue to
perform well, influenced no doubt to a significant degree
by a change in employment patterns.

With unemployment standing at historical lows,
notwithstanding the increasing cost of household debt, I
would be remiss not to record that the Group’s industrial
and logistic property assets have benefitted from these
changes in employment generally. It appears that where
possible, significant numbers of the workforce are preferring
to work from home at least for some days each week, with
the result that home deliveries have grown significantly.
Obviously, logistics have benefitted greatly from this change
in employment patterns and hence it is clear that property
assets focussed on this sector have been increasingly
sought after. This is particularly evident in the growing
revenue streams from the Group’s property assets, which
focus on such areas whilst also providing a continuing
capital growth in the medium term at the very least. As
stated earlier, this is notable in the increase in the Group’s
total assets to $98.8m.

“ I am pleased to note that the current cash
and financial assets stand at a significant
$13.6m, enabling the Group to accommodate
opportunities over the next financial year as
they doubtless arise.”

Also mentioned in my report last year, the resilient
Australian economic growth continues to evidence strong
domestic expenditure notwithstanding rising energy
costs. The high level of participation in the workforce
suggests that the economy is indeed more robust than
many commentators suggested. The increases in the
official interest rate by the Reserve Bank has been clearly
focused on ensuring inflation returns to accepted targets,
but at the same time with increased immigration there
are clear signals that the overall economy will continue
to grow in the medium term. Notwithstanding, the cost
of building materials and construction labour continues
to move towards a more stable position, with anticipated
increases in such cost bases reducing in the next financial
year. These costs have been at the forefront of your
Board’s considerations when committing to making
decisions regarding the commencement of construction of
development projects.

Hence, the Board and the Group management actively
monitor these cost bases, recognising that a significant
amount of building material is sourced from overseas
and are vulnerable to currency fluctuations. The value
of the Australian dollar continues to move within a range
which is admittedly currently quite narrow, but also with
a risk potential which sometimes unexpectedly widens.
This is the question that prudent decision making when
committing to the construction of development projects
must answer. I am pleased that we have such depth of
experience and knowledge clearly available to the Board
through the skills of our senior management.

Finally, I can report to shareholders that this annual report
is the 36th such report of Desane Group Holdings Limited.
Your Company has continued to maintain its profitability
due to the quality of its senior management and the
invaluable contribution of its current Board members.

Your Board remains confident the current strategies of
investment and cash retention will continue to result
in responsible asset growth and further earnings for
shareholders. I congratulate both the Group executives and
the employees of Desane Group Holdings Limited for the
solid and as always, prudent management of the Group.

Finally, I would like to welcome those shareholders who
have recently joined the Company. The Board looks forward
to a rewarding and fruitful association with those new
shareholders during the coming years.

Prof. John Sheehan AM
CHAIRMAN

D E S A N E G R O U P H O L D I N G S L I M I T E D

C h i e f e x e c u t i v e ’ s R e p o r t

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02.
Chief Executive’s
Report

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Phil Montrone
Managing Director & CEO

I am pleased to report that Desane Group
Holdings Limited has reported its twelfth
consecutive yearly profit result for FY23.

The Group’s net tangible assets now stand at $1.58 per share.
Our management’s focused approach has ensured that
shareholders’ asset value has been protected and enhanced.

The Group’s EBIT for this financial year stands at $2.6m.
Desane’s total assets now stand at $98.8m and total revenue
has increased by 18% over the corresponding period to $3.0m.

Desane’s cash position remains strong with $13.6m in cash
and financial assets. The Company’s diversified loan portfolio,
secured by first registered mortgages against quality property
assets, is yielding an average of 7.5% pa interest revenue.

Notwithstanding the difficult economic conditions prevailing
in Australia during this financial year, the Group’s management
has remained focussed on:

• Adding value to our existing investment property portfolio;

• Creating value through obtaining planning approvals to our

assets; and

• Preservation of cash reserves and capital.

The two Lane Cove west industrial investment assets, totalling
4,900m², are leased on a long term basis to national tenants.
These industrial properties will continue to provide Desane
with a steady annual rental income and value growth. On a
fully leased basis, the properties provide approximately $1.1m
in net rental.

As part of Desane’s stated intention to grow the investment
property portfolio, in June 2022, Desane completed the
acquisition of a prime commercial property located in the Sydney
suburb of Leichhardt for $7.25m. The property, zoned B2-Local
Centre, has ample onsite parking and is located in the heart of
Norton Street – Leichhardt’s commercial, retail and residential
district. During the course of this financial year, the property
has been upgraded and fully leased to six tenants on long term
leases. The 1,550m² of net lettable area is being leased at an
average of $300 per square metre, yielding over $450,000 per
annum net. This property is unencumbered.

During the course of this financial year, due to the rapidly
increasing cost of construction, Desane’s management made
the decision to postpone the commissioning of the construction

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of the Wacol, Brisbane industrial expansion and the boutique
residential project in Norton Street, Leichhardt, and focussed
on adding value to the Group’s existing assets by upgrading and
refurbishing existing assets and negotiating new leases, which
has resulted in increased rental income and the revaluation of
some of the property assets.

Market conditions permitting and the cost of construction
stabilising during the course of 2023 to 2025, Desane will
progress to develop the Wacol additional 3,250m² industrial
facility. On completion of the new industrial facility, the two
combined Wacol assets will have a total of 8,289m² of net
lettable area and should have a value of approximately $22m
and is expected to generate over $1.3m per annum of net rental
income for the Group.

The 2024 and 2025 financial years will present an opportunity for
Desane to progress the development of the 11,000m² Thornton
Estate property, located in the heart of Penrith. The Board has
resolved to engage a local design architect, Integrated Design
Group, to scope the possibility of subdividing the property
into a 7,000m² lot (Lot 1) and a 4,000m² lot (Lot 2). Stage 1 will
create the opportunity to develop Lot 1 into a 5,500m² facility,
comprising 32 industrial units and 60 storage units. The Stage
1 construction will be funded internally and will be sold on
completion. The successful development and sale of Stage
1 will determine the best way to progress with Stage 2. The
construction of the Western Sydney Airport continues to drive
the strong demand for industrial and commercial land in western
Sydney. The successful development of this property will make a
tangible contribution to Desane’s shareholders. This property is
unencumbered.

The construction for the boutique 4 storey residential apartment
building in Norton Street, Leichhardt, was scheduled to be
awarded to a builder in March 2023, however due to the rapid
rise of construction costs and the inability of the builder to lock
in a lump sum price for the construction work, it was decided to
postpone the development and to lease the property. Market
conditions permitting and the cost of construction stabilising
during the course of 2023 to 2025, Desane will progress
to develop this project which will comprise 9 residential
apartments, 1 ground floor retail commercial space and 10
basement car spaces. The property is located in Norton Street’s
vibrant restaurant, café and cinema precinct and is 200m from
Leichhardt North Light Rail Station.

This Norton Street project complements our Company’s
approved nearby 46 apartment project in Allen Street,
Leichhardt. This property is located 200m from Hawthorne Light
Rail Station and is a short distance from local schools and other
amenities. On completion, the combined Norton Street and
Allen Street developments could yield estimated revenues of
between $70m to $75m for the Group.

These two properties are currently leased on a medium term
basis, in anticipation of market condition sentiments improving
for residential apartment developments in Sydney’s Inner West.
These two properties are unencumbered.

Our management’s property knowledge and focussed approach

to creating additional value for our shareholders, resulted in
the acquisition of a prime commercial property, known as “Villa
Rosa”, located in the Sydney suburb of Leichhardt, for $7.25m.
Following the acquisition, the property was upgraded and fully
leased to six tenants on a long term basis. The 1,550m² of net
lettable area has been leased at an average of $300 per square
metre, yielding over $450,000 net annual rent. In January 2023,
the property was independently valued at $9.2m. The property,
zoned B2-Local Centre, has ample onsite parking and is located
in the heart of Norton Street – Leichhardt’s commercial, retail
and residential district. This property is unencumbered.

The Group’s industrial and commercial property assets, and the
approved residential development properties, combined with
the 1.2ha property asset located in the Sydney western suburb of
Penrith, should continue to achieve significant medium to long
term returns for shareholders.

The emerging economic challenges for property companies in
Australia, over the next 12 to 24 months, will require Desane’s
management to remain focussed on maintaining and improving
its existing property assets’ value and income. Desane’s existing
investment assets provide stability of income and the ability to
add value. The Group’s strong balance sheet, coupled with the
ability to acquire additional income producing properties, will
provide the opportunity to improve and protect shareholder’s
asset value, as well as to continue with its stated objectives of
restocking our Company’s investment property portfolio.

The economic uncertainty for certain classes of property assets
and the continuing high construction costs for new projects
will require Desane’s management to implement measures that
should provide a level of protection for shareholders against a
negative economic impact for their investment.

Desane’s investment property assets are performing well, in
line with industrial and logistic assets across the major capital
cities. Over the past three years, Australian consumers have
changed the way they spend, which has accelerated Australia’s
e-commerce market, resulting in a healthy demand for properties
that offer warehousing, logistics and distribution facilities.
Desane’s investment assets fall into the highly sought-after
industrial asset class, providing stability of income during these
challenging times.

I wish to thank the executive team and all our dedicated staff for
their hard work in producing a steady result in very difficult times.

Finally, I would like to acknowledge the support of our Company’s
shareholders, in particular for the confidence they have placed in
the Company’s management over the past twelve months.

PHIL MONTRONE OAM
Managing Director & CEO

D E S A N E G R O U P H O L D I N G S L I M I T E D

2 0 2 3 A N N U A L R E P O R T

An outstanding industrial property, strengthening and expanding our
investment portfolio.

16 Industrial Avenue is a 21,750m² industrial site comprising of a
5,039m² warehouse, ample on-site parking and excellent truck access.
The property is fully leased to a high quality local government tenant
on a long term basis.

Desane also has DA approval to construct an additional 3,250m²
industrial facility on the site.

16 Industrial Ave.

BRISBANE

Artist’s Impression

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Artist’s Impression

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159 Allen St.

LEICHHARDT

Lifestyle at the door step of the city fringe.

159 Allen Street, Leichhardt is a 2,782m², R1 General Residential zoned
site. The property is located approximately 5 kilometres from the CBD,
less than 200 metres from Hawthorne Light Rail Station and is a rare
development opportunity in Sydney’s city fringe.

The property is in short distance to local schools, amenities and
other public services, including the University of Sydney and the
Royal Prince Alfred Hospital at Camperdown. Desane has recently
attained planning approval from the Inner West Council for a 5-storey
apartment complex, comprising of 46 residential apartments.

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Artist’s Impression

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This property, a family legacy in the heart of the inner west, is
ideally placed in leafy surrounds and has been known for over
40 years for the joy it provided when operating as the function
venue, Villa Rosa.

The 929m² B2 zoned site is fully leased to a diversified mix
of tenants on long term leases. The property, under the
Leichhardt LEP, has an FSR of 1.5:1 and can be converted to
residential apartments in the future subject to council approval.

270-278 Norton St.

LEICHHARDT

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Artist’s Impression

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322 Norton St.

LEICHHARDT

Creating community through a boutique development.

The 607m² site at 322 Norton Street was previously used as an auto-
electrical shop and has development approval for a 9-unit, mixed-use
development. The property is located approximately 5km from the
CBD and is zoned B2 Mixed-Use.

The property is situated 200 metres from Leichhardt North Light Rail
Station and is in walking distance to public transport as well as vibrant
cafes, restaurants and the local shopping scene.

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Artist’s Impression

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A 2,700m² industrial property.

Located in the Lane Cove West industrial precinct, the property is
approximately 12 kilometres north of the Sydney CBD. The property
is fully leased to a long term tenant and is situated within 100
metres from another industrial asset owned by Desane.

7 Sirius Rd.

LANE COVE

Artist’s Impression

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13 Sirius Rd.

LANE COVE

The limited availability of highly sought after acquisition
options will continue to drive investor demand in the area.

A 2,400m² high-tech industrial building with 50 secure
basement parking spaces. The property is located within the
Lane Cove West precinct and is approximately 12 kilometres
north of the Sydney CBD.

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Artist’s Impression

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Future development on the horizon.

91 Thornton Drive, Penrith has an area of approximately
1.2 hectares, with an 88m frontage to Thornton Drive.
The site is located within 400 metres of Penrith Railway
Station and 500 metres of Westfield Penrith Plaza and
the Penrith CBD.

The property falls within the ‘Thornton’ Masterplan
Urban Transformation and will form part of the urban
transformation area. The NSW Government has announced
an $8.0 billion investment into the Western Sydney Airport
at Badgerys Creek, a $1.0 billion upgrade to the Nepean
Hospital and anticipates 40,000 new jobs will be created in
the Penrith area.

91 Thornton Drive.

PENRITH

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Artist’s Impression

D E S A N E G R O U P H O L D I N G S L I M I T E D

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03.
Directors’ Report

3 2 2 n o r t o n s t

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D E S A N E G R O U P H O L D I N G S L I M I T E D

D i r e c t o r s ’ R e p o r t

2 0 2 3 A N N U A L R E P O R T

These consolidated financial statements are the financial statements of the consolidated entity consisting of Desane Group
Holdings Limited and its controlled entities.

The consolidated financial statements were authorised for issue by the Directors on 21 August 2023. The Directors have
the power to amend and reissue the consolidated financial statements.

Through the use of the internet, we have ensured that our corporate reporting is timely and complete. All press releases,
financial reports and other information are available on our website: desane.com.au

The Directors of Desane Group Holdings Limited (“Desane” and “the Company”) present their report, together with the
financial report of the Company and its controlled entities for the financial year ended 30 June 2023.

DIRECTORS AND DIRECTORS’ INTERESTS

Prof. John B Sheehan AM
Independent Non-Executive

Director & Chairman

Mr Phil Montrone OAM
Managing Director

Mr Rick Montrone
Director

Mr Peter Krejci
Independent Non-Executive Director

Mr Jack Sciara
Company Secretary

Expertise and Experience

Prof. Sheehan, a Life Fellow member
of the Australian Property Institute
(NSW division), has over 30 years’
experience and expertise in property
compensation law, town and country
planning and environmental law. He
has been a board member since the
Company’s incorporation in 1987 and
was appointed as Chairman in 1992,
which he currently serves.

Mr P Montrone has over 30 years’
experience and expertise in property
investment, acquisitions, development
and project management. He has been
a significant board member since the
Company’s incorporation in 1987 and
was appointed as Managing Director in
1987, which he currently serves.

Special Responsibilities

Mr R Montrone, who was appointed
as Director in 2015, has over 20 years’
experience in property investment,
acquisitions, developments,
management, leasing, sales and
project management. Mr Montrone
is a licensed real estate agent and an
associate member of the Australian
Property Institute.

Mr Krejci has over 25 years’
experience and expertise in corporate
management and is a founding
Principal of BRI Ferrier. His professional
experience covers financial services,
property and construction, retail,
logistics, manufacturing and mining.
Mr Krejci was appointed as a board
member on 8 July 2019.

Special Responsibilities

• Member of the Risk Management &

Audit Committee

• Member of the Risk Management &

• Chairman of the Risk Management

Special Responsibilities

• Chairman of the Remuneration &

Nomination Committee

• Chairman of the Environmental,
Occupational Health and Safety
Committee

• Member of the Finance &
Operations Committee

• Member of the Environmental,
Occupational Health & Safety
Committee

• Member of the Risk Management &

Audit Committee

Interests In Desane

Ordinary shares: 14,596,076

• Member of the Finance &
Operations Committee

Interests In Desane

Ordinary shares: 179,305

2828

Audit Committee

• Member of the Finance &
Operations Committee

• Member of the Environmental,
Occupational Health & Safety
Committee

Interests In Desane

Ordinary shares: 303,721

& Audit Committee

• Member of the Remuneration &

Nomination Committee

• Member of the Finance &
Operations Committee

• Member of the Environmental,
Occupational Health & Safety
Committee

Interests In Desane

Ordinary shares: Nil

Mr J Sciara joined Desane in 2001
and has over 20 years’ experience and
expertise in corporate accounting
and taxation. Jack was appointed as
Company Secretary in 2016. His role
in the Company includes developing
financial and tax strategies for
the Group, investor relations, ASX
compliance and corporate governance
and overseeing the financial operations
and financial reporting of all controlled
entities. Jack is a member of the
Institute of Public Accountants and a
registered Tax Practitioner.

Special Responsibilities

• Chief Financial Officer and Company

Secretary

Interests In Desane

Ordinary shares: 203,000

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DIRECTORS’ REPORT

Meetings of Directors

The number of directors’ meetings (including meetings of committees of directors) and number of meetings attended by
each of the directors of the company during the financial year are:

Directors’ Meetings and Finance &
Operations
Committee Meetings

Risk Management & Audit
Committee Meetings

No. of Meetings
Attended

No. of Meetings
Held

No. of Meetings
Attended

No. of Meetings
Held

12*

Remuneration & Nomination
Committee Meetings

Environmental & Occupational
Health & Safety
Committee Meetings

No. of Meetings
Attended

No. of Meetings
Held

No. of Meetings
Attended

No. of Meetings
Held

Financial Review

Directors

J B Sheehan

P Montrone

R Montrone

P Krejci

J Sciara

Directors

J.B Sheehan

P. Montrone

R. Montrone

P. Krejci

J. Sciara
*As Company Secretary

Principal Activities

There were no significant changes in the principal activities of the Company during the financial year, which were:

• Property investment; and
• Property development (residential and mixed use).

Operating and Financial Review

The Group recorded a consolidated statutory net profit after tax for the year of $1.3m (2022: $4.6m). Statutory net profit after
tax has been prepared in accordance with the Corporations Act 2001 and Australian Accounting Standards, which comply
with International Financial Reporting Standards.

The profit of the consolidated group, after providing for income tax amounted to

2023
$’000

1,317

2022
$’000

4,644

A summary of consolidated financial results by operational segments is set out below:

Total Revenue

Segment Result

Property investment – rental

Property manangement and services

Property investment – net revaluations

Interest income

Less: Unallocated expenses

Operating profit

Income tax (expense)/benefit attributable to
operating profit

Deferred tax attributable to operating profit

Operating profit after income tax attributable to
members of Desane Group Holdings Limited

2023
$’000

1,964

2,504

984

5,492

2022
$’000

1,752

7,179

747

9,722

2023
$’000

(316)

2,504

984

3,212

(1,307)

1,905

2022
$’000

339

7,179

747

8,309

(1,677)

6,632

(588)

(1,988)

1,317

4,644

Desane achieved a sound financial result for the 2023 financial year. The Group’s operational revenues have improved by
18%, whilst expenses have remained steady. The Group’s property portfolio has continued to grow year on year.

In June 2022, as part of its property investment portfolio restocking, Desane completed the acquisition of a prime
commercial property located in the Sydney suburb of Leichhardt for $7.25m. The property, zoned B2-Local Centre, has
ample onsite parking and is located in the heart of Norton Street – Leichhardt’s commercial, retail and residential district.
Since its acquisition, new leases have been negotiated with existing and new tenants at market rent, with the leases
expiring in 2027, resulting in an independent property revaluation of the asset to $9.2m.

As a result of the planning approval for the extension of the Wacol industrial asset and the strong western Sydney industrial
market, both Wacol and Penrith assets have been revalued by $1m collectively, to reflect the current market value for those
two assets.

Furthermore, as a result of diligent and prudent management of the property leases and funds under investment, the Group
has achieved an 18% increase in revenues over the previous corresponding period.

The Group’s total assets now stand at $98.8m.

Despite the continued challenging economic climate ahead, Desane will continue to focus on three main objectives into
the new financial year and beyond:

1. Strategic investment acquisitions which will bolster ROE and rental income streams;
2. Evaluate its development projects with an eye to achieving maximum value outcomes; and
3. Review capital management strategies to ensure capacity to grow and continued shareholder dividends.

Capital Gains Tax Deferral

Included in the deferred tax liability of $19.7m is approximately $13.9m of capital gains tax (CGT) deferral pertaining to the
involuntary sale of the Rozelle property, in September 2018, as part of the compulsory acquisition by Roads and Maritime
Services which triggered a CGT event.

D E S A N E G R O U P H O L D I N G S L I M I T E D

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DIRECTORS’ REPORT

Dividends Paid or Recognised

Dividends paid or declared for payment are as follows:

2023
$’000

2022
$’000

This report details the nature and amount of remuneration for each director of Desane Group Holdings Limited,
and for the executives receiving the highest remuneration.

AUDITED REMUNERATION REPORT

No dividend was declared for the full year ended 30 June 2023

Dividend Reinvestment Plan (DRP)

The DRP has been suspended until further notice.

Significant Changes in State of Affairs

There was no significant change in the state of affairs of the Group.

Events Subsequent to Balance Date

There were no events subsequent to the balance date.

Likely Developments

The Group continues to pursue its strategy of focusing on its core operations, utilising a strengthened statement of
financial position to provide support to grow and develop these operations.

Environmental Regulation

The consolidated group complies with all relevant legislation and regulations in respect to environmental matters. No
matters have arisen during the year in connection with Desane’s obligations pursuant to Commonwealth and State
environmental regulations.

Occupational Health and Safety Regulations

The consolidated group complies with all relevant legislation and regulations in respect to occupational health and safety
matters.

Desane’s workplace environment and practices are regularly reviewed to ensure that the safety of its staff and visitors is a
priority.

All staff members being given the option and equipment to work from home and all Board members being given the option
to attend Board meetings remotely.

All properties owned and managed by Desane, both in NSW and QLD, also adhere to Occupational Health and Safety
requirements. Staff members and contractors (on behalf of Desane) attending properties ensured that all site safety
measures were followed.

Remuneration Policy

The remuneration policy of Desane Group Holdings Limited has been designed to align director and executive objectives
with shareholder and business objectives. The board of Desane Group Holdings Limited believes the remuneration policy
to be appropriate and effective in its ability to attract and retain the best executives and directors to run and manage the
consolidated group, as well as create goal congruence between directors, executives and shareholders.

Approach to Remuneration

The Group is committed to applying fair and equitable remuneration practices, taking into account the Company’s corporate
strategy, objectives and shareholder returns.

The Group’s current remuneration framework includes:

1. Fixed remuneration
2. Incentive schemes
3. Executive agreements

Fixed Remuneration

Fixed remuneration includes a base salary, statutory superannuation and all other statutory entitlements. Fixed
remunerations are reviewed annually by the Remuneration Committee and are based upon performance, qualification,
experience and current market practices. The Remuneration Committee accesses external independent advice if required.

Incentive Schemes (Discretionary Remuneration)

Short Term Incentives

A discretionary Short Term Incentive (“STI”) cash bonus may be offered to executives and key management personnel
(“KMP”) at the discretion of the Remuneration Committee. STIs align the achievement of strategic short term objectives for
the long term benefit of the Company and its shareholders. The total potential STI available is set at a level that provides
sufficient incentive to the executive to achieve the operational targets at a cost to the Group that is reasonable.

Approved STIs depend on the extent to which specific targets set by the Board at the beginning of the financial year (or
shortly thereafter) are achieved. The targets consist of a number of Key Performance Indicators (“KPI”) which are linked to
the Company’s strategic business objectives such as (but not limited to):

Earnings before interest and tax (“EBIT”);

• Dividends paid;
•
• Net profit after tax (“NPAT”);
• Operational performance; and
• Net tangible asset (“NTA”) per share.

On an annual basis, after consideration of the Group’s performance against KPIs, the remuneration committee determines
the amount, if any, of the STI to be paid to KMP.

For the financial year ended 30 June 2023, there was no approval or payment of an STI bonus to KMP (2022: $- ).

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DIRECTORS’ REPORT

Consequences of Performance on Shareholder Wealth

In considering the Group’s performance and benefits for shareholder wealth, the remuneration committee have
regard to the following indices in respect of the current and previous financial years.

NPAT for the year at 30 June

Dividends paid per share (cents)

Closing share price at 30 June

Earnings/(loss) per share (cents) at 30 June

Ordinary shares on issue at 30 June

NTA per share at 30 June

Executive Agreements

2023

$1.3m

$0.88

3.22

2022

$4.6m

$1.100

11.35

2021

$1.8m

4.5

$1.180

4.42

40,909,990

$1.58

$1.55

$1.44

Executive agreements are formal legal agreements between the Company and all executives and KMP. The agreements
are executed in line with the Corporations Act and will define terms of employment, role and responsibilities, performance
expectations, specify termination payment arrangements, provide provisions for performance related bonuses and ensure
transparency for the Company and its shareholders.

Executive agreements are generally reviewed every three years (unless required earlier) by the executive, KMP and the
Remuneration Committee to ensure that they are adequate and updated if required.

Termination benefits are within the limits set by the Corporations Act 2001 such that they do not require shareholder
approval.

Name

P Montrone

R Montrone

J Sciara

Commencement
Date

Term of Agreement &
Notice Period

Base Salary Incl.
Superanuation
$’000

Termination
Payments/ Benefits
$’000

1 September 1987

No fixed term & 12 months

2 November 2003

No fixed term & 12 months

3 September 2001

No fixed term & 12 months

252

423

233

Non Executive Directors

Total compensation for all non executive directors, last voted on at the 2015 Annual General Meeting, is not to exceed
$300,000 per annum. Currently, non executive directors are compensated to a total of $0.2m per annum (2022: $0.1m),
inclusive of superannuation. The 2023 non executive director fees are 50% (2022: 48%) of the aggregate maximum sum
approved by shareholders.

The base fee for the Chairman is $88,200 per annum and $63,814 per annum for other non executive directors. Base fee
cover all main board activities and membership of all board committees. Non executive directors are not provided with
retirement benefits apart from statutory superannuation if applicable.

Details of Remuneration for year ended 30 June 2023

Directors

John B. Sheehan (non-executive)

Peter Krejci (non-executive)

Phil Montrone

Rick Montrone

Chief Financial Officer/Company
Secretary

Jack Sciara

Indemnifying Officers or Auditor

Salary & Fees
$’000

Short Term Benefits
STI Cash Bonus
$’000

Superannuation
$’000

260

423

214

1,043

Total
$’000

287

467

236

1,142

The company or consolidated group has not, during or since the financial year, in respect of any person who is or has
been an officer or auditor of the company or a related body corporate, indemnified or made any relevant agreement
for indemnifying against a liability incurred as an officer, including costs and expenses in successfully defending legal
proceedings.

The company paid a premium of $35,153 to insure the directors of the company and controlled entities. The policy provides
cover for individual directors and officers of the company, in respect of claims made and notified to the insurer during the
policy period for losses and expenses incurred in defence of claims for any alleged wrongful acts arising out of their official
capacities. It will also reimburse the company for any liability it has to indemnify the directors or officers for such losses.

It is noted that the company’s Constitution allows an officer or auditor of the company to be indemnified by the company
against any liability incurred by him in his capacity of officer or auditor in defending any proceedings in which judgement is
given in his favour.

Options

No options have been granted over unissued shares during the financial year and there are no outstanding options at 30
June 2023.

Non-audit Services

The board of directors, in accordance with the advice from the Audit Committee, is satisfied that the provision of non-audit
services during the year is compatible with the general standard of independence for auditors imposed by the Corporations
Act 2001. The directors are satisfied that the services disclosed below did not compromise the external auditor’s
independence for the following reasons:

•

All non-audit services are reviewed and approved by the Audit Committee prior to commencement to ensure they do
not adversely affect the integrity and objectivity of the auditor; and

The nature of the services provided does not compromise the general principles relating to auditor independence in
accordance with APES 110: Code of Ethics for Professional Accountants set by the Accounting Professional and Ethical
Standards Board.

The following fees for non-audit services were paid/payable to the external auditors during the year ended 30 June 2023.

The remuneration for each director and the executive officer of the consolidated entity receiving the highest remuneration
during the year was as follows:

Taxation services

$’000

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DIRECTORS’ REPORT

Auditor’s Independence Declaration

The lead auditor’s Independence Declaration for the year ended 30 June 2023, has been received and can be found on page
41 of the Annual Report.

ASIC Class Order 98/100 Rounding of Amounts

The company is an entity to which ASIC Class Order 98/100 applies and accordingly, amounts in the financial statements
and directors’ report have been rounded to the nearest thousand dollars.

Corporate Governance Statement

Desane is committed to implementing sound standards of corporate governance. The Group has taken into consideration
the ASX Corporate Governance Council’s Corporate Governance principles and Recommendations (4th Edition) (“ASX
Recommendations”). The Group’s corporate governance statement outlines the key principles and practices of the
Company. A copy of the Group’s Corporate Governance Statement has been placed on the Group’s website under the
About Us tab in the Corporate Governance Section - desane.com.au/about/corporate-governance/

This Report of the Directors, incorporating the Remuneration Report, is signed in accordance with a resolution of the Board
of Directors, at Sydney, this 21st day of August 2023.

J B Sheehan
Director
Sydney

P Montrone
Director
Sydney

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04.
Auditor’s Independence
Declaration

2 7 0 - 2 7 8 n o r t o n s t

38
38

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1 5 9 A l l e n s t

05.
Financial Statements

7 S I R I U S R D

42
42

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CONSOLIDATED STATEMENT OF PROFIT OR LOSS & OTHER COMPREHENSIVE INCOME
for the year ended 30 June 2023

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2023

Continuing Operations

Revenue

Other income

Gain/(loss) on revaluation of investment properties

Employee benefits expense

Depreciation and amortisation expense

Finance costs

Litigation settlement

Other expenses from ordinary activities

Profit before income tax

Income tax (expense)/benefit

Profit from continuing operations

Other comprehensive income

Net Profit (after income tax)

Profit attributable to minority equity interest

Profit attributable to members of the parent entity

Earnings per Share:

Overall Operations

Basic earnings per share (cents per share)

Diluted earnings per share (cents per share)

Continuing Operations

Basic earnings per share (cents per share)

Diluted earnings per share (cents per share)

The accompanying notes form part of these financial statements.

Note

Consolidated Group

2023
$’000

2,004

984

2,504

2022
$’000

1,796

747

7,179

(1,209)

(1,155)

(44)

(677)

(1,657)

1,905

(588)

1,317

3.22

(49)

(164)

(400)

(1,322)

6,632

(1,988)

4,644

11.35

Current Assets

Cash and cash equivalents

Trade and other receivables

Other current assets

Other financial assets

Total Current Assets

Non-current Assets

Inventory – development property

Investment properties

Property, plant and equipment

Other assets

Other financial assets

Total Non-current Assets

Total Assets

Current Liabilities

Trade and other payables

Borrowings

Provisions

Total Current Liabilities

Non-current Liabilities

Trade and other payables

Borrowings

Provisions

Deferred tax liability

Total Non-current Liabilities

Total Liabilities

Net Assets

Equity

Issued capital

Retained earnings

Total Equity

The accompanying notes form part of these financial statements.

Consolidated Group

Note

2023
$’000

2,696

376

500

10,690

14,262

4,382

77,473

2,331

134

180

84,500

98,762

264

13,900

104

14,268

19,702

19,757

34,025

64,737

21,213

43,524

64,737

2022
$’000

2,059

371

399

11,151

13,980

4,355

74,668

2,321

137

2,162

83,643

97,623

881

236

1,117

13,900

19,114

33,086

34,203

63,420

21,213

42,207

63,420

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June 2023

CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 June 2023

Balance at 1 July 2022

Shares issued during the year

Profit attributable to members of the parent entity

Dividends paid or recognised for the year

Balance at 30 June 2023

Balance as at 1 July 2021

Shares issued during the year

Profit attributable to members of the parent entity

Dividends paid or recognised for the year

Balance at 30 June 2022

The accompanying notes form part of these financial statements.

Consolidated Group

Issued
Capital
$’000

21,213

Retained
Earnings
$’000

42,207

1,317

43,524

Total

$’000

63,420

1,317

64,737

21,213

43,524

64,737

Cash flows from operating activities

Receipts from customers

Payments to suppliers and employees

Interest received

Finance costs

Net cash provided by (used in) operating activities

Issued
Capital
$’000

21,213

Retained
Earnings
$’000

37,563

4,644

42,207

Total

$’000

58,776

4,644

63,420

Cash flows from investing activities

Purchase of property, plant and equipment

Purchase of development properties

Purchase of investment properties

Purchase of financial assets

Proceeds from sale of financial assets

Capital costs of investment properties

42,207

63,420

Net cash provided by (used in) investing activities

Cash flows from financing activities

Dividends paid by parent entity

New borrowings

Rental bonds received

Net cash provided by (used in) financing activities

Net increase/(decrease) in cash held

Cash at beginning of financial year

Consolidated Group

2023
Inflows
(Outflows)
$’000

2022
Inflows
(Outflows)
$’000

Note

2,131

(3,680)

848

(677)

(1,378)

(54)

(27)

(180)

2,577

(301)

2,015

637

2,059

1,795

(2,710)

747

(164)

(332)

(3)

(347)

(4,013)

(7,041)

6,535

(195)

(5,064)

(920)

8,000

7,102

1,706

353

Cash at end of financial year

2,696

2,059

The accompanying notes form part of these financial statements.

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NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2023

Note 1: Summary of Significant Accounting Policies

Accounting Policies

Basis of Preparation

a. Principles of Consolidation

The financial report covers the economic entity of Desane
Group Holdings Limited and its controlled entities. The
separate financial statements of the parent entity, Desane
Group Holdings Limited, have not been presented within
this financial report, as permitted by the Corporations Act,
2001. Desane Group Holdings Limited is a listed public
company, incorporated and domiciled in Australia.

The consolidated financial statements incorporate all of the
assets, liabilities and results of the parent entity controlled
by Desane Group Holdings Limited and all of its controlled
entities. Desane Group Holdings Limited controls an entity
when it is exposed to or has rights to, variable returns from
its involvement with the entity and has the ability to affect
those returns through its power over the entity.

The consolidated financial statements are presented in
Australian dollars, which is the functional currency for the
parent company and its controlled entities.

A list of controlled entities is contained in note 30 to the
financial statements. All controlled entities have a 30 June
financial year end.

The financial statements were authorised for issue on 21
August 2023 by the directors of the Company.

The financial statements are a general purpose financial
report, that have been prepared in accordance with the
Corporations Act, 2001, Australian Accounting Standards
and Interpretations of the Australian Accounting Standards
Board (“AASB”) and the International Financial Reporting
Standards as issued by the International Accounting
Standards Board (“IASB”). The Group is a for-profit entity
for financial reporting purposes under Australian
Accounting Standards.

Australian Accounting Standards set out accounting
policies that the AASB has concluded would result in a
financial report containing relevant and reliable information
about transactions, events and conditions. Compliance
with Australian Accounting Standards ensures that
the financial statements and notes also comply with
International Financial Reporting Standards, as issued
by IASB.

Except for cash flow information, the financial statements
have been prepared on an accruals basis and are based
on historical costs, modified, where applicable, by the
measurement at fair value of selected non-current assets,
financial assets and financial liabilities.

The following is a summary of the material accounting
policies adopted by the consolidated group in the
preparation of the financial report. The accounting policies
have been consistently applied, unless otherwise stated.

The accounting policies set out below have been
consistently applied to all years presented.

All inter-company balances and transactions between
entities in the economic entity, including any unrealised
profits or losses, have been eliminated on consolidation.
Accounting policies of controlled entities have been
changed where necessary to ensure consistencies with
those policies applied by the parent entity.

Where controlled entities have entered or left the economic
entity during the year, their operating results have been
included/excluded from the date control was obtained or
until the date control ceased.

Non-controlling interests, being the equity in a controlled
entity not attributable, directly or indirectly, to a parent,
are reported separately within the equity section of the
consolidated statement of financial position and statement
of other comprehensive income. The non-controlling
interests in the net assets comprise their interests at the
date of the original business combination and their share of
changes in equity since that date.

b. Income Tax

The income tax expense (benefit) for the year comprises
current income tax expense and deferred tax expense
(benefit).

Current income tax expense charged to the profit or loss
is the tax payable on taxable income calculated using
the applicable income tax rates enacted, or substantially
enacted, as at reporting date. Current tax liabilities (assets)
are therefore measured at the amount expected to be paid
to (recovered from) the relevant taxation authority. Deferred
income tax expense reflects movements in deferred tax
asset and deferred tax liability balances during the year as
well as unused tax losses.

Deferred tax assets and liabilities are ascertained based
on the temporary differences arising between the tax base

of the assets and liabilities and their carrying amounts in
the financial statements. Deferred tax assets also result
where amounts have been fully expensed but future tax
deductions are available. No deferred income tax will be
recognised from the initial recognition of an asset or a
liability, excluding a business combination, where there is
no effect on accounting or taxable profit or loss.

Deferred tax assets or liabilities are calculated at the tax
rates that are expected to apply to the period when the
asset is realised or the liability is settled, based on the tax
rates enacted or substantively enacted at reporting date.
Their measurement also reflects the manner in which
management expects to recover or settle the carrying
amount of the related asset or liability.

Deferred tax assets relating to temporary differences and
unused tax losses are recognised only to the extent that it
is probable that future taxable profit will be available against
which the benefits of the deferred tax asset can be utilised.

Where temporary differences exist in relation to investments
in subsidiaries, branches, associates and joint ventures,
deferred tax assets and liabilities are not recognised where
the timing of the reversal of the temporary difference can be
controlled and it is not probable that the reversal will occur
in the foreseeable future.

Current tax assets and liabilities are offset where a legally
enforceable right of set-off exists and it is intended that the
net settlement or simultaneous realisation and settlement
of the respective asset and liability will occur. Deferred tax
assets and liabilities are offset where a legally enforceable
right of set-off exists, the deferred tax assets and liabilities
relate to income taxes levied by the same taxation
authority on either the same taxable entity or different
taxable entities where it is intended that net settlement or
simultaneous realisation and settlement of the respective
asset and liability will occur in future periods in which
significant amounts of deferred tax assets or liabilities are
expected to be recovered or settled.

Tax Consolidation

Desane Group Holdings Limited and its wholly owned
Australian controlled entities have formed an income tax
consolidated group under tax consolidation legislation.
Each entity in the Group recognises its own current and
deferred tax assets and liabilities. Such taxes are measured
using the ‘stand-alone taxpayer’ approach to allocation.
Current tax liabilities (assets) and deferred tax assets arising
from unused tax losses and tax credits in the controlled
entities are immediately transferred to the head entity. The
Group notified the Australian Taxation Office that it had

formed an income tax consolidated group to apply from 1
July 2003. The tax consolidated group has entered a tax
funding arrangement whereby each company in the Group
contributes to the income tax payable by the
Group in proportion to their contribution to the Group’s
taxable income.

c. Inventories

Development Property

Land held for development and sale is measured at the
lower of cost and net realisable value. Net realisable value
is determined on the basis of like sales in the location and
assessed likelihood of full recovery of costs on the ultimate
sale of the property. Costs include the cost of acquisition,
development, borrowing costs and holding costs until
the completion of development. Gains and losses are
recognised in the statement of profit and loss on the
signing of an unconditional contract of sale if significant
risks and rewards and effective control over the property
passes to the purchaser at this point.

Inventory is classified as current when development is
expected to be developed and available for sale in the next
twelve months, otherwise it will be classified as non-current.

If applicable, the carrying value will include revaluations
applied to the asset during the period the property was
classified as an investment property.

d. Property, Plant and Equipment

Property

Freehold land and buildings are carried at their fair
value (being the amount for which an asset could be
exchanged between knowledgeable, willing parties in an
arm’s length transaction), based on periodic, but at least
triennial, valuations by external independent valuers,
less accumulated impairment losses and accumulated
depreciation for buildings.

Increases in the carrying amount arising on revaluation of
land and buildings are credited to a revaluation surplus in
equity. Decreases that offset previous increases of the same
asset are recognised against revaluation surplus directly in
equity; all other decreases are recognised in profit or loss.

Any accumulated depreciation at the date of revaluation is
eliminated against the gross carrying amount of the asset
and the net amount is restated to the revalued amount of
the asset.

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NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2023

Note 1: Summary of Significant Accounting Policies (cont)

Plant and Equipment

Each class of plant and equipment is carried at cost or fair
value less, where applicable, any accumulated depreciation
and impairment losses.

Plant and equipment are measured on a cost basis.

The carrying amount of plant and equipment is reviewed
annually by directors to ensure it is not in excess of the
recoverable amount from these assets. The recoverable
amount is assessed on the basis of the expected net cash
flows that will be received from the assets employment and
subsequent disposal. The expected net cash flows have
been discounted to their present values in determining
recoverable amounts.

Depreciation

The depreciable amount of plant and equipment is
depreciated on a straight line basis over their useful lives to
the economic entity commencing from the time the asset is
held ready for use.

The depreciation rates used for each class of depreciable
assets are:

Class of Fixed Asset

Depreciation Rate

Motor vehicles
Plant and equipment
Office and computer equipment

15%
2.5%-33%
10%-33%

The assets’ residual values and useful lives are reviewed and
adjusted if appropriate, at each reporting date.

An asset’s carrying value is written down immediately to its
recoverable amount if the asset’s carrying amount is greater
than its estimated recoverable amount.

the price at which the property could be exchanged
between knowledgeable, willing parties in an arm’s length
transaction. Each property is independently valued at least
every three years by registered valuers who have recognised
and appropriate professional qualifications, and recent
experience in the location and category of investment
property being valued. Changes to fair value are recorded
in the statement of profit and loss as revenue from non
operating activities. Acquired investment properties are
recognised in the statement of financial position when
control of the property is attained and the Group derives the
benefits of ownership.

Investment properties under construction are measured
at the lower of fair value and net realisable value. Cost
includes the cost of acquisition, development and interest
on financing during development. Interest and other
holding charges after practical completion are expensed
as incurred.

Investment properties are maintained at a high standard
and, as permitted by accounting standards, the properties
are not depreciated.

Rental revenue from the leasing of investment properties is
recognised in the statement of profit and loss in the periods
in which it is receivable, as this represents the pattern of
service rendered through the provision of the properties.
All tenant leases are on an arm’s length basis.

f. Leases

Leases are capitalised by recognising an asset and a liability
at the lower of the amounts equal to the fair value of the
leased property or the present value of the minimum lease
payments, including any guaranteed residual values. Lease
payments are allocated between the reduction of the lease
liability and the lease interest expense for the period.

Leased assets are depreciated on a straight-line basis over
the shorter of their estimated useful lives or the lease term.

Gains and losses on disposals are determined by comparing
proceeds with the carrying amount. These gains and
losses are included in the consolidated statement of profit
and loss.

Lease incentives under operating leases are recognised as
a liability and amortised on a straight line basis over the
lease term.

e. Investment Properties

Investment properties, comprising freehold office and
industrial complexes, are held to generate long-term
rental yields and capital gains. All tenant leases are on
an arm’s length basis. The fair value model is applied to
all investment property and each property is reviewed
at each reporting date. The fair value is defined as

g. Financial Instruments

The Group has adopted AASB 9: Financial Instruments.

Initial recognition and measurement

Financial assets and financial liabilities are recognised
when the entity becomes a party to the contractual
provisions to the instrument. For financial assets, this

is equivalent to the date that the entity commits itself
to either the purchase or sale of the asset (ie. trade date
accounting is adopted).

subsequently makes profits, the Group will resume
recognising its share of those profits once its share of the
profits equals the share of the losses not recognised.

Financial instruments are initially measured at fair value
plus transaction costs, except where the instrument is
classified “at fair value through profit or loss”, in which case
transaction costs are expensed to profit or loss immediately.

Classification and subsequent measurement

Financial instruments are subsequently measured at fair
value through profit or loss, or amortised cost using the
effective interest method, or cost.

The Group has interests in the following financial assets:

(i) Held-to-maturity investments

Held-to-maturity investments are non-derivative financial
assets that have fixed maturities and fixed or determinable
payments, and it is the Group’s intention to hold these
investments to maturity. Interest income is recognised
in profit or loss when received. On maturity, the financial
asset is derecognised and re-classified as cash at bank.

h. Impairment of Assets

At each reporting date, the group reviews the carrying
values of its tangible assets to determine whether there is
any indication that those assets have been impaired. The
assessment will include the consideration of external and
internal sources of information. If such an indication exists,
the recoverable amount of the asset, being the higher
of the asset’s fair value less cost to sell and value in use,
is compared to the asset’s carrying value. Any excess of
the asset’s carrying value over its recoverable amount is
expensed to the consolidated statement of profit and loss.

i. Investments in Associates

Associates are companies in which the Group has
significant influence. Significant influence is the power to
participate in the financial and operating policy decisions of
the entity but is not control or joint control of those policies.

Profits and losses resulting from transactions between the
Group and the associate are eliminated to the extent of the
Group’s interest in the associate.

When the Group’s share of losses in an associate equals
or exceeds its interest in the associate, the Group
discontinues recognising its share of further losses unless
it has incurred legal or constructive obligations or made
payments on behalf of the associate. When the associate

Investments in associate companies are recognised in
the financial statements by applying the equity method of
accounting, whereby the investment is initially recognised
at cost and adjusted thereafter for the post acquisition
change in the Group’s share of net assets of the associate
company. In addition, the Group’s share of the profit or loss
of the associate is included in the Group’s profit or loss.

j. Interests in Joint Arrangements

Joint arrangements represent the contractual sharing
of control between parties in a business venture where
unanimous decisions about relevant activities are required.
Joint venture operations represent arrangements whereby
joint operators maintain direct interests in each asset and
exposure to each liability of the arrangement. The Group’s
interests in the assets, liabilities, revenue and expenses of
joint operations are included in the respective line items of
the consolidated financial statements.

Gains and losses resulting from sales to a joint operation
are recognised to the extent of the other party’s interest.
When the Group makes a purchase from a joint operation,
it does not recognise its share of the gains and losses from
the joint arrangement until it resells the goods and services
to a third party.

k. Employee Benefits

Short-term Employee Benefits

Provision is made for the Group’s obligation for short-
term employee benefits. Short-term employee benefits
(other than termination benefits) that are expected to be
settled wholly before 12 months after the end of the annual
reporting period in which the employees render the related
service, including wages, salaries and sick leave. Short-term
employee benefits are measured at the (undiscounted)
amounts expected to be paid when the obligation is settled.

The Group’s obligations for short-term employee benefits
such as wages, salaries and sick leave are recognised as
part of current trade and other payables in the statement
of financial position. The Group’s obligations for employees’
annual leave and long service leave entitlements are
recognised as provisions in the statement of
financial position.

D E S A N E G R O U P H O L D I N G S L I M I T E D

f i n a n c i a l s t a t e m e n t s

2 0 2 3 A N N U A L R E P O R T

NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2023

Note 1: Summary of Significant Accounting Policies (cont)

The Group derives revenue from investing in properties for
rental and capital appreciation over time.

Other Long-term Employee Benefits

Provision is made for employees’ long service leave and
annual leave entitlements not expected to be settled wholly
within 12 months after the end of the annual reporting
period in which the employees render the related service.
Other long-term employee benefits are measured at the
present value of the expected future payments to be made
to employees. Expected future payments incorporate
anticipated future wage and salary levels, durations of
service and employee departures and are discounted
at rates determined by reference to market yields at
the end of the reporting period on government bonds
that have maturity dates that approximate the terms of
the obligations. Any remeasurements for changes in
assumptions of obligations for other long-term employee
benefits are recognised in profit or loss in the periods in
which the changes occur.

The Group’s obligations for long-term employee benefits
are presented as non-current provisions in its statement of
financial position, except where the Group does not have
an unconditional right to defer settlement for at least 12
months after the end of the reporting period, in which case
the obligations are presented as current provisions.

l. Provisions

Provisions are recognised when the group has a legal or
constructive obligation, as a result of past events, for which
it is probable that an outflow of economic benefits will
result and that outflow can be reliably measured.

m. Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, deposits
held at call with banks, other short-term highly liquid
investments with original maturities of three months or
less, and bank overdrafts. Bank overdrafts are shown within
short-term borrowings in current liabilities on the statement
of financial position.

n. Revenue and Other Income

The Group has applied AASB 15: Revenue from Contracts
with Customers.

Revenue from sale of properties held for resale and non-
current property or other assets is brought to account when
control over the property is transferred to the purchaser,
often on the signing of an unconditional contract of sale if
the significant risks and rewards and effective control over
the property passes to the purchaser at this point.
Interest revenue is recognised on a proportional basis
taking into account the interest rates applicable to the
financial assets.

Dividend revenue is recognised when the right to receive
a dividend has been established. Dividends received from
associates and joint venture entities are accounted for in
accordance with the equity method of accounting.

All revenue is stated net of the amount of goods and
services tax (GST).

o. Trade and Other Receivables

Trade and other receivables include amounts due from
customers for goods sold and services performed in the
ordinary course of business. Receivables expected to be
collected within 12 months of the end of the reporting
period are classified as current assets. All other receivables
are classified as non-current assets.

p. Trade and Other Payables

Trade and other payables represent the liabilities for goods
and services received by the entity that remain unpaid at
the end of the reporting period. The balance is recognised
as a current liability with the amounts normally paid within
30 days of recognition of the liability.

q. Borrowing Costs

Borrowing costs directly attributable to the acquisition,
construction or production of assets that necessarily take a
substantial period of time to prepare for their intended use
or sale, are added to the cost of those assets until such time
as the assets are substantially ready for their intended use
or sale.

All other borrowing costs are expensed in the period in
which they are incurred.

Revenue from the rendering of property services is
recognised upon delivery of the service to customers.

r. Goods and Services Tax (GST)

Investment property revenue is recognised on a straight-
line basis over the period of the lease term so as to reflect
a constant periodic rate of return on the net investment.

Revenues, expenses and assets are recognised net of the
amount of GST, except where the amount of GST incurred is
not recoverable from the Australian Taxation Office. In these

circumstances the GST is recognised as part of the cost of
acquisition of the asset or as part of an item of the expense.
Receivables and payables in the statement of financial
position are shown inclusive of GST.

Cash flows are presented in the cash flow statement on
a gross basis, except for the GST component of investing
and financial activities, which are disclosed as operating
cash flows.

s. Comparative Figures

When required by Accounting Standards, comparative
figures have been adjusted to conform to changes in
the presentation in the financial year. When the Group
retrospectively applies an accounting policy and makes
a retrospective restatement or reclassifies items in its
financial statement, an additional (third) statement of
financial position as at the beginning of the preceding
period in addition to the minimum comparative financial
statement is presented.

date, using generally accepted market practices.

The critical assumptions underlying management’s
estimates of fair values are those relating to the passing
rent, market rent, occupancy, capitalisation rate, direct
comparison to market sales evidence, terminal yield
and discount rate. If there is any change in direct
comparison to market sales evidence, these assumptions
or economic conditions, the fair value of the property
investments may differ. Assumptions used in valuation of
property investments are disclosed in note 14.

(ii) Impairment – general

The Group assesses impairment at the end of each
reporting period by evaluating conditions and events
specific to the Group the property sector or the economy
in general that may be indicative of impairment triggers.
Recoverable amounts of relevant assets are reassessed
using value-in-use calculations which incorporate various
key assumptions.

t. Rounding of Amounts

v. New and Amended Policies Adopted by the Group

The parent entity has applied the relief available to it
under ASIC Class Order 98/100. Accordingly, amounts in
the financial statements and directors’ report have been
rounded off to the nearest $1,000.

u. Critical Accounting Estimates and Judgements

The preparation of the financial reports requires
management to make judgements, estimates and
assumptions that affect the reported amounts in the
financial reports. Management bases its judgements and
estimates on historical experience and other various factors
it believes to be reasonable under the circumstances, but
which are inherently uncertain and unpredictable, the
results of which form the basis of the carrying value of
assets and liabilities. The resulting accounting estimates
may differ from actual results under different assumptions
and conditions.

Key estimates and assumptions that have a risk of causing
adjustment with the next financial year to the carrying
amounts of assets and liabilities recognised in these
financial reports are:

(i) Impairment – property valuations

Critical judgements are made by the Group in respect of
the fair values of investment properties. The fair value of
these investments are reviewed regularly by management
with reference to external independent property
valuations and market conditions existing at reporting

AASB 2020-: Amendments to Australian Accounting
Standards – Classification of Liabilities as Current
or Non-current.

The amendment amends AASB 101 to clarify whether a
liability should be presented as current or non-current.

The Group has adopted this standard for the year
ended 30 June 2023.

AASB 2022-6: Amendments to Australian Accounting
Standards – Non-current Liabilities with Covenants

AASB 2022-6 amends AASB101 to improve the
information an entity provides in its financial
statements about liabilities arising from loan
arrangements for which the entity’s right to defer
settlement of those liabilities for at least 12 months
after the reporting period is subject to the entity
complying with conditions specified in the loan
arrangement. It also amends an example in Practice
Statement 2 regarding assessing whether information
about covenants is material for disclosure.

The Group has adopted the amendment for the current
year ended 30 June 2023 (note 17).

D E S A N E G R O U P H O L D I N G S L I M I T E D

f i n a n c i a l s t a t e m e n t s

2 0 2 3 A N N U A L R E P O R T

NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2023

Note 2: Revenue and Other Income

Consolidated Group

Revenue from Continuing Operations

Property rental income

Property management fees and services

Total Revenue from Continuing Operations

Other Revenue

a. Interest revenue from:

- other persons

Total Other Revenue

Total Revenue

Other Income

Property investment – net revaluations

Total Other Income

Note 3: Profit for the Year

2023
$’000

1,964

2,004

984

2,988

2,504

2022
$’000

1,752

1,796

747

2,543

7,179

Profit before income tax from continuing operations includes the following specific expenses:

Expenses

Auditors’ remuneration

Depreciation of plant and equipment

Finance costs:

- External

Transfer to/(from) provisions for:

- Employee entitlements

Direct property expenditure from investment property generating rental
income

Note 4: Income Tax Expense

a. The components of tax expense comprise:

Deferred Tax

Note

Consolidated Group

2023
$’000

2022
$’000

677

(66)

889

164

665

Note

Consolidated Group

2023
$’000

588

2022
$’000

1,988

D E S A N E G R O U P H O L D I N G S L I M I T E D

f i n a n c i a l s t a t e m e n t s

2 0 2 3 A N N U A L R E P O R T

NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2023

Note 4: Income Tax Expense (cont)

b. The prima facie tax on profit from ordinary activities before income tax is reconciled to income tax as follows:

Prima facie tax payable on profit from ordinary activities before
income tax at 30% (2022: 30%)

- consolidated group

Add:

Tax effect of:

- adjustment for prior year tax provision
- other accruals/provisions
- other non-allowable items
- other items not included in taxable income

Income tax attributable to entity

The applicable weighted average effective tax rates

Note

Consolidated Group

2023
$’000

2022
$’000

572

1,990

-
27
1
(12)

588

30.8%

-
(29)
1
26

1,988

30.0%

The Group has approximately $4.4m in available carried forward tax losses as at 30 June 2023. The amount of benefits
brought to account or which may be realised in the future, is based on the assumption that no adverse change will occur
in the income tax legislation, the anticipation that the Group will derive sufficient future assessable income to enable the
benefit to be realised and continue to comply with the conditions of deductibility imposed by the law.

Note 5: Key Personnel Compensation

a. Names and position held of economic and parent entity key personnel in office at any time during the financial year are:

Key Personnel
Prof. John B. Sheehan AM
Mr Phil Montrone OAM
Mr Peter Krejci
Mr Rick Montrone
Mr Jack Sciara

b. Compensation Practices

Position
Chairman (non-executive director)
Managing Director
Director (non-executive)
Director – Head of Property
Company Secretary and Chief Financial Officer

The board’s policy for determining the nature and amount of compensation of key personnel for the group is as follows:

The compensation structure for key personnel is based on a number of factors, including length of service, particular
experience of the individual concerned, and the overall performance of the company. Employment is on a continuing basis
the terms of which are not expected to change in the immediate future. Upon retirement key personnel are paid employee
benefit entitlements accrued to the date of retirement.

The company may terminate any employee without cause by providing adequate written notice or making payment in lieu
of notice based on the individual’s annual salary component. Termination payments are generally not payable on
resignation or dismissal for serious misconduct. In the instance of serious misconduct the company can terminate
employment at any time.

All remuneration packages are set at levels that are intended to attract and retain executives capable of managing the
economic entity’s operations. Refer note 5c.

c. Key Personnel Compensation

2023

Key Personnel

John B. Sheehan

Peter Krejci

Phil Montrone

Rick Montrone

Jack Sciara

2022

Key Personnel

John B. Sheehan

Peter Krejci

Phil Montrone

Rick Montrone

Jack Sciara

d. Shareholdings

Salary & Fees
$’000

Superannuation
$’000

Short Term Incentives
$’000

260

423

214

1,043

Salary & Fees
$’000

Superannuation
$’000

Short Term Incentives
$’000

217

375

180

911

Total
$’000

287

467

236

1,142

Total
$’000

239

412

198

993

Number of shares held by parent entity directors and specified executives.

Key Personnel

John B. Sheehan

Phil Montrone

Rick Montrone

Peter Krejci

Jack Sciara

Balance
30.06.22
‘000

179

14,596

304

228

15,307

Net Change
Other *
‘000

(25)

Balance
30.06.23
‘000

179

14,596

304

203

15,282

* “Net Change Other” refers to shares purchased or sold during the financial year.

Note 6: Auditors’ Remuneration

Remuneration of the auditor for the parent entity:

GCC Business Assurance Pty Ltd

- auditing or reviewing the financial report

- taxation services

Consolidated Group

2023
$’000

2022
$’000

D E S A N E G R O U P H O L D I N G S L I M I T E D

f i n a n c i a l s t a t e m e n t s

2 0 2 3 A N N U A L R E P O R T

Reconciliation of cash

Cash at the end of the financial year as shown in the cash flow statement is reconciled to items in the statement of financial
position as follows:

NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2023

Note 7: Dividends

Dividends paid

a. No dividend was declared for full year ended 30 June 2023

b. The Group has $nil (2022 - $nil) franking credits available.

Note 8: Earnings per Share

Reconciliation of earnings used in the calculation of earnings per share

Operating profit after income tax

Reconciliation of weighted average numbers of ordinary shares used in the calculation
of earnings per share

Weighted average number of ordinary shares used in the calculation of basic
earnings per share
Basic earnings per share (cents per share)

Diluted earnings per share (cents per share)

Conversion, call, subscription or issue after 30 June 2023

Consolidated Group

2023
$’000

2022
$’000

Consolidated Group

2023
$’000

2022
$’000

1,317

4,644

Consolidated Group

2023

2022

40,909,990

3.22

11.35

Cash as above

Less: Bank overdraft (refer to note 17)

Note 10: Current Assets – Trade and Other Receivables

Trade recievables

Note 11: Current Assets – Inventory (Development Property)

(a) Current

322 Norton Street, Leichhardt – acquisition cost

322 Norton Street, Leichhardt – development costs

There has been no conversion to, calls of, or subscription for ordinary shares since the reporting date and
before the completion of these accounts.

Note 9: Current Assets – Cash and Cash Equivalents

Consolidated Group

(b) Non Current

Cash at bank and in hand

Interest bearing short term deposits

2023
$’000

696

2,000

2,696

2022
$’000

199

1,860

2,059

The effective interest rate on cash at bank was 1.0% (2022 – nil).

The effective interest rate on short term bank deposits was an average of 3.0% (2022 – 0.85%). These deposits
have a weighted average maturity of 90 days.

322 Norton Street, Leichhardt – acquisition cost

322 Norton Street, Leichhardt – development costs

Note 12: Other Assets

(a) Current Assets

Prepayments and GST receivables

(b) Non Current Assets

Formation costs

Lease payment plan

Consolidated Group

2023
$’000

2,696

2022
$’000

2,059

Consolidated Group

2023
$’000

376

2022
$’000

371

Consolidated Group

2023
$’000

2022
$’000

Consolidated Group

2023
$’000

3,379

1,003

4,382

2022
$’000

3,379

976

4,355

Consolidated Group

2023
$’000

500

2022
$’000

399

Consolidated Group

2023
$’000

132

134

2022
$’000

135

137

D E S A N E G R O U P H O L D I N G S L I M I T E D

f i n a n c i a l s t a t e m e n t s

2 0 2 3 A N N U A L R E P O R T

NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2023

Note 13: Other Financial Assets

(a) Current

Held-to-maturity investments

Fixed interest securities

(b) Non Current

Held-to-maturity investments

Fixed interest securities

The effective interest rate on fixed interest securities is an average of 7% pa.
These securities have a weighted average maturity of 365 days.

Note 14: Non-current Assets – Properties

Investment properties:

13 Sirius Road, Lane Cove NSW

7 Sirius Road, Lane Cove NSW

91 Thornton Drive, Penrith NSW

159 Allen Street, Leichhardt NSW

16 Industrial Avenue, Wacol QLD

270-278 Norton Street, Leichhardt NSW

Note

14a

14b

14c

14d

14e

14f

Consolidated Group

2023
$’000

10,690

2022
$’000

11,151

Consolidated Group

2023
$’000

180

2022
$’000

2,162

Consolidated Group

2023
$’000

8,715

10,528

10,000

23,022

16,000

9,208

77,473

2022
$’000

8,641

10,528

9,500

23,004

15,331

7,664

74,668

Valuation overview

The basis of the directors’ valuation of the investment
properties (non-current) is a fair market value as defined in
note 1e.

The directors’ valuation as at 30 June 2023. An
independent valuation was undertaken in January 2023
by a certified practicing valuation company.
The directors have based the value on the valuation
report, together with current direct comparison market
sales evidence.

In arriving at their opinion, the directors have reviewed
and adopted the following three approaches and
methodologies:

Operational Overview

Rental income from investment properties is recognised in
the consolidated statement of profit or loss.

Direct operating expenses from investment properties
generating rental income and from investment properties
not generating rental income are recognised in the
consolidated statement of profit or loss.

1. Capitalisation of current net rental income;
2. Discounted cash flow (“DCF”); and
3. Direct comparison to market sales evidence.

The properties are being valued independently at least
every three years. The Group has no restrictions on the
realisability of an investment property nor any contractual
obligations to construct, develop, perform, repair or
enhance an investment property.

a. The directors’ valuation, as at 30 June 2023. An

independent valuation was undertaken in December
2020 by a certified practicing valuation company. The
directors have based the value on the valuation report,
together with current direct comparison market
sales evidence.

b. The directors’ valuation as at 30 June 2023. An

c. The directors’ valuation, as at 30 June 2023. An

independent valuation was undertaken in December
2021 by a certified practicing valuation company. The
directors have based the value on the valuation report,
together with current direct comparison market
sales evidence.

d. The directors’ valuation as at 30 June 2023. An

e. The directors’ valuation as at 30 June 2023. An

independent valuation was undertaken in March 2022
by a certified practicing valuation company.
The directors have based the value on the valuation
report, together with current direct comparison market
sales evidence.

D E S A N E G R O U P H O L D I N G S L I M I T E D

f i n a n c i a l s t a t e m e n t s

2 0 2 3 A N N U A L R E P O R T

NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2023

Note 14: Non-current Assets – Properties (cont)

Investment Properties

2023

13 Sirius Rd, Lane Cove NSW

7 Sirius Rd, Lane Cove NSW

91 Thornton Dr, Penrith NSW

159 Allen St, Leichhardt NSW

16 Industrial Ave, Wacol QLD

270 - 278 Norton St, Leichhardt NSW

2022

13 Sirius Rd, Lane Cove NSW

7 Sirius Rd, Lane Cove NSW

91 Thornton Dr, Penrith NSW

159 Allen St, Leichhardt NSW

16 Industrial Ave, Wacol QLD

270 - 278 Norton St, Leichhardt NSW

Acquisition
Cost
$’000

Construction
Cost
$’000

Other Capital
Costs
$’000

Revaluation
$’000

Carrying Value
30.06.2023
$’000

2,900

2,950

4,149

22,280

10,073

7,688

672

1,137

1,313

3,830

8,715

340

885

603

6,101

10,528

4,966

10,000

139

23,022

268

5,659

16,000

1,450

9,208

50,040

1,809

3,479

22,145

77,473

Acquisition
Cost
$’000

Construction
Cost
$’000

Other
Capital Costs
$’000

Revaluation
$’000

Carrying Value
30.06.2022
$’000

2,900

2,950

4,149

22,280

10,073

7,642

672

1,137

1,239

3,830

8,641

340

824

585

214

6,101

4,527

10,528

9,500

139

23,004

5,044

15,331

7,664

49,994

1,809

3,224

19,641

74,668

Note 15: Non-current Assets – Property, Plant and Equipment

Consolidated Group

Suite 4, 26-32 Pirrama Road, Pyrmont – land and buildings

Less: Accumulated depreciation

Capital works – Suite 4

Less: Accumulated depreciation

Depreciable plant and equipment

Less: Accumulated depreciation

Leasehold improvements

Less: Accumulated depreciation

Office furniture and equipment – at cost

Less: Accumulated depreciation

Motor vehicle – at cost

Less: Accumulated depreciation

In-house software

Less: Accumulated depreciation

Total non-current assets

Movements in Carrying Amounts

2023
$’000

1,834
-

1,834

352
(62)

290

21
(10)

104
(12)

145
(104)

106
(48)

23
(18)

2,331

2022
$’000

1,834
-

1,834

352
(49)

303

21
(9)

104
(10)

128
(92)

69
(37)

23
(13)

2,321

Movement in the carrying amounts for each class of property, plant and equipment between the beginning and the end of
the current financial year:

Land and
Buildings
$’000

Capital
Works
$’000

Leasehold
Improvements
$’000

Plant &
Equiptment
$’000

Consolidated Group

Balance at the beginning of
year

Additions

Disposals/write offs

Depreciation expense

1,834

Carrying amount at the end of the year

1,834

303

(13)

290

(3)

(28)

116

Total
$’000

2,321

(44)

2,331

2 0 2 3 A N N U A L R E P O R T

D E S A N E G R O U P H O L D I N G S L I M I T E D

f i n a n c i a l s t a t e m e n t s

2 0 2 3 A N N U A L R E P O R T

NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2023

Note 16: Trade and Other Payables

(a) Current

Unsecured liabilities

Trade payables

(b) Non Current

Unsecured liabilites

Trade payables - rental bonds held

Note 17: Borrowings

(a) Current

Secured:

Bank overdraft

Consolidated Group

2023
$’000

264

2022
$’000

881

First mortgage finance secured over 13 Sirius Road, Lane Cove property (note 14a). Covenants imposed by mortgagor
require total debt not to exceed 50% of the property value and the EBITDA is required to exceed interest expense by at
least 2.0 times. As the interest cover covenant is below the required 2.0 times, the loan has been reclassified as current
liability for accounting purposes only. The maturity of the loan is 27 July 2024.

ii. First mortgage finance secured over 7 Sirius Road, Lane Cove property (note 14b). Covenants imposed by mortgagor

require total debt not to exceed 50% of the property value and the EBITDA is required to exceed interest expense by at
least 2.0 times. As the interest cover covenant is below the required 2.0 times, the loan has been reclassified as current
liability for accounting purposes only. The maturity of the loan is 27 July 2024.

iii. First mortgage finance secured over 16 Industrial Avenue, Wacol property (note 14e). Covenants imposed by mortgagor
require total debt not to exceed 50% of the property value and the EBITDA is required to exceed interest expense by at
least 2.0 times. As the interest cover covenant is below the required 2.0 times, the loan has been reclassified as current
liability for accounting purposes only. The maturity of the loan is 31 March 2027.

Note

Consolidated Group

2023
$’000

2022
$’000

Maturity Schedule

27 July 2024

31 March 2027

Interest Rates
(average)

Consolidated Group

6.05% pa

2023
$’000

5,900

8,000

13,900

2022
$’000

5,900

8,000

13,900

Secured Liabilities – Bank Loans

Consolidated Group

Note 18: Current Liabilities - Provisions

Finance for property 13 Sirius Road, Lane Cove

Finance for property 7 Sirius Road, Lane Cove

Finance for property 16 Industrial Avenue, Wacol

(b) Non Current

Secured Liabilities – Bank Loans

Finance for property 13 Sirius Road, Lane Cove

Finance for property 7 Sirius Road, Lane Cove

Finance for property 16 Industrial Avenue, Wacol

Note

17i

17ii

17iii

Note

17i

17ii

17iii

2023
$’000

2,950

8,000

13,900

2022
$’000

Consolidated Group

2023
$’000

2022
$’000

2,950

8,000

13,900

Doubtful debt

Employee entitlements*

* Movement represents provision set aside.

Number of employees at year end

Note 19: Non Current Liabilities – Provisions

Employee long service leave entitlement*

* Movement represents provision set aside.

Consolidated Group

2023
$’000

104

2022
$’000

172

236

Consolidated Group

2023
No

2022
No

Consolidated Group

2023
$’000

2022
$’000

Bank overdraft secured over Lane Cove properties (refer to note 29).

The provision for employee entitlements represents amounts accrued for annual leave and long service leave.

The current position for the employee entitlement includes the total amount accrued for annual leave entitlement and long
service leave that have been vested due to employees having completed the required period of service.

D E S A N E G R O U P H O L D I N G S L I M I T E D

f i n a n c i a l s t a t e m e n t s

2 0 2 3 A N N U A L R E P O R T

NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2023

Note 20: Issued Capital

40,909,990 (2022: 40,909,990) Ordinary Shares fully paid

Consolidated Group

2023
$’000

21,213

2022
$’000

21,213

Ordinary Shares Fully Paid

At beginning of the year

Ordinary Shares fully paid at reporting period

Consolidated Group

2023
Shares

2022
Shares

40,909,990

2023
$’000

21,213

2022
$’000

21,213

a. Movements in Ordinary Share Capital of the Company

No shares were issued during 2023: nil (2022: nil).

b. Authorised Capital

500,000,000 Ordinary Shares of no par value.

c. Capital Management

Management controls the capital of the Group in order to maintain a good debt to equity ratio, provide the shareholders
with adequate returns and ensure that the Group can fund its operations and continue as a going concern.

The Group’s debt and capital include ordinary share capital and financial liabilities, supported by financial assets.

There are no externally imposed capital requirements.

Management effectively manages the Group’s capital by assessing the Group’s financial risks and adjusting its capital
structure in response to changes in these risks and in the market. These responses include the management of debt levels,
distributions to shareholders and share issues.

There have been no significant changes in the strategy adopted by management to control and manage the capital of the
Group since the prior year.

Note 21: Retained Earnings

Retained earnings at beginning of financial year

Net profit attributable to members of parent entity

Retained earnings at end of financial year

Consolidated Group

2023
$’000

42,207

1,317

43,524

2022
$’000

37,563

4,644

42,207

Note 22: Deferred Taxes

Non-current

Deferred tax liability comprises:

Tax allowances relating to property and equipment

Revaluation of investment properties

Deferred tax asset attributable to tax and capital losses

Provisions

Note

Consolidated Group

2023
$’000

2022
$’000

14,457

6,644

(1,314)

(85)

19,702

14,405

5,892

(1,072)

(111)

19,114

Artist’s Impression

D E S A N E G R O U P H O L D I N G S L I M I T E D

f i n a n c i a l s t a t e m e n t s

2 0 2 3 A N N U A L R E P O R T

NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2023

Note 22: Deferred Taxes (cont)

Note

Consolidated Group

2023
$’000

2022
$’000

Reconciliation

Gross Movement

The overall movement in the deferred tax account is as follows:

Opening balance

Charge to statement of profit and loss

Closing balance

Deferred Tax Liability

Tax allowance relating to property, plant and equipment

Opening balance

Charged to the statement of profit and loss

Closing balance

Revaluation of investment properties

Opening balance

Net revaluation during the current period

Closing balance

Deferred Tax Assets

Tax and capital losses

Opening balance

Prior year adjustment

Tax and capital losses utilised

Closing balance

Provisions

Opening balance

Credited to statement of profit and loss

Closing balance

19,114

588

19,702

14,405

14,457

5,892

752

6,644

(1,072)

(242)

(1,314)

(111)

(85)

17,126

1,988

19,114

14,348

14,405

3,739

2,153

5,892

(879)

(193)

(1,072)

(82)

(29)

(111)

Note 23: Financial Instruments

a. Financial Risk Management

The group’s financial instruments consist mainly of deposits with banks, mortgage loans with banking institutions, accounts
receivable and payable, and loans to and from controlled entities.

Desane’s Board of Directors and management are responsible for the monitoring and managing of financial risk exposures
on a monthly basis.

The main risks the group is exposed to through its financial instruments are liquidity risk and interest rate risk.

Liquidity Risk

Liquidity risk arises from the possibility that the group might encounter difficulty in settling its debts or otherwise meeting
its obligations related to financial liabilities. Desane manages this risk through the following mechanisms:

• Preparing forward looking cash flow analysis in relation to its operational, investing and financing activities;
• Monitoring undrawn credit facilities;
• Obtaining funding from a variety of sources; and
• Investing surplus cash with major financial institutions.

Interest Rate Risk

Exposure to interest rate risks arises on financial assets and financial liabilities recognised at the end of the reporting period
whereby a future change in interest rates will affect future cash flows or the fair value of fixed rate financial instruments.

Interest rate risk is managed using a mix of fixed and floating rate debt. At 30 June 2023, approximately 100% of the Group’s
debt is with a floating interest rate and any balance is fixed interest rate debt.

The group entity’s exposure to interest rate risk and the effective weighted average interest rate by maturity periods are set
out in the following table (note 23d). For interest rates applicable to each class of asset or liability, refer to individual notes
to the financial statements. Exposures arise predominantly from assets and liabilities bearing variable interest rates as the
consolidated entity intends to hold fixed rate assets and liabilities to maturity.

The contractual maturities of the financial liabilities are set out below. The amounts represent the future undiscounted
principal and interest cash flows relating to the amounts drawn at reporting date.

b. Credit Risk Exposure

The credit risk on financial assets of the consolidated entity which has been recognised in the statement of financial
position is generally the carrying amount, net of any provisions for doubtful debts.

The consolidated group does not have any material credit risk exposure to any single receivable or group of receivables
under financial instruments entered into by the economic entity.

c. Net Fair Values

On Statement of Financial Position:

Included in the deferred tax liability balance of $19.7m, is an amount of approximately $13.9m of capital gains tax deferred
pertaining to the involuntary sale of the Rozelle property in September 2018 as part of the compulsory acquisition by Roads
and Maritime Services which triggered a CGT event.

The net fair value of cash and cash equivalents and non-interest bearing monetary financial assets and financial liabilities
approximates their carrying value.

D E S A N E G R O U P H O L D I N G S L I M I T E D

f i n a n c i a l s t a t e m e n t s

2 0 2 3 A N N U A L R E P O R T

NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2023

Note 23: Financial Instruments (cont)

Off Statement of Financial Position:

The parent entity and certain controlled entities have potential financial liabilities which may arise from certain
contingencies disclosed in note 30. No material losses are anticipated in respect of any of these contingencies.

d. Carrying Amount and Net Fair Values

There is no material difference between the carrying amounts and the net fair values of financial assets
and liabilities.

2023

Financial Assets

Cash and deposits

Receivables

Other financial assets

Weighted average interest rates

Financial Liabilities
Trade and other creditors

Interest bearing liabilities

Weighted average interest rate

Net financial assets (liabilities)

Note

Floating
Interest
Rate

Floating
Interest
Maturing
within
1-5 years

Fixed
Interest
Maturing
within
1 year

Fixed
Interest
Maturing
within
1-5 years

Non
Interest
Bearing

Total

$’000

10, 12

13,900

6.05%

(13,900)

$’000

2,696

10,690

13,386

$’000

180

2,696

1,009

10,870

1,009

14,575

7.0%

5.8%

266

13,900

266

14,166

6.05%

13,386

180

743

409

2022

Financial Assets

Cash and deposits

Receivables

Other financial assets

Weighted average interest rates

Financial Liabilities
Trade and other creditors

Interest bearing liabilities

Weighted average interest rate

Net financial assets (liabilities)

Note

Floating
Interest
Rate

Floating
Interest
Maturing
within
1-5 years

Fixed
Interest
Maturing
within
1 year

Fixed
Interest
Maturing
within
1-5 years

Non
Interest
Bearing

Total

$’000

10, 12

$’000

13,900

2.4%

$’000

2,059

11,151

13,210

6.3%

2,162

7.0%

(13,900)

13,210

2,162

2,059

907

13,313

907

16,279

6.3%

903

13,900

903

14,803

2.4%

1,476

Artist’s Impression

D E S A N E G R O U P H O L D I N G S L I M I T E D

f i n a n c i a l s t a t e m e n t s

2 0 2 3 A N N U A L R E P O R T

NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2023

Note 23: Financial Instruments (cont)

Sensitivity Analysis

The following table illustrates sensitivities to the Group’s exposure to changes in interest rates. The table indicates the
impact on how profit and equity values reported at reporting date would have been affected by change in the relevant
risk variable that management considers to be reasonably possible. These sensitivities assume that the movement in a
particular variable is independent of other variables.

The net effective variable interest rate borrowings (floating interest rate) expose the Group to interest rate risk which will
impact future cash flows and interest charges, are indicated in the above figures. All interest bearing liabilities and their
weighted interest rate is shown in note 23(d).

There are no financial liabilities maturing over 5 years.

Year ended 30 June 2023

- interest rate sensitivity calculated at an average of +/- 2%pa.

Year ended 30 June 2022

- interest rate sensitivity calculated at an average of +/- 2%pa.

Held to Maturity Investments

Consolidated Group

Profit
$’000

+/- 278

Equity
$’000

+/- 278

Consolidated Group

Profit
$’000

+/- 278

Equity
$’000

+/- 278

There is an inherent risk associated with investments in fixed interest securities, however, the risks are mitigated by
ensuring funds invested are secured with a first registered mortgage security, the term of the investment is for a period of
12 months or less, and the secured property asset has a loan-to-value-ratio (LVR) of less than 65% based on an independent
valuation completed by a registered and qualified property valuer.

Note 24: Related Party Transactions

All transactions are under normal commercial terms and conditions.

The Group’s main related parties are as follows:

i. Key management personnel:

Any person(s) having authority and responsibility for planning, directing and controlling the activities of the entity, directly or
indirectly, including any director (whether executive or otherwise) of that entity, are considered key management personnel.

ii. Other related parties:

Other related parties include entities controlled by the parent entity and entities over which key management personnel
have control.

Related parties of Desane Group Holdings Limited (parent entity) fall into the following categories:

a. Controlled Entities

Information relating to controlled entities is set out in note 30. Other transactions between related parties consist of:

Desane Properties Pty Ltd: Dividend paid

b. Directors

Consolidated Group

2023
$’000

1,300

2022
$’000

1,200

The names of the persons who were directors of the parent entity during the financial year are as follows:

• Phil Montrone
• John Blair Sheehan
• Rick Montrone
• Peter Krejci

Information on the remuneration of directors and executives is set out in note 5.

The Managing Director and all executives are permanent employees of Desane Group Holdings Limited.

Trafalgar Contracting Pty Ltd, which is a company owned by Mr Phil Montrone’s brother, has provided maintenance and
project management services totalling $68,635 at properties owned by the Group on an arm’s length basis. Trafalgar
Contracting Pty Ltd has also entered into a lease, at arm’s length, for premises at 159 Allen Street, Leichhardt.

Mr Jack Sciara provided professional tax services to the Group for the amount of $4,900 on an arm’s length basis. Mr Jack
Sciara’s spouse and daughter have been employed by Desane Group Holdings Limited on a part time and casual basis
respectively, as administration assistants for the accounting and finance department. Their employment is on an arm’s
length basis.

Mr Rick Montrone’s spouse was paid $41,715 on market terms, for the design and production of annual financial report, as
well as the AGM presentation and ongoing website maintenance.

Other than the above transactions, no director has entered into a material contract since the end of the previous financial
year and there were no material contracts involving directors’ interests existing at year-end.

Note 25: Commitments for Expenditure

There are no contractual commitments.

Note 26: Superannuation Commitments

In the case of employees of the holding company and controlled entities, the company contributed 10.5% of each member’s
salary into the fund nominated by each member. Group companies contribute a minimum amount equal to 10.5% of each
member’s salary, plus the cost of the insurance coverage, if required, to insure the provision of all benefits to the Fund. The
benefits provided by the accumulation fund are based on the contributions and income thereon held by the Fund on behalf
of the member. The 10.5% contribution made by group companies is legally enforceable.

The company and its controlled entities have a legally enforceable obligation to contribute to the funds.

D E S A N E G R O U P H O L D I N G S L I M I T E D

f i n a n c i a l s t a t e m e n t s

2 0 2 3 A N N U A L R E P O R T

NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2023

Note 26: Superannuation Commitments (cont)

The directors are not aware of any other changes in circumstances which would have a material impact on the overall
financial position of the funds.

Employer contributions to the plans; consolidated $119,670 (2022 - $103,456), parent entity $75,501 (2022 - $65,694).

Note 27: Contingent Liabilities

a. The parent entity has given a letter of support to each of its two controlled entities, to the effect that it will not require
repayment of the loan funds advanced in the coming year (refer note 30(ii)).

The shareholders’ funds as at 30 June 2023, in the controlled entities concerned were:

159 Allen Street Leichhardt Pty Ltd - net assets

Desane Contracting Pty Limited – net assets

Desane Properties Pty Limited – net assets

Consolidated Group

2023
$’000

(575)

56,121

2022
$’000

(321)

(2,415)

54,544

b. 7 Sirius Road Property

to the operations and or services provided by the segment.

The parent entity has guaranteed the repayment of the
first mortgage finance secured over the 7 Sirius Road
property (note 17).

Types of Operations and Services by Segment

Revenue is derived by the industry segments from the
following activities:

c. 13 Sirius Road Property

The parent entity has guaranteed the repayment of the
first mortgage finance secured over the 13 Sirius Road
property (note 17).

d. 16 Industrial Avenue Property

i. Property Development

Development projects (residential, commercial or
industrial).

ii. Property Investment

Rental income from prime real estate investments.

The parent entity has guaranteed the repayment of the first
mortgage finance secured over the 16 Industrial Avenue
property (note 17).

Note 28: Operating Segments – Consolidated Group

iii. Property Project Management and Resale

Property project management and resale of commercial,
industrial and residential properties, principally in
Sydney metropolitan areas.

Segment Information

Identification of Reportable Segments

The Group has identified its operating segments based on
the internal reports that are reviewed and used by the Board
of Directors in assessing performance and determining the
allocation of resources.

Reportable segments disclosed are based on aggregating
operating systems where the segments are considered to
have similar economic characteristics and are also similar

iv. Property Services

Property and related services.

Accounting Policies Adopted

Unless stated otherwise, all amounts reported to the Board
of Directors, with respect to operating segments, are
determined in accordance with accounting policies that
are consistent to those adopted in the annual financial
statements of the Group.

Segment Assets

Where an asset is used across multiple segments, the
asset is allocated to that segment that receives majority
economic value from that asset. In the majority of
instances, segment assets are clearly identifiable on the
basis of their nature and physical location.

Segment Liabilities

Liabilities are allocated to segments where there is a direct
nexus between the incurrence of the liability and the
operations of the segment. Borrowings and tax liabilities
are generally considered to relate to the Group as a whole
and are not allocated. Segment liabilities include trade and
other payables and certain direct borrowings.

Unallocated Items

The following items of revenue, expenses, assets and
liabilities are not allocated to operating segments as
they are not considered part of the core operations of
any segment:

• Net gains on disposal of available for sale investments;
Impairment of assets and other non recurring items of
•
revenue or expenses;
Income tax expense;

•
• Deferred tax assets and liabilities;
•
Current tax liabilities;
• Other financial liabilities;
•
•

Retirement benefit obligations; and
Administration expenses.

Geographical Segments
The consolidated group operates in one geographical
segment being New South Wales, Australia.

Inter-segment Transactions
Inter-segment pricing is based on what would be realised in
the event the sale was made to an external party at
arm’s-length basis.

2023

External sales

Other segments

Total revenue

Segment result

Unallocated expenses

Finance costs

Profit/(loss) before income tax

Income tax expense

Profit/(loss) after income tax

Property
Investment
$’000

Property
Development
$’000

Property
Services
$’000

Plant &
Equipment
$’000

Other
$’000

Consolidated
Group
$’000

1,964

2,865

984

2,988

3,889

(1,307)

(677)

1,905

(588)

1,317

D E S A N E G R O U P H O L D I N G S L I M I T E D

f i n a n c i a l s t a t e m e n t s

2 0 2 3 A N N U A L R E P O R T

NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2023

Note 28: Operating Segments – Consolidated Group (cont)

2023
Segment Assets

2022 opening balance

Unallocated Assets

Deferred tax assets

Segment Asset
Increases/(Decreases) for the Period

Acquisitions

Revaluations/(devaluations)

Capital expenditures

Depreciation and capital allowance

Net movement in other segments

Unallocated Assets

Deferred Tax Assets

Total Group Assets

2023
Segment Liabilities

2022 opening balance

Unallocated Liabilities

Deferred tax liabilities

Segment Liabilities

Increases/(Decreases) for the Period

Net movement in other segments

Unallocated Liabilities

Deferred Tax Liabilities

Total Group Liabilities

Property
Investment
$’000

Property
Development
$’000

Property
Services
$’000

Plant &
Equipment
$’000

Other
$’000

Consolidated
Group
$’000

74,668

4,355

2,504

301

77,473

4,382

2,321

16,279

(44)

(1,703)

2,331

14,576

97,623

2,504

328

(44)

(1,703)

98,762

Property
Investment
$’000

Property
Development
$’000

Property
Services
$’000

Plant &
Equipment
$’000

Consolidated
Group
$’000

Other
$’000

13,900

1,189

15,089

19,114

(766)

19,537

(766)

33,437

588

34,025

2022

External sales

Other segments

Total revenue

Segment result

Unallocated expenses

Finance costs

Profit/(loss) before income tax

Income tax expense

Profit/(loss) after income tax

2022
Segment Assets

Property
Investment
$’000

Property
Development
$’000

Property
Services
$’000

Plant &
Equipment
$’000

Consolidated
Group
$’000

Other
$’000

1,752

7,682

747

2,543

8,473

(1,677)

(164)

6,632

(1,988)

4,644

Property
Investment
$’000

Property
Development
$’000

Property
Services
$’000

Plant &
Equipment
$’000

Consolidated
Group
$’000

Other
$’000

2021 opening balance

67,350

4,009

Unallocated Assets

Deferred tax assets

Segment Asset

Increases/(Decreases) for the Period

Acquisitions

Revaluations/(devaluations)

Capital expenditures

Development expenditures

Depreciation and capital allowance

Net movement in other segments

Unallocated Assets

Deferred Tax Assets

Total Group Assets

(56)

7,179

195

346

74,668

4,355

2,367

13,919

87,645

(49)

2,360

2,321

16,279

(53)

7,179

195

346

(49)

2,360

97,623

D E S A N E G R O U P H O L D I N G S L I M I T E D

f i n a n c i a l s t a t e m e n t s

NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2023

Note 28: Operating Segments – Consolidated Group (cont)

Note 29: Cash Flow Information

2022
Segment Liabilities

2021 opening balance

Unallocated Liabilities

Deferred tax liabilities

Segment Liabilities

Increases/(Decreases) for the Period

New Borrowings

Net movement in other segments

Unallocated Liabilities

Deferred Tax Liabilities

Total Group Liabilities

Property
Investment
$’000

Property
Development
$’000

Property
Services
$’000

Plant &
Equipment
$’000

Consolidated
Group
$’000

Other
$’000

5,900

5,843

11,743

17,126

8,000

13,900

(4,654)

18,315

8,000

(4,654)

32,215

1,988

34,203

Artist’s Impression

a. Reconciliation of Cash Flow from Operations with Profit After Income Tax

Consolidated Group

Profit/(loss) after income tax

Non-cash flows in profit/(loss)

Depreciation and amortisation

(Gain)/loss on asset revaluation

Changes in assets and liabilities

(Increase)/decrease in trade receivables

(Increase)/decrease in prepayments

(Decrease)/increase in trade payments and accruals

(Decrease)/increase in other payables

(Decrease)/increase in provisions

Increase/(decrease) in deferred taxes payable

Transfer to financing activities

Cash flow from operations

Credit Standby Arrangements with Banks

Credit facility

Amount utilised

2023
$’000

1,317

(2,504)

(5)

(101)

(616)

(66)

588

(35)

(1,378)

2023
$’000

100

2022
$’000

4,644

(7,179)

(73)

(13)

241

(4,069)

1,988

4,071

(332)

Consolidated Group

2022
$’000

100

Bank overdraft facility is arranged with one bank and the general terms and conditions are set and agreed
annually. Interest rates are variable and subject to adjustment. Please refer to note 17.

Loan Facilities with Financial Institutions

Consolidated Group

Loan facilities

Amount utilised

For more details on the loan facilities, please refer to note 17.

2023
$’000

13,900

(13,900)

2022
$’000

13,900

(13,900)

2 0 2 3 A N N U A L R E P O R T

D E S A N E G R O U P H O L D I N G S L I M I T E D

f i n a n c i a l s t a t e m e n t s

NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2023

Note 30: Parent Entity Disclosures

The following information has been extracted from the books and records of the parent entity and has been
prepared in accordance with Accounting Standards.

All controlled entities are incorporated in Australia. Desane Properties Pty Ltd declared a dividend of $1,300,000 out of
retained profits (2022: $1,200,000). Desane Contracting Pty Ltd declared a dividend of $nil (2022: $nil). 159 Allen Street
Leichhardt Pty Ltd declared a dividend of $nil (2022: $nil).

STATEMENT OF COMPREHENSIVE INCOME

Result of Parent Entity

Profit for the period

Other comprehensive income

Total profit and comprehensive income for the period

STATEMENT OF FINANCIAL POSITION

Current Assets

Cash

Other assets

Non-current Assets

Trade and other receivables – loans to controlled entities

Investment – controlled entities

Property, plant and equipment

Total Assets

Current Liabilities

Trade and other payables

Short term provisions

Total Liabilities

Net Assets

Total Equity

Issued capital

Retained earnings/(accumulated losses)

Total Equity

i. Controlled Entities
Investments in controlled entities are unquoted and comprise:

Controlled Entities

Desane Properties Pty Ltd

159 Allen Street Leichhardt Pty Ltd

Parent Entity

Note

2023
$’000

2022
$’000

9,258

11,714

490

105

490

9,896

12,341

197

216

211

239

Contribution to profit/(loss) after tax:

Desane Group Holdings Limited

Desane Properties Pty Limited

Desane Contracting Pty Limited

159 Allen Street Leichhardt Pty Ltd

ii. Loans to Controlled Entities

Desane Properties Pty Limited

Desane Contracting Pty Limited

159 Allen Street Leichhardt Pty Ltd

Guarantees

2023
$’000

(1,254)

2,878

(53)

(254)

1,317

2023
$’000

(14,536)

23,794

9,258

2022
$’000

(1,161)

6,338

(516)

(17)

4,644

2022
$’000

(13,667)

1,998

23,383

11,714

Desane Group Holdings Limited has not entered into any guarantees, in the current or previous financial year, in relation to
the above debts of its controlled entities.

Capital Commitments

Desane Group Holdings has no capital commitments to note.

9,680

12,102

Contractual Commitments

21,213

(11,533)

9,680

21,213

(9,111)

12,102

Parent Entity

2023

2022

Class of
Shares

Holding
%

Investment
$’000

Holding
%

Investment
$’000

Ordinary

100

490

At 30 June 2023, Desane Group Holdings Limited had not entered into any contractual commitments for the acquisition of
property, plant and equipment or any other affairs (2022: Nil).

Note 31: Events after the Reporting Date

There were no material events subsequent to reporting date.

Note 32: Economic Dependency

A portion of all the Group’s investment properties are under financial loans.

2 0 2 3 A N N U A L R E P O R T

DIRECTORS’ DECLARATION

In accordance with a resolution of the directors of Desane Group Holdings Limited, the directors of the company
declare that:

The financial statements and notes, as set out on pages 44-83 are in accordance with the Corporations Act 2001 and;

a. Comply with Australian Accounting Standards, which, as stated in accounting policy note 1 to the financial

statements, constitutes compliance with International Financial Reporting Standards (IFRS); and

b. Give a true and fair view of the financial position as at 30 June 2023 and of the performance for the year ended on

that date of the consolidated group;

In the directors’ opinion there are reasonable grounds to believe that the company will be able to pay its debts as and
when they become due and payable; and

3. The directors have been given the declarations required by a 295A of the Corporations Act 2001 from the Managing

Director and Chief Financial Officer.

This declaration is made in accordance with a resolution of the Board of Directors.

J B Sheehan
Director
Sydney

P Montrone
Director
Sydney

21 August 2023

D E S A N E G R O U P H O L D I N G S L I M I T E D

i n d e p e n d e n t a u d i t o r ’ s R e p o r t

2 0 2 3 A N N U A L R E P O R T

06.
Independent
Auditor’s Report

7 S I R I U S R D

1 6 i n d u s t r i a l a v e

D E S A N E G R O U P H O L D I N G S L I M I T E D

i n d e p e n d e n t a u d i t o r ’ s r e p o r t

2 0 2 3 A N N U A L R E P O R T

INDEPENDENT AUDITOR’S REPORT

D E S A N E G R O U P H O L D I N G S L I M I T E D

i n d e p e n d e n t a u d i t o r ’ s r e p o r t

2 0 2 3 A N N U A L R E P O R T

INDEPENDENT AUDITOR’S REPORT

GCC Business & Assurance Pty Ltd

GPO Box 4566, Sydney NSW 2001

ABN 61 105 044 862

Telephone: (02) 9231 6166
Facsimile: (02) 9231 6155

Suite 807, 109 Pitt Street, Sydney NSW 2000

Auditor’s Responsibilities for the Audit of the Financial Report

Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of this financial report.

As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and
maintain professional scepticism throughout the audit. We also:

●

Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.

● Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Group’s internal control.

●

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by the directors.

● Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and based on
the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the
financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on
the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may
cause the Group to cease to continue as a going concern.

●

Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and
whether the financial report represents the underlying transactions and events in a manner that achieves fair
presentation.

● Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Group to express an opinion on the financial report. We are responsible for the direction,
supervision and performance of the Group audit. We remain solely responsible for our audit opinion.

We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the directors with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought
to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the directors, we determine those matters that were of most significance in
the audit of the financial report of the current period and are therefore the key audit matters. We describe these
matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in
extremely rare circumstances, we determine that a matter should not be communicated in our report because the
adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such
communication.

Report on the Remuneration

We have audited the remuneration report included in pages 33 to 35 of the directors’ report for the year ended 30
June 2023. The directors of the company are responsible for the preparation and presentation of the remuneration
report in accordance with s 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
remuneration report, based on our audit conducted in accordance with Australian Auditing Standards.

Liability limited by a scheme approved under Professional Standards Legislation

D E S A N E G R O U P H O L D I N G S L I M I T E D

i n d e p e n d e n t a u d i t o r ’ s r e p o r t

2 0 2 3 A N N U A L R E P O R T

INDEPENDENT AUDITOR’S REPORT

GCC Business & Assurance Pty Ltd

GPO Box 4566, Sydney NSW 2001

ABN 61 105 044 862

Telephone: (02) 9231 6166
Facsimile: (02) 9231 6155

Suite 807, 109 Pitt Street, Sydney NSW 2000

Responsibilities

The directors of the company are responsible for the preparation and presentation of the remuneration report in
accordance with s 300A of the Corporations Act 2001. Our responsibility is to express an opinion on
the remuneration report, based on our audit conducted in accordance with Australia Auditing Standards.

Auditor’s Opinion

In our opinion, the remuneration report of Desane Group Holdings Limited, for the year ended 30 June 2023,
complies with s 300A of the Corporations Act 2001.

GCC BUSINESS & ASSURANCE PTY LTD
(Authorised Audit Company)

GRAEME GREEN
Director

Sydney
21 August 2023

Liability limited by a scheme approved under Professional Standards Legislation

D E S A N E G R O U P H O L D I N G S L I M I T E D

s h a r e h o l d e r i n f o r m a t i o n

2 0 2 3 A N N U A L R E P O R T

7 S I R I U S R D

07.
Shareholder
Information

D E S A N E G R O U P H O L D I N G S L I M I T E D

s h a r e h o l d e r i n f o r m a t i o n

2 0 2 3 A N N U A L R E P O R T

SHAREHOLDER INFORMATION

The shareholder information set out below was applicable as at 1 August 2023.

2. TWENTY LARGEST QUOTED EQUITY SECURITY HOLDERS

1. SHAREHOLDING

Distribution of equitable securities:

Category (size of holding)

1 - 1,000

1,001 - 5,000

5,001 - 10,000

10,001 - 100,000

100,001 - and over

Rounding

Total

Number of
Ordinary
Shares*

30,503

324,235

402,378

4,614,254

35,538,620

40,909,990

Number of Holders
of Ordinary
Shares

% of Issued
Capital

126

122

125

482

0.07

0.79

0.98

11.28

86.87

0.01

100.00

There were 94 holders of less than a marketable parcel of ordinary shares.

* The number of Ordinary Shares on issue as at 30 June 2023 was 40,909,990.

The names of the 20 largest security holders are listed below:

Name

Cupara Pty Ltd

J P Morgan Nominees Australia Pty Limited

Montevans Pty Ltd

Horrie Pty Ltd

Glencairn Pty Limited

PFPT Management Pty Ltd

Cordato Partners (Superannuation) Pty Ltd

National Nominees Limited

Dotnric Pty Ltd

John & Judith Pty Ltd

Keiser Investments Pty Ltd

Hillmorton Custodians Pty Ltd

Mansfield Holdings Pty Ltd

10.

11.

12.

13.

14. Mr Peter Howells

15.

16.

17.

18.

19.

20.

Oakmount Nominees Pty Ltd

Woodtrone Pty Ltd

Waratah Property Services (No 1) Pty Ltd

Whimplecreek Pty Ltd

Joe Scardino & Felicia Scardino

BNP Paribas Nominees Pty Ltd

3. SUBSTANTIAL SHAREHOLDERS

Substantial holders in the Company are set out below:

Cupara Pty Ltd

Greig & Harrison Pty Ltd

Phoenix Portfolios Pty Ltd

Montevans Pty Ltd

4. VOTING RIGHTS

The voting rights attaching to each class of shares are set out below:

Ordinary Shares

Ordinary
Shares

% Held to
Issued Capital

11,270,878

4,390,617

2,610,400

2,210,294

1,470,000

938,831

790,409

769,893

593,579

582,677

556,158

552,051

400,632

400,000

330,000

303,721

302,005

280,000

273,555

270,526

29,296,226

27.55

10.73

6.38

5.40

3.59

2.29

1.93

1.88

1.45

1.42

1.36

1.35

0.98

0.81

0.74

0.68

0.67

0.66

71.61

Number

10,246,252

4,624,331

4,560,206

2,729,374

Ordinary

28.27

11.30

12.36

6.67

No restrictions. Every member present or by proxy shall have one vote per share and upon a poll, each share shall have
one vote.

There are no other classes of equity securities.

2 0 2 3 A N N U A L R E P O R T

D E S A N E G R O U P H O L D I N G S L I M I T E D

c o r p o r a t e d i r e c t o r y

2 0 2 3 A N N U A L R E P O R T

08.
Corporate Directory

7 S I R I U S R D

100

3 2 2 n o r t o n s t

D E S A N E G R O U P H O L D I N G S L I M I T E D

c o r p o r a t e d i r e c t o r y

2 0 2 3 A N N U A L R E P O R T

CORPORATE DIRECTORY

Directors & Key Personnel

Share Register

Prof. John Blair Sheehan AM – Chairman
(non-executive director)

Shareholders with questions about their shareholdings
should contact Desane’s external share registrar:

Phil Montrone OAM – Managing Director

Rick Montrone – Director

Peter Krejci – Director (non-executive)

Jack Sciara – Company Secretary and Chief Financial
Officer

Computershare Investor Services Pty Limited
Level 5, 115 Grenfell Street, Adelaide SA 5000
Postal Address: GPO Box 2975, Melbourne VIC 3001
Telephone enquiries within Australia: 1300-556-161
Telephone enquiries outside Australia: 61-3-9415-4000
Website: www.computershare.com

Please advise the share registrar if you have a new postal
address.

Principal Registered Office in Australia

Auditor

Suite 4, 26-32 Pirrama Road, Pyrmont NSW 2009

Other Company Details

Postal address: PO Box 331, Leichhardt NSW 2040
Telephone: (02) 9555-9922
Facsimile: (02) 9555-9944
E-mail Address: info@desane.com.au
Website: desane.com.au

GCC Business & Assurance Pty Ltd
Suite 807, 109 Pitt Street, Sydney NSW 2000

Bankers

Commonwealth Bank of Australia

Securities Exchange Listing

Desane Group Holdings Limited shares are listed on the
Australian Securities Exchange. The ASX code is DGH.

Notice of Annual General Meeting

The Annual General Meeting of Desane Group Holdings
Limited will be held at:

Doltone House – Tribeca, Ground Floor, 26-32 Pirrama Road,
Pyrmont NSW on Wednesday 25 October 2023 commencing
at 10.00 am.

102

DESANE GROUP HOLDINGS LTD
Suite 4, 26-32 Pirrama Road, Pyrmont NSW 2009 (02) 9555-9922
info@desane.com.au
www.desane.com.au