Eiffage Annual Report 2022

Plain-text annual report

ANNUAL REPORT 2022 FIRSTGRAPHENE.NET 2 WORLD LEADING MATERIALS TECHNOLOGYFGR ANNUAL RE PO RT FY20 22 3 CONTENTS Chairman’s Report ................................................................................... 4 CEO Report ............................................................................................ Operations/QHSE Report .......................................................................... 6 9 Common & Emerging Applications.............................................................. 10 R&D Technology Report ............................................................................ 12 CFO Report ............................................................................................. 16 Annual Financial Report ........................................................................... 18 Corporate Directory ................................................................................. 78 ASX:FGR l 4 CHAIRMAN’S REPORT The past year has had its share of how it improves their challenges with the most dramatic international event being Russia’s invasion of the Ukraine. That has not really had a direct impact on your Company, though coming on top of the continuing COVID-19 pandemic, it has heightened the uncertainties that we are all experiencing. The constraints on supply have reintroduced inflation as a concern in most economies and this has been escalated with rising energy prices. It looks like the early 1970s all over again. Nevertheless, First Graphene continued to make sound progress through the year under the stewardship and leadership offered by our products. Up until now, it has been an exercise in offering bespoke solutions and this has taken time. We are delivering graphene to an expanding range of buyers, and this has led to a doubling of revenue for the year to June 2022. However, the super efficiency of graphene means it continues to take time to build volumes for a book of buyers for many product verticals. Warwick Grigor Chairman Managing Director and CEO, Michael Bell. We have come Yet, we believe we have found the “killer application” that a long way since first embarking on the graphene quest. will dramatically boost our sales and lead to the need for Over the relatively short time frame of six years, since we first made graphene in bench top tests at Adelaide expanded production capacity. The acknowledgment that use of our PureGRAPH® can reduce carbon University, we quickly realised that the challenge to the emissions in the cement and concrete business by 20 commercialisation of graphene was the availability of per cent is an amazing door opener. We are dealing with industrial scale and high quality graphene for industry. It several world leading construction chemicals companies was a supply problem. Having admirably addressed that that are very keen to reduce carbon emissions. All the issue with the establishment of our production facility in test work has been very positive. A large-scale trial is due Henderson, Western Australia, the realities of pioneering to be undertaken in November this year, which could lead a new nanomaterial became more obvious. We were not to regular and expanding sales in 2023. Whereas many stepping into a market, but creating a new market. applications require less than one tonne of graphene per annum, the cement business could want thousands of One of the features of graphene is that it is an additive rather than a direct replacement, suitable for anything. tonnes. It has amazing features, such as electrical and thermal We have also had very positive news regarding the use conductivity, flexibility, fire retardancy and strength, to of graphene in perovskite solar cells, the next generation name a few, but these characteristics are imparted into of solar technology being pioneered by Greatcell Energy the materials to which it is added. Being an additive Pty Ltd, an Australian company and leader in the field of rather than a direct substitute, buyers have to be shown developing low-light solar technology. Early reports have WORLD LEADING MATERIALS TECHNOLOGY5 indicated that Greatcell can reduce its manufacturing costs by 80 per cent with the use of PureGRAPH®. There is potential for this business to require large volumes of our graphene products commencing in 2023. We have come a long way in the past six years and we have a great bank of knowledge that confirms our position as the world leader. We are building substance to our business. We are less reliant on university-based research projects as our own scientists and engineers have the required expertise to work directly with customers to deliver successful commercial outcomes. The success in these endeavours is cumulative and it is something of which to be proud. We have a great team. We thank you for your patience and support, and look forward to delivering more positive news in the coming year. “We believe we have found the ‘killer application’ that will dramatically boost our sales and lead to the need for expanded production capacity. The acknowledgment that use of our PureGRAPH® can reduce carbon emissions in the cement and concrete business by 20 per cent is an amazing door opener.” FGR ANNUAL REPORT FY2022ASX:FGR l6 CEO REPORT Positive results underpin big potential for year ahead A significant improvement in results underpinned an exciting year for First Graphene. ratio, excessive carbon utilisation in manufacturing, utilisation or disposal » Likely to see compelling benefits from the incorporation of graphene With our new executive team having completed its » New or emerging technologies that stand to benefit first 12 months of tenure during the financial year, from the inclusion of graphene and graphitic materials strategies put in place as part of the concerted focus on commercialisation are coming to fruition. First Graphene’s early adopter clients continue to increase sales orders as their product lines gain greater traction in their respective markets. At the same time, the Company’s go-to market strategy outlined last year is starting to yield results with new customers. » Represent significant market opportunities due to volume and global reach Coupled with the launch of the strategy, First Graphene bolstered its commercial team to drive growth in the selected segments – namely cement and concrete, plastics and composites, rubbers and elastomers, coatings and inks, and energy storage technologies. Last year, we outlined our target material segments which were selected if they met one or more of the following criteria: » Face ongoing challenges or limitations such as rapid wear/degradation, poor strength to weight While some slight refinements have been made to the ways in which we classify and address our key segments, the commercial team has actively pursued growth with existing clients as well as new opportunities across all segments. Sales growth For the 12 months to 30 June 2022, the Company scaling up production and continue to push the narrative saw growth in revenue to AU$723,323, which is a that the industry remains in an infantile R&D stage, First 112% improvement over FY21. The result is due to a Graphene maintains its position as a market maker. combination of higher volumes of product sales, and the inclusion of First Graphene’s new application development revenue channel. Much of this revenue was invoiced in the last quarter, indicating a marked and sustainable increase in sales momentum. While some graphene producers still grapple with issues Rather than seeing demand for kilograms of PureGRAPH® products, clients are now talking in tonnage volumes. This is a clear indication that we are writing and controlling our own narrative while the rest of the industry struggles to catch up. WORLD LEADING MATERIALS TECHNOLOGY 7 One of the key factors contributing to this outcome reseller and agency agreements with organisations that is that First Graphene has concentrated the sales have access to incredibly large, global customer bases. At focus on all stages of the supply chain, with particular the same time, we are enabling formulators and suppliers attention on upstream suppliers. The Company is working to essentially drive demand on the Company’s behalf. with an increasing number of industry partners to develop graphene-enhanced solutions with near-term opportunities. This includes cement grinding aids and concrete admixtures, with several proven products being released to market early in FY23. Many of the announcements made over the past year have referred to industry partnerships for the development of products. It is important to note that several of these partnerships have progressed rapidly to commercial trial stage. First Graphene makes a point While full-scale production may not be occurring just yet, of only supporting these developments where there is a many of these partners are purchasing large orders of tangible commercial demand at the tail end. This is critical PureGRAPH® to facilitate commercial-scale trials. to ensuring we work with the right clients, use our human As well as the advances in the cement and concrete segment, a similar shift is taking place with composites resources sensibly and achieve favourable returns on our R&D investments. and plastics. While this segment was the key focus for At the same time, First Graphene now monetises its early adopter, downstream manufacturing clients, and development and support function, providing revenue these clients continue to account for considerable orders generating services to help customers develop and continue to grow order volumes, we are seeing appropriate solutions for specific applications. We also increasing interest from upstream suppliers including continue to rapidly develop, test and launch our own new masterbatch formulators. These upstream opportunities products and PureGRAPH® formulations. provide First Graphene opportunities to implement Cost control Staff numbers are slightly down on the same time last The result is that overall expenditure for the year has year, mostly due to natural attrition and refinement of reduced by $1.2 million (16%) from the previous financial systems and processes. This has been driven by ensuring year and the bulk of cost savings are sustainable. we have the right people and expertise to match our activities, and to ensure commercial success. We have also replaced cash incentives with stock options for key staff, meaning cashflow is improved and staff have a greater sense of ownership and commitment to the Company’s continual improvement and ongoing success. Additionally, an ongoing focus on process optimisation has identified options to improve capacity and reduce energy consumption at our Henderson manufacturing facility. This process will continue with plans to implement various improvements over the coming year. As part of the optimisation and efficiency gains that have been A considerable saving has been realised by limiting identified, the Company is even better placed to rapidly the spend on academic research that offered no upscale production so we can maintain pace with the foreseeable path to commercial revenue. For research ever-increasing demand. and development activity that may have longer-term commercial opportunity, such as some energy storage applications, work is being completed largely by First Graphene’s own R&D team and with the assistance of grant funding. In every case, large-scale commercial opportunities are the end goal. Yes, we are still at the beginning of the road in terms of widespread market adoption, but we have well and truly turned off the R&D road and are accelerating as we move down the commercialisation road. FGR ANNUAL REPORT FY2022ASX:FGR l 8 The other clear message is that First Graphene has We continue to bolster the commercial team and look evolved beyond just being a graphene supplier. We are forward to announcing additional appointments in forging a pathway to becoming an advanced materials coming months that will take us another step up in our technology company. evolutionary journey. A big part of that shift is the team we have in place. In addition, to better align with the market, we have As the year progressed, we made some refinements to combined the rubbers and elastomers, and inks and our commercial team. To engage at the right levels in coatings segments into the broader and more industry upstream organisations, our focus was on finding people aligned coatings, adhesives, sealants and elastomers with the right mix of technical and commercial experience (CASE). As well as being understood within the industry, and aptitude. In other words, we needed people that the shift allows us to consolidate some roles and more could “talk the talk” within each of our target segments, efficiently target opportunities with prospects that work and that has resulted in engagement at high levels with across multiple product segments. globally significant players across all key segments. Positive outlook for year ahead The 2023 financial year has started strongly with projections for continued strong growth. With several advanced-stage commercial trials coming to fruition, the next step is to move to commercial production. And the most exciting thing about reaching those targets is that growth promotes further growth. In any industry where new technologies and materials are involved, many organisations wait to see the early innovators succeed. Then the shift occurs as fast followers capitalise on the opportunities. We are on the precipice of that shift and look forward to delivering plenty of good news in the year ahead. Michael Bell Managing Director and CEO “Rather than seeing demand for kilograms of PureGRAPH® products, clients are now talking in tonnage volumes. This is a clear indication that we are writing and controlling our own narrative while the rest of the industry struggles to catch up.” WORLD LEADING MATERIALS TECHNOLOGY 9 OPERATIONS/ QHSE REPORT Health and Safety At First Graphene, the health and safety of our people First Graphene is the number one priority, with a major driver being the premises have continuous improvement of health and safety systems. also been surveyed by a During the previous financial year, our health and safety procedures continually changed in response to COVID-19, and the public health and social measures that were third party to identify any risk improvements that were necessary, with only minor corrective actions needing to be implemented. implemented by governments. Our QHSE KPI results for the year reflect the Company’s First Graphene’s primary focus during this time was to keep our staff, customers and all stakeholders safe, which was achieved by implementing COVID-19 best practices. strong commitment to best practice and efforts in these areas, with zero Lost Time Incidents, zero Medical Treatment Incidents and zero Environmental Incidents reported. Manufacturing During the last half of the financial year, First Graphene’s University. We have conducted a range of collaborative Henderson facility dispatched several large orders to process and product improvement trials involving various customers. This included a milestone shipment graphene functionalisation and optimisation of physical of our largest ever order of 325kg, followed shortly after properties, using our prototype electro-chemical cell by orders of 300kg, 150kg and 120kg. and downstream processing equipment. An example of First Graphene successfully applied to the Australian Industrial Chemicals Introduction Scheme (AICIS) to vary the terms of our current assessment certificate (CERT8864) to include a new range of PureGRAPH® this work is the development of an experimental grade product line which has fire-retardant properties. We are looking at options to protect the intellectual property developed during this work. products, including the new PureGRAPH® AQUA product During the fourth quarter of FY23, optimisation trials lines. In addition, First Graphene also had additional end were run to investigate the yield of graphene from the user applications for our products – namely textile coating electro-chemical cells by modifications to both the cell and concrete applications - assessed and included as and electrode design. Initial results are promising, with part of the assessment certificate. both an increase in the rate of graphene production and a Over the past 12 months, the Henderson production team has continued to work closely with the UK-based Research and Development team and the Graphene Engineering and Innovation Centre (GEIC) at Manchester corresponding reduction in electricity usage per kilogram of graphene produced. David Bennett General Manager Process Operations FGR ANNUAL REPORT FY2022ASX:FGR l 10 COMMON & EMERGING APPLICATIONS Construction » Cement & Concrete - lower emissions in cement » Cladding - foam panels for insulation, sound and manufacturing, improved physical/functional vibration control products characteristics in concrete for longer-lasting, robust performance » Coatings - smart/conductive coatings to detect leaks in roof panels, storage vessels, pipework; fire-retardant » Asphalt - stronger, more flexible, longer lasting road coatings and carpark surfaces » Solar thermal roof tiles for internal heating Energy & storage » Battery anode coatings - vastly improved storage » Solar panels - better energy conversion, capacity » Wind turbine blades - for greater strength, durability and longer functional life durability, functionality in reduced daylight Infrastructure » Cement and mortar - better performance in harsh » Smart coatings - real-time leak detection conditions (eg wastewater treatment) Interior fittings & equipment » Personal protective equipment - anti-puncture gloves, » Anti-bacterial/anti-microbial foams, coatings for strengthened safety glasses mattresses, benchtops » “Smart” textiles (eg clothing, bedding) to monitor vital » Perovskite solar cells to convert ambient light to health data energy for equipment and appliances Transport » Battery/supercapacitor technology - better » Vehicle components - tyres, body panels, wear perfomance of electric vehicles components, reinforcement, protective coatings WORLD LEADING MATERIALS TECHNOLOGY ENERGY & STORAGE INTERIOR FITTINGS & EQUIPMENT 11 CONSTRUCTION INFRASTRUCTURE TRANSPORT FGR ANNUAL REPORT FY2022ASX:FGR l1 2 R&D TECHNOLOGY REPORT Strong focus on realising value in commercial applications The Research and Development team has played a The new grades developed last year, PureGRAPH® 50 key role in the delivery of the commercial strategy powder and PureGRAPH® 50 AQUA, have been very and growing First Graphene’s sales pipeline, whilst successful, with multiple customers opting for these delivering value for the business, offsetting costs by products. PureGRAPH®50 powder has demonstrated its leveraging government funding schemes and relevant tax values as a thermally conductive additive that improves incentives. the processability of thermoplastic systems. Our focus has been on working closely and collaboratively PureGRAPH®50 AQUA is showing promise as a versatile with a wide range of end users, understanding how additive for the construction segment. Its ability to be to get the best out of the Company’s product in their used either in grinding aids or admixtures underpinned by applications. This has often required bespoke formulation its ease of formulation and distinctive aspect ratio, is well and analytical work at our facility at the Graphene matched for enhancing the properties of cementitious Engineering Innovation Centre (GEIC) and, in an binders. increasing number of cases, at customers’ facilities. We have successfully shown how our graphene We are aware that, as a high-performing additive, we outperforms other carbon materials in a range of need to match the characteristics of our graphene applications, most notably as a thermally conductive with that of our customers’ system, requiring a good additive in elastomer, thermoplastic and thermoset understanding of how to formulate our materials into systems, and as a strength-enhancing additive when their systems. We have developed and refined our used as a cement grinding aid. For example, working product range and now offer a wider range of formulated closely with a European customer, we have proven masterbatches and dispersions, along with developing that our PureGRAPH® uniquely enhances the thermal our PureGRAPH® 70 product for targeted customers. conductivity in thermoplastic systems delivering a competitive advantage for the customer. “The Board and management thank you for your ongoing support. We look forward to sharing more of our growth story with you.” WORLD LEADING MATERIALS TECHNOLOGY13 Developments in thermoplastic and elastomeric systems Progress continues with our collaboration with UK- our PureGRAPH® 5 powder, enabling the development based Senergy Innovations on the development of of a custom fibre-grade polypropylene masterbatch for PureGRAPH®-enhanced polymer solar thermal cells. nonwoven applications. This is currently under evaluation This is backed by our very successful ongoing research with several industry partners. program with the University of Warwick, which is giving us further insight into how to get the best out of our materials in thermoplastic systems. The R&D team have also made progress in the development of our materials for coating applications. Work continues with a textiles client to develop a Commercial-scale compounding trials have been conductive textile coating. The R&D team has also successful with injection moulding and extrusion trials conducted some work into the advantages of graphene currently in progress to confirm material properties and technology in Electrostatic Dissipative (ED) coatings to finalise processing conditions. Following this, Senergy enhance product features and benefits. will move to product trials across the UK. First Graphene has also worked with the Production Team to enhance Success in cement and concrete space Our scientific team has worked closely with our In September 2021, we engaged on a study with the Commercial Team, downstream partners and a range of University of Wollongong, which is partnering with an universities to understand and develop the most practical Australian domestic water, sewerage and drainage ways of getting our graphene into cement and concrete statutory authority, to show how graphene could be used systems. We have recognised the challenging nature of in civil engineering infrastructure projects. The study finding an industrial-scale method of dispersing graphene confirmed that the addition of small amounts of graphene platelets into cement. We were successful in winning a UK enhance the 28-day compressive strength of both funded grant worth approximately AU$360,000 to work concrete and mortar systems by 10 per cent and 20 per with a range of industrial and academic partners to solve cent respectively. this challenge. A full-scale trial in a cement plant grinding mill at Breedon Hope Works is on track to commence in late 2022. This will be one of the largest scale programs for graphene-enhanced cement/concrete undertaken globally to date. In addition, the study also showed how the addition of PureGRAPH® reduces the apparent volume of permeable voids (permeability) of repair mortar and concrete systems by 19 per cent and 12 per cent respectively, while also reducing sulphate expansion in concrete by 64 per The graphene grinding aid addition method for use in cent, and 56 per cent in the repair mortar. Our work with the cement plant has been selected and lab-scale trials the University of Wollongong will be applicable in civil at Fosroc International and Morgan Sindall Construction engineering projects that use concrete in environments have been key to assessing the addition method. requiring high levels of durability, such as wastewater The advantages of this collaborative approach are collection and treatment plants, and coastal ports. This is demonstrated by Fosroc’s experience with grinding aids, especially relevant because the degradation of concrete which has led to new ideas for graphene grinding aid wastewater systems results in multi-million-dollar formulations. concrete repair and replacement challenges for water treatment providers. FGR ANNUAL REPORT FY2022ASX:FGR l 14 Forward focus with energy storage sector We have complemented our shorter term revenue Research into supercapacitor applications continues. generation-focussed activity with a continued focus on Through First Graphene’s relationship with the Energy strategic, longer term programs, focused largely on the Innovation Centre at Warwick Manufacturing Group, Energy Storage Sector. First Graphene entered into a Joint Development Agreement (JDA) with Greatcell Energy Ltd to advance funded by Innovate Edge, the Company has continued to optimise our graphene metal oxide pseudocapacitive active material for supercapacitors. the development of graphene-enhanced solar cells. Our materials continue to outperform activated carbon Australian-based Greatcell specialises in the development under controlled conditions and have shown what needs and utilisation of photovoltaic technologies, specifically to be done to optimise the product. The development Perovskite Solar Cells (PSC), to convert low and ambient focus is on ease of processing by end users, and we light to electricity. These solar cells are designed to be low are engaging with universities and other agencies to cost compared to other solar technologies, but currently understand how to take the technology forward. We are utilise a gold layer. making good progress towards protecting this technology Under the agreement, First Graphene and Greatcell intend and anticipate patent grants in 2022. to jointly develop graphene composites and formulations First Graphene will continue to leverage external to be used to manufacture more efficient and even lower funding as far as possible to support these projects and cost PSCs. The graphene-based solutions remove the offset related costs. They are very relevant and aligned need for a gold layer, which could reduce the cost of the with government strategies worldwide, and will be cell by approximately 80 per cent, and also enable a roll- transformational for the Company. to-roll type manufacturing process. Andy Goodwin Non-Executive Director Paul Ladislaus R&D Manager WORLD LEADING MATERIALS TECHNOLOGY15 First Graphene will continue to leverage external funding as far as possible to support these projects and offset related costs. They are very relevant and aligned with government strategies worldwide, and will be transformational for the Company. FGR ANNUAL REPORT FY2022ASX:FGR l16 CFO REPORT Strategy delivers The 2021/22 financial year saw the world starting to recover from the impacts of COVID-19 but was plunged into the Ukraine war followed by rapid inflation and increasing interest rates. Despite these significant macro socio-economic events, First Graphene continued to deliver on its Commercial Strategy. The year ended 30 June 2022 was the first full year under the Company’s new leadership and refreshed sales-focused direction. Some of the key financial highlights for FY22 include: +111% SALES REVENUE: +20% OPERATING PROFIT: FY22: AUD 0.72m FY21: AUD 0.34m FY22: AUD - 5.0m FY21: AUD - 6.3m +48% OPERATING & INVESTING CASHFLOW -94% FY22: -4.4m FY21: -8.6m CAPITAL EXPENDITURE FY22: AUD 0.1m FY21: AUD 1.5m The 2022 sales result is a marked improvement on the past few years with a continued growth trend. “The Company plans to continue building on this momentum with a focus on developing commercial applications with strategic partners. The aim will be to continue growing the sales portfolio at a rapid rate in all its strategic segments, whilst managing cash expenditure responsibly.” WORLD LEADING MATERIALS TECHNOLOGY17 Sales ($million) $0.72 Sales growth trend 2019-2022 $0.29 $0.34 $0.02 2019 2020 2021 2022 Operating & Investing Cash-Outflow ($million) $8.6 $6.4 $6.1 $4.5 The significant step-up in sales comes from organic growth from Australian early-adopter customers, and a growing customer base in the US and Europe developing graphene- enhanced cement, geotextile materials and solar panels. Strengthening fundamentals With a continued focus on managing cash expenditure, First Graphene continues to prioritise cash outflows on projects that maximise shareholder value. Key initiatives that helped reduce cash outflows include a freeze on pay rises across all employees in the Company during the financial year, with an alternative non-cash incentive plan put in place, and expenditure on third party consultants and professional services reduced by 30 per cent. This is seen in the adjacent cash outflow graph, 2019 2020 2021 2022 with the 2022 cash outflow setting the new baseline that the company will use to deliver its commercial objectives. 2023 outlook The Company plans to continue building on this momentum with a focus on developing commercial applications with strategic partners. The aim will be to continue growing the sales portfolio at a rapid rate in all its strategic segments, whilst managing cash expenditure responsibly. Aditya Asthana CFO and Company Secretary FGR ANNUAL REPORT FY2022ASX:FGR l 18 ANNUAL FINANCIAL REPORT WORLD LEADING MATERIALS TECHNOLOGY19 Directors’ Report The directors present their report together with the financial report of First Graphene Limited (‘First Graphene” or ‘Company’) and the entities it controlled (‘Consolidated Entity’ or ‘Group’) for the year ended 30 June 2022. 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 NNoonn--EExxeeccuuttiivvee CChhaaiirrmmaann 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 Sydney to become a mining analyst with institutional stockbrokers. Mr Grigor left County NatWest Securities in 1991 to establish Far East Capital Limited which was founded as a specialist mining company financier and corporate adviser, together with Andrew "Twiggy" Forrest. In 2008, Far East Capital Limited 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 Limited. OOtthheerr CCuurrrreenntt DDiirreeccttoorrsshhiippss None FFoorrmmeerr ddiirreeccttoorrsshhiippss IInntteerreessttss iinn sshhaarreess iinn tthhee llaasstt 33 yyeeaarrss aanndd ooppttiioonnss None Ordinary shares 19,083,772 3,000,000 Options Dr Andy Goodwin Ph.D. (Polymer Chemistry) NNoonn--EExxeeccuuttiivvee DDiirreeccttoorr Andy has a successful track record in innovation and technology development roles within the speciality chemicals industry. Andy has extensive leadership experience with Sanofi, Dow Corning Corporation and Thomas Swan & Co. Ltd. He has a PhD in polymer chemistry and an MTE Diploma from the IMD Business School in Lausanne, Switzerland. Andy has been actively involved in the development of the graphene materials industry since 2012. He joined First Graphene in 2017 and is based in Manchester, UK. OOtthheerr CCuurrrreenntt DDiirreeccttoorrsshhiippss None FFoorrmmeerr ddiirreeccttoorrsshhiippss IInntteerreessttss iinn sshhaarreess iinn tthhee llaasstt 33 yyeeaarrss aanndd ooppttiioonnss None Ordinary shares 2,008,993 1,000,000 Options Michael Quinert NNoonn--EExxeeccuuttiivvee DDiirreeccttoorr Mr Quinert is a founding partner of QR Lawyers which was established in July 2009. He has over 30- years’ experience as a commercial and corporate lawyer, including three years with ASX and over 21 years as a partner in a Melbourne law firms. 4 | P a g e FGR ANNUAL REPORT FY2022ASX:FGR l 20 Mr Quinert has extensive experience assisting and advising companies on IPO’s, capital raising, cross border transactions, regulatory compliance and has regularly advised publicly listed mining companies. Michael is a Non-Executive Chairman of West Wits Mining Limited and Non-Executive Director of listed First Au Limited (ASX:FAU). OOtthheerr CCuurrrreenntt DDiirreeccttoorrsshhiippss FFoorrmmeerr ddiirreeccttoorrsshhiippss IInntteerreessttss iinn sshhaarreess iinn tthhee llaasstt 33 yyeeaarrss aanndd ooppttiioonnss West Wits Mining Limited First Au Limited Manalto Limited (ASX: MTL) Covata Limited (ASX: CVT) Ordinary shares 80,000 - Options Michael Bell (Appointed 1st July 2021) MMaannaaggiinngg DDiirreeccttoorr aanndd CChhiieeff EExxeeccuuttiivvee OOffffiicceerr Mr Bell has over 21 years’ experience in engineering and business management and significant international experience driving business growth. He was with ST Engineering Group where he served as Senior Vice-President. Mike has also held roles as Director for Navman Wireless, a global Telematics company, and as General Manager with Singapore-based shipbuilder Strategic Marine. OOtthheerr CCuurrrreenntt DDiirreeccttoorrsshhiippss None FFoorrmmeerr ddiirreeccttoorrsshhiippss IInntteerreessttss iinn sshhaarreess iinn tthhee llaasstt 33 yyeeaarrss aanndd ooppttiioonnss None Ordinary shares 134,000 5,000,000 Options Results and Dividends The Group result for the year was a loss of $5,033,108 (2021: loss of $6,284,757). No final dividend has been declared or recommended as at 30 June 2022 or as at the date of this report (2021: $ nil). No interim dividends have been paid (2021: nil). Principal Activities During the financial year the principal continuing activities of the Consolidated Entity was as the leading supplier of high-performing graphene products with a robust manufacturing platform and an established 100 tonne/year graphene production capacity. PureGRAPH® graphene is easy to use and is enhancing the properties of customers’ products and materials across industries and applications worldwide. First Graphene Limited has a primary manufacturing base in Henderson, near Perth, WA. The Company is incorporated in the UK as First Graphene (UK) Ltd. and is a Tier 1 partner at the Graphene Engineering and Innovation Centre (GEIC), Manchester, UK. Events Since the End of the Financial Year No other matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in subsequent financial years. 5 | P a g e WORLD LEADING MATERIALS TECHNOLOGY 21 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 nascent nature of the graphene market 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 the Remuneration Report (page 10) and the Corporate Governance Report lodged separately on ASX on the same day as this report is lodged. 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 graphene production and sales operations are subject to regulation In Australia by the Australian Industrial Chemicals Introduction Scheme (AICIS) and by the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) in the European Union and United Kingdom. The Company’s Commercial Graphene Production facility has been approved as meeting the environmental standards set down by the Government of Western Australia’s Department of Environment Regulation. 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. 6 | P a g e FGR ANNUAL REPORT FY2022ASX:FGR l 22 Share Options At the date of this report, First Graphene Limited has the following options exercisable into ordinary shares in First Graphene Limited. Unlisted Grant Date Date of Expiry Exercise Price Share option 8 November 2019 8 November 2023 $0.25 each, if exercised on or before 8 November 2023 Number under option 15,000,000 Directors’ meetings The number of meetings of Directors held during the year and the number attended by each Director was as follows: Warwick Grigor Dr Andy Goodwin Michael Quinert Michael Bell Directors’ Meetings Meetings Attended Entitled to Attend 8 8 8 8 8 8 8 8 Indemnification and insurance of officers and auditors Under the Company’s constitution and subject to section 199A of the Corporations Act 2001, the Company indemnifies each of the directors, the company secretary and every other person who is an officer of the Company and its wholly-owned subsidiaries. The above indemnity is a continuing indemnity and applies in respect of all acts done by a person while an officer of the Company or its wholly-owned subsidiaries even though the person is not an officer at the time the claim is made. The Company has entered into a Deed of Indemnity, Access and Insurance (“Deed”) with each current and former officer of the Company and its subsidiaries, including each director and company secretary and persons who previously held those roles. During the financial year, the Company has paid a premium in respect of insuring the directors and officers of the Company and the Group. The insurance contract prohibits disclosure of the premium or the nature of liabilities insured against under the policy. No indemnity or insurance is in place in respect of the auditor. 7 | P a g e WORLD LEADING MATERIALS TECHNOLOGY 23 Remuneration report (audited) The information provided in this Remuneration Report has been audited as required by section 308(3C) of the Corporations Act 2001. This report outlines the remuneration arrangements in place for Directors of First Graphene Limited and Executives of the Group. Key Management Personnel (‘KMP’) disclosed in this report: Mr Warwick Grigor Dr Andy Goodwin Mr Michael Bell (Appointed 1 July 2021) Mr Aditya Asthana Mr Michael Quinert 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 arrangements which limit the economic risk of participating in unvested entitlements. into transactions or There has been no direct relationship between the Group’s financial performance and remuneration of key management personnel over the previous 5 years. Executive Director Remuneration Executive pay and reward consist 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 First Graphene. 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 First Graphene or for attending Board meetings. All Executive Directors, Non-Executive Directors and responsible executives of First Graphene 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 First Graphene. Non-Executive Director Remuneration The Company's policy is to remunerate non-executive Directors at a fixed fee for time, commitment and responsibilities. Remuneration 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 8 | P a g e FGR ANNUAL REPORT FY2022ASX:FGR l 24 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. 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: Setting Remuneration Arrangements The Company does not have a separate Remuneration Committee. Given the current size and composition of the Board, the Board believes there would be no efficiencies gained by establishing a separate Remuneration Committee. Accordingly, the Board performs the role of the Remuneration Committee. When the Board convenes as the Remuneration Committee it carries out those functions which are delegated to it in the Company’s Remuneration Committee Charter. 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. 9 | P a g e WORLD LEADING MATERIALS TECHNOLOGY d e t a l e r l a t o T s t n e m y a p t n e m y a P s t n e m e l t i t n E s t c a r t n o c y r a l a S f o e u l a V n o i t a r e n u m e r s i h c i h w e c n a m r o f r e p e r a h S d e s a b n o i t a n m r e T i t n e m y o p m E l r e p s ’ r o t c e r i D e l c i h e V g n i t l u s n o c - t s o P s a t n e m y a p s u n o B e s a B s t i f e n e b r e h t o & s e v i t n e c n i m r e t t r o h S : s w o l l o f s a s a w r a e y e h t g n i r u d p u o r G e h t f o s e v i t u c e x e t n e m e g a n a m y e k d n a r o t c e r i D h c a e r o f n o i t a r e n u m e r e h T 2 2 0 2 e n u J 0 3 d e d n e r a e y e h t r o f n o i t a r e n u m e r f o s l i a t e D %% $$ AA $$ AA $$ AA % 2 4 6 7 9 4 6 6 , , 2 0 6 1 8 2 - - - , 0 0 0 2 3 1 , 2 2 6 8 5 1 2 9 9 4 3 , - - - % 3 3 8 3 4 6 2 , 7 6 5 , 9 , 3 7 9 4 5 2 1 , 9 6 1 1 9 2 , - - - - - - $$ AA - 0 0 0 , 2 1 3 3 5 , 0 1 - 5 6 1 , 3 2 8 9 6 , 5 4 $$ AA $$ AA s e e f $$ AA e c n a w o l l a $$ AA e e f $$ AA s r o t c e r i D e v i t u c e x E 22 22 00 22 ee nn uu JJ 00 33 - - - - - - 4 7 3 , 3 8 3 - 0 0 0 , 0 9 9 8 0 , 3 2 1 - 0 0 0 , 0 3 0 0 0 , 5 2 2 9 9 , 4 3 1 5 6 , 1 3 2 - 4 1 1 , 8 2 8 2 9 9 , 9 8 - - - - - - - - - - s r o t c e r i D e v i t u c e x E - n o N i n w d o o G y d n A r D r o g i r i G k c w r a W ) i i ( ) i ( l l e B l e a h c M i t r e n u Q i l e a h c M i l e n n o s r e P t n e m e g a n a M y e K r e h t O - - a n a h t s A a y t i d A ll aa tt oo TT 25 e g a P | 0 1 y b e s i c r e x e o t e s o o h c n a c e h h c h w i , 1 2 0 2 r a e y l i a c n a n i f e h t n i l l e B l i e a h c M o t d e t n a r g s n o i t p o 0 0 0 0 0 0 5 e h t , , . 1 2 0 2 y l u J 1 n o r o t c e r i i D g n g a n a M d e t n o p p a s a w i l l e B l e a h c M i f o e s n e p x e e u a v l r i a f e h t s t n e s e r p e r t n e m y a p d e s a b e r a h s e h T y n a p m o c e h t o t e r a h s . r e p 5 2 0 $ g n i y a p . i . i i FGR ANNUAL REPORT FY2022ASX:FGR l 26 f o e u l a V n o i t a r e n u m e r s i h c i h w e c n a m r o f r e p e r a h S d e s a b n o i t a n m r e T i t n e m y o p m E l - t s o P s u n o B s a t n e m y a p s t c a r t n o c r e p s ’ r o t c e r i D e l c i h e V g n i t l u s n o c e s a B % $$ AA $$ AA $$ AA $$ AA d e t a l e r l a t o T s t n e m y a p t n e m y a P s t n e m e l t i t n E $$ AA ) i i i v ( y r a l a S $$ AA s e e f $$ AA e c n a w o l l a $$ AA e e f $$ AA s r o t c e r i D e v i t u c e x E 11 22 00 22 ee nn uu JJ 00 33 s t i f e n e b r e h t o & s e v i t n e c n i m r e t t r o h S : s w o l l o f s a s a w r a e y e h t g n i r u d p u o r G e h t f o s e v i t u c e x e t n e m e g a n a m y e k d n a r o t c e r i D h c a e r o f n o i t a r e n u m e r e h T 1 2 0 2 e n u J 0 3 d e d n e r a e y e h t r o f n o i t a r e n u m e r f o s l i a t e D , 7 8 8 2 9 3 , 9 1 9 4 7 2 - - 0 0 0 , 0 0 1 0 0 0 , 0 0 1 - - - - 0 9 2 , 7 3 4 8 , 0 1 2 7 4 , 5 1 3 1 1 3 , 7 0 4 ) i i ( ) i ( i n k c u G c M g a r C i ) i i i ( ) i ( d u o Y r e t e P - - - - - , 9 4 6 5 1 8 , 3 7 0 3 9 7 , 0 5 4 1 3 2 , 2 4 1 7 4 1 4 6 6 1 1 , - - - - - % 8 5 % 4 , 4 9 4 0 7 3 , 6 5 5 6 1 2 2 7 3 0 7 , 0 5 1 , 3 4 4 8 , 9 3 4 2 , 6 0 7 9 1 2 , 6 0 8 7 6 6 , 6 3 9 , 9 1 0 0 0 , 0 0 3 6 1 8 , 4 2 4 4 6 6 , 6 6 3 3 1 , 8 1 3 8 7 2 2 7 , e g a P | 1 1 . r e p 5 2 0 $ g n i y a p y b e s i c r e x e o t e s o o h c n a c e h h c h w i , 1 2 0 2 e n u J o t p u l l e B l i e a h c M o t d e t n a r g s n o i t p o 0 0 0 0 0 0 5 e h t , , f o e u a v l r i a f e h t s t n e s e r p e r t n e m y a p d e s a b e r a h s e h T . y n a p m o c e h t o t e r a h s . 0 2 0 2 n i e c n a m r o f r e p r o f i s t c a r t n o c t n e m t n o p p a r e d n u e u d s t n e m e l t i t n e s t c e l f e r s t n e m y a p s u n o B 1 2 0 2 h c r a M 2 2 n o y r a t e r c e S y n a p m o C & r e c i f f O l i i i a c n a n F f e h C s a d e c n e m m o c a n a h t s A a y t i d A r M 0 2 0 2 y l u J 1 n o r o t c e r i i D e v i t u c e x E - n o N a d e t n o p p a s a w n w d o o G y d n A r i D . s e c i v r e s r o t c e r i d r i e h t r o f l y r a a s a e v i e c e r n w d o o G y d n A r i M d n a r o g i r G 1 2 0 2 y r a u n a J 8 n o d e r i t e r n k c u G c M i r M 1 2 0 2 l i r p A 8 2 n o d e r i t e r d u o Y r e t e P r M 1 2 0 2 h c r a M 1 n o r o t c e r i D e v i t u c e x E - n o N a d e t n o p p a s a w i t r e n u Q i l e a h c M i r M 1 2 0 2 y r a u n a J 1 1 n o r e c i f f i O e v i t u c e x E f e h C s a d e c n e m m o c l l e B l e h c M i r M . i i . i i i . v i . v . i v . i i v . i i i v . x i i k c w r a W r M . t n e m e e r g a t n a t l u s n o c e v i t c e p s e r r i e h t h t i w e c n a d r o c c a n i d e t a s n e p m o c e r a r e v e w o h s e e f s ’ r o t c e r i d e v i e c e r t o n o d d u o Y r e t e P r i M d n a n k c u G c M g a r C r i M . i - - - - - 0 5 4 , 1 1 0 0 0 , 0 0 1 0 0 0 , 0 9 0 0 0 , 0 3 - - 5 7 3 , 2 1 1 1 , 6 - - - - 2 4 1 , 2 2 1 0 0 0 , 5 2 - 4 6 6 , 1 1 3 6 5 , 1 5 1 1 1 1 , 1 6 - - - - - - - - - - s r o t c e r i D e v i t u c e x E - n o N ) v i ( , ) i ( i n w d o o G y d n A r D ) i ( r o g i r i G k c w r a W ) v ( t r e n u Q i l e a h c M i l e n n o s r e P t n e m e g a n a M y e K r e h t O - - ) i i v ( a n a h t s A a y t i d A ll aa tt oo TT ) x i ( ) i v ( l l e B l e a h c M i WORLD LEADING MATERIALS TECHNOLOGY 27 The remuneration policy has been tailored to increase goal congruence between shareholders, directors and executives. The Group is in the early development phase of its operations, and due consideration is made of developing long term shareholder value. The Board has regard to the following indices in respect of the current financial year to facilitate the long-term growth of the Consolidated Group: Item 22002222 22002211 2020 2019 2018 Sales revenue $ 723,323 341,869 289,773 22,771 7,180 Loss before tax $ (5,033,108) (6,284,757) (5,366,149) (6,986,738) (7,024,612) Basic loss per shares (cents) Increase/(decrease) in share price % (0.91) (1.19) (1.11) (1.78) (1.65) (60.34) 133.1 (45.1) 134.2 275.3 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 Warwick Grigor Dr Andy Goodwin Michael Quinert Michael Bell Aditya Asthana % Fixed remuneration % Short Term Incentive % Long Term Incentive 100% 100% 100% 58% 97% - - - 42% 3% - - - - - Contractual Arrangements with KMP Remuneration and other terms of employment for Key Management Personnel are formalised in service agreements. These agreements specify the components of remuneration benefits and notice periods. The material terms of service agreements with the Key Management Personnel are noted as follows: Name Base Salary Michael Bell 350,000 Duration of Service Agreement Ongoing Notice Period By Executive By Company 3 months 3 months Aditya Asthana 235,000 Ongoing 3 months 3 months Severance Payment Entitlement No entitlement No entitlement There are no other service agreements in place. 12 | P a g e FGR ANNUAL REPORT FY2022ASX:FGR l 28 Share-based compensation Shares issued as part of remuneration for the year ended 30 June 2022 Share-based compensation 60,000 shares were issued to key management personnel as their performance rights Shares issued as part of remuneration for the year ended 30 June 2022 (granted FY 21) vested during the year. 60,000 shares were issued to key management personnel as their performance rights (granted FY 21) vested during the year. Options issued as part of remuneration for the year ended 30 June 2022 No options were issued to key management personnel as part of compensation during the Options issued as part of remuneration for the year ended 30 June 2022 year. No options were issued to key management personnel as part of compensation during the Options issued as part of remuneration in prior years year. Using the Black Scholes option pricing model and based on the assumptions set out below, Options issued as part of remuneration in prior years the CEO Options were ascribed the following value: Using the Black Scholes option pricing model and based on the assumptions set out below, the CEO Options were ascribed the following value: AAssssuummppttiioonnss:: Valuation date AAssssuummppttiioonnss:: Market price of shares Valuation date Exercise price Market price of shares Expiry date (length of time from issue) Exercise price Risk free interest rate Expiry date (length of time from issue) Volatility Risk free interest rate Indicative Value of CEO Option (cents) Volatility Total Value of CEO Options Indicative Value of CEO Option (cents) Options holdings held by key management personnel Total Value of CEO Options Options holdings held by key management personnel Directors Exercised Granted Other (i) Balance 30.06.22 Balance 01.07.21 Balance 01.07.21 11,854,951 Granted - Exercised - Other (i) (8,854,951) Balance 30.06.22 3,000,000 17 December 2020 $0.245 17 December 2020 $0.250 $0.245 8 November 2023 – 2.89 years $0.250 0.25% 8 November 2023 – 2.89 years 75% 0.25% 0.1158 75% $579,069 0.1158 Total vested 30.06.22 Total vested - 30.06.22 Vested & exercisable 30.06.22 Vested & exercisable - 30.06.22 $579,069 Vested & un- exercisable Vested & 30.06.22 un- exercisable - 30.06.22 3,108,993 11,854,951 - 3,108,993 5,000,000 - - 5,000,000 Expired - - - - - - - - - - - - - - - - - - - (2,108,993) (8,854,951) 1,000,000 3,000,000 - (2,108,993) - 1,000,000 - - - - - 5,000,000 - - 5,000,000 - - - - - - - - - - - - - - - - - - - - - - - - - - - - Directors Warwick Grigor Dr Andy Warwick Goodwin Grigor Michael Dr Andy Quinert Goodwin Michael Michael Bell Quinert Aditya Michael Asthana Bell Aditya i. Asthana i. Expired Performance rights issued as part of remuneration for the year ended 30 June 2022 Performance rights issued as part of remuneration for the year ended 30 June 2022 13 | P a g e 13 | P a g e WORLD LEADING MATERIALS TECHNOLOGY No Performance rights were issued to key management personnel as part of compensation during the year. Performance rights holdings held by key management personnel 29 Directors Warwick Grigor Dr Andy Goodwin Michael Quinert Michael Bell Aditya Asthana Balance 01.07.21 Granted Vested Other (i) Balance 30.06.22 - - - - 60,000 - - - - - - - - - 60,000 - - - - - - - - - - Shareholdings held by key management personnel Balance 01.07.21 18,883,772 2,008,993 - - - Directors Warwick Grigor Dr Andy Goodwin Michael Quinert Michael Bell Aditya Asthana i. ii. Granted Exercise of options Acquired Other - - - - - - - - - - 200,000 (i) - 80,000 (i) 134,000 (i) - - - - Balance 30.06.22 19,083,772 2,008,993 80,000 134,000 - 60,000 (ii) 60,000 Shares purchased on the market by these KMP. Shares issued upon vesting of performance rights in the year. Transactions with other related parties There were no loans or other transactions with key management personnel. No remuneration consultants were utilised at this point in the Company’s development. Voting Rights At the 2021 Annual General Meeting held on 25 November 2021 there were 4.33% of the votes against the adoption of the remuneration report. End of audited Remuneration Report 14 | P a g e FGR ANNUAL REPORT FY2022ASX:FGR l 30 Auditor’s independence The Directors received the independence declaration from the auditor of First Graphene Limited as stated on page 18. Non-audit services During the period BDO Corporate Tax (WA) Pty Ltd was paid $50,668 for the provision of taxation services (2021: $50,454). BDO Corporate Tax (WA) Pty Ltd is an affiliate member of BDO Audit (WA) Pty Ltd. Refer to Note 22 for further details The board of directors has considered the position and is satisfied the provision of the non- audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied the provision of non-audit services by the auditor, as set out in Note 22, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons: • all non-audit services have been reviewed by the board to ensure they do not impact the impartiality and objectivity of the auditor • none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants Signed in accordance with a Resolution of the Directors. Michael Bell Managing Director and Chief Executive Officer Dated at Perth this 31st day of August 2022 . Corporate Governance Statement The Company's full Corporate Governance Statement is available on the Company's website, www.firstgraphene.net/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. Annual General Meeting The Company’s Annual General Meeting will be held on 17th October 2022. Details will be included in the Annual report and the Notice of Meeting, which will be issued in due course. 15 | P a g e WORLD LEADING MATERIALS TECHNOLOGY Auditor’s Independence Declaration 31 16 | P a g e FGR ANNUAL REPORT FY2022ASX:FGR l 32 Consolidated Statement of Profit or Loss and Other Comprehensive Income For the year ended 30 June 2022 Note 2022 $ 2021 $ Continuing operations Revenue from contracts with customers 3 4(a) 4(b) 4(c) 4(d) 4(e) 5(a) 5(b) 6 Cost of goods sold Gross profit Other income Research & development Selling & marketing Mineral lease maintenance General & administrative Operating loss Finance income Finance expense Loss from continuing operations before tax Income tax (expense)/benefit Loss for the year Other comprehensive income Items which may be reclassified to profit or loss Exchange differences arising on translation of foreign operations Other comprehensive income for the year Total comprehensive loss for the year 723,323 341,869 (555,648) (266,236) 167,675 75,633 1,241,941 962,301 (1,599,816) (2,614,609) (875,857) (486,502) (98,902) (272,278) (3,562,113) (3,920,375) (4,727,073) (6,255,830) 2,377 1,892 (308,413) (30,819) (5,033,108) (6,284,757) - - (5,033,108) (6,284,757) (102,940) (102,940) 9,488 9,488 (5,136,048) (6,275,269) 17 | P a g e WORLD LEADING MATERIALS TECHNOLOGY 33 Consolidated Statement of Profit or Loss and Other Comprehensive Income (continued) For the year ended 30 June 2022 Loss for the year attributable to: Owners of First Graphene Limited Non-Controlling interests Total comprehensive loss for the year attributable to: Owners of First Graphene Limited Non-Controlling interests Loss per share for the year attributable to the owners of First Graphene Limited Basic (loss) per share (cents per share) Loss per share (cents per share) 7 7 (5,017,487) (6,297,424) (15,621) 12,667 (5,033,108) (6,284,757) (5,120,427) (6,287,936) (15,621) 12,667 (5,136,048) (6,275,269) (0.91) (0.91) (1.19) (1.19) The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes 18 | P a g e FGR ANNUAL REPORT FY2022ASX:FGR l 34 Consolidated Statement of Financial Position At 30 June 2022 Note 2022 $ 2021 $ Assets Current assets Cash and cash equivalents Inventories Trade and other receivables Other current assets Total current assets Non-current assets Property, plant and equipment Right of use asset Inventories Intangible assets Other assets Total non-current assets Total assets Liabilities Current liabilities Trade and other payables Employee liabilities Financial liabilities Lease liabilities Total current liabilities Non-current liabilities Lease liabilities Total non-current liabilities Total liabilities Net assets Equity Issued capital Reserves Accumulated losses Capital and reserves attributable to owners of First Graphene Limited Non-controlling interest Total equity 8 9 10 11 9 12 13 15 16 7,004,724 1,821,713 167,744 225,801 7,076,580 1,152,872 86,015 817,234 9,219,982 9,132,701 2,854,654 162,179 2,851,875 118,155 211,908 6,198,770 15,418,752 585,702 139,189 6,135,251 178,489 7,038,631 - - 2,666,643 342,590 3,528,896 101,652 220,805 6,860,586 15,993,287 1,321,261 154,117 4,934,817 359,297 6,769,492 - - 7,038,631 8,380,121 6,769,492 9,223,795 102,845,907 5,738,367 98,808,042 5,607,362 (100,389,940) (95,361,902) 8,194,334 9,053,502 185,787 8,380,121 170,293 9,223,795 The above consolidated statement of financial position should be read in conjunction with the accompanying notes 19 | P a g e WORLD LEADING MATERIALS TECHNOLOGY 5 9 7 , 3 2 2 , 9 ) 8 6 6 , 0 4 1 ( ) 8 0 1 , 3 3 0 , 5 ( ) 7 7 7 , 3 7 1 , 5 ( l a t o T $ - - 0 0 0 , 0 0 5 , 1 - 7 8 1 , 0 1 2 , 2 ) 3 2 9 , 8 1 ( 9 3 8 , 8 3 6 - 3 9 2 , 0 7 1 ) 1 3 7 , 5 1 ( ) 1 3 7 , 5 1 ( $ - - 5 2 2 , 1 3 - - - - - n o N g n i l l o r t n o c s t s e r e t n i - - - - - - - ) 8 4 5 , 0 1 ( ) 7 8 4 , 7 1 0 , 5 ( ) 5 3 0 , 8 2 0 , 5 ( - 0 1 1 0 1 1 - - ) 5 2 2 , 1 3 ( - - - - - - - - - - - - ) 1 2 1 , 0 3 1 ( ) 1 2 1 , 0 3 1 ( ) 2 0 9 , 1 6 3 , 5 9 ( ) 1 5 8 , 5 4 ( 0 9 5 , 3 1 d e t a l u m u c c A s e s s o l $ r e h t O e v r e s e R $ n o i t a l s n a r T e v r e s e r $ 1 2 1 , 0 8 3 , 8 7 8 7 , 5 8 1 ) 8 3 9 , 9 8 3 , 0 0 1 ( ) 6 6 9 , 6 7 ( ) 0 3 5 , 6 1 1 ( 8 8 4 , 9 ) 7 5 7 , 4 8 2 , 6 ( 7 6 6 , 2 1 ) 4 2 4 , 7 9 2 , 6 ( ) 9 6 2 , 5 7 2 , 6 ( 7 6 6 , 2 1 ) 4 2 4 , 7 9 2 , 6 ( - 0 0 0 , 8 9 8 - 5 2 8 , 7 9 1 , 2 1 3 8 , 9 1 4 ) 7 7 9 , 2 6 2 ( - - - - - ) 6 0 2 , 5 2 ( - - - - - 2 0 2 , 7 6 4 - - - - - - - 6 0 2 , 5 2 5 8 3 , 6 4 2 , 2 1 2 3 8 , 2 8 1 ) 0 8 6 , 1 3 5 , 9 8 ( ) 7 5 0 , 1 7 ( 2 0 1 , 4 - 8 8 4 , 9 8 8 4 , 9 - - - - - - e v r e s e r n o i t p O e v r e s e r $ $ d e s a b e r a h S s t n e m y a p d e u s s I l a t i p a C $ y t i u q E n i s e g n a h C f o t n e m e t a t S d e t a d i l o s n o C 2 2 0 2 e n u J 0 3 d e d n e r a e y e h t r o F - - - - - - - - - - - - 3 2 6 , 9 3 6 , 5 2 4 0 , 8 0 8 , 8 9 - - - - - - - 9 3 8 , 0 1 3 0 0 0 , 0 0 5 , 1 - 7 8 1 , 0 1 2 , 2 ) 3 2 9 , 8 1 ( 0 0 0 , 8 2 3 - - - s r e n w o s a y t i c a p a c r i r o f s s o l e v i s n e h e r p m o c l a t o T n o i t a l s n a r t y c n e r r u c n g e r o F i r a e y e h t 1 2 0 2 y l u J 1 t a s A r a e y e h t r o f s s o L e h t n i s r e n w o h t i w s n o i t c a s n a r T e h t g n i r u d s t n e m e c a p e r a h S l - n o n h t i w s n o i t c a s n a r T t n e m y a p d e s a b e r a h S t s e r e t n i g n i l l o r t n o c s t s o c e u s s i e r a h S s n o i t c a s n a r t d e u s s i s e r a h S r a e y ) 0 0 6 , 8 1 ( 0 0 6 , 8 1 s t h g i r e c n a m r o f r e p f o g n i t s e V - - 2 6 8 , 1 3 9 , 5 6 0 9 , 5 4 8 , 2 0 1 s e s s o l l d e t a u m u c c a o t r e f s n a r T 2 2 0 2 e n u J 0 3 2 0 2 , 7 6 4 7 6 1 , 6 1 4 , 5 9 1 8 , 8 7 7 , 5 9 0 2 0 2 y l u J 1 t a s A - - - - - - - - - - - - - 6 5 4 , 3 2 2 - - r o f s s o l e v i s n e h e r p m o c l a t o T n o i t a l s n a r t y c n e r r u c n g e r o F i r a e y e h t r o f s s o L r a e y e h t 0 0 0 , 8 9 8 - 5 2 8 , 7 9 1 , 2 5 7 3 , 6 9 1 ) 7 7 9 , 2 6 2 ( s r e n w o s a y t i c a p a c r i e h t n i s r e n w o h t i w s n o i t c a s n a r T e h t g n i r u d s t n e m e c a p e r a h S l - n o n h t i w s n o i t c a s n a r T t n e m y a p d e s a b e r a h S t s e r e t n i g n i l l o r t n o c s t s o c e u s s i e r a h S s n o i t c a s n a r t d e u s s i s e r a h S r a e y ) 2 0 2 , 7 6 4 ( - - s e s s o l l d e t a u m u c c a o t r e f s n a r T 35 e g a P | 0 2 5 9 7 , 3 2 2 , 9 3 9 2 , 0 7 1 ) 2 0 9 , 1 6 3 , 5 9 ( ) 1 5 8 , 5 4 ( 0 9 5 , 3 1 - 3 2 6 , 9 3 6 , 5 2 4 0 , 8 0 8 , 8 9 1 2 0 2 e n u J 0 3 e t o n g n i y n a p m o c c a e h t h t i w n o i t c n u n o c n j i d a e r e b d u o h s l y t i u q e n i s e g n a h c f o t n e m e t a t s d e t a d i l o s n o c e v o b a e h T FGR ANNUAL REPORT FY2022ASX:FGR l 36 Consolidated Statement of Cash Flows For the year ended 30 June 2022 Cash flows from operating activities Receipts from customers Payments to suppliers and employees Interest received Interest paid R&D and grant funding received Other income Note 2022 $ 2021 $ 606,947 334,087 (6,250,674) (8,337,427) 2,377 - 1,241,941 - 1,892 (20,052) 593,316 353,226 Net cash outflows from operating activities 19 (4,399,409) (7,074,958) Cash flows from investing activities Payments for property, plant and equipment Proceeds from sale of property, plant and equipment Payments for intellectual property (44,576) (1,468,502) - (46,000) 15,759 (71,741) Net cash outflows from investing activities (90,576) (1,524,484) Cash flow from financing activities Proceeds from placement of shares Proceeds from the exercise of options Payment of share issue/capital raising costs Proceeds from convertible note Finance lease payments Net cash inflows from financing activities - 898,000 1,617,372 2,790,642 (18,923) (19,133) 3,000,000 4,102,000 (180,808) (151,487) 4,417,641 7,620,022 Net decrease in cash and cash equivalents (72,344) (979,420) Cash and cash equivalents at beginning of the year 7,076,580 8,053,134 Effect of exchange rate fluctuations on cash held 488 2,866 Cash and cash equivalents at end of the year 8 7,004,724 7,076,580 The above consolidated statement of cash flows should be read in conjunction with the accompanying note 21 | P a g e WORLD LEADING MATERIALS TECHNOLOGY 37 Notes to the Consolidated Financial Statements 1. Basis of Preparation First Graphene Limited (“First Graphene” or the “Company”) is a for-profit company limited by shares, incorporated and domiciled in Australia, whose shares are publicly traded on the Australian Securities Exchange. Its registered office and principal place of business is: First Graphene Limited 1 Sepia Close Henderson WA 6166 A description of the nature of operations and principal activities of FGR and its subsidiaries (collectively, the “Group”) is included in the Chief Executive Officer’s Report, which is not part of these financial statements. The financial statements were authorised for issue in accordance with a resolution of the directors on 30 August 2022. The financial report is a general-purpose financial report which: • has been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board (AASB) and complies with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB); • has been prepared on a historical cost basis except for assets and liabilities and share- based payments which are required to be measured at fair value. The basis of measurement is discussed further in the individual notes; • is presented in Australian dollars; Accounting policies New standards, interpretation and amendments adopted by the Group The accounting policies adopted in the preparation of the consolidated financial statements are consistent with those followed in the preparation of the Group’s annual consolidated financial statements for the year ended 30 June 2021, except for the adoption of new accounting standards and interpretations effective for annual periods beginning 1 July 2021. The effect of the adoption of these new accounting standards and interpretations did not have a material impact on the annual consolidated financial statements of the Group, the nature and effect of which is discussed below. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective. 22 | P a g e FGR ANNUAL REPORT FY2022ASX:FGR l 38 Notes to the Consolidated Financial Statements Going Concern The financial report is a general purpose financial report which has been prepared on a going concern basis and in accordance with Australian Accounting Standards, the Corporations Act 2001 and other authoritative pronouncements of the Australian Accounting Standards Board. Statement of compliance The financial report complies with Australian Accounting Standards as issued by the Australian Accounting Standards Board. The financial report also complies with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. The following Standards and Interpretations have been issued by the AASB, are relevant to the Group, but are not yet effective and have not been adopted by the Group for the period ending 30 June 2022. Unless otherwise stated, the Group has yet to fully assess the impact of these Standards and Interpretations when applied in future periods. Basis of consolidation The consolidated financial statements comprise the financial statements of First Graphene Limited and its subsidiaries as at 30 June 2022 (the Group). Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has: • Power over the investee (i.e. existing rights that give the current ability to direct the relevant activities of the investee); • Exposure, or rights, to variable returns from its involvement with the investee; and • The ability to use its power over the investee to affect its returns. When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including: • The contractual arrangement with the other voting holders of the investee • Rights arising from other contractual arrangements • The Group’s voting rights and potential voting rights The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the statement of comprehensive income from the date the Group gains control until the date the Group ceases to control the subsidiary. Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation. 23 | P a g e WORLD LEADING MATERIALS TECHNOLOGY 39 Notes to the Consolidated Financial Statements A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it: • De-recognises the assets (including goodwill) and liabilities of the subsidiary • De-recognises the carrying amount of any non-controlling interests • De-recognises the cumulative translation differences recorded in equity • Recognises the fair value of the consideration received • Recognises the fair value of any investment retained’ • Recognises any surplus or deficit in profit or loss • Reclassifies the parent’s share of components previously recognised in OCI to profit or loss or retained earnings, as appropriate, as would be required if the Group had directly disposed of the related assets or liabilities Foreign currency translation The financial report is presented in Australian dollars, which is First Graphene Limited’s functional and presentation currency. Foreign currency transactions Foreign currency transactions are translated into 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. OTHER ACCOUNTING POLICIES Significant and other accounting policies that summarise the measurement basis used and are relevant to an understanding of the financial statements are provided throughout the notes to the financial statements. Where possible, wording has been simplified to provide clearer commentary on the financial report of the Group. Accounting policies determined non-significant are not included in the financial statements. There have been no changes to the Group’s accounting policies that are no longer disclosed in the financial statements. The Notes To The Financial Statements The notes include information which is required to understand the financial statements and is material and relevant to the operations and the financial position and performance of the Group. Information is considered relevant and material if, for example: • • • the amount is significant due to its size or nature; the amount is important for understanding the results of the Group; it helps to explain the impact of significant changes in the Group’s business; or 24 | P a g e FGR ANNUAL REPORT FY2022ASX:FGR l 40 Notes to the Consolidated Financial Statements • it relates to an aspect of the Group’s operations that is important to its future performance. The notes are organised into the following sections: • Performance for the year; • Operating assets and liabilities; • Capital structure and risk; • Other disclosures. A brief explanation is included under each section. Performance For the Year This section focuses on the results and performance of the Group. This covers both profitability and the resultant return to shareholders via earnings per share combined with cash generation. KEY ESTIMATES AND JUDGEMENTS In the process of applying the Group’s accounting policies, management has made a number of judgements and applied estimates of future events. Judgements and estimates which are material to the financial report are found in the following notes. Share Based Payments Estimates Judgement has been exercised in calculating the value of share based payments. The closing price of share sales on the day of the award of the share based payment is used for calculating the fair value of the payment. Convertible notes carried at fair value On initial recognition, the value of the convertible notes was calculated based on the proceeds received. At the reporting date, the fair value of the conversion options within the convertible loan has been assessed to be nil and credit risk has not changed from inception of the loan. Inventories Net realisable value tests are performed at each reporting date and represent the estimated future sales price of the product based on prevailing spot metals process at the reporting date, less estimated costs to complete production and bring the product to sale. Inventory held at 30 June 2022 relates to raw material, work in progress and finished goods and is held at net realisable value. The provision for impairment of inventories assessment requires a degree of estimation and judgement. The level of any provision is assessed by considering recent sales experience, the ageing of inventories, damaged, obsolete, slow moving inventories and other factors that affect inventory obsolescence. 25 | P a g e WORLD LEADING MATERIALS TECHNOLOGY 41 Notes to the Consolidated Financial Statements 2. Segment reporting 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 way 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: Graphene production As the Company expands its graphene production and inventory, the Board monitors the Company based on actual verses budgeted expenditure incurred. Research and development As the Company expands its research inhouse and in conjunction with third parties, the Board monitors the Company based on actual verses budgeted expenditure incurred. 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. Mining Asset Maintenance Although the Company has suspended its mineral exploration and development in Sri Lanka the Board monitors the Company based on actual verses budgeted expenditure incurred. 26 | P a g e FGR ANNUAL REPORT FY2022ASX:FGR l 42 l a t o T $ 1 2 0 2 2 2 0 2 1 2 0 2 t e s s A g n n M i i e c n a n e t n a M i $ 2 2 0 2 1 2 0 2 2 2 0 2 1 2 0 2 2 2 0 2 1 2 0 2 2 2 0 2 $ $ $ s e c i v r e S e t a r o p r o C l t n e m p o e v e D & h c r a e s e R n o i t c u d o r P e n e h p a r G s s e n i s u B t n e m g e S s t n e m e a t S t l i a c n a n i F d e a d t i l o s n o C e h t o t t s e o N 9 6 8 , 1 4 3 9 6 8 , 1 4 3 3 2 3 , 3 2 7 3 2 3 , 3 2 7 2 9 8 , 1 7 7 3 , 2 - - - - - - - - 2 9 8 , 1 7 7 3 , 2 - - - - - - ) 7 5 7 , 4 8 2 , 6 ( ) 8 0 1 , 3 3 0 , 5 ( ) 9 2 2 , 8 3 2 ( ) 2 0 9 , 8 9 ( ) 8 9 8 , 3 1 5 , 3 ( ) 4 8 9 , 7 3 5 , 3 ( ) 9 5 5 , 2 7 5 , 2 ( ) 2 2 2 , 6 9 3 , 1 ( 9 2 9 , 9 3 - - - 9 6 8 , 1 4 3 9 6 8 , 1 4 3 3 2 3 , 3 2 7 3 2 3 , 3 2 7 3 1 8 , 8 8 7 4 1 1 , 8 5 4 5 7 0 , 8 1 6 3 1 , 2 7 1 - - - - 3 7 0 , 1 4 6 6 2 , 5 4 9 1 3 , 0 8 9 0 7 , 1 3 1 2 4 , 7 6 6 9 3 1 , 1 8 3 - 0 3 9 , 2 1 1 5 7 0 , 8 1 0 5 5 , 7 2 - 7 5 6 , 1 3 7 8 2 , 3 9 9 , 5 1 1 5 7 , 8 1 4 , 5 1 9 6 2 , 2 3 7 6 4 , 4 1 7 5 , 6 1 8 , 7 3 8 5 , 0 7 6 , 6 1 1 3 , 6 0 4 , 3 8 6 3 , 4 4 9 , 3 6 3 1 , 8 3 7 , 4 2 3 3 , 9 9 7 , 4 1 9 4 , 9 6 7 , 6 1 3 6 , 8 3 0 , 7 5 2 2 , 8 2 2 8 , 2 1 0 0 , 2 4 3 , 6 9 4 0 , 7 7 6 , 6 7 5 5 , 9 3 2 0 5 5 , 4 8 1 8 0 7 , 9 7 1 0 1 2 , 4 7 1 m o r f e u n e v e R e m i t n i i t n o P s r e m o t s u c l a n r e t x e i n o i t a c e r p e D n o i t a s i t r o m A e s n e p x e g n i t a r e p O ) s s o l ( / t i f o r P e s n e p x e t s e r e t n I e u n e v e r t n e m g e S s t e s s a t n e m g e S s e i t i l i b a i l t e s s a d e s i m o r p a f o e g a P | 7 2 l i o r t n o c s n a t b o r e m o t s u c e h t e s u a c e b s i s i h T . a i r e t i r c e m i t n i i t n o p e h t g n i s u , 5 1 S R F I r e d n u e u n e v e r s e s i n g o c e r p u o r G e h T : o t d e t i m i l t o n e r a t u b , e d u c n l i s n o i t a r e d i s n o C . n o i t a g i l b o e c n a m r o f r e p a s e i f s i t a s y t i t n e e h t d n a t e s s a e h t i f o p h s r e n w o f o s d r a w e r d n a s k s i r t n a c i f i n g i s e h t s a h r e m o t s u c e h T r e m o t s u c e h t o t t e s s a e h t f o n o i s s e s s o p l a c i s y h p d e r r e f s n a r t s a h y t i t n e e h T . t e s s a e h t d e t p e c c a s a h r e m o t s u c e h T t e s s a e h t r o f t n e m y a p o t t h g i r t n e s e r p a s a h y t i t n e e h T t e s s a e h t o t e l t i t l a g e l s a h r e m o t s u c e h T • • • • • WORLD LEADING MATERIALS TECHNOLOGY 43 Notes to the Consolidated Financial Statements Geographical areas In presenting the information on the basis of geographical areas, segment revenue is based on the geographical location of operations. Segment assets are based on the geographical location of the assets. Geographical segments Australia United Kingdom Sri Lanka Total 2022 $ Revenue 723,323 - - 723,323 Total Assets 14,856,052 558,232 4,467 15,418,751 2021 $ Revenue 341,869 - - 341,869 Total Assets 9,252,761 482,374 6,258,152 15,993,287 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 2022 $ 20,787,048 (5,368,297) 15,418,751 2021 $ 23,160,997 (7,167,710) 15,993,287 Reconciliation of segment liabilities to the Statement of Financial Position Total segments liabilities Inter-segment elimination Total liabilities per statement of financial position 2022 $ 23,086,033 (16,047,402) 7,038,631 2021 $ 23,255,662 (16,486,171) 6,769,491 28 | P a g e FGR ANNUAL REPORT FY2022ASX:FGR l 44 Notes to the Consolidated Financial Statements 3. Revenue from contracts with customers Accounting Policy The Group accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of the consideration is probable. Revenues from product sales are recognised when an identified performance obligation is satisfied, and the customer obtains and accepts control of the Company’s product. Sales of product generally occur at a point in time, typically upon delivery to the customer. Taxes collected from customers relating to product and service sales and remitted to governmental authorities are excluded from revenues. The Company expenses incremental costs of obtaining a contract as and when incurred because the expected amortisation period of the asset that the Company would have recognised is one year or less. Types of goods Sale of graphene/related services Total revenue from contracts with customers Notes 2022 $ 723,323 723,323 2021 $ 341,869 341,869 4. Operating expenses and other income Accounting Policy All revenue is stated net of the amount of goods and services tax (GST). Other revenue includes R&D credits received from the Australian & UK tax government. Government Grants Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Group satisfies all attached conditions. When the grant relates to an expense item, it is recognised as income over the periods necessary to match the grant on a systematic basis to the costs that it is intended to compensate. When the grant relates to an asset, the fair value is credited against the asset and is released to the Statement of Profit or Loss and Other Comprehensive Income over the expected useful life of the relevant asset by equal annual instalments. Where a grant is received in relation to the tax benefit of research and development costs, the grant shall be credited to other income in the Statement of Profit or Loss and Other Comprehensive Income in the year of receipt. 29 | P a g e WORLD LEADING MATERIALS TECHNOLOGY 45 Notes to the Consolidated Financial Statements Depreciation 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: Plant and equipment 3-15 years The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date. Other revenue and expenses from continuing operations: Notes (a) (b) Other income R&D and grant income Government grants related to COVID19 Profit on sale of property, plant & equipment Research & development Employee expenses Consultant and research programs Legal and taxation expenses Depreciation Amortisation Impairment of intangible assets Impairment of inventory Other (c) Selling & marketing Employee expenses Advertising & promotion Depreciation Other (d) Mining lease maintenance Employee expenses Rent of premises Other (e) General & administrative Employee expenses Director, finance & company secretarial fees Legal & other professional fees ASX listing, share registry and other corporate costs Depreciation Amortisation Share based payment expense Rent of premises Insurances Other 2022 $ 1,241,941 - - 1,241,941 535,053 707,202 9,531 31,709 27,550 - - 288,770 1,599,816 562,780 139,554 2,437 171,087 875,857 32,842 41,279 24,781 98,902 2021 $ 684,186 262,356 15,759 962,301 938,419 933,307 67,286 64,148 18,075 250,000 (4,680) 348,054 2,614,609 182,125 202,074 1,101 101,203 486,502 63,118 57,919 151,241 272,278 1,543,352 1,362,164 47,189 505,377 148,510 42,830 112,930 463,839 - 79,270 618,817 3,562,113 573,168 863,860 153,011 39,972 - 419,831 15,740 71,269 421,360 3,920,375 30 | P a g e FGR ANNUAL REPORT FY2022ASX:FGR l 46 Notes to the Consolidated Financial Statements 5. Finance income and expense Accounting Policy 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. (a) Interest income on bank deposits Finance income Finance expense ((bb)) Interest expense Foreign exchange (loss)/gain - unrealised Notes 2022 $ 2,377 2,377 (296,751) (11,662) (308,413) 2021 $ 1,892 1,892 (20,052) (10,767) (30,819) 31 | P a g e WORLD LEADING MATERIALS TECHNOLOGY 47 Notes to the Consolidated Financial Statements 6. Income tax Accounting Policy Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the reporting date, and any adjustment to tax payable in respect of previous years. 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: Income Tax Expense Income tax expense/(benefit) (a) Current tax Deferred tax Under/(over) provision in prior years Total income tax expense ((bb)) Amounts recognised directly in equity Aggregate current and deferred tax arising in the reporting period and not recognised in net profit or loss or other comprehensive income but directly debited or credited in equity Current tax Deferred tax 2022 $ - - - - - - - - 2021 $ - - - - - - - - (c) Reconciliation of income tax expense to prima facie tax payable - Loss before income tax from all activities - Prima facie income tax benefit on loss before income tax at 30% (2021:30%) - Entertainment - Share based payments - Non-assessable income - Other permanent differences - Deferred tax assets not brought to account Income tax expense/(benefit) The applicable weighted average effective tax rates (5,017,488) (8,379,866) (1,254,372) (2,513,960) 4,553 115,960 (211,978) 40,830 85,518 - 0% 3,935 125,949 (139,196) 761,472 130,016 - 0% (d) Deferred tax liability Prepaid expenditure PPE Other temporary differences Off-set of deferred tax assets Net deferred tax liability recognised - - - - - - - - - - - - 32 | P a g e FGR ANNUAL REPORT FY2022ASX:FGR l 48 Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements Income Tax Expense Income Tax Expense (e) Unrecognised deferred tax asset Tax losses (e) Unrecognised deferred tax asset Capital losses Tax losses PPE & Leases Capital losses Other temporary differences PPE & Leases Other temporary differences Off-set of deferred tax liabilities Net deferred tax assets unrecognised Off-set of deferred tax liabilities Net deferred tax assets unrecognised 2022 $ 2022 $ 6,734,869 7,310,519 6,734,869 4,078 7,310,519 127,569 4,078 14,177,034 127,569 (110,890) 14,177,034 14,066,145 (110,890) 14,066,145 2021 $ 2021 $ 6,335,089 8,772,623 6,335,089 5,012 8,772,623 1,068,198 5,012 16,180,921 1,068,198 - 16,180,921 16,180,921 - 16,180,921 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 The Group has Australian revenue losses from previous years for which no deferred tax assets review in the relevant jurisdictions. have been recognised. The availability to utilise these losses in future periods is subject to review in the relevant jurisdictions. 7. Loss per share 7. Loss per share Accounting Policy Accounting Policy Loss per share (“LPS”) is the amount of post-tax profit attributable to each share. The group presents basic and diluted LPS data for ordinary shares. Basic LPS is calculated by dividing the Loss per share (“LPS”) is the amount of post-tax profit attributable to each share. The group profit or loss attributable to ordinary shareholders of the Company by the weighted average presents basic and diluted LPS data for ordinary shares. Basic LPS is calculated by dividing the number of ordinary shares outstanding during the period. profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted LPS takes into account the dilutive effect of all potential ordinary shares, being unlisted employee share options on issue. Diluted LPS takes into account the dilutive effect of all potential ordinary shares, being unlisted employee share options on issue. Weighted average ordinary shares used in calculating basic earnings per share Weighted average ordinary shares used in calculating basic earnings per share Weighted average ordinary shares used in calculating diluted earnings per share Weighted average ordinary shares used in calculating diluted earnings per share Basic loss per share - cents per share Basic loss per share - cents per share Diluted loss per share - cents per share Diluted loss per share - cents per share Number of shares Number of 2022 shares 2022 552,630,533 Number of shares Number of 2021 shares 2021 530,130,203 552,630,533 530,130,203 552,630,533 552,630,533 (0.91) (0.91) (0.91) (0.91) 2022 $ 2022 $ (5,017,487) (5,017,487) 530,130,203 530,130,203 (1.19) (1.19) (1.19) (1.19) 2021 $ 2021 $ (6,297,424) (6,297,424) (5,017,487) (6,297,424) Loss attributable to the owners of First Graphene used in calculating basic loss per share Loss attributable to the owners of First Graphene used in calculating basic loss per share Loss attributable to the owners of First Graphene used in calculating diluted loss per share Loss attributable to the owners of First Graphene used in calculating diluted loss per share (6,297,424) There have been no transactions involving ordinary shares between the reporting date and the date of completion of these financial statements which would impact on the There have been no transactions involving ordinary shares between the reporting date above EPS calculations. and the date of completion of these financial statements which would impact on the above EPS calculations. (5,017,487) 33 | P a g e 33 | P a g e WORLD LEADING MATERIALS TECHNOLOGY 49 Notes to the Consolidated Financial Statements 8. Cash and cash equivalents Accounting Policy Cash and cash equivalents in the Statement of Financial Position comprise cash at bank and in hand. Cash at bank earns interest at floating rates based on daily bank deposit rates. For the purposes of the Statement of Cash Flows, cash and cash equivalents comprise the following at the end of the reporting period: Cash at bank and in hand 2022 $ 7,004,724 7,004,724 2021 $ 7,076,580 7,076,580 The Group’s maximum exposure to financial risk is disclosed in note 15. OPERATING ASSETS AND LIABILITIES This section shows the assets used to generate the Group’s trading performance and the liabilities incurred as a result. Liabilities relating to the Group’s financing activities are addressed in the capital structure and finance costs section on page 41. 9. Inventories Accounting Policy Raw material, work in progress, finished goods and consumables are stated at the lower of cost and net realisable value. Cost comprises direct materials, direct labour and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of normal operating capacity. Costs are assigned to individual items of inventory on the basis of weighted average costs. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. Inventories expected to be sold (or consumed in the case of stores) within 12 months after the Statement of financial position date are classified as current assets, all other inventories are classified as non-current. 34 | P a g e FGR ANNUAL REPORT FY2022ASX:FGR l 5 0 Notes to the Consolidated Financial Statements Inventories (continued) Total Inventories Raw materials Work in progress Finished goods Inventories Gross Less: Provision for impairment Carrying amount Disclosed as: Current Non-current Total inventory 10. Other assets Prepayments Total other assets 2022 $ 1,987,200 316,598 2,411,910 4,715,708 (42,120) 4,673,588 1,821,713 2,851,875 4,673,588 2022 $ 850,926 850,926 2021 $ 1,859,988 350,689 2,513,211 4,723,887 (42,120) 4,681,768 1,152,872 3,528,896 4,681,768 2021 $ 817,234 817,234 11. Property, plant and equipment Accounting Policy 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: Plant and equipment 3-15 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 or loss. Any revaluation surplus reserve relating to the item disposed of is transferred directly to retained profits. 35 | P a g e WORLD LEADING MATERIALS TECHNOLOGY 51 Notes to the Consolidated Financial Statements Property, plant and equipment (continued) Key estimates and assumptions Useful Life of Assets The estimation of useful lives, residual values and depreciation methods require significant management judgements and are regularly reviewed. If they need to be modified, the depreciation and amortisation expense is accounted for prospectively from the date of the assessment until the end of the revised useful life (for both the current and future years). “Capital work in progress is projects of a capital nature which usually relates to the construction/installation of buildings, plant or equipment. Upon completion (when ready for use) capital work in progress is transferred to the relevant asset category. Capital work in progress is not depreciated.” Reconciliations of the carrying value for each class of property, plant and equipment is set out below: 30 June 2022 Carrying amount at beginning of year Additions Depreciation Movement due to foreign exchange Carrying amount at end of year 30 June 2021 Carrying amount at beginning of year Additions Depreciation Movement due to foreign exchange Carrying amount at end of year Capital Work in Progress - Plant and equipment 2,600,832 Office equipment 56,442 Motor vehicles 9,369 625,125 - 17,543 (440,181) 5,031 (16,320) - (1,613) Total 2,666,643 647,699 (458,114) - (1,471) (103) - (1,573) 625,125 2,176,724 45,050 7,756 2,854,655 Plant and equipment Office equipment Motor vehicles Total 2,293,523 8,703 11,941 2,314,167 921,996 (615,689) 56,808 (9,081) - (2,572) 978,804 (627,342) 1,002 12 - 1,014 2,600,832 56,442 9,369 2,666,643 36 | P a g e FGR ANNUAL REPORT FY2022ASX:FGR l 5 2 Notes to the Consolidated Financial Statements 12. Trade and other payables Accounting Policy 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. Current Trade and other payables Customer deposits 13. Financial liabilities Accounting Policy 2022 $ 411,492 174,210 585,702 2021 $ 1,141,552 179,708 1,321,261 Convertible notes were issued by the Group which include embedded derivatives. Convertible notes are initially recognised as financial liabilities at fair value. On initial recognition the fair value of the convertible notes equated to the proceeds received and subsequently the convertible note is measured at fair value. The movements are recognised in profit and loss as finance costs except to the extent the movement is attributed to changes in the group’s own credit risk status in which case, it is recognised in Other Comprehensive Income. Terms and Conditions The Company entered into a Share Placement Agreement with Specialty Materials Investments, LLC (the Investor) on the 27th of May 2021. Initial deposit shares issued: 2,800,000 shares at $0.235 per share • Total AUD amount that can be drawn down: $8,000,000 • • Fee paid: 1,021,276 shares at $0.235 per share • Final AUD value of shares to be issued: $8,480,000 (“subscription amount”) • Other Terms: • The final number of shares to be issued by the Company will be determined by applying the Purchase Price (as set out below) to the subscription amount. The Purchase Price will initially be equal to $0.30 per share and will reset after 10 August 2021 to the average of the five daily volume-weighted average prices selected by the Investor during the 20 consecutive trading days immediately prior to the date of the Investor’s notice to issue shares, rounded down to the next half a cent if the share price is at below 50 cents and whole cent if the share price is at above 50 cents, with no discount applicable to this formula. To the extent that Placement Shares are issued after six months, or 12 months, the Investor will receive a discount of, respectively, 3% or 6% to the foregoing Purchase Price formula. • The Purchase Price will be the subject of a Floor Price of $0.16. If the Purchase Price formula were to result in a purchase price that is less than the Floor Price, the Company may refuse to issue shares and instead opt to repay the relevant subscription amount in cash (with a 5% premium), subject to the Investor’s right to receive Placement Shares at the Floor Price in lieu of such cash repayment. The Purchase Price will not be the subject of a cap. 37 | P a g e WORLD LEADING MATERIALS TECHNOLOGY 53 Notes to the Consolidated Financial Statements • The Company will issue the Placement Shares in relation to all or part of each of the above investments on the Investor’s request, during the period ending 24 months after the date of the investment. • The Company has retained the right (but has no obligation) to repay the subscription amount in cash in lieu of issuing shares by way of a repayment of the subscription amount together with the difference between the market price of the shares and the Purchase Price (if any) in relation to the shares that would otherwise have been issued. Current Convertible liabilities 2022 $ 6,135,251 6,135,251 2021 $ 4,934,817 4,934,817 Opening Balance at 1st Jul 21 – Share Placement Agreement Finance Charge Funds Received - Placement 2 2,941,176 Shares at an issue price of $0.17 per Share on 10 February 2022 3,225,807 Shares at an issue price of $0.155 per Share on 25 March 2022 3,225,807 Shares at an issue price of $0.155 per Share on 8 April 2022 Closing Balance at 30th Jun 2022 4,342,000 293,251 3,000,000 (500,000) (500,000) (500,000) 6,135,251 CAPITAL STRUCTURE, FINANCIAL INSTRUMENTS AND RISK This section outlines how the Group manages its capital, related financing costs and its exposure to various financial risks. It explains how these risks affect the Group’s financial position and performance and what the Group does to manage these risks. The Group’s objectives when managing capital are to safeguard its ability to continue as a going concern, so that it can continue to provide returns to shareholders and benefits for other stakeholders and to maintain an efficient capital structure to reduce the cost of capital. The Board’s policy in relation to capital management is to regularly and consistently monitor future cash flows against expected expenditures for a rolling period of up to 12 months in advance. The Board determines the Group’s need for additional funding by way of either share issues or loan funds depending on market conditions at the time. The Board defines working capital in such circumstances as its excess liquid funds over liabilities and defines capital as being the ordinary share capital of the Company, plus retained earnings, reserves and net debt. In order to maintain or adjust the capital structure, the Board may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or reduce debt. There were no changes in the Group’s approach to capital management during the year. Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirement. 38 | P a g e FGR ANNUAL REPORT FY2022ASX:FGR l 54 Notes to the Consolidated Financial Statements 14. 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 instruments and short-term receivables, deposits with banks, investments. The accounting policy with respect to these financial instruments is described in note 1. local money market 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 financial 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 $7,004,724 (2021: $7,076,580). 39 | P a g e WORLD LEADING MATERIALS TECHNOLOGY Notes to the Consolidated Financial Statements The Company banks with Westpac Banking Corporation (Westpac). Westpac’s long term credit ratings are A+ (Fitch Ratings), Aa3 (Moody's Investors Service) and AA- (Standard & Poor's). 55 Cash and cash equivalents Group 2022 $ 2021 $ 7,004,724 7,076,580 7,004,724 7,076,580 40 | P a g e FGR ANNUAL REPORT FY2022ASX:FGR l 56 Notes to the Consolidated Financial Statements Impairment of financial assets The group holds trade receivables that are subject to the expected credit loss model. While cash and cash equivalents are also subject to the impairment requirements of AASB 9, the identified impairment loss was immaterial. Trade receivables The group applies the AASB 9 simplified approach to measuring the expected credit losses which uses a lifetime expected loss allowance for all trade receivables. The expected credit losses have been grouped based on shared credit risk characteristics and the days past due. The expected loss rates are based on the payment profiles of sales over a period of 36 months before 30 June 2021 and the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to reflect current and forward- looking information on macroeconomic factors affecting the ability of the customers to settle the receivables. On that basis, the loss allowance as at 30 June 2022 was determined to be nil. Trade receivables are written off when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with the group and failure to make contractual payments for a period of greater than 120 days past due. Impairment losses on trade receivables are presented as net impairment losses within operating profit. Subsequent recoveries of amounts previously written off are credited against the same line item. 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 $ $ Impairment allowance Total carrying amount $ $ Total $ Consolidated 30 June 2022 Trade receivables 167,744 167,744 Consolidated 30 June 2021 Trade receivables 86,015 86,015 - - - - - - - - 167,744 167,744 86,015 86,015 - - - - 167,744 167,744 86,015 86,015 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. 41 | P a g e WORLD LEADING MATERIALS TECHNOLOGY 57 Notes to the Consolidated Financial Statements 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. 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. WWeeiigghhtteedd aavveerraaggee eeffffeeccttiivvee iinntteerreesstt rraattee %% FFllooaattiinngg iinntteerreesstt rraattee WWiitthhiinn oonnee yyeeaarr $$ 0.01 7,004,724 7,004,724 - - - 0.01 7,076,580 7,076,580 - - - 3300 JJuunnee 22002222 Financial assets Cash and cash equivalents TToottaall FFiinnaanncciiaall aasssseettss aatt 3300 JJuunnee 22002222 Trade and other payables Financial liabilities TToottaall ffiinnaanncciiaall lliiaabbiilliittiieess aatt 3300 JJuunnee 22002222 3300 JJuunnee 22002211 Financial assets Cash and cash equivalents TToottaall FFiinnaanncciiaall aasssseettss aatt 3300 JJuunnee 22002211 Trade and other payables Financial liabilities TToottaall ffiinnaanncciiaall lliiaabbiilliittiieess aatt 3300 JJuunnee 22002211 FFiixxeedd iinntteerreesstt NNoonn--iinntteerreesstt bbeeaarriinngg WWiitthhiinn oonnee yyeeaarr $$ 11--55 yyeeaarrss $$ WWiitthhiinn oonnee yyeeaarr $$ 11--55 yyeeaarrss $$ TToottaall $$ - - - - - - - - - - - - - - - - - - - - - - - 7,004,724 - 7,004,724 585,702 6,135,251 - - 585,702 6,135,251 6,720,953 - 6,720,953 - - 1,321,361 4,934,817 - 7,076,580 7,076,580 - - - 1,321,361 4,934,817 6,256,178 - 6,256,178 42 | P a g e FGR ANNUAL REPORT FY2022ASX:FGR l 5 8 Notes to the Consolidated Financial Statements Trade and other payables and borrowings are expected to be paid as follows: 30 June 2022 Trade and other payables (refer note 13) Financial liabilities (refer note 14) 30 June 2021 Trade and other payables (refer note 13) Financial liabilities (refer note 14) Less than 1 year $ Between 1 and 2 years $ Between 2 and 5 years $ Over 5 years $ 585,702 6,135,251 6,720,953 1,321,361 4,934,817 6,256,178 - - - - - - - - - - - - Market 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. (i) Foreign exchange risk 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 $US GBP£ and Sri Lankan Rupee. Sensitivity analysis The following table does not include intra group financial assets and liabilities. It summaries the sensitivity of the Group’s financial assets and liabilities to external parties at 30 June 2021 to foreign exchange risk, based on foreign exchange rates as at 30 June 2021 and sensitivity of +/-5%: 30 June 2022 rate (cents) US$/A$ GBP/A$£ LKR/A$ 0.6876 0.5663 247.84 43 | P a g e WORLD LEADING MATERIALS TECHNOLOGY Notes to the Consolidated Financial Statements 59 Foreign exchange risk 2022 $ (66,017) 66,017 2021 $ (49,021) 49,021 (66,017) (49,021) 66,017 49,021 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 The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s cash position. A change of 10 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. Profile At reporting date the interest rate profile of the Group’s financial instruments was: Floating rate instruments Cash at bank Floating rate instruments Cash at bank 2022 $ -10bps +10bps Profit Equity Profit Equity Interest rate risk 7,004,724 7,004,724 (6,462) (6,462) 2021 $ 7,076,580 7,076,580 (6,624) (6,624) - - - - 6,462 6,462 6,624 6,624 - - - - 44 | P a g e FGR ANNUAL REPORT FY2022ASX:FGR l 60 Notes to the Consolidated Financial Statements (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. Note 30 June 2022 30 June 2021 Carrying amount $ 167,744 167,744 Net fair value $ 167,744 167,744 Carrying amount $ 85,815 85,815 Net fair value $ 85,815 85,815 13 14 585,702 6,135,251 6,720,953 585,702 6,135,251 6,720,953 1,321,361 4,934,817 6,256,178 1,321,361 4,934,817 6,256,178 Assets carried at amortised cost Trade and other receivables Total financial assets Liabilities carried at amortised cost Trade and other payables Financial liabilities Total Financial Liabilities Fair value hierarchy The Group classified the fair value of the financial instruments in the table below according to the fair value hierarchy based on the amount of observable inputs used to value the instruments: • • • Level 1 – values based on unadjusted quoted prices available in active markets for identical assets or liabilities as of the reporting date. Level 2 – values based on inputs, including quoted prices, time value and volatility factors, which can be substantially observed or corroborated in the marketplace. Prices in Level 2 are either directly or indirectly observable as of the reporting date. Level 3 – values based on prices or valuation techniques that are not based on observable market data. Fair value measurement using: Note Total $ Level 1 $ Level 2 $ Level 3 $ Financial liabilities measured at fair value - 2022 Convertible liabilities Total financial assets 14 6,135,251 6,135,251 - - 6,135,251 6,135,251 - - There were no transfers between Level 1, Level 2 and Level 3 during 2022. Fair value measurement using: Note Total $ Level 1 $ Level 2 $ Level 3 $ Financial liabilities measured at fair value - 2021 Convertible liabilities Total financial assets 14 4,934,817 4,934,817 - - 4,934,817 4,934,817 - - 45 | P a g e WORLD LEADING MATERIALS TECHNOLOGY 61 Notes to the Consolidated Financial Statements 15. Issued capital Accounting Policy Ordinary shares are classified as equity. Transaction costs directly attributable to the issue of shares or options are recognised as a deduction from equity, net of any related income tax effects. (a) Ordinar y shares Issued and fully paid Movements in shares on issue At the beginning of the period Exercise of options Shares issued to employees Entitlement issue(i) Shares issued to third party Share issue costs At the end of the period 2022 2021 2022 2021 $ 102,845,906 $ 98,808,042 Number 539,900,237 Number 539,900,237 98,808,042 95,778,819 539,900,237 525,667,329 2,210,187 2,197,825 9,120,749 9,636,632 18,600 67,375 120,000 275,000 1,500,000 898,000 9,392,790 3,821,276 328,000 129,000 1,500,000 500,000 (18,923) (262,977) - - 102,845,906 98,808,042 560,033,776 539,900,237 (i) Repayment of borrowings as per the share placement agreement – Refer Note 13. (b) Share options Listed share options At the beginning of the period Options issued Options exercised Options expired At the end of the period Share options (c) Unlisted share options At the beginning of the period Options issued Options exercised Options expired At the end of the period 2022 Number 100,955,266 2021 Number 107,471,898 - 120,000 (8,120,749) (6,636,632) (92,834,517) - - 100,955,266 2022 Number 2021 Number 17,000,000 15,000,000 - 5,000,000 (1,000,000) (3,000,000) (1,000,000) 15,000,000 - 17,000,000 46 | P a g e FGR ANNUAL REPORT FY2022ASX:FGR l 62 Notes to the Consolidated Financial Statements Refer note 17 for further details on share options issued. Performance rights (d) UUnnlliisstteedd ppeerrffoorrmmaannccee rriigghhttss At the beginning of the period Performance rights issued Performance rights converted AAtt tthhee eenndd ooff tthhee ppeerriioodd 2022 Number 2021 Number 120,000 60,000 (120,000) 60,000 - 120,000 - 120,000 Refer note 17 for further details on performance rights issued. 47 | P a g e WORLD LEADING MATERIALS TECHNOLOGY 63 Notes to the Consolidated Financial Statements 16. Share based payments Accounting Policy The value of options granted to employees is recognised as an employee expense, with a corresponding increase in equity, over the period that the employees become unconditionally entitled to the options (the vesting period), ending on the date on which the relevant employees become fully entitled to the option (the vesting date). At each subsequent reporting date until vesting, the cumulative charge to the statement of comprehensive income is the product of: • The grant date fair value of the option; • The current best estimate of the number of options that will vest, taking into account such factors as the likelihood of employee turnover during the vesting period and the likelihood of non-market performance conditions being met; and • The expired portion of the vesting period. Until an option has vested, any amounts recorded are contingent and will be adjusted if more or fewer awards vest than were originally anticipated to do so. Share based payment expense The Group recognised total share-based payment expenses as follows: Shares issued to employees Option issued to employees Performance rights issued to employees Shares issued to Advisors Options issued to directors Total Share Option Plan 2022 $ - 281,602 29,237 153,000 - 463,839 2021 $ 67,375 216,555 6,900 128,500 - 419,330 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. 2022 2021 Number of Options 37,630,904 - (1,000,000) - (21,630,904) 15,000,000 Weighted average exercise price (cents) 21.6 - 0.18 - 24.8 25.0 Number of Options 37,050,000 5,000,000 (3,000,000) (1,419,096) - 37,630,904 Weighted average exercise price (cents) 21.1 25.0 18.0 25.0 - 21.6 Outstanding 1 July Issued Exercised Traded / Sold Lapsed Outstanding 30 June 48 | P a g e FGR ANNUAL REPORT FY2022ASX:FGR l 6 4 Notes to the Consolidated Financial Statements Share-based payments – Options issued The table below summarises options granted to directors, employees and consultants under the Share Option Plan: Grant Date Expiry Date Exercise price Balance at start of the year Granted during the year Exercised during the year Expired/ lapsed during the year Balance at the end of the year Vested and exercisable during the year Number Number Number Number Number Number $0.18 2,000,000 - (1,000,000) (1,000,000) - - Unlisted options: 26 Feb 2019 8 Nov 2019 6 Jan 2020 17 Dec 2020 26 Feb 2022 8 Nov 2023 8 Nov 2023 8 Nov 2023 Listed options: $0.25 9,000,000 $0.25 1,000,000 $0.25 5,000,000 31 Oct 2017 24 Nov 2017 23 May 2018 14 May 2019 8 Aug 2021 Various 1,550,000 8 Aug 2021 Various 17,000,000 8 Aug 2021 Various 3,000,000 8 Aug 2021 Various 500,000 - - - - - - - - - - - - - 9,000,000 9,000,000 1,000,000 1,000,000 5,000,000 5,000,000 - (1,550,000) - (17,000,000) - (3,000,000) - (500,000) - - - - - - - - The weighted average remaining contractual life of the options is 1.25 years (2021: 2.25 years). Share-based payments – Performance rights issued The following performance rights were granted to employees: Employee Shoaib Qureshi Date of Grant Number of Performance Rights 60,000 21/09/2021 60,000 Share Price A$ 0.19 Value A$ Vesting Date 11,400 22/09/2022 11,400 Total vesting expense was recognised in the current year of $8,800. Vesting of these performance rights is based on completing 12 months of continuous service. 49 | P a g e WORLD LEADING MATERIALS TECHNOLOGY 65 Notes to the Consolidated Financial Statements 17. Reserves and accumulated losses Accounting Policy 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. 18. Statement of cash flow reconciliation (a) Reconciliation of net loss after tax to net cash flows from operations Net Loss Adjusted for: Depreciation Amortisation Impairment of intangible asset Write back/impairment of inventory (Gain)/loss on sale of property, plant and equipment Share based payments expensed Options expensed Shares issued to employees as payment for deferred salaries Foreign exchange loss/(gains) Changes in assets/liabilities (Increase)/decrease in trade and other receivables (Increase)/decrease in inventory (Increase)/decrease in prepayments Decrease in other assets (Decrease)/increase in trade and other payables Net cash (used in) operating activities 2022 $ 2021 $ (5,033,108) (6,284,757) 248,480 22,802 - - - 463,839 - - 76,153 18,075 250,000 (4,680) (15,759) 419,831 - - (11,662) (10,767) (81,729) 382,311 (11,690) - (378,652) (4,399,409) (20,447) (1,364,264) (129,516) 7,040 (15,867) (7,074,958) (b) Non-cash investing and financing activities There were no non-cash investing and financing activities during the reporting period. 50 | P a g e FGR ANNUAL REPORT FY2022ASX:FGR l 66 Notes to the Consolidated Financial Statements 19. Commitments The Group has no commitments which are not recorded on the statement of financial position as at 30 June 2022. (2021: Nil).. 20. Results of the parent company Current Assets Cash and cash equivalents Trade and other receivables Inventory Other current assets Total current assets Non-current assets Property, plant and equipment Right of use asset Intercompany loans receivable Inventory Investment in subsidiaries Investment Total non-current assets Total assets Liabilities Current liabilities Trade and other payables Employee liabilities Lease Liabilities Total current liabilities Non-current liabilities Lease Liabilities Total non-current liabilities Total liabilities 2022 $ 6,415,391 125,744 1,821,713 102,449 8,465,297 2,837,379 162,179 - 2,851,875 650,000 211,906 6,713,338 15,178,636 6,539,994 132,776 178,489 6,851,259 - - 6,851,259 2021 $ 6,598,192 56,368 1,152,872 687,442 8,494,874 2,630,599 342,590 - 3,528,896 650,000 220,805 7,372,890 15,867,764 6,030,222 132,190 196,213 6,358,625 163,084 163,084 6,521,709 Net Assets 8,327,377 9,346,055 Equity Issued capital Share based payments reserve Other reserves Accumulated losses Total equity Results of the parent entity: Loss for the period 102,845,906 5,931,862 - (100,450,391) 8,327,377 98,808,042 5,639,623 - (95,101,610) 9,346,055 (5,338,462) (5,338,462) (6,165,899) (6,165,899) 51 | P a g e WORLD LEADING MATERIALS TECHNOLOGY 67 Notes to the Consolidated Financial Statements 21. Events since the end of the financial year No matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in subsequent financial years. 22. Related party transactions Compensation for key management personnel The key management personnel compensation included in employee benefits expense (note 4) and share-based payments (note 17), is as follows: Short term employee benefits Share based payments Transactions with other related parties There were no loans to/from related parties in 2022 (2021: Nil) Subsidiaries 2022 $ 963,804 290,602 1,254,406 2021 $ 2,220,138 219,706 2,439,844 The consolidated financial statements include the financial statements of First Graphene Limited and the subsidiaries listed in the following table: Principal activity in the year Proportion of voting rights and shares held Class of shares held Place of Incorporation First Graphene (UK) Ltd Graphene sales and R&D 2022 100% 2021 100% Ordinary England & Wales MRL Investments (Pvt) Ltd Holding company 100% 100% Ordinary Sri Lanka MRL Graphene (Pvt) Ltd 2D Fluidics Pty Ltd Graphene Mining and exploration Development and sale of VFD, TTF and other 2D devices and materials 100% 100% Ordinary Sri Lanka 66.67% 66.67% Ordinary Australia 52 | P a g e FGR ANNUAL REPORT FY2022ASX:FGR l 68 Notes to the Consolidated Financial Statements 23. 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 - Taxation services – BDO Corporate Tax (WA) Pty Ltd 2022 $ 62,294 50,668 112,962 2021 $ 44,776 50,454 95,230 53 | P a g e WORLD LEADING MATERIALS TECHNOLOGY 69 Directors’ Declaration The Directors declare: 1. the financial statements and notes, as set out on pages 19 to 54 are in accordance with the Corporations Act 2001 and: a. b. comply with Accounting Standards and the Corporations Regulations 2001 and other mandatory professional reporting requirements; and give a true and fair view of the financial position as at 30 June 2022 and of the performance for the year ended on this date of the consolidated group; 2. the Chief Executive Officer and Chief Finance Officer have each declared: a. b. c. the financial records of the consolidated group for the financial year have been properly maintained in accordance with section 286 of the Corporations Act 2001; the financial statements, and the notes for the financial year comply with the accounting standards; and the financial statements and notes for the financial year give a true and fair view; and 3. 4. 5. in the directors’ opinion, there are reasonable grounds to believe the consolidated group will be able to pay its debts as and when they become due and payable. 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 the remuneration disclosures set out in the Directors’ Report on pages 10 to 16 as the audited Remuneration Report) comply with section 300A of the Corporations Act 2001; Signed in accordance with a resolution of the directors made pursuant to section 295 (5) of the Corporations Act 2001. On behalf of the Directors Michael Bell Managing Director 31 August 2022 54 | P a g e FGR ANNUAL REPORT FY2022ASX:FGR l 70 Independent Auditor’s Report Independent Auditor’s Report 55 | P a g e 55 | P a g e WORLD LEADING MATERIALS TECHNOLOGY 71 56 | P a g e FGR ANNUAL REPORT FY2022ASX:FGR l 7 2 57 | P a g e WORLD LEADING MATERIALS TECHNOLOGY 73 58 | P a g e FGR ANNUAL REPORT FY2022ASX:FGR l 74 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 4 August 2022. a) Distribution of Shareholdings – Fully Paid Ordinary Shares: Size of Holding 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 and over Number of Shareholders 179 1,548 1,084 2,273 485 5,569 Equity Security Fully Paid ordinary shares Options Quoted 574,319,491 0 Number of Share 34,172 5,240,324 8,527,283 79,169,689 481,348,023 574,319,491 Unquoted 0 15,000,000 59 | P a g e WORLD LEADING MATERIALS TECHNOLOGY 75 Additional Securities Exchange Information b) Top 20 Security Holders – Fully Paid Ordinary Shares (FGR) at 4 August 2022 Position Holder/Group Name 1 2 3 4 5 6 7 8 9 BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM BNP PARIBAS NOMS PTY LTD CITICORP NOMINEES PTY LIMITED TWYNAM INVESTMENTS PTY LTD GREGORACH PTY LTD HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED BUILDING ON THE ROCK LIMITED IPS Holdings DEBT MANAGEMENT ASIA CORPORATION 10 MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED 11 12 13 14 15 16 17 18 19 20 GINGA PTY LTD WILLIAM TAYLOR NOMINEES PTY LTD BERGEN GLOBAL OPPORTUNITY FUND LP MS FADILLAH BURHAN HASIBUAN MR RICHARD HOPETOUN BITCON IPS NOMINEES LIMITED HALLIDAF MANAGEMENT LIMITED MR RYAN JEHAN ROCKWOOD BNP PARIBAS NOMINEES PTY LT BISSAPP SOFTWARE PTY LTD Number of Shares 140,716,483 % 24.50% 24,281,860 4.23% 22,732,640 21,947,082 15,905,946 14,726,225 14,685,000 13,828,400 12,457,146 8,619,010 6,771,374 4,465,959 3,433,905 3,089,230 2,860,000 2,759,611 2,654,274 2,500,000 2,367,749 3.96% 3.82% 2.77% 2.56% 2.56% 2.41% 2.17% 1.50% 1.18% 0.78% 0.60% 0.54% 0.50% 0.48% 0.46% 0.44% 0.41% 2,149,496 0.37% Total 322,951,390 56.23% Total Issued Capital 574,319,491 100.00% Shareholders with less than a marketable parcel At 4 August 2022, there were 1,055 shareholders holding less than a marketable parcel of shares ($0.14 cents on this date) in the Company totalling 743,893 ordinary shares. This represented 0.4% of the issued capital. 60 | P a g e FGR ANNUAL REPORT FY2022ASX:FGR l 76 Additional Securities Exchange Information c) Licence Position as at 24 August 2022 All granted licences are in good standing and comply with the reporting requirements of the relevant licence. Licence Number IML/A/HO/9405/R/2 IML/A/HO/8416/R4 EL/225/R4 EL/228/R4 EL/321/R2 EL/262/R3 EL/325/R2 EL/326/R2 FGR Interest - % 100 100 100 100 100 100 100 100 Status Granted Granted Granted Granted Granted Granted Granted Granted General Location Central Western Central Central Central Central Central Central 61 | P a g e WORLD LEADING MATERIALS TECHNOLOGY NOTES 77 FGR ANNUAL REPORT FY2022ASX:FGR l7 8 WORLD LEADING MATERIALS TECHNOLOGY79 CORPORATE DIRECTORY Directors Share Registry Warwick Grigor (Non-Executive Chairman) Dr Andy Goodwin (Non-Executive Director) Michael Quinert (Non-Executive Director) Michael Bell (Managing Director & CEO) Company Secretary Aditya Asthana Principal Registered Office in Australia     1 Sepia Close Henderson WA 6166 +61 1300 6600 448 info@firstgraphene.net www.firstgraphene.net Stock Exchange Listings Automatic Registry Services  Level 2, 267 St Georges Terrace Perth WA 6000 All security holder correspondence to:  PO Box 2226 Strawberry Hills NSW 2021 Contact:  1300 288 664 (within Australia) +61 (0)8 9324 2099 (outside Australia)  hello@automatic.com.au  www.automatic.com.au Solicitors - Australia Steinepreis Paganin  Lawyers and Consultants Level 4, The Read Buildings 16 Milligan Stret Perth WA 6000 EMK Lawyers  Suite 1, 519 Stirling Hwy Cottesloe WA 6011 The Company is listed on the Australian Securities Exchange under the trading code FGR.  PO Box 103 Cottesloe WA 6011 The company is quoted on the Frankfurt Stock Exchange under the trading code FSE:M11. The Company is quoted on the OTCQ8 market in the USA under the trading code FGPHF. Auditor  BDO Audit (WA) Pty Ltd 38 Station Street Subiaco WA 6000 Bankers - Australia Westpac Banking Corporation  Level 6, 109 St Georges Terrace Perth WA 6000 FGR ANNUAL REPORT FY2022ASX:FGR l Contacts EUROPE Global R&D & Marketing  Graphene Engineering & Innovation Centre The University of Manchester Sackville Street, Manchester M13 9PL, United Kingdom  +44 (0)161 826 2350  info@firstgraphene.net AUSTRALIA Corporate Headquarters & Manufacturing Plant   1 Sepia Close Henderson WA 6166 +61 1300 660 448  info@firstgraphene.net FIRSTGRAPHENE.NET

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