Papyrus Australia : ASX Announcement - Half Yearly Report and Accounts

ASX ANNOUNCEMENT 11 March 2021

Audited Half Year Accounts to 31 December 2020

Papyrus Australia Ltd ("PPY"/"Company"/"Papyrus") a world leading "agricultural waste fibre technology company" advises that:-

The Company in accordance with the class waiver from listing rule 4.2B release the unaudited half year accounts to the 31 December 2020 (ASX: announcement 26 February 2021) on the conditions that:

• 1 PPY is not a mining entity or an oil and gas exploration entity, and the appended information set out in Appendix 4D of the listing rules and its unaudited half year accounts have been provided within two months from the end of the relevant accounting period being 31 December 2020.

• 2 In addition, the following information is provided to the market:

  • 2.1 PPY is relying on the Amended ASIC Relief to extend the lodgment date for its audited half year accounts and other documents to be lodged with ASIC under section 320 of the Corporations Act.

  • 2.2 PPY will immediately make a further announcement to the market if it becomes aware that there will be a material difference between the unaudited half year accounts and its audited half year accounts.

During the finalisation of the audit, the Company became aware that it was necessary to include in the accounts the Black and Scholls cost value of the 750,000 unlisted options issued to Mr Steve Howe who was appointed as a director (ASX: announcement 8 September 2020) and were subsequently approved at the AGM held on 11 November 2020 (ASX: announcement 11 November 2020). In accordance with the Black & Scholls model this required the recognition of $15,000 as an expense in the accounts.

The impact of this transaction on the accounts and in particular to the consolidated statement of profit and loss and other comprehensive income was a follows:

Accounts UnauditedAudited

Reduce profit before income tax from $195,335 to $180,535

Reduce comprehensive income from $191,338 to $180,535

There was no other material change to the accounts.

On behalf of the Board

Vince Rigano

Company Secretary

Attached: Appendix 4D

Papyrus Australia Ltd

ABN 63 110 868 409

Half Year Report

for the half year ended 31 December 2020

Contents to Half Year Report

Directors' Report .............................................................................................................. 3

Auditor's Independence Declaration ................................................................................. 6

Consolidated statement of profit or loss and other comprehensive income ....................... 7

Consolidated statement of financial position .................................................................... 8

Consolidated statement of changes in equity .................................................................... 9

Consolidated statement of cash flows ............................................................................. 10

Notes to the Financial Statements ................................................................................... 11

Directors' Declaration ..................................................................................................... 19

Independent Auditor's Review Report ............................................................................ 20

Directors' Report

For the Period ended 31 December 2020

The Directors of Papyrus Australia Ltd ('Papyrus') present their Report together with the financial statements of the consolidated entity, being Papyrus Australia Ltd ('the Company') and its controlled entities ('the Group') for the half year ended 31 December 2020.

Director Details

The following persons were directors of Papyrus during the half year and until the date of this report unless otherwise stated.

Mr Edward Byrt, Chairman

Mr Ramy Azer, Managing Director

Mr Vincent Rigano, Non-Executive Director

Mr Steve Howe (appointed 7 September 2020, resigned 1 January 2021)

Mr David Attias (appointed 13 November 2020)

Review of Operations

• 1. In the six months to 31 December 2020 the Company has supported Papyrus Egypt ("PPYEg") to consolidate the developing banana fibre business being undertaken in Sohag, Egypt as previously reported.

• 2. The Company completed the transaction for the purchase of 15% equity in Egypt Banana Fibre Company (EBFC) for an aggregate amount of EGP 3,306,055 (ASX Release: 31 August 2020) and is awaiting approval from the Egyptian Government for the issue of the share certificate. EBFC, PPY and Papyrus Egypt are presently progressing the expansion of PPY's direct interest in EBFC and its indirect interest in Papyrus Egypt from its present interests. Following the unwinding of the royalty agreement, regained its 50% equity interest in Papyrus Egypt and through its acquisition of the 13.614% interest in EBFC referred to above, has a further 6.8% indirect "interest" in Papyrus Egypt.

• 3. EBFC advised that the moulded fibre product trials carried out by a toll manufacturer under the supervision of EBFC were successful (ASX announcement: 31 August 2020).

• 4. PPY commissioned a full Due Diligence of PPYEg which was concluded in December 2020. The full legal, financial and operational review was necessary before increasing our investment and ownership in PPYEg.

• 5. The demand for our natural organic agricultural products namely: Musa (natural fertilizer), Cairo Peat, and Bokashi produced at the Sohag factory continue to out- strip supply. With product sales for the reporting period amounting to EGP2.26 million and a net tax profit of 44%. The Company has provided funding to Papyrus Egypt to enable the purchase and installation of new production equipment in the first quarter of 2021. This equipment is expected to increase current production levels substantially to meet the current and future levels of demand.

6.

Research continued to prepare for the production of moulded fibre products. Deposit to purchase new fibre refining equipment was paid. Moulded product testing at commercial facilities in the North of Egypt continued producing samples for our potential customers in China and the USA.