MUSTERA PROPERTY GROUP LIMITED — Annual Report 2021

Sep 29, 2021

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M U S T E R A P R O P E R T Y G R O U P L T D ABN 13 142 375 522

A N N U A L R E P O R T 3 0 J U N E 2 0 2 1

C O R P OR A T E D IR E C T O R Y

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DIRECTORS

AUDITOR

Mr Nicholas Zborowski Mr Anthony Ho Mr Jack Spencer-Cotton

• Executive Director BDO Audit (WA) Pty Ltd - Non-Executive Director 38 Station Street - Non-Executive Director SUBIACO WA 6008

COMPANY SECRETARY

SHARE REGISTRY

Ms Joan Dabon

REGISTERED OFFICE AND PRINCIPAL PLACE OF BUSINESS

15 McCabe Street NORTH FREMANTLE WA 6159 Telephone: (61 8) 6389 2688

Advanced Share Registry Limited 110 Stirling Highway NEDLANDS WA 6009 PO Box 1156 NEDLANDS WA 6909 Telephone: +61 8 9389 8033 Facsimile: +61 8 9262 3723

STOCK EXCHANGE

Website: www.mustera.com.au

ASX Limited Central Park 152-158 St Georges Terrace PERTH WA 6000

ASX Code: MPX

1

C O N TE NT S

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	PAGE
Corporate Directory	1
Directors' Report	3
Consolidated Statement of Profit or Loss and Other Comprehensive Income	13
Consolidated Statement of Financial Position	14
Consolidated Statement of Changes in Equity	15
Consolidated Statement of Cash Flows	16
Notes to the Consolidated Financial Statements	17
Directors' Declaration	44
Independent Auditor’s Report	45
Auditor’s Independence Declaration	49
Additional Information	50

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D IR E C T O R S ’ R E P OR T

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The Directors present their report together with the consolidated financial statements of the Group comprising of Mustera Property Group Ltd ( Company or Parent Entity ) and its subsidiaries ( Group or Consolidated Entity ) for the year ended 30 June 2021 and the auditor’s report thereon.

DIRECTORS

The Directors of the Company at any time during or since the end of the financial year unless otherwise stated are:

Mr Nicholas Zborowski

Executive Director, B.Com – appointed 10 June 2014

Mr Zborowski has over 15 years’ experience in the property development and funds management industry and has managed a diverse range of projects and portfolios in Australia and the Middle East. Prior to commencing work with Mustera in January 2014, Mr Zborowski held senior roles with Charter Hall, Tourism Development Investment Company (TDIC), Emaar Malls Group and Australand. Mr Zborowski has a Commerce Degree with a major in Property from Curtin University, Western Australia.

Mr Anthony Ho

Non-Executive Director, B.Com – appointed 3 April 2014

Mr Ho is a commerce graduate of the University of Western Australia. He qualified as a Chartered Accountant in 1983 with Deloitte and is presently a partner of a consultancy firm, Anthony Ho and Associates, specialising in providing corporate and financial services to ASX-listed companies. Prior to establishing his firm in 1991, he spent 7 years in a senior corporate role with a major investment and resource group in Western Australia. He is currently a director of a number of companies listed on ASX.

Mr Jack Spencer-Cotton

Non-Executive Director - appointed 4 April 2014

Mr Spencer-Cotton has been involved in the field of engineering for over 20 years. Engineering and technology are both a passion and career, which have given him a range of roles. He is experienced in engineering design, project planning, and team management in large scale projects. He is presently a capital projects engineer at Pfizer Perth.

Mr Benjamin Young – resigned 13 July 2020

COMPANY SECRETARY

Ms Joan Dabon, BS Psych, LLB, GIA (Affiliated) – Appointed 19 May 2021

Ms Dabon has a degree in law and is a member of the Governance Institute of Australia. She is currently completing her Graduate Diploma in Applied Corporate Governance and Risk Management. Over the past 5 years, Ms Dabon has been providing company secretarial services to ASX and NSX listed companies in their compliance, governance, capital raising, financial reporting and IPOrelated requirements.

Mr Kim Hogg, B.Com – resigned 19 May 2021

DIRECTORSHIPS IN OTHER LISTED ENTITIES

Directorships in other listed entities held by Directors of the Company during the last 3 years immediately before the end of the financial year are as follows:

		Period of	directorship
Director	Company	From	To
Nicholas Zborowski	Not Applicable	-	-
Anthony Ho	Alchemy Resources Limited	2011	Present
	Australian Agricultural Projects Limited	2003	Present
	Newfield Resources Limited	September 2011	16 April 2021
Jack Spencer-Cotton	Newfield Resources Limited	May 2021	Present
Benjamin Young1	Not Applicable	-	-
Note:

1. Mr Benjamin Young resigned on 13 July 2020.

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D IR E C T O R S ’ R E P OR T

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DIRECTORS’ INTERESTS

The relevant interests of each director in the securities of the Company at the date of this report are as follows:

Director	Shares	Options	Performance Rights2
Nicholas Zborowski	1,633,450	2,000,000	1,000,000
Anthony Ho	2,096,394	1,000,000	500,000
Jack Spencer-Cotton	1,832,219	1,211,408	500,000
Benjamin Young1	365,481	1,500,000	-

Note:

1. Mr Benjamin Young resigned on 13 July 2020.

2. A total of 2,000,000 Performance Rights granted to Directors have vested in accordance with the terms of their issue following the achievement of the applicable performance milestones. Please refer to the Company’s project update released to the ASX on 2 June 2021. These Performance Rights may be exercised at the election of the Directors who have indicated they will defer the exercise of their respective Performance Rights until further notice.

DIRECTORS’ MEETINGS

The number of Directors’ meetings held (including meetings of Committees of Directors) and the number of meetings attended by each of the Directors of the Company during the financial year are:

		Board			Audit Committee
Director	Held		Attended	Held	Attended
Nicholas Zborowski	6		6	n/a	n/a
Anthony Ho	6		6	2	2
Jack Spencer-Cotton	6		6	2	2
Benjamin Young1	1		1	n/a	n/a

Note:

1. Mr Benjamin Young resigned on 13 July 2020.

COMMITTEE MEMBERSHIP

As at the date of this Report, the Company had an Audit and Risk Committee of the Board of Directors.

Members of the Audit and Risk Committee during the financial year were:

Director	Held
Anthony Ho	Chair
Jack Spencer-Cotton	Member

PRINCIPAL ACTIVITY

The principal activity of the Group during the financial year was property investment and development.

REVIEW OF OPERATIONS

The Group recorded a loss of $2,490,661 for the financial year (2020: loss of $1,065,936).

Mustera continued with its core business during the year including the development of residential apartments and funds management. Revenue of $5.35m was recorded during the year received from rental income, fund management fees and the sale of inventory. No new projects reached completion during the year.

During the year, the Company progressed with its flagship project, Forbes Residences in Applecross. The Company commenced with its marketing campaign in Q4 2020 and at 30 June 2021 had 32 apartments under contract including two penthouse apartments. Strong interest levels have been from owner occupiers downsizing locally who recognise the boutique nature of the project as well as the green and sustainable initiatives driven though its international design practices.

After a competitive tender process, the Company appointed PACT Construction Pty Ltd to build its flagship project. They have a proven track record of delivering high quality projects and has successfully built numerous residential projects in Perth. The appointment of a builder is a major milestone for the project and the Company are pleased to have a builder with the local expertise and proven track record on board. Construction is commencing in September 2021.

The Company also divested its Belmont property being considered a non-core asset in June 2021.

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D IR E C T O R S ’ R E P OR T

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Mustera continued to focus on progressing its portfolio of development assets and delivering rental revenue and management fees through its investments during the year.

Further details of the Group’s operating activities during the year are outlined below.

COMPLETED PROJECTS

Victoria Quarter, Lot 803 Foundry Road, Midland WA – One apartment was sold during the year and the remaining four apartments are currently under contract and will settle in December 2021.

FUTURE PROJECTS

10 Forbes Road, Applecross WA - Development Approval was issued in April 2020 for 57 apartments, food and beverage and commercial office space over 13 floors.

32 apartments are sold and under contract at 30 June 2021.

In May 2021 the Company appointed PACT Construction Pty Ltd as the contractor to construct the Forbes project. Construction is due to commence in September 2021 with an estimated completion in Q2 2023. The Company continues to market the apartments for sale.

75 Haig Park Circle, East Perth WA - The property comprises a 2,233m[2] site and is situated near the corner of Plain and Royal Street, 1.5 km from the Perth Central Business District. Improvements include an open air at-grade car park with fifty car bays. The property is currently leased for public parking.

The City of Perth has adopted design guidelines to introduce development standards for the property. The scheme amendment was approved by the Minister in May 2021.

Consistent with the Group’s strategy, rental income is being generated from the leased property whilst development planning and approvals are being undertaken.

15 McCabe Street, North Fremantle WA – The property, with direct ocean and river views, comprises office improvements of approximately 2,000m[2] over two levels, on a 2,398m[2] site.

The Group has continued to progress with the preliminary design and planning for the development in anticipation of applying for planning approval in late 2021.

Consistent with the Group’s strategy, rental income is being generated from the leased property whilst development planning is being undertaken.

Grace Quarter, Lot 801 Helena Street, Midland WA – The 2,390m[2] site is located on the corner of Helena Street and Yelverton Drive and forms a part of the Midland Railway Workshops precinct.

The Group continues to assess the market conditions in anticipation of reinstating the expired development approval. In addition, the Company is also looking at alternative development options for the property.

CORPORATE

In July 2021, the Company raised $5,502,228 by the issue of 22,008,911 fully paid ordinary shares through a rights issue to shareholders (Note 33).

The deficiency in working capital as shown in the accounts is due to the short term nature of the Group’s borrowing arrangements. The Directors are confident they will be able to refinance existing loan facilities, as and when the loan facilities mature.

Looking ahead, the Group is in the final stage of completing formal debt financing documentation for the development of the Forbes Residences Project and are confident the project will be fully funded in due course.

While the directors are confident the Group will secure the funding required, the timing and extent of this is uncertain and may cast doubt on the Group’s ability to continue as a going concern, refer Note 2 for further detail.

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D IR E C T O R S ’ R E P OR T

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SUBSEQUENT EVENTS

On 20 July 2021, the Company completed a 3 for 10 non renounceable rights issue of fully paid ordinary shares issuing 22,008,911 new shares and raising $5,502,228.

On 10 August 2021, the Group fully acquired the remaining shares in Applecross Land Holdings Pty Ltd.

Other than what has been disclosed in the accounts, no matters or events have arisen since 30 June 2021 which have significantly affected, or may significantly affect, the operations of the Group, the results of the operations, or the state of affairs of the Group in future financial years.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

There have been no significant changes in the state of affairs of the Group during the year.

LIKELY DEVELOPMENTS

The Group will continue to develop its existing projects and review and assess other acquisition and development opportunities in the property market.

The Group will look to grow its funds under management.

DIVIDENDS

No dividends have been declared or paid by the Company to the date of this report.

ENVIRONMENTAL REGULATION

The Directors are not aware of any particular and significant environment regulation under a law of the Commonwealth, State or Territory relevant to the Group.

SHARE OPTIONS

The following options were granted since the end of the previous financial year:

Grant date	Expiry date	Exercise Price	Number of Options
20 July 2021	20 July 2023	$0.30	11,004,449

No options were exercised during or since the end of the financial year.

At the date of this report, unissued ordinary shares of the Company under option are:

Grant date	Expiry date	Exercise Price	Number of Options
21 October 2016	30 September 2021	$0.37	3,000,000
29 November 2018	30 November 2023	$0.46	2,500,000
20 July2021	20 July2023	$0.30	11,004,449

These options do not entitle the holder to participate in any share issue of the Company or any other entity.

INDEMNIFICATION AND INSURANCE OF OFFICERS

Indemnification

The Company has agreed to indemnify the current Directors and company secretary of the Company against all liabilities to another person (other than the Company or a related body corporate) that may arise from their position as officers of the Company, except where the liability arises out of conduct involving a lack of good faith. The agreement stipulates that the Company will meet the full amount of any such liabilities, including costs and expenses.

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Insurance

The Company paid a premium during the year in respect of a director and officer liability insurance policy, insuring the Directors of the Company, the company secretary, and all executive officers of the Company against a liability incurred as such a Director, secretary or executive officer to the extent permitted by the Corporations Act 2001. The Directors have not included details of the nature of the liabilities covered or the amount of the premium paid in respect of the directors’ and officers’ liability and legal expenses’ insurance contracts, as such disclosure is prohibited under the terms of the contract.

INDEMNIFICATION AND INSURANCE OF AUDITORS

The Company has not, during or since the financial year, indemnified or agreed to indemnify the auditor of the Company or any related entity against liability incurred by the auditor.

During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of the Company or any related entity.

NON-AUDIT SERIVCES

During the year the Group’s auditor, BDO Audit (WA) Pty Ltd, has performed certain other services in addition to the audit and review of the financial statements.

The Directors are satisfied that the provision of non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001 . The nature and scope of each type of non-audit service provided means that auditor independence was not compromised.

Details of the amount paid to the auditor of the parent entity, BDO Audit (WA) Pty Ltd, and its network firms for non-audit services provided during the year are set out below:

	2021 $ 2020 $
Services other than audit and review of financial statements: Tax compliance Technical consultation on deconsolidation of Fund Total remuneration for non-audit services	19,900 23,545 2,000 -
	21,900 23,545

AUDITOR’S INDEPENDENCE DECLARATION

A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out at the end of the Independent Auditor’s Report.

PROCEEDINGS ON BEHALF OF THE COMPANY

No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party for the purposes of taking responsibility on behalf of the Company for all or part of those proceedings.

CORPORATE GOVERNANCE

A copy of the Group’s corporate governance statement can be found on the Company’s website at http://mustera.com.au/corporate-governance.

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R E MU N E R A TI O N R E P OR T

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The remuneration report, which has been audited, outlines the key management personnel remuneration arrangements for the Group, in accordance with the requirements of the Corporations Act 2001 and its Regulations.

For the purposes of this report, key management personnel of the Group are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Group, directly or indirectly, including any Director (whether executive or otherwise) of the Company.

KEY MANAGEMENT PERSONNEL

The following were key management personnel of the Group at any time during the financial year and unless otherwise indicated were key management personnel for the entire year:

Name	Position held
Nicholas Zborowski	Executive Director
Anthony Ho	Non-executive Director
Jack Spencer-Cotton	Non-executive Director
Benjamin Young1	Non-executive Director

• Note: 1. Mr Benjamin Young resigned on 13 July 2020.

PRINCIPLES OF REMUNERATION

The remuneration structures explained below are competitively set to attract, motivate and retain suitably qualified and experienced candidates, reward the achievement of strategic objectives and achieve the broader outcome of creation of value for shareholders. The remuneration structures take into account:

• the capability and experience of the key management personnel;

• the key management personnel’s ability to control the achievement of strategic objectives;

• the Group’s performance including:

• the growth in share price; and

• the amount of incentives within each key management person’s compensation.

REMUNERATION STRUCTURE

In accordance with best practice corporate governance, the structure of non-executive directors’ remuneration is clearly distinguished from that of executives. Remuneration is determined by the Board as a whole as the Company has not yet established a remuneration committee.

NON-EXECUTIVE DIRECTORS’ REMUNERATION

The Constitution and the ASX Listing Rules specify that the aggregate remuneration of non-executive directors shall be determined from time to time by shareholders in general meeting. Total remuneration for all non-executive directors, last voted upon by shareholders in 2014, is not to exceed $300,000 per annum. Directors’ fees cover all main board activities and membership of committees if applicable.

Non-executive directors do not receive any retirement benefits, other than statutory superannuation, nor do they receive any performance-related compensation for their role as non-executive directors.

Non-executive directors’ fees as at the reporting date are as follow:

Name	Non-executive directors’ fees
Anthony Ho	$20,000 per annum
Jack Spencer-Cotton	$20,000 plus statutory superannuation per annum
Benjamin Young1	$20,000 plus statutory superannuation per annum
Note:

1. Mr Benjamin Young resigned on 13 July 2020.

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EXECUTIVE REMUNERATION

Remuneration for executives is set out in employment agreements. Details of the employment agreement with Executive directors are provided below.

Executive directors may receive performance-related compensation but do not receive any retirement benefits, other than statutory superannuation.

FIXED REMUNERATION

Fixed remuneration consists of base compensation (which is calculated on a total cost basis and includes any FBT charges related to employee benefits including motor vehicles) as well as employer contributions to superannuation funds.

Fixed remuneration is reviewed annually by the Board through a process that considers individual and overall performance of the Group.

ASSESSING PERFORMANCE AND CLAW-BACK OF REMUNERATION

The Board is responsible for assessing performance against Key Performance Indicators ( KPI s) and determining the Short-term Incentives ( STI ) and Long-term Incentives ( LTI ) to be paid. To assist in this assessment, the Board may request detailed reports on performance from management which are based on independently verifiably data such as financial measures, market share and data from independently run surveys. In the event of serious misconduct or a material misstatement in the Company’s financial statements, the Board can cancel or defer performance-based remuneration and may also claw back performance-based remuneration paid in previous financial years.

The Group does not have any formal bonus scheme in place. The Group does not have any ongoing commitment to pay bonuses.

Long-term incentive

Long-term Incentives ( LTI ) may be provided to key management personnel in the form of options over ordinary shares of the Company. LTI are considered to promote continuity of employment and provide additional incentive to recipients to increase shareholder wealth. Options may only be issued to Directors subject to approval by shareholders in general meeting.

The Company’s Securities Trading Policy prohibits employees and Directors of the Company from entering into transactions that operate or are intended to operate to limit the economic risk or are designed or intended to hedge exposure to unvested Company securities. This includes entering into arrangements to hedge their exposure to LTI granted as part of their remuneration package.

This policy may be enforced by requesting employees and Directors to confirm compliance.

CONSEQUENCE OF PERFORMANCE ON SHAREHOLDER WEALTH

In considering the Group’s performance and benefits for shareholder wealth, the Board have regard to the following indices in respect of the current financial year and the previous four financial years:

	2021	2020	2019	2018	2017
Net profit/(loss) for the year	($2,490,661)	($1,065,936)	($1,581,550)	$677,963	$808,872
Dividends paid	Nil	Nil	0.25 cent	Nil	Nil
			per share
Closing share price (30 June)	$0.30	$0.30	$0.30	$0.27	$0.28
Earnings/(loss) per share (cents)	(2.23)	(1.07)	(1.56)	0.71	0.88
Weighted average number of shares on issue	111,541,525	99,616,115	99,399,020	99,027,111	91,416,942

USE OF REMUNERATION CONSULTANTS

The Group did not engage the services of a remuneration consultant during the year.

VOTING AND COMMENTS MADE AT THE COMPANY'S 2020 ANNUAL GENERAL MEETING (AGM)

At the 2020 AGM, 100% of the votes received supported the adoption of the remuneration report for the year ended 30 June 2020. The Company did not receive any specific feedback at the AGM regarding its remuneration practices.

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EMPLOYMENT AGREEMENTS

Remuneration and other terms of employment for the executives are formalised in service agreements. The service agreements specify the components of remuneration, benefits and notice periods. Other major provisions of the agreements relating to remuneration are set out below.

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

Name	N Zborowski
Commencement Date	1 July2014
Term of agreement	No fixed term
Noticeperiod1	3 months
Base salary
(inc superannuation)	$197,100
Terminationpayments	Nil

Note:

1. The notice period applies equally to both the Company and Mr Zborowski.

REMUNERATION OF KEY MANAGEMENT PERSONNEL

					POST-
					EMPLOY-	SHARE-BASED
		SHORT-TERM			MENT	PAYMENTS
								Proportion of	Value of
			STI		Super-			remuneration	options as
		Salary &	cash	Annual	annuation	Performance		performance	proportion of
		fees1	bonus	leave	benefits	**Rights3 **	Total	related	remuneration
		$	$	$	$	$	$	%	%
Non-executive Directors
A Ho	2021	20,000	-	-	-	144,250	164,250	87.8	-
	2020	20,000	-	-	-	-	20,000	-	-
J Spencer-Cotton	2021	20,000	-	-	1,900	144,250	166,150	86.8	-
	2020	20,000	-	-	1,900	-	21,900	-	-
B Young4	2021	750	-	-	71	-	821	-	-
	2020	20,000	-	-	1,900	-	21,900	-	-
Executive Director
N Zborowski2	2021	180,000	-	(4,153)	17,100	288,500	481,447	59.9	-
	2020	185,302	-	692	17,100	-	203,094	-	-
Total	2021	220,750	-	(4,153)	19,071	577,000	812,668	71.0	-
	2020	245,302	-	692	20,900	-	266,894	-	-

Notes:

1. Includes non-monetary benefits as per Corporations Regulation 2M.3.03(1) Item 6

2. Non-monetary benefits of $5,302 were provided to Mr Zborowski in relation to 2020.

3. Performance rights granted under the performance rights scheme are expensed over the performance period, which includes the year to which it relates and the subsequent vesting period of the rights.

4. Mr Benjamin Young resigned on 13 July 2020.

SHARE-BASED REMUNERATION

No options over ordinary shares in the Company were granted as compensation to each key management person during the reporting period.

At the AGM held on 30 November 2020, shareholders approved the issue of a total of 2,000,000 performance rights to the Directors. A total of 2,000,000 Performance Rights granted to Directors have vested in accordance with the terms of their issue following the achievement of the applicable performance milestones. Please refer to the Company’s project update released to the ASX on 2 June 2021. These Performance Rights may be exercised at the election of the Directors and the Directors have indicated they will defer the exercise of their respective Performance Rights until further notice.

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Holder	Class	Number	Grant Date	Probability	Expiry Date of milestone achievement	Fair value per right	Total Fair Value
Nicholas Zborowski	A	500,000	10/12/2020	100%	10/12/2023	$0.2885	$145,250
	B	500,000	10/12/2020	100%	10/12/2023	$0.2885	$145,250
Jack Spencer-Cotton	A	250,000	10/12/2020	100%	10/12/2023	$0.2885	$72,125
	B	250,000	10/12/2020	100%	10/12/2023	$0.2885	$72,125
Anthony Ho	A	250,000	10/12/2020	100%	10/12/2023	$0.2885	$72,125
	B	250,000	10/12/2020	100%	10/12/2023	$0.2885	$72,125

The performance rights were valued at 30 cents a share being the share price on grant date 10 December 2020. Vesting occurs at the end of the performance period dated 10 December 2023, if the following performance conditions are met:

Class A) Upon announcement by the Company on the ASX market announcements platform that it has achieved committed pre-sales equal to or greater than 50% of the 57 residential apartments at Forbes Residences;

• Class B) Upon announcement by the Company on the ASX market announcements platform that it has entered into a Construction Contract for the development of Forbes Residences.

A share-based payment expense of $577,000 was recognised in the Statement of Profit or Loss and Other Comprehensive Income for the year ended 30 June 2021.

OTHER TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL

Mr Anthony Ho is a beneficiary of the Forrest Investment Trust which acquired 100,000 units in the Mustera Property Fund from the Company during the year. The consideration paid was $100,000 and the transaction was made on normal commercial terms and conditions. There was no profit or loss recognised during the financial year from this transaction.

Mr Benjamin Young, who resigned as a director of the Company on 13 July 2020, is a director and shareholder of Townshend Capital Pty Ltd ( Townshend Capital ). During the financial year, Townshend Capital provided corporate advisory services to the Group on normal commercial terms and conditions. Refer to Note 26 for the amount of fees recognised during the period.

MOVEMENT IN KEY MANAGEMENT PERSONNEL EQUITY HOLDINGS

Fully paid ordinary shares

The movement during the reporting period in the number of ordinary shares in the Company held directly, indirectly or beneficially by each key management person, including their related parties, is as follows:

	Held at	Granted as			Held at
	1 July 2020	remuneration	Additions	Disposals/Other	30 June 2021
N Zborowski	1,633,450	-	-	-	1,633,450
A Ho	2,016,394	-	80,000	-	2,096,394
J Spencer-Cotton	1,208,060	-	201,341	-	1,409,401
B Young1	365,481	-	-	-	N/A

Notes:

1. Mr Benjamin Young resigned on 13 July 2020.

Options over ordinary shares

The movement during the reporting period in the number of options over ordinary shares held directly, indirectly or beneficially by each key management person, including their related parties, is as follows:

							Vested and
	Held at	Granted as		Disposals/	Held at	Vested during	exercisable at
	1 July 2020	remuneration	Exercised	Other	30 June 2021	theyear	30 June 2021
N Zborowski	2,000,000	-	-	-	2,000,000	-	2,000,000
A Ho	1,000,000	-	-	-	1,000,000	-	1,000,000
J Spencer-Cotton	1,000,000	-	-	-	1,000,000	-	1,000,000
B Young1	1,500,000	-	-	-	N/A	-	N/A

Notes:

1. Mr Benjamin Young resigned on 13 July 2020.

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Performance rights

The movement during the reporting period in the number of performance rights held directly, indirectly or beneficially by each key management person, including their related parties, is as follows:

							Vested and
	Held at	Granted as		Disposals/	Held at	Vested during	exercisable at
	1 July 2020	remuneration	Exercised	Other	30 June 2021	theyear	30 June 2021
N Zborowski	-	1,000,000	-	-	1,000,000	1,000,000	1,000,000
A Ho	-	500,000	-	-	500,000	500,000	500,000
J Spencer-Cotton	-	500,000	-	-	500,000	500,000	500,000

This concludes the remuneration report, which has been audited.

This Directors’ Report is made out in accordance with a resolution of the Directors:

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Nicholas Zborowski

Executive Director

Dated at Perth this 30[th] day of September 2021.

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C O N S O L ID A TE D S TA TE M E N T OF P R O FI T OR L O S S A N D O TH E R C O M P R E H E N SI V E I NC O ME for the year ended 30 June 2021

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Note Revenue 5 Cost of sales Gross Profit Other income Property expenses and outgoings Property development costs Employee benefits expenses Administration and overhead costs Amortisation and depreciation Other Income and Expenses Finance income Finance costs (Increase)/Decrease in net assets attributable to unitholders Net Finance Costs Profit/(loss) before income tax Income tax benefit/(expense) 6 Net profit/(loss) for the year Other comprehensive income Items that will not be reclassified to profit or loss Items that may be reclassified subsequently to profit or loss Other comprehensive income for the year, net of tax Total comprehensive income/(loss) for the year attributable to the ordinary equity holders of the Company Total comprehensive income for the period is attributable to: Ordinary equity holders of the parent Non-controlling interest 21 Earnings/(loss) per share (cents) Basic earnings/(loss) per share for the financial year (cents) 24 Diluted earnings/(loss) per share for the financial year (cents) 24	2021 $ 2020 $ 5,352,010 2,601,741 (2,897,355) -
	2,454,655 2,601,741
	57,439 43,885 (1,106,953) (1,266,276) (1,063,091) (87,710) (974,818) (363,599) (667,559) (607,647) (113,845) (2,740)
	(3,926,266) (2,284,087)
	633 126,913 (555,031) (904,502) (491,453) (626,269)
	(1,045,851) (1,403,858)
	(2,460,023) (1,086,204) (30,638) 20,268
	(2,490,661) (1,065,936)
	- - - -
	- -
	(2,490,661) (1,065,936)
	(2,414,686) (1,040,107) (75,975) (25,829)
	(2,490,661) (1,065,936)
	(2.23) (1.07) N/A N/A

*Diluted loss per share is not shown as all potential ordinary shares on issue would decrease the loss per share and are thus not considered dilutive.

The Consolidated Statement of Profit or Loss and Other Comprehensive Income is to be read in conjunction with the accompanying notes.

13

C O N S O L ID A TE D S TA TE M E N T OF F I NA NC IA L P O S I TI O N As at 30 June 2021

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Note CURRENT ASSETS Cash and cash equivalents 7 Trade and other receivables 8 Inventories 9 Other current assets Total Current Assets NON-CURRENT ASSETS Trade and other receivables 8 Inventories 9 Investment property 10 Deferred tax assets 6 Property, plant & equipment 11 Right of use assets 12 Total Non-Current Assets TOTAL ASSETS CURRENT LIABILITIES Trade and other payables 13 Income tax payable 14 Employee benefits 15 Lease liability 16 Borrowings 17 Net assets attributable to property fund unitholders 18 Total Current Liabilities NON-CURRENT LIABILITIES Other payables 13 Deferred tax liabilities 6 Lease liability 16 Employee benefits 15 Borrowings 17 Total Non-Current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Contributed equity 19 Other reserves 20 Accumulated losses 22 Non-controlling interest 21 TOTAL EQUITY	2021 $ 2020 $ 421,449 281,321 387,135 211,264 1,189,419 1,486,774 49,220 15,197
	2,047,223 1,994,556
	2,500 2,500 22,253,488 24,133,525 17,425,091 17,359,827 157,723 188,362 123,947 19,343 24,624 -
	39,987,373 41,703,557
	42,034,596 43,698,113
	1,435,190 952,573 6,524 108,471 14,425 17,066 19,988 - 11,655,000 15,358,183 5,441,692 7,017,669
	18,572,819 23,453,962
	2,500 2,500 - - 5,125 - 31,886 - 9,900,000 8,531,000
	9,939,511 8,533,500
	28,512,330 31,987,462
	13,522,266 11,710,651
	16,131,071 11,980,795 687,494 308,019 (3,475,753) (1,061,067) 179,454 482,904
	13,522,266 11,710,651

The Consolidated Statement of Financial Position is to be read in conjunction with the accompanying notes.

14

C O N S O L ID A TE D S TA TE M E N T OF C H A N GE S I N E QU I TY for the year ended 30 June 2021

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Balance at 1 July 2019 Loss for the year Total comprehensive loss for the year Balance at 30 June 2020	Contributed Equity $ 11,980,795 - - 11,980,795	Other Reserves $ 308,019 - - 308,019	Other Reserves $ 308,019 - - 308,019	Accumulated Losses $ (20,961) (1,040,107) (1,040,107) (1,061,067)	Accumulated Losses $ (20,961) (1,040,107) (1,040,107) (1,061,067)	Total $ 12,267,853 (1,040,107) (1,040,107) (11,227,747)	Non- controlling interests $ 508,733 (25,829) (25,829) 482,904	Total Equity $ 12,776,586 (1,065,936)
								(1,065,936)
								11,710,651
Balance at 1 July 2020	11,980,795	308,019		(1,061,067)		(11,227,747)	482,904	11,710,651
Loss for theyear	-	-		(2,414,686)		(2,414,686)	(75,975)	(2,490,661)
Total comprehensive loss for theyear	-	-		(2,414,686)		(2,414,686)	(75,975)	(2,490,661)
Transactions with equity holders in their capacity as equity holders:
Shares issued, net of costs	4,150,276	-		-		4,150,276	-	4,150,276
Performance rights issue	-	577,000		-		577,000	-	577,000
Transactions with non controlling interests	-	(197,525)		-		(197,525)	(227,475)	(425,000)
Balance at 30 June 2021	16,131,071	687,494		(3,475,753)		13,342,812	179,454	13,522,266

The Consolidated Statement of Changes in Equity is to be read in conjunction with accompanying notes.

15

C O N S O L ID A TE D S TA TE M E N T OF C A SH F L OW S for the year ended 30 June 2021

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Note Cash flows from operating activities Receipts in the course of operations Receipts from repayment of vendor finance loan Other receipts Payments in the course of operations Payments for property held for development Interest received Interest paid Income tax refund/(paid) Net cash inflow/(outflow) from operating activities 28 Cash flows from investing activities Payments for property, plant and equipment Payments for leasehold improvements Payments for purchase of units in the Fund Payments for purchase of units in the Fund Proceeds from sale of units in the Fund Payments for transactions with non controlling interests Net cash (outflow)/ inflow from investing activities Cash flows from financing activities Distributions – property fund Proceeds from borrowings Repayment of borrowings Cash allocated to term deposits Payment of lease liabilities Proceeds from share issue Net cash inflow/(outflow) from financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at 1 July 2020 Cash and cash equivalents at 30 June 2021 7	2021 $ 2020 $ 5,334,419 2,682,539 - 3,410,300 58,176 43,148 (3,113,316) (2,930,904) (719,963) (305,802) 213 126,913 (295,924) (734,904) (101,947) (325,181)
	1,161,659 1,966,109
	(204,929) (5,055) (65,264) - - (250,000) (2,900,000) - 1,250,000 - (425,000) -
	(2,345,193) (255,055)
	(417,430) (655,143) 5,458,805 3,275,000 (7,792,988) (4,909,433) (60,000) (83,746) (15,000) - 4,150,276 -
	1,323,663 (2,373,322)
	140,128 (662,268) 281,321 943,589
	421,449 281,321

The Consolidated Statement of Cash Flows is to be read in conjunction with the accompanying notes.

16

N O TE S T O T H E C O NS OL I D A TE D F I NA NC IA L S T A TE ME NT S for the year ended 30 June 2021

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1. REPORTING ENTITY

Mustera Property Group Ltd ( Mustera or Parent Entity ) is a listed public company limited by shares, incorporated and domiciled in Australia.

The financial statements cover Mustera Property Group Ltd as a consolidated entity consisting of Mustera and its subsidiaries. The financial statements are presented in Australian dollars, which is Mustera's functional and presentation currency.

A description of the nature of the consolidated entity's operations and its principal activities are included in the Directors' Report, which is not part of the financial statements.

The financial statements were authorised for issue, in accordance with a resolution of Directors, on 30 September 2021. The Directors have the power to amend and reissue the financial statements.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

Basis of preparation

These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001, as appropriate for for-profit oriented entities. These financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board ('IASB').

Historical cost convention

The financial statements have been prepared under the historical cost convention, except for, where applicable, the revaluation of financial assets and liabilities at fair value through profit or loss, investment properties, certain classes of property, plant and equipment and derivative financial instruments.

Critical accounting estimates

The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the consolidated entity's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in Note 2.

Going concern

For the year ended 30 June 2021 the Group recorded a loss of $2,490,661 and had net cash inflows from operating activities of $1,161,658. The Group had cash and cash equivalent of $421,449 and net working capital deficiency of $16,525,597 as at 30 June 2021 including borrowings of $11,655,000. The ability of the Group to continue as a going concern is dependent on a number of factors including:

• (a) securing additional funding for future activities;

• (b) successfully renewing its banking facilities which are due for repayment within the next 12 months;

• (c) successful development and or sale of its inventory assets; and

• (d) raising funds by way of equity placements or rights issues.

These conditions indicate the existence of a material uncertainty which may cast significant doubt about the Group’s ability to continue as a going concern and, therefore, it may be unable to realise its assets and discharge its liabilities in the normal course of business.

Notwithstanding these factors, the financial statements have been prepared on the basis that the Group is a going concern, which contemplates the continuity of normal business activity, realisation of assets and settlement of liabilities in the normal course of business for the following reasons:

• Subsequent to the reporting date, the Company completed a rights issue raising $5,502,228 (refer to Note 33);

• The Group has commenced the financing and development of the Forbes Residences Project following the grant of the necessary building approvals during the year. At the date of this Report, the project has achieved $32m in pre-sales. The Group is in the final stage of completing formal debt financing documentation for the project. It has also entered into a conditional building contract (refer Note 23) in respect of the project. The Group is confident that the project will be fully funded in due course.

• The Group has established its bona fides with the building and investment community and with lenders, and it anticipates being able to refinance existing loan facilities, as and when the loan facilities mature and secure funding for future development opportunities;

• the Board believes that the Group is well placed to manage its business risks successfully and has a reasonable expectation that it has adequate resources to continue to operate as a going concern; and

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N O TE S T O T H E C O NS OL I D A TE D F I NA NC IA L S T A TE ME NT S for the year ended 30 June 2021

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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

• the Board is confident that the quality of the Group’s development portfolio is such that it will attract appropriate equity and debt financing for its successful development.

Should the Group not be able to continue as a going concern, it may be required to realise its assets and discharge its liabilities other than in the ordinary course of business, and at amounts that differ from those stated in the financial statements and that the financial report does not include any adjustments relating to the recoverability and classification of recorded asset amounts or liabilities that might be necessary should the Group not continue as a going concern.

Parent entity information

In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated entity only. Supplementary information about the parent entity is disclosed in Note 27.

Principles of consolidation

The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Mustera Property Group Ltd ('company' or 'parent entity') as at 30 June 2021 and the results of all subsidiaries for the year then ended. Mustera Property Group Ltd and its subsidiaries together are referred to in these financial statements as the 'consolidated entity'.

Subsidiaries are all those entities over which the consolidated entity has control. The consolidated entity controls an entity when the consolidated entity 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 to direct the relevant activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the consolidated entity. They are de-consolidated from the date that control ceases.

Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated entity are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the consolidated entity.

The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest, without the loss of control, is accounted for as an equity transaction, where the difference between the consideration transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable to the parent.

Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of profit or loss and other comprehensive income, statement of financial position and statement of changes in equity of the consolidated entity. Losses incurred by the consolidated entity are attributed to the non-controlling interest in full, even if that results in a deficit balance.

Where the consolidated entity loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and noncontrolling interest in the subsidiary together with any cumulative translation differences recognised in equity. The consolidated entity recognises the fair value of the consideration received and the fair value of any investment retained together with any gain or loss in profit or loss.

Operating segments

Operating segments are presented using the 'management approach', where the information presented is on the same basis as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for the allocation of resources to operating segments and assessing their performance.

Revenue recognition

Revenue is recognised based on the following principles.

Sale of Inventory

Revenue from property development sales is recognised when control and title has been transferred to the purchaser and the obligation to settle to the purchase price occurs. This has been determined to occur upon settlement and after contractual duties are completed. No revenue is recognised if there are significant uncertainties regarding recovery of the consideration due.

Revenue shall be measured at the transaction price agreed under the contract. The amount of revenue arising on a transaction is usually determined by agreement between the entity and the buyer or user of the asset. When the arrangement effectively constitutes a financing transaction, the fair value of the consideration is determined by discounting all future receipts using an imputed rate of interest. The imputed rate of interest is the more clearly determinable of either: (a) the prevailing rate for a similar instrument of an issuer with a similar credit rating; or (b) a rate of interest that discounts the nominal amount of the instrument to the current cash sales price of the goods or services. The difference between the fair value and the nominal amount of the consideration is recognised as interest revenue.

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N O TE S T O T H E C O NS OL I D A TE D F I NA NC IA L S T A TE ME NT S for the year ended 30 June 2021

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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Rent Income and recoverable outgoings

Rent revenue comprises rent received and receivable, and recoverable outgoings charged to tenants in accordance with the lease agreements. Rental revenue from investment properties and inventories is recognised on a straight-line basis over the lease term. Lease incentives granted are recognised as part of the rental revenue on a straight line basis over the period of the lease. Contingent rentals are recognised as income in the period when earned.

Interest Income

Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.

Income tax

Deferred income tax is provided on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax liabilities are recognised for all taxable temporary differences:

• (a) except where the deferred income tax liability arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

• (b) in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, except where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax assets and unused tax losses can be utilised:

• (a) except where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

• (b) in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Income taxes relating to items recognised directly in equity are recognised in equity and not in the Statement of Profit or Loss and Other Comprehensive Income.

The Group has unused tax losses, which have been offset against the deferred tax liabilities recognised in the accounts.

Current and non-current classification

Assets and liabilities are presented in the Consolidated Statement of Financial Position based on current and non-current classification.

An asset is current when: it is expected to be realised or intended to be sold or consumed in normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within twelve months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period. All other assets are classified as non-current.

A liability is current when: it is expected to be settled in normal operating cycle; it is held primarily for the purpose of trading; it is due to be settled within twelve months after the reporting period; or there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period. All other liabilities are classified as non-current.

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N O TE S T O T H E C O NS OL I D A TE D F I NA NC IA L S T A TE ME NT S for the year ended 30 June 2021

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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Cash and cash equivalents

Cash and cash equivalents in the Consolidated Statement of Financial Position comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

For the purposes of the Consolidated Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined above.

Trade and other receivables

Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any provision for impairment. Trade receivables are generally due for settlement within 30 days.

Collectability of trade receivables is reviewed on an ongoing basis. The Group applies the AASB 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables. Customers with heightened credit risk are provided for specifically based on historical default rates and forward looking information. Trade receivables are written off when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with the Group.

Other receivables are recognised at amortised cost, less any provision for impairment.

Investments and other financial assets

Classification

The Group classifies its financial assets in the following measurement categories:

• those to be measured subsequently at fair value (either through OCI, or through profit or loss), and

• those to be measured at amortised cost.

The classification depends on the entity’s business model for managing the financial assets and the contractual terms of the cash flows.

For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI. For investments in equity instruments that are not held for trading, this will depend on whether the Group has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income (FVOCI).

The Group reclassifies debt investments when and only when its business model for managing those assets changes.

Measurement

At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss.

Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.

Debt instruments

Subsequent measurement of debt instruments depends on the Group’s business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the Group classifies its debt instruments:

• Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other gains/(losses), together with foreign exchange gains and losses. Impairment losses are presented as separate line item in the Statement of Profit or Loss and Other Comprehensive Income.

• FVOCI: Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets’ cash flows represent solely payments of principal and interest, are measured at FVOCI. Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognised in profit or loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in other gains/(losses). Interest income from these financial assets is included in finance income using the effective interest rate method. Foreign exchange gains and losses are presented in other gains/(losses) and impairment expenses are presented as separate line item in the Statement of Profit or Loss and Other Comprehensive Income.

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N O TE S T O T H E C O NS OL I D A TE D F I NA NC IA L S T A TE ME NT S for the year ended 30 June 2021

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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

• FVPL: Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVPL. A gain or loss on a debt investment that is subsequently measured at FVPL is recognised in profit or loss and presented net within other gains/(losses) in the period in which it arises.

Equity instruments

The Group subsequently measures all equity investments at fair value. Where the Group’s management has elected to present fair value gains and losses on equity investments in OCI, there is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment. Dividends from such investments continue to be recognised in profit or loss as other income when the Group’s right to receive payments is established.

Changes in the fair value of financial assets at FVPL are recognised in other gains/(losses) in the Statement of Profit or Loss and Other Comprehensive Income as applicable. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.

Impairment of financial assets

The Group assesses on a forward looking basis the expected credit losses (ECLs) associated with its financial assets carried at amortised cost and FVOCI. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive. The shortfall is then discounted at an approximation to the asset’s original effective interest rate.

The ECL is based on either the 12-month or lifetime ECL. The 12-month ECL is the portion of lifetime ECLs that results from default events on a financial instrument that are possible within 12 months after the reporting date. When there has been a significant increase in credit risk since origination, the allowance will be based on the lifetime ECL. In all cases, the Group considers that there has been a significant increase in credit risk when contractual payments are more than 30 days past due.

The Group considers a financial asset in default when contractual payment are 90 days past due. However, in certain cases, the Group may also consider a financial asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group.

Inventories

Property Development

Inventories are stated at the lower of cost and net realisable value. Cost is assigned by specific identification and includes the cost of acquisition and development and borrowing costs during development. Net realisable value is determined on the basis of sales in the ordinary course of business. Expenses of marketing, selling and distribution to customers are estimated and deducted to establish net realisable value. Where the net realisable value of inventory is less than cost, an impairment expense is recognised in the consolidated statement of profit or loss and other comprehensive income. Reversals of previously recognised impairment charges are recognised in the consolidated Statement of Profit or Loss and Other Comprehensive Income such that the inventory is always carried at the lower of cost and net realisable value. When development is completed, borrowing costs and other holding charges are expensed as incurred.

Inventory is classified as current when development is expected to be sold in the next 12 months.

Investment properties

Investment property is property which is held either to earn income or for capital appreciation or both. Investment property also includes properties that are under construction for future use as investment properties. Initially, investment property is measured at cost including transaction costs. The investment property is subsequently measured at fair value, with any change therein recognised in profit or loss. As part of the process of determining fair value, an external, independent valuer, having an appropriate recognised professional qualification and experience in the location and category of property being valued, values individual properties periodically as considered appropriate and as determined by management. Acquisition of investment property is not accounted for as a business combination.

In addition, the Group may utilise internal valuation processes for determining fair value at reporting date. These valuation processes are taken into consideration when determining the fair value of the investment properties. The fair value is based on market values, being the estimated amount for which a property could be exchanged on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. The valuations are prepared by considering the capitalisation of net income and the discounting of future cash flows to their present value. These methods incorporate assumptions of future rental income and costs, appropriate capitalisation and discount rates and also consider market evidence of transaction prices for similar investment properties.

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N O TE S T O T H E C O NS OL I D A TE D F I NA NC IA L S T A TE ME NT S for the year ended 30 June 2021

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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Valuations reflect, where appropriate:

• the type of tenants actually in occupation or responsible for meeting lease commitments or likely to be in occupation after letting of vacant accommodation and the market’s general perception of their credit-worthiness;

• the allocation of maintenance and other operating cost responsibilities between lessor and lessee; and

• the remaining economic life of the property.

Assets held for sale

Non-current assets, or disposal groups comprising assets and liabilities, are classified as held-for-sale if it is highly probable that they will be recovered primarily through sale rather than through continuing use.

Such assets, or disposal groups, are generally measured at the lower of their carrying amount and fair value less costs to sell. Any impairment loss on a disposal group is allocated to assets and liabilities on a pro rata basis, except that no loss is allocated to inventories, financial assets, deferred tax assets, employee benefit assets or investment property, which continue to be measured in accordance with the Group’s other accounting policies. Impairment losses on initial classification as held-for-sale or held-fordistribution and subsequent gains and losses on remeasurement are recognised in profit or loss.

Once classified as held-for-sale, property, plant and equipment are no longer amortised or depreciated, and any equity-accounted investee is no longer equity accounted.

Property, plant and equipment

Items of property, plant and equipment are measured at historical cost less accumulated depreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Depreciation is calculated under diminishing balance method to write off the net cost of each item of property, plant and equipment (excluding land) over their expected useful lives as follows:

• Furniture & fittings 3-20 years

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

An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the consolidated entity. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss. Any revaluation surplus reserve relating to the item disposed of is transferred directly to retained earnings.

Impairment of non-financial assets

Non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount.

Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to form a cash-generating unit.

Trade and other payables

Liabilities are recognised for amounts to be paid in the future for goods or services received, whether or not billed to the Group. Trade accounts payable are normally settled within 30 days. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.

Borrowings

Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They are subsequently measured at amortised cost using the effective interest method.

Where there is an unconditional right to defer settlement of the liability for at least 12 months after the reporting date, the loans or borrowings are classified as non-current.

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N O TE S T O T H E C O NS OL I D A TE D F I NA NC IA L S T A TE ME NT S for the year ended 30 June 2021

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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Net assets attributable to property fund unit holders

In accordance with AASB 132 Financial Instruments, certain instruments which are classified as equity in the separate financial statements of a subsidiary or other entity controlled by the Group which represent non-controlling interests in the consolidated financial statements are classified as liabilities in the consolidated financial statements of the Group to the extent which the noncontrolling interest has a preferential claim to the net assets of the subsidiary over shareholders of the parent. Changes in the net assets are recognised in profit or loss except for distributions to unitholders and new subscriptions of units.

Finance costs

Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in the period in which they are incurred.

Provisions

Provisions are recognised when the consolidated entity has a present (legal or constructive) obligation as a result of a past event, it is probable the consolidated entity will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. If the time value of money is material, provisions are discounted using a current pre-tax rate specific to the liability. The increase in the provision resulting from the passage of time is recognised as a finance cost.

Employee benefits

Short-term employee benefits

Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be settled within 12 months of the reporting date are recognised in current liabilities in respect of employees' services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled.

Other long-term employee benefits

The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are recognised in non-current liabilities, provided there is an unconditional right to defer settlement of the liability. The liability is measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

Defined contribution superannuation expense

Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred.

Share-based payments

Equity-settled and cash-settled share-based compensation benefits are provided to employees.

Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for the rendering of services. Cash-settled transactions are awards of cash for the exchange of services, where the amount of cash is determined by reference to the share price.

The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using either the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do not determine whether the consolidated entity receives the services that entitle the employees to receive payment. No account is taken of any other vesting conditions.

The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous periods.

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N O TE S T O T H E C O NS OL I D A TE D F I NA NC IA L S T A TE ME NT S for the year ended 30 June 2021

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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market conditions are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are satisfied.

If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value of the share-based compensation benefit as at the date of modification.

If the non-vesting condition is within the control of the consolidated entity or employee, the failure to satisfy the condition is treated as a cancellation. If the condition is not within the control of the consolidated entity or employee and is not satisfied during the vesting period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited.

If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award is treated as if they were a modification.

Fair value measurement

When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; and assumes that the transaction will take place either: in the principle market; or in the absence of a principal market, in the most advantageous market.

Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act in their economic best interest. For non-financial assets, the fair value measurement is based on its highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

Assets and liabilities measured at fair value are classified, into three levels, using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. Classifications are reviewed each reporting date and transfers between levels are determined based on a reassessment of the lowest level input that is significant to the fair value measurement.

For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either not available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge and reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison, where applicable, with external sources of data.

Issued capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds.

Dividends

Dividends are recognised when declared during the financial year and no longer at the discretion of the company.

Goods and services tax

Revenues, expenses and assets are recognised net of the amount of GST except where GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable.

Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the Consolidated Statement of Financial Position.

Cash flows are included in the Consolidated Statement of Cash Flows on a net basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority is classified as part of operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.

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N O TE S T O T H E C O NS OL I D A TE D F I NA NC IA L S T A TE ME NT S for the year ended 30 June 2021

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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Earnings per share

Basic earnings per share is calculated by dividing the net earnings attributable to members of the Company for the reporting period by the weighted average number of ordinary shares of the Company.

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

New accounting standards and interpretations that are not yet mandatory

The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (‘AASB’) that are mandatory for the current reporting period. Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.

New, revised or amending Accounting Standards and Interpretations adopted

The Group has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.

Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.

Critical accounting judgements, estimates and assumptions

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various factors, including expectations of future events, management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are discussed below.

Fair value measurement hierarchy

The consolidated entity is required to classify all assets and liabilities, measured at fair value, using a three level hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date; Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and Level 3: Unobservable inputs for the asset or liability. Considerable judgement is required to determine what is significant to fair value and therefore which category the asset or liability is placed in can be subjective.

The fair value of assets and liabilities classified as level 3 is determined by the use of valuation models. These include discounted cash flow analysis or the use of observable inputs that require significant adjustments based on unobservable inputs.

Classification of properties

The Group makes judgements in respect of the classification of properties as investment property or inventory depending on the Group’s intended use of the property. Properties held either to earn income or for capital appreciation or both are classified as investment property. Properties held with the intension of redevelopment and sales of developed products are classified as inventory. The accounting treatments of investment property and inventory are different. Subsequent re-classification of properties may affect the carrying value of a property. Refer to Note 9 and Note 11 of the financial statements for further details on the Group’s inventories and investment properties. There was no re-classification of properties during the reporting period.

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N O TE S T O T H E C O NS OL I D A TE D F I NA NC IA L S T A TE ME NT S for the year ended 30 June 2021

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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Valuation of investment properties held at fair value

The Group makes judgements in respect of the fair value of investment properties. The fair value of these properties 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 assumptions underlying estimated fair values are those relating to the receipt of contractual rents, expected future market rentals, maintenance requirements, capitalisation rates and discount rates that reflect current market conditions and current or recent property investment prices. If there is any material change in these assumptions or regional, national or international economic conditions, the fair value of investment properties may differ and may need to be re-estimated.

Inventories

The net realisable value of inventories is the estimated selling price in the ordinary course of business less estimated costs to sell which approximates fair value less costs to sell. The key assumptions require the use of management judgement and are reviewed annually. They key assumptions are the variables affecting the estimated costs to develop and sell and the expected selling price, including but not limited to the fluctuations in the property market. Any reassessment of cost to develop and sell or selling price in a particular year will affect the cost of goods sold when the properties are sold.

Share-based payment transactions

The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by using the share price at the date the instruments were granted. The accounting estimates and assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting periods but may impact profit or loss and equity.

Coronavirus (COVID-19) Pandemic

Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had, or may have, on the Group based on known information. This consideration extends to the nature of the products and services offered, customers, supply chain, staffing and geographic regions in which the Group operates. Since the outbreak of COVID-19 there has been limited transactional evidence to provide visibility of its impacts on market property pricing. COVID-19 has created significant estimation uncertainty in determining key inputs used in the fair value of investment property and the net realisable value assessments at 30 June 2021.

Control of subsidiaries

The Group has amended the trust deed during the year to provide clarity on the clauses which result in Mustera Property Group Limited controlling the Mustera Property Fund and therefore consolidating this entity into the group. These amendments have removed a number of provisions relating to unit holder rights and the criteria for controlling the types of relevant activities to be undertaken by the trust. While these amendments would result in the deconsolidation of the Fund from the accounts, as the Group hold 23.75% of the units in the Fund as at 30 June 2021, the Directors have determined that the Group still has the ability to control the Fund and has continued to include it in the consolidated accounts. Refer to Note 26 for details.

3. SEGMENT INFORMATION

Identification of reportable operating segments

The consolidated entity has identified two reportable segments, being property investment and property development. The identification of reportable segments is based on the internal reports that are reviewed and used by the Board of Directors (who are identified as the Chief Operating Decision Makers ('CODM')) in assessing performance and in determining the allocation of resources.

Accounting policies

The accounting policies adopted for internal reporting to the CODM are consistent with those adopted in the financial statements.

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N O TE S T O T H E C O NS OL I D A TE D F I NA NC IA L S T A TE ME NT S for the year ended 30 June 2021

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3. SEGMENT INFORMATION (CONTINUED)

Segment information

30 June 2021 Property Investment $ Property Development $ Other1 $ Segment revenue and other income 1,591,320 3,761,323 57,439 Interest expenses 175,079 289,372 90,579 Segment result 718,351 (2,082,814) (1,050,223) Segment assets 17,359,827 22,405,209 2,269,560 Segment liabilities 15,341,692 11,908,676 1,261,963 30 June 2020 Segment revenue and other income 1,672,203 929,538 43,885 Interest expenses 275,760 422,455 206,287 Segment result 713,235 (1,097,537) (655,805) Segment assets 17,359,827 24,158,916 2,179,370 Segment liabilities 16,917,669 14,137,890 931,903	Group $ 5,410,082
	555,030
	(2,414,686)
	42,034,596
	28,512,331
	2,645,626
	904,502
	(1,040,107)
	43,698,113
	31,987,462

Note:

1. This column includes head office and group services which are not allocated to any reportable segment.

4. AUDITOR’S REMUNERATION

5. REVENUE Rental income and recoverable outgoings Sale of inventory 4. AUDITOR’S REMUNERATION The following fees were paid or payable for the services provided by BDO Audit (WA) Pty Ltd, the auditor of the company, and its related practices: Audit and review services BDO Audit (WA) Pty Ltd Audit or review of financial statements Other Services Auditors’ related practice – BDO Corporate Tax (WA) Pty Ltd & BDO Corporate Finance (WA) Pty Ltd Tax compliance	2021 $ 2020 $ 54,500 59,850
	19,900 23,545
	74,400 83,395
	2021 $ 2020 $ 2,439,607 2,601,741 2,912,403 -
	5,352,010 2,601,741

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N O TE S T O T H E C O NS OL I D A TE D F I NA NC IA L S T A TE ME NT S for the year ended 30 June 2021

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6.	INCOME TAX	INCOME TAX	2021	2020
			$	$
	**(a) **	Income tax expense
		Deferred tax expense	30,638	(10,080)
		Under provision in prior years	-	(10,188)
			30,638	(20,268)
	**(b) **	Numerical reconciliation between tax expense and pre-tax net profit
		Profit/(loss) before income tax expense	(2,460,023)	(1,086,204)
		Income tax (benefit)/expense calculated at the rate noted in (d) below	(615,006)	(325,861)
		Effect of non-deductible items	130,056	(11,365)
		Change in recognised deductible temporary differences	(298)	5,081
		Movement in deferred tax balances due to change in tax rate	31,443	(15,745)
		Decrease/(increase) in deferred tax balances not recognised	484,442	337,810
		Current period income tax expense	30,638	(10,080)
		Under provision in prior years	-	(10,188)
		Income tax (benefit)/expense	30,638	(20,268)
	**(c) **	Deferred tax assets and liabilities brought to account
		The potential tax benefit @ 25% (2020: 30%) for the following items for which a
		deferred tax asset has been recognised is as follows:
		Delayed capital expenditure deduction for tax purposes	5,485	4,700
		Delayed borrowing costs deduction for tax purposes	3,746	9,121
		Expenditure included in the asset cost base for tax purposes	8,122	12,641
		Property, plant & equipment	5,654	10,747
		Inventory	159,096	190,916
		Lease liability	6,278	-
		Provisions and accruals	22,037	13,560
		Gross deferred tax assets	210,418	241,685
		Set off against deferred tax liabilities	(52,695)	(53,323)
		Net deferred tax assets recognised	157,723	188,362
		The temporary difference @ 30% (2020: 30%) relating to the following item for
		which a deferred tax liability has been recognised is as follows:
		Accelerated capital expenditure deduction for tax purposes	46,538	53,323
		Right of use asset	6,157	-
		Gross deferred tax liabilities	52,695	53,323
		Set off of deferred tax assets	(52,695)	(53,323)
		Net deferred tax liabilities recognised	-	-
		The tax benefits of the above deferred tax assets will only be obtained if:
		(a) the Group derives future assessable income of a nature and of an amount
		sufficient to enable the benefits to be utilised;
		(b) the Group continues to comply with the conditions for deductibility imposed by
		law; and
		(c) no changes in income tax legislation adversely affect the Group in utilising the
		benefits.
	(d)	Deferred tax assets and liabilities not brought to account
		The potential tax benefit @ 25% (2020: 30%) for the following items for which no
		deferred tax asset has been recognised is as follows:
		Carry forward tax losses	1,163,386	816,310
		Expenditure included in the asset cost base for tax purposes	(26,140)	(31,416)
		Gross deferred tax assets	1,137,246	784,894
		Set off against deferred tax liabilities	-	-
		Net deferred tax assets not recognised	1,137,246	784,894
		Net deferred tax liabilities not recognised	-	-

(e) Tax Rate

The domestic effective tax rate of Mustera Property Group Ltd is 25% for the year ended 30 June 2021 (2020: 30%)

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N O TE S T O T H E C O NS OL I D A TE D F I NA NC IA L S T A TE ME NT S for the year ended 30 June 2021

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CASH AND CASH EQUIVALENTS Cash at bank and in hand	2021 $ 2020 $ 421,449 281,321

7. CASH AND CASH EQUIVALENTS

The Group’s exposure to interest rate risk and a sensitivity analysis for financial assets and liabilities are disclosed in Note 31.

TRADE AND OTHER RECEIVABLES Current Trade debtors Sundry debtors Term deposit Security deposits Non-current Security deposit – carpark lease	2021 $ 2020 $ 192,592 117,697 85,377 5,902 99,166 83,746 10,000 3,919
	387,135 211,264
	2,500 2,500
	2,500 2,500

8. TRADE AND OTHER RECEIVABLES

(a) No receivables were past due but not impaired. The Group’s exposure to credit risk related to trade and other receivables is disclosed in Note 31.

INVENTORIES Current Land and property held for development and resale (at cost) Non-current Land and property held for development and resale (at cost) Total inventories (a) Movement in inventories Balance at 1 July Additions at cost Capitalised development costs Sales of inventory Write down of inventory to net realisable value Balance at 30 June	2021 $ 2020 $ 1,189,419 1,486,774
	22,253,488 24,133,525
	23,442,907 25,620,299
	25,620,299 25,314,497 - - 719,963 305,802 (2,897,355) - - -
	23,442,907 25,620,299

9. INVENTORIES

(b) Assets pledged as security

Some of the Group’s Borrowings (refer Note 17) are secured by registered mortgage over properties classified as inventory plus fixed and floating charges over all the assets and undertakings held by the Group.

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N O TE S T O T H E C O NS OL I D A TE D F I NA NC IA L S T A TE ME NT S for the year ended 30 June 2021

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10. INVESTMENT PROPERTY Investment property at fair value (a) Movement in investment property Balance at 1 July Additions Balance at 30 June (i) Amounts recognised in profit and loss for investment properties Rental income Direct operating expenses from property that generated rental income	2021 $ 2020 $ 17,425,091 17,359,827
	17,359,827 17,359,827 65,264 -
	17,425,091 17,359,827
	1,591,311 1,672,203 696,541 718,165

(ii) Investment properties, principally land and buildings, are held for long-term rental yields and are not occupied by the entity. They are carried at fair value. Changes in fair value are presented in the profit or loss as part of other income. Refer to Note 32 for details of Fair Value.

• (iii) Assets pledged as security

Some of the Group’s Borrowings (refer Note 17) are secured by registered mortgage over properties classified as investment properties plus fixed and floating charges over all the assets and undertakings held by the Group.

11. PROPERTY, PLANT & EQUIPMENT Office furniture & equipment – at cost Less: Accumulated depreciation 12. RIGHT OF USE ASSETS Display room Less: Accumulated depreciation	2021 $ 2020 $ 241,423 37,848 (117,476) (18,505)
	123,947 19,343
	2021 $ 2020 $ 39,398 - (14,774) -
	24,624 -

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N O TE S T O T H E C O NS OL I D A TE D F I NA NC IA L S T A TE ME NT S for the year ended 30 June 2021

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13. TRADE AND OTHER PAYABLES Current Trade creditors and other payables Non-current Tenant security deposits The Group’s exposure to credit and liquidity risks related to trade and other payables a amount of trade and other payables approximates its fair value. 14. INCOME TAX PAYABLE Income tax payable 15. EMPLOYEE BENEFITS Provision for annual leave entitlements Balance brought forward Movement during the year Balance carried forward Provision for long service leave entitlements 16. LEASE LIABILITY Display Room Current Non Current 17. LOANS & BORROWINGS Current Loans from financial institutions Loans from non financial institutions Loans from related parties Non-current Loans from financial institutions Loans from non financial institutions

2021 $ 2020 $ 1,435,190 952,573 2,500 2,500 re disclosed in Note 31. The carrying 2021 $ 2020 $ 6,524 108,471 2021 $ 2020 $ 14,425 17,066 17,066 15,453 (2,641) 1,613 14,425 17,066 31,886 - 2021 $ 2020 $ 19,988 - 5,125 - 25,113 - 2021 $ 2020 $ 8,155,000 15,358,183 3,500,000 - 11,655,000 15,358,183 - - 11,665,000 15,358,183 9,900,000 5,031,000 - 3,500,000 9,900,000 8,531,000

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N O TE S T O T H E C O NS OL I D A TE D F I NA NC IA L S T A TE ME NT S for the year ended 30 June 2021

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(a) Loans

a) Loans
Facility Secured Maturity Date	Facility limit 2021 $ Utilised 2021 $ Facility limit 2020 $ Utilised 2020 $
Current McCabe St Facility1 Yes December 2021 Haig Park Cir Facility2 Yes January 2022 Belmont Facility Yes - Forbes Facility3 Yes November 2021 Sterlink Facility Yes - Helena St Facility5 Yes November 2021 Anrinza private loan4 No May 2022 Shoalwater Facility6 Yes February 2024 Non-current Haig Park Cir Facility2 Yes January 2022 McCabe St Facility1 Yes December 2021 Anrinza private loan4 No May 2022 Shoalwater Facility6 Yes February 2024	2,700,000 2,700,000 - - 2,585,000 2,331,000 - - - - 1,527,500 1,527,500 2,640,000 2,640,000 2,640,000 2,645,522 - - 800,000 800,000 484,000 484,000 484,000 485,161 3,500,000 3,500,000 - - - - 9,900,000 9,900,000
	11,909,000 11,655,000 15,351,500 15,358,183
	- - 2,585,000 2,331,000 - - 2,700,000 2,700,000 - - 3,500,000 3,500,000 9,900,000 9,900,000 - -
	9,900,000 9,900,000 8,785,000 8,531,000

• 1) This facility is secured by first registered mortgage over the McCabe St property held by the Company’s 100% owned subsidiary, Riversea Property Holdings Pty Ltd ( Riversea ), and first ranking charge over all present and after acquired property of Riversea. Interest is payable quarterly in arrears at variable rates based on a fixed commitment fee plus a variable yield.

• 2) This facility is secured by first registered mortgages over the East Perth property held by the Company’s 100% owned subsidiary, Claisebrook Holdings Pty Ltd ( Claisebrook ), and first ranking charge over all present and after acquired property of Claisebrook. Interest is payable monthly in arrears at variable rates based on a fixed commitment fee plus a variable yield.

• 3) This facility is secured by first registered mortgages over the property at Forbes Road and Kishorn Road held by the Company’s 95% owned subsidiary, Applecross Land Holdings Pty Ltd ( Applecross ) and first registered general security agreement over the assets and undertaking of Applecross. There is a required cash deposit held with the bank for no less than $80,000 by Applecross. Mustera has also provided unlimited guarantee for this facility. Interest is payable monthly in arrears at variable rates based on a fixed commitment fee plus a variable yield.

• 4) This facility is provided by a major shareholder of the Group and is unsecured and interest free.

• 5) This facility is secured by first registered mortgages over the Helena St Midland property held by the Company’s 100% owned subsidiary, Grace Property Holdings Pty Ltd ( Grace ), and first ranking charge over all present and after acquired property of Grace. Mustera has also provided unlimited guarantee for this facility. Interest is payable monthly in arrears at variable rates based on a fixed commitment fee plus a variable yield.

• 6) This facility has a term of 3 years and expires in February 2024. The facility is secured by first registered mortgages over the investment property (Shoalwater Shopping Centre) held by Mustera Property Fund ( Trust ) and first ranking charge over all assets and undertakings of the Trust. Interest is payable quarterly in arrears at variable rates based on a fixed commitment fee plus a variable yield.

(b) Fair Value

The fair values of the Group’s borrowings are not materially different to their carrying amounts since the interest payable on those borrowings are close to current market rates.

18. NET ASSETS ATTRIBUTABLE TO PROPERTY FUND UNITHOLDERS Opening balance (Acquisition)/disposal of units in the Fund by Mustera Property Group Distributions paid and payable to non-controlling interest Profit/(loss) for the period attributable to non-controlling interest	2021 $ 2020 $ 7,017,669 7,301,128 (1,650,000) (250,000) (559,228) (661,593) 633,251 628,134
	5,441,692 7,017,669

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N O TE S T O T H E C O NS OL I D A TE D F I NA NC IA L S T A TE ME NT S for the year ended 30 June 2021

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EQUITY – ISSUED CAPITAL	2021	2020
	$	$
116,226,221 (2020: 99,625,115) fully paid ordinary shares	16,131,071	11,980,795

19. EQUITY – ISSUED CAPITAL

(a) Ordinary shares

The following movements in ordinary share capital occurred during the financial year:

Balance at beginning of year Issue of shares pursuant to rights issue Balance at the end of the year	2021 Number 2020 Number 99,625,115 99,625,115 16,601,106 - 116,226,221 99,625,115	2021 $ 2020 $ 11,980,795 11,980,795 4,150,276 -
		16,131,071 11,980,795

Ordinary shares entitle the holder to participate in dividends and the proceeds from winding up of the Company in proportion to the number and amounts paid on the shares held.

On a show of hands every holder of ordinary securities present at a shareholder meeting in person or by proxy is, entitled to one vote, and upon a poll each share is entitled to one vote.

Ordinary shares have no par value and the Company does not have a limited amount of authorised capital.

(b) Capital risk management

The consolidated entity's objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the consolidated entity may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

The consolidated entity is subject to certain financing arrangements covenants and meeting these is given priority in all capital risk management decisions. There have been no events of default on the financing arrangements during the financial year.

Loan covenants

Under the terms of the major borrowing facilities, the Group is required to comply with an interest coverage ratio of between 1.5 and 2.0 times earnings. The Directors are not aware of any instances of non-compliance with this covenant during the year ended 30 June 2021.

20. OTHER RESERVES Employee Share Based Payments Reserve Balance at beginning of year Value of share based payments granted during the year (Note 30) Exercise of options during the year Balance at end of year	2021 $ 2020 $ 94,188 94,188 577,000 - - -
	671,188 94,188

The employee share based payments reserve is used to recognise the fair value of options/performance rights issued for employee services. Refer to Note 30 for further details of value of performance rights granted during the year.

Transactions with Non-Controlling Interest Reserve Excess of consideration paid recognised in the transactions with non-controlling interests reserve within equity – Applecross Land Balance at end of year	2021 $ 2020 $ 16,306 213,831
	16,306 213,831

This reserve is used to record the differences which may arise as a result of transactions with non-controlling interests that do not result in a loss of control. Refer Note 21.

Total other reserves 687,494 308,019

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N O TE S T O T H E C O NS OL I D A TE D F I NA NC IA L S T A TE ME NT S for the year ended 30 June 2021

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21. NON-CONTROLLING INTERESTS

On 11 November 2020 the group acquired an additional 5% of the issued shares of Applecross Land Holdings Pty Ltd (Applecross Land) for $425,000. Immediately prior to the purchase, the carrying amount of the existing 10% of non-controlling interest in Applecross Land was $454,950. The group recognised a decrease in con-controlling interests of $227,475 and an increase in equity attributable to owners of the parent of $197,525.

The effect on the equity attributable to the owners of the Group during the year is summarised as follows:

Carrying amount of non-controlling interests – Applecross Land Movement in carrying amount of non-controlling interests Balance at 1 July Transactions with non-controlling interests Share of loss (5%, 2020: 10%) Balance at end of year	2021 $ 2020 $ 179,454 482,904
	482,904 508,733 (227,475) (75,975) (25,829)
	179,454 482,904

Set out below is summarised financial information for each subsidiary that has non-controlling interests (“NCI”) that are material to the Group. The amounts disclosed for each subsidiary are before intercompany eliminations.

Summarised balance sheet Current assets Current liabilities Current net assets Non-current assets Non-current liabilities Non-current net assets Net assets Accumulated NCI Summarised statement of comprehensive income Revenue Profit/(loss) for the period Other comprehensive income Total comprehensive income/(loss) Profit/(loss) allocated to NCI Summarised cash flows Cash flows used in operating activities Cash flows used in investing activities Cash flows from financing activities Net increase/(decrease) in cash and cash equivalents	Applecross Land 30 June 2021 $ 30 June 2020 $ 132,735 92,325 2,822,984 2,729,951
	(2,690,249) (2,637,626)
	10,263,279 9,543,317 3,983,947 2,076,655
	6,279,332 7,466,662
	3,589,083 4,829,036
	(179,454) 482,904 - - (1,239,952) (258,291) - -
	(1,239,952) (258,291)
	(61,998) (25,829) (1,861,780) (501,898) - - (1,856,770) 511,469
	(5,010) 9,571

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N O TE S T O T H E C O NS OL I D A TE D F I NA NC IA L S T A TE ME NT S for the year ended 30 June 2021

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22. ACCUMULATED LOSSES Accumulated losses at the beginning of the year Net loss for the year Accumulated losses at the end of the year	2021 $ 2020 $ (1,061,067) (20,960) (2,414,686) (1,040,107)
	(3,475,753) (1,061,067)

23. COMMITMENTS AND CONTINGENCIES

Capital expenditure commitments

During the year, Apex View Pty Ltd (“Apex View”), a subsidiary of the Group, entered into a construction contract in relation to the Forbes Residences Project. This contract which is for a maximum sum of $47.6m was subject to a number of conditions precedent which includes:

• The project achieving a level of pre-sales of apartments, to the absolute discretion of Apex View; and

• Apex View securing satisfactory debt financing for the project.

At the date of this report, the Group has notified the building contractor that these conditions precedent have been satisfied and accordingly, the Group has a capital commitment to the maximum amount of the contract sum of $47.6m.

Contingencies

The consolidated entity does not have any contingent liabilities at balance and reporting dates.

EARNINGS PER SHARE Loss after income tax attributable to ordinary shareholders Weighted average number of ordinary shares used in calculating basic earnings per share Adjustments for calculation of diluted earnings per share: Options over ordinary shares Weighted average number of ordinary shares used in calculating diluted earnings per share Basic earnings per share Diluted earnings per share	2021 $ 2020 $ (2,414,686) (1,040,107)
	Number Number 111,541,525 99,399,020
	- -
	111,541,525 99,399,020
	Cents Cents (2.16) (1.04) N/A N/A

24. EARNINGS PER SHARE

25. KEY MANAGEMENT PERSONNEL DISCLOSURES

Compensation

The aggregate compensation made to Directors and other members of Key Management Personnel of the consolidated entity is set out below:

Short-term employee benefits Post-employment benefits Share based payments (Note 30)	2021 $ 2020 $ 220,750 245,302 19,071 20,900 577,000 -
	816,821 266,202

Other than as disclosed in Note 26 there are no further transactions with Key Management Personnel.

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N O TE S T O T H E C O NS OL I D A TE D F I NA NC IA L S T A TE ME NT S for the year ended 30 June 2021

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26. RELATED PARTY TRANSACTIONS

(a) Parent entity

Mustera Property Group Ltd is the parent entity.

(b) Subsidiaries

The Group’s interests in subsidiaries at 30 June 2021 are set out below. Unless otherwise stated, the subsidiaries have share capital consisting solely of ordinary shares that are held directly by the Group, and the proportion of ownership interests held equals the voting rights held by the Group. The country of incorporation is also their principal place of business.

	Place of	Ownership interest held by	Ownership interest held by
	business/country of	the Group
Name of entity	incorporation	2021	2020	Principal activities
Sterlink Development PtyLtd	Australia	100%	100%	Propertydevelopment
Grace PropertyHoldings PtyLtd	Australia	100%	100%	Propertydevelopment
Claisebrook Holdings PtyLtd	Australia	100%	100%	Propertydevelopment
Riversea PropertyHoldings PtyLtd	Australia	100%	100%	Propertydevelopment
Apex View PtyLtd	Australia	100%	100%	Propertydevelopment
Applecross Land Holdings Pty Ltd
(formerly known as Apex Land
Holdings PtyLtd)	Australia	95%	90%	Propertydevelopment
Mustera Property Fund
Management PtyLtd	Australia	100%	100%	Management
				Trustee company for
MPX GroupPtyLtd	Australia	100%	100%	Mustera PropertyFund
Mustera PropertyFund	Australia	24%	3%	Propertyinvestment

Loans made by Mustera Property Group Ltd to the subsidiaries are contributed to meet required expenditure payable on demand and are not interest bearing.

As set out in Note 2, The Group has concluded that it controls the Mustera Property Fund even though it holds less than 50% of the equity and voting rights in this entity. It has been assessed that the trustee of the Mustera Property Fund, who can appoint the manager of the fund, controls the relevant activities of this entity. On this basis, Mustera Property Group is deemed to control the Mustera Property Fund through its 100% owned subsidiary of MPX Group Pty Ltd (the trustee of the Mustera Property Fund).

(c) Key management personnel compensation

Disclosures relating to key management personnel are set out in Note 25.

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N O TE S T O T H E C O NS OL I D A TE D F I NA NC IA L S T A TE ME NT S for the year ended 30 June 2021

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26. RELATED PARTY TRANSACTIONS (continued)

(d) Transactions with related parties

The following transactions occurred with related parties:

			Transaction Value	Transaction Value	Outstanding	Balance
				For FY	As at 30	June
Director	Entity	Transaction	2021	2020	2021	2020
Anthony Ho	Anthony Ho &	Secretarial Services	-	18,000	-	-
	Associates
	Forrest	Acquisition of units in	100,000	-	-	-
	Investment Trust	Mustera Property Fund
Benjamin	Townshend	Corporate Advisory Fees	8,944	85,309	N/A	36,958
Young	Capital Pty Ltd
		Rental Income	-	(92,238)	N/A	(25,294)
	Spectra (WA) Pty	Rental Guarantee	-	140,615	N/A	-
	Ltd
		Property Management	-	-	N/A	-
		Rental Income	-	(44,323)	N/A	(16,396)
		Vendor Finance loan	-	(3,410,300)	N/A	-
		provided/ (repaid)
		Vendor Finance Interest	-	(125,398)	N/A	-
		received
	Sentral Strata Pty	Strata Management Fees	-	-	N/A	-
	Ltd
	Goodrich Capital	Working Capital Loan	-	-	N/A	-
	Kingsfield Pty Ltd	Rental Guarantee	-	11,385	N/A	-
		Working Capital Loan	-	440,595	N/A	-
	Benjamin Young	Reimbursements	-	72,114	N/A	-

• Share-based payments consisting of performance rights were issued to Directors. Refer to Note 30.

• The Company acquired 2,900,000 units and disposed of 1,250,000 units in the Fund during the year, holding 1,900,000 units as at 30 June 2021.

(e) Terms and conditions

Unless otherwise stated, all transactions were made on normal commercial terms and conditions and at market rates.

27. PARENT ENTITY INFORMATION

Set out below is the supplementary information about the parent entity.

Statement of profit or loss and other comprehensive income Profit/(loss) after income tax Total comprehensive income/(loss)	Parent 2021 2020 $ $ (1,469,876) (817,571)
	(1,469,876) (817,571)

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N O TE S T O T H E C O NS OL I D A TE D F I NA NC IA L S T A TE ME NT S for the year ended 30 June 2021

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Statement of financial position Total current assets Total assets Total current liabilities Total liabilities Net assets Equity Issued capital Share based payments reserve Accumulated losses Total equity	Parent 2021 2020 $ $ 1,234,163 1,070,646
	15,716,902 13,801,760
	3,969,737 1,843,883
	4,001,624 5,343,883
	11,715,278 8,457,877
	16,131,071 11,980,795 671,188 94,188 (5,086,981) (3,617,106)
	11,715,278 8,457,877

Guarantees entered into by the parent entity

The parent entity has provided financial guarantees in respect of bank loans of subsidiaries amounting to $3,124,000 (2020: $3,124,000), secured by registered mortgages over the freehold properties of the subsidiaries. The parent entity has also provided guarantee in respect of a property lease entered into by its wholly owned subsidiary. No liability was recognised by the parent entity in relation to these guarantees.

Contingent liabilities

The parent entity had no contingent liabilities as at 30 June 2021 and 30 June 2020.

Capital commitments

Refer to Note 23 for capital commitments for the Group.

28. RECONCILIATION OF CASH FLOWS USED IN OPERATING ACTIVITIES (a) Cash flows from operating activities Profit/(loss) for the year Adjustments of non-cash/non-operating items: Depreciation Lease interest Loss on disposal of fixed assets Distributions Vendor financed apartment sales Share based payments Impairment of inventory Operating loss before changes in working capital and provisions Change in trade and other receivables Change in prepayments Changes in inventories and assets held for sale Change in deferred tax assets Change in trade and other payables Change in provision for income tax Change in deferred tax liabilities Change in employee benefits Net cash used in operating activities (b) Non-cash investing and financing activities Issue of shares under dividends reinvestment plan	2021 $ 2020 $ (2,490,661) (1,065,936) 113,845 2,740 714 - 1,255 - (141,798) (1,865) - - 577,000 - - -
	(1,939,644) (1,065,061) 42,098 3,377,900 (34,022) (3,912) 2,177,392 (305,802) 30,638 (10,080) 855,952 400,592 - (429,141) - - 29,245 1,613
	1,161,659 1,966,109
	- -

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N O TE S T O T H E C O NS OL I D A TE D F I NA NC IA L S T A TE ME NT S for the year ended 30 June 2021

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29. RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES

Long-term borrowings Short-term borrowings Total liabilities from financing activities Long-term borrowings Short-term borrowings Total liabilities from financing activities	2020 $ 8,531,000 15,358,183 23,889,183 2019 $ 12,230,050 13,293,566 25,523,616	Cash flows $ 1,369,000 (3,703,183) (2,334,183) Cash flows $ (3,699,050) 2,064,617 (1,634,433)	2021 $ 9,900,000 11,655,000
			21,555,000
			2020 $ 8,531,000 15,358,183
			23,889,183

30. SHARE BASED PAYMENTS

At the annual general meeting held on 30 November 2020, shareholders approved the grant of 2,000,000 performance rights to the Directors.

to the Directors.
Holder	Class	Number	Grant Date	Probability	Expiry Date of milestone achievement	Fair value per right	Total Fair Value
Nicholas Zborowski	A	500,000	10/12/2020	100%	10/12/2023	$0.2885	$144,250
	B	500,000	10/12/2020	100%	10/12/2023	$0.2885	$144,250
Jack Spencer-Cotton	A	250,000	10/12/2020	100%	10/12/2023	$0.2885	$72,125
	B	250,000	10/12/2020	100%	10/12/2023	$0.2885	$72,125
AnthonyHo	A	250,000	10/12/2020	100%	10/12/2023	$0.2885	$72,125
	B	250,000	10/12/2020	100%	10/12/2023	$0.2885	$72,125

The performance rights were valued at 28.85 cents a share being the share price on grant date 10 December 2020. Vesting occurs at the end of the performance period dated 10 December 2023, if the following performance conditions are met:

A) Upon announcement by the Company on the ASX market announcements platform that it has achieved committed presales equal to or greater than 50% of the 57 residential apartments at Forbes Residences;

• B) Upon announcement by the Company on the ASX market announcements platform that it has entered into a Construction Contract for the development of Forbes Residences.

A share-based payment expense of $577,000 was recognised in the Statement of Profit or Loss and Other Comprehensive Income for the year ended 30 June 2021.

Set out below are summaries of options granted to Directors and employees of the Group:

Grant date Exercise price Expiry date	Balance at start ofyear Granted/ (Exercised) during year Balance at end ofyear Vested and exercisable at end ofyear
2021 21 October 2016 $0.37 30 September 2021 29 November 2018 $0.46 30 November 2023 2020 21 October 2016 $0.37 30 September 2021 29 November 2018 $0.46 30 November 2023 Weighted Average exercise price	3,000,000 - 3,000,000 3,000,000 2,500,000 - 2,500,000 2,500,000
	5,500,000 - 5,500,000 5,500,000
	3,000,000 - 3,000,000 3,000,000 2,500,000 - 2,500,000 2,500,000
	5,500,000 - 5,500,000 5,500,000
	$0.41 - $0.41 $0.41

No options expired or were forfeited during the periods covered by the above tables.

The options outstanding at 30 June 2021 have a weighted average remaining contractual life of 14.85 months (2020: 26.85 months).

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N O TE S T O T H E C O NS OL I D A TE D F I NA NC IA L S T A TE ME NT S for the year ended 30 June 2021

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31. FINANCIAL RISK MANAGEMENT

Overview

Risk management is carried out under policies set by the Board of Directors. The Board provides principles for overall risk management, as well as policies covering specific areas.

Financial risk management objectives

The Board monitors and manages the financial risk relating to the operations of the Group. The Group’s activities expose it to a variety of financial risks: credit risk, liquidity risk and market risk (interest rate risk and price risk). The overall risk management strategy focuses on managing these risks and seeks to minimise potential adverse effects on the financial performance of the Group. Risk management is carried out under the direction of the Board.

The Group holds the following financial instruments as at 30 June:

Financial assets Cash and cash equivalents Trade and other receivables Financial liabilities Trade and other payables Loans and borrowings	2021 $ 2020 $ 421,449 281,321 389,635 213,764
	811,084 495,085
	1,362,023 634,229 21,555,000 23,889,183
	22,917,023 24,523,412

Market risk

Market risk is the risk that changes in market prices, such as interest rates and commodity prices will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising returns. There were no changes in the Group’s market risk management policies from previous years.

Interest rate risk

The Group’s main interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Group to interest rate risk. Borrowings issued at fixed rates expose the Group to fair value risk.

The Group’s loans and borrowings with variable rates which expose the Group to cash flow interest rate risk totalling $18,055,000 as at 30 June 2021 (2020: $20,389,183). These loans are interest only. Monthly cash outlays of approximately $23,630 (2020: $42,175) are required to service the interest payments. An official increase/decrease in interest rates of 100 basis points (2020: 100) would have an adverse/favourable effect on profit before tax of $180,550 (2020: $203,892) per annum. The percentage change is based on the expected volatility of interest rates using market data and analyst forecasts.

The Group receives interest on its cash management deposits based on daily balances at variable interest rates. The Group’s operating accounts do not attract interest.

Credit risk

Credit risk is the risk that a counterparty will default on its contractual obligations under a financial instrument and result in a financial loss to the Group.

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N O TE S T O T H E C O NS OL I D A TE D F I NA NC IA L S T A TE ME NT S for the year ended 30 June 2021

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31. FINANCIAL RISK MANAGEMENT (continued)

The Group’s maximum exposure to credit risk at the reporting date was:

roup’s maximum exposure to credit risk at the reporting date was:
Cash and cash equivalents Trade and other receivables	2021 $ 2020 $ 421,449 281,321 389,635 213,764
	811,084 495,085

The credit quality is assessed and monitored as follows:

Credit quality of financial assets At 30 June 2021 Cash and cash equivalents Trade and other receivables – current Trade and other receivables – non-current At 30 June 2020 Cash and cash equivalents Trade and other receivables – current Trade and other receivables – non-current	Equivalent S&P rating1 Internally rated2 A-1+ No default Total 421,449 - 421,449 144,166 242,969 387,135 - 2,500 2,500
	565,615 245,469 811,084
	281,321 - 281,321 83,746 127,518 211,264 - 2,500 2,500
	365,067 130,018 495,085

1. The equivalent S&P rating of the financial assets represents that rating of the counterparty with whom the financial asset is held rather than the rating of the financial asset itself.

2. Trade and other receivables represent rental income receivables, interest accrued and deposit paid.

Allowance for impairment loss

From 1 July 2018, the Group assesses on a forward looking basis the expected credit losses associated with its debt instruments carried at amortised cost and FVOCI. The impairment methodology applied depends on whether there has been a significant increase in credit risk.

For current trade receivables, the Group applies the simplified approach permitted by AASB 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due.

Trade receivables are written off when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with the Group.

No impairment loss was recognised by the Group for the financial year (2020: $nil).

Liquidity risk management

Ultimate responsibility for liquidity risk management rests with the Board of Directors. The Board has determined an appropriate liquidity risk management framework for the management of the Group’s short, medium and long-term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves and continuously monitoring budgeted and actual cash flows and matching the maturity profiles of financial assets, expenditure commitments and liabilities.

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N O TE S T O T H E C O NS OL I D A TE D F I NA NC IA L S T A TE ME NT S for the year ended 30 June 2021

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31. FINANCIAL RISK MANAGEMENT (continued)

The following are the contractual maturities of financial liabilities on an undiscounted basis, including estimated interest payments: Cash flows for liabilities without fixed amount or timing are based on conditions existing at year end.

30 June 2021 Trade and other payables Loans and borrowings 30 June 2020 Trade and other payables Loans and borrowings	Carrying amount Contractual cash flows 1 year 2-5 years >5 years 1,362,022 (1,362,022) (1,362,022) - - 21,555,000 (22,384,091) (12,187,791) (10,196,300) -
	22,917,022 (23,746,113) (13,549,813) (10,196,300) -
	Carrying amount Contractual cash flows 1 year 2-5 years >5 years 634,229 (634,229) (634,229) - - 23,889,183 (24,322,419) (15,788,258) (8,534,161) -
	24,523,412 (24,956,648) (16,422,487) (8,534,161) -

Fair value measurement of financial instruments

The carrying amounts of the Group’s financial instruments are assumed to approximate their fair value due to either their short term nature or their terms and conditions, including interest payable at variable rates. The fair value of the Group’s borrowings are not materially different to their carrying amount since the interest payable on those borrowings are close to current market rates.

The carrying value for the interest free loan is based on initial recognition as the carrying value would likely be consistent with the fair value.

32. FAIR VALUE MEASUREMENT

Fair value hierarchy

The following table details the consolidated entity's assets and liabilities, measured or disclosed at fair value, using a three level hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being:

• Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.

• Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

• Level 3: Unobservable inputs for the asset or liability.

The following table shows the consolidated entity's assets or liabilities measured or disclosed at fair value.

2021 Assets Investment property Total assets 2020 Assets Investment property Total assets	Level 1 Level 2 Level 3 Total - - 17,425,091 17,425,091
	- - 17,425,091 17,425,091
	Level 1 Level 2 Level 3 Total - - 17,359,827 17,359,827
	- - 17,359,827 17,359,827

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N O TE S T O T H E C O NS OL I D A TE D F I NA NC IA L S T A TE ME NT S for the year ended 30 June 2021

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32. FAIR VALUE MEASUREMENT (continued)

Valuation techniques for fair value measurements categorised within level 3

The following table shows the valuation techniques used in measuring the fair value of investment property, as well as the significant unobservable inputs used.

Valuation techniques	significant unobservable inputs	Inter-relationship between key unobservable inputs and fair value measurement
Capitalisation of net income: the valuation method considers the present value of expected future rental income to be generated from the property, taking into account the market rental income, leasing downtimes and leasing incentive such as rent free periods. The expected future rental income is divided by a capitalisation rate. Among other factors, the capitalisation rate considers the nature, location and tenancy profile of theproperty.	• Market fully leased net rental income per annum after vacancy allowance $1.39m (2020: $1.39m) • Capitalisation rate 6.75% (2020: 6.75%) • Leasing vacancy 5.00% (2020: 5%) • Weighted lease duration by income: 7.24 years (2020: 7.24 years)	The estimated fair value would increase (decrease) if: • Expected market rental income were higher (lower); • Capitalisation rate were lower (higher); • Leasing downtime were shorter (longer).

The fair values adopted for investment properties have been supported by independent external valuations are considered to reflect market conditions at balance date.

Estimates of fair value take into account factors and market conditions evident at balance date. Uncertainty and changes in global market conditions in the future may impact fair values in the future.

There were no movements between different fair value measurement levels during the year (2020: nil).

33. EVENTS SUBSEQUENT TO REPORTING DATE

On 20 July 2021, the Company completed a 3 for 10 non renounceable rights issue of fully paid ordinary shares issuing 22,008,911 new shares and raising $5,502,228.

On 10 August 2021, the Group fully acquired the remaining shares in Applecross Land Holdings Pty Ltd.

Other than what has been disclosed in the accounts, no other matters or events have arisen since 30 June 2021 which have significantly affected, or may significantly affect, the operations of the Group, the results of the operations, or the state of affairs of the Group in future financial years.

43

D IR E C T O R S ’ D E C L A R A TI O N

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In the Directors’ opinion:

• (a) the attached financial statements and notes thereto comply with the Corporations Act 2001, the Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements;

• (b) the attached financial statements and notes thereto comply with International Financial Reporting Standards as issued by the International Accounting Standards Board as described in Note 2 to the financial statements;

• (c) the attached financial statements and notes thereto give a true and fair view of the consolidated entity's financial position as at 30 June 2021 and of its performance for the financial year ended on that date; and

• (d) there are reasonable grounds to believe that the consolidated entity will be able to pay its debts as and when they become due and payable.

Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.

On behalf of the directors

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Nicholas Zborowski Executive Director

30[th] September 2021 Perth

44

38 Station Street Subiaco, WA 6008 PO Box 700 West Perth WA 6872 Australia

Tel: +61 8 6382 4600 Fax: +61 8 6382 4601 www.bdo.com.au

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INDEPENDENT AUDITOR'S REPORT

To the members of Mustera Property Group Limited

Report on the Audit of the Financial Report

Opinion

We have audited the financial report of Mustera Property Group Limited (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30 June 2021, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial report, including a summary of significant accounting policies and the directors’ declaration.

In our opinion the accompanying financial report of the Group, is in accordance with the Corporations Act 2001 , including:

• (i) Giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its financial performance for the year ended on that date; and

• (ii) 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 Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (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 Company, 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.

BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation.

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Material uncertainty related to going concern

We draw attention to Note 2 in the financial report which describes the events and/or conditions which give rise to the existence of a material uncertainty that may cast significant doubt about the group’s ability to continue as a going concern and therefore the group may be unable to realise its assets and discharge its liabilities in the normal course of business. Our opinion is not modified in respect of this matter.

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 of the current period. 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. In addition to the matter described in the Material uncertainty related to going concern section, we have determined the matters described below to be the key audit matters to be communicated in our report.

Valuation of inventory

Key audit matter	How the matter was addressed in our audit
Note 9 to the financial report discloses a significant	Our	audit procedures included, but were not limited
inventory balance and Note 2 describes the accounting	to:
policies and judgements used in accounting for inventory. Property held for development and resale is treated by the Group as inventories which are measured at the lower of cost and net realisable value. Cost includes the cost of acquisition, development and eligible borrowing costs incurred during the development of each asset.	•	Obtaining position papers provided by management to support the carrying value of the individual properties and assessing the evidence provided and assumptions used in the NRV assessment, including corroborating with external market data where appropriate;
This is considered a key audit matter due to the significance of inventory to the financial statements and due to the significant judgement involved in the	•	Reviewing external valuations and/or assessing for adverse changes in prior external valuation reports of inventory where applicable;
determination of net realisable value for properties.	•	Comparing net realisable value to the carrying
		amount of the properties to ensure that they are
		carried at the lower of cost and net realisable
		value;
	•	Reviewing classification of inventory as current or
		non-current in line with the accounting policy of
		the group and the accounting standards; and
	•	Assessing the adequacy of the disclosures in Note 2
		and Note 9 to the financial report.

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Fair value of investment property

Key audit matter	How the matter was addressed in our audit
The valuation of investment property is a key audit	Our	audit procedures included, but were not limited
matter as this asset is significant in value and the fair	to:
value assessment requiring significant judgement. The Group’s disclosures about the fair value of investment property are included in Note 10 and Note 32, which details the key assumptions used in determining the	•	Obtaining and assessing the fair value of the investment property against management’s external valuation expert report;
fair value.	•	Assessing the professional competence and
		objectivity of external experts engaged by the
		Group;
	•	Reviewing the inputs and assumptions used by the
		external expert with reference to current rental
		income of the property, capitalisation rates and
		duration of leases; and
	•	Assessing the adequacy of the disclosures in Note
		2, Note 10 and Note 32 to the financial report.

Other information

The directors are responsible for the other information. The other information comprises the information in the Group’s annual report for the year 30 June 2021, but does not include the financial report and the auditor’s report thereon.

Our opinion on the financial report does not cover the other information and 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 Company 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 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

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In preparing the financial report, the directors are responsible for assessing the ability of the group to continue as a going concern, disclosing, as applicable, matters related 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 has no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the Financial Report

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

A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website at:

https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf

This description forms part of our auditor’s report.

Report on the Remuneration Report

Opinion on the Remuneration Report

We have audited the Remuneration Report included in pages 8 to 12 of the directors’ report for the year ended 30 June 2021.

In our opinion, the Remuneration Report of Mustera Property Group Limited, for the year ended 30 June 2021, complies with section 300A of the Corporations Act 2001 .

Responsibilities

The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001 . Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

BDO Audit (WA) Pty Ltd

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Phillip Murdoch,

Director

Perth, 30 September 2021.

38 Station Street Subiaco, WA 6008 PO Box 700 West Perth WA 6872 Australia

Tel: +61 8 6382 4600 Fax: +61 8 6382 4601 www.bdo.com.au

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DECLARATION OF INDEPENDENCE BY PHILLIP MURDOCH TO THE DIRECTORS OF MUSTERA PROPERTY GROUP LIMITED

As lead auditor of Mustera Property Group Limited for the year ended 30 June 2021, I declare that, to the best of my knowledge and belief, there have been:

1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

2. No contraventions of any applicable code of professional conduct in relation to the audit.

This declaration is in respect of Mustera Property Group Limited and the entities it controlled during the period.

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Phillip Murdoch

Director

BDO Audit (WA) Pty Ltd

Perth, 30 September 2021

BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation.

A D D IT I O NA L I N F OR MA T I O N

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Details of equity securities as at 21 September 2021:

Top holders

The 20 largest registered holders of each class of quoted equity security as at 21 September 2021 were:

Fully paid ordinary shares - quoted Name	No. of Shares %
1. Wonder Holdings Pty Ltd 2. Anrinza Future Pty Ltd 3. QP & Co Pty Ltd 4. Mr Hoong Ngai Christopher Lai 5. Ms May Ern Gloria Lai 6. Willy Masturi 7. Wise Day Holdings Ltd 8. Mr Park On Lai 9. Hox5 Pty Ltd 10. Mr Willy Masturi 11. Mr Jack Spencer-Cotton 12. Mr Nicholas Zborowski 13. Mr Robert Ang 14. GTO Group Corp 15. Sanny Nanang 16. B Young Holdings Pty Ltd 17. Kingsfield Pty Ltd 18. Ms Monika Adya Pratignyo 19. Luniarty Kartosudiro 20. Mr Linus Ning-Li Tan	43,069,603 31.16 41,285,656 29.87 9,265,667 6.70 5,333,334 3.86 5,333,333 3.86 4,000,000 2.89 3,333,333 2.41 2,666,667 1.93 2,096,394 1.52 2,000,000 1.45 1,516,665 1.10 1,443,450 1.04 1,409,354 1.02 1,250,000 0.90 1,010,000 0.73 1,000,000 0.72 814,295 0.59 682,500 0.49 533,106 0.39 507,224 0.37
	128,550,581 93.00

Registered holders holding 20% or more of each class of unquoted equity security as at 21 September 2021 were:

Options exercisable at $0.37 each on or before 30 September 2021 – unquoted

Options exercisable at $0.37 each on or before 30 September 2021 – unquoted
Name	No. of Options	%
N Zborowski	1,000,000	33
B Young	1,000,000	33
Options exercisable at $0.46 each on or before 30 November 2023 – unquoted
Name	No. of Options	%
N Zborowski	1,000,000	40
A Ho	500,000	20
J Spencer-Cotton	500,000	20
B Young	500,000	20
Options exercisable at $0.30 each on or before 20 July 2023 – unquoted
Name	No. of Options	%
Wonder Holdings Pty Ltd	4,969,569	45.15
Anrinza Future PtyLtd	4,763,729	43.29
Performance Rights – unquoted
Name	No. of Rights	%
N Zborowski	1,000,000	50
A Ho	500,000	25
J Spencer-Cotton	500,000	25

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A D D IT I O NA L I N F OR MA T I O N

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Distribution schedules – as at 21 September 2021

A distribution schedule of quoted shares

	Fully paid ordinary shares
**Range **	Holders Units %
1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 - Over	17 2,104 0.00 10 24,394 0.02 44 435,320 0.32 78 2,884,531 2.09 43 134,888,783 97.57
Total	192 138,235,132 100.00

A distribution schedule of unquoted options

	Options exercisable at $0.37 on or before 30 Sep 2021	Options exercisable at $0.46 on or before 30 Nov2023	Options exercisable at $0.30 on or before 20 July 2023
**Range **	Holders Units %	Holders Units %	Holders Units %
1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 - Over	- - - - - - - - - - - - 4 3,000,000 100	- - - - - - - - - - - - 4 2,500,000 100	6 823 0.01 16 35,150 0.32 8 65,189 0.59 11 468,740 4.26 5 10,434,547 94.82
Total	4 3,000,000 100	4 2,500,000 100	46 11,004,449 100.00

A distribution schedule of unquoted performance rights

	Performance Rights
**Range **	Holders Units %
1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 - Over	- - - - - - - - - - - - 3 2,000,000 100.00
Total	190 138,235,132 100.00

Substantial shareholders

The names of substantial shareholders and the number of shares to which each substantial shareholder and their associates have a relevant interest, as disclosed in substantial shareholding notices given to the Company, are set out below:

Substantial shareholder	Number of Shares
Wonder Holdings Pty Ltd	43,069,603
Anrinza Future Pty Ltd	41,285,656
QP & Co Pty Ltd	9,265,667
WillyMasturi	5,333,334

Restricted securities

As at 21 September 2021, the Company had no restricted securities.

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A D D IT I O NA L I N F OR MA T I O N

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Unmarketable parcels

Holdings less than a marketable parcel of ordinary shares (being 1,818 shares as at 21 September 2021):

Holders	Units
18	3,854

Voting Rights

The voting rights attaching to ordinary shares are:

On a show of hands, every member present in person or by proxy shall have one vote, and upon a poll, each share shall have one vote.

Options and Performance Rights do not carry any voting rights.

On-Market Buy Back

There is no current on-market buy-back.

Principles of Good Corporate Governance and Recommendations

The Board has adopted and approved the Company’s Corporate Governance Statement, which can be found on the Company’s website at http://mustera.com.au/corporate-governance.

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