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2 0 2 4 A N N U A L R E P O R T
G R O U P H O L D I N G S L I M I T E D
2024 ANNUAL REPORT
CONTENTS
CHAIRMAN’S REPORT
4
CHIEF EXECUTIVE’S REPORT
8
DIRECTORS’ REPORT
29
AUDITOR’S INDEPENDENCE DECLARATION
42
FINANCIAL STATEMENTS
45
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
46
Consolidated Statement of Financial Position
47
Consolidated Statement of Changes in Equity
48
Consolidated Statement of Cash Flows
49
Notes to the Consolidated Financial Statements
50
Directors Declaration
82
INDEPENDENT AUDITOR’S REPORT
83
SHAREHOLDER INFORMATION
89
CORPORATE DIRECTORY
92
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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 26 August 2024.
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
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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The current cash and financial assets stand at a significant $9.3m, enabling the
Group to accommodate opportunities during the financial year and over the next
financial year as they arise.
- Professor John Sheehan AM
CHAIRMAN’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
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PROFESSOR JOHN SHEEHAN AM
Chairman
It gives me great pleasure to introduce the
Annual Report of Desane Group Holdings
Limited for 2024.
I report to shareholders that the Group’s earnings before
interest and tax, for the financial year ending 30 June 2024,
was $3.1m and the Group’s total assets are now $101.7m. The
Group’s net tangible assets (NTA) now stand at $1.62 per
security, an increase of 3% over the previous corresponding
year.
The Group has pleasingly achieved a sound financial
result, again notably, with further asset revaluations. The
continuing focus of the Group on maintaining its significant
cash reserves and ongoing prudent management of existing
property assets has resulted in the financial soundness of the
overall Group. The current cash and financial assets stand
at a significant $9.3m, enabling the Group to accommodate
opportunities during the financial year and over the next
financial year as they arise.
As mentioned in my report last year, the Group’s traditional
base of industrial and logistic properties continue to perform
well, doubtless still influenced by changing employment
patterns. Unemployment still remains at historic lows, and
coupled with increasing job creation over the past twelve
months, I must recognise that long term investment in
industrial and logistic properties has benefitted from these
previously mentioned employment patterns. Contrary to
media speculation, significant numbers of the workforce
still continue to prefer working from home for some days
each week, with the result that suburban and even regional
based services have increased remarkably. Obviously,
investment in logistics properties has benefitted from such
substantive changes in delivery and purchasing formats, and
well located properties anchored in this sector have been
increasingly sought after. This is particularly evident in the
continuing increase in overall cash flow from the Group’s
leased properties, some of which focus on the sector whilst
also providing a robust and steadily rising capital value. As
I mentioned earlier, this increase in capital value is notable
with the Group’s total assets rising to $101.7m.
Also mentioned in my report last year, the resilient Australian
economy continues to demonstrate strong domestic
expenditure notwithstanding concerns over inflation. Robust
workforce participation provides guidance the Australian
economy is actually healthier and probably more vigorous
than even the Reserve Bank anticipated, and hence the
Bank’s concern with inflation expectations. The current
elevated official cash rate of 4.35% determined by the
Reserve Bank suggests the probability of this rate remaining
unchanged or even rising in the medium term is more likely
than a reduction which some commentators have urged.
Comfortingly for the Group, the cost of construction
continues to move (although slowly) towards a more
stable setting due primarily to rising contract competition,
notwithstanding the continuing impact of risk adverse
financing on even noteworthy construction contractors.
Hence, the cost of construction remains at the forefront
of your Board’s considerations when making material
decisions regarding the planning for, or commencement of,
development projects. Unsurprisingly, the Board and the
Group management continue to actively monitor such costs,
recognising that prudent decision making when committing
to construction of any development project is pivotal to
successful investment overall. As stated in my report last year,
I remain 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 37th such report of Desane Group Holdings Limited.
Your Company has continued to maintain its profitability due
to the input of its senior management and the invaluable
contribution of its current Board members. Both the Board
and the senior management of the Group recognise that
mindful measured decision making in an increasingly
capricious economic environment in the next financial year
will continue to ensure the profitability of the Company.
Such an approach has served the shareholders well in
the past and will continue to be the touchstone which
distinguishes Desane Group Holdings Limited.
Your Board remains confident
the current medium term
strategies of investment and
cash shepherding will continue
to result in ongoing Group
asset growth and further
earnings for shareholders.
I congratulate both the
team comprising the Group
executives and the dedicated
employees of Desane Group
Holdings Limited for their
professional management of
the Group.
Finally, I would like to welcome
those shareholders who
have recently joined the
Company. I and the Board
look to a rewarding and
fruitful association with those
new shareholders during the
coming years.
Professor John Sheehan AM
Chairman
The Group has pleasingly achieved
a sound financial result, again
notably, with further asset
revaluations. The continuing
focus of the Group on maintaining
its significant cash reserves and
ongoing prudent management
of existing property assets has
resulted in the financial soundness
of the overall Group.
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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
- Phil Montrone OAM
CHIEF
EXECUTIVE’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
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PHIL MONTRONE OAM
Managing Director (Retiring)
Desane’s cash position remains strong with $9.3m 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.
Being conscious of the continuing uncertainty surrounding
interest rates in Australia, in July 2024, Desane repaid a $3.6m
loan, reducing the total Group borrowings to $10.3m. The
loan to value ratio of the Group borrowings is under 40%.
Seven of Desane’s property assets are now unencumbered
Notwithstanding the difficult economic conditions prevailing
in the property sector 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.
As part of Desane’s stated intention to grow the investment
property portfolio, in February 2024, Desane completed the
acquisition of a prime commercial property located in the
Sydney suburb of Leichhardt for $3.8m. The property, zoned
E1 Local Centre, has ample onsite parking and is located in
the heart of Norton Street – Leichhardt’s commercial, retail
and residential district. The property has been upgraded
and leased. The property will generate $200,000 per annum
gross once fully leased at an average of $600 per square
metre. The property falls within the Draft Parramatta Road
Corridor Urban Transformation Strategy (PRCUTS) being
led by the NSW Government and Inner West Council. This
property is unencumbered.
Desane’s management has focussed on
adding value to the Group’s assets by
upgrading and refurbishing existing assets
and negotiating new and additional leases.
This has resulted in the total group assets
increasing by $2.9m, from $98.8m in FY23
to $101.7 in FY24.
The continuing uncertainty regarding the
financial stability of second tier Australian
construction companies and the
ever-increasing cost of construction, together
with the inability of builders to lock into a
fixed construction price, has meant that
Desane’s Board and management has had to
make the prudent decision of postponing the
commissioning of construction for the Wacol,
Brisbane industrial expansion, the boutique
residential project in Norton Street, Leichhardt, and the
Thornton industrial estate in Penrith.
Economic and market conditions permitting and the cost of
construction stabilising during the course of 2024 to 2026,
Desane will progress its intended property construction
program.
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.
Desane’s investment property assets are performing well,
in line with industrial and logistic assets across the major
capital cities. Over the past four 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.
My retirement as Managing Director has enabled a
generational management change for the Group. The
knowledge, skills and ability of the incoming Managing
Director, Rick Montrone, who has served shareholders
side by side with me for the past 21 years, coupled with the
appointment of Desane’s CFO, Jack Sciara, as a Director
and the appointment of Kylie Ichsan as Joint Company
Secretary, will serve well the interests of all current and future
shareholders.
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 (Retired)
I am pleased to report that
Desane Group Holdings Limited
has reported its thirteenth
consecutive yearly profit
result for FY24. The Group’s net
tangible assets now stand at $1.62
per share, representing an NTA
increase of 4 cents per share over
the corresponding period. 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 $3.1m. Desane’s total assets now
stand at $101.7m and total rental income
has increased by 12% over the previous
corresponding period to $2.2m.
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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RICK MONTRONE
Managing Director (Incoming)
It is with mixed emotions that I address you
for the first time as the Managing Director of
Desane Group Holdings Limited. I would like
to begin by expressing my sincere gratitude for
the trust placed in me by the Board to lead the
Group.
As I step into this role, I am acutely aware of the
responsibilities that come with it, and I am fully committed to
steering Desane toward continued success and growth.
The Desane 2024 Annual Report provides an overview
of our current position, the challenges we face, and the
opportunities that lie ahead. Together with the Desane team,
I am focused on building upon our strengths, addressing
areas where we can improve, and executing a strategy that
will deliver sustainable value for all our stakeholders.
I would like to acknowledge our recently retired Managing
Director and CEO, Phil Montrone OAM for his long-standing
contribution to Desane. Phil has made an enormous
contribution to the stability and growth of Desane. His
management and knowledge of the property sector has been
instrumental in transforming the Company from a building
contracting company to a $100m property group. We thank
Phil on behalf of the Company and shareholders for his
valued leadership over many years.
Rick Montrone
Managing Director
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16 INDUSTRIAL AVE.
BRISBANE
An outstanding industrial property,
which is 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.
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Artist’s Impression
Artist’s Impression
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
91 THORNTON DR.
PENRITH
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 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.
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7 SIRIUS RD.
LANE COVE
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.
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13 SIRIUS RD.
LANE COVE
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.
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 Sydeny 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 attained planning approval from
the Inner West Council for a 5-storey apartment complex, comprising 46 residential apartments.
Artist’s Impression
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270-278 NORTON ST.
LEICHHARDT
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.
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322 NORTON ST.
LEICHHARDT
Creating community through a boutique development.
The 607m2 site at 322 Norton Street has development approval for a 9-unit,
mixed-use development. The property is located approximately 5km from the Sydney
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.
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
DIRECTORS’
REPORT
35 NORTON ST.
LEICHHARDT
In the heart of Norton St.
The 436m² property zoned E1 Local Centre
will generate approximately $0.2m gross
revenue for the Group once fully leased.
The property falls within the Draft Parramatta
Road Corridor Urban Transformation Strategy
(PRCUTS) being led by the NSW Government
and Inner West Council for increased density
along Parramatta Road.
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A dynamic blend of
expertise & vision
MEET
THE
TEAM
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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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
Directors and Directors’ Interests
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 2024.
Expertise &
Special
Interests in
experience
responsibilities
Desane
Expertise &
Special
Interests in
experience
responsibilities
Desane
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 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 P 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 in 2019.
Mr J Sciara joined Desane in
2001 and has over 25 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.
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.
Mr Montrone retired 30 July
2024
Chairman of the Remuneration
& Nomination Committee
Chairman of the Environmental,
Occupational Health & Safety
Committee
Member of the Risk Management
& Audit Committee
Member of the Finance
& Operations Committee
Member of the Risk Management
& Audit Committee
Member of the Finance &
Operations Committee
Member of the Environmental,
Occupational Health & Safety
Committee
Appointed Managing Director
30th July 2024
Chairman of the Risk
Management & Audit Committee
Member of the Remuneration &
Nomination Committee
Member of the Finance &
Operations Committee
Member of the Environmental,
Occupational Health & Safety
Committee
Chief Financial Officer and
Company Secretary
Appointed Director 30 July 2024
Member of the Risk Management
& Audit Committee
Member of the Finance &
Operations Committee
Member of the Environmental,
Occupational Health & Safety
Committee
Ordinary shares
179,305
Ordinary shares
303,721
Ordinary shares
Nil
Ordinary shares
103,000
Ordinary shares
14,596,076
Prof. John B Sheehan AM
Independent Non-Executive Director
& Chairman
Mr Phil Montrone OAM
Managing Director - Retired
Mr Rick Montrone
Managing Director
Mr Peter Krejci
Independent
Non-Executive Director
Mr Jack Sciara
CFO & Company Secretary
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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Total Revenue
Segment Result
2024
2023
2024
2023
$’000
$’000
$’000
$’000
Property investment – rental
2,206
1,964
(354)
(316)
Property management and services
41
40
41
40
Property investment – net revaluations
3,228
2,504
3,228
2,504
Interest income
714
984
714
984
6,189
5,492
3,629
3,212
Less: Unallocated expenses
(1,325)
(1,307)
Operating profit
2,304
1,905
Income tax (expense)/benefit attributable to operating
profit
(289)
-
Deferred tax attributable to operating profit
(372)
(588)
Operating profit after income tax attributable to members
of Desane Group Holdings Limited
1,643
1,317
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’ REPORT
Director
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
J B Sheehan
12
12
2
2
P Montrone
12
12
2
2
R Montrone
11
12
2
2
P Krejci
12
12
2
2
J Sciara
12*
12
2*
2
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
J B Sheehan
1
1
1
1
P Montrone
-
1
1
1
R Montrone
-
1
1
1
P Krejci
1
1
1
1
J Sciara
1*
1
1*
1
* 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 $1.6m (2023: $1.3m). 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.
2024
2023
$’000
$’000
The profit of the consolidated group, after providing for income tax amounted to
1,643
1,317
Financial Review
Desane achieved a sound financial result for the 2024 financial year. The Group’s operational revenues improved whilst
expenses have remained steady. The Group’s property portfolio has continued to grow year on year.
As a result of a continued strong western Sydney industrial market, the Penrith asset has been independently valued to
$13.5m, as reported in the Group’s HY24 results, representing an increase of 35% on the previous corresponding period.
Furthermore, in consequence of diligent and prudent management of the Group’s property leases, the Group achieved an
increase of 12.3% in rental income.
The Group’s total assets now stand at $101.7m.
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
3.
Review capital management strategies
to ensure capacity to grow and
sustainable shareholder dividends
A summary of consolidated financial results by operational segments is set out below:
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Dividends Paid or Recognised
2024
2023
$’000
$’000
Dividends paid or declared for payment are as follows:
No dividend was declared for the full year ended 30 June 2024
-
-
DIRECTORS’ REPORT
Capital Gains Tax Deferral
Following the involuntary sale of the Rozelle property in September 2018, as part of the compulsory acquisition by Roads and
Maritime Services, a Capital Gains Tax (CGT) event was triggered for approximately $13.9m.
Desane’s management secured a private ruling with the Australian Taxation Office (ATO) to defer the payment of the $13.9m
CGT until 30 June 2024, allowing Desane ample time to acquire suitable replacement assets.
The CGT deferral period ended on 30 June 2024. Desane utilised approximately 90% of the deferral by acquiring similar
replacement assets during that period in difficult market conditions. Included in the deferred tax liability of $20.1m is
approximately $11.9m of CGT remaining from the involuntary sale of the Rozelle property.
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
In July 2024, Desane repaid $3.6m of its bank debt facility.
On 30 July 2024, the following Board and KMP changes were
announced:
•
The Managing Director / CEO, Phil Montrone, announce
his retirement;
•
Rick Montrone, Executive Director / Head of Property,
was appointed as Managing Director / CEO;
•
Jack Sciara, Chief Financial Officer / Company Secretary,
was appointed as Executive Director / Chief Financial
Officer / Joint Company Secretary; and
•
Kylie Ichsan, Financial Accountant, was appointed
Financial Accountant / Joint Company Secretary.
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.
AUDITED REMUNERATION REPORT
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.
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):
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 2024, there was no approval or payment of an STI bonus to KMP (2023: $-).
Dividends
paid
Earnings before
interest and tax
(“EBIT”)
Net profit after tax
(“NPAT”)
Operational
performance
Net tangible asset
(“NTA”) per share
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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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.
Executive Agreements
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.
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 (2023: $0.1m), inclusive of
superannuation. The 2024 non-executive director fees are 50.1% (2023: 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.
2024
2023
2022
NPAT for the year at 30 June
$1.6m
$1.3m
$4.6m
Dividends paid per share (cents)
-
-
-
Closing share price at 30 June
$0.95
$0.88
$1.10
Earnings/(loss) per share (cents) at 30 June
4.02
3.22
11.35
Ordinary shares on issue at 30 June
40,909,990
40,909,990
40,909,990
NTA per share at 30 June
$1.62
$1.58
$1.55
DIRECTORS’ REPORT
Name
Commencement
Date
Term of Agreement &
Notice Period
Base Salary Including
Superannuation
Termination
Payments /
Benefits
$’000
$’000
P Montrone
1 September 1987
No fixed term & 12 months
401
-
R Montrone
2 November 2003
No fixed term & 12 months
428
-
J Sciara
3 September 2001
No fixed term & 12 months
238
-
Short Term Benefits
Salary &
Fees
STI Cash
Bonus
Superannuation
Total
$’000
$’000
$’000
$’000
Directors
John B. Sheehan (non-executive)
88
-
-
88
Peter Krejci (non-executive)
58
-
6
64
Phil Montrone
252
-
28
280
Rick Montrone
386
-
42
428
Chief Financial Officer/Company Secretary
Jack Sciara
214
-
24
238
998
-
100
1,098
Indemnifying Officers or Auditor
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 $41,548 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 2024.
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 2024.
$’000
Taxation services
4
Details of Remuneration for year ended 30 June 2024
The remuneration for each director and the executive officer of the consolidated entity receiving the highest remuneration
during the year was as follows:
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
Auditor’s Independence Declaration
The lead auditor’s Independence Declaration for the year ended 30 June 2024, has been received and can be found on page 43
of the Financial 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 26th day of August 2024.
J B Sheehan
R Montrone
Director
Director
Sydney
Sydney
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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AUDITOR’S INDEPENDENCE DECLARATION
GCC Business & Assurance Pty Ltd
GPO Box 4566, Sydney NSW 2001
Telephone: (02) 9231 6166
ABN 61 105 044 862
Facsimile: (02) 9231 6155
Suite 807, 109 Pitt Street, Sydney NSW 2000
9
Liability limited by a scheme approved under Professional Standards Legislation
AUDITOR’S INDEPENDENCE DECLARATION
UNDER SECTION 307C OF THE CORPORATIONS ACT 2001
TO DIRECTORS OF DESANE GROUP HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
As the lead auditor for the audit of the Desane Group Holdings Limited and its controlled entitles for the year ended
30 June 2024, I declare that, to the best of my knowledge and belief, there have been no contraventions of:
(i)
The auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and
(ii) Any applicable code of professional conduct in relation to the audit.
GCC BUSINESS & ASSURANCE PTY LIMITED
(Authorised Audit Company No. 307963)
Juebin Chen
Director
Sydney, 21 August 2024
AUDITOR’S
INDEPENDENCE
DECLARATION
FINANCIAL
STATEMENTS
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 4 A N N U A L R E P O R T
4 5
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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2 0 2 4 A N N U A L R E P O R T
Consolidated Group
Note
2024
2023
$’000
$’000
Current Assets
Cash and cash equivalents
9
3,458
2,696
Trade and other receivables
10
331
376
Other current assets
11
486
500
Other financial assets
12
5,116
10,690
Total Current Assets
9,391
14,262
Non-current Assets
Inventory – development property
13
4,417
4,382
Investment properties
14
84,785
77,473
Property, plant and equipment
15
2,287
2,331
Other assets
11
91
134
Other financial assets
12
680
180
Total Non-current Assets
92,260
84,500
Total Assets
101,651
98,762
Current Liabilities
Trade and other payables
16
884
264
Borrowings
17
5,900
13,900
Provisions
18
345
104
Total Current Liabilities
7,129
14,268
Non-current Liabilities
Trade and other payables
16
2
2
Borrowings
17
8,000
-
Provisions
19
66
53
Deferred tax liability
22
20,074
19,702
Total Non-current Liabilities
28,142
19,757
Total Liabilities
35,271
34,025
Net Assets
66,380
64,737
Equity
Issued capital
20
21,213
21,213
Retained earnings
21
45,167
43,524
Total Equity
66,380
64,737
Consolidated Group
Note
2024
2023
$’000
$’000
Continuing Operations
Revenue
2
2,247
2,004
Other income
2a
714
984
Gain/(loss) on revaluation of investment properties
2
3,228
2,504
Employee benefits expense
(1,248)
(1,209)
Depreciation and amortisation expense
(48)
(44)
Finance costs
(862)
(677)
Other expenses from ordinary activities
(1,727)
(1,657)
Profit before income tax
2,304
1,905
Income tax expense
4
(289)
-
Income tax deferred
4
(372)
(588)
Profit from continuing operations
1,643
1,317
Other comprehensive income
-
-
Net Profit (after income tax)
1,643
1,317
Profit attributable to minority equity interest
-
-
Profit attributable to members of the parent entity
1,643
1,317
Earnings per Share:
Overall Operations
Basic earnings per share (cents per share)
8
4.02
3.22
Diluted earnings per share (cents per share)
8
4.02
3.22
Continuing Operations
Basic earnings per share (cents per share)
4.02
3.22
Diluted earnings per share (cents per share)
4.02
3.22
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For The Year Ended 30 June 2024
The accompanying notes form part of these financial statements.
The accompanying notes form part of these financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2024
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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Consolidated Group
Note
2024
2023
Inflows
Inflows
(Outflows)
(Outflows)
$’000
$’000
Cash flows from operating activities
Receipts from customers
2,626
2,131
Payments to suppliers and employees
(1,749)
(3,680)
Interest received
786
848
Finance costs
(852)
(677)
Net cash provided by (used in) operating activities
29
811
(1,378)
Cash flows from investing activities
Purchase of property, plant and equipment
(4)
(54)
Purchase of development properties
(35)
(27)
Purchase of investment properties
(3,715)
-
Purchase of financial assets
(1,000)
(180)
Proceeds from sale of financial assets
5,074
2,577
Capital costs of investment properties
(369)
(301)
Net cash provided by (used in) investing activities
(49)
2,015
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
762
637
Cash at beginning of financial year
2,696
2,059
Cash at end of financial year
9
3,458
2,696
Consolidated Group
Issued Capital
Retained
Earnings
Total
$’000
$’000
$’000
Balance at 1 July 2023
21,213
43,524
64,737
Shares issued during the year
-
-
-
Profit attributable to members of the parent entity
-
1,643
1,643
21,213
45,167
66,380
Dividends paid or recognised for the year
-
-
-
Balance at 30 June 2024
21,213
45,167
66,380
Issued Capital
Retained
Earnings
Total
$’000
$’000
$’000
Balance at 1 July 2022
21,213
42,207
63,420
Shares issued during the year
-
-
-
Profit attributable to members of the parent entity
-
1,317
1,317
21,213
43,524
64,737
Dividends paid or recognised for the year
-
-
-
Balance at 30 June 2023
21,213
43,524
64,737
The accompanying notes form part of these financial statements.
The accompanying notes form part of these financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2024
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 June 2024
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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Note 1: Summary of Significant Accounting Policies
Basis of Preparation
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 are presented in
Australian dollars, which is the functional currency for the
parent company and its controlled entities.
The financial statements were authorised for issue on 26
August 2024 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.
Accounting Policies
a. Principles of Consolidation
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.
A list of controlled entities is contained in note 30 to the
financial statements. All controlled entities have a 30
June financial year end.
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 assess 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.
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.
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2024
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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Note 1: Summary of Significant Accounting Policies
(continued)
The depreciation rates used for each class of
depreciable assets are:
Class of Fixed Asset
Depreciation
Rate
Motor vehicles
15%
Plant and equipment
2.5%-33%
Office and computer equipment
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.
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.
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
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 and other comprehensive income 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.
Lease incentives under operating leases are recognised
as a liability and amortised on a straight line basis over
the lease term.
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 (i.e. trade date
accounting is adopted).
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.
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.
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.
j.
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.
k. 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.
l.
Revenue and Other Income
The Group has applied AASB 15: Revenue from Contracts
with Customers.
Revenue from the rendering of property services is
recognised upon delivery of the service to customers.
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.
The Group derives revenue from investing in properties
for rental and capital appreciation over time.
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).
m. 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.
n. Trade and Other Payables
Trade and other payables represent the liabilities for
goods and services received by the entity that remain
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2024
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
5 5
2 0 2 4 A N N U A L R E P O R T
Consolidated Group
2024
2023
$’000
$’000
Revenue from Continuing Operations
Property rental income
2,206
1,964
Property management fees and services
41
40
Total Revenue from Continuing Operations
2,247
2,004
Other Revenue
a. Interest revenue from:
- other persons
714
984
Total Other Revenue
714
984
Total Revenue
2,961
2,988
Other Income
Property investment – net revaluations
3,228
2,504
Total Other Income
3,228
2,504
Note 1: Summary of Significant Accounting Policies
(continued)
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.
o. 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.
p. Goods and Services Tax (GST)
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 Tax
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.
q. 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.
r. Rounding of Amounts
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.
s. 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 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 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. New and Amended Policies Adopted by the Group
- 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 2024.
- 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 2024 (note 17).
Note 2: Revenue and Other Income
Note 3: Profit for the Year
Profit before income tax from continuing operations includes the following
specific expenses:
Consolidated Group
Note
2024
2023
$’000
$’000
Expenses
Auditors’ remuneration
6
94
89
Depreciation of plant and equipment
48
44
Finance costs:
- External
862
677
Transfer to/(from) provisions for:
- Employee entitlements
(33)
(66)
Direct property expenditure from investment property generating rental income
1,109
889
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2024
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
5 7
2 0 2 4 A N N U A L R E P O R T
2024
Salary & Fees
Superannuation
Short Term
Incentives
Total
Key Personnel
$’000
$’000
$’000
$’000
John B. Sheehan
88
-
-
88
Peter Krejci
58
6
-
64
Phil Montrone #
252
28
-
280
Rick Montrone
386
42
-
428
Jack Sciara
214
24
-
238
# Refer to note 31.
998
100
-
1,098
Key Personnel
Balance
30.06.23
‘000
Net Change
Other*
‘000
Balance
30.06.24
‘000
John B. Sheehan
179
-
179
Phil Montrone
14,596
-
14,596
Rick Montrone
304
-
304
Peter Krejci
-
-
-
Jack Sciara
203
(100)
103
15,282
(100)
15,182
2023
Salary & Fees
Superannuation
Short Term
Incentives
Total
Key Personnel
$’000
$’000
$’000
$’000
John B. Sheehan
88
-
-
88
Peter Krejci
58
6
-
64
Phil Montrone
260
27
-
287
Rick Montrone
423
44
-
467
Jack Sciara
214
22
-
236
1,043
99
-
1,142
c. Key Personnel Compensation
Note 4: Income Tax Expense
a. The components of tax expense comprise
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:
Consolidated Group
Note
2024
2023
$’000
$’000
Current tax
289
-
Deferred tax
22
372
588
661
588
Consolidated Group
2024
2023
$’000
$’000
Prima facie tax payable on profit from ordinary activities before income tax at
30% (2023: 30%)
- consolidated group
691
572
Add:
Tax effect of:
- adjustment for prior year tax provision
(54)
-
- other accruals/provisions
23
27
- other non-allowable items
1
1
- other items not included in taxable income
-
(12)
Income tax attributable to entity
661
588
The applicable weighted average effective tax rates
28.7%
30.8%
b. The prima facie tax on profit from ordinary activities before income tax is reconciled to income tax as follows:
Key Personnel
Position
Prof. John B. Sheehan AM
Chairman (non-executive director)
Mr Phil Montrone OAM
Managing Director (retired 30 July 2024)
Mr Peter Krejci
Director (non-executive)
Mr Rick Montrone
Director – Head of Property (appointed Managing Director 30 July 2024)
Mr Jack Sciara
Company Secretary and Chief Financial Officer (appointed Executive Director 30 July 2024)
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.
d. Shareholdings
Number of shares held by parent entity directors and specified executives.
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2024
* “Net Change Other” refers to shares purchased or sold during the financial year.
b. Compensation Practices
The board’s policy for determining the nature and amount of compensation of key personnel for the group is as follows:
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
5 9
2 0 2 4 A N N U A L R E P O R T
Consolidated Group
2024
2023
$’000
$’000
Remuneration of the auditor for the parent entity:
GCC Business Assurance Pty Ltd
- auditing or reviewing the financial report
90
85
- taxation services
4
4
94
89
Consolidated Group
2024
2023
$’000
$’000
Prepayments and GST receivables
486
500
Note 8: Earnings per Share
Note 9: Current Assets – Cash and Cash Equivalents
Consolidated Group
2024
2023
$’000
$’000
Cash at bank and in hand
458
696
Interest bearing short term deposits
3,000
2,000
3,458
2,696
The effective interest rate on cash at bank was 1.3% (2023 – 1.0%).
The effective interest rate on short term bank deposits was an average of 4.45%
(2023 – 3.0%). These deposits have a weighted average maturity of 90 days.
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:
Cash as above
3,458
2,696
Less: Bank overdraft (refer to note 17)
-
-
3,458
2,696
Note 10: Current Assets – Trade and Other Receivables
Consolidated Group
2024
2023
$’000
$’000
Trade receivables
331
376
Note 11: Other Assets
Consolidated Group
2024
2023
$’000
$’000
Formation costs
2
2
Lease payment plan
89
132
91
134
(b)
Non-Current Assets
(a)
Current Assets
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2024
Note 6: Auditors’ Remuneration
Note 7: Dividends
Consolidated Group
2024
2023
$’000
$’000
Dividends paid
a.
No dividend was declared for full year ended 30 June 2024
-
-
b.
The Group has $nil (2023 - $nil) franking credits available.
Consolidated Group
2024
2023
$’000
$’000
Reconciliation of earnings used in the calculation of earnings per share
Operating profit after income tax
1,643
1,317
Reconciliation of weighted average numbers of ordinary shares used in the calculation of
earnings per share
Consolidated Group
2024
2023
Weighted average number of ordinary shares used in the calculation of basic earnings
per share
40,909,990
40,909,990
Basic earnings per share (cents per share)
4.02
3.22
Diluted earnings per share (cents per share)
4.02
3.22
Conversion, call, subscription or issue after 30 June 2024
There has been no conversion to, calls of, or subscription for ordinary shares since the reporting date and before the
completion of these accounts.
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
6 1
2 0 2 4 A N N U A L R E P O R T
Consolidated Group
(a)
Current
2024
2023
$’000
$’000
Held-to-maturity investments
Fixed interest securities
5,116
10,690
Consolidated Group
(b)
Non-Current
2024
2023
$’000
$’000
Held-to-maturity investments
Fixed interest securities
680
180
Note 12: Other Financial Assets
The effective interest rate on fixed interest securities is an average of 7.5% pa.
These securities have a weighted average maturity of 365 days.
Note 13: Non-Current Assets – Inventory (Development Property)
Note 14: Non-current Assets – Properties
Valuation overview
The basis of the directors’ valuation of the investment properties (non-current) is a fair market value as defined in note 1e.
In arriving at their opinion, the directors have reviewed and adopted the following three approaches and methodologies:
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 2024. An independent valuation was undertaken in June 2024 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 2024. An independent valuation was undertaken in June 2024 by a certified
practicing valuation company. The directors have based the value on the valuation report, together with current direct
comparison market sales evidence.
c. The directors’ valuation, as at 30 June 2024. An independent valuation was undertaken in February 2024 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 2024. 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.
e. The directors’ valuation as at 30 June 2024. 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.
f.
The directors’ valuation as at 30 June 2024. 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.
g. Valued at cost expenditure as at 30 June 2024. The purchase of the property was settled in February 2024.
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.
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2024
Consolidated Group
2024
2023
$’000
$’000
322 Norton Street, Leichhardt – acquisition cost
3,379
3,379
322 Norton Street, Leichhardt – development costs
1,038
1,003
4,417
4,382
Consolidated Group
Investment properties:
Note
2024
2023
$’000
$’000
13 Sirius Road, Lane Cove NSW
14a
8,700
8,715
7 Sirius Road, Lane Cove NSW
14b
10,500
10,528
91 Thornton Drive, Penrith NSW
14c
13,541
10,000
159 Allen Street, Leichhardt NSW
14d
23,024
23,022
16 Industrial Avenue, Wacol QLD
14e
16,021
16,000
270-278 Norton Street, Leichhardt NSW
14f
9,220
9,208
35 Norton Street, Leichhardt NSW
14g
3,779
-
84,785
77,473
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
6 3
2 0 2 4 A N N U A L R E P O R T
Consolidated Group
2024
2023
$’000
$’000
Suite 4, 26-32 Pirrama Road, Pyrmont – land and buildings
1,834
1,834
Less: Accumulated depreciation
-
-
1,834
1,834
Capital works – Suite 4
352
352
Less: Accumulated depreciation
(76)
(62)
276
290
Depreciable plant and equipment
21
21
Less: Accumulated depreciation
(11)
(10)
10
11
Leasehold improvements
104
104
Less: Accumulated depreciation
(14)
(12)
90
92
Office furniture and equipment – at cost
73
145
Less: Accumulated depreciation
(39)
(104)
34
41
Motor vehicle – at cost
106
106
Less: Accumulated depreciation
(64)
(48)
42
58
In-house software
23
23
Less: Accumulated depreciation
(22)
(18)
1
5
Total non-current assets
2,287
2,331
Note 14: Non-current Assets – Properties (continued)
Investment Properties
2024
2023
Acquisition
Cost
Construction
Cost
Other
Capital
Costs
Revaluation
Carrying
Value
30.06.2023
$’000
$’000
$’000
$’000
$’000
13 Sirius Rd, Lane Cove NSW
2,900
672
1,313
3,830
8,715
7 Sirius Rd, Lane Cove NSW
2,950
1,137
339
6,101
10,527
91 Thornton Dr, Penrith NSW
4,149
-
885
4,966
10,000
159 Allen St, Leichhardt NSW
22,280
-
603
139
23,022
16 Industrial Ave, Wacol QLD
10,073
-
268
5,659
16,000
270-278 Norton St, Leichhardt NSW
7,688
-
71
1,450
9,209
50,040
1,809
3,479
22,145
77,473
Note 15: Non-current Assets – Property, Plant and Equipment
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2024
Acquisition
Cost
Construction
Cost
Other
Capital
Costs
Revaluation
Carrying
Value
30.06.2024
$’000
$’000
$’000
$’000
$’000
13 Sirius Rd, Lane Cove NSW
2,900
672
1,422
3,706
8,700
7 Sirius Rd, Lane Cove NSW
2,950
1,137
343
6,070
10,500
91 Thornton Dr, Penrith NSW
4,149
-
1,042
8,350
13,541
159 Allen St, Leichhardt NSW
22,280
-
605
139
23,024
16 Industrial Ave, Wacol QLD
10,073
-
289
5,659
16,021
270-278 Norton St, Leichhardt NSW
7,688
-
82
1,450
9,220
35 Norton St, Leichhardt NSW
3,715
-
64
-
3,779
53,755
1,809
3,847
25,374
84,785
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
6 5
2 0 2 4 A N N U A L R E P O R T
(a)
Current
Consolidated Group
2024
2023
$’000
$’000
Unsecured liabilities
Trade payables
884
264
Movements in Carrying Amounts
Movement in the carrying amounts for each class of property, plant and equipment between the beginning and the end of the
current financial year:
Note 16: Trade and Other Payables
(b)
Non-Current
i.
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. The loan was due
to mature on 27 July 2024. In July 2024, $2,950,000 was
repaid and the first mortgage security released.
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. The loan was due
to mature on 27 July 2024.
Note 18: Current Liabilities – Provisions
* Movement represents net increase (decrease) in provision set aside.
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2024
Note 17: Borrowings
In July 2024, $650,000 was repaid, reducing the loan
facility to $2,300,000 and the loan facility was renewed
for 12 months. The new loan covenants imposed by the
mortgagor require total debt not to exceed 50% of the
property value and the EBITDA is required to exceed
interest expense by at least 1.5 times.
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. The maturity of the
loan is 31 March 2027.
Maturity Schedule
Land and
Buildings
Capital
Works
Leasehold
Improvements
Plant &
Equipment
Total
$’000
$’000
$’000
$’000
$’000
Consolidated Group
Balance at the beginning of year
1,834
290
91
116
2,331
Additions
-
-
-
4
4
Disposals/write offs
-
-
-
-
-
Depreciation expense
-
(13)
(3)
(32)
(48)
Carrying amount at the end of the
year
1,834
277
88
88
2,287
(b) Non-Current
Consolidated Group
2024
2023
$’000
$’000
Unsecured liabilities
Trade payables – rental bonds held
2
2
(a)
Current
Consolidated Group
Note
2024
2023
$’000
$’000
Secured:
Bank overdraft
a
-
-
Secured Liabilities – Bank Loans
Finance for property 13 Sirius Road, Lane Cove
17i
2,950
2,950
Finance for property 7 Sirius Road, Lane Cove
17ii
2,950
2,950
Finance for property 16 Industrial Avenue, Wacol
17iii
-
8,000
5,900
13,900
a. Bank overdraft secured over Lane Cove properties (refer to note 29.)
Consolidated Group
Note
2024
2023
$’000
$’000
Secured Liabilities – Bank Loans
Finance for property 16 Industrial Avenue, Wacol
17iii
8,000
-
Interest
Consolidated Group
Rates
2024
2023
(average)
$’000
$’000
27 July 2024
6.32% pa
5,900
5,900
31 March 2027
6.32% pa
8,000
8,000
13,900
13,900
Consolidated Group
2024
2023
$’000
$’000
Current income tax
289
-
Employee entitlements*
56
104
345
104
Note 15: Non-current Assets – Property, Plant and Equipment (continued)
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
6 7
2 0 2 4 A N N U A L R E P O R T
Consolidated Group
Consolidated Group
2024
2023
2024
2023
Shares
Shares
$’000
$’000
Ordinary Shares Fully Paid
At beginning of the year
40,909,990
40,909,990
21,213
21,213
Ordinary Shares fully paid at reporting period
40,909,990
40,909,990
21,213
21,213
a. Movements in Ordinary Share Capital of the Company
No shares were issued during 2024: nil (2023: 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.
Consolidated Group
2024
2023
No
No
Number of employees at year end
7
7
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2024
Note 18: Current Liabilities – Provisions (continued)
Note 19: Non-Current Liabilities – Provisions
Consolidated Group
2024
2023
$’000
$’000
Employee long service leave entitlement*
66
53
* Movement represents provision set aside.
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.
Consolidated Group
2024
2023
$’000
$’000
Retained earnings at beginning of financial year
43,524
42,207
Net profit attributable to members of parent entity
1,643
1,317
Retained earnings at end of financial year
45,167
43,524
Note 21: Retained Earnings
Note 20: Issued Capital
Consolidated Group
2024
2023
$’000
$’000
40,909,990 (2023: 40,909,990) Ordinary Shares fully paid
21,213
21,213
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
6 9
2 0 2 4 A N N U A L R E P O R T
Consolidated Group
Note
2024
2023
$’000
$’000
Non-current
Deferred tax liability comprises:
Tax allowances relating to property and equipment
12,524
14,457
Revaluation of investment properties
7,612
6,644
Deferred tax asset attributable to tax and capital losses
-
(1,314)
Provisions
(62)
(85)
20,074
19,702
Reconciliation
Gross Movement
The overall movement in the deferred tax account is as follows:
Opening balance
19,702
19,114
Charge to statement of profit and loss
4
372
588
Closing balance
20,074
19,702
Deferred Tax Liability
Tax allowance relating to property, plant and equipment
Opening balance
14,457
14,405
Charged to the statement of profit and loss
(1,933)
52
Closing balance
12,524
14,457
Revaluation of investment properties
Opening balance
6,644
5,892
Net revaluation during the current period
968
752
Closing balance
7,612
6,644
Deferred Tax Assets
Tax and capital losses
Opening balance
(1,314)
(1,072)
Prior year adjustment
-
-
Tax and capital losses utilised
1,314
(242)
Closing balance
-
(1,314)
Provisions
Opening balance
(85)
(111)
Credited to statement of profit and loss
23
26
Closing balance
(62)
(85)
Note 22: Deferred Taxes
Capital Gains Tax Deferral
Following the involuntary sale of the Rozelle property in September 2018, as part of the compulsory acquisition by Roads and
Maritime Services, a Capital Gains Tax (CGT) event was triggered for approximately $13.9m.
Desane’s management secured a private ruling with the Australian Taxation Office (ATO) to defer the payment of the $13.9m
CGT until 30 June 2024, allowing Desane ample time to acquire suitable replacement assets. The CGT deferral period ended
on 30 June 2024.
Included in the deferred tax liability of $20.1m is approximately $11.9m of CGT remaining from the involuntary sale of the Rozelle
property. Approximately $2.0m CGT has been included in the income tax as at 30 June 2024.
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 2024, 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:
The net fair value of cash and cash equivalents and non-
interest bearing monetary financial assets and financial
liabilities approximates their carrying value.
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.
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2024
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
7 1
2 0 2 4 A N N U A L R E P O R T
Note 23: Financial Instruments (continued)
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.
Note 23: Financial Instruments (continued)
2024
Note
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
$’000
$’000
$’000
$’000
Financial Assets
Cash and deposits
9
-
3,458
-
-
3,458
Receivables
10, 11
-
-
-
908
908
Other financial assets
12
-
5,116
680
-
5,796
-
8,574
680
908
10,162
Weighted average
interest rates
0.0%
4.7%
7.0%
0.0%
4.7%
Financial Liabilities
Trade and other
creditors
16
-
-
-
886
886
Interest bearing
liabilities
17
13,900
-
-
-
13,900
13,900
-
-
886
14,786
Weighted average
interest rate
6.3%
0.0%
0.0%
0.0%
6.3%
Net financial assets
(liabilities)
(13,900)
8,574
680
22
(4,624)
2023
Note
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
$’000
$’000
$’000
$’000
Financial Assets
Cash and deposits
9
-
2,696
-
-
2,696
Receivables
10, 11
-
-
-
1,009
1,009
Other financial assets
12
-
10,690
180
-
10,870
-
13,386
180
1,009
14,575
Weighted average
interest rates
0.0%
7.0%
7.0%
0.0%
5.8%
Financial Liabilities
Trade and other
creditors
16
-
-
-
266
266
Interest bearing
liabilities
17
13,900
-
-
-
13,900
13,900
-
-
266
14,166
Weighted average
interest rate
6.05%
0.0%
0.0%
0.0%
6.05%
Net financial assets
(liabilities)
(13,900)
13,386
180
743
409
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.
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2024
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
7 3
2 0 2 4 A N N U A L R E P O R T
Consolidated Group
Profit
Equity
$’000
$’000
Year ended 30 June 2024
+/- 206
+/- 206
Note 23: Financial Instruments (continued)
- interest rate sensitivity calculated at an average of +/- 2%pa.
Consolidated Group
Profit
Equity
$’000
$’000
Year ended 30 June 2023
+/- 278
+/- 278
- interest rate sensitivity calculated at an average of +/- 2%pa.
Held to Maturity Investments
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 50% 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:
Consolidated Group
2024
2023
$’000
$’000
Desane Properties Pty Ltd: Dividend paid
1,350
1,300
b. Directors
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 $48,045 at properties owned by the Group on an arm’s length basis. Trafalgar
Contracting Pty Ltd has 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 $30,750 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 11.0% of each member’s
salary into the fund nominated by each member. Group companies contribute a minimum amount equal to 11.0% 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 11.0% contribution made by group companies is legally enforceable.
The company and its controlled entities have a legally enforceable obligation to contribute to the funds.
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 $127,267 (2023 - $119,670), parent entity $84,803 (2023 - $75,501).
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 2024, in the controlled entities concerned were:
2024
2023
$’000
$’000
159 Allen Street Leichhardt Pty Ltd – net assets
(768)
(575)
Desane Properties Pty Limited – net assets
57,933
56,121
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2024
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
7 5
2 0 2 4 A N N U A L R E P O R T
Note 27: Contingent Liabilities(continued)
b. 7 Sirius Road Property
The parent entity has guaranteed the repayment of the
first mortgage finance secured over the 7 Sirius Road
property (note 17).
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
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
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 to
the operations and or services provided by the segment.
Types of Operations and Services by Segment
Revenue is derived by the industry segments from the
following activities:
i.
Property Development
Development projects (residential, commercial or
industrial).
ii.
Property Investment
Rental income from prime real estate investments.
iii. Property Project Management and Resale
Property project management and resale of
commercial, industrial and residential properties,
principally in Sydney metropolitan areas.
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.
2024
Property
Investment
Property
Development
Property
Services
Plant and
Equipment
Other
Consolidated
Group
$’000
$’000
$’000
$’000
$’000
$’000
External sales
2,206
-
41
-
714
2,961
Other segments
-
-
-
-
-
-
Total revenue
2,206
-
41
-
714
2,961
Segment result
3,736
-
41
-
714
4,491
Unallocated expenses
(1,325)
Finance costs
(862)
Profit/(loss) before income
tax
2,304
Income tax expense
(661)
Profit/(loss) after income tax
1,643
2024
Segment Assets
Property
Investment
Property
Development
Property
Services
Plant and
Equipment
Other
Consolidated
Group
$’000
$’000
$’000
$’000
$’000
$’000
2023 opening balance
77,473
4,382
-
2,331
14,576
98,762
Unallocated Assets
Deferred tax assets
-
-
-
-
-
-
Segment Asset Increases/
(Decreases) for the Period
Acquisitions
3,715
-
-
4
-
3,719
Revaluations/(devaluations)
3,228
-
-
-
-
3,228
Capital expenditures
369
35
-
-
-
404
Development expenditures
-
-
-
-
-
-
Depreciation and capital
allowance
-
-
-
(48)
-
(48)
Net movement in other
segments
-
-
-
-
(4,414)
(4,414)
84,785
4,417
-
2,287
10,162
101,651
Unallocated Assets
Deferred Tax Assets
Total Group Assets
101,651
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2024
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
7 7
2 0 2 4 A N N U A L R E P O R T
2024
Segment Liabilities
Property
Investment
Property
Development
Property
Services
Plant and
Equipment
Other
Consolidated
Group
$’000
$’000
$’000
$’000
$’000
$’000
2023 opening balance
13,900
-
-
-
20,125
34,025
Unallocated Liabilities
Segment Liabilities
Increases/(Decreases) for
the Period
New Borrowings
-
-
-
-
-
-
Net movement in other
segments
-
-
-
-
827
827
13,900
-
-
-
20,952
34,852
Unallocated Liabilities
Deferred Tax Liabilities
372
Total Group Liabilities
35,224
Note 28: Operating Segments – Consolidated Group (continued)
2023
Segment Assets
Property
Investment
Property
Development
Property
Services
Plant and
Equipment
Other
Consolidated
Group
$’000
$’000
$’000
$’000
$’000
$’000
2022 opening balance
74,668
4,355
-
2,321
16,279
97,623
Unallocated Assets
-
Deferred tax assets
-
-
-
-
-
-
Segment Asset Increases/
(Decreases) for the Period
Acquisitions
-
-
-
54
-
54
Revaluations/(devaluations)
2,504
2,504
Capital expenditures
301
27
-
-
-
328
Depreciation and capital
allowance
-
-
-
(44)
-
(44)
Net movement in other
segments
-
-
-
-
(1,703)
(1,703)
77,473
4,382
-
2,331
14,576
98,762
Unallocated Assets
Deferred Tax Assets
-
Total Group Assets
98,762
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2024
2023
Property
Investment
Property
Development
Property
Services
Plant and
Equipment
Other
Consolidated
Group
$’000
$’000
$’000
$’000
$’000
$’000
External sales
1,964
-
40
-
984
2,988
Other segments
-
-
-
-
-
-
Total revenue
1,964
-
40
-
984
2,988
Segment result
2,865
-
40
-
984
3,889
Unallocated expenses
(1,307)
Finance costs
(677)
Profit/(loss) before income
tax
1,905
Income tax expense
(588)
Profit/(loss) after income tax
1,317
2023
Segment Liabilities
Property
Investment
Property
Development
Property
Services
Plant and
Equipment
Other
Consolidated
Group
$’000
$’000
$’000
$’000
$’000
$’000
2022 opening balance
13.900
-
-
-
20,303
34,203
Unallocated Liabilities
Segment Liabilities Increases/
(Decreases) for the Period
Net movement in other
segments
-
-
-
-
(766)
(766)
13,900
-
-
-
19,537
33,437
Unallocated Liabilities
Deferred Tax Liabilities
588
Total Group Liabilities
34,025
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
7 9
2 0 2 4 A N N U A L R E P O R T
Credit Standby Arrangements with Banks
Consolidated Group
2024
2023
$’000
$’000
Credit facility
100
100
Amount utilised
-
-
Consolidated Group
2024
2023
$’000
$’000
Loan facilities
13,900
13,900
Amount utilised
(13,900)
(13,900)
Consolidated Group
2024
2023
$’000
$’000
Profit/(loss) after income tax
1,643
1,317
Non-cash flows in profit/(loss)
Depreciation and amortisation
48
44
(Gain)/loss on asset revaluation
(3,228)
(2,504)
Changes in assets and liabilities
(Increase)/decrease in trade receivables
45
(5)
(Increase)/decrease in prepayments
14
(101)
(Decrease)/increase in trade payments and accruals
620
(616)
(Decrease)/increase in other payables
-
-
(Decrease)/increase in provisions
(34)
(66)
Increase/(decrease) in deferred taxes payable
372
588
Transfer to financing activities
1,331
(35)
Cash flow from operations
811
(1,378)
Note 29: Cash Flow Information
a. Reconciliation of Cash Flow from Operations with Profit After Income Tax
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
For more details on the loan facilities, please refer to note 17.
Parent Entity
Note
2024
2023
$’000
$’000
STATEMENT OF COMPREHENSIVE INCOME
Result of Parent Entity
Profit for the period
26
46
Other comprehensive income
-
-
Total profit and comprehensive income for the period
26
46
STATEMENT OF FINANCIAL POSITION
Current Assets
Cash
10
7
Other assets
36
36
Non-current Assets
Trade and other receivables – loans to controlled entities
ii
9,320
9,258
Investment – controlled entities
i
490
490
Property, plant and equipment
78
105
Total Assets
9,934
9,896
Current Liabilities
Trade and other payables
87
19
Short term provisions
141
197
Total Liabilities
228
216
Net Assets
9,706
9,680
Total Equity
Issued capital
21,213
21,213
Retained earnings/(accumulated losses)
(11,507)
(11,533)
Total Equity
9,706
9,680
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.
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2024
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
8 1
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Parent Entity
2024
2023
Controlled Entities
Class of
Shares
Holding
Investment
Holding
Investment
%
$’000
%
$’000
Desane Properties Pty Ltd
Ordinary
100
490
100
490
159 Allen Street Leichhardt Pty Ltd
Ordinary
100
-
100
-
490
490
Note 30: Parent Entity Disclosures (continued)
i.
Controlled Entities
Investments in controlled entities are unquoted and comprise:
All controlled entities are incorporated in Australia. Desane Properties Pty Ltd declared a dividend of $1,350,000 out of
retained profits (2023: $1,300,000). 159 Allen Street Leichhardt Pty Ltd declared a dividend of $nil (2023: $nil).
Desane Contracting Pty Ltd was closed down during the year.
Contribution to profit/(loss) after tax:
2024
2023
$’000
$’000
Desane Group Holdings Limited
(1,324)
(1,254)
Desane Properties Pty Limited
3,161
2,878
Desane Contracting Pty Limited
-
(53)
159 Allen Street Leichhardt Pty Ltd
(194)
(254)
1,643
1,317
ii.
Loans to Controlled Entities
2024
2023
$’000
$’000
Desane Properties Pty Limited
(14,472)
(14,536)
159 Allen Street Leichhardt Pty Ltd
23,792
23,794
9,320
9,258
Guarantees
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.
Contractual Commitments
At 30 June 2024, Desane Group Holdings Limited had not entered into any contractual commitments for the acquisition of
property, plant and equipment or any other affairs (2023: Nil).
Note 31: Events after the Reporting Date
In July 2024, Desane repaid $3.6m of its bank debt facility.
On 30 July 2024, the following Board and KMP changes were announced:
•
The Managing Director / CEO, Phil Montrone, announced his retirement (refer to note 31(a));
•
Rick Montrone, Executive Director / Head of Property, was appointed as Managing Director / CEO;
•
Jack Sciara, Chief Financial Officer / Company Secretary, was appointed as Executive Director / Chief Financial Officer /
Joint Company Secretary; and
•
Kylie Ichsan, Financial Accountant, was appointed Financial Accountant / Joint Company Secretary.
(a) Together with his accumulated employee entitlements (fully provided in these statements) it was resolved to waive the
period of notice and pay Mr Phil Montrone a termination benefit of $360,000 in August 2024.
Note 32: Economic Dependency
A portion of all the Group’s investment properties are under financial loans.
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2024
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
INDEPENDENT
AUDITOR’S
REPORT
In accordance with a resolution of the directors of Desane Group Holdings Limited, the directors of the company declare that:
1. The financial statements and notes, as set out on pages 46 to 81 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 2024 and of the performance for the year ended on
that date of the consolidated group;
2. 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.
DIRECTORS’ DECLARATION
J B Sheehan
R Montrone
Director
Director
Sydney
Sydney
26 August 2024
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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GCC Business & Assurance Pty Ltd
GPO Box 4566, Sydney NSW 2001
Telephone: (02) 9231 6166
ABN 61 105 044 862
Facsimile: (02) 9231 6155
Suite 807, 109 Pitt Street, Sydney NSW 2000
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF DESANE GROUP HOLDINGS LIMITED
REPORT ON THE AUDIT OF CONSOLIDATED FINANCIAL STATEMENTS
Report on the Financial Report
Opinion
We have audited the financial report of Desane Group Holdings Limited and controlled entities (“the Group”)
which comprises the consolidated statement of financial position as at 30 June 2024, the consolidated statement
of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated
statement of cash flows for the year then ended, and notes to the financial statements, including a summary of
material accounting policies information and the directors’ declaration.
In our opinion, the accompanying financial report of the Desane Group Holdings Limited is in accordance with the
Corporations Act 2001, including:
(a)
giving a true and fair view of the Group’s financial position as at 30 June 2024 and of its performance
for the year ended on that date; and
(b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of
our report. We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards
Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code)
that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical
responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to
the directors of the Group, would be in the same terms if given to the directors as at the time of this auditor’s
report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the financial report for the year ended 30 June 2024. These matters were addressed in the context of our audit
of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion
on these matters.
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Liability limited by a scheme approved under Professional Standards Legislation
GCC Business & Assurance Pty Ltd
GPO Box 4566, Sydney NSW 2001
Telephone: (02) 9231 6166
ABN 61 105 044 862
Facsimile: (02) 9231 6155
Suite 807, 109 Pitt Street, Sydney NSW 2000
Description of Key Audit Matter
How Our Audit Addressed the Key Audit Matter
1. Valuation of Investment Properties – non current
refer note 1(e) and note 14 to the consolidated
financial statements.
$,000
13 Sirius Road, Lane Cove NSW
8,700
7 Sirius Road, Lane Cove NSW
10,500
91 Thornton Drive, Penrith NSW
13,541
159 Allen Street, Leichhardt NSW
23,024
16 Industrial Avenue, Wacol QLD
16,021
270-278 Norton Street, Leichhardt NSW
9,220
The properties were valued by the directors based
on the methodologies used by independent
valuations undertaken by a firm of licensed valuers.
During the year, independent valuations were
undertaken for the Lane Cove properties in June
2024 and in February 2024 for the Penrith property.
Commercial property valuations are sensitive to the
key assumptions applied in valuations.
In
particular, rates of capitalisation of net rental
income, the inputs to determine discounted cash
flow outcomes and in appropriately assessing
market sales evidence in the property sector and
location under review.
Our procedures included, but were not limited to the
following:
1. We confirmed that the independent valuations
were undertaken in accordance with both
International Financial Reporting Standards
(IFRS) 13 and the Australian Property Institute
Standards to determine the fair value of the
properties.
2. We considered the valuation methods used by
the directors to ensure their approach and
methodologies accorded with the industry norm
for valuations of this nature and that all
commonly accepted valuation methods had
been considered.
3. The professional membership of the
independent valuers was confirmed.
4. We checked the continued reliability of the
underlying assumptions used in the valuations to
supporting lease agreements and other
documents.
5. We compared the inputs in the valuations,
including capitalisation rates, discount rates and
rental yields to historical data and available
industry data for their current relevance and
applicability. The relative sensitivity of the inputs
was discussed with the directors.
6. We reviewed the Directors’ and management’s
assessment and evidence of comparable market
sales for reasonableness.
7. We considered the adequacy of the disclosures
in the financial statements.
We confirmed that the directors’ valuations were in
accordance with generally acceptable market
valuations with the key assumptions being within the
range of current market data.
We found the
disclosures in the financial statements to be
adequate.
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INDEPENDENT AUDIT REPORT TO THE MEMBERS
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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GCC Business & Assurance Pty Ltd
GPO Box 4566, Sydney NSW 2001
Telephone: (02) 9231 6166
ABN 61 105 044 862
Facsimile: (02) 9231 6155
Suite 807, 109 Pitt Street, Sydney NSW 2000
Auditor’s Responsibility 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 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, safeguards applied.
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 Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 36 to 39 of the directors’ report for the year ended
30 June 2024. In our opinion, the remuneration report of Desane Group Holdings Limited, for the year ended 30
June 2024, complies with section 300A of the Corporations Act 2001.
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Liability limited by a scheme approved under Professional Standards Legislation
INDEPENDENT AUDIT REPORT TO THE MEMBERS
GCC Business & Assurance Pty Ltd
GPO Box 4566, Sydney NSW 2001
Telephone: (02) 9231 6166
ABN 61 105 044 862
Facsimile: (02) 9231 6155
Suite 807, 109 Pitt Street, Sydney NSW 2000
Information Other than the Financial Report and the Auditor’s Report Thereon
The directors are responsible for the other information. The other information comprises the information included
in the Group’s annual report for the year ended 30 June 2024, but does not include the financial report and our
auditor’s report. Our opinion on the financial report does not cover the other information and accordingly we do
not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our
responsibility is to read the other information and, in doing so, consider whether the other information is
materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be
materially misstated. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact. We have nothing to report in this
regard.
Responsibilities of the Directors for the Financial Report
The directors of the Group are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001. The directors’
responsibility also includes such internal control as the directors determine is necessary to enable the
preparation of a financial report that gives a true and fair view and is free from material misstatement, whether
due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the Group’s ability to continue as a
going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
Description of Key Audit Matter
How Our Audit Addressed the Key Audit Matter
2. Fixed Interest Securities (refer note 12)
$,000
Current
5,116
Non-current
680
5,796
The fixed interest securities represent loan
advances to property investment businesses via
designated facilitating financial institutions.
Desane’s due diligence protocols include
requirement of an independent valuation of the
underlying property, executed loan agreements,
fixed first registered mortgage security and
satisfactory loan to the value of the property ratio.
Our procedures included, but were not limited to the
following:
1. We confirmed all balances with the financial
institutions concerned.
2. We checked the allocation between current and
non-current in the financial statements.
3. We spoke to management at each financial
institution to assess recoverability of the loans.
4. We verified key documentation including
independent valuations, loan agreements and
first mortgage registrations.
5. We assessed the reasonableness of loan to
valuation ratio. Balances appear fairly stated at
30 June 2024.
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GCC Business & Assurance Pty Ltd
GPO Box 4566, Sydney NSW 2001
Telephone: (02) 9231 6166
ABN 61 105 044 862
Facsimile: (02) 9231 6155
Suite 807, 109 Pitt Street, Sydney NSW 2000
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Liability limited by a scheme approved under Professional Standards Legislation
Responsibilities
The directors of the Group 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.
GCC Business & Assurance Pty Ltd
Authorised Audit Company
Juebin Chen
Director
Sydney
Dated: 26 August 2024
INDEPENDENT AUDIT REPORT TO THE MEMBERS
SHAREHOLDER’S
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
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3.
SUBSTANTIAL SHAREHOLDERS
Substantial holders in the Company are set out below:
Ordinary
Number
%
Cupara Pty Ltd
10,246,252
28.27
Greig & Harrison Pty Ltd
4,624,331
11.30
Phoenix Portfolios Pty Ltd
4,560,206
12.36
Montevans Pty Ltd
2,729,374
6.67
4.
VOTING RIGHTS
The voting rights attaching to each class of shares are set out below:
Ordinary Shares
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.
The shareholder information set out below was applicable as at 5 August 2024.
1.
SHAREHOLDING
Distribution of equitable securities:
Category (size of holding)
Number of
Ordinary
Shares*
Number of
Holders of
Ordinary
Shares
% of Issued
Capital
1 -1,000
30,793
126
0.08
1,001 -5,000
301,287
117
0.74
5,001 -10,000
362,274
47
0.89
10,001 -100,000
4,462,412
116
10.91
100,001 -and over
35,753,224
56
87.39
Rounding
(0.01)
Total
40,909,990
462
100.00
There were 92 holders of less than a marketable parcel of ordinary shares.
* The number of Ordinary Shares on issue as at 30 June 2024 was 40,909,990.
2.
TWENTY LARGEST QUOTED EQUITY SECURITY HOLDERS
The names of the 20 largest security holders are listed below:
Name
Ordinary
Shares
% Held to
Issued Capital
1.
Cupara Pty Ltd
11,270,878
27.55
2.
J P Morgan Nominees Australia Pty Limited
4,499,201
11.00
3.
Montevans Pty Ltd
2,610,400
6.38
4.
Horrie Pty Ltd
2,210,294
5.40
5.
Glencairn Pty Limited
1,470,000
3.59
6.
Citicorp Nominees Pty Limited
1,065,153
2.60
7.
PFPT Management Pty Ltd
938,831
2.29
8.
Cordato Partners (Superannuation) Pty Ltd
790,409
1.93
9.
Dotnric Pty Ltd
593,579
1.45
10.
John & Judith Pty Ltd
582,677
1.42
11.
Keiser Investments Pty Ltd
556,158
1.36
12.
Hillmorton Custodians Pty Ltd
552,051
1.35
13.
BNP Paribas Nominees Pty Ltd
418,163
1.02
14.
Mansfield Holdings Pty Ltd
400,632
0.98
15.
Est Mr Peter Howells
354,953
0.87
16.
Oakmount Nominees Pty Ltd
330,000
0.81
17.
Woodtrone Pty Ltd
303,721
0.74
18.
Waratah Property Services (No 1) Pty Ltd
302,005
0.74
19.
Whimplecreek Pty Ltd
280,000
0.68
20.
Joe Scardino & Felicia Scardino
273,555
0.67
29,802,660
72.85
SHAREHOLDER INFORMATION
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CORPORATE
DIRECTORY
Directors & Key Personnel
Prof. John Blair Sheehan AM – Chairman (non-executive
director)
Rick Montrone – Managing Director
Peter Krejci – Director (non-executive)
Jack Sciara – Director, Chief Financial Officer and
Joint Company Secretary
Kylie Ichsan- Financial Accountant and Joint Company
Secretary
Principal Registered Office in Australia
Suite 4, 26-32 Pirrama Road, Pyrmont NSW 2009
Other Company Details
Postal address: PO Box 331, Leichhardt NSW 2040
Telephone: (02) 9555-9922
E-mail Address: info@desane.com.au
Website: desane.com.au
Share Register
Shareholders with questions about their shareholdings should
contact Desane’s external share registrar:
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.
Auditor
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 Suite 2, Upper Deck, 26-32 Pirrama
Road, Pyrmont NSW on Thursday, 14 November 2024,
commencing at 10.30 am.
COMPANY PARTICULARS
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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