First Graphene Ltd. - Annual Report 2022

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ACN 007 870 760 ABN 50 007 870 760

ASX APPENDIX 4E

PRELIMINARY FINAL REPORT

FOR THE YEAR ENDED 30 JUNE 2022

(INCORPORATING INFORMATION PURSUANT TO ASX LISTING RULE 4.3A)

ASX Appendix 4E

Details of the Reporting Period

Current reporting period: 30 June 2022 Previous corresponding reporting period: 30 June 2021 Functional Currency Australian Dollars

Results for Announcement to the Market

	30 June	30 June	Change
	2022	2021
	$	$	$	%
Revenue from ordinary activities	723,323	341,869	381,454	112%
Loss from ordinary activities after tax attributable to members	(4,727,073)	(6,255,830)	1,528,757	24%
Net Loss for the period attributable to members	(5,033,108)	(6,284,757)	1,251,649	20%
Basic & Diluted (loss) per share (cents per share)	(0.91)	(1.19)	0.28	24%

Dividends

No dividends have been paid or are proposed to be paid by First Graphene Limited and there is no dividend reinvestment plan in place / operation for the year ended 30 June 2022 (2021:Nil)

Net Tangible Assets per share

	30 June	30 June
	2022	2021
	Cents per Share	Cents per Share
Net Tangible Assets per share	1.50	1.72

Control Gained or Lost over Entities

There were no changes to control over entities by First Graphene limited or its subsidiaries during the financial year

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Details of Associates and Joint Ventures

No material impact to the consolidated group result of First Graphene Limited from the investment noted below

Name of Entity Holding % planarTECH (Holdings) Ltd 2.1%

Commentary on results for the period

Please refer to Results Review on Page 3

Compliance Statement

The attached Annual Financial Report has been prepared using Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (“AASB”)

Audit Status

The attached Annual Financial Report for the year ended 30 June 2022 has been subject to an audit by our external auditor, BDO Audit (WA) Pty Ltd. A copy of the independent audit report to the members of First Graphene Limited is included in the accompanying Financial Report.

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Results Review for Financial Year 2022

The financial year ended 30 June 2022 (FY22) saw First Graphene Ltd. (“FGR” or the “Company”) complete its first full financial year under its new commercial strategy and leadership.

Despite the significant macro socio-economic events around the world, namely the war in Ukraine, COIVD 19 and high inflationary pressures, FGR continued to deliver on its strategy.

Some of the key financial highlights this year for FY22 include the following:

Full Year ended 30 June	2022	2021	Variance
	A$000	A$000	%
Sales Revenue	723	342	112%
Operating Profit / (Loss)	(5,033)	(6,285)	20%
Operating & Investing Cashflow	(4,490)	(8,599)	48%
Capital Expediture	91	1,524	94%

Commercial strategy delivers and evolves

Sales have more than doubled during the year (+112%), building on the revenue from early adopters in Western Australia such as Aquatic Leisure and newGen group through to new customers in the US and Europe. These include customers who are developing graphene enhanced cement, geotextile materials and solar panels. FGR has also begun to diversify its technology offering through provision of application development services, evolving from a graphene manufacturer to a true advanced materials technology company.

Disciplined Growth

Whilst the commercial strategy is heading into an exciting and rapid growth phase, FGR management have maintained a strong focus on cashflow management. Cash outflow has reduced by nearly 50% and the Operating loss has reduced by 20% compared to FY21. This has been delivered through tight cost controls, switching focus to initiatives that can deliver a rapid commercial return and provision of non-cash incentives to employees. This has helped build a resilient platform on which the company will continue to grow and expand its sales focused strategy in a disciplined and responsible manner.

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ACN 007 870 760 ABN 50 007 870 760

ANNUAL FINANCIAL REPORT

30 JUNE 2022

Corporate Directory

Directors

Share Registry

Warwick Grigor (Non-Executive Chairman) Dr Andy Goodwin (Non-Executive Director) Michael Quinert (Non-Executive Director) Michael Bell (Managing Director and CEO)

Automic Registry Services Level 5, 191 St Georges Terrace, Perth WA 6000

All securityholder correspondence to: PO Box 5193, Sydney, NSW 2001

Contact:

Company Secretary

Aditya Asthana

P: 1300 288 664 (within Australia) P: +61 (0)2 9698 5414 (outside Australia) Email: [email protected] Website: www.automic.com.au

Principal Registered Office in Australia

1 Sepia Close Henderson WA 6166 Telephone: +61 1300 660 448 Email: [email protected] Website: www.firstgraphene.net

Auditor

BDO Audit (WA) Pty Ltd Level 9, Mia Yellagonga Tower 2 5 Spring St Perth WA 6000

Stock Exchange Listings

The Company is listed on the Australian Securities Exchange under the trading code FGR

The Company is quoted on the Frankfurt Stock Exchange under the trading code FSE:M11.

The Company is quoted on the OTCQB market in the USA under the trading code FGPHF.

Solicitors – Australia

EMK Lawyers Suite 1, 519 Stirling Hwy, Cottesloe WA 6011 PO Box 103, Cottesloe WA 6011

Bankers – Australia

Westpac Banking Corporation

Level 6, 109 St Georges Terrace, Perth WA 6000

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Table of Contents	Table of Contents
Corporate Directory............................................................................................................................. 2
Table of Contents ............................................................................................................................................. 3
Directors’ Report.................................................................................................................................................. 4
Remuneration report (audited)..................................................................................................................... 8
Auditor’s Independence Declaration .............................................................................................................. 16
Consolidated Statement of Profit or Loss and Other Comprehensive Income ............................................ 17
Consolidated Statement of Financial Position ................................................................................................. 19
Consolidated Statement of Changes in Equity ............................................................................................... 20
Consolidated Statement of Cash Flows ........................................................................................................... 21
1.	Basis of Preparation ............................................................................................................................... 22
2.	Segment reporting ................................................................................................................................. 26
3.	Revenue from contracts with customers ............................................................................................ 29
4.	Operating expenses and other income .............................................................................................. 29
5.	Finance income and expense ............................................................................................................. 31
6.	Income tax ............................................................................................................................................. 32
7.	Loss per share ......................................................................................................................................... 33
8.	Cash and cash equivalents .................................................................................................................. 34
9.	Inventories ................................................................................................................................ 34
10.	Other assets ......................................................................................................................... 35
11.	Property, plant and equipment ........................................................................................ 35
12.	Trade and other payables ................................................................................................. 37
13.	Financial liabilities................................................................................................................ 37
14.	Financial Risk Management .............................................................................................. 39
15.	Issued capital ...................................................................................................................... 46
16.	Share based payments ...................................................................................................... 48
17.	Reserves and accumulated losses ................................................................................... 50
18.	Statement of cash flow reconciliation ............................................................................. 50
19.	Commitments ...................................................................................................................... 51
20.	Results of the parent company ......................................................................................... 51
21.	Events since the end of the financial year ...................................................................... 52
22.	Related party transactions ................................................................................................ 52
23.	Auditors’ remuneration ...................................................................................................... 53
Directors’ Declaration ........................................................................................................................ 54
Independent Auditor’s Report .......................................................................................................... 55
Additional Securities Exchange Information................................................................................... 59

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Directors’ Report

The directors present their report together with the financial report of First Graphene Limited (‘First Graphene” or ‘Company’) and the entities it controlled (‘Consolidated Entity’ or ‘Group’) for the year ended 30 June 2022.

Directors

The names and details of the Company’s Directors in office during the financial year and until the date of this report are as follows. The Directors were in office for this entire period unless otherwise stated.

Warwick Grigor BEc. LLB, MAusIMM, FAICD

Non-Executive Chairman

Mr Grigor is a highly respected and experienced mining analyst, with an intimate knowledge of all market related aspects of the mining industry. He is a graduate of the Australian National University having completed degrees in law and economics. His association with mining commenced with a position in the finance department of Hamersley Iron, and from there he moved to Sydney to become a mining analyst with institutional stockbrokers. Mr Grigor left County NatWest Securities in 1991 to establish Far East Capital Limited which was founded as a specialist mining company financier and corporate adviser, together with Andrew "Twiggy" Forrest.

In 2008, Far East Capital Limited sponsored the formation of a stockbroking company, BGF Equities, and Mr Grigor assumed the position of Executive Chairman. This was re-badged as Canaccord Genuity Australia Limited when a 50% stake was sold to Canaccord Genuity Group Inc. Mr Grigor retired from Canaccord in October 2014, returning to Far East Capital Limited.

Other Current Directorships None	Former directorships in the last 3 years None	Interests in shares and options Ordinary shares19,083,772 Options 3,000,000

Dr Andy Goodwin Ph.D. (Polymer Chemistry)

Non-Executive Director

Andy has a successful track record in innovation and technology development roles within the speciality chemicals industry. Andy has extensive leadership experience with Sanofi, Dow Corning Corporation and Thomas Swan & Co. Ltd. He has a PhD in polymer chemistry and an MTE Diploma from the IMD Business School in Lausanne, Switzerland.

Andy has been actively involved in the development of the graphene materials industry since 2012. He joined First Graphene in 2017 and is based in Manchester, UK.

Other Current Directorships None	Former directorships in the last 3 years None	Interests in shares and options Ordinary shares2,008,993 Options 1,000,000

Michael Quinert

Non-Executive Director

Mr Quinert is a founding partner of QR Lawyers which was established in July 2009. He has over 30years’ experience as a commercial and corporate lawyer, including three years with ASX and over 21 years as a partner in a Melbourne law firms.

Mr Quinert has extensive experience assisting and advising companies on IPO’s, capital raising, cross border transactions, regulatory compliance and has regularly advised publicly listed mining companies.

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Michael is a Non-Executive Chairman of West Wits Mining Limited and Non-Executive Director of listed First Au Limited (ASX:FAU).

Other Current Directorships West Wits Mining Limited First Au Limited	Former directorships in the last 3 years Manalto Limited (ASX: MTL) Covata Limited (ASX: CVT)	Interests in shares and options Ordinary shares80,000 Options -

Michael Bell (Appointed 1[st] July 2021)

Managing Director and Chief Executive Officer

Mr Bell has over 21 years’ experience in engineering and business management and significant international experience driving business growth.

He was with ST Engineering Group where he served as Senior Vice-President.

Mike has also held roles as Director for Navman Wireless, a global Telematics company, and as General Manager with Singapore-based shipbuilder Strategic Marine.

Other Current Directorships None	Former directorships in the last 3 years None	Interests in shares and options Ordinary shares134,000 Options 5,000,000

Results and Dividends

The Group result for the year was a loss of $5,033,108 (2021: loss of $6,284,757).

No final dividend has been declared or recommended as at 30 June 2022 or as at the date of this report (2021: $ nil).

No interim dividends have been paid (2021: nil).

Principal Activities

During the financial year the principal continuing activities of the Consolidated Entity was as the leading supplier of high-performing graphene products with a robust manufacturing platform and an established 100 tonne/year graphene production capacity. PureGRAPH[®] graphene is easy to use and is enhancing the properties of customers’ products and materials across industries and applications worldwide.

First Graphene Limited has a primary manufacturing base in Henderson, near Perth, WA. The Company is incorporated in the UK as First Graphene (UK) Ltd. and is a Tier 1 partner at the Graphene Engineering and Innovation Centre (GEIC), Manchester, UK.

Events Since the End of the Financial Year

No other matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in subsequent financial years.

Significant Changes in State of Affairs

There were no significant changes in the state of affairs of the consolidated entity during the financial year.

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Likely Developments and expected results of operations

The Directors have excluded from this report any further information on the likely developments in the operations of the Group and the expected results of those operations in future financial years, other than as mentioned in the Chairman’s Statement and Review of Operations, as the Directors have reasonable grounds to believe the nascent nature of the graphene market makes it impractical to forecast future profitability and other material financial events.

Directors’ and other officers’ emoluments

Details of the remuneration policy for Directors and other officers are included in the Remuneration Report (page 10) and the Corporate Governance Report lodged separately on ASX on the same day as this report is lodged.

Details of the nature and amounts of emoluments for each Director of the Company and Executive Officers are included in the Remuneration Report.

Environmental Regulations

The Group’s graphene production and sales operations are subject to regulation In Australia by the Australian Industrial Chemicals Introduction Scheme (AICIS) and by the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) in the European Union and United Kingdom.

The Company’s Commercial Graphene Production facility has been approved as meeting the environmental standards set down by the Government of Western Australia’s Department of Environment Regulation.

Proceedings on behalf of company

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

The Company was not a party to any such proceedings during the year.

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Share Options

At the date of this report, First Graphene Limited has the following options exercisable into ordinary shares in First Graphene Limited.

Unlisted	Grant Date	Date of		Exercise Price	Number
		Expiry			under
					option
Share option	8 November	8	$0.25	each, if exercised on	15,000,000
	2019	November	or before 8 November
		2023	2023

Directors’ meetings

The number of meetings of Directors held during the year and the number attended by each Director was as follows:

	Directors’ Meetings	Directors’ Meetings
	Meetings Attended	Entitled to Attend
Warwick Grigor	8	8
Dr Andy Goodwin	8	8
Michael Quinert	8	8
Michael Bell	8	8

Indemnification and insurance of officers and auditors

Under the Company’s constitution and subject to section 199A of the Corporations Act 2001, the Company indemnifies each of the directors, the company secretary and every other person who is an officer of the Company and its wholly-owned subsidiaries. The above indemnity is a continuing indemnity and applies in respect of all acts done by a person while an officer of the Company or its wholly-owned subsidiaries even though the person is not an officer at the time the claim is made.

The Company has entered into a Deed of Indemnity, Access and Insurance (“Deed”) with each current and former officer of the Company and its subsidiaries, including each director and company secretary and persons who previously held those roles.

During the financial year, the Company has paid a premium in respect of insuring the directors and officers of the Company and the Group. The insurance contract prohibits disclosure of the premium or the nature of liabilities insured against under the policy.

No indemnity or insurance is in place in respect of the auditor.

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Remuneration report (audited)

The information provided in this Remuneration Report has been audited as required by section 308(3C) of the Corporations Act 2001.

This report outlines the remuneration arrangements in place for Directors of First Graphene Limited and Executives of the Group.

Key Management Personnel (‘KMP’) disclosed in this report:

Mr Warwick Grigor Dr Andy Goodwin Mr Michael Bell (Appointed 1 July 2021) Mr Aditya Asthana Mr Michael Quinert

Remuneration Policy

Emoluments of Directors and Senior Executives are set by reference to payments made by other companies of similar size and industry, and by reference to the skills and experience of the Directors and Executives. Details of the nature and amounts of emoluments of each Director of the Company are disclosed annually in the Company's annual report.

Directors and Senior Executives are prohibited from entering into transactions or arrangements which limit the economic risk of participating in unvested entitlements.

There has been no direct relationship between the Group’s financial performance and remuneration of key management personnel over the previous 5 years.

Executive Director Remuneration

Executive pay and reward consist of a base fee and short-term performance incentives. Long term performance incentives may include options granted at the discretion of the Board and subject to obtaining the relevant approvals. The grant of options is designed to recognise and reward efforts as well as to provide additional incentive and may be subject to the successful completion of performance hurdles.

Executives are offered a competitive level of base pay at market rates (for comparable companies) and are reviewed annually to ensure market competitiveness.

The remuneration policy is designed to encourage superior performance and long-term commitment to First Graphene. At this stage of the Company’s development there is no contractual performance-based remuneration.

Executive Directors do not receive any fees for being Directors of First Graphene or for attending Board meetings.

All Executive Directors, Non-Executive Directors and responsible executives of First Graphene are entitled to an Indemnity and Access Agreement under which, inter alia, they are indemnified as far as possible under the law for their actions as Directors and officers of First Graphene.

Non-Executive Director Remuneration

The Company's policy is to remunerate non-executive Directors at a fixed fee for time, commitment and responsibilities. Remuneration for Non-Executive Directors is not linked to individual performance. Given the Company is at its early stage of development and the financial restrictions placed on it, the Company may consider it appropriate to issue unlisted options to Non-Executive Directors, subject to obtaining the relevant approvals. This Policy is

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subject to annual review. All of the Directors' option holdings are fully disclosed. From time to time the Company may grant options to non-executive Directors. The grant of options is designed to recognise and reward efforts as well as to provide Non-Executive Directors with additional incentive to continue those efforts for the benefit of the Company.

Non-Executive Directors are remunerated for their services from the maximum aggregate amount (currently $300,000 per annum) approved by shareholders for this purpose. They receive a base fee which is currently set at $25,000 per annum per non-executive Director and $30,000 per annum for the non-executive Chairman. There are no termination payments to non-executive Directors on their retirement from office.

The Company’s policy for determining the nature and amounts of emoluments of Board members and Senior Executives of the Company is set out below:

Setting Remuneration Arrangements

The Company does not have a separate Remuneration Committee. Given the current size and composition of the Board, the Board believes there would be no efficiencies gained by establishing a separate Remuneration Committee. Accordingly, the Board performs the role of the Remuneration Committee. When the Board convenes as the Remuneration Committee it carries out those functions which are delegated to it in the Company’s Remuneration Committee Charter.

Executive Officer Remuneration, including Executive Directors

The remuneration structure for Executive Officers, including Executive Directors, is based on a number of factors, including length of service, the particular experience of the individual concerned, and the overall performance of the Company. The contracts for service between the Company and specified Directors and Executives are on a continuing basis, the terms of which are not expected to change in the immediate future. Upon retirement Executive Directors and Executives are paid employee benefit entitlements accrued to the date of retirement.

As an incentive, the Company has adopted an employee share option plan. The purpose of the plan is to give employees, directors and officers of the Company an opportunity, in the form of options, to subscribe for shares. The Directors consider the plan will enable the Company to retain and attract skilled and experienced employees, board members and officers, and provide them with the motivation to make the Company more successful.

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Details of remuneration for the year ended 30 June 2022

The remuneration for each Director and key management executives of the Group during the year was as follows:

				Short term incentives & other benefits	Short term incentives & other benefits	Short term incentives & other benefits
	Base consulting fee	Vehicle allowance	Director’s fees	Salary	Bonus payment as per contracts	Post- Employment Entitlements	Termination Payment	Share based payments	Total	Value of remuneration which is performance related
30 June 2022	A$	A$	A$	A$	A$	A$	A$	A$	A$	%
Executive Directors										-
Michael Bell(i) (ii)	-	-	-	383,374	-	-	-	281,602	664,976	42%

Non-Executive Directors
Warwick Grigor	-	-	30,000	90,000	-	12,000	-	-	132,000	-
Dr Andy Goodwin	-	-	25,000	123,089	-	10,533	-	-	158,622	-
Michael Quinert	-	-	34,992	-	-	-	-	-	34,992	-
Other Key Management Personnel
Aditya Asthana	-	-	-	231,651	-	23,165	-	9,567	264,383	3%

Total	-	-	89,992	828,114	-	45,698	-	291,169	1,254,973

i. Michael Bell was appointed Managing Director on 1 July 2021.

ii. The share based payment represents the fair value expense of the 5,000,000 options granted to Michael Bell in the financial year 2021, which he can choose to exercise by paying $0.25 per share to the company

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Details of remuneration for the year ended 30 June 2021

The remuneration for each Director and key management executives of the Group during the year was as follows:

				Short term incentives & other benefits	Short term incentives & other benefits	Short term incentives & other benefits
	Base consulting fee	Vehicle allowance	Director’s fees	Salary	Bonus payment as per contracts (viii)	Post- Employment Entitlements	Termination Payment	Share based payments	Total	Value of remuneration which is performance related
30 June 2021	A$	A$	A$	A$	A$	A$	A$	A$	A$	%
Executive Directors										-
Craig McGuckin(i) (ii)	315,472	7,290	-	-	100,000	-	392,887	-	815,649	-
Peter Youd(i) (iii)	407,311	10,843	-	-	100,000	-	274,919	-	793,073	-
Non-Executive Directors
Warwick Grigor(i)	-	-	30,000	90,000	100,000	11,450	-	-	231,450	-
Dr Andy Goodwin(i), (iv)	-	-	25,000	122,142	-	-	-	-	147,142	-
Michael Quinert(v)	-	-	11,664	-	-	-	-	-	11,664	-
Other Key Management Personnel
Michael Bell(vi)(ix)	-	-	-	151,563	-	2,375	-	216,556	370,494	58%
Aditya Asthana(vii)	-	-	-	61,111	-	6,111	-	3,150	70,372	4%
Total	722,783	18,133	66,664	424,816	300,000	19,936	667,806	219,706	2,439,844

i. Mr Craig McGuckin and Mr Peter Youd do not receive director’s fees however are compensated in accordance with their respective consultant agreement. Mr Warwick Grigor and Mr Andy Goodwin receive a salary for their director services.
ii. Mr McGuckin retired on 8 January 2021
iii. Mr Peter Youd retired on 28 April 2021
iv. Dr Andy Goodwin was appointed a Non-Executive Director on 1 July 2020
v. Mr Michael Quinert was appointed a Non-Executive Director on 1 March 2021
vi. Mr Michel Bell commenced as Chief Executive Officer on 11 January 2021
vii. Mr Aditya Asthana commenced as Chief Financial Officer & Company Secretary on 22 March 2021
viii. Bonus payments reflects entitlements due under appointment contracts for performance in 2020.
ix. The share based payment represents the fair value of the 5,000,000 options granted to Michael Bell upto June 2021, which he can choose to exercise by paying $0.25 per share to the company.

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The remuneration policy has been tailored to increase goal congruence between shareholders, directors and executives. The Group is in the early development phase of its operations, and due consideration is made of developing long term shareholder value. The Board has regard to the following indices in respect of the current financial year to facilitate the long-term growth of the Consolidated Group:

Item	2022	2021	2020	2019	2018
Sales revenue $	723,323	341,869	289,773	22,771	7,180
Loss before tax $	(5,033,108)	(6,284,757)	(5,366,149)	(6,986,738)	(7,024,612)
Basic loss per shares	(0.91)	(1.19)	(1.11)	(1.78)	(1.65)
(cents)
Increase/(decrease) in	(60.34)	133.1	(45.1)	134.2	275.3
share price %

Relationship between Remuneration and Company Performance

There is not a connection between the profitability of the Company and remuneration as the Company is not generating revenues.

Name	% Fixed remuneration	% Short Term Incentive	% Long Term Incentive
Warwick Grigor	100%	-	-
Dr Andy Goodwin	100%	-	-
Michael Quinert	100%	-	-
Michael Bell	58%	42%	-
Aditya Asthana	97%	3%	-

Contractual Arrangements with KMP

Remuneration and other terms of employment for Key Management Personnel are formalised in service agreements. These agreements specify the components of remuneration benefits and notice periods. The material terms of service agreements with the Key Management Personnel are noted as follows:

			Notice Period	Notice Period
Name	Base Salary	Duration of	By Executive	By Company	Severance
		Service			Payment
		Agreement			Entitlement
Michael Bell	350,000	Ongoing	3 months	3 months	No
					entitlement
Aditya	235,000	Ongoing	3 months	3 months	No
Asthana					entitlement

There are no other service agreements in place.

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Share-based compensation

Shares issued as part of remuneration for the year ended 30 June 2022

60,000 shares were issued to key management personnel as their performance rights (granted FY 21) vested during the year.

Options issued as part of remuneration for the year ended 30 June 2022

No options were issued to key management personnel as part of compensation during the year.

Options issued as part of remuneration in prior years

Using the Black Scholes option pricing model and based on the assumptions set out below, the CEO Options were ascribed the following value:

Assumptions:
Valuation date	17 December 2020
Market price of shares	$0.245
Exercise price	$0.250
Expiry date (length of time from issue)	8 November 2023 – 2.89 years
Risk free interest rate	0.25%
Volatility	75%
Indicative Value of CEO Option (cents)	0.1158
Total Value of CEO Options	$579,069

Options holdings held by key management personnel

Directors	Balance 01.07.21			Other (i)	Balance 30.06.22
Warwick
Grigor	11,854,951	-	-	(8,854,951)	3,000,000	-	-	-
Dr Andy
Goodwin	3,108,993	-	-	(2,108,993)	1,000,000	-	-	-
Michael
Quinert	-	-	-	-	-	-	-	-
Michael
Bell	5,000,000	-	-	-	5,000,000	-	-	-
Aditya
Asthana	-	-	-	-	-	-	-	-

i. Expired

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Performance rights issued as part of remuneration for the year ended 30 June 2022

No Performance rights were issued to key management personnel as part of compensation during the year.

Performance rights holdings held by key management personnel

Directors	Balance 01.07.21		Vested
Warwick
Grigor	-	-	-	-	-
Dr Andy
Goodwin	-	-	-	-	-
Michael
Quinert	-	-	-	-	-
Michael
Bell	-	-	-	-	-
Aditya
Asthana	60,000	-	60,000	-	-

Shareholdings held by key management personnel

Directors	Balance 01.07.21	Granted	Exercise of options	Acquired	Acquired	Other	Balance 30.06.22
Warwick
Grigor	18,883,772	-	-	200,000 (i)		-	19,083,772
Dr Andy
Goodwin	2,008,993	-	-		-	-	2,008,993
Michael
Quinert	-	-	-	80,000 (i)		-	80,000
Michael
Bell	-	-	-	134,000 (i)		-	134,000
Aditya
Asthana	-	-	-		-	60,000 (ii)	60,000

i. Shares purchased on the market by these KMP.

ii. Shares issued upon vesting of performance rights in the year.

Transactions with other related parties

There were no loans or other transactions with key management personnel.

No remuneration consultants were utilised at this point in the Company’s development.

Voting Rights

At the 2021 Annual General Meeting held on 25 November 2021 there were 4.33% of the votes against the adoption of the remuneration report.

End of audited Remuneration Report

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Auditor’s independence

The Directors received the independence declaration from the auditor of First Graphene Limited as stated on page 18.

Non-audit services

During the period BDO Corporate Tax (WA) Pty Ltd was paid $50,668 for the provision of taxation services (2021: $50,454). BDO Corporate Tax (WA) Pty Ltd is an affiliate member of BDO Audit (WA) Pty Ltd. Refer to Note 22 for further details

The board of directors has considered the position and is satisfied the provision of the nonaudit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001 . The directors are satisfied the provision of non-audit services by the auditor, as set out in Note 22, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:

all non-audit services have been reviewed by the board to ensure they do not impact the impartiality and objectivity of the auditor
none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants

Signed in accordance with a Resolution of the Directors.

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Michael Bell

Managing Director and Chief Executive Officer

Dated at Perth this 31[st ] day of August 2022

Corporate Governance Statement

The Company's full Corporate Governance Statement is available on the Company's website, www.firstgraphene.net/corporate/corporate-governance.html.

A completed Appendix 4G and the full Corporate Governance Statement have been lodged with the Australian Securities Exchange as required under Listing Rules 4.7.3 and 4.7.4.

Annual General Meeting

The Company’s Annual General Meeting will be held on 17[th] October 2022.

Details will be included in the Annual report and the Notice of Meeting, which will be issued in due course.

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Auditor’s Independence Declaration

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Consolidated Statement of Profit or Loss and Other Comprehensive

Income

For the year ended 30 June 2022

Note	2022 $ 2021 $
Continuing operations Revenue from contracts with customers 3 Cost of goods sold Gross profit Other income 4(a) Research & development 4(b) Selling & marketing 4(c) Mineral lease maintenance 4(d) General & administrative 4(e) Operating loss Finance income 5(a) Finance expense 5(b) Loss from continuing operations before tax Income tax (expense)/benefit 6 Loss for the year Other comprehensive income Items which may be reclassified to profit or loss Exchange differences arising on translation of foreign operations Other comprehensive income for the year Total comprehensive loss for the year	723,323 341,869 (555,648) (266,236)
	167,675 75,633 1,241,941 962,301 (1,599,816) (2,614,609) (875,857) (486,502) (98,902) (272,278) (3,562,113) (3,920,375)
	(4,727,073) (6,255,830) 2,377 1,892 (308,413) (30,819)
	(5,033,108) (6,284,757) - -
	(5,033,108) (6,284,757)
	(102,940) 9,488
	(102,940) 9,488
	(5,136,048) (6,275,269)

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Consolidated Statement of Profit or Loss and Other Comprehensive Income (continued)

For the year ended 30 June 2022

ncome (continued) or the year ended 30 June 2022
Loss for the year attributable to: Owners of First Graphene Limited Non-Controlling interests Total comprehensive loss for the year attributable to: Owners of First Graphene Limited Non-Controlling interests Loss per share for the year attributable to the owners of First Graphene Limited Basic (loss) per share (cents per share) 7 Loss per share (cents per share) 7	(5,017,487) (6,297,424) (15,621) 12,667
	(5,033,108) (6,284,757)
	(5,120,427) (6,287,936) (15,621) 12,667
	(5,136,048) (6,275,269)
	(0.91) (1.19) (0.91) (1.19)

The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes

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Consolidated Statement of Financial Position

At 30 June 2022

Note	2022 $ 2021 $
Assets Current assets Cash and cash equivalents 8 Inventories 9 Trade and other receivables Other current assets 10 Total current assets Non-current assets Property, plant and equipment 11 Right of use asset Inventories 9 Intangible assets Other assets Total non-current assets Total assets Liabilities Current liabilities Trade and other payables 12 Employee liabilities Financial liabilities 13 Lease liabilities Total current liabilities Non-current liabilities Lease liabilities Total non-current liabilities Total liabilities Net assets Equity Issued capital 15 Reserves 16 Accumulated losses Capital and reserves attributable to owners of First Graphene Limited Non-controlling interest Total equity	7,004,724 7,076,580 1,821,713 1,152,872 167,744 86,015 225,801 817,234
	9,219,982 9,132,701 2,854,654 2,666,643 162,179 342,590 2,851,875 3,528,896 118,155 101,652 211,908 220,805
	6,198,770 6,860,586
	15,418,752 15,993,287
	585,702 1,321,261 139,189 154,117 6,135,251 4,934,817 178,489 359,297
	7,038,631 6,769,492
	- -
	- -
	7,038,631 6,769,492
	8,380,121 9,223,795
	102,845,907 98,808,042 5,738,367 5,607,362 (100,389,940) (95,361,902)
	8,194,334 9,053,502 185,787 170,293
	8,380,121 9,223,795

The above consolidated statement of financial position should be read in conjunction with the accompanying

notes

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Consolidated Statement of Changes in Equity

For the year ended 30 June 2022

	Issued Capital $ Share based payments reserve $ Option reserve $ Translation reserve $ Other Reserve $ Accumulated losses $ Non- controlling interests $ Total $
As at 1 July 2021 Loss for the year Foreign currency translation Total comprehensive loss for the year Transactions with owners in their capacity as owners Share placements during the year Shares issued Transactions with non-controlling interest Share issue costs Share based payment transactions Vesting of performance rights Transfer to accumulated losses 30 June 2022	98,808,042 5,639,623 - 13,590 (45,851) (95,361,902) 170, 293 9,223,795 - - - - 110 (5,017,487) (15,731) (5,033,108) - - - (130,121) - (10,548) - (140,668)
	- - - (130,121) 110 (5,028,035) (15,731) (5,173,777) 1,500,000 - - - - - - 1,500,000 2,210,187 - - - - - - 2,210,187 - - - - (31,225) - 31,225 - (18,923) - - - - - - (18,923) 328,000 310,839 - - - - - 638,839 18,600 (18,600) - - - - - - - - - - - - - -
	102,845,906 5,931,862 - (116,530) (76,966) (100,389,938) 185,787 8,380,121

As at 1 July 2020 Loss for the year Foreign currency translation Total comprehensive loss for the year Transactions with owners in their capacity as owners Share placements during the year Shares issued Transactions with non-controlling interest Share issue costs Share based payment transactions Transfer to accumulated losses 30 June 2021	95,778,819 5,416,167 467,202 4,102 (71,057) (89,531,680) 182,832 12,246,385 - - - - - (6,297,424) 12,667 (6,284,757) 9,488 9,488
	- - - 9,488 - (6,297,424) 12,667 (6,275,269) 898,000 - - - - - - 898,000 2,197,825 - - - - - - 2,197,825 - - - - 25,206 - (25,206) - (262,977) - - - - - - (262,977) 196,375 223,456 - - - - - 419,831 - - (467,202) - - 467,202 - -
	98,808,042 5,639,623 - 13,590 (45,851) (95,361,902) 170, 293 9,223,795

The above consolidated statement of changes in equity should be read in conjunction with the accompanying note

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Consolidated Statement of Cash Flows

For the year ended 30 June 2022

Note	2022 $ 2021 $
Cash flows from operating activities Receipts from customers Payments to suppliers and employees Interest received Interest paid R&D and grant funding received Other income Net cash outflows from operating activities 19 Cash flows from investing activities Payments for property, plant and equipment Proceeds from sale of property, plant and equipment Payments for intellectual property Net cash outflows from investing activities Cash flow from financing activities Proceeds from placement of shares Proceeds from the exercise of options Payment of share issue/capital raising costs Proceeds from convertible note Finance lease payments Net cash inflows from financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of the year Effect of exchange rate fluctuations on cash held Cash and cash equivalents at end of the year 8	606,947 334,087 (6,250,674) (8,337,427) 2,377 1,892 - (20,052) 1,241,941 593,316 - 353,226
	(4,399,409) (7,074,958)
	(44,576) (1,468,502) - 15,759 (46,000) (71,741)
	(90,576) (1,524,484)
	- 898,000 1,617,372 2,790,642 (18,923) (19,133) 3,000,000 4,102,000 (180,808) (151,487)
	4,417,641 7,620,022
	(72,344) (979,420) 7,076,580 8,053,134 488 2,866
	7,004,724 7,076,580

The above consolidated statement of cash flows should be read in conjunction with the accompanying note

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Notes to the Consolidated Financial Statements

1. Basis of Preparation

First Graphene Limited (“First Graphene” or the “Company”) is a for-profit company limited by shares, incorporated and domiciled in Australia, whose shares are publicly traded on the Australian Securities Exchange. Its registered office and principal place of business is:

First Graphene Limited 1 Sepia Close Henderson WA 6166

A description of the nature of operations and principal activities of FGR and its subsidiaries (collectively, the “Group”) is included in the Chief Executive Officer’s Report, which is not part of these financial statements.

The financial statements were authorised for issue in accordance with a resolution of the directors on 30 August 2022.

The financial report is a general-purpose financial report which:

has been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board (AASB) and complies with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB);
has been prepared on a historical cost basis except for assets and liabilities and sharebased payments which are required to be measured at fair value. The basis of measurement is discussed further in the individual notes;
is presented in Australian dollars;

Accounting policies

New standards, interpretation and amendments adopted by the Group

The accounting policies adopted in the preparation of the consolidated financial statements are consistent with those followed in the preparation of the Group’s annual consolidated financial statements for the year ended 30 June 2021, except for the adoption of new accounting standards and interpretations effective for annual periods beginning 1 July 2021. The effect of the adoption of these new accounting standards and interpretations did not have a material impact on the annual consolidated financial statements of the Group, the nature and effect of which is discussed below.

The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

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Notes to the Consolidated Financial Statements

Going Concern

The financial report is a general purpose financial report which has been prepared on a going concern basis and in accordance with Australian Accounting Standards, the Corporations Act 2001 and other authoritative pronouncements of the Australian Accounting Standards Board.

Statement of compliance

The financial report complies with Australian Accounting Standards as issued by the Australian Accounting Standards Board. The financial report also complies with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board.

The following Standards and Interpretations have been issued by the AASB, are relevant to the Group, but are not yet effective and have not been adopted by the Group for the period ending 30 June 2022. Unless otherwise stated, the Group has yet to fully assess the impact of these Standards and Interpretations when applied in future periods.

Basis of consolidation

The consolidated financial statements comprise the financial statements of First Graphene Limited and its subsidiaries as at 30 June 2022 (the Group ).

Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has:

Power over the investee (i.e. existing rights that give the current ability to direct the relevant activities of the investee);
Exposure, or rights, to variable returns from its involvement with the investee; and
The ability to use its power over the investee to affect its returns.

When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

The contractual arrangement with the other voting holders of the investee
Rights arising from other contractual arrangements
The Group’s voting rights and potential voting rights

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the statement of comprehensive income from the date the Group gains control until the date the Group ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it:

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Notes to the Consolidated Financial Statements

De-recognises the assets (including goodwill) and liabilities of the subsidiary
De-recognises the carrying amount of any non-controlling interests
De-recognises the cumulative translation differences recorded in equity
Recognises the fair value of the consideration received
Recognises the fair value of any investment retained’
Recognises any surplus or deficit in profit or loss
Reclassifies the parent’s share of components previously recognised in OCI to profit or loss or retained earnings, as appropriate, as would be required if the Group had directly disposed of the related assets or liabilities

Foreign currency translation

The financial report is presented in Australian dollars, which is First Graphene Limited’s functional and presentation currency.

Foreign currency transactions

Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.

Foreign operations

The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the reporting date. The revenues and expenses of foreign operations are translated into Australian dollars using the average exchange rates, which approximate the rate at the date of the transaction, for the period. All resulting foreign exchange differences are recognised in other comprehensive income through the foreign currency reserve in equity.

The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed of.

OTHER ACCOUNTING POLICIES

Significant and other accounting policies that summarise the measurement basis used and are relevant to an understanding of the financial statements are provided throughout the notes to the financial statements. Where possible, wording has been simplified to provide clearer commentary on the financial report of the Group. Accounting policies determined non-significant are not included in the financial statements. There have been no changes to the Group’s accounting policies that are no longer disclosed in the financial statements.

The Notes To The Financial Statements

The notes include information which is required to understand the financial statements and is material and relevant to the operations and the financial position and performance of the Group. Information is considered relevant and material if, for example:

the amount is significant due to its size or nature;
the amount is important for understanding the results of the Group;
it helps to explain the impact of significant changes in the Group’s business; or
it relates to an aspect of the Group’s operations that is important to its future performance.

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Notes to the Consolidated Financial Statements

The notes are organised into the following sections:

Performance for the year;
Operating assets and liabilities;
Capital structure and risk;
Other disclosures.

A brief explanation is included under each section.

Performance For the Year

This section focuses on the results and performance of the Group. This covers both profitability and the resultant return to shareholders via earnings per share combined with cash generation.

KEY ESTIMATES AND JUDGEMENTS

In the process of applying the Group’s accounting policies, management has made a number of judgements and applied estimates of future events. Judgements and estimates which are material to the financial report are found in the following notes.

Share Based Payments Estimates

Judgement has been exercised in calculating the value of share based payments. The closing price of share sales on the day of the award of the share based payment is used for calculating the fair value of the payment.

Convertible notes carried at fair value

On initial recognition, the value of the convertible notes was calculated based on the proceeds received. At the reporting date, the fair value of the conversion options within the convertible loan has been assessed to be nil and credit risk has not changed from inception of the loan.

Inventories

Net realisable value tests are performed at each reporting date and represent the estimated future sales price of the product based on prevailing spot metals process at the reporting date, less estimated costs to complete production and bring the product to sale. Inventory held at 30 June 2022 relates to raw material, work in progress and finished goods and is held at net realisable value.

The provision for impairment of inventories assessment requires a degree of estimation and judgement. The level of any provision is assessed by considering recent sales experience, the ageing of inventories, damaged, obsolete, slow moving inventories and other factors that affect inventory obsolescence.

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Notes to the Consolidated Financial Statements

2. Segment reporting

Identification of reportable segments

The Group has identified its operating segments based on the internal reports which are reviewed and used by the Board (the chief operating decision makers) in assessing performance and in determining the allocation of resources.

The existing operating segments are identified by management based on the way the Group’s operations were carried out during the financial year. Discrete financial information about each of these operating businesses is reported to the Board on a monthly basis.

The reportable segments are based on aggregated operating segments determined by the similarity of the asset base and revenue or income streams, as these are the sources of the Group’s major risks and have the most effect on the rates of return. The Group’s segment information for the current reporting period is reported based on the following segments:

Graphene production

As the Company expands its graphene production and inventory, the Board monitors the Company based on actual verses budgeted expenditure incurred.

Research and development

As the Company expands its research inhouse and in conjunction with third parties, the Board monitors the Company based on actual verses budgeted expenditure incurred.

Corporate services

This segment reflects the overheads associated with maintaining the ASX listed FGR corporate structure, identification of new assets and general management of an ASX listed entity.

Mining Asset Maintenance

Although the Company has suspended its mineral exploration and development in Sri Lanka the Board monitors the Company based on actual verses budgeted expenditure incurred.

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Notes to the Consolidated Financial Statements

Business	Graphene Production	Graphene Production	Research &	Development	Corporate Services	Corporate Services	Mining Asset	Mining Asset	Total	Total
Segment		$		$		$	Maintenance			$
								$
	2022	2021	2022	2021	2022	2021	2022	2021	2022	2021
Revenue from
external
customers	723,323	341,869	-	-			-	-	723,323	341,869
Point in time	723,323	341,869	-	-	-	-	-	-	723,323	341,869
Interest
revenue	-	-	-	-	2,377	1,892	-	-	2,377	1,892
Operating	-	39,929	(1,396,222)	(2,572,559)	(3,537,984)	(3,513,898)	(98,902)	(238,229)	(5,033,108)	(6,284,757)
Profit/(loss)
Depreciation
expense	381,139	667,421	31,709	80,319	45,266	41,073	-	-	458,114	788,813
Amortisation
expense	31,657	-	27,550	18,075	112,930	-	-	-	172,136	18,075
Segment assets	4,799,332	4,738,136	3,944,368	3,406,311	6,670,583	7,816,571	4,467	32,269	15,418,751	15,993,287
Segment
liabilities	174,210	179,708	184,550	239,557	6,677,049	6,342,001	2,822	8,225	7,038,631	6,769,491

The Group recognises revenue under IFRS 15, using the point in time criteria. This is because the customer obtains control of a promised asset and the entity satisfies a performance obligation. Considerations include, but are not limited to:

The entity has a present right to payment for the asset
The customer has legal title to the asset
The entity has transferred physical possession of the asset to the customer
The customer has the significant risks and rewards of ownership of the asset
The customer has accepted the asset.

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Notes to the Consolidated Financial Statements

Geographical areas

In presenting the information on the basis of geographical areas, segment revenue is based on the geographical location of operations. Segment assets are based on the geographical location of the assets.

	2022 $ 2021 $
Geographical segments	Revenue Total Assets Revenue Total Assets
Australia United Kingdom Sri Lanka Total	723,323 14,856,052 341,869 9,252,761 - 558,232 - 482,374 - 4,467 - 6,258,152
	723,323 15,418,751 341,869 15,993,287

Reconciliation of segment assets and liabilities to the Statement of financial Position

Reconciliation of segment assets to the Statement of Financial Position

	2022 $ 2021 $
Total segments assets Inter-segment elimination Total assets per statement of financial position	20,787,048 23,160,997 (5,368,297) (7,167,710)
	15,418,751 15,993,287

Reconciliation of segment liabilities to the Statement of Financial Position

	2022 $ 2021 $
Total segments liabilities Inter-segment elimination Total liabilities per statement of financial position	23,086,033 23,255,662 (16,047,402) (16,486,171)
	7,038,631 6,769,491

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Notes to the Consolidated Financial Statements

3. Revenue from contracts with customers

Accounting Policy

The Group accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of the consideration is probable.

Revenues from product sales are recognised when an identified performance obligation is satisfied, and the customer obtains and accepts control of the Company’s product. Sales of product generally occur at a point in time, typically upon delivery to the customer.

Taxes collected from customers relating to product and service sales and remitted to governmental authorities are excluded from revenues. The Company expenses incremental costs of obtaining a contract as and when incurred because the expected amortisation period of the asset that the Company would have recognised is one year or less.

Notes	2022 $ 2021 $
Types of goods Sale of graphene/related services Total revenue from contracts with customers	723,323 341,869
	723,323 341,869

4. Operating expenses and other income

Accounting Policy

All revenue is stated net of the amount of goods and services tax (GST).

Other revenue includes R&D credits received from the Australian & UK tax government.

Government Grants

Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Group satisfies all attached conditions.

When the grant relates to an expense item, it is recognised as income over the periods necessary to match the grant on a systematic basis to the costs that it is intended to compensate.

When the grant relates to an asset, the fair value is credited against the asset and is released to the Statement of Profit or Loss and Other Comprehensive Income over the expected useful life of the relevant asset by equal annual instalments.

Where a grant is received in relation to the tax benefit of research and development costs, the grant shall be credited to other income in the Statement of Profit or Loss and Other Comprehensive Income in the year of receipt.

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Notes to the Consolidated Financial Statements

Depreciation

Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment (excluding land) over their expected useful lives as follows: Plant and equipment 3-15 years

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

Other revenue and expenses from continuing operations:

Notes	2022 $ 2021 $
(a) Other income R&D and grant income Government grants related to COVID19 Profit on sale of property, plant & equipment (b) Research & development Employee expenses Consultant and research programs Legal and taxation expenses Depreciation Amortisation Impairment of intangible assets Impairment of inventory Other (c) Selling & marketing Employee expenses Advertising & promotion Depreciation Other (d) Mining lease maintenance Employee expenses Rent of premises Other (e) General & administrative Employee expenses Director, finance & company secretarial fees Legal & other professional fees ASX listing, share registry and other corporate costs Depreciation Amortisation Share based payment expense Rent of premises Insurances Other	1,241,941 684,186 - 262,356 - 15,759
	1,241,941 962,301
	535,053 938,419 707,202 933,307 9,531 67,286 31,709 64,148 27,550 18,075 - 250,000 - (4,680) 288,770 348,054
	1,599,816 2,614,609
	562,780 182,125 139,554 202,074 2,437 1,101 171,087 101,203
	875,857 486,502
	32,842 63,118 41,279 57,919 24,781 151,241
	98,902 272,278
	1,543,352 1,362,164 47,189 573,168 505,377 863,860 148,510 153,011 42,830 39,972 112,930 - 463,839 419,831 - 15,740 79,270 71,269 618,817 421,360
	3,562,113 3,920,375

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Notes to the Consolidated Financial Statements

5. Finance income and expense

Accounting Policy

Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets.

Dividend revenue is recognised when the right to receive a dividend has been established. Dividends received from associates and joint venture entities are accounted for in accordance with the equity method of accounting.

Notes	2022 $ 2021 $
(a) Finance income Interest income on bank deposits (b) Finance expense Interest expense Foreign exchange (loss)/gain - unrealised	2,377 1,892
	2,377 1,892
	(296,751) (20,052) (11,662) (10,767)
	(308,413) (30,819)

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Notes to the Consolidated Financial Statements

6. Income tax

Accounting Policy

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the reporting date, and any adjustment to tax payable in respect of previous years. The major components of income tax expense are:

A reconciliation between tax expense and the product of accounting profit before income tax multiplied by the Group’s applicable income tax rate is as follows:

Income tax expense	2022 $ 2021 $
(a) Income tax expense/(benefit) Current tax Deferred tax Under/(over) provision in prior years Total income tax expense (b) Amounts recognised directly in equity Aggregate current and deferred tax arising in the reporting period and not recognised in net profit or loss or other comprehensive income but directly debited or credited in equity Current tax Deferred tax (c) Reconciliation of income tax expense to prima facie tax payable - Loss before income tax from all activities - Prima facie income tax benefit on loss before income tax at 30% (2021:30%) - Entertainment - Share based payments - Non-assessable income - Other permanent differences - Deferred tax assets not brought to account Income tax expense/(benefit) The applicable weighted average effective tax rates (d) Deferred tax liability Prepaid expenditure PPE Other temporary differences Off-set of deferred tax assets Net deferred tax liability recognised	- - - - - - - -
	- -
	- - - -
	- -
	(5,017,488) (8,379,866) (1,254,372) (2,513,960) 4,553 3,935 115,960 125,949 (211,978) (139,196) 40,830 761,472 85,518 130,016
	- -
	0% 0%
	- - - - - -
	- - - -
	- -

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Notes to the Consolidated Financial Statements

Income tax expense	2022 $ 2021 $
(e) Unrecognised deferred tax asset Tax losses Capital losses PPE & Leases Other temporary differences Off-set of deferred tax liabilities Net deferred tax assets unrecognised	6,734,869 6,335,089 7,310,519 8,772,623 4,078 5,012 127,569 1,068,198
	14,177,034 16,180,921 (110,890) -
	14,066,145 16,180,921

The Group has Australian revenue losses from previous years for which no deferred tax assets have been recognised. The availability to utilise these losses in future periods is subject to review in the relevant jurisdictions.

7. Loss per share

Accounting Policy

Loss per share (“LPS”) is the amount of post-tax profit attributable to each share. The group presents basic and diluted LPS data for ordinary shares. Basic LPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period.

Diluted LPS takes into account the dilutive effect of all potential ordinary shares, being unlisted employee share options on issue.

	Number of shares 2022 Number of shares 2021
Weighted average ordinary shares used in calculating basic earnings per share Weighted average ordinary shares used in calculating diluted earnings per share Basic loss per share - cents per share Diluted loss per share - cents per share	552,630,533 530,130,203 552,630,533 530,130,203
	(0.91) (1.19) (0.91) (1.19)

	2022 $ 2021 $
Loss attributable to the owners of First Graphene used in calculating basic loss per share Loss attributable to the owners of First Graphene used in calculating diluted loss per share	(5,017,487) (6,297,424) (5,017,487) (6,297,424)

There have been no transactions involving ordinary shares between the reporting date and the date of completion of these financial statements which would impact on the above EPS calculations.

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Notes to the Consolidated Financial Statements

8. Cash and cash equivalents

Accounting Policy

Cash and cash equivalents in the Statement of Financial Position comprise cash at bank and in hand. Cash at bank earns interest at floating rates based on daily bank deposit rates.

For the purposes of the Statement of Cash Flows, cash and cash equivalents comprise the following at the end of the reporting period:

	2022 $ 2021 $
Cash at bank and in hand	7,004,724 7,076,580
	7,004,724 7,076,580

The Group’s maximum exposure to financial risk is disclosed in note 15.

OPERATING ASSETS AND LIABILITIES

This section shows the assets used to generate the Group’s trading performance and the liabilities incurred as a result. Liabilities relating to the Group’s financing activities are addressed in the capital structure and finance costs section on page 41.

9. Inventories

Accounting Policy

Raw material, work in progress, finished goods and consumables are stated at the lower of cost and net realisable value. Cost comprises direct materials, direct labour and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of normal operating capacity. Costs are assigned to individual items of inventory on the basis of weighted average costs. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

Inventories expected to be sold (or consumed in the case of stores) within 12 months after the Statement of financial position date are classified as current assets, all other inventories are classified as non-current.

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Notes to the Consolidated Financial Statements

Inventories (continued)

Total Inventories	2022 $ 2021 $
Raw materials Work in progress Finished goods Inventories Gross Less: Provision for impairment Carrying amount Disclosed as: Current Non-current Total inventory	1,987,200 1,859,988 316,598 350,689 2,411,910 2,513,211
	4,715,708 4,723,887
	(42,120) (42,120)
	4,673,588 4,681,768
	1,821,713 1,152,872 2,851,875 3,528,896
	4,673,588 4,681,768

10. Other assets

	2022 $ 2021 $
Prepayments Total other assets	850,926 817,234
	850,926 817,234

11. Property, plant and equipment

Accounting Policy

Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes expenditure which is directly attributable to the acquisition of the items.

Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment (excluding land) over their expected useful lives as follows:

Plant and equipment 3-15 years

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

Leasehold improvements and plant and equipment under lease are depreciated over the unexpired period of the lease or the estimated useful life of the assets, whichever is shorter.

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

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Notes to the Consolidated Financial Statements

Property, plant and equipment (continued)

Key estimates and assumptions

USEFUL LIFE OF ASSETS

The estimation of useful lives, residual values and depreciation methods require significant management judgements and are regularly reviewed. If they need to be modified, the depreciation and amortisation expense is accounted for prospectively from the date of the assessment until the end of the revised useful life (for both the current and future years).

“Capital work in progress is projects of a capital nature which usually relates to the construction/installation of buildings, plant or equipment. Upon completion (when ready for use) capital work in progress is transferred to the relevant asset category. Capital work in progress is not depreciated.”

Reconciliations of the carrying value for each class of property, plant and equipment is set out below:

30 June 2022	Capital Work in Progress Plant and equipment Office equipment Motor vehicles Total
Carrying amount at beginning of year Additions Depreciation Movement due to foreign exchange Carrying amount at end of year	- 2,600,832 56,442 9,369 2,666,643 625,125 17,543 5,031 - 647,699 - (440,181) (16,320) (1,613) (458,114) - (1,471) (103) - (1,573)
	625,125 2,176,724 45,050 7,756 2,854,655

30 June 2021	Plant and equipment Office equipment Motor vehicles Total

Carrying amount at beginning of year Additions Depreciation Movement due to foreign exchange Carrying amount at end of year	2,293,523 8,703 11,941 2,314,167 921,996 56,808 - 978,804 (615,689) (9,081) (2,572) (627,342) 1,002 12 - 1,014 2,600,832 56,442 9,369 2,666,643

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Notes to the Consolidated Financial Statements

12. Trade and other payables

Accounting Policy

Trade and other payables represent the liabilities for goods and services received by the entity which remain unpaid at the end of the reporting period. The balance is recognised as a current liability with the amounts normally paid within 30 days of recognition of the liability.

	2022 $ 2021 $
Current Trade and other payables Customer deposits	411,492 1,141,552 174,210 179,708
	585,702 1,321,261

13. Financial liabilities

Accounting Policy

Convertible notes were issued by the Group which include embedded derivatives. Convertible notes are initially recognised as financial liabilities at fair value.

On initial recognition the fair value of the convertible notes equated to the proceeds received and subsequently the convertible note is measured at fair value. The movements are recognised in profit and loss as finance costs except to the extent the movement is attributed to changes in the group’s own credit risk status in which case, it is recognised in Other Comprehensive Income.

Terms and Conditions

The Company entered into a Share Placement Agreement with Specialty Materials Investments, LLC (the Investor) on the 27[th] of May 2021.

Total AUD amount that can be drawn down: $8,000,000
Initial deposit shares issued: 2,800,000 shares at $0.235 per share
Fee paid: 1,021,276 shares at $0.235 per share
Final AUD value of shares to be issued: $8,480,000 (“subscription amount”)
Other Terms:
The final number of shares to be issued by the Company will be determined by applying the Purchase Price (as set out below) to the subscription amount. The Purchase Price will initially be equal to $0.30 per share and will reset after 10 August 2021 to the average of the five daily volume-weighted average prices selected by the Investor during the 20 consecutive trading days immediately prior to the date of the Investor’s notice to issue shares, rounded down to the next half a cent if the share price is at below 50 cents and whole cent if the share price is at above 50 cents, with no discount applicable to this formula. To the extent that Placement Shares are issued after six months, or 12 months, the Investor will receive a discount of, respectively, 3% or 6% to the foregoing Purchase Price formula.
The Purchase Price will be the subject of a Floor Price of $0.16. If the Purchase Price formula were to result in a purchase price that is less than the Floor Price, the Company may refuse to issue shares and instead opt to repay the relevant subscription amount in cash (with a 5% premium), subject to the Investor’s right to receive Placement Shares at the Floor Price in lieu of such cash repayment. The Purchase Price will not be the subject of a cap.

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Notes to the Consolidated Financial Statements

The Company will issue the Placement Shares in relation to all or part of each of the above investments on the Investor’s request, during the period ending 24 months after the date of the investment.
The Company has retained the right (but has no obligation) to repay the subscription amount in cash in lieu of issuing shares by way of a repayment of the subscription amount together with the difference between the market price of the shares and the Purchase Price (if any) in relation to the shares that would otherwise have been issued.

	2022	2021
	$	$
Current
Convertible liabilities	6,135,251	4,934,817
	6,135,251	4,934,817
Opening Balance at 1st Jul 21 – Share Placement Agreement		4,342,000
Finance Charge		293,251
Funds Received - Placement 2		3,000,000
2,941,176 Shares at an issue price of $0.17 per Share on 10 February 2022		(500,000)
3,225,807 Shares at an issue price of $0.155 per Share on 25 March 2022		(500,000)
3,225,807 Shares at an issue price of $0.155 per Share on 8 April 2022		(500,000)
Closing Balance at 30th Jun 2022		6,135,251

CAPITAL STRUCTURE, FINANCIAL INSTRUMENTS AND RISK

This section outlines how the Group manages its capital, related financing costs and its exposure to various financial risks. It explains how these risks affect the Group’s financial position and performance and what the Group does to manage these risks.

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

The Board’s policy in relation to capital management is to regularly and consistently monitor future cash flows against expected expenditures for a rolling period of up to 12 months in advance. The Board determines the Group’s need for additional funding by way of either share issues or loan funds depending on market conditions at the time. The Board defines working capital in such circumstances as its excess liquid funds over liabilities and defines capital as being the ordinary share capital of the Company, plus retained earnings, reserves and net debt. In order to maintain or adjust the capital structure, the Board may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or reduce debt.

There were no changes in the Group’s approach to capital management during the year.

Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirement.

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Notes to the Consolidated Financial Statements

14. Financial Risk Management

(a) Financial risk management

The Group’s activities expose it to a variety of financial risks: credit risk, liquidity risk and market risk (currency risk and interest rate risk). The Group’s principal financial liabilities comprise trade and other payables. The main purpose of these financial liabilities is to raise finance for the Group’s operations. The Group has various financial assets such as trade and other receivables, deposits with banks, local money market instruments and short-term investments. The accounting policy with respect to these financial instruments is described in note 1.

Financial risk management structure:

Board of Directors

The Board is ultimately responsible for ensuring there are adequate policies in relation to risk oversight and management and internal control systems. The Group’s policies are designed to ensure financial risks are identified, assessed, addressed and monitored to enable achievement of the Group’s business objectives.

(b) Financial risks

Credit risk

Credit risk refers to the risk a counterparty will default on its contractual obligation resulting in financial loss to the Group. Credit risk is managed on a group basis and structures the levels of credit risk it accepts by placing limits on its exposure to a single counterparty or group of counterparties. The Group has no significant concentrations of credit risk.

It is the Group’s policy to place funds generated internally and from deposits with clients with high quality financial institutions. The Group does not employ a formalised internal ratings system for the assessment of credit exposures. Amounts due from and to clients and dealers represents receivables sold and payables for securities purchased which have been contracted for but not yet settled on the reporting date, respectively. The majority of these transactions are carried out on a delivery versus payment basis, which results in securities and cash being exchanged within a very close timeframe. Settlement balances outside standard terms are monitored on a daily basis.

Exposure to credit risk

The maximum exposure to credit risk, excluding the value of any collateral or other security, at the reporting date to recognised financial assets, is the carrying amount, net of any provision for impairment of those assets, as disclosed in the statement of financial position and the notes to the financial statements. The Group does not have any material credit risk exposure to any single receivable or group of receivables under financial instruments entered into by the Group.

The Group’s maximum exposure to credit risk without taking account of any collateral or other credit enhancements at the reporting date was $7,004,724 (2021: $7,076,580).

The Company banks with Westpac Banking Corporation (Westpac). Westpac’s long term credit ratings are A+ (Fitch Ratings), Aa3 (Moody's Investors Service) and AA- (Standard & Poor's).

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Notes to the Consolidated Financial Statements

Financial Risk Management (continued)

	Group
	2022 $ 2021 $
Cash and cash equivalents	7,004,724 7,076,580
	7,004,724 7,076,580

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Notes to the Consolidated Financial Statements

Impairment of financial assets

The group holds trade receivables that are subject to the expected credit loss model. While cash and cash equivalents are also subject to the impairment requirements of AASB 9, the identified impairment loss was immaterial.

Trade receivables

The group applies the AASB 9 simplified approach to measuring the expected credit losses which uses a lifetime expected loss allowance for all trade receivables. The expected credit losses have been grouped based on shared credit risk characteristics and the days past due.

The expected loss rates are based on the payment profiles of sales over a period of 36 months before 30 June 2021 and the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to reflect current and forward- looking information on macroeconomic factors affecting the ability of the customers to settle the receivables.

On that basis, the loss allowance as at 30 June 2022 was determined to be nil.

Trade receivables are written off when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with the group and failure to make contractual payments for a period of greater than 120 days past due.

Impairment losses on trade receivables are presented as net impairment losses within operating profit. Subsequent recoveries of amounts previously written off are credited against the same line item.

For the purposes of the Group’s disclosures regarding credit quality, its financial assets have been analysed as follows:

	Neither Past Due nor individually impaired $ Past due but not individually impaired $ Individually impaired $ Total $ Impairment allowance $ Total carrying amount $
Consolidated 30 June 2022 Trade receivables Consolidated 30 June 2021 Trade receivables	167,744 - - 167,744 - 167,744
	167,744 - - 167,744 - 167,744
	86,015 - - 86,015 - 86,015
	86,015 - - 86,015 - 86,015

Financial assets past due but not individually impaired

For the purpose of this analysis an asset is considered past due when any payment due under the contractual terms is received one day past the contractual due date. The majority of these transactions are carried out on a delivery versus payment basis, which results in securities and cash being exchanged within a very close timeframe. Settlement balances outside standard terms are monitored on a daily basis. Credit risk is also mitigated as securities held for the counterparty by the Group can ultimately be sold should the counterparty default. There were no renegotiated financial assets during the year.

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Notes to the Consolidated Financial Statements

Collateral pledged or held

There is no collateral held as security by the Group or its controlled entities.

Liquidity risk

Liquidity risk is the risk the Group will not be able to meet its financial obligations as they fall due. The Group manages liquidity risk by monitoring forecast cash requirements and cash flows.

The primary objective of the Group is to manage short-term liquidity requirements in such a way as to minimise financial risk. The Group maintains sufficient cash resources to meet its obligations, cash deposits are repayable on demand.

The tables below present the cash flows receivable and payable by the Group under financial assets and liabilities by remaining contractual maturities at the reporting date. The amounts disclosed are the contractual, undiscounted cash flows.

	Weighted average effective interest rate % Floating interest rate Fixed interest Non-interest bearing Within one year $ Within one year $ 1-5 years $ Within one year $ 1-5 years $ Total $

30 June 2022 Financial assets Cash and cash equivalents Total Financial assets at 30 June 2022 Trade and other payables Financial liabilities Total financial liabilities at 30 June 2022 30 June 2021 Financial assets Cash and cash equivalents Total Financial assets at 30 June 2021 Trade and other payables Financial liabilities Total financial liabilities at 30 June 2021	0.01 7,004,724 - - - - 7,004,724
	7,004,724 - - - - 7,004,724
	- - - 585,702 - 585,702 - - - 6,135,251 - 6,135,251
	- - - 6,720,953 - 6,720,953
	0.01 7,076,580 - - - - 7,076,580
	7,076,580 - - - - 7,076,580
	- - - 1,321,361 - 1,321,361 - - - 4,934,817 - 4,934,817
	- - - 6,256,178 - 6,256,178

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Notes to the Consolidated Financial Statements

Trade and other payables and borrowings are expected to be paid as follows:

	Less than 1 year $ Between 1 and 2 years $ Between 2 and 5 years $ Over 5 years $
30 June 2022 Trade and other payables (refer note 13) Financial liabilities (refer note 14) 30 June 2021 Trade and other payables (refer note 13) Financial liabilities (refer note 14)	585,702 - - - 6,135,251
	6,720,953 - - -
	1,321,361 - - - 4,934,817
	6,256,178 - - -

Market Risk

Market risk is the risk the fair value of future cash flows of financial instruments will fluctuate due to changes in market variables such as interest rates, foreign exchange rates and equity prices.

(i) Foreign exchange risk

The consolidated entity undertakes certain transactions denominated in foreign currency and are exposed to foreign currency risk through foreign exchange fluctuations.

Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial liabilities denominated in a currency which is not the entity’s functional currency. The risk is measured using sensitivity analysis and cash flow forecasting.

The Group’s profitability can be significantly affected by movements in the $US/$A exchange rates, and to a lesser degree, though movements in the Sri Lankan Rupee verses the Australian dollar. Through reference to industry standard practices, and open market foreign currency trading patterns within the past 12 months, the group set the level of acceptable foreign exchange risk.

The Group seeks to manage this risk by holding foreign currency in $US GBP£ and Sri Lankan Rupee.

Sensitivity analysis

The following table does not include intra group financial assets and liabilities. It summaries the sensitivity of the Group’s financial assets and liabilities to external parties at 30 June 2021 to foreign exchange risk, based on foreign exchange rates as at 30 June 2021 and sensitivity of +/-5%:

	30 June 2022
	rate (cents)
US$/A$	0.6876
GBP/A$£	0.5663
LKR/A$	247.84

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Notes to the Consolidated Financial Statements

	Foreign exchange risk
	2022	2021
	$	$
Change in profit/loss due to:
Improvement in AUD by 5%	(66,017)	(49,021)
Decline in AUD by 5%	66,017	49,021
Change in equity due to:
Improvement in AUD by 5%	(66,017)	(49,021)
Decline in AUD by 5%	66,017	49,021

(ii) Interest rate risk

Group

The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s cash position. A change of 10 basis points in interest rates at the reporting date would result in a change of profit or loss by the amounts shown below. This analysis assumes all other factors remain constant.

Profile

At reporting date the interest rate profile of the Group’s financial instruments was:

	2022 $ Interest rate risk -10bps +10bps Profit Equity Profit Equity


Floating rate instruments Cash at bank Floating rate instruments Cash at bank	7,004,724 (6,462) - 6,462 -
	7,004,724 (6,462) - 6,462 -
	2021 $ 7,076,580 (6,624) - 6,624 -
	7,076,580 (6,624) - 6,624 -

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Notes to the Consolidated Financial Statements

(c) Net fair values

Fair value versus carrying amount

Fair value of financial instruments

Set out below is a comparison by class of the carrying amounts and fair values of the Group’s financial instruments which are carried in the financial statements.

Methodologies and assumptions

For financial assets and liabilities which are liquid or have short term maturities it is assumed the carrying amounts approximate to their fair value.

	30 June 2022 30 June 2021
Note	Carrying amount $ Net fair value $ Carrying amount $ Net fair value $
Assets carried at amortised cost Trade and other receivables Total financial assets Liabilities carried at amortised cost Trade and other payables 13 Financial liabilities 14 Total Financial Liabilitie~~s~~	167,744 167,744 85,815 85,815
	167,744 167,744 85,815 85,815
	585,702 585,702 1,321,361 1,321,361 6,135,251 6,135,251 4,934,817 4,934,817
	6,720,953 6,720,953 6,256,178 6,256,178

Fair value hierarchy

The Group classified the fair value of the financial instruments in the table below according to the fair value hierarchy based on the amount of observable inputs used to value the instruments:

Level 1 – values based on unadjusted quoted prices available in active markets for identical assets or liabilities as of the reporting date.
Level 2 – values based on inputs, including quoted prices, time value and volatility factors, which can be substantially observed or corroborated in the marketplace. Prices in Level 2 are either directly or indirectly observable as of the reporting date.
Level 3 – values based on prices or valuation techniques that are not based on observable market data.

	Fair value measurement using:
Note	Total $ Level 1 $ Level 2 $ Level 3 $
Financial liabilities measured at fair value - 2022 Convertible liabilities 14 Total financial assets	6,135,251 - 6,135,251 -
	6,135,251 - 6,135,251 -

There were no transfers between Level 1, Level 2 and Level 3 during 2022.

	Fair value measurement using:
Note	Total $ Level 1 $ Level 2 $ Level 3 $
Financial liabilities measured at fair value - 2021 Convertible liabilities 14 Total financial assets	4,934,817 - 4,934,817 -
	4,934,817 - 4,934,817 -

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Notes to the Consolidated Financial Statements

15. Issued capital

Accounting Policy

Ordinary shares are classified as equity. Transaction costs directly attributable to the issue of shares or options are recognised as a deduction from equity, net of any related income tax effects.

(a) Ordinar y shares	2022 2021 2022 2021
	$ $ Number Number
Issued and fully paid Movements in shares on issue At the beginning of the period Exercise of options Shares issued to employees Entitlement issue(i) Shares issued to third party Share issue costs At the end of the period	102,845,906 98,808,042 539,900,237 539,900,237
	98,808,042 95,778,819 539,900,237 525,667,329 2,210,187 2,197,825 9,120,749 9,636,632 18,600 67,375 120,000 275,000 1,500,000 898,000 9,392,790 3,821,276 328,000 129,000 1,500,000 500,000 (18,923) (262,977) - -
	102,845,906 98,808,042 560,033,776 539,900,237

(i) Repayment of borrowings as per the share placement agreement – Refer Note 13.	(i) Repayment of borrowings as per the share placement agreement – Refer Note 13.	(i) Repayment of borrowings as per the share placement agreement – Refer Note 13.
(b) Share options
Listed share options	2022	2021
	Number
At the beginning of the period	100,955,266	107,471,898
Options issued	-	120,000
Options exercised	(8,120,749)	(6,636,632)
Options expired	(92,834,517)	-
At the end of the period	-	100,955,266

(c) Share options Unlisted share options At the beginning of the period Options issued Options exercised Options expired At the end of the period	2022 2021 Number Number 17,000,000 15,000,000 - 5,000,000 (1,000,000) (3,000,000) (1,000,000) - 15,000,000 17,000,000

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Notes to the Consolidated Financial Statements

Refer note 17 for further details on share options issued.

(d) Performance rights Unlisted performance rights At the beginning of the period Performance rights issued Performance rights converted At the end of the period	2022 2021
	Number Number
	120,000 - 60,000 120,000 (120,000) -
	60,000 120,000

Refer note 17 for further details on performance rights issued.

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Notes to the Consolidated Financial Statements

16. Share based payments

Accounting Policy

The value of options granted to employees is recognised as an employee expense, with a corresponding increase in equity, over the period that the employees become unconditionally entitled to the options (the vesting period), ending on the date on which the relevant employees become fully entitled to the option (the vesting date).

At each subsequent reporting date until vesting, the cumulative charge to the statement of comprehensive income is the product of:

The grant date fair value of the option;
The current best estimate of the number of options that will vest, taking into account such factors as the likelihood of employee turnover during the vesting period and the likelihood of non-market performance conditions being met; and
The expired portion of the vesting period.

Until an option has vested, any amounts recorded are contingent and will be adjusted if more or fewer awards vest than were originally anticipated to do so.

Share based payment expense

The Group recognised total share-based payment expenses as follows:

	2022 $ 2021 $
Shares issued to employees Option issued to employees Performance rights issued to employees Shares issued to Advisors Options issued to directors Total	- 67,375 281,602 216,555 29,237 6,900 153,000 128,500 - -
	463,839 419,330

Share Option Plan

The Company provides directors, certain employees and advisors with share options. The options are exercisable at set prices and the vesting and exercisable terms varied to suit each grant of options.

	2022 2021
	Number of Options Weighted average exercise price (cents) Number of Options Weighted average exercise price (cents)
Outstanding 1 July Issued Exercised Traded / Sold Lapsed Outstanding 30 June	37,630,904 21.6 37,050,000 21.1 - - 5,000,000 25.0 (1,000,000) 0.18 (3,000,000) 18.0 - - (1,419,096) 25.0 (21,630,904) 24.8 - -
	15,000,000 25.0 37,630,904 21.6

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Notes to the Consolidated Financial Statements

Share-based payments – Options issued

The table below summarises options granted to directors, employees and consultants under the Share Option Plan:

Grant	Expiry	Exercise	Balance at	Granted	Exercised	Expired/	Balance at	Vested
Date	Date	price	start of the	during	during the	lapsed	the end of the	and
			year	the year	year	during the	year	exercisable
						year		during the
								year
			Number	Number	Number	Number	Number	Number
Unlisted
options:
26	26
Feb	Feb
2019	2022	$0.18	2,000,000	-	(1,000,000)	(1,000,000)	-	-
	8
8 Nov	Nov
2019	2023	$0.25	9,000,000	-	-	-	9,000,000	9,000,000
	8
6 Jan	Nov
2020	2023	$0.25	1,000,000	-	-	-	1,000,000	1,000,000
17	8
Dec	Nov
2020	2023	$0.25	5,000,000	-	-	-	5,000,000	5,000,000
Listed
options:
31	8
Oct	Aug
2017	2021	Various	1,550,000	-	-	(1,550,000)	-	-
24	8
Nov	Aug
2017	2021	Various	17,000,000	-	-	(17,000,000)	-	-
23	8
May	Aug
2018	2021	Various	3,000,000	-	-	(3,000,000)	-	-
14	8
May	Aug
2019	2021	Various	500,000	-	-	(500,000)	-	-

The weighted average remaining contractual life of the options is 1.25 years (2021: 2.25 years).

Share-based payments – Performance rights issued

The following performance rights were granted to employees:

Employee	Number of	Date of	Share	Value	Vesting
	Performance	Grant	Price A$	A$	Date
	Rights
Shoaib Qureshi	60,000	21/09/2021	0.19	11,400	22/09/2022
	60,000			11,400

Total vesting expense was recognised in the current year of $8,800. Vesting of these performance rights is based on completing 12 months of continuous service.

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Notes to the Consolidated Financial Statements

17. Reserves and accumulated losses

Accounting Policy

The share based payments reserve holds the directly attributable cost of services provided pursuant to the options issued to corporate advisors, directors, employees and past directors of the Group.

The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations.

18. Statement of cash flow reconciliation

2022
$
2021
$

(a)
Reconciliation of net loss after tax to net cash
flows from operations
Net Loss
Adjusted for:
Depreciation
Amortisation
Impairment of intangible asset
Write back/impairment of inventory
(Gain)/loss on sale of property, plant and equipment
Share based payments expensed
Options expensed
Shares issued to employees as payment for deferred
salaries
Foreign exchange loss/(gains)
Changes in assets/liabilities
(Increase)/decrease in trade and other receivables
(Increase)/decrease in inventory
(Increase)/decrease in prepayments
Decrease in other assets
(Decrease)/increase in trade and other payables
Net cash (used in) operating activities

(5,033,108)
(6,284,757)
248,480
76,153
22,802
18,075
-
250,000
-
(4,680)
-
(15,759)
463,839
419,831
-
-
-
-
(11,662)
(10,767)
(81,729)
(20,447)
382,311
(1,364,264)
(11,690)
(129,516)
-
7,040
(378,652)
(15,867)

(4,399,409)
(7,074,958)

(b) Non-cash investing and financing activities

There were no non-cash investing and financing activities during the reporting period.

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Notes to the Consolidated Financial Statements

19. Commitments

The Group has no commitments which are not recorded on the statement of financial position as at 30 June 2022. (2021: Nil)..

20. Results of the parent company

	2022 $ 2021 $
Current Assets Cash and cash equivalents Trade and other receivables Inventory Other current assets Total current assets Non-current assets Property, plant and equipment Right of use asset Intercompany loans receivable Inventory Investment in subsidiaries Investment Total non-current assets Total assets Liabilities Current liabilities Trade and other payables Employee liabilities Lease Liabilities Total current liabilities Non-current liabilities Lease Liabilities Total non-current liabilities Total liabilities Net Assets Equity Issued capital Share based payments reserve Other reserves Accumulated losses Total equity Results of the parent entity: Loss for the period	6,415,391 6,598,192 125,744 56,368 1,821,713 1,152,872 102,449 687,442
	8,465,297 8,494,874
	2,837,379 2,630,599 162,179 342,590 - - 2,851,875 3,528,896 650,000 650,000 211,906 220,805
	6,713,338 7,372,890
	15,178,636 15,867,764
	6,539,994 6,030,222 132,776 132,190 178,489 196,213
	6,851,259 6,358,625
	- 163,084
	- 163,084
	6,851,259 6,521,709

	8,327,377 9,346,055
	102,845,906 98,808,042 5,931,862 5,639,623 - -
	(100,450,391) (95,101,610)
	8,327,377 9,346,055
	(5,338,462) (6,165,899)
	(5,338,462) (6,165,899)

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Notes to the Consolidated Financial Statements

21. Events since the end of the financial year

No matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in subsequent financial years.

22. Related party transactions

Compensation for key management personnel

The key management personnel compensation included in employee benefits expense (note 4) and share-based payments (note 17), is as follows:

	2022 $ 2021$
Short term employee benefits Share based payments	963,804 2,220,138 290,602 219,706
	1,254,406 2,439,844

Transactions with other related parties

There were no loans to/from related parties in 2022 (2021: Nil)

Subsidiaries

The consolidated financial statements include the financial statements of First Graphene Limited and the subsidiaries listed in the following table:

	Principal activity in	Proportion of voting	Proportion of voting	Class of	Place of
	the year	rights and	shares held	shares held	Incorporation
		2022	2021
First Graphene (UK) Ltd	Graphene sales and R&D	100%	100%	Ordinary	England & Wales
MRL Investments (Pvt) Ltd	Holding company	100%	100%	Ordinary	Sri	Lanka
MRL Graphene (Pvt) Ltd	Graphene Mining and exploration	100%	100%	Ordinary	Sri	Lanka
	Development and
	sale of VFD, TTF
2D Fluidics Pty Ltd	and other 2D	66.67%	66.67%	Ordinary	Australia
	devices and
	materials

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Notes to the Consolidated Financial Statements

23. Auditors’ remuneration

Services provided by the Group’s auditor (in tenure as auditor) and associated firms

During the year, the Group (including its overseas subsidiaries) obtained the following services from BDO Audit (W.A.) Pty Ltd as detailed below:

Auditors’ remuneration	2022 $ 2021 $
Remuneration of the auditor of the Group for: - Audit services – BDO Audit (WA) Pty Ltd - Taxation services – BDO Corporate Tax (WA) Pty Ltd	62,294 44,776 50,668 50,454
	112,962 95,230

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Directors’ Declaration

The Directors declare:

the financial statements and notes, as set out on pages 19 to 54 are in accordance with the Corporations Act 2001 and:
a. comply with Accounting Standards and the Corporations Regulations 2001 and other mandatory professional reporting requirements; and
b. give a true and fair view of the financial position as at 30 June 2022 and of the performance for the year ended on this date of the consolidated group;
the Chief Executive Officer and Chief Finance Officer have each declared:
a. the financial records of the consolidated group for the financial year have been properly maintained in accordance with section 286 of the Corporations Act 2001;
b. the financial statements, and the notes for the financial year comply with the accounting standards; and
c. the financial statements and notes for the financial year give a true and fair view; and
in the directors’ opinion, there are reasonable grounds to believe the consolidated group will be able to pay its debts as and when they become due and payable.
the consolidated group has included in the notes to the financial statements an explicit and unreserved statement of compliance with the International Financial Reporting Standards
the remuneration disclosures set out in the Directors’ Report on pages 10 to 16 as the audited Remuneration Report) comply with section 300A of the Corporations Act 2001;

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

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Michael Bell Managing Director 31 August 2022

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Independent Auditor’s Report

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Additional Securities Exchange Information

(note, this information does not form part of the audited financial statements)

Additional information required by the Australian Securities Exchange Limited and not shown elsewhere in this report is as follows. This information is complete as at 4 August 2022.

a) Distribution of Shareholdings – Fully Paid Ordinary Shares:

Size of Holding	Number of Shareholders Number of Share
1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 and over	179 34,172 1,548 5,240,324 1,084 8,527,283 2,273 79,169,689 485 481,348,023
	5,569 574,319,491
Equity Security	Quoted Unquoted
Fully Paid ordinary shares Options	574,319,491 0 0 15,000,000

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Additional Securities Exchange Information

b) Top 20 Security Holders – Fully Paid Ordinary Shares (FGR) at 4 August 2022

Position	Holder/Group Name	Number of Shares	%
1	BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM	140,716,483	24.50%
2	BNP PARIBAS NOMS PTY LTD	24,281,860	4.23%
3	CITICORP NOMINEES PTY LIMITED	22,732,640	3.96%
4	TWYNAM INVESTMENTS PTY LTD	21,947,082	3.82%
5	GREGORACH PTY LTD	15,905,946	2.77%
6	HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED	14,726,225	2.56%
7	BUILDING ON THE ROCK LIMITED	14,685,000	2.56%
8	IPS Holdings	13,828,400	2.41%
9	DEBT MANAGEMENT ASIA CORPORATION	12,457,146	2.17%
10	MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED	8,619,010	1.50%
11	GINGA PTY LTD	6,771,374	1.18%
12	WILLIAM TAYLOR NOMINEES PTY LTD	4,465,959	0.78%
13	BERGEN GLOBAL OPPORTUNITY FUND LP	3,433,905	0.60%
14	MS FADILLAH BURHAN HASIBUAN	3,089,230	0.54%
15	MR RICHARD HOPETOUN BITCON	2,860,000	0.50%
16	IPS NOMINEES LIMITED	2,759,611	0.48%
17	HALLIDAF MANAGEMENT LIMITED	2,654,274	0.46%
18	MR RYAN JEHAN ROCKWOOD	2,500,000	0.44%
19	BNP PARIBAS NOMINEES PTY LT <IB AU NOMS RETAILCLIENT	2,367,749	0.41%
	DRP>
20	BISSAPP SOFTWARE PTY LTD	2,149,496	0.37%
	Total	322,951,390	56.23%
	Total Issued Capital	574,319,491	100.00%

Shareholders with less than a marketable parcel

At 4 August 2022, there were 1,055 shareholders holding less than a marketable parcel of shares ($0.14 cents on this date) in the Company totalling 743,893 ordinary shares. This represented 0.4% of the issued capital.

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Additional Securities Exchange Information

c) Licence Position as at 24 August 2022

All granted licences are in good standing and comply with the reporting requirements of the relevant licence.

Licence Number	FGR Interest - %	Status	General Location
IML/A/HO/9405/R/2	100	Granted	Central
IML/A/HO/8416/R4	100	Granted	Western
EL/225/R4	100	Granted	Central
EL/228/R4	100	Granted	Central
EL/321/R2	100	Granted	Central
EL/262/R3	100	Granted	Central
EL/325/R2	100	Granted	Central
EL/326/R2	100	Granted	Central

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AI assistant

First Graphene Ltd. — Annual Report 2022

35640_rns_2022-08-30_8b71e882-48c2-4043-8743-33890df7e510.pdf

ASX APPENDIX 4E

PRELIMINARY FINAL REPORT

FOR THE YEAR ENDED 30 JUNE 2022

ASX Appendix 4E

Details of the Reporting Period

Results for Announcement to the Market

Dividends

Net Tangible Assets per share

Control Gained or Lost over Entities

Details of Associates and Joint Ventures

Commentary on results for the period

Compliance Statement

Audit Status

Results Review for Financial Year 2022

Commercial strategy delivers and evolves

Disciplined Growth

ANNUAL FINANCIAL REPORT

Corporate Directory

Directors

Share Registry

Company Secretary

Principal Registered Office in Australia

Auditor

Stock Exchange Listings

Solicitors – Australia

Bankers – Australia

Table of Contents

Directors’ Report

Directors

Warwick Grigor BEc. LLB, MAusIMM, FAICD

Non-Executive Chairman

Dr Andy Goodwin Ph.D. (Polymer Chemistry)

Non-Executive Director

Michael Quinert

Non-Executive Director

Michael Bell (Appointed 1[st] July 2021)

Managing Director and Chief Executive Officer

Results and Dividends

Principal Activities

Events Since the End of the Financial Year

Significant Changes in State of Affairs

Likely Developments and expected results of operations

Directors’ and other officers’ emoluments

Environmental Regulations

Proceedings on behalf of company

Share Options

Directors’ meetings

Indemnification and insurance of officers and auditors

Remuneration report (audited)

Remuneration Policy

Executive Director Remuneration

Non-Executive Director Remuneration

Setting Remuneration Arrangements

Executive Officer Remuneration, including Executive Directors

Details of remuneration for the year ended 30 June 2022

Details of remuneration for the year ended 30 June 2021

Relationship between Remuneration and Company Performance

Contractual Arrangements with KMP

Share-based compensation

Shares issued as part of remuneration for the year ended 30 June 2022

Options issued as part of remuneration for the year ended 30 June 2022

Options issued as part of remuneration in prior years

Options holdings held by key management personnel

Performance rights issued as part of remuneration for the year ended 30 June 2022

Shareholdings held by key management personnel

Transactions with other related parties

Voting Rights

End of audited Remuneration Report

Auditor’s independence

Non-audit services

Michael Bell

Corporate Governance Statement

Annual General Meeting

Auditor’s Independence Declaration

Consolidated Statement of Profit or Loss and Other Comprehensive

Income

Consolidated Statement of Profit or Loss and Other Comprehensive Income (continued)

First Graphene Ltd. Annual Report 2022