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Westlake Chemical Partners(Formerly MRL Corporation Limited)
ABN 50 007 870 760
ANNUAL REPORT
30 JUNE 2016
CORPORATE
DIRECTORY
DIRECTORS
Warwick Grigor
Craig McGuckin
Peter R. Youd
Chris Banasik
(Chairman)
(Managing Director)
(Executive Director)
(Non-Executive Director)
COMPANY SECRETARY
Peter R. Youd
PRINCIPAL REGISTERED OFFICE
IN AUSTRALIA
Suite 3
9 Hampden Road
Nedlands WA 6009
Telephone: +61 1300 660 448
+61 1300 855 044
Facsimile:
info@firstgraphite.com.au
Email:
www.firstgraphite.com.au
Website:
STOCK EXCHANGE LISTING
The Company is listed on the Australian Securities Exchange
Limited under the trading codes FGR, FGROA and FGROB
SHARE REGISTRY
Automic Registry Services
Level 1, 7 Ventnor Avenue
West Perth W.A. 6005
Telephone: +61 8 9324 2099
+61 8 9321 2337
Facsimile:
AUDITOR
BDO Audit (WA) Pty Ltd
38 Station Street
Subiaco WA 6008
SOLICITORS – AUSTRALIA
Steinepreis Paganin
Lawyers and Consultants
Level 4,
The Read Buildings
16 Milligan Street
Perth WA 6000
SOLICITORS – SRI LANKA
Varners
Level 14, West Tower
World Trade Centre
Echelon Square
Colombo 01
Sri Lanka
BANKERS
Westpac Banking Corporation
Level 6
109 St Georges Terrace
Perth WA 6000
2
First Graphite Ltd • ANNUAL REPORT 2016TABLE OF
CONTENTS
Corporate Directory
Table of Contents
Chairman’s Report
Review of Operations
Overview of Operations
Exploration
Environment
Safety
Directors’ Report
Remuneration Report (audited)
Auditor’s Independence
Corporate Governance Statement
Auditor’s Independence Declaration
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
1. Basis of Preparation
2. Accounting policies
3. Financial Risk Management
4. Segment reporting
5. Operating profit and finance income and expense
6.
Income tax
7. Earnings per share
8. Dividends paid and proposed
9. Cash and cash equivalents
10. Interests in other entities
11. Exploration and evaluation assets
12. Property, plant and equipment
13. Trade and other payables
14. Issued Capital
15. Share based payments
16. Reserves and accumulated losses
17. Statement of cash flow reconciliation
18. Commitments and contingencies
19. Results of the parent company
20. Events since the end of the financial year
21. Related party transactions
22 Auditors’ remuneration
Directors’ Report
Independent Auditor’s Report
Additional Securities Exchange Information
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3
ANNUAL REPORT 2016 • First Graphite Ltd
CHAIRMAN’S
REPORT
Dear Fellow Shareholder
The 2016 financial year has been one of significant achievements and “Firsts” for your Company.
During September and October 2015 the Company completed a Shareholder Purchase Plan and private placement which
raised a total of $4.5m at $0.055 per share. In May 2016 the Company was able to complete a further strongly supported
raising of $2.4m at $0.09 per share. These funds have enabled the Company to continue to pursue its stated goal of
becoming a producer of high quality graphene from high grade Sri Lankan graphite.
Following extensive bench scale test work undertaken by the University of Adelaide, FGR constructed its first prototype
commercial scale production unit for graphene. This unit was successfully commissioned during August and confirmed
the scalability of the production process which has been developed by the Company. Having established the ability
to produce graphene at very low cost, First Graphite is continuing its work at the University of Adelaide to identify
commercial applications of graphene, thereby opening up new markets.
The board sees the production and commercialisation of graphene as providing the most significant driver for your
Company’s share price appreciation in the future.
The continued exploration efforts of the Company resulted in it being granted additional licences in November 2015
which meant it became the largest holder of graphite exploration licences in Sri Lanka. Drilling at the Aluketiya project
provided an intersection of 1.72m of high grade vein graphite over 2.81m. This was the most significant intercept from
any FGR drilling program and it is likely the most significant reported graphite intersection in Sri Lankan modern history.
Subsequent analysis yielded Length Weighted Average (LWA) 98.41% Total Graphitic Carbon (TGCLOI) with results as high
as 99.51% TGCLOI. In another first the Company brought an Australian geophysics company to Sri Lanka to conduct down
hole electromagnetic surveys on previously drilled holes at Aluketiya and Pandeniya. These surveys were enormously
successful and the results were released to the Australian Securities Exchange on 23 September 2016.
On a mining front the Company was granted an Industrial Mining Licence – A class (IML-A) over the Pandeniya project
in April 2016. This was the first new underground graphite mining licence granted in 25 years. This was a clear
demonstration of the ability of the Company to take a target area from exploration through to mining.
The future for your Company looks promising with ongoing progress of its own exploration and mining areas and the
exciting developments in its graphene strategy.
In closing I would like to thank our shareholders for their continued support. The board would also like to express its
thanks to our Managing Director, Mr Craig McGuckin, for his tireless and considerable efforts to advance the Company’s
projects and his inspirational leadership in building the Sri Lankan team. This team is also to be thanked for their
considerable efforts.
The board looks forward to an exciting and rewarding 2016/17 financial year.
Warwick Grigor
Non-Executive Chairman
28 September 2016
4
First Graphite Ltd • ANNUAL REPORT 2016
REVIEW OF
OPERATIONS
OVERVIEW OF OPERATIONS
Graphene Research and Development
Your Company has made considerable progress during the
2016 financial year on its high quality graphene strategy.
About Graphene
Graphene is a natural material which is the basic building
block of graphite, achieved when the thickness is reduced
to less than 10 atoms. Though it was “discovered” in the
1940s, it took until 2004, before scientists figured out
how to isolate it from graphite particles, using the simple
“scotch tape” exfoliation method. Since then there has
been tremendous interest in graphene with research
scientists demonstrating its suitability for combination
with a vast range of materials, which greatly enhances
the performance of those materials. There has also been
an explosion in the number of patents being taken out as
industry has been preparing for the start of the new and
deeply disruptive “graphene age”.
Graphene has been talked about in glowing terms with
scientists suggesting confidently it is the key to the
future of almost all materials. Its disruptive qualities
are one consideration, but what does the path to
commercialisation look like? There is no road map, but
some parallels can be drawn with the path taken by
the internet with graphene being to materials what the
internet has been to communications.
To start with the internet was about emails. A major
breakthrough occurred with the release of the first web
browser in 1994, which turned the web into a user friendly
graphical interface communications environment. As
computing power increased and technology convergence
accelerated we have experienced the development of smart
phones and wireless-based applications offering flexibility
and commercial opportunity and massive productivity
gains well beyond what was first contemplated.
One of the greatest challenges being faced today in
commercialising graphene is how to produce high quality
material, on a large scale at low cost, and in a reproducible
manner. Currently, the synthesis of graphene by
conventional methods involves the use of toxic chemicals
and these methods usually result in the generation of
hazardous waste and poisonous gases. Other methods
are capital intensive and complex. Thus the major hurdle
in manufacturing graphene on an industrial scale is the
process complexity and the associated high cost of its
production, which results in expensive product.
The quality of graphene produced is also crucial, as the
presence of defects, impurities, grain boundaries, multiple
domains, structural disorders, or wrinkles in the graphene
sheet can have an adverse effect on its electronic and
optical properties.
At First Graphite Limited we have addressed these
issues by producing graphene using high-grade, vein
graphite from Sri Lanka. Sri Lankan graphite has a unique
crystalline structure and is the highest quality, naturally
occurring material in the world. The use of electrochemical
exfoliation on this unique product was viewed as a method
to overcome some of the issues outlined above.
Test work has conclusively demonstrated up to 80% of our
unique vein graphite converts to graphene within a short
time frame. Furthermore, the graphene platelet size being
produced is larger than that produced by other graphite
material and graphene production methods with graphene
platelets of between 45µm and 78µm regularly produced.
First Graphite promises the ability to dramatically change
the cost structure of the graphene supply curve, thereby
facilitating the acceleration of the development of
applications for consumption of bulk tonnages of graphene
in industry.
Sri Lanka
The 2016 financial year has seen significant progress made
on the Company’s high grade vein graphite projects in Sri
Lanka.
The Company holds 39,500ha over thirteen exploration
licences together with two granted Industrial Mining
Licences, one at Pandeniya and one at Aluketiya. All areas
are held 100% in the name of MRL Graphite (Pvt) Ltd, a Sri
Lankan subsidiary company.
Pandeniya
(within the Warakapola exploration licences)
In April 2016 the Company was granted Industrial Mining
licence IML/A/HO/9405 (IMLA)covering the Pandeniya
development area. This was the first new IMLA to have
been issued is Sri Lanka for an underground graphite
project in over twenty five years and the first to include
a full environmental review. The award of this licence
demonstrated the capability of the Company to take an
area of interest through the exploration phase, apply for
licensing and be successful in the conversion process.
Since the award of the licence and at the time of writing
the Company has successfully completed the shaft
rehabilitation to a depth of 30 metres to the shaft floor. At
the bottom of the shaft a further 39 metres of horizontal
drives/offset shafts were encountered, these workings
were not anticipated in the initial mine plan however have
been cleaned out and mapped where safe to do so.
Following cleanout and examining these drives three
older shafts were also found together with clear evidence
of graphite vein stoping. The age and unstable condition
of these old workings made them unsuitable for current
use as it was considered to be unsafe for the Company’s
miners to use as a primary access.
5
ANNUAL REPORT 2016 • First Graphite Ltd REVIEW OF OPERATIONS (Continued)
These facts, together with the additional information
supplied from the DHTEM, led to a change to the mine
plan and the existing shaft is now being sunk a further
15 metres to gain access to the structures identified by
the DHTEM and previous diamond drilling below the
previously mined areas. To date the shaft has been
advanced to 34 metres below the shaft collar.
Figure 1: Schematic of shaft development and drives
Aluketiya
At Aluketiya Shaft H has been sunk to a depth of 17 metres.
Between 12 and 15 metres a void was encountered which
caused significant delays to the shaft sinking efforts.
During this activity the shaft liners hung up, in the process
of freeing up the liners damage was done to three of
the smaller cement liners. This has now been remedied
and shaft sinking re-commenced. The mine plan calls
for the shaft to be sunk between 28 and 35 metres
depth, depending on the ground conditions below the
weathered and fresh rock interface. An exploration drive
will then be driven 20 metres to the large drill intersection
encountered in drill hole ALK11. A second target will be
drilled shortly up dip from the large intersection on ALK18
to determine the potential to access that structure from
Shaft H.
Shaft J’s head frame has been erected and the Company
has commenced the installation of the support equipment
such as hoists, generators and compressors.
While these delays, while unfortunate, were necessary
to amended mine plans and enable a longer term set
up for the delivery of ore over a longer period. With the
additional prospectively shown from the DHTEM it would
have been unwise and short sighted not to have amended
the initial plans.
EXPLORATION
In August
the Company conducted a downhole
electromagnetic (DHTEM) surveys at its Aluketiya and
Pandeniya projects. This was the first DHTEM survey to
have been conducted in Sri Lanka and proved extremely
successful.
6
Graphite is an excellent conductor of electricity, a
property which makes it highly amenable to exploration
Surface and airborne
using electrical techniques.
electromagnetic techniques have been used previously
by FGR and other companies to search for graphite in Sri
Lanka. The limitation of these techniques is that while
presence of graphite can be determined, DHTEM can
predict the location of veins in three dimensions.
GEM geophysics provided the field data acquisition
services and Southern Geoscience provided the survey
planning and data interpretation for the surveys conducted
in August 2016.
The full results of this survey were released to the
Australian Securities Exchange on 23 September 2016.
ENVIRONMENT
The Directors and management are conscious of
ensuring all activities are undertaken with a view to
achieving the highest environmental standards which
are practically possible.
The Industrial Mining Licence granted to the Company at
Pandeniya was the first to include a full environmental
review. At Aluketiya the Company successfully converted
its Industrial Mining Licence from a category C to a
category A following a successful Initial Environmental
Examination.
The surface footprint of the mining activities is small and
all mining activities are to be conducted underground.
As a result, the impact on the surrounding area will be
minimal. No processing will occur on the mining location
and all mined graphite will be transported to a central
processing facility.
SAFETY
Employment and Training Program
All potential full time MRL employees must undergo
a Company funded full medical examination prior to
commencing employment. All employees are also
required to complete a Company funded safety first
training course at the commencement of employment
and annual refresher courses. All employees are given
a stringent safety training program and the Company has
two full time Occupational Health, Safety and Environment
(OHS&E) Officers.
The safety training and safety standards adopted by the
Company are those applicable to the well-developed and
proven standards used in the West Australian mining and
petroleum industries and exceed the legislative standards
imposed in Sri Lanka.
The Company will be ensuring training is provided to all
machinery operators by qualified training institutions
and personnel. Employees will then be signed out as
competent operators for selected pieces of machinery,
e.g. cranes, winches, compressors etc.
Refresher courses will be conducted to make sure
competence levels are maintained.
First Graphite Ltd • ANNUAL REPORT 2016
DIRECTORS’
REPORT
The directors present their report together with the
financial report of the consolidated entity (referred to
hereafter as the ‘consolidated entity’) and the entities
it controlled at the end of, or during, the year ended
30 June 2016.
Planning Engineer, Mine Manager and Managing Director
of private and publicly listed companies.
No other directorships have been held in the last
three years.
DIRECTORS
The names and details of the Company’s Directors in
office during the financial year and until the date of this
report are as follows. The Directors were in office for this
entire period unless otherwise stated.
Warwick Grigor
BEc. LLB, MAusIMM, FAICD
Non-Executive Chairman (Appointed 4 December 2015)
Mr Grigor is a highly respected and experienced mining
analyst, with an intimate knowledge of all market related
aspects of the mining industry. He is a graduate of the
Australian National University having completed degrees
in law and economics. His association with mining
commenced with a position in the finance department
of Hamersley Iron, and from there he moved to Jacksons,
Graham, Moore and Partners to become Australia’s first
specialist gold mining analyst. Mr Grigor left to be the
founding research partner at Pembroke Securities and
then the Senior Analyst at County NatWest Securities.
He left County in 1991 to found Far East Capital Limited
which was established as a specialist mining company
financier and corporate adviser, together with Andrew
“Twiggy” Forrest.
In 2008, Far East Capital sponsored the formation of a
stockbroking company, BGF Equities, and Mr Grigor
assumed the position of Executive Chairman. This was re-
badged as Canaccord Genuity Australia Limited when a
50% stake was sold to Canaccord Genuity Group Inc. Mr
Grigor retired from Canaccord in October 2014, returning
to Far East Capital.
Special Responsibilities:
Member of the Audit Committee and Remuneration
Committee
Other Current Directorships:
Non-executive director of Peninsular Energy Limited
Peter Youd
B Bus (Accounting), AICA
Executive Director
Peter Youd is a Chartered Accountant and has extensive
experience within the resources and oil and gas services,
industries. For the last 28 years Mr Youd has held a
number of senior management positions and directorships
for publicly listed and private companies in Australia and
overseas.
No other directorships have been held in the last three
years.
Special Responsibilities:
Member of the Audit Committee
Chris Banasik
B App Sc (Physics), MSc (Econ Geol), Grad Dip Ed,
MAusIMM
Non-Executive Director
Mr Banasik was a founding Director of Exploration and
Geology for the ASX listed company Silver Lake Resources
Limited and held this position from May 2007 until
November 2014.
Mr Banasik has a Master’s Degree in Mineral Economics
from University of WA and Bachelor’s Degree in Applied
Physics from Curtin University.
Prior to becoming the Director of Exploration and Geology
of Silver Lake Resources, he held senior geological
management positions over 12 years’ with organisations
including WMC Resources Ltd, Reliance Mining Ltd,
Goldfields Mine Management and Consolidated Minerals
Ltd. He has gained extensive experience in every aspect
of mining, mineral processing, smelting and refining
primarily for gold and nickel.
Former Directorships:
Silver Lake Resources Limited until November 2014
Craig McGuckin
Dip. Minsurv Class 1, Dip Surfmin
Managing Director
Denis Geldard
(resigned 30 June 2016)
Non-Executive Director
Craig McGuckin is a qualified mining professional with 30
years’ experience in the mining, drilling and petroleum
industries. He has held senior positions including Senior
Peter Hepburn-Brown
(resigned 20 November 2015)
Non-Executive Director
7
ANNUAL REPORT 2016 • First Graphite Ltd
DIRECTORS’ REPORT (Continued)
COMPANY SECRETARY & CHIEF FINANCIAL OFFICER
Peter Youd
B Bus (Accounting), AICA
Results and Dividends
The Group result for the year was a loss of $4,927,830 (2015: loss of $3,200,472).
No final dividend has been declared or recommended as at 30 June 2016 or as at the date of this report (2015: $ nil).
No interim dividends have been paid (2015: nil).
Principal Activities
During the financial year the principal continuing activities of the consolidated entity were as an explorer and developer
of high-grade graphite projects in Sri Lanka. It is also a developer and producer of high technology graphene materials.
Events Since the End of the Financial Year
There are no known subsequent events of a material nature.
Significant Changes in State of Affairs
There were no significant changes in the state of affairs of the consolidated entity during the financial year.
Likely Developments and expected results of operations
The Directors have excluded from this report any further information on the likely developments in the operations of the
Group and the expected results of those operations in future financial years, other than as mentioned in the Chairman’s
Statement and Review of Operations as the Directors have reasonable grounds to believe the continuing market volatility
makes it impractical to forecast future profitability and other material financial events.
Directors’ and other officers’ emoluments
Details of the remuneration policy for Directors and other officers are included in Principle 8: “Remunerate fairly and
responsibly” of the Remuneration Report (page 10) and the Corporate Governance Principles (page 17).
Details of the nature and amounts of emoluments for each Director of the Company and Executive Officers are included
in the Remuneration Report.
Environmental Regulations
The Group’s operations are not regulated by any significant environmental regulation under a law of the Commonwealth
or of a state or territory.
Proceedings on behalf of company
No person has applied to the Court under section 237 of the Corporations Act for leave to bring proceedings on behalf of
the Company or intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on
behalf of the Company for all or any part of those proceedings.
The Company was not a party to any such proceedings during the year.
Share Options
At the date of this report, First Graphite Limited has unlisted options holders holding options exercisable into ordinary
shares in First Graphite Limited as follows:
Unlisted
Grant Date
Date of Expiry
Exercise Price
Number under option
Share options
31 Oct 2014
31 Oct 2017
Share option
Share option
11 Jan-2016
11 Jan-2016
11 Jan 2019
11 Jan 2019
$0.092
$0.10
$0.15
12,000,000
500,000
500,000
No options were exercised, lapsed or cancelled during the year and to the date of this report.
8
First Graphite Ltd • ANNUAL REPORT 2016At the date of this report, First Graphite Limited has listed options holders holding options exercisable into ordinary shares
in First Graphite Limited as follows:
Listed
Grant Date
Date of Expiry
Exercise Price
Number under option
Share options (“FGROA”)
9 Jan 2013
17 Oct 2016
Share options (“FGROA”)
6 Mar 2013
17 Oct 2016
Share options (“FGROA”)
18 Dec 2013
17 Oct 2016
Share options (“FGROA”)
31 Oct 2014
17 Oct 2016
Share options (“FGROB”)
28 Apr 2014
21 May 2017
Share options (“FGROB”)
29 June 2015
21 May 2017
Share options (“FGROB”)
27 Nov 2015
21 May 2017
Share options (“FGROB”)
31 May 2016
21 May 2017
$0.20
$0.20
$0.20
$0.20
$0.10
$0.10
$0.10
$0.10
13,000,000
22,698,551
5,500,000
8,200,000
25,500,000
28,500,000
57,366,282
13,505,000
No options were exercised, lapsed or cancelled during the year and to the date of this report 259,100 options have been
exercised after the financial year end.
Directors’ meetings
The number of meetings of Directors held during the year and the number attended by each Director was as follows:
Warwick Grigor (appointed 4 December 2015)
Craig McGuckin
Peter Youd
Chris Banasik
Denis Geldard (resigned 30 June 2016)
Peter Hepburn-Brown (resigned 20 November 2015)
Directors Meetings
Meetings Attended
Entitled to Attend
3
4
4
4
4
-
3
4
4
4
4
-
Indemnification and insurance of officers and auditors
During or since the end of the financial year, the Company has not given an indemnity or entered into an agreement
to indemnify, or paid or agreed to pay insurance premiums, against costs incurred in defending any writ, summons,
application or other originating legal or arbitral proceedings, cross claim or counterclaim issued against or served upon any
Director or Officer alleging any wrongful act; or any written or verbal demand alleging any wrongful act communicated
to any Director or Officer under any circumstances and by whatever means.
In relation to the other activities of the Company, the Company has not, during or since the financial year, in respect of
any person who is or has been an officer of the Company or a related body corporate paid any premiums in regards to
indemnification and insurance of Directors and Officers.
No indemnity or insurance is in place in respect of the auditor.
9
ANNUAL REPORT 2016 • First Graphite Ltd DIRECTORS’ REPORT (Continued)
REMUNERATION REPORT (AUDITED)
This report outlines the remuneration arrangements in
place for Directors of First Graphite Limited and Executives
of the Group.
Key Management Personnel disclosed in this report
Mr Craig McGuckin
Mr Peter Youd
Mr Warwick Grigor
Mr Chris Banasik
Mr Denis Geldard
Mr Peter Hepburn-Brown (resigned 20 November 2015)
(appointed 4 December 2015)
(resigned 30 June 2016)
Remuneration Policy
Emoluments of Directors and senior executives are set
by reference to payments made by other companies of
similar size and industry, and by reference to the skills
and experience of the Directors and Executives. Details of
the nature and amounts of emoluments of each Director
of the Company are disclosed annually in the Company’s
annual report.
Directors and Senior Executives are prohibited from
entering into transactions or arrangements which limit the
economic risk of participating in unvested entitlements.
Non-Executive Director Remuneration
Remuneration
The Company’s policy is to remunerate non-executive
Directors at a fixed fee for time, commitment and
responsibilities.
for Non-Executive
Directors is not linked to individual performance. Given
the Company is at its early stage of development and
the financial restrictions placed on it, the Company may
consider it appropriate to issue unlisted options to Non-
Executive Directors, subject to obtaining the relevant
approvals. This Policy is subject to annual review. All of
the Directors’ option holdings are fully disclosed. From
time to time the Company may grant options to non-
executive Directors. The grant of options is designed to
recognise and reward efforts as well as to provide Non-
Executive Directors with additional incentive to continue
those efforts for the benefit of the Company.
Non-Executive Directors are remunerated for their
services from the maximum aggregate amount (currently
$300,000 per annum) approved by shareholders for this
purpose. They receive a base fee, which is currently set
at $25,000 per annum per non-executive Director and
$30,000 per annum for the non-executive Chairman.
There are no termination payments to Non-Executive
Directors on their retirement from office.
There has been no direct relationship between the
Group’s financial performance and remuneration of key
management personnel over the previous 5 years.
The Company’s policy for determining the nature and
amounts of emoluments of Board members and Senior
Executives of the Company is set out below:
Executive Director Remuneration
Setting Remuneration Arrangements
Executive pay and reward consists of a base fee
and short term performance incentives. Long term
performance incentives may include options granted
at the discretion of the Board and subject to obtaining
the relevant approvals. The grant of options is designed
to recognise and reward efforts as well as to provide
additional incentive and may be subject to the successful
completion of performance hurdles.
Executives are offered a competitive level of base pay
at market rates (for comparable companies) and are
reviewed annually to ensure market competitiveness.
The remuneration policy is designed to encourage
superior performance and long-term commitment to FGR.
At this stage of the Company’s development there is no
contractual performance based remuneration.
Executive Directors do not receive any fees for being
Directors of FGR or for attending Board and Board
Committee meetings.
All Executive Directors, Non-Executive Directors and
responsible executives of FGR are entitled to an Indemnity
and Access Agreement under which, inter alia, they are
indemnified as far as possible under the law for their
actions as Directors and officers of FGR.
The Company has established a separate Remuneration
Committee. Members of the Remuneration Committee
are Chris Banasik and Warwick Grigor. The Remuneration
Committee complies with Recommendation 8.2 in that
the committee consists of only non-executive directors.
Executive Officer Remuneration,
including Executive Directors
The remuneration structure for Executive Officers,
including Executive Directors, is based on a number
of factors, including length of service, the particular
experience of the individual concerned, and the overall
performance of the Company. The contracts for service
between the Company and specified Directors and
Executives are on a continuing basis, the terms of which
are not expected to change in the immediate future.
Upon retirement Executive Directors and Executives are
paid employee benefit entitlements accrued to the date
of retirement.
As an incentive, the Company has adopted an employee
share option plan. The purpose of the plan is to give
employees, directors and officers of the Company an
opportunity, in the form of options, to subscribe for shares.
The Directors consider the plan will enable the Company
to retain and attract skilled and experienced employees,
board members and officers, and provide them with the
motivation to make the Company more successful.
10
First Graphite Ltd • ANNUAL REPORT 2016DIRECTORS’ REPORT (Continued)
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ANNUAL REPORT 2016 • First Graphite Ltd
DIRECTORS’ REPORT (Continued)
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12
First Graphite Ltd • ANNUAL REPORT 2016
DIRECTORS’ REPORT (Continued)
Relationship between Remuneration and Company Performance
There is not a connection between the profitability of the Company and remuneration as the Company is not generating
revenues.
Name
Craig McGuckin
Peter Youd
Warwick Grigor
Chris Banasik
Denis Geldard
Peter Hepburn-Brown
Service Agreements
% Fixed
remuneration
% Short Term
Incentive
% Long Term
Incentive
83.14
74.06
71.05
74.25
100.00
100.00
-
-
-
-
-
-
16.86
25.94
28.95
25.75
-
-
Remuneration and other terms of employment for the executives are formalised in service agreements. These agreements
specify the components of remuneration benefits and notice periods. The material terms of service agreements with the
Executive Directors are noted as follows:
Name
Term of agreement and notice period Base fee
Termination payment(3)
Mr Craig McGuckin
No fixed term; 12 months(1)
Mr Peter Youd
No fixed term; 12 months(1)
(2)$447,000
(2)$318,600
None
None
(1) The twelve-month notice period applies only to the Company. The executive is required to give three months’ notice.
(2) Base fee quoted are for the period ended 30 June 2016 includes vehicle allowance and an additional allowance equal to 9.5% of the base fee.
A travel allowance based on the number of days spent away from Australia is also payable. They are reviewed annually by the Board
(3) Notice period of termination benefit in lieu of notice (on behalf of the Company), other than for gross misconduct.
There are no other service agreements in place.
Shares-based compensation
Shares issued as part of remuneration for the year ended 30 June 2016
No shares were issued to directors and other key management personnel as part of compensation during the year.
Options issued as part of remuneration for the year ended 30 June 2016
The Black Scholes Model - Simple European Call Option method was used as the basis for valuation of the options granted.
The terms and conditions of each grant of options over ordinary shares affecting remuneration of directors and other key
management personnel in this financial year or future reporting years are as follows:
Vesting date
and exercisable
date
Date of
Expiry
Exercise
price
Fair value
per option at
grant date
Fair value
of options
granted
% Vested
Grant Date
9 Jan 2013
9 Jan 2013
17 Oct 16
28 April 2014
28 April 2014
21 May 2017
$0.20
$0.10
$0.128
$1,344,000
$0.033
$430,333
31 Oct 2014
31 Oct 2014
31 Oct 2017
$0.092
$0.0628
$753,720
27 Nov 2015
21 May 2017
21 May 2017
$0.10
$0.0253
$405,079
Options granted carry no dividend or voting rights.
100
100
100
100
13
ANNUAL REPORT 2016 • First Graphite Ltd
DIRECTORS’ REPORT (Continued)
The number of options over ordinary shares granted to and vested by directors and other key management personnel as
part of compensation during the year ended 30 June 2016 are set out below:
Directors
Number of
options granted
during the year
Number of
options vested
during the year
Value of
options granted
Value of
options
exercised
Value of options
lapsed or
forfeited
Craig McGuckin
5,000,000
5,000,000
Peter Youd(i)
5,000,000
5,000,000
Warwick Grigor
5,000,000
5,000,000
Chris Banasik
1,000,000
1,000,000
Total
16,000,000
16,000,000
126,587
126,587
126,587
25,317
405,078
(i) Options granted to Mr Youd include 1 million which were allotted to his nominees
$
-
-
-
-
-
$
-
-
-
-
-
These share options do not have service or performance vesting criteria as they have been granted to directors for their
commitment and contributions to the Group to date.
Options and rights holdings held by key management personnel
Directors
Balance
01.07.15
Granted
Exercised
Other
Balance
30.06.16
Total
vested
30.06.16
Vested &
exercisable
30.06.16
Vested &
un-exercisable
30.06.16
C McGuckin 16,270,109
5,000,000
P Youd(i)
16,770,109
3,000,000
W Grigor(i)
C Banasik
-
-
5,000,000
1,000,000
D Geldard(ii)
2,500,000
P Hepburn-
Brown(iii)
2,000,000
-
-
-
-
-
-
-
-
272,728
21,542,837
21,542,837
21,542,837
(36,363)
19,733,746
19,733,746
19,733,746
10,295,000 15,295,000
15,295,000 15,295,000
636,364
1,636,364
1,636,364
1,636,364
(2,500,000)
(2,000,000)
-
-
-
-
-
-
-
-
-
-
-
-
(i) Adjusted for options no longer held in a trustee capacity as these securities are now held by the beneficiaries directly.
Granted
Acquired
Other
Balance
30.06.16
7,631,240
6,511,521
545,454
416,727
-
-
13,105,946
13,105,946
272,727
-
772,727
-
(2,516,800)
90,909
(292,509)
-
-
-
-
-
-
-
-
(ii) Appointed 4 December 2015
(iii) Resigned 30 June 2016
(iv) Resigned 20 November 2015
Directors
C McGuckin
P Youd
W Grigor(i)
Chris Banasik
D Geldard(ii)
P Hepburn-Brown(ii)
(i) Appointed 4 December 2015
(ii) Resigned 30 June 2016
Balance
01.07.15
7,085,786
6,094,794
-
500,000
2,516,800
201,600
14
First Graphite Ltd • ANNUAL REPORT 2016DIRECTORS’ REPORT (Continued)
(iii) Resigned 20 November 2015
Transactions with other related parties
During the reporting period, there were no other payments to related parties.
There were no loans or other transactions with key management personnel.
No remuneration consultants were utilised as at this point in the Company’s development as this would be a waste of
shareholders’ valuable funds.
Voting Rights
At the 2015 Annual General Meeting held on 27 November 2015 there were 0.81% of the votes against the adoption of
the remuneration report.
End of audited Remuneration Report
15
ANNUAL REPORT 2016 • First Graphite Ltd AUDITORS INDEPENDENCE
AUDITOR’S
DECLARATION
INDEPENDENCE
Auditor’s independence
The Directors received the independence declaration from the auditor of MRL Corporation Limited as stated on page 21.
The Directors received the independence declaration from the auditor of First Graphite Limited as stated on page 18.
Non-audit services
Non-audit services
During the period BDO Corporate Tax (WA) Pty Ltd was paid $29,977 for the provision of taxation services (2014: $22,695). BDO
Corporate Tax (WA) Pty Ltd is an affiliate member of BDO Audit (WA) Pty Ltd. Refer to Note 24 for further details
During the period BDO Corporate Tax (WA) Pty Ltd was paid $17,315 for the provision of taxation services (2015: $29,977).
BDO Corporate Tax (WA) Pty Ltd is an affiliate member of BDO Audit (WA) Pty Ltd. Refer to Note 22 for further details
Signed in accordance with a Resolution of the Directors.
Signed in accordance with a Resolution of the Directors.
Craig McGuckin
Craig McGuckin
Managing Director
Managing Director
Dated at Perth this 30th day of September 2015
Dated at Perth this 28th day of September 2016
Corporate Governance Statement
The Company’s full Corporate Governance Statement is available on the Company’s website,
www.mrltd.com.au/corporate/corporate-governance.html.
A completed Appendix 4G and the full Corporate Governance Statement have been lodged with the Australian Securities
Exchange as required under Listing Rules 4.7.3 and 4.7.4.
CORPORATE GOVERNANCE
STATEMENT
The Company’s full Corporate Governance Statement is available on the Company’s website,
www.firstgraphite.com.au/corporate/corporate-governance.html
A completed Appendix 4G and the full Corporate Governance Statement have been lodged with the Australian Securities
Exchange as required under Listing Rules 4.7.3 and 4.7.4.
20 MRL CORPORATION LIMITED ANNUAL REPORT 2015
16
First Graphite Ltd • ANNUAL REPORT 2016
AUDITOR’S INDEPENDENCE
DECLARATION
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
DECLARATION OF INDEPENDENCE BY PHILLIP MURDOCH TO THE DIRECTORS OF FIRST GRAPHITE
LIMITED
As lead auditor of First Graphite Limited for the year ended 30 June 2016, 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 First Graphite Limited and the entities it controlled during the period.
Phillip Murdoch
Director
BDO Audit (WA) Pty Ltd
Perth, 28 September 2016
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, other than for the acts or omissions of financial services licensees.
17
ANNUAL REPORT 2016 • First Graphite Ltd CONSOLIDATED STATEMENT OF PROFIT OR
LOSS AND OTHER COMPREHENSIVE INCOME
For the year ended 30 June 2016
Continuing operations
Other revenue
Revenue
Administration expense
Insurance
Legal fees
Employee benefits expense
Occupancy costs
Communication costs
Project assessment expense
Development costs
Depreciation and amortisation
Options expense
Share based payments expense
Operating loss
Finance income
Finance expense
Loss from continuing operations before tax
Note
5(a)
2016
A$
-
-
2015
A$
-
-
5(b)
(970,969)
(1,026,827)
5(c)
5(e)
5(d)
5(f)
(81,070)
(49,167)
(37,638)
(58,781)
(50,326)
(15,084)
(221,639)
(180,197)
(60,577)
(51,404)
(51,933)
(1,433,175)
(2,708,769)
-
(77,711)
(14,998)
(431,896)
(753,720)
-
(16,500)
(4,691,369)
(3,601,012)
16,321
(2,176)
198,065
-
(4,677,224)
(3,402,947)
Income tax (expense)/benefit
6
-
-
Loss after income tax attributable to the owners of First Graphite Limited
(4,677,224)
(3,402,947)
Other comprehensive income
Items which may be reclassified to profit and loss
Exchange differences arising on translation of foreign operations
Other comprehensive income for the year
Total comprehensive loss for the year attributable to the owners of
First Graphite Limited
(250,606)
(250,606)
202,475
202,475
(4,927,830)
(3,200,472)
Loss per share for the year attributable to the owners of
First Graphite Limited
Basic (loss) per share (cents per share)
Diluted (loss) per share (cents per share)
7
7
(1.86)
(1.86)
(2.03)
(2.03)
The above consolidated statement of profit or loss and other comprehensive income should be
read in conjunction with the accompanying notes
18
First Graphite Ltd • ANNUAL REPORT 2016CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
At 30 June 2016
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Other current assets
Total current assets
Non-current assets
Exploration and evaluation assets
Property, plant and equipment
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Lease liabilities
Total current liabilities
Non-current liabilities
Lease liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Note
2016
A$
2015
A$
9
3,101,282
1,055,093
20,471
71,962
36,172
32,339
3,193,715
1,123,604
11
12
1,848,446
1,910,640
421,890
61,556
2,270,337
1,972,196
5,464,052
3,095,800
13
667,730
484,782
23,073
-
690,803
484,782
73,904
73,904
-
-
764,706
484,782
4,699,345
2,611,018
14
67,328,257
60,743,995
3,344,348
3,163,058
(65,973,260)
(61,296,035)
4,699,345
2,611,018
The above consolidated statement of financial position should be read in conjunction with the accompanying notes
19
ANNUAL REPORT 2016 • First Graphite Ltd CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
For the year ended 30 June 2016
Transactions with owners in their capacity as owners
Consolidated Group
As at 1 July 2015
Loss for the year
Foreign currency translation
Total comprehensive loss for the year
Share placement during the year
Share issue costs
Issue of options
30 June 2016
As at 1 July 2014
Loss for the year
Foreign currency translation
Total comprehensive loss for the year
Issued
capital
Share based
payments
reserve
Translation
reserve
Accumulated
losses
Total
60,743,995
2,848,053
315,005
(61,296,035)
2,611,018
-
(4,677,224)
(4,677,224)
(250,606)
-
(250,606)
(250,606)
(4,677,224)
(4,927,830)
-
-
-
-
-
-
7,009,691
(425,429)
431,896
7,009,691
(425,429)
-
431,896
67,328,257
3,279,949
64,399
(65,973,259)
4,699,346
58,281,263
2,094,333
112,530
(57,893,088)
2,595,038
-
-
-
-
-
-
Transactions with owners in their capacity as owners
Share placement during the year
Share issue costs
Issue of options
30 June 2015
2,647,500
(184,768)
-
753,720
60,743,995
2,848,053
315,005
(61,296,035)
2,611,018
-
(3,402,947)
(3,402,947)
202,475
-
202,475
202,475
(3,402,947)
(3,200,472)
-
-
-
-
-
-
2,647,500
(184,768)
753,720
-
-
-
-
-
-
-
-
-
-
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
20
First Graphite Ltd • ANNUAL REPORT 2016CONSOLIDATED STATEMENT
OF CASH FLOWS
For the year ended 30 June 2016
Cash flows from operating activities
Payments to suppliers and employees
Interest received
Interest paid
Note
2016
A$
2015
A$
(4,200,932)
(2,338,196)
12,963
(2,176)
18,663
-
Net cash outflows from operating activities
17
(4,190,145)
(2,319,533)
Cash flows from investing activities
Payments for property, plant and equipment
(347,982)
(45,175)
Net cash outflows from investing activities
(347,982)
(45,175)
Cash flow from financing activities
Proceeds from rights issue/placement of shares
Payment of share issue/capital raising costs)
Finance lease payments
Net cash inflows from financing activities
7,009,691
2,148,000
(425,429)
(141,768)
(3,305)
-
6,580,957
2,006,232
Net increase/(decrease) in cash and cash equivalents
2,042,830
(358,476)
Cash and cash equivalents at beginning of the year
Effect of exchange rate fluctuations on cash held
1,055,093
1,230,499
3,359
183,070
Cash and cash equivalents at end of the year
9
3,101,282
1,055,093
The above consolidated statement of cash flows should be read in conjunction with the accompanying note
21
ANNUAL REPORT 2016 • First Graphite Ltd NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
1. BASIS OF PREPARATION
The Group is a for-profit entity for the purpose of preparing
the financial statements.
The financial report has been prepared on an accruals
basis and is based on historical costs modified by the
revaluation of selected non-current assets, financial
assets and financial liabilities for which fair value basis of
accounting has been applied.
These consolidated financial statements are presented
in Australian Dollars (A$), which is the Company’s
functional currency.
The accounting policies detailed below have been
consistently applied to all of the period presented unless
otherwise stated.
a) Authorisation of financial statements
and statement of compliance with IFRS
The financial report is a general purpose financial
report prepared
in accordance with Australian
Accounting Standards, including Australian Accounting
Interpretations, other authoritative pronouncements
of the Australian Accounting Standards Board and the
Corporations Act 2001.
The financial report covers the consolidated group of
First Graphite Limited and controlled entities (Group).
First Graphite Limited (FGR) is a listed public Company,
incorporated and domiciled in Australia.
The financial report of the Group complies with all
International Financial Reporting Standards (IFRS) in
their entirety.
The following is a summary of the material accounting
policies adopted by the Group in the preparation of the
financial report. The accounting policies have been
consistently applied, unless otherwise stated.
b) Going Concern
For the year ended 30 June 2016 the entity recorded a loss
of $4,927,830 and had net cash outflows from operating
activities of $4,190,145.
The ability of the entity to continue as a going concern
is dependent on securing additional funding through
the sale of equity securities to either existing or new
shareholders to continue to fund its operational and
marketing activities.
These conditions indicate a material uncertainty that
may cast a significant doubt about the entity’s ability to
continue as a going concern and, therefore, that it may be
unable to realise its assets and discharge its liabilities in
the normal course of business.
Management believe there are sufficient funds to meet
the entity’s working capital requirements and as at the
date of this report. Subsequent to year end the entity
expects to receive additional funds via the sale of equity
securities to either existing or new shareholders
The financial statements have been prepared on the basis
that the entity 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:
y
In the event of further funds not being raised
the entity’s activities would be wound back to a
sustainable level.
Should the entity 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 entity not continue as
a going concern.
2. ACCOUNTING POLICIES
a) Principles of consolidation
Subsidiaries are all entities (including structured entities)
over which the Group has control. The Group controls an
entity when the Group is exposed to, or has to, variable
returns from its investment with the entity and has
the ability to affect those returns through its power to
direct the activities of the entity. Subsidiaries are fully
consolidated from the date on which control is transferred
to the Group. They are deconsolidated from the date
when control ceases.
The acquisition method of account is used to account for
business combinations by the Group.
Intercompany
transactions, balance and unrealised
gains on transactions between Group companies are
eliminated. Unrealised losses are also eliminated unless
the transaction provides evidence of an impairment of the
transferred asset. Accounting policies of subsidiaries have
been changed where necessary to ensure consistency
with the policies adopted by the Group.
Non-controlling interests in the results and equity of
subsidiaries are shown separately in the consolidated
statement of profit or loss and other comprehensive
income, statement of changes in equity and statement of
financial position respectively.
22
First Graphite Ltd • ANNUAL REPORT 2016b) Foreign currency translation
The financial report is presented in Australian dollars,
which
functional and
presentation currency.
is First Graphite Limited’s
translated
Foreign currency transactions
into
transactions are
Foreign currency
Australian dollars using the exchange rates prevailing at
the dates of the transactions. Foreign exchange gains and
losses resulting from the settlement of such transactions
and from the translation at financial year-end exchange
rates of monetary assets and liabilities denominated in
foreign currencies are recognised in profit or loss.
Foreign operations
The assets and liabilities of foreign operations are
translated into Australian dollars using the exchange
rates at the reporting date. The revenues and expenses
of foreign operations are translated into Australian dollars
using the average exchange rates, which approximate
the rate at the date of the transaction, for the period.
All resulting foreign exchange differences are recognised
in other comprehensive income through the foreign
currency reserve in equity.
The foreign currency reserve is recognised in profit or
loss when the foreign operation or net investment is
disposed of.
c)
Taxes
Income taxes
The charge for current income tax expense is based on
the profit for the period adjusted for any non- assessable
or disallowed items. It is calculated using tax rates which
have been enacted or are substantively enacted by the
reporting date.
Deferred tax is accounted for using the liability method in
respect of temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts
in the financial statements.
No deferred income tax will be recognised from the initial
recognition of an asset or liability, excluding a business
combination, where there is no effect on accounting or
taxable profit or loss.
Deferred tax is calculated at the tax rates which are
expected to apply to the period when the asset is realised
or liability is settled. Deferred tax is credited in the
statement of profit or loss except where it relates to items
which may be credited directly to equity, in which case
the deferred tax is adjusted directly against equity.
Deferred income tax assets are recognised to the extent
it is probable future tax profits will be available against
which deductible temporary differences can be utilised.
Deferred tax is not recognised for taxable temporary
differences arising on the recognition of indefinite life
intangibles including goodwill and trademarks.
The amount of benefits brought to account or which may
be realised in the future is based on the assumption no
adverse change will occur in income taxation legislation
and the anticipation the economic entity will derive
sufficient
income to enable the
benefit to be realised and comply with the conditions of
deductibility imposed by the law.
future assessable
FGR formed an income tax Group under the Tax
Consolidation Regime effective 1 July 2003, and its
wholly-owned Australian subsidiaries were members of
the tax consolidated group. Under Australian Accounting
Interpretation 1052, each entity in the Group recognises
its own current and deferred tax amounts, except for
any deferred tax assets resulting from unused tax losses
and tax credits assumed by the head entity. A new
subsidiary, MRL Corporation Pty Ltd was incorporated in
December 2011 and joined as a member of the existing
tax consolidated
Goods and services tax (GST)
Revenues, expenses and assets are recognised net of the
amount of GST, except where the amount of GST incurred
is not recoverable from the Australian Tax Office. In these
circumstances the GST is recognised as part of the cost
of acquisition of the asset or as part of an item of the
expense. Receivables and payables in the statement of
financial position are shown inclusive of GST.
d) Financial Instruments
Recognition
Financial instruments are initially measured at fair value
on trade date, which includes transaction costs for
financial assets and liabilities not at fair value through
the profit and loss, when the related contractual rights or
obligations exist. Subsequent to initial recognition these
instruments are measured as set out below.
Loans and receivables
Loans and receivables are non-derivative financial assets
with fixed or determinable payments which are not
quoted in an active market and are stated at amortised
cost using the effective interest rate method.
Financial liabilities
Non-derivative financial liabilities are recognised at
amortised cost, comprising original debt less principal
payments and amortisation.
23
ANNUAL REPORT 2016 • First Graphite Ltd NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Fair value
Fair value is determined based on current bid prices for
all quoted investments. Valuation techniques are applied
to determine the fair value for all unlisted securities,
including recent arm’s length transactions, reference to
similar instruments and option pricing models.
Impairment
At each reporting date, the Group assesses whether
there is objective evidence a financial instrument has
been impaired. In the case of available-for-sale financial
instruments, a significant prolonged decline in the value
of the instrument is considered to determine whether
impairment has arisen. Impairment losses are recognised
in the profit and loss in Statement of profit or loss.
e) Exploration and evaluation assets
Only acquisition-related expenditure has been capitalised.
The Company will expense exploration and evaluation
expenditure as incurred in respect of each identifiable area
of interest until such a time where a JORC 2012 compliant
resource is announced in relation to the identifiable area
of interest.
Exploration and evaluation assets are only recognised if
the rights of the area of interest are current and either:
i) The expenditures are expected to be recouped
through successful development and exploitation or
from sale of the area of interest; or
ii) Activities in the area of interest have not at the
reporting date, reached a stage which permits a
reasonable assessment of the existence or otherwise
of economically recoverable reserves, and active and
significant operations in, or in relation to, the areas of
interest are continuing.
Exploration and evaluation assets are assessed for
impairment if (i) sufficient data exists to determine
technical feasibility and commercial viability, and (ii) facts
and circumstances suggest the carrying amount exceeds
the recoverable amount. For the purpose of impairment
testing, exploration and evaluation assets are allocated
to cash-generating units to which the exploration activity
relates. The cash generating unit shall not be larger than
the area of interest.
Once the technical feasibility and commercial viability of
the extraction of mineral resources in an area of interest
are demonstrable, exploration and evaluation assets
attributable to this area of interest are first tested for
impairment and then reclassified to mining property and
development assets within property, plant and equipment.
When an area of interest is abandoned or the directors
decide it is not commercial, and accumulated costs in
respect of the area are written off in the financial period
the decision is made.
f)
Impairment of assets
At each reporting date, the Group reviews the carrying
values of its tangible and intangible assets to determine
whether there is any indication those assets have been
impaired. If such an indication exists, the recoverable
amount of the asset, being the higher of the asset’s fair
value less costs to sell and value in use, is compared
to the asset’s carrying value. Any excess of the asset’s
carrying value over its recoverable amount is expensed to
the profit and loss in Statement of profit or loss.
Impairment testing is performed annually for goodwill
and other intangible assets.
Where it is not possible to estimate the recoverable
amount of an individual asset, the Group estimates the
recoverable amount of the cash-generating unit to which
the asset belongs.
g) Property, plant and equipment
Plant and equipment is stated at historical cost less
accumulated depreciation and impairment. Historical cost
includes expenditure which is directly attributable to the
acquisition of the items.
Depreciation is calculated on a straight-line basis to
write off the net cost of each item of property, plant and
equipment (excluding land) over their expected useful
lives as follows:
y
Plant and equipment 3-7 years
The residual values, useful
lives and depreciation
methods are reviewed, and adjusted if appropriate, at
each reporting date.
Leasehold improvements and plant and equipment under
lease are depreciated over the unexpired period of the
lease or the estimated useful life of the assets, whichever
is shorter.
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 the profit and loss. Any revaluation surplus reserve
relating to the item disposed of is transferred directly to
retained profits.
h) Contributed equity
Ordinary shares are classified as contributed equity.
Incremental costs directly attributable to the issue of new
shares or options are shown as a deduction, net of tax,
from the proceeds.
i)
Trade and other payables
Trade and other payables represent the liabilities for
goods and services received by the entity which remain
unpaid at the end of the reporting period. The balance
is recognised as a current liability with the amounts
normally paid within 30 days of recognition of the liability.
24
First Graphite Ltd • ANNUAL REPORT 2016j)
Employee benefits
Provision is made for the company’s liability for employee
benefits arising from services rendered by employees to
reporting date. Employee benefits which are expected
to be settled within one year have been measured at the
amounts expected to be paid when the liability is settled,
plus related on-costs.
Employee benefits payable later than one year have been
measured at the present value of the estimated future
cash outflows to be made for those benefits.
k) Provisions
Provisions are recognised when the Group has a legal
or constructive obligation, as a result of past events, for
which it is probable an outflow of economic benefits will
results and this outflow can be reliably measured.
l)
Cash and cash equivalents
Cash and cash equivalents includes cash on hand,
deposits held at call with banks, other short-term highly
liquid investments with original maturities of three
months or less, and bank overdrafts. Bank overdrafts are
shown within short-borrowings in current liabilities on the
statement of financial position.
Cash flows are presented in the statement of cash flows
on a gross basis, except for customer account transactions
and the GST component of investing and financing
activities, which are disclosed as operating cash flows.
m) Revenue recognition
Interest revenue is recognised on a proportional basis
taking into account the interest rates applicable to the
financial assets.
Dividend revenue is recognised when the right to receive
a dividend has been established. Dividends received from
associates and joint venture entities are accounted for in
accordance with the equity method of accounting.
All revenue is stated net of the amount of goods and
services tax (GST).
n) Finance costs
Finance costs directly attributable to the acquisition,
construction or production of assets which necessarily
take a substantial period of time to prepare for their
intended use or sale, are added to the cost of those
assets, until such time as the assets are substantially
ready for their intended use or sale.
All other finance costs are recognised in income in the
period in which they are incurred.
o) Comparative figures
When required by Accounting Standards, comparative
figures have been adjusted to conform to changes in
presentation for the current financial year.
p) Critical Accounting Estimates
and Judgements
The preparation of financial statements in conformity
with AIFRS requires the use of certain critical
accounting estimates. It also requires management
to exercise its judgement in the process of applying
the Group’s accounting policies. The area that may have
a significant risk of causing a material adjustment
to the carrying amounts of certain assets and liabilities
within the next annual reporting period is:
Key Estimates – Impairment
The Group assesses impairment at each reporting date
by evaluating conditions specific to the Company which
may lead to impairment of exploration and evaluation
assets, and plant and equipment. Where an impairment
trigger exists under the relevant standard the recoverable
amount of the asset is determined. The recoverable
amount of the asset is the higher of its value in use and
its fair value less cost to sell. Value-in-use calculations
performed
recoverable amounts
incorporate a number of key estimates and fair value less
cost to sell is determined using market rates.
in assessing
the
Exploration and evaluation expenditure
The Board of Directors determines when an area of interest
should be abandoned. When a decision is made that an
area of interest is not commercially viable, all costs that
have been capitalised in respect of that area of interest
are written off. The Directors’ decision is made after
considering the likelihood of finding commercially
viable reserves.
Share-based payment transactions
The Group measures the cost of equity-settled transactions
with employees and consultants by reference to the fair
value of the equity instruments at the date at which
they are granted. The fair value of options is determined
using a Black-Scholes model, using the assumptions
detailed in Note 15.
25
ANNUAL REPORT 2016 • First Graphite Ltd NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
q) Share-based payments transactions
Equity-settled and cash-settled share-based compensation
benefits are provided to employees.
Equity-settled transactions are awards of shares, or
options over shares, which 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 which 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 which do not
determine whether the consolidated entity receives the
services which 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
which 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.
The cost of cash-settled transactions is initially, and at
each reporting date until vested, determined by applying
either the Binomial or Black-Scholes option pricing model,
taking into consideration the terms and conditions on
which the award was granted. The cumulative charge to
profit or loss until settlement of the liability is calculated
as follows:
y During the vesting period, the liability at each reporting
date is the fair value of the award at this date multiplied
by the expired portion of the vesting period;
y
From the end of the vesting period until settlement
of the award, the liability is the full fair value of the
liability at the reporting date.
into consideration
Market conditions are
in
taken
determining fair value. Therefore, any awards subject
to market conditions are considered to vest irrespective
of whether or not the 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
which 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.
Where equity instruments are granted to persons other
than directors or employees the consolidated Statement of
Profit or Loss and Other Comprehensive Income is charged
with the fair value of any goods or services received.
r)
Earnings per share
Basic EPS is calculated as net profit attributable to members,
adjusted to exclude costs of servicing equity (other than
dividends) divided by the weighted average number of
ordinary shares, adjusted for any bonus element.
Diluted EPS is calculated as net profit attributable to
members, adjusted for:
y
y
y
costs of servicing equity (other than dividends) and
preference share dividends;
the after tax effect of dividends and interest associated
with dilutive potential ordinary shares which have
been recognised as expenses; and
other non-discretionary changes in revenues or
expenses during the period which would result from
the dilution of potential ordinary shares;
All changes in the liability are recognised in profit or loss.
The ultimate cost of cash-settled transactions is the cash
paid to settle the liability.
divided by the weighted average number of ordinary
shares and dilutive potential ordinary shares, adjusted for
any bonus element.
26
First Graphite Ltd • ANNUAL REPORT 2016s) New standards and interpretations not yet adopted
The following new/amended accounting standards and interpretations have been issued, but are not mandatory for
financial years ended 30 June 2016. They have not been adopted in preparing the financial statements for the year ended
30 June 2016 and are expected to impact the entity in the period of initial application. In all cases the entity intends to
apply these standards from application date as indicated in the table below.
Application
Date
Annual
reporting
periods
beginning
on or after
1 January
2018
Impact on Initial Application
Adoption of AASB 9 is only
mandatory for the year ending
30 June 2019. The entity has not
yet made an assessment of the
impact of these amendments.
Title and
Affected
Standard(s)
Financial
Instrument
AASB
reference
AASB 9
(issued
December
2014)
Nature of Change
Classification and measurement
AASB 9 amendments the classification
and measurement of financial assets:
y
y
Financial assets will either be
measured at amortised cost, fair value
through other comprehensive income
(FVTOCI) or fair value through profit or
loss (FVTPL).
Financial assets are measured at
amortised cost or FVTOCI if certain
restrictive conditions are met. All other
financial assets are measured at FVTPL.
y All investments in equity instruments
will be measured at fair value.
For those investments in equity
instruments that are not held for
trading, there is an irrevocable election
to present gains and losses in OCI.
Dividends will be recognised in profit
or loss.
The following requirements have
generally been carried forward
unchanged from AASB 139 Financial
Instruments: Recognition and
Measurement into AASB 9:
y
Classification and measurement of
financial liabilities, and
y Derecognition requirements for
financial assets and liabilities.
However, AASB 9 requires that gains or
losses on financial liabilities measured at
fair value are recognised in profit or loss,
except that the effects of changes in the
liability’s credit risk are recognised in
other comprehensive income.
Impairment
The new impairment model in AASB 9 is
now based on an ‘expected loss’ model
rather than an ‘incurred loss’ model.
A complex three stage model applies to
debt instruments at amortised cost or at
fair value through other comprehensive
income for recognising impairment losses.
27
ANNUAL REPORT 2016 • First Graphite Ltd NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
AASB
reference
Title and
Affected
Standard(s)
Nature of Change
Application
Date
Impact on Initial Application
A simplified impairment model
applies to trade receivables and lease
receivables with maturities that are less
than 12 months.
For trade receivables and lease
receivables with maturity longer than
12 months, entities have a choice of
applying the complex three stage model
or the simplified model.
Hedge accounting
Under the new hedge accounting
requirements:
y
y
The 80-125% highly effective
threshold has been removed
Risk components of non-financial
items can qualify for hedge
accounting provided that the risk
component is separately identifiable
and reliably measurable
y An aggregated position (i.e.
combination of a derivative and
a non-derivative) can qualify for
hedge accounting provided that it is
managed as one risk exposure
When entities designate the intrinsic
value of options, the initial time value is
deferred in OCI and subsequent changes
in time value are recognised in OCI.
y When entities designate only the spot
element of a forward contract, the
forward points can be deferred in OCI
and subsequent changes in forward
points are recognised in OCI. Initial
foreign currency basis spread can also
be deferred in OCI with subsequent
changes be recognised in OCI
y Net foreign exchange cash flow
positions can qualify for hedge
accounting.
An entity will recognise revenue to
depict the transfer of promised goods or
services to customers in an amount that
reflects the consideration to which the
entity expects to be entitled in exchange
for those goods or services. This
means that revenue will be recognised
when control of goods or services is
transferred, rather than on transfer of
risks and rewards as is currently the case
under IAS 18 Revenue.
AASB 15
(issued
December
2014)
Revenue
from
Contracts
with
Customers
28
Due to the recent release of this
standard, the entity has not yet
made a detailed assessment of
the impact of this standard.
Annual
reporting
periods
beginning
on or after
1 January
2018
First Graphite Ltd • ANNUAL REPORT 2016Title and
Affected
Standard(s)
Leases
AASB
reference
AASB 16
(issued
February
2016)
Application
Date
Annual
reporting
periods
beginning
on or after
1 January
2019.
Nature of Change
AASB 16 eliminates the operating and
finance lease classifications for lessees
currently accounted for under AASB 117
Leases. It instead requires an entity to
bring most leases onto its balance sheet
in a similar way to how existing finance
leases are treated under AASB 117. An
entity will be required to recognise a
lease liability and a right of use asset in
its balance sheet for most leases.
There are some optional exemptions for
leases with a period of 12 months or
less and for low value leases.
Lessor accounting remains largely
unchanged from AASB 117.
Impact on Initial Application
To the extent that the entity, as
lessee, has significant operating
leases outstanding at the date of
initial application, 1 July 2019,
right-of-use assets will be
recognised for the amount of the
unamortised portion of the useful
life, and lease liabilities will be
recognised at the present value of
the outstanding lease payments.
Thereafter, earnings before
interest, depreciation,
amortisation and tax (EBITDA) will
increase because operating lease
expenses currently included in
EBITDA will be recognised instead
as amortisation of the right-of-
use asset, and interest expense
on the lease liability. However,
there will be an overall reduction
in net profit before tax in the
early years of a lease because the
amortisation and interest charges
will exceed the current straight-
line expense incurred under AASB
117 Leases. This trend will reverse
in the later years.
There will be no change to
the accounting treatment for
short-term leases less than 12
months and leases of low value
items, which will continue to be
expensed on a straight-line basis.
29
ANNUAL REPORT 2016 • First Graphite Ltd NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. FINANCIAL RISK MANAGEMENT
(a) Financial risk management
The Group’s activities expose it to a variety of financial risks: credit risk, liquidity risk and market risk (currency risk and
interest rate risk). The Group’s principal financial liabilities comprise trade and other payables. The main purpose of these
financial liabilities is to raise finance for the Group’s operations. The Group has various financial assets such as trade and
other receivables, deposits with banks, local money market instruments and short-term investments. The accounting
policy with respect to these financial instruments is described in note 2.
Financial risk management structure:
Board of Directors
The Board is ultimately responsible for ensuring there are adequate policies in relation to risk oversight and management
and internal control systems. The Group’s policies are designed to ensure financial risks are identified, assessed, addressed
and monitored to enable achievement of the Group’s business objectives.
(b) Financial risks
Credit risk
Credit risk refers to the risk a counterparty will default on its contractual obligation resulting in financial loss to the Group.
Credit risk is managed on a group basis and structures the levels of credit risk it accepts by placing limits on its exposure
to a single counterparty or group of counterparties. The Group has no significant concentrations of credit risk.
It is the Group’s policy to place funds generated internally and from deposits with clients with high quality fi institutions.
The Group does not employ a formalised internal ratings system for the assessment of credit exposures. Amounts due
from and to clients and dealers represents receivables sold and payables for securities purchased which have been
contracted for but not yet settled on the reporting date, respectively. The majority of these transactions are carried out
on a delivery versus payment basis, which results in securities and cash being exchanged within a very close timeframe.
Settlement balances outside standard terms are monitored on a daily basis.
Exposure to credit risk
The maximum exposure to credit risk, excluding the value of any collateral or other security, at the reporting date to
recognised financial assets, is the carrying amount, net of any provision for impairment of those assets, as disclosed in the
statement of financial position and the notes to the financial statements. The Group does not have any material credit risk
exposure to any single receivable or group of receivables under financial instruments entered into by the Group.
The Group’s maximum exposure to credit risk without taking account of any collateral or other credit enhancements at the
reporting date was $1,055,093 (2015: $1,230,499).
The Company banks with Westpac Banking Corporation (Westpac). Westpac is rated AA- and Stable by Standard and Poor’s
rating agency.
Cash and cash equivalents
Group
2016
2015
3,101,282
1,055,093
3,101,282
1,055,093
30
First Graphite Ltd • ANNUAL REPORT 2016Impairment and provisioning policies
Impairment provisions are recognised for financial reporting purposes only for losses which have been incurred at
the reporting date, based on objective evidence of impairment. All credit exposures are reviewed at least annually.
Impairment allowances on credit exposures are determined by an evaluation of the incurred loss at the reporting date.
For the purposes of the Group’s disclosures regarding credit quality, its financial assets have been analysed as follows:
Neither Past
Due nor
individually
impaired
Past due
but not
individually
impaired
Individually
impaired
Consolidated 30 June 2016
$
Cash and cash equivalents
3,101,282
3,101,282
Consolidated 30 June 2015
$
Cash and cash equivalents
1,055,093
1,055,093
$
-
$
-
-
$
-
$
-
-
Total
$
3,101,282
3,101,282
$
1,055,093
1,055,093
Impairment
allowance
$
-
$
-
-
Total
carrying
amount
$
3,101,282
3,101,282
$
1,055,093
1,055,093
Financial assets past due but not individually impaired
For the purpose of this analysis an asset is considered past due when any payment due under the contractual terms is
received one day past the contractual due date. The majority of these transactions are carried out on a delivery versus
payment basis, which results in securities and cash being exchanged within a very close timeframe. Settlement balances
outside standard terms are monitored on a daily basis. Credit risk is also mitigated as securities held for the counterparty
by the Group can ultimately be sold should the counterparty default. There were no renegotiated financial assets during
the year.
Collateral pledged or held
There is no collateral held as security by the Group or its controlled entities.
Liquidity risk
Liquidity risk is the risk the Group will not be able to meet its financial obligations as they fall due. The Group manages
liquidity risk by monitoring forecast cash requirements and cash flows.
The primary objective of the Group is to manage short-term liquidity requirements in such a way as to minimise financial
risk. The Group maintains sufficient cash resources to meet its obligations, cash deposits are repayable on demand.
31
ANNUAL REPORT 2016 • First Graphite Ltd NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The tables below present the cash flows receivable and payable by the Group under financial assets and liabilities by
remaining contractual maturities at the reporting date. The amounts disclosed are the contractual, undiscounted cash flows.
Weighted
average
effective
interest
rate
Floating
interest
rate
Within
one year
30 June 2016
%
$
Financial assets
Cash and cash
equivalents
Total Financial assets at
30 June 2015
Financial liabilities
0.31
3,101,282
3,101,282
Trade and other payables
n/a
Total financial liabilities
at 30 June 2016
-
-
$
%
0.31
1,055,093
1,055,093
30 June 2015
Financial assets
Cash and cash
equivalents
Total Financial assets at
30 June 2015
Financial liabilities
Trade and other payables
n/a
Total financial liabilities
at 30 June 2015
-
-
Fixed interest
Non-interest bearing
Within
one year 1-5 years
Within
one year
1-5 years
$
-
-
-
-
$
-
-
-
-
$
-
-
-
-
$
-
-
-
-
$
-
-
667,730
667,730
$
-
-
484,782
484,782
$
-
-
-
-
$
-
-
-
-
Total
$
3,101,282
3,101,282
667,730
667,730
$
1,055,093
1,055,093
484,782
484,782
Trade and other payables and loans to related parties and shareholders are expected to be paid as follows:
30 June 2016
Trade and other payables (refer note 13)
30 June 2015
Trade and other payables (refer note 13)
Less than 1
year
Between 1
and 2 years
Between 2
and 5 years
Over 5 years
667,730
667,730
484,782
484,782
-
-
-
-
-
-
-
-
-
-
-
-
32
First Graphite Ltd • ANNUAL REPORT 2016Market Risk
Market risk is the risk the fair value of future cash flows of financial instruments will fluctuate due to changes in market
variables such as interest rates, foreign exchange rates and equity prices.
Foreign exchange risk
(i)
The consolidated entity undertakes certain transactions denominated in foreign currency and are exposed to foreign
currency risk through foreign exchange fluctuations.
Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial liabilities
denominated in a currency which is not the entity’s functional currency. The risk is measured using sensitivity analysis
and cash flow forecasting.
The Group’s profitability can be significantly affected by movements in the $US/$A exchange rates, and to a lesser degree,
though movements in the Sri Lankan Rupee verses the Australian dollar. Through reference to industry standard practices,
and open market foreign currency trading patterns within the past 12 months, the group set the level of acceptable
foreign exchange risk.
The Group seeks to manage this risk by holding foreign currency in $US and Sri Lankan Rupee.
Sensitivity analysis
The following table does not include intra group financial assets and liabilities. It summaries the sensitivity of the Group’s
financial assets and liabilities to external parties at 30 June 2016 to foreign exchange risk, based on foreign exchange rates
as at 30 June 2016 and sensitivity of +/-10%:
30 June 2016 rate (cents)
0.7417
110.98
US$/A$
LKR/A$
Market Risk
2016
Change in profit/loss due to:
Improvement in AUD by 5%
Decline in AUD by 5%
Change in equity due to:
Improvement in AUD by 5%
Decline in AUD by 5%
(ii)
Interest rate risk
Group
Foreign exchange risk
2016
A$
2015
A$
(84,318)
(40,741)
84,318
40,741
(84,318)
(40,741)
84,318
40,741
The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s cash position. A
change of 100 basis points in interest rates at the reporting date would result in a change of profit or loss by the amounts
shown below. This analysis assumes all other factors remain constant.
33
ANNUAL REPORT 2016 • First Graphite Ltd NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Profile
At reporting date the interest rate profile of the Group’s financial instruments was:
Interest rate risk
-10bps
+10bps
Profit
Equity
Profit
Equity
2016
A$
3,101,282
3,101,282
(998)
(998)
2015
A$
1,055,093
1,055,093
(356)
(356)
-
-
-
-
998
998
356
356
-
-
-
-
Floating rate instruments
Cash at bank
Floating rate instruments
Cash at bank
(c) Net fair values
Fair value versus carrying amount
Fair value of financial instruments
Set out below is a comparison by class of the carrying amounts and fair values of the Group’s financial instruments which
are carried in the financial statements.
Methodologies and assumptions
For financial assets and liabilities which are liquid or have short term maturities it is assumed the carrying amounts
approximate to their fair value.
30 June 2016
30 June 2015
Note
Carrying
amount
Net fair
value
Carrying
amount
Net fair
value
A$
A$
A$
A$
20,471
20,471
20,471
20,471
36,172
36,172
36,172
36,172
Assets carried at amortised cost
Trade and other receivables
Total financial assets
Liabilities carried at amortised cost
Trade and other payables
13
667,730
667,730
484,782
484,782
Total Financial Liabilities
667,730
667,730
484,782
484,782
34
First Graphite Ltd • ANNUAL REPORT 20164. SEGMENT REPORTING
(a) Identification of reportable segments
The Group has identified its operating segments based on the internal reports which are reviewed and used by the Board
(the chief operating decision makers) in assessing performance and in determining the allocation of resources.
The existing operating segments are identified by management based on the manner in which the Group’s operations
were carried out during the financial year. Discrete financial information about each of these operating businesses is
reported to the Board on a monthly basis.
The reportable segments are based on aggregated operating segments determined by the similarity of the asset base and
revenue or income streams, as these are the sources of the Group’s major risks and have the most effect on the rates of
return. The Group’s segment information for the current reporting period is reported based on the following segments:
Mining and exploration activities
The Board has determined the Company has one reportable segment, being mineral exploration and development in
Sri Lanka. As the Company is focused on mineral exploration, the Board monitors the Company based on actual verses
budgeted exploration expenditure incurred by area of interest.
Corporate services
This segment reflects the overheads associated with maintaining the ASX listed FGR corporate structure, identification of
new assets and general management of an ASX listed entity.
Business Segment
2016
2015
2016
2015
2016
2015
Exploration
Corporate Services
Total
Revenue from
external customers
A$
-
A$
-
A$
-
A$
-
A$
-
A$
-
Interest revenue
2,555
11,117
10,408
7,546
12,963
18,663
Operating loss
(1,770,688)
(2,271,621)
(2,906,536)
(1,131,326)
(4,677,224)
(3,402,947)
Depreciation expense
Amortisation expense
30,754
3,729
12,297
43,228
2,701
73,982
14,998
-
-
-
3,729
-
Segment assets
373,135
1,541,325
5,090,917
1,554,475
5,464,052
3,095,800
Segment liabilities
145,383
21,851
619,323
462,931
764,706
484,782
(b) Geographical areas
In presenting the information on the basis of geographical areas, segment revenue is based on the geographical location
of customers. Segment assets are based on the geographical location of the assets.
Geographical segments
Revenue
Total Assets
Revenue
Total Assets
2016
2015
Australia
Sri Lanka
Total
10,408
5,090,917
2,555
373,135
12,963
5,464,052
7,546
11,117
18,663
1,554,475
1,541,325
3,095,800
35
ANNUAL REPORT 2016 • First Graphite Ltd NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(c) Reconciliation of segment assets and liabilities to the Statement of financial Position
Reconciliation of segment assets to the Statement of Financial Position
Total segments assets
Inter-segment elimination
Total assets per statement of financial position
Reconciliation of segment liabilities to the Statement of Financial Position
Total segments liabilities
Inter-segment elimination
Total liabilities per statement of financial position
2016
2015
9,106,133
5,602,951
(3,642,081)
(2,507,151)
5,464,052
3,095,800
2016
2015
4,881,623
2,864,307
(4,116,917)
(2,379,525)
764,706
484,782
5. OPERATING PROFIT AND FINANCE INCOME AND EXPENSE
Revenue and expenses from continuing operations
Notes
2016
2015
(a) Other revenue
(b) Other administrative expenses includes:
Financial administration and other consultancy
Directors fee and directors consulting fee
Audit and accounting fees
Other accounting services
ASX listing and share registry fees
Travel and accommodation
(c)
Employee benefits expense
As at 30 June 2016: 35 employees remained within the group
(2015: 14)
(d) Share based payments expense
(e) Options expense
(f)
Finance income and expense
Interest income on bank deposits
Foreign exchange gain
294,272
865,523
35,319
22,614
163,301
110,689
108,784
564,237
28,755
31,352
103,529
128,705
37,638
15,084
15
15
-
16,500
431,896
753,720
12,963
3,358
16,321
18,663
179,402
198,065
36
First Graphite Ltd • ANNUAL REPORT 2016INCOME TAX
6.
The major components of income tax expense are:
A reconciliation between tax expense and the product of accounting profit before income tax multiplied by the Group’s
applicable income tax rate is as follows:
Total loss before income tax from all activities
2016
2015
(4,677,224)
(3,402,947)
Prima facie tax benefit on loss before income tax at 30% (2015: 30%)
(1,403,167)
(1,020,884)
Unrecognised temporary differences
Unrecognised tax losses
Income tax expense
Income tax expense from continuing activities
Total income tax expense
49,778
971,106
-
-
-
-
-
-
Unused tax losses for which no deferred tax has been recognised
(10,825,257)
(7,942,097)
Potential tax benefit at 30%
(3,247,577)
(2,382,629)
The Group has Australian revenue losses from previous years for which no deferred tax assets have been recognised. The
availability to utilise these losses in future periods is subject to review in the relevant jurisdictions.
7. EARNINGS PER SHARE
Net loss used in calculating basic loss per share
Net loss used in calculating diluted loss per share
Weighted average ordinary shares used in calculating
basic earnings per share
Weighted average ordinary shares used in calculating
basic earnings per share
Basic loss per share - cents per share
Diluted loss per share - cents per share
8. DIVIDENDS PAID AND PROPOSED
No final dividend has been proposed or paid during the year (2015: $nil)
2016
A$
2015
A$
(4,677,224)
(3,402,947)
(4,677,224)
(3,402,947)
Number of
shares
Number of
shares
251,700,071
167,830,971
251,700,071
167,830,971
(1.86)
(1.86)
(2.03)
(2.03)
37
ANNUAL REPORT 2016 • First Graphite Ltd NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
9. CASH AND CASH EQUIVALENTS
For the purposes of the cash flow statement, cash and cash equivalents comprise the following at the end of the
reporting period:
Cash at bank and in hand
The Group’s maximum exposure to financial risk is disclosed in note 3.
10. INTERESTS IN OTHER ENTITIES
Proportion of voting
rights and shares held
Principal activity in the year
MRL Investments (Pvt) Ltd
Holding company
MRL Graphite (Pvt) Ltd
Graphite exploration and mining
2016
100%
100%
11. EXPLORATION AND EVALUATION ASSETS
Opening balance
Cash paid for acquisition of exploration interest
Share based payments for acquisition of exploration interest(i)
Foreign currency translation adjustment
Carrying amount
2016
A$
2015
A$
3,101,282
1,055,093
3,101,282
1,055,093
Class of
shares
held
Place of
Incorporation
2015
100% Ordinary
Sri Lanka
100% Ordinary
Sri Lanka
2016
A$
2015
A$
1,910,640
1,333,325
-
-
(62,194)
-
450,000
127,315
1,848,446
1,910,640
(i)
In accordance with the second stage of the agreement with The Supreme Group of Sri Lanka for the acquisition of graphite exploration licences,
5,000,000 vendor shares in FGR were issued to the Supreme Group at $0.09 per share.
The recoverability of exploration and evaluation assets is dependent on the successful development and commercial
exploitation or sale of the respective areas of interest.
38
First Graphite Ltd • ANNUAL REPORT 201612. PROPERTY, PLANT AND EQUIPMENT
Reconciliations of the carrying value for each class of property, plant and equipment is set out below:
Exploration equipment:
Carrying amount at beginning of year
- Additions
- Transfer from Capital Work in Progress
- Depreciation
- Movement due to foreign exchange
Carrying amount at year end
Capital Work in Progress:
Carrying amount at beginning of year
- Additions
- Transfer to Exploration equipment
- Movement due to foreign exchange
Carrying amount at year end
Plant & equipment:
Carrying amount at beginning of year
- Additions
- Depreciation
- Movement due to foreign exchange
Carrying amount at year end
Office equipment:
Carrying amount at beginning of year
- Additions
- Depreciation
- Movement due to foreign exchange
Carrying amount at year end
Motor vehicles:
Carrying amount at beginning of year
- Additions
- Depreciation
- Movement due to foreign exchange
Carrying amount at year end
Leased Motor Vehicles:
Carrying amount at beginning of year
- Additions
- Amortisation
- Movement due to foreign exchange
Carrying amount at year end
2016
A$
10,403
270,293
25,907
(57,557)
(7,255)
241,791
25,907
-
(25,907)
-
-
21,449
7,576
(11,180)
(2,165)
15,680
2,250
27,135
(4,639)
(665)
24,081
1,547
-
(605)
(133)
808
-
142,305
(3,729)
954
139,530
2015
A$
14,024
-
(6,626)
3,005
10,403
-
25,907
-
-
25,907
10,799
15,852
(7,209)
2,007
21,449
985
1,665
(721)
321
2,250
-
1,751
(442)
238
1,547
-
-
-
-
-
Total carrying amount at year end
421,890
61,556
39
ANNUAL REPORT 2016 • First Graphite Ltd NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
13. TRADE AND OTHER PAYABLES
Current
Trade and other payables
2016
A$
2015
A$
667,730
667,730
484,782
484,782
The Group’s maximum exposure to financial risk is disclosed in note 3. Due to their short term nature the carrying value
of trade and other payables is assumed to approximate their future value.
Trade payables are non-interest bearing, unsecured and are normally settled on 30 day terms from end of month in which
the invoice is received.
14. ISSUED CAPITAL
(a) Ordinary shares
2016
$
2015
$
2016
2015
Number
Number
Issued and fully paid
67,328,257
58,281,263
196,716,587
149,191,587
Movements in shares on issue
At the beginning of the period
60,743,995
58,281,263
196,716,587
149,191,587
Share purchase plan September 2015
563,791
-
10,250,714
Tranche 1 of placement to investors October 2015
1,611,756
Tranche 2 of placement to investors November
2015
2,403,244
29,304,658
43,695,342
Placement to investors May 2016
2,430,900
27,010,006
Share issue costs
(425,429)
(184,768)
-
Placement to senior employee
Placement to investors September 2014
Shares issued to Supreme Global Holdings (Pvt) Ltd1
Placement to investors May 2015
Placement to investors June 2015
Placement/management fee to consultants2
16,500
1,148,000
450,000
810,000
190,000
33,000
-
-
300,000
16,400,000
5,000,000
20,250,000
4,750,000
825,000
At the end of the period
67,328,257
60,743,995
306,977,307
196,716,587
1
2
In accordance with the second stage of the agreement with The Supreme Group of Sri Lanka for the acquisition of graphite exploration licences,
5,000,000 vendor shares in FGR were issued to the Supreme Group at $0.09 per share.
Share based payment was valued at the time of the transactions at the fair value of the instruments issued as the Company was unable to fair
value the services acquired
40
First Graphite Ltd • ANNUAL REPORT 2016(b) Share options
Listed share options
At the beginning of the period
Options expired
Options issued9
Options exercised
Options changed from unlisted to listed series
Options issued3
Options released from escrow
At the end of the period
(c) Share options
Unlisted share options
At the beginning of the period
Options issued4
Options issued5
Options issued6
Options issued7
Options issued8
Options released from escrow
Options changed from unlisted to listed series
At the end of the period
Refer note 14 for further details
2016
2015
Number
Number
49,398,551
25,054,053
13,505,000
6
111,625,357
(7,054,053)
-
-
8,200,000
23,198,551
174,528,914
49,398,551
2016
2015
Number
Number
66,000,000
48,698,551
-
12,000,000
36,500,000
28,500,000
16,000,000
5,125,357
1,000,000
-
-
-
-
(23,198,551)
(111,625,357)
-
13,000,000
66,000,000
3
Issued 8,200,000 listed options, as free attaching to the 16,400,000 placement shares to investors in September 2014, exercisable at 20 cents on
or before 17 October 2016.
4
12,000,000 options issued to directors, exercisable at $0.092 cents on or before 31 October 2017.
5 36,500,000 options issued to placement participants, exercisable at $0.10 cents on or before 21 May 2017.
6 16,000,000 options issued to directors and corporate adviser, exercisable at $0.10 cents on or before 21 May 2017.
7 5,125,357 options issued under Share Placement Plan, exercisable at $0.10 cents on or before 21 May 2017.
8 1,000,000 options were granted to the Sri Lankan Country Manager on 11 January 2016, with exercise prices of $0.10 for 500,000 options and $0.15
for 500,000 options, in accordance with the Employee Share Options Plan. The options expire on 11 January 2019
9 13,505,000 options issued to placement participants, exercisable at $0.10 cents on or before 21 May 2017.
41
ANNUAL REPORT 2016 • First Graphite Ltd NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
15. SHARE BASED PAYMENTS
(a) Employee Share Option Plan
The Company provides directors, certain employees and advisors with share options. The options are exercisable at set
prices and the vesting and exercisable terms varied to suit each grant of options.
2016
2015
Weighted
average
exercise price
(cents)
0.146
Number of
Options
48,198,551
Number of
Options
36,198,551
17,000,000
0.125
12,000,000
48,198,551
Weighted
average
exercise price
(cents)
16.4
9.2
14.6
Outstanding 1 July
Issued4,6,8
Outstanding 30 June
An additional 16,000,000 unlisted options were granted to directors, with an exercise price of $0.10, in accordance
with the Employee Share Options Plan and a corporate adviser with an exercise price of $0.10. The options expire on
21 May 2017.
The pricing of the options at the time of issue was calculated using the Black-Scholes option valuation method applying
the following inputs.
Exercise price range
$0.10
List of options range
1.5 years
Underlying share price
Expected share volatility
Dividend yield
Risk free interest rate
$0.06
120%
0%
2.03%
Fair value of options
$0.0253
1,000,000 unlisted options were granted to the Sri Lankan Country Manager on 11 January 2016, with exercise prices
of $0.10 for 500,000 options and $0.15 for 500,000 options, in accordance with the Employee Share Options Plan. The
options expire on 11 January 2019
The pricing of the options at the time of issue was calculated using the Black-Scholes option valuation method applying
the following inputs.
Exercise price range
List of options range
Underlying share price
$0.10
3 years
$0.048
Expected share volatility
120%
Dividend yield
Risk free interest rate
Fair value of options
Exercise price range
List of options range
Underlying share price
0%
1.98%
$0.0285
$0.15
3 years
$0.048
Expected share volatility
120%
Dividend yield
Risk free interest rate
Fair value of options
0%
1.98%
$0.0251
42
First Graphite Ltd • ANNUAL REPORT 2016
Historical volatility has been the basis for determining expected share price volatility as it assumes this is indicative of
future tender, which may not eventuate. When applicable, market conditions have been built into the options pricing
model to reflect the likelihood of those conditions being met. Historical data has been used to determine dividend yield
and option life. The fair value of the consultants’ and directors’ option is not based on the fair value of the services
provided but on the Black Scholes option pricing model.
The Group recognised total expenses of $431,896 (2015: $753,720) related to director, senior employee and consultant
share based payment transactions in the period.
Share-based payments and options issued to directors and consultants
The table below summarises options granted to directors, employees and consultants:
Grant
Date
Expiry
Date
Exercise
price
Balance
at start of
the year
Granted
during the
year
Exercised
during
the year
Expired
during
the year
Balance
during the
year
Vested and
exercisable
during the
year
Number
Number
Number
Number
Number
Number
11 Jan
2016
11 Jan
2016
11 Jan
2019
11 Jan
2019
27 Nov
2015
21 May
2017
31 Oct
2014
31 Oct
2017
28 Apr
2014
21 May
2017
9 Jan
2013
17 Oct
2016
$0.15
$0.10
$0.10
-
-
-
500,000
500,000
16,000,000
$0.092
12,000,000
$0.10
13,000,000
$0.20
13,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
500,000
500,000
-
-
16,000,000
16,000,000
12,000,000
12,000,000
13,000,000
13,000,000
13,000,000
13,000,000
The weighted average remaining contractual life of the options is 0.79 years (2015: 2.8years).
Share based payments expense – options issued to directors
2016
2015
405,079
753,720
Share based payments expense – options issued to a senior employee
26,817
-
Total
431,896
753,720
16. RESERVES AND ACCUMULATED LOSSES
The share based payments reserve holds the directly attributable cost of services provided pursuant to the options issued
to corporate advisors, directors, employees and past directors of the Group.
The translation reserve comprises all foreign currency differences arising from the translation of the financial statements
of foreign operations.
43
ANNUAL REPORT 2016 • First Graphite Ltd NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
17. STATEMENT OF CASH FLOW RECONCILIATION
(a) Reconciliation of net loss after tax to net cash flows from operations
Net Loss
Adjusted for:
Depreciation
Amortisation
Share based payments expensed
Options expensed
(Profit)/loss on sale of subsidiaries
Foreign exchange gains
Changes in assets/liabilities
(Increase)/decrease in trade and other receivables
(Increase)/decrease in prepayments
Decrease in trade and other payables
2016
A$
2015
A$
(4,677,224)
(3,402,947)
73,982
3,729
431,896
-
-
14,998
-
16,500
753,720
-
(181,553)
(113,483)
15,701
(39,623)
182,946
(9,472)
162,563
258,588
Net cash (used in) operating activities
(4,190,145)
(2,319,533)
(b) Non-cash investing and financing activities
There were no non-cash investing and financing activities during the reporting period.
18. COMMITMENTS AND CONTINGENCIES
(a) Lease expenditure commitments
Operating leases (non-cancellable)
Minimum lease payments
- Not later than one year
- Later than one year and not later than five years
- Later than five years
Total operating leases (non-cancellable)
2016
A$
2015
A$
19,239
18,689
-
-
-
-
19,239
18,689
The operating leases are entered into for the purposes of leasing company premises.
(b) Contingent liabilities
On 9 April 2013 the Company announced it had reached agreed terms with The Supreme Group of Sri Lanka for the
acquisition of 45km2 of graphite exploration licences representing 45 Grids. The remaining terms of the acquisition are;
1.
Payment of US$500,000 at the time of commencement of commercial mining activities.
The Directors do not believe there are any grounds for any other claims of a material nature as at the date of this report
and as at the reporting date.
44
First Graphite Ltd • ANNUAL REPORT 201619. RESULTS OF THE PARENT COMPANY
Current Assets
Cash and cash equivalents
Trade and other receivables
Other current assets
Other financial assets
Total current assets
Non-current assets
Property, plant and equipment
Intercompany loans receivable
Total assets
Liabilities
Current liabilities
Trade and other payables
Total current liabilities
Total liabilities
Net Assets
Equity
Issued capital
Share based payments reserve
Accumulated losses
Total equity
Results of the parent entity:
Loss for the period
2016
A$
2015
A$
3,037,861
1,042,544
20,471
7,040
-
10,649
7,040
-
3,065,372
1,060,233
177,099
29,489
4,097,496
1,984,231
4,274,595
2,013,720
7,339,967
3,073,953
619,323
619,323
462,931
462,931
619,323
462,931
6,720,644
2,611,022
67,328,257
60,743,995
3,279,949
2,848,053
(63,887,562)
(60,981,026)
6,720,644
2,611,022
(2,906,536)
(3,200,064)
(2,906,536)
(3,200,064)
45
ANNUAL REPORT 2016 • First Graphite Ltd NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
20. EVENTS SINCE THE END OF THE FINANCIAL YEAR
There are no known subsequent events of a material nature.
21. RELATED PARTY TRANSACTIONS
(a) Compensation for key management personnel
The aggregate compensation made to directors and other key management personnel is set out below:
2016
A$
2015
A$
1,402,649
1,174,718
405,078
753,720
1,807,727
1,928,438
Short term employee benefits
Share based payments
(b) Transactions with other related parties
During the reporting period there were no other payments to related parties.
There were no loans to/from related parties in 2016 (2015: Nil)
22 AUDITORS’ REMUNERATION
Services provided by the Group’s auditor (in tenure as auditor) and associated firms
During the year, the Group (including its overseas subsidiaries) obtained the following services from BDO Audit (W.A.) Pty
Ltd as detailed below:
Auditors’ remuneration
Remuneration of the auditor of the Group for:
- Audit services – BDO Audit (WA) Pty Ltd
- Other services – BDO Corporate Tax (WA) Pty Ltd
2016
A$
45,031
17,315
62,346
2015
A$
28,755
29,977
58,732
46
First Graphite Ltd • ANNUAL REPORT 2016DIRECTORS’
REPORT
The Directors declare:
1. the financial statements and notes, as set out on pages 19 to 46 are in accordance with the Corporations Act 2001 and:
a. comply with Accounting Standards and the Corporations Regulations 2001 and other mandatory professional
reporting requirements; and
b. give a true and fair view of the financial position as at 30 June 2016 and of the performance for the year ended on
this date of the consolidated group;
a. the financial records of the consolidated group for the financial year have been properly maintained in accordance
2. the Chief Executive Officer and Chief Finance Officer have each declared:
AUDITORS INDEPENDENCE
DECLARATION
with section 286 of the Corporations Act 2001;
b. the financial statements, and the notes for the financial year comply with the accounting standards; and
c. the financial statements and notes for the financial year give a true and fair view; and
as and when they become due and payable.
3. in the directors’ opinion, there are reasonable grounds to believe the consolidated group will be able to pay its debts
Auditor’s independence
The Directors received the independence declaration from the auditor of MRL Corporation Limited as stated on page 21.
4. the consolidated group has included in the notes to the financial statements an explicit and unreserved statement of
compliance with the International Financial Reporting Standards
comply with section 300A of the Corporations Act 2001;
Non-audit services
5. the remuneration disclosures set out in the Directors’ Report on pages 10 to 15 (as the audited Remuneration Report)
During the period BDO Corporate Tax (WA) Pty Ltd was paid $29,977 for the provision of taxation services (2014: $22,695). BDO
Corporate Tax (WA) Pty Ltd is an affiliate member of BDO Audit (WA) Pty Ltd. Refer to Note 24 for further details
Signed in accordance with a resolution of the directors made pursuant to S295 (5) of the Corporations Act 2001. On behalf
Signed in accordance with a Resolution of the Directors.
of the Directors.
Craig McGuckin
Craig McGuckin
Managing Director
Managing Director
Dated at Perth this 30th day of September 2015
28 September 2016
Corporate Governance Statement
The Company’s full Corporate Governance Statement is available on the Company’s website,
www.mrltd.com.au/corporate/corporate-governance.html.
A completed Appendix 4G and the full Corporate Governance Statement have been lodged with the Australian Securities
Exchange as required under Listing Rules 4.7.3 and 4.7.4.
47
20 MRL CORPORATION LIMITED ANNUAL REPORT 2015
ANNUAL REPORT 2016 • First Graphite Ltd INDEPENDENT
AUDITOR’S REPORT
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
INDEPENDENT AUDITOR’S REPORT
To the members of First Graphite Limited
Report on the Financial Report
We have audited the accompanying financial report of First Graphite Limited, which comprises the
consolidated statement of financial position as at 30 June 2016, 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, notes comprising a summary of
significant accounting policies and other explanatory information, and the directors’ declaration of the
consolidated entity comprising the company and the entities it controlled at the year’s end or from
time to time during the financial year.
Directors’ Responsibility 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. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101
Presentation of Financial Statements, that the financial statements comply with International
Financial Reporting Standards.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
audit in accordance with Australian Auditing Standards. Those standards require that we comply with
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
reasonable assurance about whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial report. The procedures selected depend on the auditor’s judgement, including the
assessment of the risks of material misstatement of the financial report, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the company’s
preparation of the financial report that gives a true and fair view in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the company’s internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of accounting estimates made by the directors, as
well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations
Act 2001.
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, other than for the acts or omissions of financial services licensees.
48
First Graphite Ltd • ANNUAL REPORT 2016INDEPENDENT
AUDITOR’S REPORT
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of First Graphite Limited, would be in the same terms if given to the directors as
at the time of this auditor’s report.
Opinion
In our opinion:
(a)
the financial report of First Graphite Limited is in accordance with the Corporations Act 2001,
including:
(i)
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2016
and of its performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b)
the financial report also complies with International Financial Reporting Standards as disclosed in
Note 1.
Emphasis of matter
Without modifying our opinion, we draw attention to Note 1(b) in the financial report, which describes
the conditions which give rise to the existence of a material uncertainty that may cast significant
doubt about the consolidated entity’s ability to continue as a going concern and therefore, the
consolidated entity may be unable to realise its assets and discharge its liabilities in the normal course
of business.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 10 to 15 of the directors’ report for the
year ended 30 June 2016. 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.
Opinion
In our opinion, the Remuneration Report of First Graphite Limited for the year ended 30 June 2016
complies with section 300A of the Corporations Act 2001.
BDO Audit (WA) Pty Ltd
Phillip Murdoch
Director
Perth, 28 September 2016
49
ANNUAL REPORT 2016 • First Graphite Ltd ADDITIONAL SECURITIES
EXCHANGE INFORMATION
(Note, this information does not form part of the audited financial statements)
Additional information required by the Australian Securities Exchange Limited and not shown elsewhere in this report is
as follows. This information is complete as at 27 September 2016.
a) Distribution of Shareholdings – Fully Paid Ordinary Shares:
Holding Ranges
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - 9,999,999,999
Totals
Equity Security
Fully Paid ordinary shares
Options
Substantial Shareholder
The Company has received the following Substantial Holding notice:
Shareholder Name
Agcentral Pty Ltd *
Holders
Total Units
% Issued
Share Capital
76
68
178
717
382
12,863
236,595
1,492,683
31,487,462
274,226,804
0.00%
0.08%
0.49%
10.24%
89.19%
1,421
307,456,407
100.00%
Quoted
Unquoted
307,456,407
-
174,269,836
13,000,000
Number of
Shares
17,751,901
% of Issued
Shares
5.77
* Agcentral Pty Ltd lodged a Substantial Shareholder Notice on 6 July 2016 advising that they hold 18,000,000 shares (5.87% shareholding interest of
First Graphite). Agcentral Pty Ltd are not required to lodge an updated substantial shareholder notice as their % has not changed by more than 1%
but the above figures have been restated to allow for changes in Agcentral Pty Ltd’s shareholding interest since that date.
50
First Graphite Ltd • ANNUAL REPORT 2016b) Top 20 Security Holders – Fully Paid Ordinary Shares (FGR) at 27 September 2016
Position
Name of Holder
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
AGCENTRAL PTY LTD
IPS NOMINEES LTD
J P MORGAN NOMINEES AUSTRALIA LIMITED
GREGORACH PTY LTD
CITICORP NOMINEES PTY LIMITED
MR CRAIG ROBERT MCGUCKIN & MRS LEE ANN MCGUCKIN
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