Papyrus Australia Annual Report 2022

Plain-text annual report

Papyrus Australia Annual Report 2022 Statutory Accounts For the Year Ended 30 June 2022 P A P Y R U S A U S T R A L I A L T D - A B N 6 3 1 1 0 8 6 8 4 0 9 PAPYRUS AUSTRALIATable of Contents Letter from the Chairman Company Overview Our Purpose Our Environmental Impact Corporate Information Corporate Governance Statement Directors’ Report Auditor’s independent Declaration Consolidated Statement of Profit or Loss and Other Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Change in Equity Consolidated Statement of Cash Flows Notes to the Financial Statements Directors’ Declaration Independent Audit Report 4 7 8 9 10 11 20 34 35 36 37 38 39 67 68 2 P A P Y R U S A U S T R A L I A PAPYRUS AUSTRALIA3 P A P Y R U S A U S T R A L I A PAPYRUS AUSTRALIARenewable source, sustainable futureLetter from the Chairman On behalf of the Directors of Papyrus Australia Limited (Papyrus), I am pleased to present the Annual Report for the financial year ending 30 June 2022 (FY22). Papyrus recognises that the sovereignty of Aboriginal and Torres Strait Islander peoples over their land was never ceded, and the impact of this ongoing dispossession continues to this day. Our diverse team in Australia work in different locations on traditional lands and we recognise the traditional custodians of these lands. We pay our respects to all Aboriginal and Torres Strait Islander Elders past, present and emerging future leaders. Environmental asset In the spirit of embracing the Indigenous respect for the land and understanding global stewardship, Papyrus has developed a world- first technology which promotes a circular economy, whereby it creates valuable products from abundant waste materials that would otherwise negatively contribute to climate change and a deteriorating environment. Rapidly converging global events have caused a year of accelerated change in thinking around the globe, prompting the prioritisation of improved practices, new initiatives and innovations, which has provided an opportunity for Papyrus to demonstrate our uniqueness. Our patented, zero-waste process enables the development and distribution of sustainable alternatives to plastic, timber fibre and chemicals, which is more than just a goal or a vision – it’s our reason for being and the core element of our present and future operations internationally. Our emerging technology can contribute to a better tomorrow for diverse and emerging economies, banana growing communities and agricultural regions, and will have a significant decarbonising global impact. 4 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIA“ Our emerging technology can contribute to a better tomorrow M R E D W A R D B Y R T Operations Growth relationships We work to meet global demands for sustainable, economic, environmental and social production expectations. Our technology processes and re- purposes problematic banana plantation waste, which is abundant in banana growing areas, mostly located in developing countries and often in impoverished communities. Our Papyrus showcase operational facility in Sohag, Egypt has proven the success of our technology and in September 2021 we lodged the Australian patent application for our banana fibre production process to produce banana fibre pulp to be used for moulded food packaging products. In November 2021 we leased a fully operational moulded fibre packaging facility in Sharqiah Egypt to utilise the Sohag-produced banana fibre pulp, for the production of food packaging products. The success at Sharqiah has led to an agreement with Sohag-based Al Ahram for Plastic Manufacturing, to enable their transition from plastic packaging to banana fibre-based food packaging – the first such transition worldwide. Our Australian technology has achieved strategic growth and attracted significant attention this year, as the world grapples with the urgency of climate change. In April 2022, we entered into an agreement with the Egyptian Government, via the National Authority for Military Production (the Ministry), as part of their ‘national waste retrieval and re-purposing program’. The Cooperation Protocol and subsequent Roadmap we signed with the Ministry, will establish a national industry in Egypt to retrieve, process and repurpose banana plantation waste utilising the Papyrus technology and IP. The key structural elements establish a long- term relationship as it is estimated there is the potential for at least 40 banana waste processing factories in Egypt based on the current banana plantation areas. Following that announcement of the Papyrus agreement with the Egyptian Government, the European Bank for Reconstruction and Development (EBRD) in June 2022 agreed to provide funding support to develop a five-year business plan for the full commercialisation of the Papyrus production facilities in Egypt. This plan will underpin the expansion in Egypt which 5 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAhas an estimated 6.7 million tonnes of banana plantation waste each year and provides a model for potential expansion into Africa, which has an estimated annual 1.5 billion tonnes of banana and plantain plantation waste that could be processed using Papyrus’ technology. Another strategic partnership developed this year in Egypt is with Al Ahram for Plastics technology, Manufacturing. The Papyrus producing a regular and significant supply of banana fibre pulp, will enable Al Ahram to transition from their current plastic-based food packaging to environmentally friendly banana fibre packaging. This is the first such transition worldwide and the beginning of a new era of sustainable packaging products in Egypt in which Papyrus will proudly play a part. Our team It has been a privilege to work with my Board colleagues this past year and with our growing team across the company who each play such an integral role in our work, and I thank them for their personal contributions. In November 2021, we welcomed Ms Kerry Chikarovski AM as Executive Director – Government Relations, which is an important next step in facilitating the Company’s strategic objectives in the Australian market. We also strengthened our leadership capabilities to support our growth strategy in March 2022, with the appointment of Mr Daniel Schmidt, who joined the executive team as Chief Operating Officer to support the next stage of growth- oriented initiatives and commercialising the business. Papyrus enjoys a shared culture and vision of a just and sustainable world across our diverse and unique team that we are confident will deliver long-term, profitable growth for our shareholders. The outlook In the coming year, our key focus will be to deliver on agreements with our new business partners and deliver operational efficiencies in our current processes in Sohag and Sharqiah. We believe the continual development of long- term growth partnerships align with our goal of playing a major role in the global economy and in carbon reduction in the environment and our current opportunities certainly give us a chance to test our belief. introducing the As Egypt steps into the spotlight in November 2022 to host the United Nations Climate Conference at COP27, the Papyrus technology will be showcased as part of the Egyptian ‘Global Waste Government Initiative 50 by 2050’ concept to increase the treatment and recycling rate of banana plantation and other waste in Egypt and Africa. This initiative along with the proposed formation of a ‘global coalition for global impact’, could propel the Papyrus technology onto the world stage and we welcome the Egyptian Government’s future global initiative and cooperation. Papyrus Australia Ltd Edward Byrt Chairman 6 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPAPYRUS AUSTRALIACompany Overview Papyrus Australia has created a chemical free, mechanical process that converts banana plantation waste into cost competitive commercial quantities of banana fibre pulp, fertiliser, food packaging and other consumable products. 7 Board & Management Manufacturing Facilities Papyrus benefits from a strong Board and Executive team, with significant global experience in commercialisation, technology, R&D, compliance, investment and operations. Papyrus operates two proven commercial scale facilities in Egypt including a processing plant converting banana waste into pulp and fertiliser and a separate facility converting pulp into food packaging products using fibre moulding machines. Research & Development We conduct ongoing R&D to continually innovate the conversion process with the objective of developing new products, enhanced processes, more efficient equipment and wider applications for the banana fibre. Technology & Intellectual Property Our patents protect innovative processes, methodologies and equipment that Papyrus has developed to efficiently convert banana plantation waste into high quality consumable products. • Two patents granted • One patent pending PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPAPYRUS AUSTRALIAOur Purpose Seeking a sustainable, eco-friendly response to growing environmental uncertainty, we have developed our world-first technology to directly address the negative impacts of agri-waste, deforestation and plastic polution. 8 Vision Be the global technology leader for the conversion of banana plantation waste into consumable products. Mission Replace plastic and forest sourced food packaging products by a 100% biodegradable, renewable, circular economy product. Goals Engage banana growers, packaging manufacturers and other stakeholders in a global commercialisation of the technology. Create a global waste management supply chain across the key banana growing regions of Africa, Asia-Pacific and Latin America. PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPAPYRUS AUSTRALIAOur Purpose Our Environmental Impact The Papyrus technology alleviates three key environmental and sustainability issues. 1. 2. 3. Reducing greenhouse gas emissions Global banana farm practices leave cut down trunks, stalks and leaves to rot on the land which emit considerable methane gases as they decompose. Papyrus processes the banana waste so that they no longer rot or decompose. Replacing Plastics used in food packaging Plastic food packaging causes serious environmental and health issues. Many fibre mould manufacturers use natural stock such as bagasse or wood which are expensive and energy intensive. Papyrus pulp replaces plastics, bagasse and wood pulp in many food packaging uses. Replacing synthetic fertiliser Synthetic fertilisers made from chemicals and non- organic material leach into groundwater causing water pollution as well as having detrimental long-term impacts on soil and ecosystem health. Papyrus’ organic extracted fertiliser from banana waste replaces synthetic fertiliser. 9 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIACorporate Information This annual report covers Papyrus Australia Ltd (ABN 63 110 868 409), and its subsidiaries (the consolidated group or ‘Group’). The Group’s functional and presentation currency is Australian dollars. A description of the Group’s operations and of its principal activities is included in the review of operations and activities in the directors’ report on pages 20 to 33. The directors’ report is not part of the financial report. Directors Mr Edward Byrt (Chairman) Mr Ramy Azer (Managing Director) Mr David Attias (Non-Executive Director) Ms Kerry Chikarovski (Executive Director) Mr Pascal Gouel (Executive Director) Mr Vincent Peter Rigano (Non-Executive Director) Company Secretary Mr Vincent Peter Rigano Registered Office C/- V P Rigano & Co Pty Ltd Level 2, 2 Peel Street ADELAIDE SA 5000 Principal place of business C/- V P Rigano & Co Pty Ltd Level 2, 2 Peel Street ADELAIDE SA 5000 Share Registry Computershare Investor Services Pty Ltd Level 5, 115 Grenfell Street ADELAIDE SA 5000 Auditors BDO Audit (SA) Pty Ltd Level 7, BDO Centre 420 King William Street ADELAIDE SA 5000 1 0 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPAPYRUS AUSTRALIACorporate Governance Statement Papyrus Australia Limited (the Company) and the Board are committed to achieving and demonstrating the highest standards of corporate governance. The Board continues to review the framework and practices to ensure they meet the interests of shareholders. The Company and its controlled entities together are referred to as the Group in this statement. The Group details below the corporate governance practices in place at the end of the financial year, all of which comply with the principles and recommendations of the ASX corporate governance council unless otherwise stated. Some of the charters and policies that form the basis of the corporate governance practices of the Group may be located on the Group’s website, http://www.papyrusaustralia.com.au/ On 27 February 2019, the ASX Corporate Governance Council released the 4th Edition of its Corporate Governance Principles and Recommendations (4th Edition Recommendations). The Group reviewed its corporate governance and reporting practices under these principles and this Corporate Governance Statement reflect this. As at the date of this statement, the Group complies with the 4th Edition Recommendations (unless otherwise stated). the disclosures in 1 1 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPrinciple 1: Lay solid foundations for management and oversight The relationship between the Board and senior management is critical to the Group’s long-term success. The Directors are responsible to the shareholders for the performance of the group in both the short and the longer term and seek to balance objectives in the best interests of the group as a whole. Their focus is to enhance the interests of shareholders and other key stakeholders and to ensure the Group is properly managed. The responsibilities of the Board include: • providing strategic guidance to the Group including contributing to the development of and approving the corporate strategy; • reviewing and approving business plans, the annual budget and financial plans including available resources and major capital expenditure initiatives; • overseeing and monitoring the organisational performance and the achievement of the Group’s strategic goals and objectives; • monitoring financial performance including approval of the annual and half-year financial reports and liaison with the Company’s auditors; • appointment and performance assessment of the Managing Director (MD); • ratifying the appointment and/or removal and contributing to the performance assessment for the members of the senior management team, including the Company Secretary; • ensuring there are effective management processes in place and approving major corporate initiatives; • enhancing and protecting the reputation of the organisation; 1 2 • overseeing the operation of the Group’s system for compliance and risk management reporting to shareholders; and • ensuring appropriate resources are available to senior management. Due to the size of the Group, the day to day management of the Group’s affairs and the implementation of the corporate strategy and policy initiatives are managed by the Board. The Board has not publicly disclosed a statement of matters reserved for the Board, or the Board charter. Given the size of the Company at this time, the Board does not consider the formation of a Board charter necessary. The Board is presently responsible for evaluating Board candidates and recommending individuals for appointment to the Board. The Board evaluates prospective candidates against a range of criteria including the skills, experience, expertise and diversity that will best complement Board effectiveness at the time. The Board and undertakes screening checks prior to nominating a director for election by shareholders, and provides to shareholders all material its possession concerning the director standing for election or re-election in the explanatory notes accompanying the notice of meeting. background appropriate information in A written agreement has not been executed with each director setting out the terms of their appointment; therefore the Group does not comply with recommendation 1.3 of the Corporate Governance Principles and Recommendations. The Company believes that due to their size and nature of operations that this is acceptable, however will ensure written agreements are executed with future directors and senior executives. PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAThe Company Secretary is accountable directly to the Board, through the Chair, on all matters to do with the proper functioning of the Board. The Company Secretary is responsible for maintaining the information systems and processes that are appropriate for the Board to fulfill its role and to achieve the objective of the Company. The Company Secretary is also responsible for ensuring that the Board procedures are complied with and advising the Board on governance matters. All Directors and Committees have access to the Company Secretary for advice and services. Independent advisory services are retained by the Company Secretary at the request of the Board or Committees. formally documents The Company does not have a diversity policy, which the principles and commitment in relation to maintaining a diverse group of employees within the Company, and therefore has not complied with recommendation 1.5(b) of the Corporate Governance Principles and Recommendations. However the Board continually assesses the composition of the Board. The Company believes this to be appropriate at this time, but notes it uses diversity as a driver for staff recruitment. The total proportion of men and women on the board, (being Key in senior positions Management Personal and decision makers of the Company) and across the whole organisation is listed below: Category Board Senior Management Whole Organisation Men Women 5 2 7 1 - - The Group has not disclosed in this Corporate Governance Statement its measureable objectives for achieving gender diversity therefore has not complied with and the Corporate 1.5(a) of recommendation Governance Principles and Recommendations. Due to the size of the Company and its number of employees, the Board does not consider 1 3 it appropriate, at this time, to formally set measurable objectives for gender diversity. The Board will at least annually evaluate its performance and the performance of its committees and individual directors to determine whether or not it is functioning effectively by reference to the current best practices. The Board continually evaluates the composition of the Board, however a formal evaluation of its performance and the performance of its committees and individual directors is yet to be conducted. Due to the size of the Company, the Board has determined that this is appropriate at Company’s stage to date, however it does recognise that ongoing performance evaluation is important to ensure that the Board, committees and individual director’s remain relevant and committed to the Company’s business operations and changing business requirements. At the date of this report, the Company has not complied with recommendation 1.6(b) of the Corporate Governance Principles and Recommendations. The Group currently has three senior executives and has no formal process for evaluating the performance of its senior executives. Principle 2: Structure the board to add value The Board has not established a nomination committee, and thus not complied with recommendation 2.1(a) of the Corporate Governance Principles and Recommendations. The Directors takes ultimate responsibility in addressing board succession issues and to ensure the Board has the appropriate balance of skills, knowledge, experience, independence and diversity to enable it to discharge its duties and responsibilities effectively. The Board closely assesses diversity criteria when considering Board candidates. The Group’s desired mix of skills and competence is listed below. The Board considers its current composition adequately meets these required competencies. PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAArea Leadership Competence Business Leadership, Public Listed Company Experience 5 Business, Finance and Legal Accounting, Audit, Business Strategy, Competitive Business Analysis, Corporate Financing, Financial Literacy, Legal, Mergers and Acquisitions, Risk Management, Tax – International 2 Sustainability and Stakeholder Management 7 Community Relations, Corporate Governance, Health & Safety, Human Resources, Remuneration Engineering and Technical Engineering qualifications At the date of this statement the Board consists of the following directors: Mr Edward Byrt, Non-Executive Chairman, Mr Ramy Azer, Managing Director, Mr David Attias Non-Executive Director, Ms Kerry Chikarovski Executive Director, Mr Pascal Gouel Executive Director, Mr Vincent Rigano, Non-Executive Director/Company Secretary. The Board considers this to be an appropriate composition given the size and development of the Group at the present time and continually assesses the composition of the Board to ensure its membership maintains a combination of skills and experience that ensure the Board has the expertise to meet both its responsibilities to stakeholders and its strategic objectives. The names of directors including details of their qualifications and experience are set out in the Directors’ Report of the Annual Report and also available on the Company’s website: www. papyrusaustralia.com.au Independence The Board is conscious of the need for independence and ensures that where a conflict of interest may arise, the relevant Director(s) leave the meeting to ensure a full and frank discussion of the matter(s) under consideration by the rest of the Board. Those Directors who have interests in specific transactions or potential transactions do not receive Board papers related to those transactions or potential transactions, do not participate in any part of a Directors’ meeting which considers those transactions or potential transactions, are not involved in the decision making process in respect of those transactions or potential transactions, and are asked not to discuss those transactions or potential transactions with other Directors. Directors of the Company are considered to be independent when they are independent of management and free from any business or other relationship that could materially interfere with, or could reasonably be perceived to materially interfere with, the exercise of their unfettered and independent judgment. The Board has accepted the following definition of an independent Director: An independent director is a director who is not a member of management, is a Non-Executive Director and who: • • • is not, or has not been, employed in an executive capacity by the Group and there has been a period of at least three years between ceasing such employment and serving on the Board; is not, or has not within the last three years been, a partner, director or senior employee of a provider of material professional services to the Group; is not, or has not within the last three years been, in a material business relationship (e.g. as a supplier or customer) with the Group, or an officer or, or otherwise associated with, someone with such a relationship; 1 4 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIA• is not a substantial security holder of the entity or an officer of, or otherwise associated with, a substantial security holder of the entity; • does not have a material contractual relationship with the Group other than as a director; or • has not been a director of the entity for such a period that his or her independence may have been compromised. Mr David Attias and Mr Vincent Rigano are Non- Executive Directors and have no other material relationships with the Group other than their directorship. Mr Rigano has some shareholding in the Group, he is not a substantial security holder. As such, the Group assesses that it has two independent directors during the year as those relationships are defined. The Board considers its current structure to be an appropriate composition of the required skills and experience, given the experience of the individual Directors and the size and development of the Company at the present time. Each individual member of the Board is satisfied that whilst the Company may not comply with Recommendation 2.4, all Directors bring an independent judgment to bear on Board decisions. The Company’s Chairman, Mr Edward Byrt is not an independent director, due to his shareholding, but he does not fulfil the role of CEO. The Company therefore has not complied with recommendation 2.5 of the Corporate Governance Principles and Recommendations. The Company believes this to be appropriate at this time given the size and nature of the Company’s operations, but will continue to consider the composition of the board in the future. The Company does not maintain a formal program for inducting new Directors, however the Company Secretary ensures all new directors receive adequate information and documentation on appointment. The Company also ensures that appropriate professional development opportunities are provided to directors to ensure they develop and maintain the skills and knowledge needed to perform their role as directors effectively. Principle 3: Act lawfully, ethically and responsibly The Company has developed a Code of conduct (the Code) which has been fully endorsed by the Board and applies to all directors and employees. The Code is regularly reviewed and updated as necessary to ensure it reflects the highest standards of behaviour and professionalism and the practices necessary to maintain confidence in the group’s integrity and to take into account legal obligations and reasonable expectations of the Company’s stakeholders. In summary, the Code requires that at all times all Company personnel act with the utmost integrity, objectivity and in compliance with the letter and the spirit of the law and company policies. Principle 4: Safeguard integrity in corporate reporting Audit Committee (the Committee) The Committee consists of the following directors: Mr Vincent Rigano (Committee Chair) (Non- Executive Director), Mr Edward Byrt (Non- Executive Chairman), Mr David Attias (Non- Executive Director) and Mr Ramy Azer (Managing Director) Mr Vincent Rigano is an independent member as discussed above in Principle 4 and the Chair of the Committee. The chair of the Committee is not the chair of the Board; however, the independent members do not comprise the majority of the Committee, therefore the Group does not comply with recommendation 4.1(a) (1) of the Corporate Governance Principles and Recommendations. As three out of six Directors are members of the audit committee, and given 1 5 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAquality and independence. The performance of the external auditor is reviewed annually and applications for tender of external audit services are requested as deemed appropriate, taking into consideration assessment of performance, existing value and tender costs. BDO Audit (SA) Pty Ltd (‘BDO’) was appointed as the external auditor at the Company’s AGM in 2021. It is BDO’s policy to rotate audit engagement partners on listed companies in accordance with the requirements of the Corporations Act 2001, which is generally after five years, subject to certain exceptions. The amount of fees paid to the external auditors is provided in a note to the financial statements. It is the policy of the external auditors to provide an annual declaration of their independence to the Committee. The external auditor will attend the Annual General Meeting and be available to answer shareholder questions about the conduct of the audit and the preparation and content of the audit report. the size of the Company, the Board deems the composition of the Committee appropriate at this time. The relevant qualifications and experience of each of the members of the Committee can be found in the director profiles contained within the Company’s Annual Report and on the Company’s website at: www.papyrusaustralia. com.au. All members of the Audit Committee are financially literate and have an appropriate understanding of the industries in which the group operates. The number of times the Committee met throughout the period and the individual attendance of the members at those meetings are outlined within the Annual Report. The Audit Committee does not have a formal charter and has therefore not complied with the Corporate recommendation 4.1(3) of Governance Principles and Recommendations. The Board believes this is appropriate given the size of the Company and the composition of the Committee. The Audit Committee has authority, within the scope of its responsibilities, to seek any information it requires from any employee or external party. The Managing Director and Company Secretary have certified to the Board that the financial statements are founded on a sound system of risk management and internal control and that the system is operating efficiently and effectively in all material respects. This declaration is provided to the Board before it approves the Company’s financial statements for a financial period, and declares that in their opinion, the financial records of the Company have been properly maintained and that the financial statements comply with the appropriate accounting standards and give and true and fair view of the financial position and performance of the entity. External auditors The Company and Board Policy, is to appoint external auditors who clearly demonstrate 1 6 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPrinciple 5: Make timely and balanced disclosure Continuous disclosure The Company has a policy that all the Company Shareholders and investors have equal access to the Company’s information. The Board will ensure that all price sensitive information is disclosed to the ASX in accordance with the continuous disclosure requirements of the Corporations Act and the ASX Listing Rules. The Board strives to ensure that security holders are provided with sufficient information to assess the performance of the Group and its Directors and to made well-informed investment decisions. The Company provides all information about itself and its corporate governance via its website at: www.papyrusaustralia.com.a10u Principle 6: Respect the rights of security holders Investor relations and member participation The Company does not have a formal shareholder communication policy which is not in compliance with recommendation 6.2 of the Corporate Governance Principles and Recommendations. Shareholders are encouraged to participate at all Annual General Meetings and other General Meetings of the Company. Upon the dispatch of any notice of meeting to Shareholders, the Company Secretary shall send out material with that notice of meeting stating that all Shareholders are encouraged to participate at the meeting. The meetings shall also be conducted to allow questions and feedback to the Board and management of the Company. The Company aims to promote effective communication to and from shareholders. At this time Members of the Company cannot register to receive email notifications when an announcement is made by the Company to the ASX, which is a departure from recommendation 6.3 of the Corporate Governance Principles and Recommendations; however Members are encouraged to contact the company via their website or directly to the registered office. Members are also encouraged to register with the Company’s share register to communicate electronically. Principle 7: Recognise and manage risk The Board has identified the significant areas of potential business and legal risk of the Company. The identification, monitoring and, where appropriate, the reduction of significant risk to the Company is the responsibility of the Board. The Board has also established an Audit, Risk and Compliance Committee which addresses the risks to the Company. The Board will review and monitor the parameters under which such risks will be managed. Management accounts will be prepared and reviewed at Board meetings. Budgets will be prepared and compared against actual results. The Board is responsible for satisfying itself annually, or more frequently as required, that management has developed and implemented a sound system of risk management and internal control, a review took place during the reporting period. The Company does not have an internal audit function due to the size and nature of the Group, however the Audit, Business Risk and Compliance Committee is responsible for ensuring there are adequate policies in relation to risk management, compliance and internal control systems. They monitor the Company’s risk management by overseeing management’s actions the evaluation, management, monitoring and reporting of material operational, financial, compliance and strategic risks. In providing this oversight, the Audit Committee and the Board: in 1 7 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIA• • • • • reviews the framework and methodology for risk identification, the degree of risk the Company is willing to accept, the management of risk and the processes for auditing and evaluating the Company’s risk management system; reviews group-wide objectives in the context of the abovementioned categories of corporate risk; reviews and, where necessary, approves guidelines and policies governing the identification, assessment and management of the Company’s exposure to risk; reviews and approves the delegations of financial authorities and addresses any need to update these authorities on an annual basis, and reviews compliance with agreed policies. The Committee recommends any actions it deems appropriate to the board for its consideration. Management is responsible for designing, implementing and reporting on the adequacy of the Company’s risk management and internal control system and has to report to the Board on the effectiveness of: • • the risk management and internal control system during the year, and the company’s management of its material business risks. Securities Trading Policy The Company has established a policy concerning trading in the Company’s shares by the Company’s officers, employees and contractors and consultants to the Company while engaged in work for the Company (“Representatives”). This policy provides that it is the responsibility of each Representative to ensure they do not breach the insider trading prohibition in the Corporations Act. Breaches of the insider trading prohibition will result in disciplinary action being taken by the Company. 1 8 Management is responsible for designing, implementing and reporting on the adequacy of the Company’s risk management and internal control system and has to report to the Board on the effectiveness of: the risk management and system during the year, and internal control the company’s management of its material business risks. Representatives must also obtain written consent from the Chairman (or, in the case of the Chairman, from the Board) prior to trading in the Company’s securities. Subject to these restrictions, the policy provides that Directors, the Company Secretary and employees of, or contractors to, the Company that have access to the Company’s financial information are permitted to trade in the Company’s securities throughout the year except during the following periods: a. the period between the end of the March and September quarters and the release of the Company’s quarterly report to ASX for so long as the Company is required by the Listing Rules to lodge quarterly reports; b. the period between the end of the June quarter and the release of the Company’s annual report to ASX; and c. the period between the end of the December quarter and the release of the Company’s half year report to ASX. In exceptional circumstances the Board may waive the requirements of the Share Trading Policy to allow Representatives to trade in the shares of the Company, provided to do so would not be illegal. Directors must advise the Company Secretary of changes to their shareholdings in the Company within two business days of the change. The Securities Trading Policy can be viewed on the ASX announcements tab at www.asx.com.au. PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAThe Board has not established a Remuneration Committee, as given the size of the Group and number of employees, it is not considered that this is required at this time. The Board therefore fulfils the duties of the committee. Every employee of the Group signs a formal employment contract at the time of their appointment covering a range of matters including their duties, rights, responsibilities and any entitlements on termination. on directors’ information Further and executives’ remuneration, including principles used to determine remuneration, is set out in the directors’ report under the heading ‘Remuneration report’ included within the Annual Report. In accordance with Group policy, participants in equity-based remuneration plans are not permitted to enter into any transactions that would limit the economic risk of options or other unvested entitlements. Exposure to material economic, environmental and social sustainability risk The Company’s policy is to identify and manage potential or apparent business, economic, environmental and social sustainability risks (if appropriate). The Company at present has not identified specific material risk exposure in these categories. Review of the Company’s risk management policy is conducted at least annually and reports are continually created by management on the efficiency and effectiveness of the Company’s risk management framework and associated internal compliance and control procedures. Principle 8: Remunerate fairly and responsibly The Chairman and the Directors are entitled to draw Directors fees and receive reimbursement of reasonable expenses for attendance at meetings. The Company is required to disclose in its annual report details of remuneration to Directors. The maximum aggregate annual remuneration which may be paid to Non-Executive Directors is $300,000. This amount cannot be increased without Shareholder approval. 1 9 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPAPYRUS AUSTRALIADirectors’ Report The Directors present their report, together with the financial statements of the Group, being Papyrus Australia Ltd (the Group) and its controlled entities, for the financial year ended 30 June 2022. Edward Byrt, LLB Non-Executive Chairman Ted Byrt is a company director with over 30 years’ experience in commerce, corporate international business. He governance and is a specialist strategic advisor for major development and infrastructure projects within Australia and offshore. Ted is a business advisor and Board member of several leading organisations in South Australia. He was until March 2017 Presiding Member of the Development Assessment Commission, he is Chairman of the China Cluster, The Australian Advanced Manufacturing Centre Pty Ltd, Red Chip Photonics Pty Ltd and Arkwright Technologies Pty Ltd, he was until December 2017 a Director of Treyo Leisure & Entertainment Ltd (ASX listed) and he is a Board member of the Aboriginal Foundation of South Australia Inc. He is also a member of the Company’s Audit committee and has been a Director of the Company since 2004. Ted is not (currently or in the previous 3 years) a director of any other listed companies. 2 0 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. Directors were in office for this entire period unless otherwise stated. Mr Edward Byrt, Chairman Mr Ramy Azer, Managing Director Mr David Attias, Non-Executive Director Ms Kerry Chikarovski, Executive Director (appointed 1 November 2021) Mr Pascal Gouel, Executive Director (appointed 29 July 2022) Mr Vincent Peter Rigano, Non-Executive Director Ramy Azer, MSTC, MSc (Eng), Grad Dip Bus, Bachelor of Engineering (Mechanical) Managing Director Ramy Azer is the founder and developed the Company’s technology. He has been a regular guest lecturer and speaker on issues including sustainable and innovation. Ramy has been Managing Director since 2005 and prior to that had 10 years’ experience with Papyrus Technology Pty Ltd. development business Ramy is not (currently or in the previous 3 years) a director of any other listed companies. David Attias, MBA Banking and Finance Non-Executive Director Driven by business opportunity, David brings a solid financial, analytical and technological background to the Papyrus Team. David is a serial entrepreneur, having founded and and successfully managed hospitality businesses. e-commerce He is currently a director of L39 Capital, a non- executive director of Creative Food Australia, and has held a prior funds management position in a Blockchain Technology Investment Fund. David’s experience is ultimately a reflection PAPYRUS AUSTRALIAPAPYRUS AUSTRALIARecently, he was an Investment Committee member of an Industry Superannuation Fund, responsible for deal origination, due diligence and execution of various global private equity deals and has held a number of operational and investment roles in his career including Chief Investment Officer, General Manager, Director level roles and a number of operational roles within various industries and sectors. Pascal is not (currently or in the previous 3 years) a director of any other listed companies. Vincent Peter Rigano, BA Accounting, CPA Non-Executive Director and Company Secretary Vince is a CPA with over 25 years’ experience in corporate accounting, management consulting and company secretarial. Vince has been company secretary for a number of years for Papyrus. Vince provides management accounting and consulting services to a variety of industry sectors including start-ups. He is also a member of the Company’s Audit Committee. Vince is not (currently or in the previous 3 years) a director of any other listed companies. of his passion for property investment and portfolio management. David is not (currently or in the previous 3 years) a director of any other listed companies. Kerry Chikarovski BA Economics and BA Laws, Executive Director (Appointed on 1 November 2021) Kerry established Chikarovski & Associates – government relations firm working with organisations, not for profits and industry associations, to help them understand the processes of government and work successfully with bureaucrats and politicians at local, state and federal levels of government; advising clients across a range of industry sectors on policy and regulatory issues, as well as in relation to major projects and procurement, including banking and finance, infrastructure, construction and property, transport, energy , health, sport, and manufacturing. political experienced An and media commentator, across a variety of programs including Sky News PM Agenda, Lunch Agenda, ABCNews24, The Drum, ABC 702 and RN Drive. She is Chairperson of NSW Women’s Rugby Union; Director, Humpty Dumpty Foundation, and of Our Watch; Ambassador, for the Australian Indigenous Education Foundation; former Trustee of the Sydney Cricket & Sports Ground Trust; former NSW Leader of the Liberal Party in NSW & Leader of the Opposition. Kerry was previously a Solicitor and Lecturer in Law. Kerry is not (currently or in the previous 3 years) a director of any other listed companies. Pascal Gouel B.Ch.E, Master of Engineering management, MBA Executive Director (Appointed on 29 July 2022) Pascal is an accomplished professional with over 25 years global experience in operations, top tier management consulting and investment management including 10 years spent working in the Middle East in Egypt, Kuwait, KSA and UAE. Pascal has worked for firms such as Booz Allen, Qantas, British American Tobacco as well as number of Family Offices out of Kuwait and Germany. 2 1 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPapyrus Australia Ltd ABN 63 110 868 409 Directors’ Report 30 June 2022 Pascal Gouel B.Ch.E, Master of Engineering management, MBA (Executive Director) (Appointed on 29 July 2022) Pascal is an accomplished professional with over 25 years global experience in operations, top tier management consulting and investment management including 10 years spent working in the Middle East in Egypt, Kuwait, KSA and UAE. Pascal has worked for firms such as Booz Allen, Qantas, British American Tobacco as well as number of Family Offices out of Kuwait and Germany. Principal Activities And Significant Changes In Nature Of Activities Recently, he was an Investment Committee member of an Industry Superannuation Fund, responsible for deal origination, due diligence and execution of various global private equity deals and has held a number of operational and investment roles in his career including Chief Investment Officer, General Manager, Director level roles and a number of operational roles within various industries and sectors. The Group’s commercialisation strategy remains focused on being a technology licensing Group Pascal is not (currently or in the previous 3 years) a director of any other listed companies. assisting suitable entities to establish banana plantation waste processing factories in locations Vincent Peter Rigano, BA Accounting, CPA (Non-Executive Director and Company Secretary) worldwide where bananas are grown. Vince is a CPA with over 25 years’ experience in corporate accounting, management consulting and company secretarial. Vince has been company secretary for a number of years for Papyrus. There have been no significant changes in the nature of those activities during the year. Vince provides management accounting and consulting services to a variety of industry sectors including start-ups. He is also a member of the Company’s Audit Committee. Vince is not (currently or in the previous 3 years) a director of any other listed companies. Operating Results PRINCIPAL ACTIVITIES AND SIGNIFICANT CHANGES IN NATURE OF ACTIVITIES The loss of the consolidated group after providing for income tax amounted to $1,176,771 (2021: The Group’s commercialisation strategy remains focused on being a technology licensing Group assisting suitable entities to $90,783). establish banana veneering and panel production factories in locations worldwide where bananas are grown. There have been no signiﬁcant changes in the nature of those activities during the year. Interests In The Shares And Options Of The Company And Related Bodies Corporate The loss of the consolidated group after providing for income tax amounted to $1,176,771 (2021: $90,783). OPERATING RESULTS INTERESTS IN THE SHARES AND OPTIONS OF THE COMPANY AND RELATED BODIES CORPORATE As at the date of this report, the interests of the directors in the shares and options of Papyrus Australia Ltd were: As at the date of this report, the interests of the directors in the shares and options of Papyrus Australia Ltd were: Edward Byrt Ramy Azer David Attias Kerry Chikarovski (appointed 1 November 2021) * Pascal Gouel (appointed 29 July 2022) Vincent Peter Rigano Number of Ordinary Shares Direct interest Indirect interest Number of Options over Ordinary Shares 25,799,481 48,613,253 - 100,000 - 140,000 - 10,433,064 - - 12,830,445 642,884 - - - 4,000,000 - - * Ms Chikarovski was issued 4,000,000 unlisted options upon the appointment to the Board during the year. * Ms Chikarovski was issued 4,000,000 unlisted options upon the appointment to the Board during the year. DIVIDENDS Dividends No dividends were paid or declared since the start of the financial year. No recommendation for payment of dividends has been made. OPERATIONS REVIEW No dividends were paid or declared since the start of the financial year. No recommendation for payment of dividends has been made. The 2021/2022 financial year has seen significant development towards commercialisation of the Papyrus Australia Ltd (Papyrus) technology. This year Papyrus has focused on the following key areas: • Continued improvement and development of the suite of technologies • Refining and narrowing the range of end products to target for initial commercialisation • Developing the business commercialisation model. Operations Review The 2021/2022 financial year has seen significant development towards commercialisation of the Papyrus Australia Ltd (Papyrus) technology. This year Papyrus has focused on the following 11 key areas: • Continued improvement and development of the suite of technologies • Refining and narrowing the range of end products to target for initial commercialisation 2 2 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPAPYRUS AUSTRALIA• Developing the business commercialisation model. The Technology • Developing key customer relationships for early adoption of the technologies and development of the banana plantation waste processing industry As the world confronts the growing threat of climate change, there is an increasing demand for innovations to reduce our global impact, which continues to drive Papyrus Australia. This has built a platform for the future growth plans for Papyrus and delivered the following key results in financial year 2021/2022. Key Highlights: • Initial selection of two key end products to support the drive for commercialisation: 1. Banana plantation waste fibre for moulded food packaging 2. Liquid fertiliser (Musa) • Refining the technology, process and equipment to manufacture the two key end products identified at the Papyrus Egypt factory in Sohag and leased factory in Sharqiah Egypt. • Development of the business model with two main operating and revenue pillars: 1. Equipment manufacturing, sales and licencing 2. Products trading to connect producers to users • Secured Grant funding from the European Bank for Reconstruction and Development to develop the commercialisation plan and five-year business plan • Secured two cornerstone business partners and customers for the initial adoption of the technology outside our demonstration plant: 1. Egyptian Government 2. Al Ahram for Plastics Manufacturing (Al Ahram) Papyrus’ world-first, patented technologies displace plastic packaging by providing alternatives from banana fibre. This is done via a zero-waste process that is fully sustainable, does not consume any chemicals or water during manufacture and does not contribute to the destruction of the environment, addressing growing environmental uncertainty. The global impact of this technology on banana producing countries has the potential to address economic and social disadvantage and significantly reduce the environmental degradation from banana plantation waste. lodged In September 2021, Papyrus the Australian patent application for banana fibre production process for moulded food packaging. This Australian patent was an important first step in the Company acquiring broad-ranging international patent protection for this state- of-the-art zero waste, dewatering and fibre production process. Dewatering process The market success of the Papyrus fertiliser product ‘MUSA’, led to the registration of this trademark product in Egypt and as ‘MUZA’ in Australia. With continued high demand, trials to increase Musa production from the dewatering plant demonstrated positive results with the capability of doubling its output. Fibre production process The significant commercial value of this process was proven in a series of trials undertaken this year, in which the Company successfully produced commercial quantities of high-quality biodegradable moulded food packaging using off-the-shelf moulding machines. Future market opportunity also exists from the valuation of emissions reduction from banana tree waste stockpiles. 2 3 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPAPYRUS AUSTRALIAEngineering Development In the second half of the financial year, on the back of selecting two end products to focus on, Papyrus has been able to refine the process design to five key stages of production: 1. Shredding 2. Crushing and dewatering 3. Liquid fertiliser production 4. Refining 5. Moulding Upon completing the process design the team has also completed the proposed plant layout and equipment design for the process. Papyrus has completed the prefeasibility estimate for the sale of processing equipment from the Equipment Manufacturing arm of its business. This will form the foundation for initial equipment sales to prospective customers. Papyrus has developed the initial equipment supply chain model and commenced engagement of key suppliers for each of key components. Papyrus Egypt Joint Venture Fiber Production Demonstration Plant (Sohag, Egypt) An increase in demand for Papyrus products in Egypt earlier this year led to the upscale of the production capacity in our operations in Sohag. The upscaling along with the mechanical improvements in the dewatering of the fibre resulted in more Musa and other agri-products being produced and in the quality of the fibre and pulp produced. These important to the overall technology were improvement and has led to increased sales and revenues. improvements Fiber Moulding Plant (Sharqiah, Egypt) Increased production enabled the Papyrus’ joint venture company, Papyrus Egypt to lease 2 4 a fully operational moulded fibre packaging facility in Sharqiah Egypt from November 2021. This enabled the Company to fast-track testing and production of products such as the world first 100% banana fibre burger clam shell. The plant is producing at scale and selling moulded egg trays utilising fibre produced at the Sohag factory. It is also important to note that Papyrus Australia has increased its equity in the Egyptian Banana Fibre Company to 39.22% which gives it a direct and indirect interest in Papyrus Egypt of 69.61%. Business Development Al Ahram for Plastics Manufacturing The success at the Sharqiah facility led to the signing of a partnering agreement with the long established and successful Sohag based Egyptian corporation Al Ahram, to enable their transition from plastic packaging to banana fibre-based food packaging. This first such transition worldwide, marks the beginning of a new era of sustainable and compostable 100% banana fibre packaging products in Egypt that will propel the Papyrus technology onto the world stage. Egyptian Government Of significant note to showcase our philosophy and technology is the Co-operation Protocol and Roadmap Agreement that Papyrus has signed with the Egyptian Government via the National Authority for Military Production (The Ministry). This agreement is to establish a national industry in Egypt to process banana plantation waste, as part of the national waste retrieval and repurposing program. The Egyptian Government the implementation of Papyrus Technology will be enabled to through • build facilities to convert banana tree waste into useable products such as liquid fertiliser and refined fibre • create local employment by expanding across Egypt PAPYRUS AUSTRALIAPAPYRUS AUSTRALIA• use the agri-waste productively and reduce methane emissions, and • replace plastics and industrially produced fertilizers. This agreement will see Papyrus build its first scale production facility with a strategic partner and creating a model for future expansion. IP, the In the licence agreement with the Egyptian Government, Papyrus will supply technology and integrated control systems, specialised components and technical support. The Ministry will operate the facility under commercial agreement and Papyrus will be the sole distributor of the output of the factories. It is estimated there is the potential for up to 40 banana waste processing factories in Egypt based on the current area of banana plantations. This project will substantially benefit Papyrus’ Egyptian business and help propel this innovative Australian technology onto the world stage, as it promotes a circular economy and produces valuable product from waste material with a process that has no negative environmental impact. Grant funding from the European Bank for Reconstruction and Development A substantial opportunity for Papyrus arose at the end of the financial year, when the European Bank for Reconstruction and Development (EBRD) agreed to provide funding support for the development of a five-year business plan. This business plan will address the full commercialisation of the Papyrus production facility in Sohag, Egypt and the anticipated expansion of Papyrus in Egypt. The EBRD funded business plan which will look at key factors including growth over the next five years, the profitable utilisation of production facilities in Egypt, employment in local communities and the reduction of agricultural waste and its negative impact on the surrounding environment. This plan will underpin the Company’s expansion in Egypt which produces an estimated 6.7 2 5 million tonnes of banana plantation waste each year. It also provides a model for expansion into Africa, which has an estimated annual 1.5 billion tonnes of banana plantation* waste that could be processed using the Papyrus technology. Building Capability to facilitate In November 2021 Papyrus appointed Kerry Chikarovski AM as Executive Director – Government Relations the Company’s strategic objectives in the Australian market. As a former MP and leader of the New South Wales Liberal Party from 1999 to 2002, Ms Chikarovski brings highly valuable firsthand government knowledge and extensive community and stakeholder relations expertise to the Company. In January 2022 Daniel Schmidt joined the Papyrus executive team to support the next stage of commercialising the business. Daniel brings over 15 years’ experience in senior roles in the mining and metals industry, specifically focused on the management of processing operations, supply chains and procurement. In his role as Chief Operating Officer, Daniel will draw upon his experience in project management and delivering organisational change to support the commercialisation of Papyrus. Outlook The selection of two key end products and securing the Egyptian Government and Al Ahram as initial adopters of the technology has tightened the focus for the business going forward and established a framework to commence the initial commercialisation in line with the business model. The proposed sale of fibre processing equipment and implementing the business model with the Egyptian Government provides a critical platform and launchpad for sales of the fibre processing technology in the region and more significantly, into the African market, where 60% of the global banana and plantain plantations* exist. The establishment of a dedicated banana waste fibre moulding line with Al Ahram producing finished moulded food packaging will also be a significant step to realising commercialisation PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAof the technology. The successful establishment of these factories with our partners this coming year is the final step in realising the value of the technology at a commercial scale. technology in response to market demand. We are continuing to invest in growth to achieve greater outcomes for economies, communities, and our environment. Papyrus continues to receive strong interest in its technology from many banana growing regions around the world including Australia, Philippines, Thailand, Indonesia, Africa and South America. With approximately 10 million hectares of banana plantation worldwide producing an estimated 2.2 billion tonnes of agri-waste annually that is mostly unutilised and readily accessible, there is a significant future potential to license and sell the Papyrus technology to growing regions throughout the world. In November 2021, Ms Kerry Chikarovski was appointed as an Executive Director – Government Relations. The Non-Executive Directors continued to forego their remuneration during the year. The Annual General Meeting of the Company was held on 26 November 2021, where the Chairman and Managing Director gave a comprehensive review of Company’s operations and strategic activities including the introduction of UPE director Siew Hong Koh and the team from L39 Capital. In summary, Papyrus has achieved a significant shift in capability, capacity, and operational performance this year and with a strong and energetic commitment to purpose, is scaling up the commercialisation of Papyrus 2 6 Significant Changes In The State Of Affairs There have been no significant changes in the state of affairs of the Company during the year ended 30 June 2022. Likely Developments And Expected Results The Company continues to investigate new opportunities for approval by the Company’s shareholders and the ASX if required. The outcome of these investigations cannot be predicted at this time. The Group may require further capital to sustain its activities. Environmental Regulation The Group’s operations are not subject to any significant environmental regulations under either Commonwealth or State legislation. The Group however believes that it has adequate systems in place for the management of any future environmental regulations. PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPAPYRUS AUSTRALIAMatters Subsequent To The End Of The Financial Year Papyrus Australia Ltd ABN 63 110 868 409 On 29 July 2022 the Company appointed Mr. Pascal Gouel as Executive Director – International Directors’ Report Business Development. 30 June 2022 There have been no other significant matters subsequent to the end of the financial year. MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR On 29 July 2022 the Company appointed Mr. Pascal Gouel as Executive Director – International Business Development. Shares under option There have been no other significant matters subsequent to the end of the financial year. At the date of this report, the following options to acquire ordinary shares in the Company were Shares under option on issue: At the date of this report, the following options to acquire ordinary shares in the Company were on issue: Issue Date Expiry Date Exercise Price Vesting date 11/11/2020 17/11/2020 4/05/2021 4/05/2021 30/08/2021 4/11/2021 29/03/2022 1/04/2022 11/11/2022 17/05/2022 4/05/2026 4/05/2026 30/08/2022 4/11/2022 29/03/2023 1/04/2025 $0.05 $0.015 $0.20 $0.40 $0.06 $0.10 $0.10 $0.10 4/05/2023 Net Issued /(Exercised or expired) during year Number under option at the date of this report 750,000 750,000 (41,666,667) 250,000 250,000 (20,000,000) 4,000,000 1,000,000 250,000 - 250,000 250,000 - 4,000,000 1,000,000 250,000 Shares issued as a result of the exercise of options Shares issued as a result of the exercise of options As a result of the exercise of options by L39, 41,666,667 shares were issued on various dates during the year ended 30 June 2022 (23,000,000 options were exercised during 2021 financial year). As a result of the exercise of options by L39, 41,666,667 shares were issued on various dates during Options Expired the year ended 30 June 2022 (23,000,000 options were exercised during 2021 financial year). 20,000,000 options expired on the 30 August 2022. New options issued Options Expired On 30 August 2021 the Company entered into a deed with Sydney based BPE Investments Pty Ltd and Union Pacific Investments Pty Ltd to promote the Company to potential users of its environmentally friendly technology, improve the Company’s opportunities and profile in Australia and internationally and increase value to shareholders. As a result of the deed 20,000,000 options expired on the 30 August 2022. execution, the Company issued 20,000,000 unlisted options at a purchase price of $0.0005, exercisable at $0.06 per option, and expiring in 12 months from the date of issue, these options subsequently expired on the 30 August 2022. 4,000,000 unlisted options exercisable at $0.10 per option and with an expiry date of one year from date of issue, being 4 November 2022 were issued on the appointment of Kerry Chikarovski as a director. 1,000,000 unlisted options exercisable at $0.10 per option and with an expiry date of one year from date of issue, being 29 March 2023 were issued under an independent services deed executed with Sydney-based Markson Sparks Pty Ltd (“MS”) to assist the Company with its promotional activities. 250,000 unlisted options exercisable at $0.10 per option and with an expiry date of three years from date of issue, being 1 April 2025 were issued, for outstanding services rendered by the general manager of Papyrus Egypt. Option holders do not have any rights to participate in any issues of shares or other interests of the company or any other entity. There have been no other options granted over unissued shares or interests of any control entity within the Group during or since the end of the reporting period. For details of options issued to directors and executives as remuneration, refer to the remuneration report. INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS To the extent permitted by law, the Company has not indemnified (un-insured) each director and the secretary of the Company. The liabilities insured include costs and expenses that may be incurred in defending civil or criminal proceedings (that may be brought) against the officers in their capacity as officers of the Company or a related body, and any other payments arising from liabilities incurred by the officers in connection with such proceedings, other than where such liabilities arise out of conduct involving a willful breach of duty by the officers or the improper use by the officers of their position or of information to gain advantage for themselves or someone else or to cause detriment to the Company. 2 7 15 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPAPYRUS AUSTRALIA Indemnification And Insurance Of Directors And Officers To the extent permitted by law, the Company has not indemnified (un-insured) each director and the secretary of the Company. The liabilities insured include costs and expenses that may be incurred in defending civil or criminal proceedings (that may be brought) against the officers in their capacity as officers of the Company or a related body, and any other payments arising from liabilities incurred by the officers in connection with such proceedings, other than where such liabilities arise out of conduct involving a willful breach of duty by the officers or the improper use by the officers of their position or of information to gain advantage for themselves or someone else or to cause detriment to the Company. New options issued On 30 August 2021 the Company entered into a deed with Sydney based BPE Investments Pty Ltd and Union Pacific Investments Pty Ltd to promote the Company to potential users of its environmentally friendly technology, improve the Company’s opportunities and profile in Australia and increase value to shareholders. As a result of the deed execution, the Company issued 20,000,000 unlisted options at a purchase price of $0.0005, exercisable at $0.06 per option, and expiring in 12 months from the date of issue, these options subsequently expired on the 30 August 2022. internationally and 4,000,000 unlisted options exercisable at $0.10 per option and with an expiry date of one year from date of issue, being 4 November 2022 were issued on the appointment of Kerry Chikarovski as a director. 1,000,000 unlisted options exercisable at $0.10 per option and with an expiry date of one year from date of issue, being 29 March 2023 were issued under an independent services deed executed with Sydney-based Markson Sparks Pty Ltd (“MS”) to assist the Company with its promotional activities. 250,000 unlisted options exercisable at $0.10 per option and with an expiry date of three years from date of issue, being 1 April 2025 were issued, for outstanding services rendered by the general manager of Papyrus Egypt. Option holders do not have any rights to participate in any issues of shares or other interests of the company or any other entity. There have been no other options granted over unissued shares or interests of any control entity within the Group during or since the end of the reporting period. For details of options issued to directors and executives as remuneration, refer to the remuneration report. 2 8 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPAPYRUS AUSTRALIARemuneration Report - Audited report outlines remuneration This arrangements in place for key management personnel of Papyrus Australia Ltd. the Remuneration philosophy The Board is responsible for determining remuneration policies applicable to Directors and senior executives of the entity. The broad policy is to ensure that remuneration properly reflects the individuals’ duties and responsibilities and is retaining and competitive motivating people with appropriate skills and experience. At the time of determining remuneration, consideration is given by the Board to the Group’s financial performance. in attracting, remuneration that Employment contracts The employment conditions of the Managing Director, Mr Ramy Azer, are formalised in a one year service contract between his related entity Ramy Azer (an incorporated Egyptian entity BRN 4294) and Papyrus Australia Ltd and his fee is $250,000 per annum (exclusive of GST) and a displacement allowance of $50,000 payable by the joint venture company Papyrus Egypt. The Company may terminate the services contract without cause by providing one (1) month’s written notice or making payment in lieu of notice, based on the annual fee. Termination payments are generally not payable on resignation or dismissal for serious misconduct. In the instance of serious misconduct the Company can terminate employment at any time. It is noted that this contract expired on the 30 November 2021 and was extended for a further 12 months period to November 2022. The Company has employment contracts with the following: • Mr Daniel Schmidt, Chief Operations Officer with a remuneration of $205,000 per annum plus superannuation. The contract has no fixed term with each party can terminate the contract with 3 months’ notice in writing. 2 9 • Mr Peter Rostig, Manager – Engineering & Business Development with a remuneration of $135,000 per annum plus superannuation. The contract has no fixed term with each party can terminate the contract with 3 months’ notice in writing. The Company has consultancy contracts with the following executive directors: • On the 1st November 2021, the Company entered into a services deed with Chikarovski and Associates to provide services with a remuneration of $30,000 per annum. The deed had no fixed term and may be terminated by either party with 30 days’ notice in writing. Key management personnel remuneration and equity holdings The Board currently determines the nature and amount of remuneration for key management personnel of the Group. The policy is to align key management personnel objectives with shareholder and business objectives by providing a fixed remuneration component and offering specific long-term incentives. The non-executive directors and other executives receive a superannuation guarantee contribution required by the government, which is currently 10.5%, and do not receive any other retirement benefits. Some individuals, however, may choose to sacrifice part of their salary to increase payments towards superannuation. All remuneration paid to key management personnel is expensed as incurred. Executives are also entitled to participate in the Group share option scheme. Options are valued using the Black-Scholes methodology. The Board policy is to remunerate non- executive Directors at market rates based on comparable companies for time, commitment and responsibilities. The Board determines payments to non-executive directors and reviews their remuneration annually, based on PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAmarket practice, duties and accountability. Independent external advice is sought when required. with a vote total of more than 95%. The Company did not receive any specific feedback at the AGM on its remuneration report. Non-executive Directors’ fees are determined within an aggregate director’s fee pool limit, which is periodically recommended for approval by shareholders. The pool does not include the remuneration payable to the Managing Director Mr Ramy Azer. The maximum currently stands at $300,000 per annum and was approved by shareholders prior to the Company listing in April 2005. It should be noted that other than the Managing Director, no other directors have received any remuneration during the 2022 financial year. Use Of Remuneration Consultants recommendations made During the financial year, there were no in remuneration relation to key management personnel for the Company by any remuneration consultants. The Company did not use any remuneration consultation during financial year 2022. Voting And Comments Made At The Company’s 2021 Annual General Meeting Papyrus Australia Ltd motion in relation to the approval of 2021 remuneration report passed Details Of Remuneration Amounts of remuneration Detail of the remuneration of key management personnel of the Group are set out in the following tables. They key management personnel of the Group consisted of the following directors Papyrus Australia Limited: Mr Edward Byrt, Chairman Mr Ramy Azer, Managing Director Mr David Attias, Non-Executive Director Ms Kerry Chikarovski Executive Director (Appointed 1 November 2021) Mr Vincent Peter Rigano, Non-Executive Director And the following person: Mr Daniel Schmidt (Appointed 6 January 2022) – General Manager Mr Peter Rostig – Manager – Engineering & Business Development There has been no change to the key management personnel of the group since the end of the reporting period. 3 0 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPapyrus Australia Ltd ABN 63 110 868 409 Directors’ Report 30 June 2022 REMUNERATION REPORT CONTINUED- AUDITED VOTING AND COMMENTS MADE AT THE COMPANY’S 2021 ANNUAL GENERAL MEETING Papyrus Australia Ltd motion in relation to the approval of 2021 remuneration report passed with a vote total of more than 95%. The Company did not receive any specific feedback at the AGM on its remuneration report. DETAILS OF REMUNERATION Amounts of remuneration Detail of the remuneration of key management personnel of the Group are set out in the following tables. They key management personnel of the Group consisted of the following directors Papyrus Australia Limited: Mr Edward Byrt, Chairman Mr Ramy Azer, Managing Director Mr David Attias, Non-Executive Director Ms Kerry Chikarovski Executive Director (Appointed 1 November 2021) Mr Vincent Peter Rigano, Non-Executive Director And the following person: Mr Daniel Schmidt (Appointed 6 January 2022) – General Manager Mr Peter Rostig – Manager – Engineering & Business Development There has been no change to the key management personnel of the group since the end of the reporting period. Table 1: Directors’ remuneration for the year ended 30 June 2022 and 30 June 2021 Table 1: Directors’ remuneration for the year ended 30 June 2022 and 30 June 2021 Primary Benefit Post-Employment Salary & Fees $ Superannuation $ Share-based Payments Options $ Primary Benefit $ Mr Ramy Azer 2022(*) 2021 Mr Edward Byrt 2022 2021 Mr David Attias 2022 2021 Ms Kerry Chikarovski (appointed 1 November 2021) 2022(**) 2021 Mr Vincent Rigano 2022 2021 Total 2022 2021 250,000 145,833 - - - - 22,000 - - - 272,000 145,833 - - - - - - - - - - - - - - - - - - 250,000 145,833 - - - - 64,832 22,000 - - - - - - 64,832 - 272,000 145,833 Papyrus Australia Ltd (*) Represents remuneration to Mr Azer under the service contract discussed above from July 2021. The remuneration above (*) Represents remuneration to Mr Azer under the service contract discussed above from July 2021. The remuneration above ABN 63 110 868 409 doesn’t included benefits paid to Mr Azer by Papyrus Egypt, the entity that the Company has joint control over and accounts for doesn’t included benefits paid to Mr Azer by Papyrus Egypt, the entity that the Company has joint control over and accounts for using equity method. These benefits are displacement allowance and an amount of $50,000 and $29,167 were payable to Mr Azer Directors’ Report using equity method. These benefits are displacement allowance and an amount of $50,000 and $29,167 were payable to Mr for the year ended 30 June 2022 and 30 June 2021 respectively. Azer for the year ended 30 June 2022 and 30 June 2021 respectively. 30 June 2022 (**) Represents the payments made to Ms Chikarovski under the consultancy contract as discussed above and the incentive package remunerated to Ms Chikarovski upon her appointment as Director of the Company in November 2021, over which (**) Represents the payments made to Ms Chikarovski under the consultancy contract as discussed above and the incentive REMUNERATION REPORT CONTINUED- AUDITED shareholder approval will be obtained at 2022 AGM. package remunerated to Ms Chikarovski upon her appointment DETAILS OF REMUNERATION CONTINUED 17 Table 2: Remuneration of key management personnel for the year ended 30 June 2022 and 30 June 2021 Table 2: Remuneration of key management personnel for the year ended 30 June 2022 and 30 June 2021 Primary Benefit Post-Employment Salary & Fees $ Superannuation $ Share-based Payments Options $ Primary Benefit $ Mr Peter Rostig 2022 (****) 2021 Mr Daniel Schmidt (appointed January 2022) 2022(***) 2021 Total 2022 2021 108,555 17,318 41,394 - 149,949 17,318 9,163 1,645 4,139 - 13,302 1,645 13,155 2,192 - - 13,155 2,192 117,718 21,155 45,533 - 163,251 18,963 (***) Represents remuneration to Mr Schmidt under the service contract discussed above. Mr Schmidt commenced on a as needs (***) Represents remuneration to Mr Schmidt under the service contract discussed above. Mr Schmidt commenced on a as bases from January 2022 and commenced fulltime employment during June 2022. needs bases from January 2022 and commenced fulltime employment during June 2022. (****) Mr Rostig under the service contract discussed above, a sign-on incentive was provided to Mr Rostig as part of his appointment with the Company. 500,000 unlisted options under a contract of employment were issued 4 May 2021, of these 250,000 vested on 4 May 2022 have an exercise price of $0.20 per option and expire on 4 May 2026. The remaining 250,000 options will vest on 4 May 2023 if Mr Rostig remains in employment with the Company, have an exercise price of $0.40 per option and an expiry date of 4 May 2026. 3 1 All remuneration for both 2022 and 2021 for key management personnel was fixed and not linked to performance. Options holdings of Directors and Key Management Personnel Balance at 1 July 2021 Granted as remuneration Other Changes - Exercised Other Changes - Issued Balance at 30 Vested and June 2022 Exercisable at 30 June 2022 K Chikarovski (*) P Rostig (**) Total - 4,000,000 500,000 500,000 - 4,000,000 - - - - - - 4,000,000 4,000,000 500,000 250,000 4,500,000 4,2500,000 (*) 4,000,000 unlisted options exercisable at $0.10 per option were issued to Ms Chikarovski with an expiry date of one year from the date of issue, being 4 November 2021 shareholder approval for the issue will be obtained at the 2022 AGM. The options had a fair value of$64,832 at the grant date, determined using Black Scholes valuation model. (**) 500,000 unlisted options under a contract of employment were issued 4 May 2021, of these 250,000 vested on 4 May 2022 as Mr Rostig remained in employment with the Company at that time, have an exercise price of $0.20 per option and expire on 4 May 2026. The remaining 250,000 options will vest on 4 May 2023 if Mr Rostig remains in employment with the Company, have an exercise price of $0.40 per option and an expiry date of 4 May 2026. The options had a fair value of $8,868 and $8,573 at the grant date, determined using Black Scholes valuation model respectively. 18 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIA Papyrus Australia Ltd ABN 63 110 868 409 Directors’ Report 30 June 2022 REMUNERATION REPORT CONTINUED- AUDITED DETAILS OF REMUNERATION CONTINUED Table 2: Remuneration of key management personnel for the year ended 30 June 2022 and 30 June 2021 Primary Benefit Post-Employment Primary Benefit Salary & Fees Superannuation $ $ Share-based Payments Options $ $ Mr Peter Rostig 2022 (****) 2021 Mr Daniel Schmidt (appointed January 2022) 2022(***) 2021 Total 2022 2021 108,555 17,318 41,394 - 149,949 17,318 9,163 1,645 4,139 - 13,302 1,645 13,155 2,192 - - 13,155 2,192 117,718 21,155 45,533 - 163,251 18,963 (****) Mr Rostig under the service contract discussed above, a sign-on incentive was provided to Mr Rostig as part of his (***) Represents remuneration to Mr Schmidt under the service contract discussed above. Mr Schmidt commenced on a as needs appointment with the Company. 500,000 unlisted options under a contract of employment were issued 4 May 2021, of these bases from January 2022 and commenced fulltime employment during June 2022. 250,000 vested on 4 May 2022 have an exercise price of $0.20 per option and expire on 4 May 2026. The remaining 250,000 (****) Mr Rostig under the service contract discussed above, a sign-on incentive was provided to Mr Rostig as part of his options will vest on 4 May 2023 if Mr Rostig remains in employment with the Company, have an exercise price of $0.40 per appointment with the Company. 500,000 unlisted options under a contract of employment were issued 4 May 2021, of these option and an expiry date of 4 May 2026. 250,000 vested on 4 May 2022 have an exercise price of $0.20 per option and expire on 4 May 2026. The remaining 250,000 options will vest on 4 May 2023 if Mr Rostig remains in employment with the Company, have an exercise price of $0.40 per All remuneration for both 2022 and 2021 for key management personnel was fixed and not option and an expiry date of 4 May 2026. linked to performance. All remuneration for both 2022 and 2021 for key management personnel was fixed and not linked to performance. Options holdings of Directors and Key Management Personnel Options holdings of Directors and Key Management Personnel Balance at 1 July 2021 Granted as remuneration Other Changes - Exercised Other Changes - Issued Balance at 30 June 2022 Vested and Exercisable at 30 June 2022 K Chikarovski (*) P Rostig (**) Total - 4,000,000 500,000 500,000 - 4,000,000 - - - - - - 4,000,000 4,000,000 500,000 250,000 4,500,000 4,2500,000 (*) 4,000,000 unlisted options exercisable at $0.10 per option were issued to Ms Chikarovski with an expiry date of one year from (*) 4,000,000 unlisted options exercisable at $0.10 per option were issued to Ms Chikarovski with an expiry date of one year Papyrus Australia Ltd the date of issue, being 4 November 2021 shareholder approval for the issue will be obtained at the 2022 AGM. The options had from the date of issue, being 4 November 2021 shareholder approval for the issue will be obtained at the 2022 AGM. The options a fair value of$64,832 at the grant date, determined using Black Scholes valuation model. had a fair value of$64,832 at the grant date, determined using Black Scholes valuation model. ABN 63 110 868 409 Directors’ Report (**) 500,000 unlisted options under a contract of employment were issued 4 May 2021, of these 250,000 vested on 4 May 2022 (**) 500,000 unlisted options under a contract of employment were issued 4 May 2021, of these 250,000 vested on 4 May 2022 as Mr Rostig remained in employment with the Company at that time, have an exercise price of $0.20 per option and expire on 4 30 June 2022 as Mr Rostig remained in employment with the Company at that time, have an exercise price of $0.20 per option and expire on Papyrus Australia Ltd May 2026. The remaining 250,000 options will vest on 4 May 2023 if Mr Rostig remains in employment with the Company, have 4 May 2026. The remaining 250,000 options will vest on 4 May 2023 if Mr Rostig remains in employment with the Company, have an exercise price of $0.40 per option and an expiry date of 4 May 2026. The options had a fair value of $8,868 and $8,573 at the ABN 63 110 868 409 an exercise price of $0.40 per option and an expiry date of 4 May 2026. The options had a fair value of $8,868 and $8,573 at the REMUNERATION REPORT CONTINUED - AUDITED grant date, determined using Black Scholes valuation model respectively. grant date, determined using Black Scholes valuation model respectively. Directors’ Report DETAILS OF REMUNERATION CONTINUED 30 June 2022 Key Management Personnel (Direct) Shareholdings Key Management Personnel (Direct) Shareholdings REMUNERATION REPORT CONTINUED - AUDITED Balance at 1 July 2021 Other Changes Balance at 30 June 2022 DETAILS OF REMUNERATION CONTINUED R Azer 48,613,253 Key Management Personnel (Direct) Shareholdings E Byrt 25,779,481 Balance at 1 July 2021 Other Changes Balance at 30 June 2022 D Attias K Chikarovski (*) R Azer V Rigano E Byrt Total D Attias - - 48,613,253 12,830,445 25,779,481 87,223,179 - 18 - - - 100,000 - - - 100,000 - 48,613,253 25,779,481 - 100,000 48,613,253 12,830,445 25,779,481 87,323,179 - * During the year Mrs Chikarovski purchased 100,000 shares on market prior to joining the board. * During the year Mrs Chikarovski purchased 100,000 shares on market prior to joining the board. K Chikarovski (*) 100,000 - 100,000 - 12,830,445 87,223,179 V Rigano Other transactions with key management personnel Other transactions with key management personnel Total The Company has an unsecured loan representing a draw down facility provided by Talisker (SA) Pty Ltd (“Talisker”), an entity The Company has an unsecured loan representing a draw down facility provided by Talisker (SA) Pty associated with the Company’s Managing Director, Mr Ramy Azer. The loan is unsecured and repayable from future revenues or * During the year Mrs Chikarovski purchased 100,000 shares on market prior to joining the board. proceeds from future equity raisings, subject to not materially prejudicing the ability of the Company to repay its creditors. The Ltd (“Talisker”), an entity associated with the Company’s Managing Director, Mr Ramy Azer. The loan balance of the loan at 30 June 2022 is $0 (2021: $0). As at 30 June 2022, the accrued interest of $61,700 associated with the Other transactions with key management personnel is unsecured and repayable from future revenues or proceeds from future equity raisings, subject to loan historically is still outstanding. The interest was agreed between the parties to be paid only when the group makes sufficient not materially prejudicing the ability of the Company to repay its creditors. The balance of the loan at profit. This interest portion was presented in the financial statement of the Group within the ‘Trade and other payables’ a current The Company has an unsecured loan representing a draw down facility provided by Talisker (SA) Pty Ltd (“Talisker”), an entity liability. associated with the Company’s Managing Director, Mr Ramy Azer. The loan is unsecured and repayable from future revenues or 30 June 2022 is $0 (2021: $0). As at 30 June 2022, the accrued interest of $61,700 associated with the proceeds from future equity raisings, subject to not materially prejudicing the ability of the Company to repay its creditors. The loan historically is still outstanding. The interest was agreed between the parties to be paid only when The Company had unsecured payable owing to with V Rigano. The payable was short-term in nature and no interest is charged balance of the loan at 30 June 2022 is $0 (2021: $0). As at 30 June 2022, the accrued interest of $61,700 associated with the on this. The balance of the loan is as follows: the group makes sufficient profit. This interest portion was presented in the financial statement of the loan historically is still outstanding. The interest was agreed between the parties to be paid only when the group makes sufficient profit. This interest portion was presented in the financial statement of the Group within the ‘Trade and other payables’ a current Group within the ‘Trade and other payables’ a current liability. liability. Balance at 30 June 2021 Balance at 30 June 2022 87,323,179 12,830,445 100,000 V Rigano The Company had unsecured payable owing to with V Rigano. The payable was short-term in nature and The Company had unsecured payable owing to with V Rigano. The payable was short-term in nature and no interest is charged no interest is charged on this. The balance of the loan is as follows: on this. The balance of the loan is as follows: END OF AUDITED REMUNERATION REPORT. 1,033 - V Rigano - 1,033 Balance at 30 June 2021 Balance at 30 June 2022 END OF AUDITED REMUNERATION REPORT. 3 2 19 19 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPapyrus Australia Ltd ABN 63 110 868 409 Directors’ Report Directors’ Meetings 30 June 2022 DIRECTORS’ MEETINGS The number of meetings of directors (including meetings of committees of directors) held during The number of meetings of directors (including meetings of committees of directors) held during the year and the number of the year and the number of meetings attended by each director were as follows: meetings attended by each director were as follows: Number of meetings held Number of meetings attended: Mr Edward Byrt Mr Ramy Azer Mr David Attias Mrs Kerry Chikarovski Mr Vincent Rigano Directors' Meetings 14 Number eligible to attend Number attended Audit Committee 2 Number eligible to attend Number attended 14 14 14 10 14 14 14 14 8 14 2 2 2 - 2 2 - 2 - 2 Members acting on the audit committee of the Board are: Members acting on the audit committee of the Board are: Vincent Rigano Non-executive director Edward Byrt Non-executive director Vincent Rigano Non-executive director David Attias Non-executive director Managing director Ramy Azer Edward Byrt Non-executive director David Attias Non-executive director PROCEEDINGS ON BEHALF OF THE COMPANY Ramy Azer Managing director The Group was not a party to any proceedings during the year. Proceedings On Behalf Of The Company NON AUDIT SERVICES BDO Audit (SA) Pty Ltd, in its capacity as auditor for Papyrus Australia Ltd, has not provided any non-audit services throughout The Group was not a party to any proceedings during the year. the reporting period. Non Audit Services AUDITOR’S INDEPENDENCE DECLARATION The auditor’s independence declaration for the year ended 30 June 2022 as required under section 307C of the Corporations Act BDO Audit (SA) Pty Ltd, in its capacity as auditor for Papyrus Australia Ltd, has not provided any 2001 has been received and can be found on page 21. non-audit services throughout the reporting period. Signed in accordance with a resolution of the directors. Auditor’s Independence Declaration The auditor’s independence declaration for the year ended 30 June 2022 as required under Mr Ramy Azer section 307C of the Corporations Act 2001 has been received and can be found on page 33. Managing Director Dated this 26th day of September 2022 Signed in accordance with a resolution of the directors. Mr Ramy Azer Managing Director Dated this 26th day of September 2022 20 3 3 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPapyrus Australia Ltd ABN 63 110 868 409 Directors’ Report 30 June 2022 20 DIRECTORS’ MEETINGS The number of meetings of directors (including meetings of committees of directors) held during the year and the number of meetings attended by each director were as follows: Directors' Meetings Audit Committee Number of meetings held 14 2 Number of meetings attended: Number eligible to attend Number attended Number eligible to attend Number attended Mr Edward Byrt 14 14 2 2 Mr Ramy Azer 14 14 2 - Mr David Attias 14 14 2 2 Mrs Kerry Chikarovski 10 8 - - Mr Vincent Rigano 14 14 2 2 Members acting on the audit committee of the Board are: Vincent Rigano Non-executive director Edward Byrt Non-executive director David Attias Non-executive director Ramy Azer Managing director PROCEEDINGS ON BEHALF OF THE COMPANY The Group was not a party to any proceedings during the year. NON AUDIT SERVICES BDO Audit (SA) Pty Ltd, in its capacity as auditor for Papyrus Australia Ltd, has not provided any non-audit services throughout the reporting period. AUDITOR’S INDEPENDENCE DECLARATION The auditor’s independence declaration for the year ended 30 June 2022 as required under section 307C of the Corporations Act 2001 has been received and can be found on page 21. Signed in accordance with a resolution of the directors. Mr Ramy Azer Managing Director Dated this 26th day of September 2022 Tel: +61 8 7324 6000 Fax: +61 8 7324 6111 www.bdo.com.au BDO Centre Level 7, 420 King William Street Adelaide SA 5000 GPO Box 2018 Adelaide SA 5001 Australia DECLARATION OF INDEPENDENCE BY ANDREW TICKLE TO THE DIRECTORS OF PAPYRUS AUSTRALIA LIMITED As lead auditor of Papyrus Australia Limited for the year ended 30 June 2022, I declare that, to the best of my knowledge and belief, there have been: 1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and 2. No contraventions of any applicable code of professional conduct in relation to the audit. This declaration is in respect of Papyrus Australia Limited and the entities it controlled during the period. Andrew Tickle Director BDO Audit (SA) Pty Ltd Adelaide, 26 September 2022 BDO Audit (SA) Pty Ltd ABN 33 161 379 086 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (SA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. 21 3 4 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIA Financial Report Papyrus Australia Ltd Consolidated Statement of Profit or Loss and Other ABN 63 110 868 409 Comprehensive Income For the Year Ended 30 June 2022 Consolidated Statement of Profit or Loss and Other Comprehensive Income For the Year Ended 30 June 2022 Other income Share based payment expense Consultancy expenses / Salaries and Wages Depreciation expense Employee benefits expenses Other expenses Share of net profits of associate and joint venture Loss before income tax benefit Income tax benefit Loss for the period Other compressive income Total comprehensive income for the year Loss attributable to the parent Loss for the year Total comprehensive income attributable to the parent Total comprehensive income attributable to members of the parent entity Earnings per share: Basic earnings per share Diluted earnings per share Note Consolidated Group 30 June 2022 $ 30 June 2021 $ 2 (a) - - (97,685) (36,856) (391,941) (149,483) (212) - 2 (b) 2 (c) (163,251) (18,963) (276,346) (311,680) (247,336) (1,176,771) - 426,199 (90,783) - (1,176,771) (90,783) - (1,176,771) (1,176,771) (1,176,771) (1,176,771) (1,176,771) - (90,783) (90,783) (90,783) (90,783) (90,783) Cents (0.27) (0.27) Cents (0.02) (0.02) 3 4 4 3 5 The accompanying notes form part of these financial statements. 22 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPAPYRUS AUSTRALIA Papyrus Australia Ltd ABN 63 110 868 409 Consolidated Statement of Financial Position As At 30 June 2022 Consolidated Statement of Financial Position As At 30 June 2022 CURRENT ASSETS Cash and cash equivalents Trade and other receivables Prepayments TOTAL CURRENT ASSETS NON-CURRENT ASSETS Property, plant and equipment Investments accounted for using the equity method TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Other non-current liabilities TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS / (LIABILITIES) EQUITY Issued capital Reserves Accumulated losses Total attributable to owners of parent TOTAL EQUITY / (DEFICIT) Note Consolidated Group 30 June 2022 $ 30 June 2021 $ 5 6 7 8 9 1,376,268 2,071,640 1,045,373 452,634 - 9 2,421,641 2,524,283 2,960 - 1,052,242 1,299,578 1,055,202 1,299,578 3,476,843 3,823,861 10 203,984 203,985 121,916 121,916 - - - - 203,984 121,916 3,272,859 3,701,945 11 12 25,672,581 25,032,581 1,060,263 952,578 (23,459,985) (22,283,214) 3,272,859 3,701,945 3,272,859 3,701,945 3 6 The accompanying notes form part of these financial statements. 23 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPAPYRUS AUSTRALIA Papyrus Australia Ltd Consolidated Statement of changes in equity ABN 63 110 868 409 For the Year Ended 30 June 2022 Consolidated Statement of changes in equity For the Year Ended 30 June 2022 Issued Capital Consolidated Group Earnings/ (Accumulated losses) Share Option Reserve Total $ $ $ $ 21,395,581 (22,192,431) 915,722 118,872 - - (90,783) (90,783) - - (90,783) (90,783) Shares issued via private placement on 10 December 2020 2,142,000 Issue of Share options - Total transactions with owners and other transactions 11 3,637,000 Balance at 30 June 2021 25,032,581 (22,283,214) 952,578 3,701,945 Balance at 1 July 2020 Comprehensive income Loss for the year Total comprehensive income for the period transactions with owners, in their capacity as owners, and other transactions Shares issued via exercise of options on 20 August 2020 Shares issued via private placement on 17 October 2020 Shares issued via exercise of options on 17 November 2020 Shares issued as a result of 2020 AGM on 17 November 2020 Shares issued via private placement on 4 December 2020 Balance at 1 July 2021 Comprehensive income Loss for the year Total comprehensive income for the period transactions with owners, in their capacity as owners, and other transactions Shares Issued via exercise of options on 19 January 2022 Shares issued via exercise of options on 24 January 2022 Shares issued via exercise of options on 30 March 2022 Shares issued via private placement on 1 April 2022 Shares issued via exercise of options on 29 April 2022 Shares issued via exercise of options on 11 May 2022 Share based payments Unlisted Options issued to sophisticated investor on 20 August 2021 30,000 132,000 230,000 367,000 735,000 75,000 150,000 75,000 15,000 150,000 175,000 - - 25,032,581 (22,283,214) 952,578 3,701,945 - - (1,176,771) (1,176,771) - (1,176,771) - (1,176,771) - - - - - - - - - - - - - - 30,000 132,000 230,000 367,000 735,000 2,142,000 36,856 36,856 36,856 3,673,856 - - - - - - - - - - - - - - - 97,685 10,000 75,000 150,000 75,000 15,000 150,000 175,000 97,685 10,000 107,685 747,685 Total transactions with owners and other transactions 11 640,000 Balance at 30 June 2022 25,672,581 (23,459,985) 1,060,263 3,272,859 3 7 The accompanying notes form part of these financial statements. 24 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPAPYRUS AUSTRALIA Papyrus Australia Ltd ABN 63 110 868 409 Consolidated Statement of Cash Flows For the Year Ended 30 June 2022 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 Note Consolidated Group 30 June 2022 $ 30 June 2021 $ - - (750,760) (498,381) NET CASH USED IN OPERATING ACTIVITIES 13 (750,760) (498,381) CASH FLOWS FROM INVESTING ACTIVITIES Purchase property, plant & equipment Purchase of investment in equity accounting investments Loans made to joint venture entity (3,172) - - (613,379) (576,440) (449,232) CASH FLOWS FROM FINANCING ACTIVITIES (579,612) (1,062,611) Proceeds from issue of shares Proceeds from issue of options Repayment of borrowings NET CASH PROVIDED BY FINANCING ACTIVITIES Net (decrease)/increase in cash and cash equivalents Cash at the beginning of the financial year 625,000 3,637,000 10,000 - - (32,510) 635,000 3,604,490 (695,372) 2,043,498 2,071,640 28,142 CASH AT THE END OF THE FINANCIAL YEAR 5(a) 1,376,268 2,071,640 3 8 The accompanying notes form part of these financial statements. 25 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPAPYRUS AUSTRALIA Notes to the Financial Statements For the year ended 30 June 2022 This financial report covers the consolidated financial statements and notes of Papyrus Australia Ltd (‘the Company’) as an Individual entity and the consolidated Group comprising Papyrus Australia Ltd and its Controlled Entities (‘the Group’). Papyrus Australia Ltd is a for- profit Group limited by shares, incorporated and domiciled in Australia, whose shares are publicly traded on the Australian Securities Exchange. The financial statements were authorised for issue by the Board of Directors on 26 September 2022. Each of the entities within the Group prepare their financial statements based on the currency of the primary economic environment in which the entity operates (functional currency). The consolidated financial statements are presented in Australian dollars which is the parent entity’s functional and presentation currency. The separate financial statements and notes of the parent entity, Papyrus Australia Ltd, have not been presented within this financial report as permitted by amendments made to the Corporations Act 2001. 1. Summary Of Significant Accounting Policies (a) Basis of Preparation The financial statements are general purpose financial statements that have been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. The Group is a for-profit entity for financial reporting purposes under Australian Accounting Standards. These financial statements and notes comply with International Financial Reporting Standards as issued by the International Accounting Standards Board. The significant accounting policies used in the preparation and presentation of these financial statements are provided below and are consistent with prior reporting periods unless otherwise stated. Except for the cash flow information, the financial statements are prepared on an accruals basis and are based on historical costs, except for the measurement at fair value of selected non-current assets, financial assets and financial liabilities. (b) Principles of Consolidation The consolidated financial statements include the financial position and performance of controlled entities from the date on which control is obtained until the date that control is lost. Intragroup assets, liabilities, equity, income, expenses and cash flows relating to transactions between entities in the consolidated entity have been eliminated in full for the purpose of these financial statements. 3 9 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPAPYRUS AUSTRALIAAppropriate adjustments have been made to a controlled entity’s financial position, performance and cash flows where the accounting policies used by that entity were different from those adopted by the consolidated entity. All controlled entities have a June financial year end. A list of controlled entities is contained in Note 16 to the financial statements. Subsidiaries Subsidiaries are all entities (including structured entities) over which the parent has control. Control is established when the parent is exposed to or has rights to variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the relevant activities of the entity. (c) Business combinations The acquisition method of accounting is used to account for all business combinations regardless of whether equity instruments or other assets are acquired. Cost is measured as the fair value of the assets given, shares issued, or liabilities incurred or assumed at the date of exchange. Costs directly attributable to the combination are expensed as incurred. Where equity instruments are issued in a business combination, the fair value of the instruments is their published market price as at the date of exchange unless, in rare circumstances, it can be demonstrated that the published price at the date of exchange is an unreliable indicator of fair value, and that other evidence and valuation methods provide a more reliable measure of fair value. Transaction costs arising on the issue of equity instruments are recognised directly in equity. Except for non-current assets or disposal groups classified as held for sale (which are measured at fair value less costs to sell), all identifiable assets acquired, liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of the business combination over the net fair value of the Group’s share of the identifiable net assets acquired is recognised as goodwill. If the cost of acquisition is less than the Group’s share of the net fair value of the identifiable net assets of the subsidiary, the difference is recognised as a gain in the income statement, but only after a reassessment of the identification and measurement of the net assets acquired. (d) Revenue and other income Revenue is recognised when the amount of the revenue can be measured reliably, it is probable that economic benefits associated with the transaction will flow to the entity and specific criteria relating to the type of revenue has been satisfied. Revenue is measured at the fair value of the consideration received or receivable and is presented net of returns, discounts and rebates. All revenue is stated net of the amount of goods and services tax (GST). 4 0 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPAPYRUS AUSTRALIAInterest revenue Interest is recognised using the effective interest method. Grant revenue Government grants are recognised at fair value where there is reasonable assurance that the grant will be received, and all grant conditions will be met. Grants relating to expense items are recognised as income over the periods necessary to match the grant to the costs they are compensating. Grants relating to assets are credited to deferred income at fair value and are credited to income over the expected useful life of the asset on a straight- line basis. (e) Finance costs Finance costs directly attributable to the acquisition, construction or production of assets that necessarily take a substantial period of time to prepare for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. All other finance costs are recognised in income in the period in which they are incurred. (f) Cash and cash equivalents Cash and cash equivalents comprise cash on hand, demand deposits and short- term investments which are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value. Bank overdrafts also form part of cash equivalents for the purpose of the consolidated statement of cash flows and are presented within current liabilities on the consolidated statement of financial position. (g) Trade and other receivables For trade receivables, the Group applies a simplified approach in calculating Expected Credit Losses (‘ECLs’) as allowed in accordance with AASB 9 Financial Instruments. Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. (h) Income Tax The tax expense recognised in the consolidated statement of profit or loss and other comprehensive income relates to current income tax expense plus deferred tax expense (being the movement in deferred tax assets and liabilities and unused tax losses during the year). Current tax is the amount of income taxes payable (recoverable) in respect of the taxable profit (tax loss) for the year and is measured at the amount expected to be paid to (recovered from) the taxation authorities, using the tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. 4 1 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPAPYRUS AUSTRALIADeferred tax is provided on temporary differences which are determined by comparing the carrying amounts of tax bases of assets and liabilities to the carrying amounts in the financial statements. Deferred tax is not provided for the following: The initial recognition of an asset or liability in a transaction that is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss). Taxable temporary differences arising on the initial recognition of goodwill. Temporary differences related to investment in subsidiaries, associates and jointly controlled entities to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. Deferred tax consequences relating to a non- monetary asset carried at fair value are determined using the assumption that the carrying amount of the asset will be recovered through sale. Deferred tax assets are recognised for all deductible temporary differences and unused tax losses to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and losses can be utilised. The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed a each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Current tax assets and liabilities are offset where there is a legally enforceable right to set off the recognised amounts and there is an intention either to settle on a net basis or to realise the asset and settle the liability simultaneously. Deferred tax assets and liabilities are offset where there is a legal right to set off current tax assets against current tax liabilities and the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered. Current and deferred tax is recognised as income or an expense and included in profit or loss for the period except where the tax arises from a transaction which is recognised in other 4 2 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPAPYRUS AUSTRALIAcomprehensive income or equity, in which case the tax is recognised in other comprehensive income or equity respectively. Tax consolidation legislation Papyrus Australia Ltd and its wholly owned Australian subsidiaries have formed an income tax consolidated group. Each entity in the tax consolidated group accounts for their own current and deferred tax amounts. These tax amounts are measured using the ‘stand-alone taxpayer’ approach to allocation. Current tax liabilities (assets) and deferred tax assets arising from unused tax losses and tax credits in the subsidiaries are immediately transferred to the parent entity. (i) Goods and Services Tax (GST) Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the Australian Taxation Office (ATO). Receivables and payable are stated inclusive of GST. The net amount of GST recoverable from, or payable to, the ATO is included as part of receivables or payables in the consolidated statement of financial position. Cash flows in the consolidated statement of cash flows are included on a gross basis and the GST component of cash flows arising from investing and financing activities which is recoverable from, or payable to, the taxation authority is classified as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority. (j) Plant and Equipment Each class of plant and equipment are measured using the cost model as specified below. Where the cost model is used, the asset is carried at its cost less any accumulated depreciation and any impairment losses. Costs include purchase price, other directly attributable costs and the initial estimate of the costs of dismantling and restoring the asset, where applicable. Depreciation The depreciable amount of all plant and equipment is depreciated on a straight- line and diminishing value basis from the date that management determine that the asset is available for use. Assets held under a finance lease and leasehold improvements are depreciated over the shorter of the term of the lease and the assets useful life. 4 3 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPapyrus Australia Ltd ABN 63 110 868 409 Notes to the Financial Statements For the year ended 30 June 2022 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (j) Plant and Equipment Each class of plant and equipment are measured using the cost model as specified below. Where the cost model is used, the asset is carried at its cost less any accumulated depreciation and any impairment losses. Costs include purchase price, other directly attributable costs and the initial estimate of the costs of dismantling and restoring the asset, where applicable. Depreciation The depreciable amount of all plant and equipment is depreciated on a straight that management determine that the asset is available for use. line and diminishing value basis from the date ‑ Assets held under a finance lease and leasehold improvements are depreciated over the shorter of the term of the lease and the assets useful life. The estimated useful lives used for each class of depreciable asset are shown below: The estimated useful lives used for each class of depreciable asset are shown below: Fixed asset class Plant and Equipment Useful life 2.5 ‑ 20 years At the end of each annual reporting period, the depreciation method, useful life and residual value of each asset is reviewed. Any At the end of each annual reporting period, the depreciation method, useful life and residual revisions are accounted for prospectively as a change in estimate. value of each asset is reviewed. Any revisions are accounted for prospectively as a change Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the statement of profit or loss and other comprehensive income. in estimate. (k) Financial instruments Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the statement of profit or loss and other Initial recognition and measurement comprehensive income. A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. (k) Financial instruments (i) Financial assets Initial recognition and measurement Initial recognition and measurement A financial instrument is any contract that gives rise to a financial asset of one entity and a Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through other financial liability or equity instrument of another entity. comprehensive income (OCI), and fair value through profit or loss. (i) Financial assets The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the Group’s business model for managing them. Initial recognition and measurement In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level. Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through other comprehensive income (OCI), and fair value through profit or loss. The Group’s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both. The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the Group’s business model for managing them. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way trades) are recognised on the trade date, i.e., the date that the Group commits to purchase or sell the asset. In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level. The Group’s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way trades) are recognised on the trade date, i.e., the date that the Group commits to purchase or sell the asset. 30 Subsequent measurement of financial assets at amortised cost The Group measures financial assets at amortised cost if both of the following conditions are met: 4 4 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPAPYRUS AUSTRALIA • The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows; and • The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding Financial assets at amortised cost are subsequently measured using the effective interest method and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired. Derecognition A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e., removed from the Group’s consolidated statement of financial position) when: • The rights to receive cash flows from the asset have expired; or • The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Group continues to recognise the transferred asset to the extent of its continuing involvement. In that case, the Group also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay. Impairment of financial assets The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms. ECLs are recognised in two stages. For credit exposures for which there has not been 4 5 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPAPYRUS AUSTRALIAa significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL). The Group considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the Group may also consider a financial asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows. (ii) Financial liabilities Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs unless the Group designated a financial liability at fair value through profit or loss. Subsequently, financial liabilities are measured at amortised cost using the effective interest method except for derivatives and financial liabilities designated at FVTPL, which are carried subsequently at fair value with gains or losses recognised in profit or loss (other than derivative financial instruments that are designated and effective as hedging instruments). A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of the new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss. (l) Impairment of non-financial assets At the end of each reporting period, the Group determines whether there is an evidence of an impairment indicator for non-financial assets. Where this indicator exists and regardless for goodwill, indefinite life intangible assets and intangible assets not yet available for use, the recoverable amount of the assets is estimated. Where assets do not operate independently of other assets, the recoverable amount of the relevant cash- generating unit (CGU) is estimated. The recoverable amount of an asset or CGU is the higher of the fair value less costs of disposal and the value in use. Value in use is the present value of the future cash flows expected to be derived from an asset or cash- generating unit. Where the recoverable amount is less than the carrying amount, an impairment loss is 4 6 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPAPYRUS AUSTRALIArecognised in profit or loss. Reversal indicators are considered in subsequent periods for all assets which have suffered an impairment loss, except for goodwill. (m) Trade and other payables Trade and other payables are carried at amortised costs and represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services. (n) Interest bearing loans and borrowings All loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction costs. After initial recognition, interest- bearing loans and borrowings are subsequently measured at amortised cost. (o) Equity settled compensation Group provides benefits to employees of the Group in the form of share- based payments, whereby employees receive options incentives (equity- settled transactions). There is currently one plan in place to provide these benefits, the Employee Share Option Plan (ESOP) which provides benefits to employees. The cost of these equity- settled transactions with employees is measured by reference to the fair value at the date at which they were granted. The fair value is determined using the Black- Scholes option pricing model. The cost of equity- settled transactions is recognised as an expense in the consolidated statement of profit or loss and other comprehensive income, together with a corresponding increase in the share option reserve, when the options are issued. However, where options have vesting terms attached, the cost of the transaction is amortised over the vesting period. Upon the exercise of options, the balance of share-based payments reserve relating to those options is transferred to issued capital. (p) Share capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options which vest immediately are recognised as a deduction from equity, net of any tax effects. (q) Earnings per share The Group presents basic and diluted earnings per share information for its ordinary shares. 4 7 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPAPYRUS AUSTRALIABasic earnings per share is calculated by dividing the profit attributable to members of the Group by the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share adjusts the basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares. In accordance with AASB 133 ‘Earnings per Share’, as potential ordinary shares may only result in a situation where their conversion results in an increase in loss per share or decrease in profit per share from continuing operations, no dilutive effect has been taken into account in 2021 and 2022. (r) Critical accounting estimates and judgments The preparation of financial reports requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Except as described below, in preparing this report, the significant judgements made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial report for the year ended 30 June 2022. Key estimates Impairment of assets The Group assesses impairment at each reporting date by evaluating conditions specific to the Group that may lead to an impairment of assets. Where an impairment trigger exists, the recoverable amount of the asset is determined. 4 8 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPAPYRUS AUSTRALIA(s) Investment in associate and joint venture An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operational policy decisions of the investee, but is not control or joint control over those policies. A joint venture is a type of joint agreement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control. The considerations made in determining significant influence or joint control are similar to those necessary to determine control over subsidiaries. The Group’s investment in its associate and joint venture are accounted for using the equity method. Under the equity method, the investment in an associate or joint venture is initially recognised at cost. The carrying amount of the investment is adjusted to recognise changes in the Group’s share of the net assets of the associate or joint venture since the acquisition date. Goodwill relating to the associate or joint venture is included in the carrying amount of the investment and is not tested for impairment separately. The Statement of profit or loss reflects the Group’s share of the results of operations of the associate or joint venture. Any change in OCI of those investees is presented as part of the Group’s OCI. In addition, when there has been a change recognised directly in the equity of the associate or joint venture, the Group recognises its share of any changes, when applicable, in the statement of changes in equity. Unrealised gains or losses resulting from transactions between the Group and associate or joint venture are eliminated to the extent of the interest in the associate or joint venture. The aggregate of the Group’s share of the profit or loss of an associate and a joint venture is shown on the face of the statement of profit or loss outside operating profit and represents profit or loss after tax and non-controlling interest in the subsidiaries of the associate or joint venture. The financial statements of the associate or joint venture are prepared for the same reporting period as the Group. When necessary, adjustments are made to bring to account policies in line with those of the Group. (t) New Accounting Standards and Interpretations New Accounting Standards Issued But Not Yet Effective And Not Been Adopted Early By The Group There are a number of standards, amendments to standards, and interpretations which have been issued by the IASB that are effective in future accounting periods that the group has decided not to adopt early. The Group has reviewed and assessed that none of these new accounting standards, used but not yet effective, are expected to have material impact on the group. 4 9 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPapyrus Australia Ltd ABN 63 110 868 409 Notes to the Financial Statements 2. Revenue And Expenses For the year ended 30 June 2022 2 REVENUE AND EXPENSES REVENUE (a) Other income Other income EXPENSES (b) Employee benefit expenses Wages, salaries and other remuneration expenses Total employee benefit expenses Included in wages, salaries and other remuneration expenses were $13,302 defined contribution plan expense for the year ended 30 June 2022 (2021: $1,645) (c) Other expenses Audit and accounting fees Legal fees Professional services Travel and accommodation Governance and secretarial costs Intellectual property expenses Information technology Share registry and ASX expenses Other expenses Consolidated Group 30 June 2022 $ 30 June 2021 $ - - - - 163,251 163,251 18,963 18,963 122,024 (900) - 51,473 2,245 19,020 4,825 66,564 11,095 276,346 59,997 35,017 57,292 28,746 6,080 11,395 6,300 101,141 5,712 311,680 5 0 35 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPAPYRUS AUSTRALIA Papyrus Australia Ltd Papyrus Australia Ltd ABN 63 110 868 409 ABN 63 110 868 409 Notes to the Financial Statements Notes to the Financial Statements For the year ended 30 June 2022 For the year ended 30 June 2022 3. Income Tax Expense 3 INCOME TAX EXPENSE 3 INCOME TAX EXPENSE The major components of tax expense (income) comprise: The major components of tax expense (income) comprise: The major components of tax expense (income) comprise: Papyrus Australia Ltd ABN 63 110 868 409 Notes to the Financial Statements Income tax expense Income tax expense For the year ended 30 June 2022 A reconciliation between tax expense and the product of accounting Loss before income tax A reconciliation between tax expense and the product of accounting Loss before income tax multiplied by the Group’s applicable A reconciliation between tax expense and the product of accounting Loss before income tax multiplied by the Group’s applicable income tax multiplied by the Group’s applicable income tax 3 INCOME TAX EXPENSE income tax - - - - Loss before income tax The major components of tax expense (income) comprise: Loss before income tax At the Group's income tax rate of 25% (2021: 26%) At the Group's income tax rate of 25% (2021: 26%) Share-based payments expensed during the year Share-based payments expensed during the year Expenditure not allowable for income tax purposes Expenditure not allowable for income tax purposes Income tax expense Tax losses not recognised due to not meeting recognition criteria Tax losses not recognised due to not meeting recognition criteria Consolidated Group Consolidated Group 30 June 30 June 2022 2022 $ $ 30 June 30 June 2021 2021 $ $ (1,176,771) (1,176,771) (90,783) (90,783) Consolidated Group (294,193) 30 June (294,193) 2022 24,421 24,421 $ 83 83 - 269,689 269,689 - - (23,603) 30 June (23,603) 2021 9,583 9,583 $ 489 489 - 13,531 13,531 - - 83 24,421 269,689 (90,783) (294,193) (1,176,771) A reconciliation between tax expense and the product of accounting Loss before income tax multiplied by the Group’s applicable The Group has tax losses arising in Australia of $13,846,024 (2021: $12,767,269). income tax The Group has tax losses arising in Australia of $13,846,024 (2021: $12,767,269). The Group has tax losses arising in Australia of $13,846,024 (2021: $12,767,269). No deferred tax asset has been recognised because it is not likely future assessable income is derived of a nature and of an No deferred tax asset has been recognised because it is not likely future assessable income is derived of a nature and of an Loss before income tax amount sufficient to enable the benefit to be realised. No deferred tax asset has been recognised because it is not likely future assessable income is amount sufficient to enable the benefit to be realised. derived of a nature and of an amount sufficient to enable the benefit to be realised. 4 EARNINGS PER SHARE At the Group's income tax rate of 25% (2021: 26%) (23,603) 4 EARNINGS PER SHARE 9,583 Share-based payments expensed during the year 4. Earnings Per Share Basic earnings per share amounts are calculated by dividing net loss for the year attributable to ordinary equity holders of the 489 Expenditure not allowable for income tax purposes Basic earnings per share amounts are calculated by dividing net loss for the year attributable to ordinary equity holders of the Group by the weighted average number of ordinary shares outstanding during the year. 13,531 Tax losses not recognised due to not meeting recognition criteria Group by the weighted average number of ordinary shares outstanding during the year. Basic earnings per share amounts are calculated by dividing net loss for the year attributable Diluted earnings per share amounts are calculated by dividing the net loss attributable to ordinary equity holders of the Group by Diluted earnings per share amounts are calculated by dividing the net loss attributable to ordinary equity holders of the Group by to ordinary equity holders of the Group by the weighted average number of ordinary shares the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary The Group has tax losses arising in Australia of $13,846,024 (2021: $12,767,269). the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares. outstanding during the year. shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares. No deferred tax asset has been recognised because it is not likely future assessable income is derived of a nature and of an In accordance with AASB 133 ‘Earnings per Share’, as potential ordinary shares may only result in a situation where their amount sufficient to enable the benefit to be realised. Diluted earnings per share amounts are calculated by dividing the net loss attributable to In accordance with AASB 133 ‘Earnings per Share’, as potential ordinary shares may only result in a situation where their conversion results in an increase in loss per share or decrease in profit per share from continuing operations, no dilutive effect conversion results in an increase in loss per share or decrease in profit per share from continuing operations, no dilutive effect has been taken into account in 2022 or 2021. ordinary equity holders of the Group by the weighted average number of ordinary shares has been taken into account in 2022 or 2021. 4 EARNINGS PER SHARE outstanding during the year plus the weighted average number of ordinary shares that would The following reflects the income and share data used in the basic and diluted earnings per share computations: The following reflects the income and share data used in the basic and diluted earnings per share computations: be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares. Basic earnings per share amounts are calculated by dividing net loss for the year attributable to ordinary equity holders of the Group by the weighted average number of ordinary shares outstanding during the year. (a) Reconciliation of earnings to profit or loss from continuing operations (a) Reconciliation of earnings to profit or loss from continuing operations In accordance with AASB 133 ‘Earnings per Share’, as potential ordinary shares may only result Diluted earnings per share amounts are calculated by dividing the net loss attributable to ordinary equity holders of the Group by in a situation where their conversion results in an increase in loss per share or decrease in Net loss attributable to ordinary equity holders of the parent (1,176,771) the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary Net loss attributable to ordinary equity holders of the parent (1,176,771) shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares. profit per share from continuing operations, no dilutive effect has been taken into account (b) Weighted average number of ordinary shares outstanding during the year used in calculating basic EPS in 2022 or 2021. (b) Weighted average number of ordinary shares outstanding during the year used in calculating basic EPS In accordance with AASB 133 ‘Earnings per Share’, as potential ordinary shares may only result in a situation where their conversion results in an increase in loss per share or decrease in profit per share from continuing operations, no dilutive effect Weighted average number of ordinary shares for basic earnings per share 382,482,257 The following reflects the income and share data used in the basic and diluted earnings per has been taken into account in 2022 or 2021. 382,482,257 Weighted average number of ordinary shares for basic earnings per share Effect of dilution share computations: Effect of dilution The following reflects the income and share data used in the basic and diluted earnings per share computations: Share options - Share options - (a) Reconciliation of earnings to profit or loss from continuing operations Weighted average number of ordinary shares adjusted for the effect of dilution 438,836,237 Weighted average number of ordinary shares adjusted for the effect of dilution 438,836,237 (a) Reconciliation of earnings to profit or loss from continuing operations - - 382,482,257 382,482,257 438,836,237 438,836,237 (90,783) (90,783) - - Net loss attributable to ordinary equity holders of the parent (1,176,771) (90,783) (b) Weighted average number of ordinary shares outstanding during the year used in calculating basic EPS 36 36 Weighted average number of ordinary shares for basic earnings per share 438,836,237 382,482,257 Effect of dilution Share options - - 5 1 Weighted average number of ordinary shares adjusted for the effect of dilution 438,836,237 382,482,257 36 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPAPYRUS AUSTRALIA Papyrus Australia Ltd ABN 63 110 868 409 Notes to the Financial Statements For the year ended 30 June 2022 3 INCOME TAX EXPENSE The major components of tax expense (income) comprise: Income tax expense income tax Loss before income tax At the Group's income tax rate of 25% (2021: 26%) Share-based payments expensed during the year Expenditure not allowable for income tax purposes Tax losses not recognised due to not meeting recognition criteria Consolidated Group 30 June 2022 $ 30 June 2021 $ - - (1,176,771) (90,783) (294,193) (23,603) 24,421 9,583 269,689 83 - 489 13,531 - A reconciliation between tax expense and the product of accounting Loss before income tax multiplied by the Group’s applicable The Group has tax losses arising in Australia of $13,846,024 (2021: $12,767,269). No deferred tax asset has been recognised because it is not likely future assessable income is derived of a nature and of an amount sufficient to enable the benefit to be realised. 4 EARNINGS PER SHARE Basic earnings per share amounts are calculated by dividing net loss for the year attributable to ordinary equity holders of the Group by the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share amounts are calculated by dividing the net loss attributable to ordinary equity holders of the Group by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares. In accordance with AASB 133 ‘Earnings per Share’, as potential ordinary shares may only result in a situation where their conversion results in an increase in loss per share or decrease in profit per share from continuing operations, no dilutive effect has been taken into account in 2022 or 2021. The following reflects the income and share data used in the basic and diluted earnings per share computations: (a) Reconciliation of earnings to profit or loss from continuing operations Net loss attributable to ordinary equity holders of the parent (b) Weighted average number of ordinary shares outstanding during the year used in (1,176,771) (90,783) calculating basic EPS (b) Weighted average number of ordinary shares outstanding during the year used in calculating basic EPS Papyrus Australia Ltd Weighted average number of ordinary shares for basic earnings per share Effect of dilution ABN 63 110 868 409 Share options Notes to the Financial Statements Weighted average number of ordinary shares adjusted for the effect of dilution For the year ended 30 June 2022 Papyrus Australia Ltd Papyrus Australia Ltd 5. Cash And Cash Equivalents 5 CASH AND CASH EQUIVALENTS ABN 63 110 868 409 ABN 63 110 868 409 Notes to the Financial Statements Notes to the Financial Statements For the year ended 30 June 2022 For the year ended 30 June 2022 36 5 CASH AND CASH EQUIVALENTS 5 CASH AND CASH EQUIVALENTS Cash at bank and in hand 438,836,237 382,482,257 - - 438,836,237 382,482,257 Consolidated Group 30 June 2022 $ 30 June 2021 $ Consolidated Group Consolidated Group 1,376,268 30 June 30 June 1,376,268 2022 2022 $ $ 2,071,640 30 June 30 June 2,071,640 2021 2021 $ $ Cash at bank earns interest at floating rates based on daily bank deposit rates. Cash at bank earns interest at floating rates based on daily bank deposit rates. Cash at bank and in hand 1,376,268 Short term deposits are made for varying periods of between one day and six months, depending on the immediate cash Cash at bank and in hand 1,376,268 Short-term deposits are made for varying periods of between one day and six months, requirements of the Group, and earn interest at the respective short-term deposit rates. 1,376,268 1,376,268 depending on the immediate cash requirements of the Group, and earn interest at the (a) Reconciliation of cash respective short-term deposit rates. Cash at bank earns interest at floating rates based on daily bank deposit rates. Cash at bank earns interest at floating rates based on daily bank deposit rates. 2,071,640 2,071,640 2,071,640 2,071,640 ‑ ‑ ‑ Cash and Cash equivalents reported in the consolidated statement of cash flows are reconciled to the equivalent items in the (a) Reconciliation of cash term deposits are made for varying periods of between one day and six months, depending on the immediate cash Short term deposits are made for varying periods of between one day and six months, depending on the immediate cash Short consolidated statement of financial position as follows: requirements of the Group, and earn interest at the respective short-term deposit rates. requirements of the Group, and earn interest at the respective short-term deposit rates. Cash and Cash equivalents reported in the consolidated statement of cash flows are Cash at bank and in hand (a) Reconciliation of cash (a) Reconciliation of cash reconciled to the equivalent items in the consolidated statement of financial position as 2,071,640 follows: Cash and Cash equivalents reported in the consolidated statement of cash flows are reconciled to the equivalent items in the Cash and Cash equivalents reported in the consolidated statement of cash flows are reconciled to the equivalent items in the consolidated statement of financial position as follows: consolidated statement of financial position as follows: 6 TRADE AND OTHER RECEIVABLES 2,071,640 1,376,268 1,376,268 Cash at bank and in hand Cash at bank and in hand CURRENT Other receivables GST recoverable 6 TRADE AND OTHER RECEIVABLES 6. Trade And Other Receivables 6 TRADE AND OTHER RECEIVABLES 1,376,268 1,376,268 1,376,268 1,376,268 1,039,623 5,750 1,045,373 2,071,640 2,071,640 2,071,640 2,071,640 449,273 3,361 452,634 CURRENT CURRENT Other Receivable represent receivable from Papyrus Egypt, a joint venture company that the Group accounts for using equity 449,273 Other receivables method. No expected credit losses were recognized for the receivable for the year ended 30 June 2022 (2021: Nil) as there did 449,273 Other receivables not note a significant increase in credit risk. This amount is interest free and repayable on demand. 3,361 GST recoverable 3,361 GST recoverable 452,634 452,634 1,039,623 1,039,623 5,750 5,750 1,045,373 1,045,373 7 PREPAYMENTS Other Receivable represent receivable from Papyrus Egypt, a joint venture company that the Group accounts for using equity Other Receivable represent receivable from Papyrus Egypt, a joint venture company that the Group accounts for using equity Other Receivable represent receivable from Papyrus Egypt, a joint venture company that method. No expected credit losses were recognized for the receivable for the year ended 30 June 2022 (2021: Nil) as there did Prepayment for the investment in equity in method. No expected credit losses were recognized for the receivable for the year ended 30 June 2022 (2021: Nil) as there did not note a significant increase in credit risk. This amount is interest free and repayable on demand. the Group accounts for using equity method. No expected credit losses were recognized for not note a significant increase in credit risk. This amount is interest free and repayable on demand. Egypt Banana Fibre Company and Papyrus Egypt the receivable for the year ended 30 June 2022 (2021: Nil) as there did not note a significant Total - 7 PREPAYMENTS 7 PREPAYMENTS increase in credit risk. This amount is interest free and repayable on demand. 9 9 - Prepayment for the investment in equity in Prepayment for the investment in equity in Egypt Banana Fibre Company and Papyrus Egypt Egypt Banana Fibre Company and Papyrus Egypt Total Total - - - - 9 9 9 9 5 2 37 37 37 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPAPYRUS AUSTRALIA Papyrus Australia Ltd ABN 63 110 868 409 Notes to the Financial Statements For the year ended 30 June 2022 5 CASH AND CASH EQUIVALENTS Cash at bank and in hand ‑ (a) Reconciliation of cash Cash at bank and in hand 6 TRADE AND OTHER RECEIVABLES CURRENT Other receivables GST recoverable Consolidated Group 30 June 2022 $ 30 June 2021 $ 1,376,268 1,376,268 2,071,640 2,071,640 1,376,268 2,071,640 1,376,268 2,071,640 1,039,623 5,750 1,045,373 449,273 3,361 452,634 Cash at bank earns interest at floating rates based on daily bank deposit rates. Short term deposits are made for varying periods of between one day and six months, depending on the immediate cash requirements of the Group, and earn interest at the respective short-term deposit rates. Cash and Cash equivalents reported in the consolidated statement of cash flows are reconciled to the equivalent items in the consolidated statement of financial position as follows: Other Receivable represent receivable from Papyrus Egypt, a joint venture company that the Group accounts for using equity method. No expected credit losses were recognized for the receivable for the year ended 30 June 2022 (2021: Nil) as there did not note a significant increase in credit risk. This amount is interest free and repayable on demand. 7. Prepayments 7 PREPAYMENTS Prepayment for the investment in equity in Papyrus Australia Ltd Egypt Banana Fibre Company and Papyrus Egypt ABN 63 110 868 409 Papyrus Australia Ltd Total Notes to the Financial Statements ABN 63 110 868 409 For the year ended 30 June 2022 Notes to the Financial Statements 8. Plant And Equipment For the year ended 30 June 2022 8 PLANT AND EQUIPMENT 8 PLANT AND EQUIPMENT PLANT AND EQUIPMENT Plant and equipment at cost PLANT AND EQUIPMENT Accumulated depreciation and impairment Plant and equipment at cost (a) Movements in carrying amounts of plant and equipment Accumulated depreciation and impairment 37 - - 9 9 Consolidated Group 30 June 30 June Consolidated Group 2021 2022 30 June 30 June $ $ 2021 2022 $ 3,172 (212) 3,172 2,960 (212) $ - - - - - (a) Movements in carrying amounts of plant and equipment Movement in the carrying amounts for each class of plant and equipment between the beginning and the end of the current and previous financial years: Movement in the carrying amounts for each class of plant and equipment between the Movement in the carrying amounts for each class of plant and equipment between the beginning and the end of the current and beginning and the end of the current and previous financial years: previous financial years: 2,960 - Consolidated Consolidated Year ended 30 June 2022 Balance at the beginning of year Year ended 30 June 2022 Additions Balance at the beginning of year Depreciation expense Additions Balance at the end of the year Depreciation expense Balance at the end of the year 9 INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD 9 INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD Name Classification Name Classification Place of Business/ Incorporation Place of Business/ Incorporation Proportion of Ordinary Share Interests/ Proportion of Participating Ordinary Share Shares Interests/ Participating Shares 2022 2021 39.22 2022 % 25.46 2021 % Associate Sohag, Egypt Egyptian Banana Fibre Company Egyptian Banana Papyrus Egypt Fibre Company Plant and Equipment $ Plant and Equipment $ - 3,172 - (212) 3,172 2,960 (212) 2,960 Measurement Method Measurement Method Equity method Carrying amount Carrying amount 2022 2021 1,052,242 2022 1,299,578 2021 Associate Joint Venture Sohag, Egypt Sohag, Egypt 39.22 50% % 25.46 - % Equity method Equity method 1,052,242 - 1,299,578 - - - - Joint Venture Sohag, Egypt Equity method Papyrus Egypt In 2021, Papyrus Australia Limited relinquished its entitlement to licencing fees and royalties in Papyrus Egypt in consideration 50% for the reacquisition of 50% equity in Papyrus Egypt from Egyptian Banana Fibre Company. In 2021, Papyrus Australia Limited relinquished its entitlement to licencing fees and royalties in Papyrus Egypt in consideration As a result of the relinquishment of its entitlement to licensing fees and royalties, the Group progressively acquired 39.22% equity for the reacquisition of 50% equity in Papyrus Egypt from Egyptian Banana Fibre Company. in Egyptian Banana Fibre Company for a total consideration of $1,052,242, which resulted in an indirect interest in Papyrus Egypt by 19.66%. No further acquisition was made during the year with regard to shareholding in Egyptian Banana Fibre Company. The As a result of the relinquishment of its entitlement to licensing fees and royalties, the Group progressively acquired 39.22% equity increase in shareholding disclosed above was due to the finalization of share transfers during the 2022 financial years, for which in Egyptian Banana Fibre Company for a total consideration of $1,052,242, which resulted in an indirect interest in Papyrus Egypt payments were made in 2021 financial year. The goodwill balance relating to these transactions were included in the carrying by 19.66%. No further acquisition was made during the year with regard to shareholding in Egyptian Banana Fibre Company. The amount of the investment. increase in shareholding disclosed above was due to the finalization of share transfers during the 2022 financial years, for which payments were made in 2021 financial year. The goodwill balance relating to these transactions were included in the carrying As a result of the above transaction, Papyrus Egypt is a joint arrangement that is structured as an incorporated entity (company) amount of the investment. with two principal members, Papyrus Australia Limited and Egyptian Banana Fibre Company. The primary purpose of the company is to operate the factory in Sohag, Egypt with Papyrus technology and explore Egypt and the Middle East market. The As a result of the above transaction, Papyrus Egypt is a joint arrangement that is structured as an incorporated entity (company) Group's intention is to acquire further shareholding in Egyptian Banana Fibre Company in the future to gain control over Papyrus with two principal members, Papyrus Australia Limited and Egyptian Banana Fibre Company. The primary purpose of the Egypt. The Group has 50% economic interest in Papyrus Egypt and 50% of the voting rights in relation to the joint venture. company is to operate the factory in Sohag, Egypt with Papyrus technology and explore Egypt and the Middle East market. The Group's intention is to acquire further shareholding in Egyptian Banana Fibre Company in the future to gain control over Papyrus The Group has joint control, of Papyrus Egypt with the other party sharing the joint control being Egyptian Banana Fibre Egypt. The Group has 50% economic interest in Papyrus Egypt and 50% of the voting rights in relation to the joint venture. Company. As a result, Papyrus Egypt has been accounted for using the equity method in accordance with AASB 128 Investments in Associates and Joint Ventures. The Group has joint control, of Papyrus Egypt with the other party sharing the joint control being Egyptian Banana Fibre Company. As a result, Papyrus Egypt has been accounted for using the equity method in accordance with AASB 128 Investments in Associates and Joint Ventures. 5 3 38 38 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPAPYRUS AUSTRALIA Papyrus Australia Ltd ABN 63 110 868 409 Notes to the Financial Statements For the year ended 30 June 2022 8 PLANT AND EQUIPMENT PLANT AND EQUIPMENT Plant and equipment at cost Accumulated depreciation and impairment (a) Movements in carrying amounts of plant and equipment Consolidated Group 30 June 2022 $ 30 June 2021 $ 3,172 (212) 2,960 - - - Movement in the carrying amounts for each class of plant and equipment between the beginning and the end of the current and previous financial years: Consolidated Year ended 30 June 2022 Balance at the beginning of year Additions Depreciation expense Balance at the end of the year Plant and Equipment $ - 3,172 (212) 2,960 9. Investments Accounted For Using The Equity Method 9 INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD Name Classification Place of Business/ Incorporation Proportion of Ordinary Share Interests/ Participating Shares Measurement Method Carrying amount Egyptian Banana Fibre Company Associate Sohag, Egypt Papyrus Egypt Joint Venture Sohag, Egypt 2022 39.22 % 50% 2021 25.46 % Equity method 1,052,242 1,299,578 2022 2021 - Equity method - - In 2021, Papyrus Australia Limited relinquished its entitlement to licencing fees and royalties in Papyrus Egypt in consideration In 2021, Papyrus Australia Limited relinquished its entitlement to licencing fees and royalties for the reacquisition of 50% equity in Papyrus Egypt from Egyptian Banana Fibre Company. in Papyrus Egypt in consideration for the reacquisition of 50% equity in Papyrus Egypt from As a result of the relinquishment of its entitlement to licensing fees and royalties, the Group progressively acquired 39.22% equity Egyptian Banana Fibre Company. in Egyptian Banana Fibre Company for a total consideration of $1,052,242, which resulted in an indirect interest in Papyrus Egypt by 19.66%. No further acquisition was made during the year with regard to shareholding in Egyptian Banana Fibre Company. The increase in shareholding disclosed above was due to the finalization of share transfers during the 2022 financial years, for which As a result of the relinquishment of its entitlement to licensing fees and royalties, the payments were made in 2021 financial year. The goodwill balance relating to these transactions were included in the carrying Group progressively acquired 39.22% equity in Egyptian Banana Fibre Company for a amount of the investment. total consideration of $1,052,242, which resulted in an indirect interest in Papyrus Egypt As a result of the above transaction, Papyrus Egypt is a joint arrangement that is structured as an incorporated entity (company) with two principal members, Papyrus Australia Limited and Egyptian Banana Fibre Company. The primary purpose of the by 19.66%. No further acquisition was made during the year with regard to shareholding in company is to operate the factory in Sohag, Egypt with Papyrus technology and explore Egypt and the Middle East market. The Egyptian Banana Fibre Company. The increase in shareholding disclosed above was due Group's intention is to acquire further shareholding in Egyptian Banana Fibre Company in the future to gain control over Papyrus Egypt. The Group has 50% economic interest in Papyrus Egypt and 50% of the voting rights in relation to the joint venture. to the finalization of share transfers during the 2022 financial years, for which payments were made in 2021 financial year. The goodwill balance relating to these transactions were The Group has joint control, of Papyrus Egypt with the other party sharing the joint control being Egyptian Banana Fibre Company. As a result, Papyrus Egypt has been accounted for using the equity method in accordance with AASB 128 included in the carrying amount of the investment. Investments in Associates and Joint Ventures. As a result of the above transaction, Papyrus Egypt is a joint arrangement that is structured as an incorporated entity (company) with two principal members, Papyrus Australia Limited 38 and Egyptian Banana Fibre Company. The primary purpose of the company is to operate the factory in Sohag, Egypt with Papyrus technology and explore Egypt and the Middle East market. The Group’s intention is to acquire further shareholding in Egyptian Banana Fibre Company in the future to gain control over Papyrus Egypt. The Group has 50% economic interest in Papyrus Egypt and 50% of the voting rights in relation to the joint venture. The Group has joint control, of Papyrus Egypt with the other party sharing the joint control being Egyptian Banana Fibre Company. As a result, Papyrus Egypt has been accounted for using the equity method in accordance with AASB 128 Investments in Associates and Joint Ventures. 5 4 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPAPYRUS AUSTRALIA Papyrus Australia Ltd ABN 63 110 868 409 Notes to the Financial Statements Investments Accounted For Using The Equity Method (Continued) For the year ended 30 June 2022 9 INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (Continued) Summarised Financial Position Cash and cash equivalents Total current assets Total non-current assets Total current liabilities Total non-current liabilities Net assets Group's share (%) Direct shareholding Indirect shareholding Total shareholding Group share of joint venture's net assets Revenue Depreciation (Loss) for the year before income tax Income tax expense (Loss) for the year Other comprehensive income Total comprehensive income Group's share (%) Direct shareholding Indirect shareholding Total shareholding Group share of joint venture's net assets Reconciliation to Carrying Amounts Investment at beginning of the year Investments during the year Excess of the entity's shares of net fair value of investee's identifiable assets and liabilities at transaction date Share of the JV for the year Closing carrying amount of investment 5 5 39 Consolidated Group 30 June 2022 $ 96,028 196,046 1,646,995 1,035,195 - 30 June 2021 $ 177,564 256,984 1,663,417 558,817 - 884,039 1,361,584 50.00% 19.61% 69.61% 615,379 50.00% 12.73% 62.73% 854,108 186,684 91,116 (355,317) - 201,341 78,561 (292,486) - (355,317) (292,486) - - (355,317) (292,486) 50.00% 19.61% 69.61% 50.00% 12.73% 62.73% (247,336) (183,474) 1,299,578 - - - 873,379 609,673 (247,336) 1,052,242 (183,474) 1,299,578 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPAPYRUS AUSTRALIA Papyrus Australia Ltd ABN 63 110 868 409 Notes to the Financial Statements For the year ended 30 June 2022 10. Trade And Other Payables 10 TRADE AND OTHER PAYABLES Papyrus Australia Ltd ABN 63 110 868 409 Notes to the Financial Statements CURRENT For the year ended 30 June 2022 Trade payables Sundry payables and accrued expenses 10 TRADE AND OTHER PAYABLES (a) Trade payables (a) Trade payables Trade payables are non-interest bearing and normally settled on 60-day terms. Note 10 (a) 10 (b) Consolidated Group 30 June 2022 $ 30 June 2021 $ 28,132 175,852 203,984 3,224 118,693 121,917 Consolidated Group 30 June 2022 30 June 2021 Note $ $ 10 (a) 10 (b) 28,132 CURRENT Trade payables Information regarding the risks associated with current payables is set out in Note 18. Trade payables are non-interest bearing and normally settled on 60-day terms. (b) Sundry payables and accrued expenses 3,224 Information regarding the risks associated with current payables is set out in Note 18. Within Sundry payables and accrued expenses, $61,700 relates to accrued interest on the loan provided by Talisker (SA) Pty Ltd 118,693 Sundry payables and accrued expenses (an entity associated with the Managing Director Ramy Azer) repayable from future revenues or proceeds from future equity raisings, subject to not materially prejudicing the ability of the Company to repay its creditors. (b) Sundry payables and accrued expenses Furthermore, included in Sundry payables and accrued expense was $1,033 payable to Mr V. Rigano, a Non-Executive Director. (a) Trade payables Within Sundry payables and accrued expenses, $61,700 relates to accrued interest on the The payable was short-term in nature and no interest is payable. Trade payables are non-interest bearing and normally settled on 60-day terms. loan provided by Talisker (SA) Pty Ltd (an entity associated with the Managing Director Ramy Information regarding the risks associated with current payables is set out in Note 18. Azer) repayable from future revenues or proceeds from future equity raisings, subject to not 11 ISSUED CAPITAL materially prejudicing the ability of the Company to repay its creditors. (b) Sundry payables and accrued expenses 469,627,333 fully paid ordinary shares (2021: 427,710,666) 25,032,561 Within Sundry payables and accrued expenses, $61,700 relates to accrued interest on the loan provided by Talisker (SA) Pty Ltd (an entity associated with the Managing Director Ramy Azer) repayable from future revenues or proceeds from future equity Total issued capital Furthermore, included in Sundry payables and accrued expense was $1,033 payable to Mr V. raisings, subject to not materially prejudicing the ability of the Company to repay its creditors. Rigano, a Non-Executive Director. The payable was short-term in nature and no interest is (a) Ordinary shares Furthermore, included in Sundry payables and accrued expense was $1,033 payable to Mr V. Rigano, a Non-Executive Director. payable. The payable was short-term in nature and no interest is payable. Consolidated 25,672,581 25,032,561 25,672,581 203,984 175,852 121,917 2022 2022 2021 2021 11. Issued Capital At the beginning of the reporting period 11 ISSUED CAPITAL Issued via exercise of options 17 January 2022 (2021: 20 August 2020) 469,627,333 fully paid ordinary shares (2021: 427,710,666) Issued pursuant to private placement 21 October 2021 Total issued capital Issued via exercise of options 24 January 2022 (2021: 17 November 2020) (a) Ordinary shares Issued via exercise of options 30 March 2022 Issued pursuant to 2021 AGM resolution issued pursuant to private placement 1 April 2022 (2021: 4 At the beginning of the reporting period December 2020) Issued via exercise of options 17 January 2022 (2021: 20 Issued pursuant via exercise of options 29 April 2022 August 2020) Issued pursuant via exercise of options 11 May Issued pursuant to private placement 21 October 2021 2022 Issued via exercise of options 24 January 2022 (2021: 17 Shares issued pursuant to private placement on 10 November 2020) December 2021 Issued via exercise of options 30 March 2022 At the end of the reporting period Issued pursuant to 2021 AGM resolution Number $ Number $ 427,710,666 25,032,581 299,343,999 21,395,581 5,000,000 75,000 - - 10,000,000 5,000,000 2022 Number - 150,000 Consolidated 75,000 2022 $ - 3,000,000 25,672,581 11,075,000 25,672,581 30,000 25,032,561 132,900 25,032,561 23,000,000 230,000 - 2021 30,591,667 Number - 2021 367,100 $ 427,710,666 250,000 25,032,581 15,000 299,343,999 14,700,000 21,395,581 735,000 5,000,000 10,000,000 75,000 150,000 3,000,000 - - 11,666,667 10,000,000 - 5,000,000 469,627,333 - - 175,000 150,000 11,075,000 - 23,000,000 - 75,000 25,672,581 - 46,000,000 - 427,710,666 30,591,667 2,142,000 - 25,032,581 367,100 30,000 - 132,900 - 230,000 issued pursuant to private placement 1 April 2022 (2021: 4 On 17 January 2022, the Company announced that it had raised $75,000 by way of a conversion of 5,000,000 options to ordinary December 2020) fully paid shares at a price of $0.015 per new share, and the Company announced the conversion was completed. Issued pursuant via exercise of options 29 April 2022 On 24 January 2022, the Company announced that it had raised $75,000 by way of a conversion of 10,000,000 options to Issued pursuant via exercise of options 11 May ordinary fully paid shares at a price of $0.015 per new share, and the Company announced the placement was completed. 2022 14,700,000 10,000,000 150,000 735,000 250,000 15,000 - - 11,666,667 175,000 - - Shares issued pursuant to private placement on 10 December 2021 At the end of the reporting period 40 - 469,627,333 - 25,672,581 46,000,000 427,710,666 2,142,000 25,032,581 On 17 January 2022, the Company announced that it had raised $75,000 by way of a conversion of 5,000,000 options to ordinary fully paid shares at a price of $0.015 per new share, and the Company announced the conversion was completed. On 24 January 2022, the Company announced that it had raised $75,000 by way of a conversion of 10,000,000 options to ordinary fully paid shares at a price of $0.015 per new share, and the Company announced the placement was completed. 5 6 40 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPAPYRUS AUSTRALIA Issued Capital (Continued) On 17 January 2022, the Company announced that it had raised $75,000 by way of a conversion of 5,000,000 options to ordinary fully paid shares at a price of $0.015 per new share, and the Company announced the conversion was completed. On 24 January 2022, the Company announced that it had raised $150,000 by way of a conversion of 10,000,000 options to ordinary fully paid shares at a price of $0.015 per new share, and the Company announced the placement was completed. On 30 March 2022, the Company announced that it had raised $75,000 by way of a conversion of 5,000,000 options to ordinary fully paid shares at a price of $0.015 per new share, and the Company announced the placement was completed. On 1 April 2022, the Company announced that issued 250,000 ordinary fully paid shares at a price of $0.06 per new share for services rendered, the cost of this transaction was $15,000, and the Company announced the placement was completed. On 29 April 2022, the Company announced that it had raised $150,000 by way of a conversion of 10,000,000 options to ordinary fully paid shares at a price of $0.015 per new share, and the Company announced the placement was completed. On 11 May 2022, the Company announced that it had raised $175,000 by way of a conversion of 11,666,667 options to ordinary fully paid shares at a price of $0.015 per new share, and the Company announced the placement was completed. The holders of ordinary shares are entitled to participate in dividends (in the event when a dividend is declared) and the proceeds on winding up of the Group. Via a poll at meetings of the Group, each holder of ordinary shares has one vote per share held in person. The Group does not have authorised capital or par value in respect of its shares. In the event of winding up the Company, ordinary shareholders rank after all creditors and are fully entitled to any net proceeds of liquidation. (b) Capital Management The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to stakeholders. The capital structure of the Group consists of cash and cash equivalents and equity attributable to equity holders of the parent, comprising issued capital, reserves and accumulated losses. Proceeds from share issues are used to maintain and expand the Group’s plant and equipment requirements, research and development activities and fund operating costs. 5 7 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPapyrus Australia Ltd ABN 63 110 868 409 Notes to the Financial Statements For the year ended 30 June 2022 11 ISSUED CAPITAL (continued) On 30 March 2022, the Company announced that it had raised $75,000 by way of a conversion of 5,000,000 options to ordinary fully paid shares at a price of $0.015 per new share, and the Company announced the placement was completed. On 1 April 2022, the Company announced that issued 250,000 ordinary fully paid shares at a price of $0.06 per new share for services rendered, the cost of this transaction was $15,000, and the Company announced the placement was completed. On 29 April 2022, the Company announced that it had raised $150,000 by way of a conversion of 10,000,000 options to ordinary fully paid shares at a price of $0.015 per new share, and the Company announced the placement was completed. On 11 May 2022, the Company announced that it had raised $175,000 by way of a conversion of 11,666,667 options to ordinary fully paid shares at a price of $0.015 per new share, and the Company announced the placement was completed. The holders of ordinary shares are entitled to participate in dividends (in the event when a dividend is declared) and the proceeds on winding up of the Group. Via a poll at meetings of the Group, each holder of ordinary shares has one vote per share held in person. The Group does not have authorised capital or par value in respect of its shares. In the event of winding up the Company, ordinary shareholders rank after all creditors and are fully entitled to any net proceeds of liquidation. (b) Capital Management The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to stakeholders. The capital structure of the Group consists of cash and cash equivalents and equity attributable to equity holders of the parent, comprising issued capital, reserves and accumulated losses. Proceeds from share issues are used to maintain and expand the Group’s plant and equipment requirements, research and development activities and fund operating costs. 12. Reserves 12 RESERVES Share Option Reserve Balance at beginning of financial year Share based payments Unlisted options purchase payment Balance at end of the year Consolidated Group 30 June 2022 $ 30 June 2021 $ 952,578 97,685 10,000 915,722 36,856 - 1,060,263 952,578 Note 12(a) 12(b) (a) Share option reserve (a) Share option reserve This reserve is used to record the value of equity benefits provided to employees and directors as part of their remuneration. Refer to Note 14 for further details of these plans. There were $97,685 share-based options were issued to employees or This reserve is used to record the value of equity benefits provided to employees and directors during the current year directors as part of their remuneration. Refer to Note 14 for further details of these plans. (b) Unlisted options On 30 August 2021 the Company issued 20,000,000 unlisted options to sophisticated investors exercisable at $0.06 per option There were $97,685 share-based options were issued to employees or directors during the converted with an expiry period of 12 months. The options were issued at a price of $0.0005 per option. current year (b) Unlisted options On 30 August 2021 the Company issued 20,000,000 unlisted options to sophisticated Papyrus Australia Ltd investors exercisable at $0.06 per option converted with an expiry period of 12 months. The ABN 63 110 868 409 options were issued at a price of $0.0005 per option. Notes to the Financial Statements 41 13. Reconciliation Of Net Loss After Tax To Net Cash For the year ended 30 June 2022 Flows From Operations 13 RECONCILIATION OF NET LOSS AFTER TAX TO NET CASH FLOWS FROM OPERATIONS Net loss Non-cash flow in loss: - Depreciation expense - Share-based payment expense - Non-cash share issued recognised as expense - Share of net profit of associate & joint venture Changes in assets and liabilities - Decrease/(Increase) in trade and other receivables - Decrease/(Increase) in trade and other payables Net cash (used in)/provided by operating activities 14 SHARE BASED PAYMENTS Employee Share Option Plan Consolidated Group 30 June 2022 $ 30 June 2021 $ (1,176,771) (90,783) 212 97,685 15,000 - 36,856 - 247,336 (426,199) (2,339) 68,117 (3,377) (14,878) (750,760) (498,381) The Group established the Papyrus Australia Ltd Employee Share Option Plan and a summary of the Rules of the Plan are set out below: • • All employees (full and part time) will be eligible to participate in the Plan. Options are granted under the Plan at the discretion of the Board and if permitted by the Board, may be issued to an employee's nominee. If, prior to the expiry date of options, a person ceases to be an employee of the Group for any reason other than retirement at age 60 or more (or such earlier age as the Board permits), permanent disability, redundancy or death, the options held by that person (or that person's nominee) automatically lapse on the first to occur of a) the expiry of the period of 30 days from the date of such occurrence, and b) the expiry date. If a person dies, the options held by that person will be exercisable by that person's legal personal representative. Options can’t be transferred other than to the legal personal representative of a deceased option holder. The Company will not apply for official quotation of any options issued under the plan. Option holders may only participate in new issues of securities by first exercising their options. • • • • 5 8 The Board may amend the Plan Rules subject to the requirements of the Listing Rules The following table illustrates the number (No.) and weighted average exercise prices (WAEP) and movements in share options issued during the year: A summary of the Group options issued is as follows: 2022 Exercise price WAEP Start of the year No. Granted during the Exercised during the Expired during the year No. year No. year No. 0.05 750,000 (*) 0.015 41,666,667 (**) 250,000 (***) 250,000 (***) 0.20 0.40 0.10 0.06 - 5,250,000(****) - 20,000,000(******) 42,916,667 25,250,000 (41,666,667) (41,666,667) - - - - - - - - - 42 Balance at the end of the year No. Vested and exercisable at the end of the year No. - - - - - - - 750,000 750,000 - 250,000 250,000 250,000 - - 5,250,000 5,250,000 20,000,000 20,000,000 26,500,000 26,250,000 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPAPYRUS AUSTRALIA Papyrus Australia Ltd ABN 63 110 868 409 Notes to the Financial Statements For the year ended 30 June 2022 14. Share Based Payments Employee Share Option Plan 13 RECONCILIATION OF NET LOSS AFTER TAX TO NET CASH FLOWS FROM OPERATIONS Consolidated Group 30 June 2022 30 June 2021 The Group established the Papyrus Australia Ltd Employee Share Option Plan and a summary Net loss of the Rules of the Plan are set out below: Non-cash flow in loss: • All employees (full and part time) will be eligible to participate in the Plan. - Depreciation expense 212 - Share-based payment expense 97,685 • Options are granted under the Plan at the discretion of the Board and if permitted by the - Non-cash share issued recognised as expense - Share of net profit of associate & joint venture Board, may be issued to an employee’s nominee. (1,176,771) (426,199) (90,783) 247,336 36,856 15,000 $ $ - - (3,377) 68,117 (2,339) (14,878) (750,760) 14 SHARE BASED PAYMENTS Net cash (used in)/provided by operating activities Changes in assets and liabilities • - Decrease/(Increase) in trade and other receivables - Decrease/(Increase) in trade and other payables If, prior to the expiry date of options, a person ceases to be an employee of the Group for any reason other than retirement at age 60 or more (or such earlier age as the Board permits), permanent disability, redundancy or death, the options held by that person (or that person’s nominee) automatically lapse on the first to occur of a) the expiry of the period of 30 days from the date of such occurrence, and b) the expiry date. If a person dies, the options held by that person will be exercisable by that person’s legal personal Employee Share Option Plan representative. The Group established the Papyrus Australia Ltd Employee Share Option Plan and a summary of the Rules of the Plan are set out below: • Options can’t be transferred other than to the legal personal representative of a deceased • • All employees (full and part time) will be eligible to participate in the Plan. Options are granted under the Plan at the discretion of the Board and if permitted by the Board, may be issued to an option holder. employee's nominee. • If, prior to the expiry date of options, a person ceases to be an employee of the Group for any reason other than retirement • The Company will not apply for official quotation of any options issued under the plan. at age 60 or more (or such earlier age as the Board permits), permanent disability, redundancy or death, the options held by that person (or that person's nominee) automatically lapse on the first to occur of a) the expiry of the period of 30 days from the date of such occurrence, and b) the expiry date. If a person dies, the options held by that person will be exercisable by • Option holders may only participate in new issues of securities by first exercising their options. that person's legal personal representative. • Options can’t be transferred other than to the legal personal representative of a deceased option holder. • The Company will not apply for official quotation of any options issued under the plan. The Board may amend the Plan Rules subject to the requirements of the Listing Rules • Option holders may only participate in new issues of securities by first exercising their options. (498,381) The following table illustrates the number (No.) and weighted average exercise prices (WAEP) The Board may amend the Plan Rules subject to the requirements of the Listing Rules and movements in share options issued during the year: The following table illustrates the number (No.) and weighted average exercise prices (WAEP) and movements in share options issued during the year: A summary of the Group options issued is as follows: A summary of the Group options issued is as follows: 2022 Exercise price WAEP Start of the year No. Granted during the year No. Exercised during the year No. Expired during the year No. Balance at the end of the year No. Vested and exercisable at the end of the year No. 0.05 750,000 (*) 0.015 41,666,667 (**) 250,000 (***) 250,000 (***) 0.20 0.40 0.10 0.06 - - - - - (41,666,667) - - - - - 5,250,000(****) - 20,000,000(******) 42,916,667 25,250,000 (41,666,667) - - - - - - - 750,000 750,000 - 250,000 250,000 - 250,000 - 5,250,000 5,250,000 20,000,000 20,000,000 26,500,000 26,250,000 (*) 750,000 unlisted exercisable at $0.05 per option were issued to Mr Steve Howes with an expiry date of two years from the date of issue, being 11 November 2020 when the shareholder approval was obtained. Mr Steve Howe was a 42 director of the Company from 7 September 2020 to 1 January 2021 when he resigned from the Board. 5 9 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPAPYRUS AUSTRALIA Share Based Payments (Continued) Papyrus Australia Ltd (**) Unlisted options issued for the investors as part of the November capital raising, and as such this is not ABN 63 110 868 409 Papyrus Australia Ltd share-based payment within the scope of AASB 2. Notes to the Financial Statements ABN 63 110 868 409 (***) A sign-on incentive was provided to Mr P. Rostig as part of his appointment with the Company in prior year, For the year ended 30 June 2022 according to which, 500,000 unlisted options under a contract of employment were issued 4 May 2021, of these Notes to the Financial Statements 250,000 vested on 4 May 2022 have an exercise price of $0.20 per option and expire on 4 May 2026. The remaining 14 SHARE BASED PAYMENTS (Continued) For the year ended 30 June 2022 250,000 options will vest on 4 May 2023 if Mr Rostig remains in employment with the Company, have an exercise (*) 750,000 unlisted exercisable at $005 per option were issued to Mr Steve Howes with an expiry date of two years from the date price of $0.40 per option and an expiry date of 4 May 2026. 14 SHARE BASED PAYMENTS (Continued) of issue, being 11 November 2020 when the shareholder approval was obtained. Mr Steve Howe was a director of the Company from 7 September 2020 to 1 January 2021 when he resigned from the Board. (****) This comprised of: (**) Unlisted options issued for the investors as part of the November capital raising, and as such this is not share-based payment (*) 750,000 unlisted exercisable at $005 per option were issued to Mr Steve Howes with an expiry date of two years from the date within the scope of AASB 2. of issue, being 11 November 2020 when the shareholder approval was obtained. Mr Steve Howe was a director of the Company 1. (***) A sign-on incentive was provided to Mr P. Rostig as part of his appointment with the Company in prior year, according to from 7 September 2020 to 1 January 2021 when he resigned from the Board. which, 500,000 unlisted options under a contract of employment were issued 4 May 2021, of these 250,000 vested on 4 May (**) Unlisted options issued for the investors as part of the November capital raising, and as such this is not share-based payment 2022 have an exercise price of $0.20 per option and expire on 4 May 2026. The remaining 250,000 options will vest on 4 May within the scope of AASB 2. 2023 if Mr Rostig remains in employment with the Company, have an exercise price of $0.40 per option and an expiry date of 4 (***) A sign-on incentive was provided to Mr P. Rostig as part of his appointment with the Company in prior year, according to May 2026. which, 500,000 unlisted options under a contract of employment were issued 4 May 2021, of these 250,000 vested on 4 May (****) This comprised of: 2022 have an exercise price of $0.20 per option and expire on 4 May 2026. The remaining 250,000 options will vest on 4 May 2. 1,000,000 unlisted options exercisable at $0.10 per option and with an expiry date of one year from date of 1. 4,000,000 unlisted options exercisable at $0.10 per option were issued to Ms Chikarovski, a Director of the Company 2023 if Mr Rostig remains in employment with the Company, have an exercise price of $0.40 per option and an expiry date of 4 with an expiry date of one year from the date of issue, being 4 November 2021 shareholder approval for the issue will be May 2026. issue, being 29 March 2023 were issued under an independent services deed executed with Sydney-based obtained at the 2022 AGM. The options had a fair value of $64,832 at the grant date, determined using Black Scholes (****) This comprised of: Markson Sparks Pty Ltd (“MS”) to assist the Company with its promotional activities. The options had a fair valuation model. 1. 4,000,000 unlisted options exercisable at $0.10 per option were issued to Ms Chikarovski, a Director of the Company value of $14,181 at the grant date, determined using Black Scholes valuation model. 2. 1,000,000 unlisted options exercisable at $0.10 per option and with an expiry date of one year from date of issue, being with an expiry date of one year from the date of issue, being 4 November 2021 shareholder approval for the issue will be 29 March 2023 were issued under an independent services deed executed with Sydney-based Markson Sparks Pty Ltd obtained at the 2022 AGM. The options had a fair value of $64,832 at the grant date, determined using Black Scholes (“MS”) to assist the Company with its promotional activities. The options had a fair value of $14,181 at the grant date, 3. 250,000 unlisted options exercisable at $0.10 per option and with an expiry date of three years from date of valuation model. determined using Black Scholes valuation model. 2. 1,000,000 unlisted options exercisable at $0.10 per option and with an expiry date of one year from date of issue, being issue, being 1 April 2025 were issued, for outstanding services rendered by the general manager of Papyrus 3. 250,000 unlisted options exercisable at $0.10 per option and with an expiry date of three years from date of issue, being 29 March 2023 were issued under an independent services deed executed with Sydney-based Markson Sparks Pty Ltd Egypt. The options had a fair value of $6,995 at the grant date, determined using Black Scholes valuation 1 April 2025 were issued, for outstanding services rendered by the general manager of Papyrus Egypt. The options had (“MS”) to assist the Company with its promotional activities. The options had a fair value of $14,181 at the grant date, model. a fair value of $6,995 at the grant date, determined using Black Scholes valuation model. determined using Black Scholes valuation model. 3. 250,000 unlisted options exercisable at $0.10 per option and with an expiry date of three years from date of issue, being (******) Unlisted options issued to sophisticated investor on 20 August 2021, and as such, this is not share-based payment within 1 April 2025 were issued, for outstanding services rendered by the general manager of Papyrus Egypt. The options had (******) Unlisted options issued to sophisticated investor on 20 August 2021, and as such, this is not share-based the scope of AASB 2. a fair value of $6,995 at the grant date, determined using Black Scholes valuation model. payment within the scope of AASB 2. 4,000,000 unlisted options exercisable at $0.10 per option were issued to Ms Chikarovski, a Director of the Company with an expiry date of one year from the date of issue, being 4 November 2021 shareholder approval for the issue will be obtained at the 2022 AGM. The options had a fair value of $64,832 at the grant date, determined using Black Scholes valuation model. (******) Unlisted options issued to sophisticated investor on 20 August 2021, and as such, this is not share-based payment within the scope of AASB 2. Exercised during the year Exercised No. during the year No. 2021 Exercise Price WAEP 2021 Exercise Price WAEP 0.01 Start of the year No. Start of the year No. 2,000,000 Balance at the end of the year Balance at No. the end of the year No. Expired during the year Expired No. during the year No. Granted during the year Granted No. during the year No. (2,000,000) - - - - Vested and exercisable at the end of the year Vested and exercisable No. at the end of the year No. 750,000 750,000 750,000 0.05 - - - 0.015 0.01 0.05 0.20 0.015 0.40 0.20 - 2,000,000 - - - - 2,000,000 - 41,666,667 - 750,000 250,000 41,666,667 250,000 42,916,667 250,000 - (2,000,000) - - - - (2,000,000) - - - - - - - - - 41,666,667 - 750,000 250,000 41,666,667 250,000 42,916,667 250,000 41,666,667 - 750,000 - 41,666,667 - 42,416,667 - 0.40 - 250,000 - 250,000 - The weighted average remaining contractual life of options outstanding at year end was 1.99 years (2021: 2.94 years). The weighted average remaining contractual life of options outstanding at year end was 1.99 years (2021: 2.94 years). 42,916,667 (2,000,000) 42,416,667 42,916,667 2,000,000 - - The range of weighted average exercise prices for options outstanding at the end of the year was $0.158 (2021: $0.02) The range of weighted average exercise prices for options outstanding at the end of the year was $0.158 (2021: $0.02) For the options granted during the current financial year, the valuation model inputs used to determine the fair value at the grant The weighted average remaining contractual life of options outstanding at year end was 1.99 years (2021: 2.94 years). date, are as follows: For the options granted during the current financial year, the valuation model inputs used to determine the fair The range of weighted average exercise prices for options outstanding at the end of the year was $0.158 (2021: $0.02) For the options granted during the current financial year, the valuation model inputs used to determine the fair value at the grant value at the grant date, are as follows: Grant date Fair value at date, are as follows: grant date Share price at grant date Expected volatility Exercise price Risk-free rate Expiry date 4 November 2021 Grant date 29 March 2022 4 November 2022 Expiry date 29 March 2023 $0.057 Share price at $0.061 grant date $0.10 Exercise price $0.10 114.9% Expected volatility 148.9% 1 April 2022 4 November 2021 1 April 2025 4 November 2022 29 March 2022 29 March 2023 1 April 2022 1 April 2025 $0.061 $0.057 $0.061 $0.061 $0.10 $0.10 $0.10 $0.10 148.9% 114.9% 148.9% 148.9% 6 0 43 43 2% Risk-free rate 5% 5% 2% 5% 5% $0.162 Fair value at $.0141 grant date $0.028 $0.162 $.0141 $0.028 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPAPYRUS AUSTRALIA 15. Contingencies And Commitments Papyrus Australia Ltd On 28 January 2022, the Group entered into a Partnership agreement with AL Haram for ABN 63 110 868 409 Plastic Manufacturing with the intention of setting up a joint venture company to manufacture Notes to the Financial Statements banana fibre packaging products. The agreement has a term of 20 years unless terminated earlier by mutually written consents by the parties. As at the reporting date, no financial For the year ended 30 June 2022 contribution has been made by either party towards the set-up of the joint venture company 15 CONTINGENCIES AND COMMITMENTS and negotiation continues to finalise the relevant terms and conditions. On 28 January 2022, the Group entered into a Partnership agreement with AL Haram for Plastic Manufacturing with the intention In the opinion of the Directors, the Group did not have any another commitment or of setting up a joint venture company to manufacture banana fibre packaging products. The agreement has a term of 20 years unless terminated earlier by mutually written consents by the parties. As at the reporting date, no financial contribution has been contingencies at 30 June 2022 (2021: nil). made by either party towards the set-up of the joint venture company and negotiation continues to finalise the relevant terms and conditions. 16. Remuneration Of Auditors In the opinion of the Directors, the Group did not have any another commitment or contingencies at 30 June 2022 (2021: nil). During the financial year the following fees paid or payable for services provided by the 16 REMUNERATION OF AUDITORS Group’s auditors and their network firms: During the financial year the following fees paid or payable for services provided by the Group’s auditors and their network firms: Consolidated Group 30 June 2022 $ 30 June 2021 $ Grant Thornton Audit Pty Ltd Fee for the review of the financial report as at 31 December 2020 - 17,300 BDO Audit (SA) Pty Ltd Fee for the review of the financial report as at 31 December 2021 Fee for the audit and review of the financial report BDO Khaled & Co (BDO network firm) Audit of Component financials Total remuneration of auditors No non - audit services have been provided. 17,000 50,000 $32,500 - 67,000 12,666 62,466 6 1 44 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPAPYRUS AUSTRALIA Papyrus Australia Ltd ABN 63 110 868 409 Notes to the Financial Statements For the year ended 30 June 2022 17. Interest In Controlled Entities And Joint Ventures Papyrus Australia Ltd 17 INTEREST IN CONTROLLED ENTITIES AND JOINT VENTURES ABN 63 110 868 409 Principal place of business / country of incorporation Notes to the Financial Statements Name of entity For the year ended 30 June 2022 Parent entity 17 INTEREST IN CONTROLLED ENTITIES AND JOINT VENTURES Papyrus Australia Ltd (a) Australia Subsidiaries Name of entity Papyrus Technology Pty Ltd (b) PPY Manufacturing Pty Ltd (b) Parent entity Australian Advanced Manufacturing Centre Pty Ltd (b) Papyrus Australia Ltd (a) Joint Venture Subsidiaries Papyrus Egypt LLC Papyrus Technology Pty Ltd (b) PPY Manufacturing Pty Ltd (b) Associate Australian Advanced Manufacturing Centre Pty Ltd (b) Egypt Banana Fiber Company Principal place of business / country of incorporation Australia Australia Australia Australia Egypt Australia Australia Australia Egypt Ownership Interest 2022 % 2021 % Ownership Interest 2022 100 % 100 100 50 100 100 100 39.22% 2021 100 % 100 100 50 100 100 100 25.46% 18. Financial Risk Management 50 50 Egypt Joint Venture *The percentage of ownership interest held is equivalent to the percentage voting rights for all subsidiaries. *The percentage of ownership interest held is equivalent to the percentage voting rights for all subsidiaries. Papyrus Egypt LLC a. Papyrus Australia Ltd is the head entity within the tax-consolidated group. a. Papyrus Australia Ltd is the head entity within the tax-consolidated group. b. These companies are members of the tax-consolidated group. Associate 18 FINANCIAL RISK MANAGEMENT b. These companies are members of the tax-consolidated group. Egypt Banana Fiber Company Categories of financial instruments *The percentage of ownership interest held is equivalent to the percentage voting rights for all subsidiaries. The totals for each category of financial instruments, measured in accordance with the Accounting Standards as detailed in the accounting policies to these financial statements, are as follows: a. Papyrus Australia Ltd is the head entity within the tax-consolidated group. b. These companies are members of the tax-consolidated group. Categories of financial instruments 18 FINANCIAL RISK MANAGEMENT The totals for each category of financial instruments, measured in accordance with the Accounting Standards as detailed in the accounting policies to these financial statements, Categories of financial instruments The totals for each category of financial instruments, measured in accordance with the Accounting Standards as detailed in the are as follows: Financial assets accounting policies to these financial statements, are as follows: Cash and cash equivalents Consolidated Group 30 June 2021 30 June 2022 2,071,640 39.22% 25.46% Egypt Note $ 5 $ Trade and Other receivables Total financial assets Financial Liabilities Financial liabilities at amortised cost Financial assets Trade and other payables Cash and cash equivalents Total financial liabilities Trade and Other receivables 6 1,376,268 Consolidated Group 1,045,373 30 June 2,421,641 2022 30 June 2,524,274 2021 452,634 Note $ $ 10 5 6 203,984 1,376,268 203,984 1,045,373 121,917 2,071,640 121,917 452,634 Total financial assets Credit risk Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in a financial loss to the Group. Financial Liabilities 2,421,641 2,524,274 Financial liabilities at amortised cost The Group has adopted a policy of only dealing with creditworthy counterparties as a means of mitigating the risk of financial loss from activities. Trade and other payables 121,917 10 203,984 Total financial liabilities The Group does not have any significant credit risk exposure to any single counterparty or any Group of counterparties having similar characteristics. The credit risk on liquid funds is limited because the counterparties are banks with high credit-ratings Credit risk assigned by international credit-rating agencies. Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in a financial loss to the Group. 203,984 121,917 The Group has adopted a policy of only dealing with creditworthy counterparties as a means of mitigating the risk of financial loss 45 from activities. The Group does not have any significant credit risk exposure to any single counterparty or any Group of counterparties having similar characteristics. The credit risk on liquid funds is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies. 6 2 45 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPAPYRUS AUSTRALIA Financial Risk Management (Continued) Credit risk Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in a financial loss to the Group. The Group has adopted a policy of only dealing with creditworthy counterparties as a means of mitigating the risk of financial loss from activities. The Group does not have any significant credit risk exposure to any single counterparty or any Group of counterparties having similar characteristics. The credit risk on liquid funds is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies. The carrying amount of financial assets recorded in the financial statements, net of any allowances for losses, represents the Group’s maximum exposure to credit risk. Market risk (i) Cash flow interest rate sensitivity The Group is exposed to interest rate risk as it holds some bank deposits at floating rates. The Group’s policy is to minimise interest rate cash flow risk exposures on long-term financing. Longer-term deposits are therefore usually at fixed rates. At the reporting date, the Group is exposed to changes in market interest rates through its short term bank deposits, which are subject to variable interest rates. (ii) Financial instrument composition and maturity analysis The Group is not materially exposed to any effects on changes in interest rates. The Group has no borrowings outstanding as at the reporting date 30 June 2022 (2021: nil). Trade payables are often settled within 30 day credit term and classified as current liabilities. Liquidity risk Liquidity risk arises from the Group’s management of working capital and the finance charges and principal repayments on its debt instruments. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due. Ultimate responsibility for liquidity risk management rests with the Board of Directors, whom have built an appropriate liquidity risk management framework for the management of the Group’s short, medium and long-term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves. 6 3 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPAPYRUS AUSTRALIA19. Related Parties (a) Transactions with related parties Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated. The following transactions occurred with related parties: Talisker (SA) Pty Ltd (“Talisker”) an entity associated with the Company’s Managing Director, Mr Ramy Azer in 2012 entered into an agreement with the Company to provide a draw down facility of $250,000. The unsecured loan during the year represents the draw down from the facility as at 2022: $0 (2021: $0). The loan is unsecured and repayable from future revenues or proceeds from future equity raisings, subject to not materially prejudicing the ability of the Company to repay its creditors. The is interest bearing at the rate of interest payable by the National Australia Bank Limited on ‘Usaver savings accounts’ or, ’12 month term deposits’(whichever is greater) plus one percent (1%) and is considered payable at the time the loan is repaid. As at 30 June 2022, the accrued interest of $61,700 associated with the loan historically is still outstanding. The interest was agreed between the parties to be paid only when the group makes sufficient profit. This interest portion was presented in the financial statement of the Group within the ‘Trade and other payables’ a current liability as disclosed at note 9(b). Furthermore, included in Sundry payables and accrued expense was $1,033 payable to Mr V. Rigano, a Non-Executive Director. The payable was short-term in nature and no interest is payable. On the 1st November 2021, the Company entered into a services deed with Chikarovski and Associates to provide services with a remuneration of $30,000 per annum. The deed had no fixed term and may be terminated by either party with 30 days’ notice in writing. (b) Interests of Key Management Personnel (KMP) Any person(s) having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director (whether executive or otherwise) of that entity are considered key management personnel. For details of Key Management Personnel’s interests in shares and options of the Company, refer to Key Management Personnel disclosures in the Remuneration Report contained in the Directors’ Report. The following individuals are classified as key management personnel in accordance with AASB 124 ‘Related Party Disclosures’. Mr Edward Byrt - ChairmanMr Ramy Azer - Managing Director Mr David Attias - Non-Executive Director Ms Kerry Chikarovski - Executive Director Mr Vincent Peter Rigano -Non-Executive Director and Company Secretary Mr Daniel Schmidt – General Manager Mr Peter Rostig – Manager Engineering & Business Development 6 4 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPapyrus Australia Ltd ABN 63 110 868 409 Notes to the Financial Statements For the year ended 30 June 2022 19 RELATED PARTIES (Continued) (b) Interests of Key Management Personnel (KMP) Any person(s) having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director (whether executive or otherwise) of that entity are considered key management personnel. For details of Key Management Personnel’s interests in shares and options of the Company, refer to Key Management Personnel disclosures in the Remuneration Report contained in the Directors' Report. The following individuals are classified as key management personnel in accordance with AASB 124 'Related Party Disclosures'. Chairman Mr Edward Byrt Mr Ramy Azer - Managing Director ‑(cid:3) Mr David Attias - Non-Executive Director Ms Kerry Chikarovski - Executive Director Mr Vincent Peter Rigano Non-Executive Director and Company Secretary 20. Key Management Personnel Disclosures Mr Daniel Schmidt – General Manager Mr Peter Rostig – Manager Engineering & Business Development ‑ Totals of remuneration paid 20 KEY MANAGEMENT PERSONNEL DISCLOSURES Key management personnel remuneration included within employee expenses for the year Totals of remuneration paid is shown below: Key management personnel remuneration included within employee expenses for the year is shown below: Short term employee benefits Post-employment benefits ‑ Share based payments Total remuneration paid to key management personnel 30 June 2022 $ 149,949 13,302 13,155 176,406 30 June 2021 $ 17,318 1,645 2,192 21,155 During the year, the Group has a service contract with Mr Azer, the Managing Director and $250,000 has been remunerated to him During the year, the Group has a service contract with Mr Azer, the Managing Director and in accordance with the contract (2021: $145,833). This was included in consultancy expense in the profit or loss. $250,000 has been remunerated to him in accordance with the contract (2021: $145,833). During the year, the Group has a service deed with Chikarovski and Associates, an entity controlled by Ms Kerry Chkarovski, a This was included in consultancy expense in the profit or loss. Director of the Group, and a payment of $20,000 has been paid to this entity under service deed (2021: nil). The audited remuneration report contained in the Directors' Report contains details of the remuneration paid or payable to each During the year, the Group has a service deed with Chikarovski and Associates, an entity member of the Group's key management personnel for the year ended 30 June 2022. controlled by Ms Kerry Chkarovski, a Director of the Group, and a payment of $20,000 has Other key management personnel transactions been paid to this entity under service deed (2021: nil). For details of other transactions with key management personnel, refer to Note 19: Related Parties. The audited remuneration report contained in the Directors’ Report contains details of the remuneration paid or payable to each member of the Group’s key management personnel for the year ended 30 June 2022. Other key management personnel transactions For details of other transactions with key management personnel, refer to Note 19: Related Parties. 21. Parent Entity The following information has been extracted from the books and records of the parent, Papyrus Australia Ltd and has been prepared in accordance with Accounting Standards. 47 The financial information for the parent entity, Papyrus Australia Ltd has been prepared on the same basis as the consolidated financial statements except as disclosed below. Investments in subsidiaries, associates and joint ventures Investments in subsidiaries, associates and joint venture entities are accounted for at cost in the financial statements of the parent entity. Dividends received from associates are recognized in the parent entity profit or loss, rather than being deducted from the carrying amount of these investments. 6 5 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPAPYRUS AUSTRALIA Papyrus Australia Ltd ABN 63 110 868 409 Notes to the Financial Statements For the year ended 30 June 2022 21 PARENT ENTITY The following information has been extracted from the books and records of the parent, Papyrus Australia Ltd and has been prepared in accordance with Accounting Standards. The financial information for the parent entity, Papyrus Australia Ltd has been prepared on the same basis as the consolidated financial statements except as disclosed below. Investments in subsidiaries, associates and joint ventures Investments in subsidiaries, associates and joint venture entities are accounted for at cost in the financial statements of the parent entity. Dividends received from associates are recognized in the parent entity profit or loss, rather than being deducted from the Parent Entity (Continued) carrying amount of these investments. Statement of Financial position Assets Current assets Non-current assets Total Assets Liabilities Current Liabilities Non-current liabilities Total liabilities Equity Issued capital Accumulated losses Reserves Total equity (deficit) Statement of Profit or Loss and other Comprehensive Income Total loss for the year Other comprehensive loss Total comprehensive loss 30 June 2022 $ 30 June 2021 $ 2,421,600 1,055,244 3,476,844 2,524,283 1,299,578 3,823,861 203,985 121,917 - - 203,985 121,917 25,672,581 25,032,581 (23,459,985) (22,192,431) 1,060,263 3,272,859 952,578 3,792,727 (1,267,554) (90,783) - - (1,267,554) (90,783) Contingent liabilities Contingent liabilities Contingent liabilities of the parent entity have been incorporated into the Group information in Note 15. The contingent liabilities of the parent are consistent with that of the Group. Contingent liabilities of the parent entity have been incorporated into the Group information Contractual commitments in Note 15. The contingent liabilities of the parent are consistent with that of the Group. There are no contractual commitments of the parent entity at 30 June 2022 (30 June 2021: nil). 22 MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR Contractual commitments On 29 July 2022 the Company appointed Mr. Pascal Gouel as Executive Director – International Business Development. There are no contractual commitments of the parent entity at 30 June 2022 (30 June 2021: nil). There have been no other significant matters subsequent to the end of the financial year. 22. Matters Subsequent To The End Of The Financial Year On 29 July 2022 the Company appointed Mr. Pascal Gouel as Executive Director – International Business Development. There have been no other significant matters subsequent to the end of the financial year. 48 6 6 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPAPYRUS AUSTRALIA Directors’ Declaration The directors of the Group declare that: 1. the financial statements and notes for the year ended 30 June 2022 are in accordance with the Corporations Act 2001 and: a. comply with Australian Accounting Standards, which, as stated in accounting policy Note 1 to the financial statements, constitutes explicit and unreserved compliance with International Financial Reporting Standards (IFRS); and b. give a true and fair view of the financial position and performance of the consolidated group; 2. the Managing Director and Company Secretary have given the declarations required by Section 295A that: a. the financial records of the Group for the financial year have been properly maintained in accordance with section 286 of the Corporations Act 2001; b. the financial statements and notes for the financial year comply with the Accounting Standards; and c. the financial statements and notes for the financial year give a true and fair view. In the director’s opinion, there are reasonable grounds to believe that the Group will be able to pay its debts as and when they become due and payable with the continuing support of creditors. This declaration is made in accordance with a resolution of the Board of Directors. Mr Ramy Azer Managing Director Dated this 26th day of September 2022 6 7 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPapyrus Australia Ltd ABN 63 110 868 409 Directors’ Declaration 49 The directors of the Group declare that: 1. the financial statements and notes for the year ended 30 June 2022 are in accordance with the Corporations Act 2001 and: a. comply with Australian Accounting Standards, which, as stated in accounting policy Note 1 to the financial statements, constitutes explicit and unreserved compliance with International Financial Reporting Standards (IFRS); and b. give a true and fair view of the financial position and performance of the consolidated group; 2. the Managing Director and Company Secretary have given the declarations required by Section 295A that: a. the financial records of the Group for the financial year have been properly maintained in accordance with section 286 of the Corporations Act 2001; b. the financial statements and notes for the financial year comply with the Accounting Standards; and c. the financial statements and notes for the financial year give a true and fair view. 3. In the director’s opinion, there are reasonable grounds to believe that the Group will be able to pay its debts as and when they become due and payable with the continuing support of creditors. This declaration is made in accordance with a resolution of the Board of Directors. Mr Ramy Azer Managing Director Dated this 26th day of September 2022 Tel: +61 8 7324 6000 Fax: +61 8 7324 6111 www.bdo.com.au BDO Centre Level 7, 420 King William Street Adelaide SA 5000 GPO Box 2018 Adelaide SA 5001 Australia INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF PAPYRUS AUSTRALIA LIMITED Report on the Audit of the Financial Report Opinion We have audited the financial report of Papyrus Australia Limited(the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30 June 2022, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial report, including a summary of significant accounting policies and the directors’ declaration. In our opinion the accompanying financial report of the Group, is in accordance with the Corporations Act 2001, including: (i) Giving a true and fair view of the Group’s financial position as at 30 June 2022 and of its financial performance for the year ended on that date; and (ii) Complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Financial Report section of our report. We are independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. BDO Audit (SA) Pty Ltd ABN 33 161 379 086 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (SA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. 50 6 8 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIA Investment accounted for using the equity method KEY AUDIT MATTER HOW THE MATTER WAS ADDRESSED IN OUR AUDIT As disclosed in Note 9, during the financial Our audit procedures to address the matter included, amongst year ended 30 June 2022, the shareholding in others: Egyptian Banana Fibre Company has increased to 39.22% which gives the Group a total direct and indirect interest in Papyrus Egypt of 69.61%. This is a key audit matter because of the significant management judgement involved in the assessment of whether the Group has control over Papyrus Egypt and the consequential accounting implications. • • • • Reviewing investment and shareholder documents. Confirming the Group’s interest in each investee entity. Evaluating the Group’s accounting for its investments for consistency with Australian Accounting Standards, including the appropriateness of the equity accounting method. Assessing the appropriateness and accuracy of the disclosures to the financial statements in accordance with the applicable Accounting Standards. Other information The directors are responsible for the other information. The other information comprises the information in the Group’s annual report for the year ended 30 June 2022, but does not include the financial report and the auditor’s report thereon. Our opinion on the financial report does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the directors for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic alternative but to do so. 6 9 51 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIA Auditor’s responsibilities for the audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf This description forms part of our auditor’s report. Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in pages 16 to 19 of the directors’ report for the year ended 30 June 2022. In our opinion, the Remuneration Report of Papyrus Australia Limited, for the year ended 30 June 2022, complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. BDO Audit (SA) Pty Ltd Andrew Tickle Director Adelaide, 26 September 2022 7 0 52 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIA ASX Additional Information ASX Additional Information Additional information required by the Australian Stock Exchange Limited and not shown elsewhere in the report follows. The information is current as at 26 September 2022. Additional information required by the Australian Stock Exchange Limited and not shown elsewhere in the report follows. The information is current as at 26 September 2022. ASX Additional Information Distribution of equity securities Ordinary share capital Additional information required by the Australian Stock Exchange Limited and not shown elsewhere in the report follows. The information is current as at 26 September 2022. 469,627,333 Fully paid ordinary shares are held by 1,965 individual shareholders. Distribution of equity securities • Ordinary share capital Distribution of equity securities All issued ordinary shares carry one vote per shares. • Options Ordinary share capital 469,627,333 Fully paid ordinary shares are held by 1,965 individual shareholders. • All issued ordinary shares carry one vote per shares. • 469,627,333 Fully paid ordinary shares are held by 1,965 individual shareholders. Options 6,250,000 Options are held by 5 individual option holders. All issued ordinary shares carry one vote per shares. • The number of shareholders, by size of holding, in each class are: 6,250,000 Options are held by 5 individual option holders. Options The number of shareholders, by size of holding, in each class are: • 6,250,000 Options are held by 5 individual option holders. Fully Paid The number of shareholders, by size of holding, in each class are: 107 254 292 Fully Paid 970 107 342 254 1,965 292 970 724 342 1,965 1-1,000 1,001 - 5000 5,001 – 10,000 10,001 – 100,000 1-1,000 100,001 and over 1,001 - 5000 5,001 – 10,000 10,001 – 100,000 Holding less than a marketable parcel 100,001 and over Unquoted Options 0 0 0 Unquoted Options 0 0 6 0 6 0 0 0 6 6 Holding less than a marketable parcel 724 0 Substantial shareholders Substantial shareholders Substantial shareholders Ordinary shareholders Fully paid Number Percentage Fully paid Number Percentage 75,071,889 30,756,400 25,562,497 23,000,000 75,071,889 17,637,489 30,756,400 16,456,061 25,562,497 23,000,000 72,738,550 17,637,489 15.99 10.17 8.45 7.61 15.99 5.83 10.17 5.44 8.45 7.61 30.93% 5.83 16,456,061 5.44 72,738,550 30.93% Ordinary shareholders CERTANE CT PTY LTD BIJO (SA) PTY LTD RONDELLE PTY LTD UNION PACIFIC EQUITIES PTY LTD CERTANE CT PTY LTD MR RAMY AZER BIJO (SA) PTY LTD STROUD NOMINEES PTY LTD A/C> UNION PACIFIC EQUITIES PTY LTD MR RAMY AZER STROUD NOMINEES PTY LTD 53 53 7 1 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPAPYRUS AUSTRALIAASX Additional Information Twenty largest holders of quoted equity securities Twenty largest holders of quoted equity securities CERTANE CT PTY LTD BIJO (SA) PTY LTD RONDELLE PTY LTD UNION PACIFIC EQUITIES PTY LTD MR RAMY AZER STROUD NOMINEES PTY LTD MRS MARGARET FAY FULLER V P RIGANO & CO PTY LTD MR KARIM MOHAMED HAMDOUH ABBAS BPE INVESTMENTS PTY LTD MR STEVO HINIC STROUD NOMINEES PTY LTD MR PAUL LAPERE MR CON TSAKALIS MR DAVID ROBERT WOODWARD MR EHAB AMIR NAKHLA HENNES MR ANTHONY RICHARD LEWIS MR MARIO ALDO ZANDEL + MISS DEIRDRIE ANNE BLOOMFIELD MRS MARGARET THORPE WOODWARD IRWIN BIOTECH NOMINEES PTY LTD Fully Paid Ordinary Shares Number 75,071,889 30,756,400 25,562,497 24,700,000 17,637,489 16,456,061 12,000,000 11,625,445 11,125,000 10,714,655 9,001,000 8,785,768 6,009,751 5,400,000 5,248,000 5,184,165 3,950,000 3,119,182 3,100,000 3,000,000 Percenta ge 15.99 6.55 5.44 5.26 3.76 3.50 2.56 2.48 2.37 2.28 1.92 1.87 1.28 1.15 1.12 1.10 0.84 0.66 0.66 0.64 288,447,302 61.42 54 7 2 PAPYRUS AUSTRALIAPAPYRUS AUSTRALIAPAPYRUS AUSTRALIAConfidential and proprietary. Copyright (c) by Papyrus Australia Ltd. All Rights Reserved. PAPYRUS AUSTRALIA

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