A T L A S P E A R L S A N D P E R F U M E S - A N N U A L R E P O R T • 2 0 1 4
For personal use only C O N T E N T S
Cover photography by Brownyn Kidd, shot on location in Melbourne at His Majesty’s theatre
Celebrating the natural gifts of the South Sea Islands.Atlas Pearls and Perfumes Ltd is a dynamic, ASX listed company (ATP) sustainably producing pearls and plants as nature intended. These natural materials are among the best in the world and are showcased as finished products in pearl jewellery, fragrances and cosmetics through Atlas retail brands. The company nurtures, creates and retails high quality luxury products, which, through their formation, are inextricably linked to the well-being of surrounding communities and environments.Atlas pearls touch so many hearts and are an essential part of the remote communities throughout the South Seas.For personal use only A T L A S P E A R L S A N D P E R F U M E S • 2 0 1 4
C O N T E N T S
WELCOME
Page 2
PEARL FARMING
Page 4
BEYOND BEAUTY
Page 6
RESEARCH AND TECHNOLOGY
Page 8
ESSENTIAL OILS OF TASMANIA
Page 10
FRAGRANCE AND COSMETICS DEVELOPMENT
Page 12
CORPORATE SOCIAL RESPONSIBILITY
Page 14
FINANCIALS
Page 16
CHAIRMAN’S REPORT
Page 17
DIRECTORS’ REPORT
Page 21
DIRECTORY
Inside back cover
PAGE 3
For personal use only W E L C O M E
Table One:
Increased Revenue and Profits for 2013/14
LICENSING BIOTECHNOLOGY
INNOVATIONS
12mnths
30-Jun
2014
$
12mnths
30-Jun
2013
$
Move-
ment
$
Revenue
16,283,183
10,453,703
5,829,480
Normalised
EBITDA
NPBT
NPAT
3,470,313
(363,078)
3,833,391
1,458,642
(4,237,906)
5,696,548
1,813,922
(944,694)
2,758,616
* 2012/13 is the normalised 12 Month period ending 30 June 2013.
Atlas is viewing pearls with fresh eyes, going
beyond the mere beauty of the gem, by
extracting the very elements that trigger
the formation of the pearl itself. Atlas has
extracted a number of active ingredients from
the pearl oyster (shell and soft tissues).
Due to the strategic point of difference in
the luxury supply chain it has enabled Atlas
to open direct dialogue with multi-national
brands that offer significant upside for the
sale of extracts as well as stimulating new
markets for the export of loose pearls and
pearl jewellery.
The pearling industry needs to diversify and
maximise the use of by-products to build new
income streams.
RECORD REVENUE
1.
Record revenue of $16.28m for the 12
months ending 30 June 2014.
2. Closed the period with $2.66m in
liquidity (cash and headroom in bank
facility access).
3.
4.
EBITDA of $3.47m. Strong sales results
in the June auction have had a positive
impact on Normalised EBITDA 2013/14.
Sales of essential oils of $2.02m in the
2013/14 period, improving on the
revenue for the 6 months to 30 June 13
of $503,076.
5. Overall Gross Profit percentage increased
to 62% for the 12 months to 30 June
2014 from 60% in 30 June 2013 results
as loose pearl prices rose due to the
reduced supply of white South Sea pearls
driven by lower global production.
PAGE 4
WelcomeI took on the role of Executive Chairman of Atlas in January 2010. The last five years have been a troubled and an unprecedented period in relation to world economic affairs. Based on the 2013/14 financial results, I want to take this occasion to reflect and thank my co-directors, staff, customers, suppliers and shareholders for all of your contributions to the delivery of a five year plan that has resulted in Atlas emerging from the global financial recession as a stronger and more sustainable luxury ingredient supplier.Atlas is pleased to announce that it lifted gross earnings by 56% in 2013/14; this represents the Company’s highest gross revenue in its 20 year history. Significantly, this has been achieved while lifting gross profit from 60% to 62%.ATLAS PEARLS AND PERFUMES • 2014For personal use only
STEPHEN BIRKBECK - CEO & Chairman
TINA ARENA - Singer Song-writer
Atlas has initiated research in the USA,
Europe, Asia and Australia on a wide range of
applications of pearl extracts in the following
sectors:
1) Perfume
2) Cosmetics
3) Jewellery and
4) Pearl Farming (seeding of oysters).
This research aims to create demand for the
Atlas pearl extracts. This in turn is providing a
platform for Atlas to build its corporate profile
with a range of luxury brands that see the
emerging Corporate Social Responsibility as a
key business practice of the 21st Century.
LEVERAGING OFF INDONESIAN ASSETS
As this report demonstrates, the acquisition of
EOT has been a success with sales exceeding
budget forecasts. The Tasmanian technical
IP hub is allowing Atlas to commercialise its
pearl powder research and through perfume
exports to diversify its revenue streams into
the luxury sector.
Atlas is now reviewing how it can combine its
Indonesian operational assets to complement
Tasmanian technical skills to enter the world’s
second largest flavour and fragrance market.
There are various short-term growth
opportunities in Indonesia that can harness
the synergies between our Group’s assets,
(the Tasmanian and Indonesian work-forces).
Atlas has developed a deep knowledge and
understanding of business in Indonesia;
this accompanied by the Group’s existing
geographical presence, sourcing and logistical
capabilities puts the Company in a unique
position to take advantage of this growing
market.
CORPORATE SOCIAL RESPONSIBILITY
Cradle to Cradle - 3,000 Hands
The research and commercialisation of pearl
extracts is aimed at establishing a deeper
luxury connection between the pearl and
humans, beyond the visible spectrum of
jewellery and is fully aligned with the Atlas
cradle to cradle sustainability commitment
of making the most out of each and every
part of the material that the Company uses to
create value.
The Atlas Corporate Responsibility approach is
fundamental to the Company’s DNA. Recent
21st century market trends provide Atlas
with substantial opportunities as licensing
partner targets are made aware of the depth
of actions taken.
We remain committed to being a global force
in luxury Corporate Social Responsibility and
intend to pioneer a cradle to cradle approach
to the pearl and perfume supply chains by
respecting the regional communities and
environment in which we work.
VALUE ADDED DIVISION
This division is designed by activities that take
our luxury production streams and develop
designs, concepts technologies, and markets
to substantially increase the price and margin
for its farmed produce.
CREATIVE TEAM
Atlas continues to build its Paris and New York
based support base for designs, concepts
and licensing. With a range of jewellery
collaborations being launched over the next
year I would like to welcome world leading
pearl jewellery designer Simon Henderson to
the team.
Over the last four weeks Atlas has had the
pleasure of working closely with Tina Arena,
who is spearheading the work of a new
creative team that is dedicated to joining the
genres of perfume and pearls. Her 39 year
career is unprecedented in her chosen art-
form. A lady of elegance, Tina shares strong
roots in France with Atlas and has taken the
bold move to invest in Atlas and work towards
a common future.
ACKNOWLEDGMENTS
Atlas was announced as a finalist in the WA
Industry and Export Awards that will be held
on the 24th October 2014, where winners will
be selected for the prestigious national finals
held in Sydney in November 2014.
Our Indonesian and Tasmanian regional
workforces are the reason that we have been
able to survive in a marketplace that has
proven too tough for many in the pearling
industry. The team’s sacrifices, work ethic
and passion give our Board and senior
management the self-belief required through
the difficult times.
Stephen Birkbeck
Chairman and CEO
PAGE 5
For personal use only P E A R L
F A R M I N G
PAGE 6
At the heart of Atlas’ pearling success are the people of our Company who work passionately and harmoniously with nature to produce some of the world’s finest South Sea pearls.As a world-leader in the successful cultivation of silver and white South Sea pearls from the Pinctada maxima we consistently strive to enhance efficiency and productivity of the Company’s core business - pearl farming.ATLAS PEARLS AND PERFUMES • 2014For personal use only PIERRE FALLOURD - Vice President of Pearling
PEARL PRODUCTION
WHOLESALE
Wholesale grew 50% from $600k to $900k
in the last financial year. The increase in
number of sales can be attributed to retailers
as opposed to wholesalers. A positive sign
demonstrating that our presence in Perth,
Western Australia is practical, efficient and
serving key retailers.
The continued success of our pearl farming
division has been made possible through
an increase in synergy between all involved
in the long and complex pearl value chain,
stretching from our dedicated workforce in
Indonesia right through to our head office
team in Australia.
In the past five years we have expanded our
scale of production. In 2014/15 we estimate
Atlas will be producing over 350 kg’s of high
quality “sellable” pearls – a 100% increase in
the core element of the Company’s exports.
In the next financial year we will see our
second major hub growing to optimal scale
with this achievement made all the more
remarkable despite the global financial crisis
(GFC) causing fiscal hardship to the sector, and
a contraction in the global pearling industry.
TRADING
Atlas completed the year strongly with the
best auction results achieved since the GFC
commenced. This supports our belief that our
sales strategy of holding fewer, bigger auctions
is paying off and that there is a growing and
sustainable demand for the 9-13 mm specialty
pearl size, a category for which we have now
built our global reputation as a market leader.
We are now able to consistently produce
harvests of this highly prized and sought after
specification of white South Sea pearls.
PAGE 7
The last financial year has seen a broadened
focus from expanding value added activities
to placing further attention on epitomising
pearl farming operations through research
and development initiatives and an
innovative, scientific approach.
With a wide range of water and land assets
spread over a diverse geographical range
Atlas has a strong foundation to mitigate
risk and propel the company into the next
financial year with stabilisation and expansion
of revenue streams.
At the heart of Atlas’ pearling success are the people of our Company who work passionately and harmoniously with nature to produce some of the world’s finest South Sea pearls.As a world-leader in the successful cultivation of silver and white South Sea pearls from the Pinctada maxima we consistently strive to enhance efficiency and productivity of the Company’s core business - pearl farming.For personal use only B E Y O N D
B E A U T Y
PAGE 8
ATLAS PEARLS AND PERFUMES • 2014For personal use only DANIELLE BRANDENBURG - CFO
JEWELLERY DESIGN AND SOUTH SEA
PEARL MATCHING
Atlas creates a wide range of aspirational and
elegant pearl jewellery.
From classic to contemporary styles, each
piece showcases the pure beauty of the
pearl. We are acknowledged for our value,
consistency and unfaltering ability to match
quality South Sea pearls. Atlas has also
developed an international reputation in the
high-demand category of 9-13mm white and
silver South Sea pearls.
One of the main aims of our value-added
division is to take the highly praised Atlas
South Sea pearl and create breathtaking and
meaningful jewellery.
Our designs are the result of an in-house
team and also selected imported work from
internationally acclaimed designers, allowing
Atlas retail to offer a range of exquisite designs
showcasing the beauty and authenticity of
the pearl.
Atlas has five retail outlets in Bali (Indonesia);
two tourism operations at other South Sea
island pearling centres including Alyui Bay,
West Papua and Punggu Island located near
the island of the Komodo Dragon.
Atlas has its global headquarters in Claremont,
Western Australia – along with a magnificent
retail showroom.
With an exceptional selection of pearls and
world-class design capabilities the possibilities
are endless with Atlas.
INNOVATION
At Atlas we are viewing pearls in a new light,
going beyond the mere beauty of the gem,
by extracting the very elements that trigger
the formation of the pearl itself. Atlas has
extracted a number of active ingredients from
the pearl oyster (shell and soft tissues).
Due to the strategic value of such points of
difference in the luxury supply chain it has
enabled us to open direct dialogue with
multi-national brands that offer significant
upside for the sale of extracts as well as
stimulating new markets for the export of
loose pearls and pearl jewellery.
There is substantial value adding from
pearl by-products (pearl shell, soft tissue
and substandard pearls) that are currently
discarded or earning less than $3.00 kg.
Atlas has initiated research in the USA,
Europe, Asia and Australia on a wide range of
applications of pearl extracts in the following
sectors: 1) Perfume; 2) Cosmetics; 3) Jewellery;
and 4) Pearl farming (seeding of oysters). This
research aims to create demand for the Atlas
pearl extracts.
Recognising that the pearl represents less
than 1 % of the total bio-mass of the oyster,
we have invested significantly in unlocking
the active ingredients in the bio-mass
highlighted by its acquisition of Essential
Oils of Tasmania. Atlas’ patented extractive
technology, when applied to the 100 tonnes
of annual bio-mass, transforms the low value
by-product into key active components of
perfume and as an active cosmeceutical.
Already demonstrating compelling efficacy,
global demand for these products is evident
in Atlas’ advanced negotiations with an
international multi-national skin care company.
This in turn is providing a platform for Atlas
to build its corporate profile with a range
of luxury brands that see Corporate Social
Responsibility as an essential business practice
in the 21st Century.
PAGE 9
At Atlas Pearls and Perfumes, beauty is at the heart of everything we do.We understand that to build new income streams our Company and the pearling industry as a whole need to diversify and maximize the use of by-products.The past year has seen the value added divisions at Atlas expand greatly. Our utilisation of oyster by-product, stranding and matching capabilities coupled with a unique desire to delve beyond the beauty of the pearl and discover further benefits of these wondrous gems, places the Company in a strong position with a diversified product range for the next financial year.For personal use only R E S E A R C H A N D
T E C H N O L O G Y
PAGE 10
ATLAS PEARLS AND PERFUMES • 2014For personal use only DR. JOSEPH TAYLOR - Non Executive Director
bioactive compounds without the use of
chemical solvents, which as a consequence,
results in extracts that can be organically
certified. Almost any natural raw material
can be fed into the machine.
Using the same funding, a commercial
scale pearl powdering mill was also built.
This mill can process large volumes (500Kg/
day) of mother of pearl shell and produce
highly refined micronised pearl powder for
the cosmetic and health industry. Research
utilising the pearl powder continues
including creating ingestible products for
the wellness industry.
Atlas is anticipating even more advances
in the research and technology division
during 2014/15.
The selective breeding and genetic
improvement programme is now housed
within a dedicated research hatchery
and associated farm area. This facility will
provide the “stud” oyster stock for our
commercial operations and continue to
develop key pedigree lines. The programme
has received further support through an
Australian Research Council grant that
helps fund the ongoing collaboration with
James Cook University. This project has now
entered phase three into unravelling the
complex genetic processes that control
pearl development.
During the same period the first scientific
studies were completed on the potential
benefits of pearl oyster tissue, protein and
powder extracts on the genetic activity
of human skin cells. In total 9 different
key pearl oyster extracts produced by
EOT were tested using microarray DNA
technology with human skin cells. The
results demonstrated effects on the
genes responsible for the production of
collagen, elastin and hyaluronic acid – all
major factors in skin health – as well as anti
oxidant activity. These results suggest that
the pearl, famous as a traditional skin care
treatment, has scientifically valid potential
to improve human skin health.
These same extracts are being tested in the
pearl surgery process as potential boosters
for natural process of growing a pearl. In
effect we are putting key bioactive pearl
extracts back into the oyster to stimulate
the nacre building process. Preliminary
results demonstrated an improvement in
the success of pearl seeding surgery with a
higher percentage of pearls resulting when
oysters were treated with the extracts.
EOT received a $1.1M grant from
AusIndustry in support of commercialising
IP developed for the extract. Raw materials
include: pearl and pearl oysters, Manuka,
Blackcurrant, Sea Lettuce, Tasmanian
Mountain Pepper, Fire Tree, Truffles and
bioactive compounds. EOT is considered
preeminent in extractive technology of
natural ingredients.
The grant has provided funds to purchase
and commission the first purpose built,
commercial scale Supercritical Liquid
CO2 Extraction Device in Australia. The
key advantage of the device is the ability
to separate essential oils, fragrances and
PAGE 11
Research results and the commercialization of technology were very exciting for 2013/14. The long-term selective pearl oyster breeding and genetic improvement programme in Indonesia reached a major milestone with virgin pearl oysters reaching seeding maturity within record time. In prior seasons less than 30% of any pearl oyster generation could be seeded below 22 months of age. In FY13/14 76% of the virgin pearl oyster stock was seeded by 21 months of age. This result reduces dramatically the production cycle from birth to harvest and will impact positively on the cost of growing a pearl.For personal use only E S S E N T I A L O I L S O F
T A S M A N I A
Hobart-based, Essential Oils of Tasmania (EOT) is a 100% owned subsidiary of Atlas
and produces a wide range of essential oil products for use in perfume, pharmaceutical
and food industries. Crops include Lavender, Boronia, Tasmanian Native Mountain
Pepper, Parsley, Fennel and Peppermint.
PAGE 12
ATLAS PEARLS AND PERFUMES • 2014For personal use only STEPHEN GLEESON
Managing Director - Essential Oils of Tasmania
Atlas acquired EOT in January 2013 to
strengthen our Company’s ability to use the
Company’s Intellectual Property (IP) and
become a processer and exporter of perfume
and cosmetic ingredients. The core rationale
behind the acquisition was to protect five
years of pearl powder research and have EOT
deliver the skill base to expand the R & D and
commission a pearl powdering facility.
EOT Sales for the 2013/14 year were $2.02
million, which is a substantial improvement
on the previous fiscal year (six month sales to
30th June 2013 were $503,076).
While there is on-going revenue growth
potential in Tasmania, we are continuing to
work on ways of combining the Australian
extraction IP with our team’s intimate and
long standing knowledge of operating
businesses successfully in Indonesia - the
world’s second largest flavour and fragrance
perfume export market.
There are various short-term growth
opportunities in Indonesia that can harness
the synergies between our Group’s assets, the
Tasmanian and Indonesian work-force. Atlas
has developed a deep knowledge and
understanding of business in Indonesia,
this accompanied with the Group’s existing
geographical presence, sourcing and logistics
capabilities puts the Company in a unique
position to take advantage of this growing
market.
Currently, EOT has over 300 ha of crops it owns
(or that are under contract for food flavouring)
that have created employment in Tasmania.
By diversifying into perfume extractions, this
project will lead to the creation of further job
opportunities in the region.
COMMERCIALISATION GRANT
TINA ARENA FRAGRANCE
In May 2014 EOT was awarded a $1.1
million AusIndustry grant to support the
commercialisation of its propriety innovative
extraction technology and secure long term
supply agreements for these products.
The grant has provided immediate benefits
including the creation of regional jobs and
export opportunities along with the ability to
plan and, in the next three years, create a state
of the art manufacturing and extraction facility.
The funding will lay the foundations for an
Australian perfume industry that will provide a
blueprint for Australian IP to develop stronger
agribusiness ties internationally.
It is expected the centre will contribute to
the Tasmanian economy in terms of skilled
job creation, exports and wide ranging
collaboration with global organisations in the
luxury industry.
Our recent announcement that Atlas will
be creating Australia’s first luxury fragrance
with singer, song-writer Tina Arena is set to
launch Australia into new territory, breaking
into the traditional European perfume market
and putting Tasmania on the map. The
global perfume venture will focus worldwide
attention on the incredible crops of EOT and
the pristine wonders that the great state
of Tasmania has to offer, whilst leading the
charge for a new generation of perfume and
cosmeceuticals.
It is extracts from the crops, produced on 20
farms across Tasmania’s clean environment
that will feature in the production of the
perfume collaboration, alongside world best
plant extracts from France.
PAGE 13
For personal use only
F R A G R A N C E & C O S M E T I C S
D E V E L O P M E N T
PAGE 14
ATLAS PEARLS AND PERFUMES • 2014As pioneers of pearl-perfume extraction, Atlas Pearls and Perfumes’ explorative gains in pearling are transcending through to the world of fragrances and cosmetics.The Company’s Fragrance and Cosmetic Division is working on a number of exciting projects.For personal use only NELSON ROCHER
Head of Development: Perfumes & Cosmetics
TINA ARENA
This year Atlas announced our collaboration
with Australia’s most successful female
recording artist, Tina Arena.
The partnership includes the development of
a luxury fragrance utilising quality ingredients
from Essential Oils of Tasmania (EOT) and
products from France – Tina Arena’s adopted
home.
Renowned French perfumer Bertrand
Duchaufour has been working with Project
Manager Nelson Rocher and Tina Arena to
create the scent. French company MAKAO is
designing the fragrance bottle and packaging.
Tina Arena has been involved in every step
of the perfume development process and
describes the collaboration “As a blend of
beauty from both countries.”
Atlas plans to unveil the perfume in 2015.
PEARL COSMETIC BRAND
Atlas is developing an exciting brand based
on the properties of the pearl and featuring
pearl extract.
Over the past two years we have conducted
significant research and development into the
efficacy of pearl extracts, with excellent results.
Pearl nacre (shell) has been powdered and
then had propriety technology applied to
extract key pearl proteins and pearl amino
acids. A range of extracts from the shell and
soft tissue have simultaneously been tested
and experimented in preliminary in-vitro trials
in the USA on human DNA to scope key areas
of ongoing interest for our key global customer
targets (multi-national beauty brands that also
sell jewellery). The objective is to validate
ESSENTIAL OILS OF TASMANIA
traditional Chinese medicinal claims on human
cells cultured in the US to determine a range of
pearl extract rejuvenation properties on human
soft tissues.
To celebrate the beauty and purity of
Tasmania, Essential Oils of Tasmania has
developed five fragrances, to be launched in
late 2014.
These and other in-vitro “proof of concept”
trials are vital in securing long term export
agreements with larger companies that wish
to partner with Atlas as a unique supplier of
active ingredients that are complemented
with a strategic marketing proposition
The Company has engaged a leading Paris-
based luxury creative agency to finalise a
strategic plan to maximise the commercial roll
out of pearl cosmetics and a pearl perfume
extract innovation (2008) that Atlas purchased
the rights to in 2011. Nelson Rocher will
direct the brief which aims to launch and
commercialise specific pearl market concepts
and technologies related to its extracts and
pearl jewellery through incubating proof of
concept marketing trials in Atlas retail shops.
If the roll out trial is successful, Atlas will
work with a Paris based agent, luxury brand
customer base and its own extensive Paris and
New York based luxury networks to identify
various licensing opportunities for these
innovations and products.
Michel Roudnitska, son of legendary Grasse
perfumer, Edmond Roudnitska, was critical
to the development of the five fragrances.
Each fragrance will utilize EOT oils, and will
specifically highlight each of EOT’s signature
ingredients: Mountain Pepper; Boronia; Fire
Tree; Lavender and Pearl.
The finished scents will be the first consumer
products to come out of EOT.
PEARL JEWELLERY APPLICATIONS
Research has been conducted in collaboration
with the Gemological Institute of America to
measure the potential benefits of various active
ingredients on pearl luster (shine) and also
tests on the internal structure of the pearl to
measure potential impact on Orient (the ability
to refract light). Research has been conducted
that follows a protocol very similar to a
cosmetic clinical test to reveal the impact on
the internal structure of each pearl exposed to
accelerated aging in the different environments
selected using propriety active ingredients.
Distribution will focus on the global retail
jewellery sector, generating further synergies
by upselling Atlas pearls in finished supporting
jewellery. The pearl perfume extract is unique
to Atlas. The extraction of the fragrance of
the pearl provides Atlas with a range of other
commercial opportunities to explore.
Establishing successful correlations between
human and pearl skin is unique to Atlas. We
are pioneering a new approach with the
expressed aim of lifting the global demand
for pearls and pearl jewellery which currently
represents less than 5% of retailers’ inventory
value added sales.
PAGE 15
For personal use only C O R P O R AT E S O C I A L R E S P O N S I B I L I T Y
3 0 0 0 H A N D S
MORE THAN 800 ATLAS EMPLOYEES AROUND THE WORLD.
PAGE 16
ATLAS PEARLS AND PERFUMES • 2014For personal use only MORE THAN 800 ATLAS EMPLOYEES AROUND THE WORLD.
CRADLE TO CRADLE
Over 3000 hands nurture the journey of an Atlas creation into yours.
From the moment nature’s treasure is born until the finished product
is delivered into the hands of the wearer, we infuse care, love and respect.
We operate with the innate philosophy of creating and sharing items of sustainable beauty.
This is achieved through harmoniously working to enhance the economic,
environmental and social well-being of the communities and locations in which we operate.
Atlas farming operations, whether they are land or sea-based,
strive to consistently create and build stable economies in remote areas.
Core to our belief is optimising every aspect of our production,
ensuring there is minimal wastage and that all the richness of the
oyster and the pearl is realised in meaningful ways.
To enhance the communities who are integral to the success of Atlas
we endeavour to provide support through scholarship, sponsorship
and community development programs whilst encouraging a culture
whereby knowledge is transferred and skills are shared.
At Atlas we recognise that education and skill development represent empowerment
and the betterment of the families and communities that make our business a success.
Seeing their commitment and belief in our business is a source of continued pride.
We operate and work on a fundamental understanding that harmoniously
working to enhance the environment and associated ecosystems
is the key to a sustainable future.
An integrated approach is taken to ensure ethical practices underpin all we do,
from high-level management strategies right through to daily interactions
with surrounding communities and environments.
PAGE 17
For personal use only PAGE 18
PAGE 18
For personal use only C H A I R M A N ’ S R E P O R T
Dear Shareholder
FISCAL RESULTS IN 2013/14
Atlas is pleased to announce that 2013/14 audited
net earnings are higher than forecast.
This report is the first 30 June Annual Financial
Report for Atlas Pearls and Perfumes Ltd (Atlas)
bringing the Group in line with the Australian
financial year. In the past twelve months Atlas
realised many key milestones outlined in its
strategic plan providing for the on-going and
improving profitability of the Company’s core
business. Research and Development (R & D) is in its
tenth year, focussing on optimising core business
activities, as well as bio-mass applications that
underpin the Company’s diversification strategy.
This R & D will not only create new high value
export and revenue streams from the existing
pearl production inputs by utilisation of the waste
products but ensures that Atlas is a recognised
world leader in pioneering cradle to cradle practises
in the luxury supply chain.
$3.8 Million Improvement in EBITDA in 2013/14
Compared to 2012/13 *
Atlas increased its gross revenue by 56%, to
$16,283,183. This is a record result in the 20 year
history of the Company. More importantly, gross
profits increased from 60% to 62% and combined
with prudent overhead cost management has
improved EBITDA from a loss of $363,078 to a profit
of $3,470,313 (i.e. $3.8m improvement). The EBITDA
is 21% of gross revenue and has resulted in a net
profit before tax improvement of $5,696,548 and an
NPAT improvement of $2,758,616. All net earnings
are well in excess of the Board of Director’s 2013/14
budgets and forecasts.
Table One:
Increased Revenue and Profits for 2013/14
12mnths
30-Jun
2014
$
12mnths
30-Jun
2013
$
Move-
ment
$
Revenue
16,283,183
10,453,703
5,829,480
Normalised
EBITDA
NPBT
NPAT
3,470,313
(363,078)
3,833,391
1,458,642
(4,237,906)
5,696,548
1,813,922
(944,694)
2,758,616
* 2012/13 is the normalised 12 Month period ending 30 June 2013.
1.
2.
3.
4.
5.
Record revenue of $16.28m for the 12 months
ended 30 June 2014.
Closed the period with $2.66m in liquidity
(cash and headroom in bank facility access).
EBITDA of $3.47m. Strong sales results in the
June auction have had a positive impact on
Normalised EBITDA 2013/14.
Sales of essential oils of $2.02m in the 2013/14
period, improving on the revenue for the 6
months to 30 June 13 of $503,076.
Overall Gross Profit percentage increased to
62% for the 12 months to 30 June 2014 from
60% in 30 June 2013 results as loose pearl
prices rose due to the reduced supply of
white south sea pearls driven by lower global
production.
Refer to Appendix 1 – Summary of key Fiscal Table 3.
PEARL PRODUCTION AND LOOSE
PEARL SALES
Atlas has expanded its scale of production over the
past five years and in 2014/15 estimates producing
over 350 Kgs of high quality “sellable” pearls, which
is a 100% increase in this core element of the
Company’s exports. The team is working on the next
5 Year production blue print (to June 2020). Atlas
will build key production strengths to maximise
quality through on-going pearl genetic research.
This R & D, when combined with a strong 5 Year
historical CAPEX investment provides Atlas with
a wide range of water and land assets spread
over a diverse geographical range. This unique
combination minimises the risks normally
associated with aquaculture such as disease and
climate. Combined with production efficiency
and low cost centres, our key investment features
are responsible for the Company’s current global
competitive advantage.
In 2014/15 Atlas will see its second major hub
growing to optimal scale with this achievement
made all the more remarkable due to the global
financial crisis (GFC) causing fiscal hardship to the
sector and a contraction in the global pearling
industry.
Atlas completed the year strongly with the best
auction results achieved since the GFC commenced.
This supports our belief that our sales strategy of
holding fewer, bigger auctions is paying off and that
there is a growing and sustainable demand for the
9-13 mm specialty pearl size, a category for which
we have now built our global reputation as a market
leader. We are now able to consistently produce
harvests of this highly prized and sought after
specification of white south sea pearls.
Atlas will continue to invest heavily in R & D
providing the Company with a significant
competitive advantage. An Atlas supported pearl
research program has been awarded $540,000 by
the Australian Research Council. The collaborative
research approach between Atlas and James
Cook University (JCU) has resulted in many key
achievements in pearl aquaculture and genetic
research over the last nine years. Researchers have
unravelled the most detailed genetic map of any
commercial shellfish species and have created a
unique pedigree system allowing for commercial
improvements in domestication, retention rates,
pearl quality (weight, colour and lustre) and this is
providing a strong foundation for sustainable pearl
farming.
PEARL BY-PRODUCT EXTRACTS
One of the core products derived from pearl
farming is a by-product that represents > 95% of
the harvested oyster. The pearling industry needs
to diversify and maximise the use of by-products
to build new income streams. There is substantial
value adding from pearl by-products (pearl shell,
soft tissue and substandard pearls) that are currently
discarded or earning less than $3.00 kg.
Atlas has initiated research in the USA, Europe, Asia
and Australia on a wide range of applications of
pearl extracts in the following sectors:
1) Perfume
2) Cosmetics
3) Jewellery and
4) Pearl Farming (seeding of oysters).
This research aims to create demand for the Atlas
pearl extracts. This in turn is providing a platform
for Atlas to build its corporate profile with a range
of luxury brands that see the emerging corporate
social responsibility as a key marketing trend of the
21st Century.
PEARL BY-PRODUCT
COMMERCIALISATION
Atlas is viewing pearls with fresh eyes, going beyond
the mere beauty of the gem, by extracting the very
elements that trigger the formation of the pearl itself.
Atlas has extracted a number of active ingredients
from the pearl oyster (shell and soft tissues).
Due to the strategic value of such points of
difference in the luxury supply chain it has enabled
Atlas to open direct dialogue with multi-national
brands that offer significant upside for the sale of
extracts as well as stimulating new markets for the
export of loose pearls and pearl jewellery.
PAGE 17
ATLAS PEARLS AND PERFUMES LTD AND ITS SUBSIDIARIESFor personal use only
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
C H A I R M A N ’ S R E P O R T C O N T I N U E D
PROJECTS CURRENTLY BEING
UNDERTAKEN INCLUDE:
1) Perfume of the Pearl Applications
Atlas has engaged a leading Paris based luxury
creative agency to finalise a strategic plan to
maximize the commercial roll out of pearl cosmetics
(Pearl Rituals) and a pearl perfume extract
innovation (2008) that Atlas purchased the rights
to in 2011. Nelson Rocher will direct the brief which
aims to launch and commercialise specific pearl
market concepts and technologies related to its
extracts and pearl jewellery through incubating
proof of concept marketing trials in Atlas retail
shops. If the roll out trial is successful, Atlas will work
with the Paris based agent’s luxury brand customer
base and its own extensive Paris and New York
networks to identify various licensing opportunities
for these innovations and products.
Distribution will focus on the global retail
jewellery sector, generating further synergies
by upselling Atlas pearls in finished supporting
jewellery. The pearl perfume extract is unique to
Atlas. The extraction of the fragrance of the pearl
provides Atlas with a range of other commercial
opportunities to explore.
2) Cosmetic Application
Pearl nacre (shell) has been powdered and, using
propriety technology, pearl proteins and pearl amino
acids were extracted. A range of extracts from the
shell and soft tissue have simultaneously been
tested and experimented in preliminary in-vitro trials
in the USA on human DNA to scope key areas of
ongoing interest for our key global customer targets
(multi-national beauty brands that also sell jewellery).
The objective is to validate traditional Chinese
medicinal claims on human cells cultured in the US
to determine a range of pearl extract rejuvenation
properties on human soft tissues.
These and other in-vitro “proof of concept” trials
are vital in securing long term export agreements
with larger companies that wish to partner with
Atlas as a unique supplier of active ingredients
that are complemented with a strategic marketing
proposition.
Phase 1 of the Pearl Oyster extract cellular studies
was completed. In short, results are encouraging.
All 9 of the extracts showed activity (concentration
dependent) on skin cells, with the protein variants
showing the most pronounced results. Overall
results give promising indications of extract activity
at cellular level.
A post-graduate at James Cook University has
been assigned to analyse the DNA Micro Array data
(180,000 data points) over the next 2-3 months. In
conjunction with the skin cell study results above,
the Microarray results will help to map out the
directions of the type of testing to run for Phase
2. Phase 2 will narrow down the ingredients and
run tests on enhanced skin tissue models, more
indicative to effects directly on skin.
3) Pearl Jewellery Applications
Research has been conducted in collaboration with
the Gemological Institute of America to measure
the potential benefits of various active ingredients
on pearl luster (shine) and also tests on the internal
structure of the pearl to measure potential impact
on Orient (the ability to refract light). Research has
been conducted that follows a protocol very similar
to a cosmetic clinical test to reveal the impact on
the internal structure of each pearl exposed to
accelerated aging in the different environments
selected using proprietary active ingredients.
Establishing successful correlations between human
and pearl skin is unique to Atlas. We are pioneering
a new approach with the express aim of lifting
the global demand for pearls and pearl jewellery,
which currently represents less than 5% of retailers
inventory value added sales.
In Vitro proof of Concept trials conducted in the USA
Treatment
Pearl Nacre Powder
Whole Nacre Protein
Hydrolysed Nacre Protein
Saibo Mantle Powder
Whole Saibo Mantle Protein
Hydrolysed Saibo Mantle Protein
Peristracum Mantle Powder
Whole Peristracum Mantle Protein
Hydrolysed Peristracum Mantle Protein
Reactive
Oxygen
formation
reduction
Collagen
production
increase
Elastin
production
increase
Hyaluronic
Acid (HA)
synthesis
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
4) Pearl Farming Applications
Live experiments using a wide range of pearl
extracts on a statistically relevant group of pearl
oysters were conducted to track potential benefits
on pearl formation and determine if the active
ingredients improve seeding retention rates and
stimulate nacre deposition. Due to the relative
success of the pilot trial, Atlas is now scaling up
a large commercial trial using the extract that
provided the highest statistical result in the first
phase of experimentation.
CONCLUSION ON PEARL EXTRACT
RESEARCH AND MARKET
COMMERCIALISATION
The research and commercialisation of pearl extracts
is aimed at establishing a deeper luxury connection
between the pearl and humans, beyond the visible
spectrum of jewellery and is fully aligned with the
Atlas cradle to cradle sustainability commitment of
making the most out of each and every part of the
material that the Company uses to create value.
PERFUME DIVISION:
ESSENTIAL OILS OF TASMANIA (EOT)
In 2012, EOT was a struggling Australian exporter
of food flavours. Atlas purchased the company
(January 2013) and widened its scope to use the
Company’s Intellectual Property (IP) to become a
processer and exporter of perfume and cosmetic
ingredients. The core rationale behind the
acquisition was to protect 5 years of pearl powder
research and have EOT provide the skill base to
expand the R & D and construct and commission a
pearl powdering facility.
In May 2014 EOT was awarded a $1.1 million grant
to support the commercialisation of its pearl
extraction technology and secure long term supply
agreements for these products. It will be Australia’s
first Supercritical Fluid Extraction (SFE) plant using
CO2 for the extraction of flavour and fragrance
ingredients and bioactive compounds.
Atlas is pleased to announce that in August
2014 EOT completed the construction and
commissioning of a pearl powdering and extraction
plant in Hobart (constructed to Food and Drug
Authority, USA standards) and successfully shipped
the first shipment of extracts to New York.
World Senses was established in 2012 (50/50% joint
venture with Nomad Two Worlds in New York) with
the express purpose of collaborating with large
international brands to help secure contracts with
the vision of seeing pearl powder extract supply
agreements established in the USA (this JV in the
USA is ongoing).
PAGE 18
For personal use only
C H A I R M A N ’ S R E P O R T C O N T I N U E D
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
C H A I R M A N ’ S R E P O R T C O N T I N U E D
EOT Sales for the 2013/14 year were $2.02 million,
which is a substantial improvement on the previous
fiscal year (6 month sales to 30/6/13 were $503,076).
While there is on-going revenue growth potential
in Tasmania, Atlas continues to work on ways of
combining the Australian extraction IP with the
Atlas team’s intimate and long standing knowledge
of operating businesses successfully in Indonesia.
There are various short term growth opportunities
in Indonesia that can harness the synergies
between our groups’ assets, the Tasmanian and
Indonesian work-forces. Indonesia is the world’s
second largest flavour and fragrance perfume
export market. Atlas has developed a deep
knowledge and understanding of business in
Indonesia; this accompanied by the Group’s existing
geographical presence, sourcing and logistics
capabilities puts the Company in a unique position
to take advantage of this growing market. (Refer to
Appendix 2, Tables 4 and 5).
VALUE ADDED SALES DIVISION
INCREASED ITS GROSS REVENUE BY
63% IN 2013/14
Value Adding is a key priority for Atlas to de-risk the
business from any future commodity price swings
for pearls. Value added sales increased by 63% in
2013/14 to $4.38 million ($2.75m previous year).
As well as de-risking the core pearling venture
cyclical exposure, the value added sales provide
significantly higher margins further up the luxury
supply chain. This allowed Atlas to increase its GP
(now at 62%) and incubate marketing “concepts”
in the Company’s own chain of retail stores in
Indonesia and Australia. This data will be presented
as required in global licensing negotiations,
demonstrating the proposition of selling luxury
products in uncontested niche luxury-market
segments; marketing perfumes to jewellery retailers
and selling jewellery to perfume retailers.
The Atlas Indonesian farm retail outlets continue to
lead the way for Indonesian sales. We are pleased
to announce the opening of a new retail outlet at
Punggu (Flores) in August 2014. This new outlet will
capture the increasing tourism trade to Komodo
Island and Flores.
Atlas is launching new jewellery collaborations
over the coming twelve months and has recently
signed a contract with leading pearl jewellery
designer Simon Henderson who will work with
the Company’s French design and product
development team spearheaded by the Atlas
Design Director, Tina Arena.
The acquisition of Essential Oils of Tasmania in January
2013 has further assisted in growing value added sales
revenue. As the growing revenues demonstrate we
have successfully built alternate higher value sales and
aim to continue to create increased demand for value
added pearls and perfumes.
CORPORATE SOCIAL RESPONSIBILITY
We remain committed to being a global force in
luxury Corporate Social Responsibility and intend to
pioneer a cradle to cradle approach to the pearl and
perfume supply chains by respecting the regional
communities and environment we work in. Our
approach to pearl by-products is central to this
approach and is also opening new revenue streams
and giving Atlas invaluable exposure to large multi-
national purchasers of luxury ingredients.
RE-INVESTMENT IN FAST GROWTH
STRATEGY
Atlas has not paid a dividend since the on-set of
the GFC. The Board wants to prioritise access to
on-going development funds while we continue
to expand our revenue and profits at a fast rate.
I am spearheading a revised 5 year blue print
commencing 2014/15 with supporting fiscal
assumptions and budgets for Board and senior
executive ratification at our next Board meeting in
November.
The Board is greatly appreciative of the support
provided by its shareholders and understands the
desire for dividends, however we need to balance
this sensible request against the past performance
of this cyclical stock and ensure that when we
declare the commencement of dividends that we
are able to maintain a sustainable dividend that
shareholders can rely upon.
ACKNOWLEDGEMENTS
Atlas was announced as a finalist in the WA Industry
and Export Awards that will be held on the 24th
October 2014, where winners will be selected
for the prestigious national finals held in Sydney
in November 2014. I would like to highlight the
achievements of the Atlas team of employees and
consultants and sincerely thank them for their hard
work and support over the past 5 years.
Our Indonesian and Tasmanian regional workforces
are the reason that we have been able to survive
in a marketplace that has proven too tough for
many in the pearling industry. The teams sacrifices,
work ethic and passion give our Board and senior
management the self-belief required through the
difficult times.
SUSTAINED GROWTH WHILE THE
PEARLING INDUSTRY CONTRACTED
Pearling is traditionally a cyclical industry and the
price of the commodity due to the 2009 GFC impact
created a contraction in global pearl production.
Over the past 5 years, against a background of
an eroding industry, Atlas, with the phenomenal
support of our shareholders continued to grow
the business and diversify. This year has been truly
rewarding and this is reflected in recent share price
gains. With a diversified base of operations and
product streams we are in a commanding position
to increase our footprint in the luxury sector.
In a climate of fiscal restraint, this could have only
been achieved with the continued support of our
shareholders.
CONCLUSION
It is pleasing to see the share price improving,
closing at 8.5 cents as at 30th June 2014 and 13.0
cents as at 26th August 2014.
I took on the role of Executive Chairman of Atlas
in January 2010. The last five years have been a
troubled and an unprecedented period in relation
to world economic affairs. As such I want to take this
occasion to reflect and thank my co-directors, staff,
customers and suppliers for all of your contributions
to the delivery of a five year plan that has resulted in
Atlas emerging from the global financial recession
a stronger and more sustainable luxury ingredient
supplier.
Stephen Birkbeck,
Chairman
28th August 2014
Note: This report is the first full 30 June annual
financial report for Atlas and Pearls Perfumes
Ltd (“Atlas”), bringing the Group in line with the
Australian financial year. The financial report
presented covers the period 1 July 2013 to 30 June
2014. The prior period report presented was for
the period 1 January 2012 to 30 June 2013, and
covered a once off 6 month financial year end. The
comparative numbers presented in the Chairman’s
report are for the 12 months ended 30 June 2013,
which are unaudited and based on normalised 2011
and 2012 financials.
PAGE 19
For personal use only
D I R E C T O R S ’ R E P O R T
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
C H A I R M A N ’ S R E P O R T C O N T I N U E D
12 Months Ended
30 June 14
$’000
Unaudited Normalised
12 Months
Ended
30 June 13
$’000
16,283
3,470
21.31%
303
578
(63)
300
(12)
436
-
1,929
11.8%
471
(355)
1,814
0.61
28,416
40,823
5,155
28,809
18%
326.62
10,453
(363)
(3.47%)
244
(2,058)
5,907
302
-
404
(70)
(4,756)
(45.5%)
(519)
(3,293)
(945)
(0.81)
25,797
35,676
5,274
25,797
20%
287.04
Appendix 1, Table 3, Summary of Key Fiscal Achievements in 2013/14
Revenue from continuing operation
Normalised earnings before interest, tax, depreciation and amortisation (Normalised EBITDA
EBITDA margin
Depreciation & amortisation
Foreign exchange (gains)/losses
Revaluation and write-off of Agriculture Assets (oysters, pearls and crops)
Other non-operating costs
Inventory write off
Derivative instruments
Other taxes
Earnings/(loss) before interest and tax (EBIT)
EBIT margin
Finance/interest net costs/(income)
Income tax benefit
Net profit after tax (NPAT)
Basic earnings/(loss) per share (cents)
Net Tangible Assets
Assets
Debt (Current & Non-current)
Shareholder funds
Debt/shareholder funds (%)
Number of shares on issue (million)
Appendix 2, Tables 4 Regional Exports of Essential Oil in 2010
Island/Region
Sumatra
Java
Province
Riau and Riau Islands
West Sumatra
North Sumatra
Lampung
TOTAL
DKI Jakarta
West Java
Central Java
East Java
TOTAL
Kalimantan
East Kalimantan
The lesser Sunda Islands
Sulawesi
Source: Statistics Indonesia (BPS) 2011
TOTAL
Bali
Eastern Nusa Tenggara
TOTAL
Central Sulawesi
TOTAL
Total Volume
PAGE 20
Exported Volume (kg)
22,534
198,410
2,361,298
3,317
2,585,559
1,392,906
7,291
378,578
236,834
2,015,609
1,862
1,862
2,635
616
3,251
34,400
34,400
4,640,681
For personal use only
C H A I R M A N ’ S R E P O R T C O N T I N U E D
D I R E C T O R S ’ R E P O R T
Your Directors present their report on the consolidated entity (referred to hereafter as the Company) consisting of
Atlas Pearls and Perfumes Ltd (formerly Atlas South Sea Pearls Limited) and the entities it controlled at the end of,
or during the period ended 30 June 2014.
DIRECTORS
1.
The following persons were directors of Atlas Pearls and Perfumes Ltd during all or
part of the financial period and up to the date of this report except where stated:
STEPHEN PAUL BIRKBECK (Age – 54)
EXECUTIVE CHAIRMAN OF THE BOARD, CHIEF EXECUTIVE OFFICER
(Remuneration Committee)
Mr Birkbeck was the founder and former CEO of Mt Romance, an Australian
company that has become one of the largest producers of sandalwood oil in the
world. Mr Birkbeck has extensive marketing expertise, especially in the luxury
goods markets. He has been presented with a number of excellence awards
in relation to the success of Mt Romance and brings this extensive business
development skill to the Board.
Appointed Chief Executive Officer 16 January 2012
Appointed Director on 15 April 2005
Appointed Chairman of the Board on 21 December 2009
(Last re-elected as a Director – 31 May 2011)
Directorships of other listed companies held in the last three years: * Nil
NELSON ROCHER (Age - 29)
ALTERNATE DIRECTOR TO STEPHEN PAUL BIRKBECK
Mr Rocher has worked for the internationally recognised cosmetic and perfume
group Yves Rocher, a market leader in France. He worked in Yves Rocher
marketing department as a product development manager with his focus and
passion being the products, branding and marketing areas.
Appointed Alternate Director 18 July 2014
Directorships of other listed companies held in the last three years: * Nil
JOSEPH JAMES UEL TAYLOR, B.Sc. (Biology), Ph.D. (Age – 47)
NON EXECUTIVE DIRECTOR, TECHNICAL DIRECTOR
(Audit Committee, Remuneration Committee)
Dr Taylor is a marine biologist and aquaculturist whose PhD research specialised
in the husbandry of Pinctada maxima pearl oysters. Since 1989, Dr Taylor has
been involved in the management of aquaculture operations, mainly associated
with South Sea pearl farming. He has acquired extensive knowledge about
the biology of pearl oysters and has presented many research papers on this
subject. Dr Taylor commenced employment with the Company in 1996 as
the Project Manager and has overseen the development of the business to its
current level of production.
Appointed Director on 13 September 2000
Managing Director from 31 August 2001 to 1 June 2009
(Last re-elected as a Director – 31 May 2010)
Directorships of other listed companies held in the last three years: * Nil
GEOFF NEWMAN, B.Ec (Hons),M.B.A, F.C.P.A ,F.A.I.C.D. (Age – 63)
INDEPENDENT NON EXECUTIVE DIRECTOR
(Chair of Audit Committee, Chair of Remuneration Committee)
Mr Newman has over 26 years’ experience in finance, marketing and general
management roles in organisations either directly involved in the resources
sector or providing services and products to businesses in that sector. In 1995,
after managing Bunnings Pulpwood operations for a number of years, he joined
Coogee Chemicals Pty Ltd as Commercial Manager and then was appointed
to the Board as Finance Director in the following year. Until August 2005 he
was Finance Director/CFO and Company Secretary of both Coogee Chemicals
and its oil and gas subsidiary Coogee Resources Ltd before he retired from the
Coogee group of companies at the end of June 2006.
Director since 15 October 2010
(Last re-elected as a Director – 30 May 2013)
Directorships of other listed companies held in the last three years:
* Neptune Marine Services LTD – appointed 16 October 2008,
resigned 30 September 2011
TIMOTHY JAMES MARTIN, B.Arts, M.B.A, G.A.I.C.D. (Age – 42)
NON EXECUTIVE DIRECTOR (Remuneration Committee)
Mr Martin has over 16 years of experience in the chemical, manufacturing and
property sectors in Australia and south-east Asia. Mr Martin is Managing Director
of Coogee Chemicals, a privately owned chemical manufacturing and shore
side Terminal and Distribution Company, with operations throughout Australia
and in Asia.
He has experience in the resource sector as a Non-Executive Director of related
company Coogee Resources, where he was also a member of their Risk and
Audit Committee until the company was sold to PTTEP (the National Oil
Company of Thailand).
Prior to this Tim worked in the wholesale food manufacturing and distribution
business in senior management positions, primarily servicing retail supermarket
chains in Australia.
He is also Director Principal of a private company specialising in commercial
property development and leasing, with current projects in Port Hedland,
Rockingham, and south Western Australia. He is also a board member of the
Kwinana Industries Council representing heavy industry to government and
other stakeholders as well as being a member of the Plastics and Chemicals
Industry Association of Australia (PACIA) strategic issues advisory council.
Appointed Director on 4 February 2013.
Elected as Director on 30 May 2013.
Directorships of other listed companies held in the last three years: * Nil
STEPHEN JOHN ARROW (Age - 54)
INDEPENDENT NON EXECUTIVE DIRECTOR
Mr Arrow has been involved in the pearling industry in Western Australia and
the Northern Territory since 1980 and is Managing Director and owner of Arrow
Pearl Co Pty Ltd. Mr Arrow brings to the Board extensive pearling experience
from many regions of the world as well as contacts within the industry.
Mr Arrow previously served on the board of Atlas Pearls and Perfumes Ltd from
29 June 1999 until 28 May 2008.
Appointed 2 January 2014
Directorships of other listed companies held in the last three years: * Nil
PAGE 21
ATLAS PEARLS AND PERFUMES LTD AND ITS SUBSIDIARIESFor personal use only
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
D I R E C T O R S ’ R E P O R T C O N T I N U E D
2.
COMPANY SECRETARY
4.
REMUNERATION REPORT (AUDITED)
The role of Company Secretary at the end of the financial period was shared by
Mr Stephen Gleeson and Ms Susan Hunter.
STEPHEN GLEESON, B.BUS, CPA
Prior to joining Atlas in 2012, Mr Gleeson held the position of CFO/Company
Secretary of statewide recruitment company Skill Hire from 2008 to 2012. He
also has international experience as CFO of Peter Lik USA and has previously
acted as Company Secretary for the ASX listed company Golden Valley Mines
NL. He has 26 years’ experience in corporate restructuring and business
re-engineering, and is a member of CPA Australia.
Appointed 24 April 2012.
SUSAN HUNTER, BCom, ACA, F Fin, GAICD, AGIA
Ms Hunter has 20 years’ experience in the corporate finance industry. She is
founder and Managing Director of consulting firm Hunter Corporate which
specialises in the provision of corporate governance and company secretarial
advice to ASX listed companies and has held senior executive roles at Ernst &
Young and PricewaterhouseCoopers in their Corporate Finance divisions and
at Bankwest in their Strategy and Ventures division. She holds a Bachelor of
Commerce, is a Member of the Australian Institute of Chartered Accountants, a
Fellow of the Financial Services Institute of Australasia, a Graduate Member of
the Australian Institute of Company Directors and a Member of the Governance
Institute of Australia.
Appointed 19 December 2012.
3.
DIRECTORS’ MEETINGS
The attendance at meetings of the Company’s Directors including meetings of
committees of Directors is shown below:
Director
Period
Directors’
Meetings
Audit
Remuneration
Committee
Meetings
Committee
Meetings
Held
Attended
Held
Attended
Held
Attended
S.P. Birkbeck2
G.Newman1,2
J.J.U. Taylor1,2
T. Martin2
S.J. Arrow3,4
01/07/13 -
30/06/14
01/07/13 -
30/06/14
01/07/13 -
30/06/14
01/07/13 -
30/06/14
01/07/13 -
30/06/14
6
6
6
6
3
6
6
6
5
3
3
3
3
3
3
-
3
3
-
-
1
1
1
1
1
1
1
1
1
1
Notes
1.
2.
3.
4.
Member of the Audit Committee
Member of the Remuneration Committee
Attended Remuneration Committee as a guest
Appointed director on 2 January 2014
The Directors are pleased to present your Company’s 2014 remuneration
report which sets out remuneration information for Atlas Pearls and Perfumes
Ltd’s non-executive directors, executive directors and other key management
personnel.
Name
Position
Non-executive and executive directors
S. Birkbeck
Chairman & CEO
N. Rocher (appointed 14 July 2014)
Alternate Director
J. Taylor
G. Newman
T. Martin
Non-Executive Director
Independent Non-Executive Director
Non-Executive Director
S. Arrow (appointed 2 Jan 2014)
Independent Non-Executive Director
Other key management personnel
S Gleeson (appointed 01 July 2014)
Managing Director EOT
J.S Jorgensen
C Triefus (resigned 31 December 2013)
Chief Operations Officer PT Cendana
Indopearl
Retail Production Manager PT Cendana
Indopearl
D Brandenburg (appointed 01 July 2014)
Chief Financial Officer
P Fallourd (appointed 01 May 2014)
Vice President of Pearling
S Mackay-Coghill (appointed 01 May 2014)
Vice President of Jewellery, Perfumes &
Cosmetics
Changes since the end of the reporting period
The following changes have been made to the remuneration of the following
key management personnel after 30 June 2014;
Managing Director of EOT and Company Secretary – S Gleeson
Mr S Gleeson was appointed as Managing Director of Essential Oils on 1 July
2014. Mr S Gleeson previously held the title of Chief Financial Officer and
continues to hold the title of Company Secretary. Mr S Gleeson’s contract was
renegotiated on 10 July 2014.
Base salary for the 2014/15 financial year of $200,000 inclusive of 9.5%
superannuation, reviewed annually.
Bonus based on achieving various milestones (STIP) relating to essential oil sales,
commissioning of the new pearl extraction plant, and various other grants.
Bonus of 1% growth of 2014/15 EBITDA paid quarterly.
Chief Financial Officer – D Brandenburg
Ms D Brandenburg was appointed Chief Financial Officer on 1 July 2014. Ms
Brandenburg’s contract was renegotiated on 18 July 2014.
Base salary for the 2014/15 financial year of $175,000 inclusive of 9.5%
superannuation, reviewed annually.
Bonus of 2% on growth of real EBITDA from 13/14 to 14/15.
4.1
Remuneration Governance
4.1.1
Role of the remuneration committee
The remuneration committee is a committee of the Board. It is primarily
responsible for making recommendations to the Board on:
•
•
•
•
Non-executive director fees
Remuneration levels of executive directors and other key management
personnel
The over-archiving executive remuneration framework and operation of the
incentive plan, and
Key performance indicators and performance hurdles for the executive team.
Their objective is to ensure that remuneration policies and structures are fair and
competitive and aligned with the long-term interest of the company.
PAGE 22
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A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
D I R E C T O R S ’ R E P O R T C O N T I N U E D
4.
REMUNERATION REPORT (AUDITED) (cont.)
4.1.2
Non-Executive Director Remuneration Policy
Fees and payments to non-executive directors reflect the demands which are
made on, and the responsibilities of, the directors. Non-executive directors’ fees
are reviewed annually by the Board. Consideration is given to the remuneration
of comparable companies when setting fee levels.
The Non Executive Directors’ aggregate annual remuneration may not exceed
$350,000 which is periodically recommended for approval by shareholders. This
limit was approved by shareholders at the Annual General Meeting on 30th May
2007. In the period ending 30 June 2014, the total non-executive directors’ fees
including retirement benefit contributions were $212,574.
The following fees have applied:
•
•
•
•
Base fees for Non-Executive Directors - $50,000 per annum as of 1 July 2014.
Additional fees of $8,000 per annum for the Chairman of the Audit
Committee.
Chairman’s package is $351,000 per annum including superannuation.
The Technical Director receives an additional $750 per day for pearl technical
and Indonesian entity support.
Use of remuneration consultants
During the financial year ended 30 June 2014 the Company did not engage
any remuneration consultants. The Company engaged remuneration
consultants Gerard Daniels during the period ended 30 June 2013 to provide an
independent market review of the Chief Executive Officer/Executive Chairman
and Independent Non-Executive Director Fees. Total fees charged for this service
was $15,000 + GST.
Gerard Daniels was engaged by, and reported directly to, the chair of the
remuneration committee. The agreement for the provision of remuneration
consulting services was executed by the chair of the remuneration committee
under delegated authority on behalf of the board.
The report containing the remuneration recommendations was provided by
Gerard Daniels directly to the chair of the remuneration committee; and
Gerard Daniels was permitted to speak to management throughout the
engagement to understand company processes, practices and other business
issues and obtain management perspectives. However, Gerard Daniels was not
permitted to provide any member of management with a copy of their draft or
final report that contained the remuneration recommendations.
As a consequence, the board is satisfied that the recommendations were
made free from undue influence from any members of the key management
personnel.
Voting and comments made that the Company’s 2013
Annual General Meeting.
Atlas Pearls and Perfumes Ltd received more than 90% of “yes” votes on its
remuneration report for the 2013 financial year. The Company did not receive
any specific feedback at the AGM or throughout the year on its remuneration.
Relationship between Key Management Personnel
Remuneration and Performance.
Each Key Management Personnel is remunerated on an individual basis. Some
Key Management Personnel are entitled to bonuses based on a percentage of
EBITDA.
4.1.3
Executive remuneration policy and framework
In determining executive remuneration, the board aims to ensure that
remuneration practices are:
•
•
•
•
Competitive and reasonable, enabling the company to attract and
retain key talent
Aligned to the Company’s strategic and business objectives and the
creation of shareholder value
Transparent, and
Acceptable to shareholders
The executive remuneration framework has three components;:Base pay and
benefits, including superannuation:
•
•
Short-term performance incentives, and
Long-term incentives through participation in the Atlas South Sea
Pearl Limited Employee Share Plan.
Employment contracts are in place between the Company (or its subsidiaries)
and all key management personnel. Under these contracts, key management
personnel are paid a base salary (which may be provided in the form of cash
or non-financial benefits) in accordance with their skills and experience as well
as entitlements including superannuation and accrued annual leave and long
service leave in the event of termination.
Executives’ salaries are reviewed annually and are adjusted to take into
consideration the individuals’ responsibilities and skills compared to others
within the Company and the industry. There are no guaranteed base pay
increases in any executives contracts.
There were no short or medium term cash incentives provided to any executives
of the company during the last financial period except where noted in section
4.2 of this report. Short or medium cash incentives are incorporated into some
executives salary packages at the time of this report. The framework provides
a mix of fixed and variable pay with short and medium term incentives. As
executives gain seniority with the group, the balance of this mix shifts to a
higher proportion of ‘at risk’ rewards.
An Employee Share Plan (ESP) provides some senior executives with incentive
over and above their base salary (refer 4.5 below). The allocation of shares under
the Employee Share Plan (ESP) is not subject to performance conditions of the
Company. The reasons for establishing the ESP were:
•
•
To align the interests of senior management with shareholders. The ESP
provides employees with incentive to strive for long term profitability
which is in line with shareholder objectives; and
To provide an incentive for employees to extend their employment
terms with the company. Pearl farming is a long term business and the
experience of long serving senior employees is an important factor in the
long term success of the Company.
PAGE 23
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D I R E C T O R S ’ R E P O R T C O N T I N U E D
4.2
Details of remuneration
The following tables show details of the remuneration received by the directors and the key management personnel of the Group for the current and previous financial period.
Name
Cash salary
& fees
Short term benefits
Short term
incentive
cash bonus
Non-cash
monetary
benefit
Total cash
salary, fees
and short
term
benefits
Post-
employment
benefits
Super-
annuation
Benefit
Long term
benefits
Share base
compensation
Total
Long Service
Leave
$
$
$
$
$
$
$
$
Directors (Non-Executive)
G. Newman 5
J.J.U. Taylor 1, 10
T. Martin 6
S. Arrow11
Directors (Executive)
S.P. Birkbeck 1,2,9,10
N. Rocher 14
Total
Total
2014
2013
2014
2013
2014
2013
2014
2014
2013
2014
2013
2014
2013
Other Key Management Personnel
S Gleeson 4,8,10
JS Jorgensen 3,9,10
C Triefus 7,9
D Brandenburg 4,8
P Fallourd 12
S Mackay-Coghill 13,8
Total
Total
Grand Total 2014
Grand Total 2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
63,800
20,487
71,960
56,625
50,000
12,500
27,500
225,000
87,500
18,812
457,072
177,112
206,422
103,211
165,000
75,359
59,849
42,800
141,672
-
66,278
-
66,222
-
705,443
221,370
1,162,515
398,482
-
-
-
-
-
-
-
-
-
-
-
-
-
9,368
-
-
-
-
8,547
-
-
25,000
-
42,915
-
42,915
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
33,205
9,971
19,940
11,305
-
-
-
-
-
53,145
21,276
53,145
21,276
63,800
20,487
71,960
56,625
50,000
12,500
27,500
225,000
87,500
18,812
-
457,072
177,112
215,790
103,211
198,205
85,330
79,789
54,105
150,219
-
66,278
-
91,222
-
801,503
242,646
1,258,575
419,758
-
-
4,235
2,250
-
-
-
20,625
7,875
-
-
24,860
10,125
21,844
9,289
-
-
-
13,542
3,519
1,354
-
40,259
9,289
65,119
19,414
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
628
-
-
-
-
12,559
-
2,974
-
16,162
-
13,160
-
1,487
-
-
-
1,424
-
3,686
1,424
-
21,181
-
37,343
-
63,800
20,487
76,823
58,875
50,000
12,500
27,500
258,184
95,375
21,786
-
498,094
187,237
250,794
112,500
199,692
85,330
79,789
54,105
165,185
73,483
94,000
-
862,943
251,935
1,361,037
439,172
Notes:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
Dr J Taylor and Mr S Birkbeck are Directors of the Company’s Malaysian subsidiary Aspirasi Satria Sdn Bhd.
Mr S Birkbeck is a key management personnel of the Group with the title of Chief Executive Officer. Mr S Birkbeck was appointed Chief Executive Officer as at 16 January 2012.
Mr J Jorgensen is a key management personnel of the Group and was appointed to the position of Chief Operating Officer (COO) in September 2010. Mr J Jorgensen is the Chief Operations Officer of the
Company’s Indonesian subsidiary, P.T. Cendana Indopearls.
S Gleeson was appointed Chief Financial Officer on the 1 February 2012. S Gleeson resigned as Chief Financial Officer on 1 July 2014. D Brandenburg was appointed Chief Financial Officer on 1 July 2014.
G Newman appointed 15 October 2010.
T Martin appointed 4 February 2013.
Mr C Triefus is the Retail Production Manager. The Retail Production Manager manages the retail stores in Bali and co-ordinates all retail stock for the Group. Mr Triefus resigned as Retail Production Manager on 31
December 2013.
Bonuses were paid to the KMP’s Stephen Gleeson, Sonia Mackay Coghill, and Danielle Brandenburg based on the milestones achieved during the period. In 2013 and 2012 Stephen Gleeson received his bonus
based on achieving various milestones relating to tax compliance and 2% of EBITDA paid twice yearly.
A number of key management took part in the 2012 salary sacrifice scheme. $50,000 of Stephen Birkbeck’s salary was accrued for under the ESSP scheme and was transferred to him in shares in 2013. In 2012,
$25,000 of Jan Jorgensen’s salary had been accrued for under the ESSP scheme and was transferred to him in shares in 2013. $17,000 of Colin Triefus’ salary had been accrued for under the ESSP scheme and was
transferred to him in shares in 2013.
Non-Monetary benefits of other key management personnel included accommodation allowances, school fees and medical expenses, as per individual employment contracts.
S Arrow appointed as Non Executive Director on 2 January 2014.
P Fallourd appointed as Vice President of Pearling on 1 May 2014.
S Mackay-Coghill appointed as Vice President Jewellery, Cosmetics & Perfume on 1 May 2014.
N Rocher appointed as an alternate director to S Birkbeck on 18 July 2014.
PAGE 24
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D I R E C T O R S ’ R E P O R T C O N T I N U E D
4.2.1 Details of remuneration – performance analysis
The following table indicates the percentage of remuneration relating to
options and performance:
Year
Name
% Performance
% Options
2014
2014
2014
2014
2014
2014
2014
2014
N Rocher
S Birkbeck
S Gleeson
J Jorgensen
D Brandenburg
P Fallourd
S Mackay-Coghill
J Taylor
14.1%
4.9%
9.0%
0.7%
6.0%
5.0%
28.1%
0.8%
14.1%
4.9%
5.2%
0.7%
0.9%
5.0%
1.5%
0.8%
4.2.2
Relationship between remuneration and Atlas performance
The following table shows performance indicators as prescribed by the
Corporations Act 2001 over the past 5 reporting periods:
12
months
2014
6
months
2013
12
months
2012
12
months
2011
12
months
2010
1,813,922
(2,194,645)
1,406,150
593,936
2,387,165
0.61
(0.81)
0.68
0.43
1.91
0
0
0
0
0
53%
(25%)
(60%)
(38%)
(9%)
4.4%
0.0%
2.6%
8.8%
1.5%
Profit/(loss) for
the year / period
Basic earnings
per share
Dividend
payments
Increase
(decrease) in
share price
Total KMP
incentives as a
percentage
profit/loss %
Service Agreements
4.3
On appointment to the board, all non-executive directors enter into a service
agreement with the Company.
Remuneration and other terms of employment for the Chief Executive Office,
Chief Financial Officer, Chief Operations Officer and other key management
personnel are also formalised in service agreements.
Details of key management personnel contracts are set out below:
4.3.1
Mr Stephen Birkbeck (Executive Chairman - CEO)
Mr S Birkbeck was appointed as CEO commencing from 16 January 2012.
Base salary for the 2015 financial period of $351,000 per annum plus
superannuation, reviewed annually for CEO role of Atlas.
Termination conditions- either party may terminate the contract of employment
by giving six months’ notice or a lesser amount as mutually agreed.
4.3.2
Mr Jan Jorgensen (Chief Operating Officer)
Base salary for the 2014 financial period of $165,000 per annum reviewed
annually and also subject to various non-financial allowances relating to living
in Indonesia.
Entitled to commission on Pearl Meat sales of 15% of sales excluding VAT or GST.
Entitled to commission on Mother of Pearl sales of 5% for annual sales in excess
of $300,000 excluding VAT or GST.
Termination conditions – either party may terminate the contract of employment
by giving two months’ notice or a lesser amount as mutually agreed.
4.3.3
Mrs Danielle Brandenburg
(Chief Financial Officer – appointed 1 July 2014)
Base salary for the 2015 financial period of $175,000 per annum inclusive of
superannuation, reviewed annually.
Bonus on 2% of real EBITDA growth on 13/14 to 14/15.
Termination conditions- either party may terminate the contract of employment
by giving six months’ notice or a lesser amount as mutually agreed.
4.3.4
Mr Pierre Fallourd (Vice President of Pearling)
Base salary for the 2014 financial period of $200,000 per annum inclusive of
superannuation, reviewed annually.
Bonus on 2% of real EBITDA growth on 13/14 to 14/15.
Termination conditions- either party may terminate the contract of employment
by giving six months’ notice or a lesser amount as mutually agreed.
4.3.5
Mrs Sonia Mackay-Coghill
(Vice President of Jeweller, Perfumes & Cosmetics)
Base salary for the 2014 financial period of $200,000 per annum inclusive of
superannuation, reviewed annually.
Commission payable on 5% of sales in Australia above last year (excluding loose
pearl sales and Showcase)
$25,000 advance on bonus paid.
Termination conditions- either party may terminate the contract of employment
by giving six months’ notice or a lesser amount as mutually agreed.
4.3.6
Mr Colin Triefus
(Retail Production Manager retired 31 December 2013)
Employed under a fixed term contract which was renewed 1 January 2013 and
expired on 31 December 2013.
Base salary for the 2013 financial period of $85,600 per annum and also subject
to various non-financial allowances relating to living in Indonesia.
Letter of Agreement signed 25 June 2013 that both parties agreed that the
employment contract which was dated 28 November 2012 should end at 30
September 2013.
Agreement stated that from 1 October 2013 until 31 December 2013 Colin
Triefus would work two days each week.
Base Salary 1 October 2013 until 31 December 2013 was $3,000 per month.
During this time Colin Triefus accrued no further holiday entitlement.
Not entitled to any special termination payments under these contracts.
4.3.7
Mr Stephen Gleeson (Managing Director Essential Oils of
Tasmania & Joint Company Secretary – appointed 1 July 2014)
Base salary for the 2015 financial period of $200,000 per annum inclusive of
superannuation, reviewed annually.
Bonus based on achieving various milestones (STIP) relating to essential oil sales,
commissioning of the new pearl extraction plant, and various other grants.
Bonus of 1% growth of 2014/15 EBITDA paid quarterly.
Termination conditions- either party may terminate the contract of employment
by giving six months’ notice or a lesser amount as mutually agreed.
4.3.8
Mr Nelson Rocher (Alternate Director – appointed 18 July 14
Head of Perfume Development – appointed 1 June 2014)
Base salary for the 2015 financial period of $82,125 per annum inclusive
of superannuation, reviewed annually.
Termination conditions- either party may terminate the contract of employment
by giving one months’ notice or a lesser amount as mutually agreed.
4.3.9
Other non - executives (standard contracts)
Contract terminates on retirement.
The Company may terminate the executive’s employment agreement by providing
2 months’ written notice or providing payment in lieu of the notice period.
Not entitled to any special termination payments under these contracts.
PAGE 25
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D I R E C T O R S ’ R E P O R T C O N T I N U E D
4.4
4.4.1
Additional Information of the remuneration report
Loans to Directors and Executives
Details of loans made to directors of the company and other key management personnel of the Group under the Employee Salary Sacrifice Plan, including their
personally related parties, are set out below:
Loans to Directors and Executives
Group
30 Jun 2014
30 Jun 2013
Balance at the
start of the
period
Loans provided
during
the period
Interest paid and
payable for the
period
Interest not
charged
Balance at the
end of the period
No in Group at
the end of the
period
$
375,000
375,000
$
$
-
-
-
-
$
14,100
6,864
$
375,000
375,000
2
2
i. Individuals with loans above $100,000 during the financial year
30 Jun 2014
Name
J. Taylor*
S. Adams*
30 Jun 2013
Name
J. Taylor*
S. Adams*
Balance at the
start of the
period
$
Loans provided
during the
period
$
Interest paid and
payable for the
period
$
263,000
112,000
375,000
-
-
-
-
-
-
Interest not
charged
$
9,889
4,211
14,100
Balance at
the end of the
period
$
Highest
indebtedness
during the period
$
263,000
112,000
375,000
263,000
112,000
375,000
Balance at the
start of the year
Loans provided
during the year
$
263,000
112,000
375,000
$
-
-
-
Interest paid and
payable for the
year
$
-
-
-
Interest not
charged
$
4,787
2,077
6,864
Balance at
the end of the
year
$
Highest
indebtedness
during the year
$
263,000
112,000
375,000
263,000
112,000
375,000
All loans to key management persons are under terms and conditions as set out
in note 23 relating to the employee share plan.
The amounts shown for interest not charged in the tables above represent
the difference between the amount paid and payable for the period and the
amount of interest that would have been charged on an arms’ length basis.
*These loans have been provided for in a prior period.
There is no allowance for impaired receivables in relation to any outstanding
balances, and no expense has been recognised in respect of impaired
receivables due from key management.
ii.
Other loans to Key Management Personnel
The loan advance of $25,000 to S Mackay-Coghill in advance of anticipated bonuses.
The loan is to be repaid to the Company at the earlier of; the date that the individual
meets their bonus criterion, or the date that the individual terminates employment.
An interest rate of 7% p.a. will be charged on the loan from date of draw down until
date of repayment. Interest is due for payment when the loan is repaid. The bonus
will be taxed when the bonus criterion are met.
4.4.2
Options
Performance options were issued to directors and key management personnel
during the financial period end 30 June 2014. The options were issued at nil cost
to employees and will expire at 31 December 2016. The options are exercisable
based on the completion of KPI’s specific to each individual. See table at 4.5.10
for details.
4.4.3
Other Key Management Personnel transactions
i.
ii.
iii.
iv.
v.
$11,905 of the ESSP accrual above is for shares salary sacrificed by
Stephen Birkbeck during the year ended 30 June 2014 under the
Atlas South Sea Pearl Employee Share Plan.
During the twelve months ended 30 June 2014 and the six months
ended 30 June 2013 none of the directors salary sacrificed into the
Non - Executive Director Fee Salary Sacrifice Share plan.
During the period, sales of individual pearls of small quantities were
made to some staff and Directors on normal commercial terms.
During the 12 months ended 30 June 2014, $30,000 in research and
development fees were charged to Atlas Pearls and Perfumes Ltd by
Raintree Pearls and Perfumes Pty Ltd. Raintree Pearls and Perfumes
Pty Ltd is controlled by Stephen Birkbeck.
During the twelve months ended 30 June 2014 Atlas Pearls and
Perfumes Ltd sold pearls on behalf of Arrow Pearls Pty Ltd. Atlas
received on consignment approximately $1,750,000 of loose South
Sea Pearls from Steve Arrow on the 5th of December 2013. Atlas
received a sales commission of 5.0% based on the gross value of the
pearls. Commission earned on the sale of loose pearls 24.2on behalf
of entities controlled by key management personnel was $113,614
for the year end 30 June 2014 (30 June 2013 – nil). Atlas paid the net
proceeds of pearls sales to Arrow less the commission, in the form of
50% cash and 50% in shares until 10 million shares were acquired
(capped at $650,000). The shares were priced at $0.065 per share.
PAGE 26
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D I R E C T O R S ’ R E P O R T C O N T I N U E D
4.5
Share based payments compensation
In 2006 and 2007 ordinary shares were issued to key management personnel of Atlas Pearls and Perfumes Ltd under an Employee Share Plan (ESP) that was
approved by shareholders at the company’s annual general meeting in May 2006. These shares have been issued to employees under the following terms:
4.5.1 In 2007 shares were issued at a price of 40 cents each, 900,000 were issued on 17th April and 200,000 were issued on 10th May 2007 when the
market price was 41 cents and 48 cents per share respectively. In 2006, 2,150,000 shares were issued at a price of 29 cents each on 30th May when the market price
was 31 cents per share.
4.5.2 Entitlement to 50% of the beneficial interest on the shares vested to employees after they have completed two (2) years of employment with the company
from the date of issue of the shares, and entitlement to the remaining 50% of the beneficial interest in the shares vested to employees after they have completed
three (3) years of employment with the company from the date of issue of the shares;
4.5.3 Shares issued under the ESP have been paid for by employees who have been provided with an interest free, non-recourse loan by the Company.
This loan is to be repaid from the proceeds of dividends paid in relation to these shares.
4.5.4 Details relating to the allocation of shares to directors and key management personnel under the ESP are as follows:
Name
Date of Issue
No. of Shares
Issued(3)
Shares Vested
to end of 2010
Shares
Forfeited
in the year
Financial Year
in which shares
vested
Nature
of shares
Minimum value
of grant yet to
be vested (1)
Joseph Taylor
10/5/07
200,000
100%
30/5/06
1,000,000
100%
0%
0%
2009 – 50%
2010 – 50%
2008 – 50%
2009 – 50%
Ordinary Shares
Ordinary
Shares
$-
$-
Maximum
value of grant
yet to be
vested (2)
$-
$-
Notes –
The minimum benefit is based on the fact that the vesting criteria for the shares on issue have not yet been met.
The maximum value is based on the value that is calculated at the time that the shares were issued.
The above named individuals are only entitled to these shares when the recourse loan is repaid. As at 30 June 2014, none of these loans have been repaid. Hence, these shares remain as treasury shares in the employee
share trust.
In 2012 key management personnel were invited to participate in
4.5.5
the Atlas South Sea Pearl Limited Non-Executive Director Fee Sacrifice Share Plan
and Employee Salary Sacrifice Share Plan that was approved by shareholders
at the Company’s Annual General Meeting on 30 May 2012. These shares have
been issued to employees under the terms outlined in note 4.5.6.
The existing Employee Share Loan Plan was replaced by a new Employee
Salary Sacrifice Share Plan and Non-Executive Director Plan at the AGM on the
30 May 2012.
4.5.6
The Atlas Employee Salary Sacrifice Share Plan
On 30 May 2012, the Atlas Employee Salary Sacrifice Share Plan was established.
On the 4th of September 2012 6,064,000 shares were issued into the Atlas South
Sea Pearl Limited Employee Share Trust at $0.05 per share. During the 12 months
ended 30 June 2014 2,866,640 shares were issued into the Atlas South Sea Pearl
Ltd Employee Share Trust in eight different tranches at prices ranging between
$0.0639 and $0.0661. On the 15th of March 2013, 2,931,616 shares were issued
into the Atlas South Sea Pearl Limited Employee Share Trust at $0.05 per share.
During the twelve months ended 30 June 2014 2,866,640 shares were issued out
of the Atlas South Sea Pearl Limited Employee Share Trust to employees who
participated in the salary sacrifice plan (six months ended 30 June 2013 5,594,000).
Under the Salary Sacrifice Plan, the Company agrees to issue shares to eligible
employees, in lieu of the amount of remuneration that each eligible employee
has agreed to sacrifice from their monthly remuneration.
To participate in the Salary Sacrifice Plan, eligible employees are required to
salary sacrifice a minimum of 10% of their annual base salary into shares. There
is no maximum percentage or value cap to the amount that each eligible
employee can sacrifice.
The issue price for shares under the Salary Sacrifice Plan will be determined from
time to time by the Board of Directors (in their discretion). For the participants
who entered into conditional salary sacrifice arrangements before the AGM on
the 30th of May 2012, the issue price per share is 5 cents.
The Employee Share Plan is open to eligible participants being any eligible
employee; or conditional upon the company obtaining any necessary ASIC relief
to extend the operation of ASIC Class Order 03/184 (or similar class order) to
them: any eligible contractor; or eligible casual employee, who is declared by
the Board to be an eligible participant for the purposes of the plan.
There are no vesting conditions attached to the plan. Once an employee has
salary sacrificed salary equivalent to the number of shares taken up under the
plan the shares are issued to the employee.
An eligible employee means: a full time or part time employee (including an
executive director) of a Group Company. An eligible contractor means: an
individual that has: performed work for a Group Company, for more than 12
months; and received 80% of more of their income in the preceding year from
a Group Company; or a company where each of the following are satisfied in
relation to the company:
Throughout the previous 12 months the company has had a contract in
place with a Group Company, for the provision of the services of an individual
(contracting individual) to a Group Company;
•
•
•
The contracting individual has performed work for a Group Company, for
more than 12 months;
The contracting individual has been the only member for the company for
more than 12 months; and
More than 80% of the aggregate income of the company and the
contracting individual from all sources (other than from each other) in the
preceding 12 months was received from a Group Company.
The Board may determine the terms and conditions of the salary sacrifice
arrangement for which shares are offered in lieu of that Remuneration.
The number of shares to be issued, transferred or allocated to the Trustee to be
held on behalf of a participant will be the dollar amount of the salary sacrifice
divided by the issue price per share outlined in the Invitation. In the case of
fractional entitlements, the number of shares to be issue, transferred or allocated
to the Trustee to be held on behalf of a participant will be rounded up to the
nearest whole share, unless otherwise determined by the Board from time to time.
Shares to be acquired by eligible participants under the salary sacrifice plan are
held in the trust until such time that the shares are fully paid for. Shares held by
the trust and not yet issued to employees at the end of the reporting period
are shown as treasury shares in the financial statements. As at 30 June 2014
2,866,640 (30 June 2013 - 5,594,000) of the shares issued were issued out of
the Atlas South Sea Pearl Limited Employee Share Trust to eligible participants.
The shares rank equally with other fully paid ordinary shares. Where shares are
issued to employees of subsidiaries of the Group, the transactions are treated in
accordance with the accounting policy at note 1.16.
PAGE 27
For personal use only
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
D I R E C T O R S ’ R E P O R T C O N T I N U E D
4.5.7 The details relating to the allocation of shares to directors and key management personnel under the Employee Salary Sacrifice Share Plan are as follows for
year end 30 June 2014 and period ended 30 June 2013:
Name
Stephen
Birkbeck
Name
Stephen
Birkbeck
Jan
Jorgensen
Date of
Entrance
Entitlement
No. of
Shares
No. of
Shares to be
Issued
Date of
Issue
Shares
Vested to
June 2014
Shares
Forfeited in
the year
Financial
Year in
which
shares vest
07/03/14
183,154
-
-
100%
0%
2014 – 100%
Date of
Entrance
Entitlement
No. of
Shares
No. of
Shares
Issued
Date of
Issue
Shares
Vested to
end of 2012
Shares
Forfeited in
the year
Nature of
shares
Share issue
price
Total Value
Salary
Sacrificed
Ordinary
Shares
$0.065
$11,905
Nature of
shares
Share issue
price
Total Value
Salary
Sacrificed
Ordinary
Shares
Ordinary
Shares
Ordinary
Shares
$0.05
$50,000
$0.05
$25,000
$0.05
$17,000
Financial
Year in
which
shares
vested
2012 – 100%
2012 – 100%
2012 – 100%
0%
0%
0%
4/09/12
1,000,000
1,000,000
8/5/13
100%
4/09/12
500,000
500,000
4/3/13
100%
Colin Triefus
4/09/12
340,000
340,000
28/3/13
100%
4.5.8
The Atlas Non-Executive Director Fee Sacrifice Share Plan
On the 26 June 2012 828,000 shares were issued into the Atlas Pearls and Perfumes Ltd Non-Executive Director Trust at $0.05 per share. These shares have since been
issued to Non-Executive Directors. There were no new shares issued under the NED plan during the period ended 30 June 2014.
The Non-Executive Director Salary Sacrifice Share Plan is open to eligible participants, being any Non-Executive Director who is declared by the Board to be an
eligible participant for the purpose of the Plan.
The Company’s Non-Executive Directors will receive a portion of their Director’s fee in the form of shares.
The Company agrees to issue or procure the transfer of shares to eligible Non-Executive Directors, in lieu of the amount of Directors’ fees that each eligible Non-
Executive Director has agreed to sacrifice from their monthly Directors’ fees each financial year.
The issue price for shares under the Salary Sacrifice Plan will be determined from time to time by the Board of Directors (in their discretion). For the participants who
entered into conditional salary sacrifice arrangements before the AGM on the 30th of May 2012, the issue price per share is 5 cents.
4.5.9
The details relating to the allocation of shares to directors and key management personnel under the Non-Executive Director Fee Salary
Sacrifice Share Plan are as follows:
Name
Joseph
Taylor
Geoff
Newman
Date of
Entrance
Entitlement
No. of
Shares
No. of
Shares
Issued
Date of
Issue
Shares
Vested to
end of 2012
Shares
Forfeited in
the year
26/6/12
180,000
180,000
29/6/12
100%
26/6/12
648,000
648,000
29/6/12
100%
0%
0%
Notes – 1. These shares were issued under the NED plan described above directly to the NEDs, for past services rendered.
Financial
Year in
which
shares
vested
2012 – 100%
2012 – 100%
Nature of
shares
Share issue
price
Total Value
Salary
Sacrificed
Ordinary
Shares
Ordinary
Shares
$0.05
$9,000
$0.05
$32,400
4.5.10
The details relating to the allocation of performance options to directors and key management personnel under the Atlas Pearls and Perfumes
Ltd Employee Option Plan are as follows:
Name
Stephen Birkbeck1
Joseph Taylor1
Stephen Gleeson2
Stephen Gleeson1
Pierre Fallourd2
Pierre Fallourd1
Nelson Rocher2
Jan Jorgensen2
Danielle Brandenburg1
Sonia McKay-Coghill1
Date of
Grant
Entitlement
No. of
Options
Vesting
Date
Expiry Date
Shares
Forfeited in
the year
Financial
Year in
which
shares vest
Nature of
shares
Value Per
Options at
30 June 14
Option
Exercise
Price
13/05/14
13/05/14
24/02/14
02/06/14
24/02/14
02/06/14
24/02/14
24/02/14
02/06/14
02/06/14
10,000,000
30/6/16
500,000
30/6/16
2,000,000
30/6/16
1,000,000
30/6/16
1,000,000
30/6/16
1,000,000
30/6/16
1,000,000
30/6/16
500,000
30/6/16
2,000,000
30/6/16
2,000,000
30/6/16
31/12/16
31/12/16
31/12/16
31/12/16
31/12/16
31/12/16
31/12/16
31/12/16
31/12/16
31/12/16
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
2016
2016
2016
2016
2016
2016
2016
2016
2016
2016
Ordinary Shares
$12,559
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
$628
$5,948
$712
$2,974
$712
$2,974
$1,487
$1,424
$1,424
$0.0858
$0.0858
$0.0858
$0.095
$0.0858
$0.095
$0.0858
$0.0858
$0.095
$0.095
Notes –
1.
These unlisted options were approved by the shareholders at the EGM held on 13 May 2014
2.
These unlisted options were approved by the Board of Directors on 24 February 2014
PAGE 28
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D I R E C T O R S ’ R E P O R T C O N T I N U E D
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
D I R E C T O R S ’ R E P O R T C O N T I N U E D
4.5.11
The details relating to the equity instruments held by key management personnel are as follows:
a. Equity instrument disclosures relating to key management personnel
1.
2.
Options and rights granted as compensation
There were 21,000,000 options issued to key management personnel as remuneration during the period ended 30 June 2014 (30 June 2013 – Nil).
Option holdings
There were 21,000,000 options on issue to key management personnel during the period ended 30 June 2014 (30 June 2013 – 500,000).
b. Shareholdings
The number of shares in the company held during the financial period by each director of the company and the other key management personnel of the Group,
including their personally related parties, are set out below.
Details of shares that were granted as compensation during the reporting period are provided at note 23 and in the Remuneration Report contained at section 4
of the Directors’ Report.
Balance 01/07/13
Options Exercised
Other Changes (1)
Balance 30/06/14
Parent Entity Directors
Mr S.P. Birkbeck
Mr J.J.U. Taylor
Mr G. Newman
Mr T. Martin (2)
Mr S. Arrow (3)
Mr N. Rocher(3)
Other Key Management Personnel
Mr J. Jorgensen
Mr S. Gleeson
Mr C. Triefus(2)
Mr P. Fallourd(3)
Ms S. Mackay - Coghill(3)
Ms D. Brandenburg(3)
37,109,027
1,400,000
1,411,295
16,628,145
-
-
624,400
3,100,000
1,215,000
-
-
-
6,018,172
-
128,000
2,528,600
-
-
-
500,000
-
-
-
-
61,487,867
9,174,772
-
-
-
-
11,508,089
6,612,185
49,072
(1,215,000)
2,586,206
-
100,000
19,640,552
43,127,199
1,400,000
1,539,295
19,156,745
11,508,089
6,612,185
624,400
3,649,072
-
2,586,206
-
100,000
90,303,191
Notes –
1.
2.
3.
Other changes refer to shares purchased or sold during the financial period. Removal of balance on resignation of Director/KMP or balance held at appointment of Director/KMP
Director/KMP retired or resigned in the financial period
Director/KMP appointed in the period
c. Option holding
The number of options over ordinary shares in the parent entity held during the six months ended 30 June 2014 by each director and other members of key
management personnel of the consolidated entity, including their personally related parties, is set out below:
Balance 01/07/13
Granted
Exercised
Expired/ forfeited/other
Balance 30/06/14
Parent Entity Directors
Mr S.P. Birkbeck
Mr J.J.U. Taylor
Mr G. Newman
Mr T. Martin
Mr S. Arrow (1)
Mr N. Rocher
Other Key Management Personnel
Mr J. Jorgensen
Mr S. Gleeson
Mr C. Triefus
Mr P. Fallourd
Ms S. Mackay- Coghill
Ms D. Brandenburg
6,018,172
-
128,000
2,528,000
-
-
-
500,000
-
-
-
-
10,000,000
500,000
-
-
-
1,000,000
500,000
3,000,000
-
2,000,000
2,000,000
2,000,000
6,018,172
-
128,000
2,528,000
-
-
-
500,000
-
-
-
-
This is the end of the Audited Remuneration Report.
9,174,172
21,000,000
9,174,172
-
-
-
-
-
-
-
-
-
-
-
-
-
10,000,000
500,000
-
-
-
1,000,000
500,000
3,000,000
-
2,000,000
2,000,000
2,000,000
21,000,000
PAGE 29
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D I R E C T O R S ’ R E P O R T C O N T I N U E D
5.
5.1
PRINCIPAL ACTIVITIES AND REVIEW OF OPERATIONS
Principal Activities
The Company is a producer of pearls and perfumes (and cosmetics) with administrative and retail centres in Bali and Perth, pearl farms in Indonesia and a natural
ingredients processing plant in Tasmania for the processing of natural ingredients to extract essential oils, fragrances and flavours. In addition, the Company has a
joint venture, World Senses, with Nomad Two Worlds in marketing and value adding.
PAGE 30
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A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
D I R E C T O R S ’ R E P O R T C O N T I N U E D
5.2
5.2.1
Review of Operations and significant changes in the state of affairs
5.2.3
Financial Position
12 Months in Perspective.
This report is the first twelve month period with the new 30 June financial year
end. The prior year comparative period reported is for the once off six month
financial report required as part of changing over to Australian reporting year.
The results reflect a full twelve months of trading for the period 1st July 2013 to
30 June 2014.
Record sales revenue of $16,283,183 was achieved for the twelve months ended
30 June 2014. The year finished strongly with the Company’s most successful
pearl auction to date held in Kobe Japan in June 2014.
Atlas is now considered the market leader in 9-13mm specialty pearl size of
South Sea Pearls. Growing and sustainable demand for loose pearls is evidence
of a significant recovery in the market from the low point reached during the
Global Financial Crisis in 2009.
This combined with a change in selling strategy has seen a significant recovery
in the Group’s revenues for the year to date. Atlas is now selling pearls to 50 of
the world’s largest wholesalers, previously 70-80% of the Atlas harvest was sold
to just four different customers.
Essential oils sales contributed $2,023,581 towards the Group’s total revenues (30
June 2013 - $503,076). Essential Oils of Tasmania was acquired in January 2013
as part of the Group’s value-added strategy.
5.2.2
Shareholder Returns
12 Months
Ending
6 Months
Ending
12 Months
Ending
30 June
2014 $’000
30 June
2013
$’000
31 Dec
2012
$’000
Net profit/(loss) after tax
Basic EPS (cents)
Dividends paid
Dividends (per share) (cents)
1,814
0.61
Nil
Nil
(2,195)
(0.81)
Nil
Nil
1,406
0.68
Nil
Nil
The adjustments from NPAT to arrive at reported Normalised EBITDA for these
periods are shown below:
12 Months
Ending
6 Months
Ending
12 Months
Ending
30 June
2014 $’000
30 June
2013
$’000
31 Dec
2012
$’000
Net profit/(loss) after tax
Tax expense/( benefit)
Finance/Interest net costs
Depreciation & amortisation
Foreign Exchange (gain)/loss
Agriculture Standard revaluation (gain)/
loss/ pearl adjustments
Other Non-Operating (income)/expense
Inventory write off
Derivative Instrument (gain)/loss
1,814
(355)
471
303
578
(63)
300
(12)
436
(2,195)
(1,472)
222
136
(1,091)
2,908
242
-
-
1,406
(1,767)
(650)
216
(1,137)
3,147
130
-
-
Normalised EBITDA
3,470
(1,250)
1,345
Total Assets
Debt (Current & Non-current)
Other Liabilities
Shareholder funds
Debt / Shareholder funds
Number of shares on issue (million)
Net tangible assets per share (cents)
Share price at reporting date (cents)
30 June
2014
$’000
30 June
2013
$’000
31 Dec
2012
$’000
40,823
(5,155)
(6,859)
28,809
18%
326.62
8.7
8.5
35,676
(5,274)
(4,605)
25,797
20%
33,602
(4,936)
(4,449)
24,217
20%
287.039
237.135
9.0
4.1
10.2
4.5
There has been an increase in the net assets of the group of $5.1M in the twelve
months to 30 June 2014 (six months to 30 June 2013 - $1.6M). Movements in
the net worth of the economic entity are summarised below:
•
•
•
•
•
•
•
Cash reserves decreased to $1.7M (30 June 2013 - $1.8M) at 30 June 2014.
During the twelve months ended 30 June 2014 core debt was decreased
by $119K.
Trade receivables increased to $3M (30 June 2013 - $1.1M) principally due
to the 30 June 2014 loose pearl auction held on the 29th of June 2014.
Oyster assets value increased by $2.3M during the twelve months ended
30 June 2014. The main drivers behind the increase in value include:
an improvement in the market price of pearls from ¥8,250/momme
at 30 June 2013 to ¥11,000/momme and a higher number of Oysters
harvestable within the next 12 months from 205K at 30 June 2013 to 249K
at 30 June 2014. This increase has been partly offset by a weaker Yen:
¥95.52 to AUD (30 June 2014) compared to ¥91.64 to AUD (30 June 2013),
and the total change in fair value less husbandry costs of oysters during
the twelve months ended 30 June 2014 was an increase of $1.9M.
Pearls on hand decreased from 164,399 at 30 June 2013 to 52,436 at 30
June 2014; the net realisable value decreased from $2.5M at 30 June 2013
to $1.07M at 30 June 2014 as the auction originally schedule for June 2013
was held in early July 2013 resulting in a build-up of stock at 30 June 2013
and another large auction was held on the 29 June 2014. A write-off of
$1.2M was recognised in relation to adjusting the fair value of loose pearls
and jewellery costs for the period as inventory is required to be valued at
either fair value (for biological harvested assets) or the lower of cost and
net realisable value. Pearl inventory on hand at 30 June 2014 was lower
grade after the large June auction.
Jewellery inventory was $2.9M as at 30 June 2014, down from $3.0M as at
30 June 2013 reflecting the Company’s improving inventory management
controls.
Borrowings were $5.1M at 30 June 2014 consistent with the 30 June 2013.
Essential oil finished product made up $1.35M of the inventory balance at
30 June 2014 ($1.1M at 30 June 2013). During the twelve months ended
30 June 2014 the group recorded write-ups of Lavender and Boronia crops
of $0.3M, for six months ended 30 June 2013 the group recorded write-
downs of Lavender and Boronia crops totalling $0.4M.
5.2.4
Operating Results
Atlas recorded a net profit after tax for the period ended 30 June 2014 of $1.8M,
an increase of $4M (30 June 2013– net loss after tax of $2.2M).
The operating revenue for the twelve months ended 30 June 2014 was $16.3M,
compared to the six months ended 30 June 2013 was $3.5M. Pearl sales revenue
was $11.9M (30 June 2013 - $1.9M), with retail and wholesale sales revenue of
$1.45M (30 June 2013 - $0.6M) and essential oil sales of $2.02M (30 June 2013
-$0.5M). The number of jewellery retail outlets in Bali remained consistent with
2013 at a total of seven.
Gross Profit percentage overall increased to 62% for the twelve months of 2014
from 60% for the first six months of 2013 due to the reduced supply of white
south sea pearls as a result of lower global production.
PAGE 31
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D I R E C T O R S ’ R E P O R T C O N T I N U E D
5.2.5 Pearl Oyster Production Results
Staff numbers at the end of the year were as follows:
Results across the breeding and farming system for the financial period July
1 2013 to June 30, 2014 were on target with operational projections. Both
the Bali and Lembata hatcheries have had successful seasons and a record
number of virgin oysters were seeded during the 13/14 financial year. These
oysters produce the best quality pearls within the Atlas production system and
currently represent almost 90% of all pearl carrying stocks farmed internally. A
record seeding result achieved in Bali in the second half of FY13/14 bodes well
for future harvests.
Juvenile grow-out was particularly good in Bali with Lembata results improving
again on the prior season, with the later close to mirroring Bali’s production.
There are sufficient juvenile oysters in the farming system to reach seeding
targets for FY14/15.
The effects of the selective breeding programme in terms of growth took a
significant leap forward during the last six months with pearl oysters achieving
seeding size two to three months earlier than prior years. At the same time,
these young oysters are taking the same size range of nuclei and have achieved
a record result in terms of pearl formation or retention.
Over the past year pearl quality has also improved, which has been reflected in
both price and demand for goods. We have now had several commercial sized
pearl harvests at the newer sites of Punggu (near Komodo Island) and Alor.
Each site has specific differences in terms of certain pearl traits but importantly
the value of pearls from each farm is consistent. The subtle variations observed
particularly in relation to overtones in colour may prove to be an added value
drive in pearl marketing. As it stands, Atlas pearls are well recognised with the
international wholesale trade.
With increasing numbers of high quality oysters coming through the system,
Atlas has increased its selection criteria for seeding. As a consequence the
Company has expanded its JV seeding programme using surplus 2nd grade
stock with a third party farmer. This allows extra oysters to be seeded for Atlas at
minimal cost.
A major change is underway in the selective breeding programme with
the completion of the R & D facility in Bali. All future genetic improvement
programmes will be independent to the commercial operation. The
Company now has a pearl oyster “Stud” farm and hatchery for developing
“best of breed” which will in turn become the pedigree broodstock for the
commercial division. In doing so, the efficiency of the main commercial
operations will improve significantly.
5.2.6
3000 Hands: Sharing and Sustaining
Over 3000 Hands are involved in the journey of an Atlas creation from the
moment nature’s treasure is born until the finished product is delivered into
the hands wearer. 3000 Hands encompasses the values acknowledged by all
shareholders and stakeholders as they enter the world of Atlas.
The 3000 Hands: Sharing and Sustaining video web series will continue over the
next 12 months, featuring portraits supporting the unique position of Atlas in
Indonesia and the relationship of creating beautiful pearls and perfumes with
community, people and environment.
These stories reveal the Atlas philosophy in terms of community engagement
and sustainable practice and provide a strong vehicle for ”marketing our luxury
products to the world. If you haven’t done so, please take a moment to visit
www.3000hands.com. New episodes will continue to become available.
5.2.7
Personnel
Atlas places a strong emphasis on training and retention of its workforce to
ensure a more efficient and cost effective operation. Staff numbers increased
from 2013 to 2014 as the Company continues to develop operations.
2014
2013
2012
Expatriates – Indonesia
Indonesian nationals – permanent
Indonesian nationals – part time
Australia
Total Personnel
21
536
341
43
941
15
613
149
30
807
20
629
178
13
840
5.2.8
Marketing
Over the past few months, several companies have approached Atlas seeking
opportunities to collaborate. A group of 20 European retailers led by a global
jewellery leader (Gellner) visited Atlas farms, an Australian South Sea pearl
farmer confirmed its interest to join Atlas auction format, researchers and the
prestigious Gemmological Institute of America (GIA) commenced collaboration
on various R&D programs. All this positive feedback further reinforce the
strong perception of Atlas as a sophisticated operator, the quality of the pearls
produced as well as the reliability and consistency of the Company’s distribution
and marketing.
To further enhance the customer experience both at wholesale and retail level,
new grading and matching capabilities have been added to Perth Headquarters
making it an efficient, convenient and flexible trading and service platform for
the Australian market.
Significant efforts are being invested to improve the clarity of Atlas’ range of
finished product and retail experience. New Jewellery collections are being
designed/produced, showrooms are under renovation and the trend of
industrial tourism in Bali is being embraced with the opening of a new retail site
near the Komodo Island National Park. At the same time we have implemented
specially crafted customer recruitment programs and tourism strategies.
Those coordinated efforts will be rewarded by pearl price improvement
and further reinforced with the addition of new talent at the pearling and
distribution level. It can be said that Atlas pearls are now becoming a quality
household name.
5.2.9
Research and Development
A third grant from the Australian Research Council is supporting phase three
of our collaborative genetic research project with James Cook University. The
program, which now boasts a dedicated hatchery and farm facility, is exploring
in more detail the genetic basis for pearl creation. This “stud” breeding facility
in North Bali has been commissioned and is a first for pearl oysters using the
world’s most comprehensive shellfish genome map to create a diverse stock
selected for growth and pearl quality. The foundation work over the last 9 years
has already seen our current generation of pearl oysters reduce the cycle of
production by an average three months whilst enjoying record success in terms
of survival and post operation success.
A $1M development grant to commercialise key pearl and native plant extracts at
EOT was a major coup and recognises the technical skills of the Tasmanian team.
Concurrently, pearl and pearl oyster protein extracts are being tested in the
pearl growing process. Preliminary results are exciting, even more so as all the IP
is controlled and contained within the Atlas group.
The same extracts have already completed the first round of efficacy testing in
relation to human skin cell health. Initial results indicate that the extracts have
a potential for skin health. Moreover, The Gemmoligical Institute of America is
testing these materials directly on the surface of pearls.
DIVIDENDS
6.
No dividends were declared and paid by the Company during the twelve month
period ended 30 June 2014 or the 6-month period ended 30 June 2013.
EVENTS SINCE THE END OF THE FINANCIAL YEAR
7.
Mr Nelson Rocher was appointed Alternate Director to Mr Stephen Birkbeck on
18 July 2014.
PAGE 32
For personal use only
D I R E C T O R S ’ R E P O R T C O N T I N U E D
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
D I R E C T O R S ’ R E P O R T C O N T I N U E D
8.
LIKELY DEVELOPMENTS AND EXPECTED
RESULTS OF OPERATIONS
With our two technical hubs, Bali and Lembata beginning to reach optimal size
Atlas is surveying both dormant existing lease areas and new sites for future
growth opportunities. Several internationally backed pearl farming companies
have approached Atlas wishing to collaborate and all potential JV options are
being investigated.
Our current surplus in hatchery capacity has the potential to convert to a
surplus in mature oysters for seeding over the next 2 years creating opportunity
for additional pearl production.
Commissioning of our second pearl oyster transport vessel, the Poernomo, in
the first quarter of FY14/15 will greatly enhance our ability to efficiently relocate
virgin and seeded oysters and create opportunities for testing new sites by
acting as a temporary operations facility.
The commissioning of the dedicated stud breeding facility will have an impact
on the efficiency of the commercial farming programme by removing the need
to maintain detailed comprehensive records of every pearl oyster family in the
system. With family pedigree lines now numbering in the hundreds, isolating the
monitoring and selection programme to a dedicated team and facility frees the
large-scale farms to rationalise stock and improve efficiency on the commercial
scale and reduce husbandry costs. Furthermore, financial modelling analysis
demonstrates that the stud farm is expected to be a profit centre within three
years and is expected to produce the Best of Breed pearls creating a unique
marketing position for a small premium grade crop. The availability of three
hatcheries within the Atlas farm model is creating major risk mitigation and
extending our production season by exploiting the environmental variation found
in our different regional centres. A major spawning in August 2014 resulted in
larvae being shared by the three hatcheries.
DIRECTORS’ INTERESTS
9.
The relevant interest of each current Director in the share capital of the
Company, as notified by the Directors to the Australian Stock Exchange in
accordance with S205G (1) of the Corporations Act 2001, at the date of this
report is as follows:
Ordinary Shares
Unlisted Options
S.P. Birkbeck(3)
N. Rocher(5)
Direct
-
-
J.J.U.Taylor (1),(2)
200,000
G. Newman(2)
S. Arrow(4)
T. Martin(6)
-
-
4,256,545
Indirect
43,127,199
6,612,185
1,200,000
1,539,295
11,508,089
14,900,200
Direct
-
-
-
-
-
-
Indirect
10,000,000
1,000,000
500,000
-
-
-
1.
2.
3.
4.
5.
6.
The 1,200,000 shares held indirectly by Dr J Taylor are held in trust under the rules of the Employee
Share Plan. These shares have now vested. Dr Taylor is only entitled to the shares once the loan is
repaid in full (Refer Note 23).
Dr J Taylor acquired 180,000 shares, and G Newman acquired 648,000 shares in 2012 under the Non-
Executive Director Fee Salary Sacrifice Share Plan (Refer to Note 4.5.9 of Remuneration Report).
1,000,000 shares held in trust in the ESP for Stephen Birkbeck were issued on 8 May 2013 (Refer to
Note 4.5.7).
Mr S Arrow was appointed as director on 2 January 2014
Mr N Rocher was appointed as alternate director to Mr S Birkbeck on 18 July 2014
14,900,200 indirect ordinary shares held by Mr T Martin are held by a private entity which Mr T
Martin is 1 of 4 directors. This entity is classified as a related party.
OPTIONS
10.
The Company had 32,582,005 options granted over unissued shares at the 30
June 2013. As part of the rights issue on 18 January 2013 a total of 30,240,735
unlisted options expiring 29 January 2014 exercisable at $0.05 each were issued
pursuant to the Company’s non-renounceable entitlements Prospectus dated
16 November 2012. An additional 2,452,979 options were issued when the
shortfall was taken up in March and April 2013. These options expired on 29
January 2014. Options exercised during the six months ended 30 June 2013
totalled 111,709. Options exercised during the twelve months ended 30 June
2014 totalled 29,577,674.
During the year end 30 June 2014 26,500,000 in unlisted options were issued to
certain employees and consultants of Atlas Pearls and Perfumes Ltd, pursuant to
the Atlas Pearls and Perfumes Ltd Employee Option Plan. The unquoted options
are exercisable at $0.0858 (18,000,000) and $0.095 (8,500,000) respectively, on or
before 31 December 2016, subject to certain vesting conditions specific to each
employee/consultant.
11.
INDEMNIFICATION AND INSURANCE OF
DIRECTORS AND OFFICERS
11.1
Indemnification
The Company has agreed to indemnify the following current directors of the
Company; Mr S Birkbeck, Dr J Taylor, Mr G Newman and Mr T Martin and the
following former directors; Mr S Adams, Mr RP Poernomo , Mr G Snow, Mr R
Wright and Mr I Murchison, against all liabilities to another person (other than
the Company or a related body corporate) that may arise from their position
as directors of the Company, except where the liability arises out of conduct
which involves negligence, default, breach of duty or a lack of good faith. The
agreement stipulates that the Company will meet the full amount of any such
liabilities, including costs and expenses.
11.2
Insurance Premiums
Since the end of the previous financial year the Company has paid insurance
premiums of $15,670 (2013 - $16,498) in respect of directors’ and officers’ liability
and legal expenses insurance contracts, for current and former directors and
officers.
NON-AUDIT SERVICES
12.
The company may decide to employ the auditor on assignments additional to
their statutory audit duties where the auditor’s expertise and experience with
the Company and/or the Group are important.
Details of the amounts paid or payable to the auditor (BDO) for audit and non-
audit services provided during the period are set out below.
The Board of directors, in accordance with advice from the audit committee,
is satisfied that the provision of non-audit services during the period is
compatible with general standards of independence for auditors imposed by
the Corporations Act 2001. The directors are satisfied that the services disclosed
below did not compromise the external auditor independence requirements
of the Corporations Act 2001. The nature of the service provided do not
compromise the general principles relating to auditor independence because
they relate to tax advice in relation to compliance issues and review of the tax
provisions prepared by the Company. None of the services undermine the
general principles relating to auditor independence as set out in APES 110 Code
of Ethics for Professional Accountants.
PAGE 33
For personal use only
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
D I R E C T O R S ’ R E P O R T C O N T I N U E D
The following fees were paid or payable for services provided by the auditor of the parent entity, its related practices and non-related audit firms during the period
ended 30 June:
12. NON AUDIT SERVICES (CONT)
BDO Australian Firm
Audit and review of financial reports
Related practices of BDO Australian Firm
Total renumeration for audit services
TAXATION SERVICES
BDO Australian Firm:
Tax compliance services and advice
Related practices of BDO Australian Firm
Total renumeration for taxation services
Consolidated
12 months
Ending
30 June
2014
$
6 months
Ending
30 June
2014
$
111,966
-
111,966
51,962
-
51,962
74,765
-
74,765
28,449
-
28,449
Total renumeration for non-audit and taxation services
51,962
28,449
13.
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied under section 237 of the Corporations Act 2001 for leave of court to bring proceedings on behalf of the Company or to intervene in any
proceedings to which the Company is a party for the purpose of ta king responsibility on behalf of the Company for all or part of those proceedings. The Company
has not been a party to any proceedings during the period.
14.
AUDITORS INDEPENDENCE DECLARATION
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 35.
Signed in accordance with a resolution of the Directors.
S.P Birkbeck
Chairman
28 August 2014
PAGE 34
For personal use only
D I R E C T O R S ’ R E P O R T C O N T I N U E D
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
D I R E C T O R S ’ R E P O R T C O N T I N U E D
PAGE 35
For personal use only A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
C O N S O L I D A T E D S T A T E M E N T O F P R O F I T O R L O S S
C O N S O L I D A T E D S T A T E M E N T O F F I N A N C I A L P O S I T I O N
AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2014
AS AT 30 JUNE 2014
Note
12 Months Ending
30 June 2014
$
6 Months Ending
30 June 2013
$
2
2
3
3
3
4
Revenue from continuing operations
Cost of goods sold
Gross profit
Other income
Marketing expenses
Administration expenses
Finance costs
Other expenses
Profit/(Loss) before income tax
Income tax benefit
Profit/(Loss) for the period from continuing operations
Other comprehensive income/(losses)
Items that will be reclassified as profit or loss:
Exchange differences on translation of foreign operations
Other comprehensive income/(losses) for the period, net of tax
Total comprehensive income/(losses) for the period
Profit/(loss) is attributable to:
Owners of the Company
Total comprehensive income/(losses) is attributable to:
16,283,183
(6,230,257)
10,052,926
1,091,279
(360,364)
(6,814,921)
(513,496)
(1,996,783)
1,458,642
355,280
1,813,922
(792,775)
(792,775)
1,021,147
3,505,125
(1,389,004)
2,116,121
1,754,041
(88,221)
(3,444,476)
(240,532)
(3,763,505)
(3,666,572)
1,471,927
(2,194,645)
1,181,648
1,181,648
(1,012,997)
1,813,922
(2,194,645)
Owners of the Company
1,021,147
(1,012,997)
Overall operations :
Earnings per share for profit/(loss) from continuing operations attributable to the ordinary equity holders of the Company
Basic earnings/(loss) per share (cents)
Diluted earnings/(loss) per share (cents)
5
5
0.61
0.57
(0.81)
N/A
The accompanying Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.
PAGE 36
For personal use only C O N S O L I D A T E D S T A T E M E N T O F P R O F I T O R L O S S
AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2014
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
C O N S O L I D A T E D S T A T E M E N T O F F I N A N C I A L P O S I T I O N
AS AT 30 JUNE 2014
Note
12 Months Ending
30 June 2014
$
6 Months Ending
30 June 2013
$
Current Assets
Cash and cash equivalents
Trade and other receivables
Derivative financial instruments
Inventories
Biological assets
Total current assets
Non-current assets
Intangibles
Loans joint venture entities
Investments accounted for using Equity Method
Inventories
Biological Assets
Property, plant and equipment
Deferred tax assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Borrowings
Derivative financial instruments
Current tax liabilities
Short-term provisions
Total current liabilites
Non-current liabilities
Derivative financial instrument
Borrowings
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained profits
Total equity
6
7
8
9
10
25
29
9
10
11
14
12
13
8
14
15
8
13
14
16
17
18
The above Consolidated Statement of Finacial Position should be read in conjunction with the accompanying notes.
1,665,207
3,020,985
-
6,114,013
8,414,231
19,214,436
392,875
67,896
3,025
132,093
12,011,412
4,401,274
4,599,784
21,608,359
40,822,795
3,141,549
5,014,791
852,323
(94,060)
57,928
8,971,901
-
140,168
2,901,397
3,041,565
12,013,466
1,767,156
1,0764,871
-
7,115,790
5,914,682
15,872,499
-
313,926
280,984
223,399
11,535,561
4,513,455
2,936,629
19,803,955
35,676,454
2,329,224
4,436,797
14,479
234,884
92,037
7,107,421
390,148
837,646
1,544,570
2,772,364
9,879,785
28,809,329
25,796,669
32,153,001
(8,036,205)
4,692,533
28,809,329
30,203,033
(7,284,974)
2,878,610
25,796,669
PAGE 37
For personal use only A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
C O N S O L I D A T E D S T A T E M E N T O F C H A N G E S I N E Q U I T Y
FOR THE YEAR ENDED 30 JUNE 2014
C O N S O L I D A T E D S T A T E M E N T O F C A S H F L O W S
FOR THE YEAR ENDED 30 JUNE 2014
Attributable to owners of Atlas Pearls and Perfumes Ltd
Contributed
equity
Share based
payment
reserve
Note
$
$
Foreign
currency
translation
reserve
$
Retained
earnings
Total equity
$
$
18
17
16
19
17
18
17
16
19
17
27,610,085
581,029
(9,047,651)
5,073,255
24,216,718
-
-
-
2,592,948
-
-
2,592,948
-
-
-
-
-
-
-
-
(2,194,645)
(2,194,645)
1,181,648
1,181,648
1,181,648
(2,194,645)
(1,012,997)
-
-
-
-
-
-
-
2,592,948
-
-
-
2,592,948
30,203,033
581,029
(7,866,003)
2,878,610
25,796,669
30,203,033
581,029
(7,866,003)
2,878,610
25,796,669
-
-
-
1,949,968
-
-
-
-
-
-
-
41,545
-
-
1,813,922
1,813,922
(792,776)
-
(792,775)
(792,776)
1,813,922
1,021,147
-
-
-
1,949,968
-
41,545
-
-
-
-
32,153,001
622,574
(8,658,779)
4,692,532
28,809,329
Balance at 1 January 2013
(Loss) for the period
Exchange differences on translation of foreign operations
Total comprehensive income / (loss) for the period
Transactions with owners in their capacity as owners
Contributions of equity, net of transaction costs
Dividends provided for or paid
Employee share scheme
Balance at 30 June 2013
Balances at 1 July 2013
Profit for the year
Exchange differences on translation of foreign operations
Total comprehensive income / (loss) for the period
Transactions with owners in their capacity as owners
Contributions of equity, net of transaction costs
Dividends provided for or paid
Employee share scheme
Acquisition of EOT
Balance at 30 June 2014
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
PAGE 38
For personal use only
C O N S O L I D A T E D S T A T E M E N T O F C H A N G E S I N E Q U I T Y
FOR THE YEAR ENDED 30 JUNE 2014
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
C O N S O L I D A T E D S T A T E M E N T O F C A S H F L O W S
FOR THE YEAR ENDED 30 JUNE 2014
Note
12 Months Ending
30 June 2014
$
6 Months Ending
30 June 2013
$
Cash flows from operating activities
Proceeds from pearl, jewellery and oyster sales
Proceeds from essential oil sales
Proceeds from other operating activities
Interest paid
Interest received
Payments to suppliers and employees
Income tax (paid)/received
Net cash used in operating activities
24.2
Cash flows from investing activities
Cash obtained on business combination
Payments for property, plant and equipment
Joint venture partnership contributions (paid)
Net cash used in investing activities
Cash flows from financing activities
Repayment of borrowings
Proceeds from issue of shares
Share transaction costs
Proceeds from convertible notes
Net cash used in financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial period
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at the end of the financial year
6
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
11,858,342
1,738,829
443,514
(204,364)
9,329
(13,743,885)
(359,059)
(257,294)
-
(1,234,528)
(53,971)
(1,288,499)
(329,224)
1,808,715
(30,321)
-
1,449,171
(96,623)
1,767,156
(5,326)
1,665,207
2,336,290
682,947
299,375
(169,515)
22,221
(6,637,748)
2,321,163
(1,145,267)
142,221
(233,328)
(186,109)
(277,216)
(1,646,257)
1,640,271
(43,688)
1,100,000
1,050,326
(372,157)
2,127,414
11,899
1,767,156
PAGE 39
For personal use only
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
1.1
Basis of preparation
These general purpose financial statements have been prepared in accordance
with Australian Accounting Standards, other authoritative pronouncements of
the Australian Accounting Standards Board and the Corporations Act 2001. Atlas
Pearls and Perfumes Ltd is a for-profit entity for the purpose of preparing the
financial statements.
The financial statements cover the consolidated entity of Atlas Pearls and
Perfumes Ltd and its subsidiaries. Atlas Pearls and Perfumes Ltd is a listed public
company, incorporated and domiciled in Australia.
A description of the nature of the consolidated entity’s operations and its
principal activities is included in the review of operations and activities in the
directors report which is not part of these financial statements.
The financial statements were authorised for issue by the directors on 28st
August 2014. The directors have the power to amend and reissue the financial
statements.
The principal accounting policies adopted in the preparation of these
consolidated financial statements are set out below. The accounting policies
have been consistently applied to all the periods presented, unless otherwise
stated.
1.2
Compliance with IFRS
The consolidated financial statements of the Atlas Pearls and Perfumes Ltd
group also comply with International Financial Reporting Standards (IFRS) as
issued by the International Accounting Standards Board (IASB).
1.3
New and amended standards adopted by the group
None of the new standards and amendments to standards that are mandatory
for the first time for the financial period beginning 1 July 2013 affected any
of the amounts recognised in the current period or any prior period and are
not likely to affect future periods. Changes in AASB 10 Consolidated Financial
Statements, AASB 11 Joint Arrangements, AASB 12 Disclosure of Interests in
Other Entities, AASB 13 Fair Value Measurement did not result in adjustment to
the amounts recognised in the financial statements.
1.4
Historical Cost Convention
These financial statements have been prepared under the historical cost basis, as
modified by the revaluation of available for sale financial assets, financial assets
and liabilities (including derivative instruments) at fair value through profit or
loss and biological assets at fair value less cost to sell.
1.5
Critical Accounting Estimates
The preparation of financial statements requires the use of certain critical
accounting estimates. It also requires management to exercise its judgement
in the process of applying the Group’s accounting policies. The areas involving
a higher degree of judgement or complexity, or areas where assumptions and
estimates are significant to the financial statements are disclosed in note 1.34.
1.6
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all
subsidiaries of Atlas Pearls and Perfumes Ltd (“Company” or “parent entity”) as at
30 June 2014 and the results of its subsidiaries for the twelve month period then
ended. Atlas Pearls and Perfumes Ltd and its subsidiaries together are referred to
in this financial statement as the consolidated entity.
Subsidiaries are all entities (including structured entities) over which the group
has control. The group controls an entity when the group is exposed to, or has
rights to, variable returns from its involvement with the entity and has the ability
to affect those returns through its power to direct the activities of the entity.
Subsidiaries are fully consolidated from the date on which control is transferred
to the group. They are deconsolidated from the date that control ceases.
The acquisition method of accounting is used to account for the acquisition of
business combinations by the Group.
Intercompany transactions, balances and unrealised gains on transactions
between Group companies are eliminated. Unrealised losses are also eliminated
unless the transaction provides evidence of the impairment of the asset
transferred. Accounting policies of subsidiaries have been changed where
necessary to ensure consistency with the policies adopted by the Group.
Non-controlling interests in the results and equity of subsidiaries are shown
separately in the consolidated income statement, statement of comprehensive
income, statement of changes in equity and statement of financial position
respectively.
(i) Employee Share Trust
The Group has formed a trust to administer the Group’s employee share scheme.
The trust is consolidated, as the substance of the relationship is that the trust is
controlled by the Group. Shares held by Atlas South Sea Pearl Limited Employee
Share Trust are disclosed as treasury shares and deducted from contributed
equity.
(ii) Joint Ventures
Joint venture entities
The interest in a joint venture entity is accounted for using the equity method
after initially being recognised at cost in the consolidated statement of financial
position. Under the equity method of accounting, the investments are initially
recognised at cost and adjusted thereafter to recognise the group’s share of the
post-acquisition profits or losses of the investee in profit or loss, and the group’s
share of movements in other comprehensive income of the investee in other
comprehensive income. Details relating to the entity are set out in note 30.
When the group’s share of losses in an equity-accounted investment equals
or exceeds its interest in the entity, including any other unsecured long-term
receivables, the group does not recognise further losses, unless it has incurred
obligations or made payments on behalf of the other entity.
Unrealised gains on transactions between the group and its associates and joint
ventures are eliminated to the extent of the group’s interest in these entities.
Unrealised losses are also eliminated unless the transaction provides evidence of
an impairment of the asset transferred. Accounting policies of equity accounted
investees have been changed where necessary to ensure consistency with the
policies adopted by the group.
The group treats transactions with non-controlling interests that do not result
in a loss of control as transactions with equity owners of the group. A change in
ownership interest results in an adjustment between the carrying amounts of
the controlling and non-controlling interests to reflect their relative interests in
the subsidiary. Any difference between the amount of the adjustment to non-
controlling interests and any consideration paid or received is recognised in a
separate reserve within equity attributable to the owners.
1.7
Income tax
The income tax expense or revenue for the period is the tax payable on the
current period’s taxable income based on the applicable tax rate for each
jurisdiction adjusted by changes in deferred tax assets and liabilities attributable
to temporary differences and to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted
or substantively enacted at the end of the reporting period in the countries
where the company’s subsidiaries operate and generate taxable income. It
establishes provisions where appropriate on the basis of amounts expected to
be paid to the tax authorities.
Deferred income tax is provided in full, using the liability method, on temporary
differences arising between the tax bases of assets and liabilities and their
carrying amounts in the consolidated financial statements. However, the
deferred income tax is not accounted for if it arises from initial recognition of
an asset or liability in a transaction other than a business combination that at
the time of the transaction affects neither accounting nor taxable profit or loss.
Deferred income tax is determined using tax rates (and laws) that have been
enacted or substantially enacted by the reporting date and are expected to
apply when the related deferred income tax asset is realised or the deferred
income tax liability is settled.
Deferred tax is credited in the consolidated statement of profit or loss and other
comprehensive income except where it relates to items that may be credited
directly to equity, in which case the deferred tax is adjusted directly against equity.
PAGE 40
For personal use only N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Deferred tax assets are recognised for deductible temporary differences and
unused tax losses only to the extent that it is probable that future taxable
amounts will be available to utilise those temporary differences and losses.
basis so as to write off the cost or valuation of property, plant and equipment
over their estimated useful lives commencing from the time the asset is held
ready for use.
The depreciation rates used for each class of depreciable assets are:
Deferred tax liabilities and assets are offset when there is a legally enforceable right
to offset current tax assets and liabilities and when the deferred tax balances relate
to the same taxation authority. Current tax assets and liabilities are offset where
the entity has a legally enforceable right to offset and intends either to settle on a
net basis, or to realise the asset and settle the liability simultaneously.
1. 8
(a)
(b)
(c)
(d)
(e)
(f )
Inventories
Pearls – The cost of pearls grown by the Group is the fair value less
husbandry costs at the time the pearls are harvested. At each
reporting date they are valued at the lower of cost and net realisable
value.
Nuclei - quantities on hand at the period end are valued at the lower
of cost and net realisable value.
Oysters – refer note 1.10.
Crops – refer note 1.10.
Essential Oils - quantities on hand at the period end are valued at the
lower of cost and net realisable value.
Other inventories – including jewellery, fuel, mechanical parts and
farm spares at the period end are valued at the lower of cost and net
realisable value.
Net realisable value is the estimated selling price in the ordinary course of
business less the estimated costs necessary to make the sale.
1.9
Biological Assets
Oysters and Crops are measured at their fair value less estimated husbandry
costs. The fair value of these biological assets is determined by using the present
value of expected net cash flows from the oysters/crops, discounted using a
pre-tax market determined rate.
Changes in fair value less estimated husbandry costs of these assets are
recognised in the consolidated statement of profit or loss and other
comprehensive income in the period they arise.
The details of the Biological assets that are held by the economic entity as at 30
June 2014 are provided at Note 10.
Each class of property, plant & equipment is stated at historical cost less, where
applicable, any accumulated depreciation and impairment losses.
1.10 Property, Plant and Equipment
Property
Freehold land and buildings are shown at their cost, less subsequent
depreciation for buildings.
Leasehold property is shown at cost and amortised over the shorter of the
term of the unexpired lease on the property or the estimated useful life of the
improvements on the property.
Plant and Equipment
Plant and equipment are measured on the cost basis less depreciation and
impairment losses.
The carrying value of plant and equipment and their useful lives are reviewed
annually by Directors to ensure it is not in excess of the recoverable amount of
these assets which is assessed on the basis of the expected net cash flows that
will be received from the assets employed and subsequent disposal.
The cost of fixed assets constructed within the economic entity includes the
cost of materials and direct labour. Repairs and maintenance carried out on the
assets are expensed unless there is a future economic benefit that will flow to
the Group which can be reliably measured, in which case the value of the asset
is increased.
Gains and losses on disposals are determined by comparing proceeds with
carrying amount. These are included in the consolidated statement of profit or
loss and other comprehensive income.
Depreciation
Depreciation on property, plant and equipment is calculated on a straight line
Class of fixed asset
Depreciation Rate
Freehold land
Leasehold land & buildings & improvements
Vessels
Plant & equipment
2013/14
5-10%
5-10%
10%
10-50%
2013
5-10%
5-10%
10%
10-50%
1.11
Investments and Other Financial Assets
The Group classifies its investments in the following categories: financial assets
at fair value through profit or loss, loans and receivables, held-to-maturity
investments, and available-for-sale financial assets. The classification depends on
the purpose for which the investments were acquired. Management determines
the classification of its investments at initial recognition and re-evaluates this
designation at each reporting date.
(a)
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for
trading. A financial asset is classified in this category if acquired principally
for the purpose of selling in the short term. Derivatives are classified as held
for trading unless they are designated as hedges. Assets in this category are
classified as current assets. Realised and unrealised gains and losses arising
from changes in the fair value of these assets are included in the consolidated
statement of profit or loss and other comprehensive income in the period in
which they arise.
(b)
Loans and receivables
Loans and receivables are non derivative financial assets with fixed or
determinable payments that are not quoted in an active market. They are
included in current assets, except for those with maturities greater than 12
months after the reporting date which are classified as non-current assets. Loans
and receivables are included in receivables in the statement of financial position.
(c)
Available-for-sale financial assets
Available-for-sale financial assets, comprising principally marketable equity
securities, are non-derivatives that are either designated in this category or not
classified in any of the other categories. They are included in non-current assets
unless management intends to dispose of the investment within 12 months of
the reporting date. Unrealised gains and losses arising from changes in fair value
are taken directly to equity. Investments are designated as available-for-sale
if they do not have fixed maturities and fixed or determinable payments and
management intends to hold them for the medium to long term.
(d)
Recognition and derecognition
Regular purchases and sales of financial assets are recognised on trade-date, the
date on which the Group commits to purchase or sell the asset. Investments
are initially recognised at fair value plus transaction costs for all financial assets
not carried at fair value through profit or loss. Financial assets carried at fair
value through profit or loss are initially recognised at fair value and transaction
costs are expensed in the consolidated statement of profit or loss and other
comprehensive income. Financial assets are derecognised when the rights
to receive cash flows from the financial assets have expired or have been
transferred and the economic entity has transferred substantially all the risks and
rewards of ownership.
(e)
Measurement
At initial recognition, the group measures a financial asset at its fair value plus,
in the case of a financial asset not at fair value through profit or loss, transaction
costs that are directly attributable to the acquisition of the financial asset.
Transaction costs of financial assets carried at fair value through profit or loss are
expensed in the profit or loss.
Loans and receivables and held-to-maturity investments are carried at amortised
cost using the effective interest rate method.
Available-for-sale financial assets and financial assets at fair value through profit
and loss are subsequently carried at fair value. Gains or losses arising from
changes in the fair value of the financial assets at fair value through profit or loss
PAGE 41
For personal use only
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
category are presented in the consolidated statement of profit or loss and other
comprehensive income within other income or other expenses in the period in
which they arise.
(f)
Impairment
The Group assesses at each reporting date whether there is objective evidence
that a financial asset or group of financial assets is impaired. In the case of equity
securities classified as available-for –sale, a significant or prolonged decline
in the fair value of a security below its cost is considered as an indicator that
the securities are impaired. A financial asset or a group of financial assets is
impaired and impairment losses are incurred only if there is objective evidence
of impairment as a result of one or more events that occurred after the initial
recognition of the asset ( a ‘loss’ event) and that loss event (or events) has an
impact on the estimated future cash flows of the financial asset or group of
financial assets that can be reliably estimated.
If there is evidence of impairment for any of the Group’s financial assets carried
at amortised cost, the loss is measured as the difference between the asset’s
carrying amount and the present value of estimated future cash flows. The
cash flows are discounted at the financial asset’s original effective interest rate.
The loss is recognised in the consolidated statement of profit or loss and other
comprehensive income.
If, in a subsequent period, the amount of the impairment loss decreases and the
decrease can be related objectively to an event occurring after the impairment
was recognised, the reversal of the previously recognised impairment loss
is recognised in the consolidated statement of profit or loss and other
comprehensive income.
1.12
Derivative instruments
Derivative instruments are initially measured at fair value on the date a derivative
contract is entered into and are subsequently remeasured to their fair value
at each reporting date. Gains and losses arising from changes in fair value are
taken to the consolidated statement of profit or loss and other comprehensive
income.
1.13
Impairment of assets
Other assets are tested for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An
impairment loss is recognised for the amount by which the assets carrying
amount exceeds its recoverable amount. The recoverable amount is the higher
of an asset’s fair value less costs to sell and value in use. Non financial assets
other than goodwill that suffered impairment are reviewed for possible reversal
of the impairment at each reporting date.
1.14
(a)
Foreign Currency Translation
Functional and presentation currency
Items included in the financial statements of each of the subsidiaries within
the Group’s entities are measured using the currency of the primary economic
environment in which the entity operates (“the functional currency”). The
consolidated financial statements are presented in Australian dollars, which is
Atlas Pearls and Perfumes Ltd’s functional and presentation currency.
(b)
Transactions and balances
Foreign currency transactions are translated into the functional currency using
the exchange rates prevailing at the date of the transactions. Foreign exchange
gains and losses resulting from the settlement of such transactions and from
the translation at period end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the consolidated statement
of profit or loss and other comprehensive income, except when they are
deferred in equity as qualifying cash flow hedges and qualifying net investment
hedges or are attributable to part of the net investment in a foreign operation.
Translation differences on assets and liabilities carried at fair value are reported
as part of the fair value gain or loss. Translation differences on non-monetary
assets and liabilities such as equities held at fair value through profit or loss
are recognised in profit or loss as part of the fair value gain or loss. Translation
differences on non-monetary assets such as equities classified as available for
sale financial assets are included in the fair value reserve in equity.
PAGE 42
All foreign exchange gains and losses are presented in the Statement of Profit of
Loss and Other Comprehensive Income within other income or other expenses
unless they relate to financial instruments.
(c)
Group Companies
The results and financial position of all group entities (none of which has the
currency of a hyperinflation economy) that have a functional currency different
from the presentation currency are translated into the presentation currency as
follows:
Assets and liabilities for each statement of financial position presented are
translated at the closing rate at the date of that statement of financial position;
Income and expenses for each statement of profit or loss and other
comprehensive income are translated at average exchange rates;
and all resulting exchange differences are recognised as a separate component
of equity.
On consolidation, exchange differences arising from the translation of any
net investment in foreign entities, and of borrowings and other currency
instruments designated as hedges of such investments, are taken to
shareholders’ equity. When a foreign operation is sold or borrowings are repaid,
a proportional share of such exchange differences are recognised in the
statement of profit or loss and other comprehensive income as part of the gain
or loss on sale.
1.15
Employee Benefits
Short Term Obligation
Liabilities for wages and salaries, including non-monetary benefits and
accumulating sick leave that are expected to be settled wholly within 12
months after the end of the period in which the employees render the related
service are recognised in respect of employees’ services up to the end of the
reporting period and are measured at the amounts expected to be paid when
the liabilities are settled. The liability for accumulating sick leave is recognised
in the provision for employee benefits. All other short-term employee benefit
obligations are presented as payables.
Wages and salaries, annual leave, sick leave and long service leave
Contributions are made by the Group to employee superannuation funds and
are charged as expenses when incurred.
Share-based payments
Share-based compensation benefits are provided to employees via the Atlas
Pearls and Perfumes Ltd Employee Share Plan. Information relating to this
scheme is set out in note 23.
The fair value of shares granted under the Employee Share Plan is recognised as
an employee expense with a corresponding increase in equity. The fair value is
measured at the date that the employee enters into the plan and is recognised
over the period during which the employee becomes unconditionally entitled
to the shares.
1.16
Provisions
Provisions for legal claims, service warranties and make good obligations are
recognised when the group has a present legal or constructive obligation as
a result of a past event; it is more likely than not that an outflow of resources
will be required to settle the obligation; and the amount has been reliably
estimated.
1.17
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with
financial institutions, other short-term, high liquid investments with original
maturity or three months or less that are readily convertible to known amounts
of cash and which are subject to an insignificant risk of change in value, and
bank overdrafts.
1.18
Revenue recognition
Revenue is measured at the fair value of the consideration received or
receivable. Amounts disclosed as revenue are net of returns, trade allowances,
rebates and amounts collected on behalf of third parties.
Revenue is recognised to the extent that it is probable that the economic benefits
will flow to the entity and the revenue can be reliably measured. The following
specific recognition criteria must also be met before revenue is recognised:
For personal use only N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
1.25
Contributed Equity
Sales Revenue comprises of revenue earned from the sale of
(a)
products or services to entities outside the economic entity. Sales revenue is
recognised when the goods are provided or when the fee in respect of services
provided is receivable.
Ordinary share capital is recognised at the fair value of the consideration
received by the Company and recognised in equity.
Any transaction costs arising on the issue of ordinary shares are recognised
directly in equity as a reduction of the share proceeds received.
(b)
Interest Income is recognised as it accrues.
1.19
Leases
Lease payments for operating leases, where substantially all the risk and benefits
remain with the lessor, are charged as expenses in the period in which they are
incurred.
1.20
Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured
at amortised cost using the effective interest method, less provision for
impairment. All trade receivables are generally due for settlement within 30 days.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which
are known to be uncollectible are written off by reducing the carrying amount
directly. An allowance account – provision for impairment of trade receivables, is
used when there is objective evidence that the Group will not be able to collect
all amounts due according to the original terms of the receivables.
Significant financial difficulties of the debtor, financial reorganisation, and
default and delinquency in payments, more than 30 days overdue, are
considered indicators that the trade receivable is impaired. The Group also
considers the long term history of the debtor. The amount of the impairment
allowance is the difference between the assets carrying amount and the present
value of estimated future cash flows, discounted at the effective interest rate.
Cash flows relating to short term receivables are not discounted if the effect of
discounting is immaterial.
The amount of the impairment loss is recognised in the statement of profit
or loss and other comprehensive income within other expenses. When a
trade receivable for which an impairment allowance had been recognised
becomes uncollectible in a subsequent period, it is written off against the
allowance account. Subsequent recoveries of amounts previously written off
are credited against other expenses in the statement of profit or loss and other
comprehensive income.
1.21
Trade and other payables
These amounts represent liabilities for goods and services provided to the
group prior to the end of financial period which are unpaid. The amounts are
unsecured and are usually paid within 30 days of recognition.
1.22
Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred.
Borrowings are subsequently measured at amortised cost. Any difference
between the proceeds and the redemption amount is recognised in the
statement of profit or loss and other comprehensive income over the period
of the borrowings using the effective interest rate method. Fees paid on the
establishment of loan facilities, which are not an incremental cost relating to the
actual draw down of the facility, are recognised in the statement of profit or loss
and other comprehensive income.
Borrowings are removed from the statement of financial position when the
obligation specified in the contract is discharged, cancelled or expired.
Borrowings are classified as current liabilities unless the Group has an
unconditional right to defer settlement of the liability for at least 12 months
after the reporting date.
1.23
Borrowing costs
Borrowing costs incurred for the construction of any qualifying asset are
capitalised during the period of time that is required to complete and prepare
the asset for its intended use or sale. Other borrowing costs are expensed.
1.24
Convertible notes
The fair value of the liability portion of a convertible note is determined using
a market interest rate for an equivalent non-convertible note. This amount
is recorded as a liability on an amortised cost basis until extinguished on
conversion or maturity of the notes. The remainder of the proceeds is allocated
to the conversion option. This is recognised and included in shareholders’ equity,
net of income tax effects.
1.26
Dividends
Provision is made for the amount of any dividend declared, being appropriately
authorised and no longer at the discretion of the entity, on or before the end of
the period but not distributed at reporting date.
1.27
Goods and Service Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST except
where the GST incurred on a purchase of goods & services is not recoverable
from the taxation authority, in which case the GST is recognised as part of the
cost of acquisition of the asset or as part of the expense item as applicable; and
where receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is
included as part of receivables in the statement of financial position.
Cash flows are included in the statement of cashflows on a gross basis and the
GST component of cash flows arising from investing and financing activities,
which is recoverable from, or payable to, the taxation authority are classified as
operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST
recoverable from, or payable to, the taxation authority.
1.28
Earnings Per Share
Basic earnings per share
(a)
Basic earnings per share is determined by dividing net profit after income tax
attributable to members of the Company, excluding any costs of servicing
equity other than ordinary shares, by the weighted average number of ordinary
shares outstanding during the financial period, adjusted for bonus elements
in ordinary shares issued during the period. The weighted average number of
shares used for the basic earnings per share calculation is 297,634,113.
Diluted earnings per share
(b)
Diluted earnings per share adjusts the figure used in determination of basic
earnings per share to take into account the after income tax effect of interest
and other financial costs associated with dilutive potential ordinary shares and
the weighted average number of shares assumed to have been issued for no
consideration in relation to dilutive potential ordinary shares. The weighted
average number of shares used for the basic earnings per share calculation is
319,634,113.
1.29
Segment Reporting
The Group has identified its operating segments based on internal reports that
are reviewed and used by the board of Directors and management team (the
chief operating decision makers) in assessing performance and in determining
the allocation of resources.
The operating segments are identified by management based on the manner
in which the product is sold, whether retail or wholesale. Management also
considers the business from a geographical perspective and has identified
four reportable segments. Discrete financial information about each of these
operating businesses is reported to the board of Directors and management
team on at least a monthly basis.
The wholesale business is a producer and supplier of pearls within the wholesale
market. The retail business is the manufacture and sale of pearl jewellery and
related products within the retail market.
The accounting policies used by the Group in reporting segments are the same
as those contained in note 1 to the accounts and in the prior period except as
detailed below:
Inter-entity sales
Inter-entity sales are recognised based on an internally set transfer price. These
transactions are eliminated within the internal reports. The revenue from
external parties reported to the chief operating decision maker is measured
in a manner consistent with that in the statement of profit or loss and other
comprehensive income.
PAGE 43
For personal use only
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Key estimates – Impairment
Biological assets and pearl inventories
These are recognised at cost within the internal reports.
It is the Group’s policy that if items of revenue and expense are not allocated
to operating segments then any associated assets and liabilities are also not
allocated to segments. This is to avoid asymmetrical allocations within segments
which management believe would be inconsistent.
1.30
Comparative Figures
The group assesses impairment at each reporting date by evaluating conditions
specific to the group that may lead to impairment of assets. Where an
impairment trigger exists, the recoverable amount of the asset is determined.
Value-in-use calculations performed in assessing recoverable amounts
incorporate a number of key estimates.
Critical judgements in applying the entity’s accounting policies
-
Doubtful debts provision
When required by Accounting Standards, comparative figures have been
adjusted to conform to changes in presentation for the current financial period.
No provision has been recognised in respect of receivables owed to the group
for the period ended 30 30 June 2014 or 30 June 2013.
1.31
Business combinations
The acquisition method of accounting is used to account for all business
combinations, regardless of whether equity instruments or other assets are
acquired. The consideration transferred for the acquisition of a subsidiary
comprises the fair values of the assets transferred, the liabilities incurred and
the equity interests issued by the group. The consideration transferred also
includes the fair value of any asset or liability resulting from a contingent
consideration arrangement and the fair value of any pre-existing equity interest
in the subsidiary. Acquisition related costs are expensed as incurred. Identifiable
assets acquired and liabilities and contingent liabilities assumed in a business
combination are, with limited exceptions, measured initially at their fair values
at the acquisition date. On an acquisition by acquisition basis, the group
recognises any non – controlling interest in the acquiree either at fair value
or at the non-controlling interest’s proportionate share of the acquiree’s net
identifiable assets.
The excess of the consideration transferred the amount of any non-controlling
interest in the acquiree and the acquisition date fair value of any previous
equity interest in the acquiree over the fair value of the group’s share of the
net identifiable assets acquired is recorded as goodwill. If those amounts are
less than the fair value of the net identifiable assets of the subsidiary acquired
and the measurements of all amounts have been reviewed, the difference is
recognised directly in profit and loss as a bargain purchase.
Where settlement of any part of cash contribution is deferred, the amounts
payable in the future are discounted to their present value as at the date
of exchange. The discount rate used is the entity’s incremental borrowing
rate, being the rate at which a similar borrowing could be obtained from an
independent financier under comparable terms and conditions.
Contingent consideration is classified as equity or a financial liability. Amounts
classified as a financial liability are subsequently remeasured to fair value with
changes in fair value recognised in profit or loss.
1.32
Parent entity financial information
The financial information for the parent entity, Atlas Pearls and Perfumes Ltd,
disclosed in note 31 has been prepared on the same basis as the consolidated
financial statements, except as set out below:
(i)
Investments in subsidiaries
Investments in subsidiaries are accounted for at cost in the financial statements
of Atlas Pearls and Perfumes Ltd.
(ii)
Share-based payments
The grant by the company of ordinary shares to the employees of subsidiary
undertakings in the group is treated as a capital contribution to that subsidiary
undertaking. The fair value of employee services received, measured by
reference to the grant date fair value, is recognised over the vesting period as an
increase to investment in subsidiary undertakings, with a corresponding credit
to equity.
1.33
Critical accounting estimates and judgments
The resulting accounting estimates will, by definition, seldom equal the related
actual results. The estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying amounts of assets and liabilities
within the next financial year are discussed below. The directors evaluate
estimates and judgements incorporated into the financial report based on
historical knowledge and best available current information. Estimates assume
a reasonable expectation of future events and are based on current trends and
economic data, obtained both externally and within the Group.
PAGE 44
-
Write-off of pearl inventories
There was a write-off of $2,229,674 as at 30 June 2014 (30 June 2013 –
$1,745,978). Refer to note 3.
-
Determination of net market value of inventories and biological assets
Agricultural assets include pearl oysters, both seeded and unseeded and pearls
that have been harvested from the oysters which remain unsold. Seeded oysters
are measured at their fair value using the net present value of expected future
net cash flows attributed to this inventory less the estimated husbandry costs.
The fair value of unseeded oysters is determined by reference to market prices for
this type of asset in Indonesia. Pearls are measured at their fair value husbandry
costs by reference to anticipated market prices for pearls upon harvest. Carrying
amount of inventories and biological assets are disclosed in note 10.
Key assumptions that have been used to determine the fair market value of the
oysters at 30 June 2014 are as follows:
30 June 2014
30 June 2013
Average selling price for pearls1
¥11,000 per momme
¥8,250 per momme
¥ exchange rate
Average pearl size
¥95.52:AUD1.00
¥91.64:AUD1.00
0.60 momme
0.60 momme
Proportion of market grade pearls
Discount rate applied to cash flow
62%
20%
61%
20%
Mortality & Rejection rates
Historical comparison
Historical comparison
Average unseeded oyster value
$1.32
$1.90
Sellable Actual Results for the year ended 30 June 2014
01/07/13 –
31/12/13
01/01/14 –
30/06/14
Total
Total Weight Sold (Momme)
55,327
41,675
97,002
Average ¥/Momme
¥9,615 per
momme
¥10,539 per
momme
¥10,012 per
momme
Total No. of Pearls sold
98,673
80,683
179,356
1.
Average pearl prices are based on management’s best judgement of the
quality of pearls in the water at year end. Atlas expects the percentage
of F-ops harvested to increase over the next two years, resulting in the
harvest of heavier, rounder pearls. Management takes into consideration
historical averages discounted for potential market volatility when
calculating the average selling prices for pearls.
2.
In May 2014 approx. 40,000 low grade/by product pearls were sold,
reducing the ¥ per momme for this period.
Biological assets are valued using estimated future yen rates. Biological assets
recognised as current assets on the Statement of Financial Position represent
the estimated value of the pearls to be harvested within the next 12 months.
The yen rate used is based on the estimated yen rates for the next 18 months
from Commonwealth Bank of Australia.
For personal use only
N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
3.
Key assumptions that have been used to determine the fair market value of the
crops at 30 June 2014 are as follows:
PROFIT/(LOSS) BEFORE INCOME TAX INCLUDES THE
FOLLOWING SPECIFIC ITEMS
302,686
707,575
571,833
1,006,071
6,814,921
971,954
11,964
435,732
(6,290)
(1,971,114)
2,229,675
(11,982)
-
299,971
-
36,874
136,160
172,094
657,450
999,228
3,444,476
-
195,906
-
135,128
735,322
1,745,978
405,566
36,616
273,781
84,693
150,615
Boronia
30 June 2014
30 June 2013
Discount rate applied to cash flow
Estimated life
Flower yield per ha
Oil Yield per kg of flower
Farm gate price per kg
JV Grower Share
3-6%
10 years
2,000kg
60%
$2,425
3-6%
10 years
2,000kg
60%
$2,500
50% of profit after
production and
harvesting costs
50% of profit after
production and
harvesting costs
Operating lease rental costs
Compliance and finance
Other
12 Months
Ending
30 June 2014
6 Months
Ending
30 June 2013
Administration expenses from ordinary
activities
Salaries and wages
4,226,756
1,479,544
Depreciation property, plant and equipment
Lavender
30 June 2014
30 June 2013
Other expenses
Discount rate applied to cash flow
Estimated life
Oil Yield per ha
3-6%
10 years
Year 1 – nil
Year 2 – 30%
Year 3 – 40%
Year 4:10 – 50%
3-6%
10 years
Year 1 – nil
Year 2 – 10%
Year 3 – 25%
Year 4:10 – 40%
Selling price per kg
$320
$300
Loss on foreign exchange unrealised
Loss on financial instruments unrealised
Gain on derivative financial instruments
Provision for employee entitlements
Change in fair value less husbandry costs
of oysters
Write-off of pearl and jewellery costs
- Determination of derivative liability within Convertible Notes
Write-off of crops
The fair value of the embedded derivative outstanding is measured using
models that require the exercise of judgements in relation to variables such as
expected volatility and future share price. Any changes in the variables will affect
the fair value of the derivative post reporting date.
Changes in fair value less husbandry costs
of crops
Share of loss on joint ventures
Write-down on investments
Other
2.
REVENUE FROM CONTINUING OPERATIONS
1,996,784
3,763,505
Consolidated
12 Months
Ending
30 June 2014
6 Months
Ending
30 June 2013
$
$
15,933,177
3,252,608
13,333
336,673
18,629
233,888
16,283,183
3,505,125
Finance costs
Interest and finance charges payable
513,496
513,496
240,532
240,532
Net loss/(profit) on foreign currency
derivatives not qualifying as hedges
11,964
195,806
Sales Revenue
Sale of goods
Other Revenue
Interest income
Other revenues
Revenue
Other Income
Foreign exchange (losses)/gains realised
405,990
Foreign exchange gains unrealised
Gain on acquisition of EOT
Gain on derivative liability
Grant funds
Insurance refund
Write back of dividend provision
EOT Crop Revaluation
Other Income
-
-
-
336,600
16,922
9,768
321,999
1,091,279
400,792
885,945
59,911
32,177
-
114,431
260,785
-
1,754,041
PAGE 45
For personal use only
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
4.
INCOME TAX EXPENSE
5.
EARNINGS/ (LOSS) PER SHARE
12 Months
Ending
30 June 2014
$
6 Months
Ending
30 June 2013
$
a) The components of tax expense/(benefit) comprise:
Current tax
Deferred tax
Prior period under/(over) provision
(240,946)
(114,334)
-
(308,328)
(786,208)
(377,391)
(355,280)
(1,471,927)
b) Deferred income tax (revenue) expense included in income tax expense comprises:
Decrease(increase) in deferred tax assets
(excluding tax losses) (note 14)
(Decrease)increase in deferred tax
liabilities (note 14)
(1,398,565)
(400,535)
1,284,231
(385,673)
(114,334)
(786,208)
c) Numerical reconciliation of income tax expenses to prima facie tax payable:
Profit/(loss) before income tax expense
1,458,642
(3,666,572)
Tax at the Australian tax rate of 30%
437,593
(1,099,972)
Tax effect of amounts which are not deductible in calculating taxable income:
Non deductible expenses
Tax losses not brought to account
Sundry items
Permanent Differences (Indonesia)
Difference in overseas tax rates
Income tax under/(over) provided in
prior years
26,224
(8,923)
(667,992)
(142,182)
-
-
(26,114)
114,724
(216)
(34,848)
(48,110)
(377,390)
Earnings reconciliation
30 June 2014
$
30 June 2013
$
Basic earnings/(loss) per share (cents per share)
Diluted earnings per share (cents per share)
0.61
0.57
(0.81)
N/A
Net profit/(loss) used for basic earnings
1,813,922
(2,194,645)
After tax effect of dilutive securities
-
-
Diluted earnings/(loss)
1,813,922
(2,194,645)
Weighted average number of ordinary shares out-
standing during the period used for calculation of
basic earnings per share
Adjustments for calculation of diluted earnings
per share: convertible notes
Weighted average number of potential ordinary
shares outstanding during the period used for
calculation of diluted earnings per share
297,634,113
271,638,917
22,00,000
319,634,113
N/A
N/A
Diluted earnings per share is calculated after taking into consideration all options
and any other securities that were on issue that remain unconverted at 30 June 2014
as potential ordinary shares which may have a dilutive effect on the profit of the
Consolidated Group.
Ordinary shares issued to employees under the Employee Share Plan are considered to
be potential ordinary shares and have been included in the determination of diluted
earnings per share to the extent that they are dilutive.
6. CASH AND CASH EQUIVELANT
30 June 2014
$
30 June 2013
$
1,665,207
1,665,207
1,767,156
1,767,156
Income tax expense/(benefit)
(355,280)
(1,471,927)
Weighted average effective tax rates
(24%)
40%
Cash at bank
Interest rate risk exposure
d) Dererred income tax at 30 June relates to the following:
Deferred tax liabilities
Accrued interest
Fair value adjustment on biological assets
and agricultural produce
Prepayments
Convertible notes
Property, Plant and Equipment
-
-
The Group’s exposure to interest rate risk is disclosed in note 32. The maximum
exposure to credit risk at the reporting date is the carrying amount of each class
of cash and cash equivalents mentioned above.
1,312,530
(541,261)
Cash not available for use
665
-
-
The Group has cash held as a guarantee as part of their obligations under their
lease agreement totalling $112,153 (2013: $106,441).
(1,080)
9,653
-
7. TRADE & OTHER RECEIVABLES
Unrealised foreign exchange gain
43,634
147,950
Deferred tax assets
Difference in accounting and tax depreciation
-
Stock
Accruals
Provisions
Unrealised foreign exchange losses
Unrealised foreign exchange gains
Other
Tax losses
(1,116,863)
-
(105,977)
(180,228)
-
4,530
(264,590)
(90,740)
(274,151)
(6,450)
215,041
(69,323)
-
(193,789)
(617,232)
Deferred tax (income)
(306,326)
(1,421,382)
For details of the franking account, refer to Note 19.
PAGE 46
12 Months
Ending
30 June 2014
$
6 Months Ending
30 June 2013
$
CURRENT
Trade receivables
Sundry debtors & prepayments
2,339,893
681,092
3,020,985
355,464
719,407
1,074,871
(a) Impaired trade receivables
There were no impaired trade receivables for the group during the period ended
30 June 2014 or 30 June 2013.
For personal use only N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
TRADE & OTHER RECEIVABLES (cont.)
7.
(b) Past due but not impaired
As at 30 June 2014, trade receivables of $289,325 (2013: $220,576) were past due
but not impaired in the Group. Within the Group these relate to a small number
of independent customers for whom there is no recent history of default. Given
the past history with this customer no impairment has been recognised in the
financial period. The ageing analysis of these trade receivables is as follows:
Up to one month
2-3 months
3 months and above
12 Months
Ending
30 June 2014
$
6 Months
Ending
30 June 2013
$
163,797
43,466
82,062
289,325
143,378
23,002
54,196
220,576
The other classes within trade and other receivables do not contain impaired
assets other than those disclosed and are not past due.
(c) Other receivables
These amounts generally arise from transactions outside the normal operating
activities of the Group. Collateral is not normally obtained.
(d) Foreign exchange and interest rate risk
The Group’s exposure to interest rate risk and foreign exchange risk in relation to
trade and other receivables is disclosed in note 32.
(e) Fair value and credit risk
Due to the short term nature of these receivables, their carrying amount is
assumed to approximate their fair value.
The maximum exposure to credit risk at the reporting date is the carrying
amount of each class of receivables mentioned above. Refer to note 32 for more
information on the risk management policy of the Group and the credit quality
of the entity’s trade receivables.
8.
DERIVATIVE FINANCIAL INSTRUMENTS
Derivative financial assets
Forward foreign exchange contracts
Derivative financial liabilities
Forward foreign exchange contracts
Convertible notes
30 June
2014
$
30 June
2013
$
-
-
26,443
825,880
852,323
14,479
390,148
404,627
(a) Instruments used by the Group
The Group is party to derivative financial instruments in the normal course
of business in order to hedge a proportion of the exposure to fluctuations in
foreign exchange rates in accordance with the Groups financial risk policies
(refer note 32).
Derivative financial assets and liabilities comprise forward exchange contracts
and an embedded derivative in the convertible note agreements (refer to
note 13 for convertible note terms). Gains and losses arising from changes in
fair value of foreign exchange hedging contracts and convertible notes are
recognised in the statement of profit or loss and other comprehensive income
in the period in which they arise.
The Groups operating expenses mainly consist of materials and services
purchased in Indonesian Rupiah. In order to protect against exchange rate
movements, during the year ended 31 December 2012 the Group had entered
into forward exchange contracts to purchase Indonesian Rupiah during the year.
During the period ended 30 June 2014 the Group did not enter into any forward
exchange contracts to purchase Indonesian Rupiah. In addition the sale of pearls
is denominated in Japanese Yen and so the Group has entered
into forward exchange contracts and options to sell Japanese Yen and receive
Australian Dollars.
See note 1.12 for details of accounting policy in relation to derivatives.
(b) Risk exposures
Information about the Group’s exposure to credit risk, foreign exchange risk and
interest rate risk is provided in note 32.
9.
INVENTORIES
12 Months
Ending
30 June 2014
$
6 Months
Ending
30 June 2013
$
CURRENT
Pearls – at fair value
1,067,815
2,454,602
Essential oil finished products – at cost
1,350,428
1,140,927
Other – at cost
Jewellery
Pearl Meat
Mother of Pearl
Farm Consumables & Fuel
Cosmetics
NON CURRENT
Nuclei – at cost
2,935,950
15,658
332,693
263,560
147,910
3,695,770
3,010,595
46,464
160,268
302,934
-
3,520,261
6,114,013
7,115,790
132,093
223,399
TOTAL INVENTORY
6,246,106
7,339,189
Inventories write-off expense of $2,229,675 (2013: $1,745,978) is included within
other expenses in the statement of profit or loss and other comprehensive
income refer to note 3. Write-off of pearls occurred when reviewing net
realisable value versus cost.
10.
BIOLOGICAL ASSETS
CURRENT
Oysters – at fair value
Crops – at fair value
NON CURRENT
Oysters – at fair value
Crops – at fair value
12 Months
Ending
30 June 2014
$
6 Months
Ending
30 June 2013
$
8,414,231
-
8,414,231
10,930,028
1,081,385
12,011,412
5,818,298
96,384
5,914,682
11,204,083
331,478
11,535,561
Total Biological Assets
20,425,643
17,450,243
During the twelve months ended 30 June 2014 no significant events occurred
which impacted on oyster mortalities.
PAGE 47
For personal use only
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
BIOLOGICAL ASSETS (cont.)
10.
The details of the Biological Assets that are held by the Group as at period end
are as follows:
Nature: Oysters (Pinctada Maxima)
12 Months Ending
30 June 2014
6 Months
Ending
30 June 2013
No.
No.
2,060,121
727,793
2,787,914
1,276,824
696,030
1,972,854
Quantity held within the Group
operations:-
Juvenile and mature oysters
which are not seeded
Nucleated oysters
During the period ended 30 June 2014, the Group harvested 272,479 (2013:
109,037) pearls. A reconciliation of the movement in the fair market value of the
oysters during the period is reflected as follows:
Selling Price (¥/momme)
-10%
No Change
+10%
¥10,000
(Sellable Grade)
¥1,727
(Commercial
Grade)
¥11,000
(Sellable Grade)
¥1,900
(Commercial
Grade)
¥12,100
(Sellable Grade)
¥2,090
(Commercial
Grade)
FX rate
¥105.07
¥95.52
¥86.84
Profit $
Profit $
Profit $
($3,917,634)
($2,035,022)
$43,598
($2,070,873)
-
$2,286,482
($39,436)
$2,238,524
$4,753,655
The Group is exposed to financial risk in respect of its involvement in primary
production which consists of the breeding and rearing of oysters for the
purpose of producing pearls. The primary financial risk associated with this
activity occurs due to the length of time between the expenditure of cash
in relation to the operation of the farm and the harvesting of the pearls and
realisation of cash receipts from the sales to third parties. The Group ensures that
it maintains sufficient working capital to ensure that it can sustain its operation
through any delays in cash flow that may be reasonably foreseen.
Sensitivity analysis - Crops
Oysters
12 Months
Ending
30 June
2014
$
6 Months
Ending
30 June
2013
$
The mark to market estimation of the value of the biological assets (Crops) is
determined using the net present value of expected future net cash flows attributed
to this inventory less the estimated husbandry costs. The primary assumptions
used for this estimate are shown in Note 1.33. The following table summarises the
potential impact of changes in the key non-production related variables:
Carrying amount at beginning of the period
Value of new juvenile oysters recognised into stock
Increase in value of stock from change in pearl
oyster development
17,022,380
3,198,017
16,434,545
1,414,911
13,808,040
3,210,849
Decrease in value through mortality
(5,182,524)
(1,733,834)
-10%
$2,205/kg
Decrease in value of Agriculture asset from harvest
of pearls
Gain/(Loss) from changes to fair value less
estimated husbandry costs
Exchange adjustment
Carrying amount at end of the period
(8,329,108)
(2,926,974)
Discount rate
Profit $
1,971,114
(3,143,663)
19,344,256
(735,322)
1,358,206
17,022,381
3% - 5.7%
($30,350)
3 – 6%
($35,233)
3.3 – 6.9%
($40,431)
Sensitivity analysis - Oysters
The mark to market estimation of the value of the biological assets (Oysters) is
determined using the net present value of expected future net cash flows attributed
to this inventory less the estimated husbandry costs. The primary assumptions
used for this estimate are shown in Note 1.33 . The following table summarises the
potential impact of changes in the key non-production related variables:
-10%
Selling Price (¥/momme)
No Change
+10%
¥10,000
(Sellable Grade)
¥1,727 (Commercial
Grade)
¥11,000
(Sellable Grade)
¥1,900
(Commercial Grade)
¥12,100
(Sellable Grade)
¥2,090
(Commercial
Grade)
Discount
rate
22%
20%
18.18%
Profit $
Profit $
Profit $
($2,243,054)
($2,035,022)
($1,839,885)
($237,764)
-
$223,066
$1,968,056
$2,238,524
$2,492,311
PAGE 48
Boronia
Farm Gate Price
No Change
$2,425/kg
Profit $
$5,642
-
($6,022)
Lavender
Farm Gate Price
No Change
$320/kg
Profit $
+10%
$2,668/kg
Profit $
$45,231
$38,743
$31,820
+10%
$352/kg
Profit $
$15,618
$129,309
-
$111,733
($16,589)
$93,061
-10%
$291/kg
Profit $
($87,738)
($101,572)
($116,268)
Discount rate
3% - 5.7%
3 – 6%
3.3 – 6.9%
The Group is exposed to financial risk in respect of its involvement in primary
production which consists of the tending to crops the purpose of producing
essential oils. The primary financial risk associated with this activity occurs due to
the length of time between the expenditure of cash in relation to the operation
of the farm and the harvesting of the crops and realisation of cash receipts from
the sales to third parties. The Group ensures that it maintains sufficient working
capital to ensure that it can sustain its operation through any delays in cash flow
that may be reasonably foreseen.
Level 3 analysis:
The finance and operations departments undertake the valuation of the oysters
and the crops. The calculations are considered to be level 3 fair values. The
data is taken from internal management reporting and work completed by the
executive within the respective field teams to determine the material inputs to
the model. The inputs below are confirmed with the relevant executives and
agreed with the Board of Directors every six months.
For personal use only
N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
BIOLOGICAL ASSETS (cont.)
10.
The main level 3 inputs used by the group for oysters are derived and evaluated
as follows:
Input
2014
2013
Commentary
Average selling
price
¥11,000 per
momme
Yen Exchange rate
Average Pearl size
¥95.52:
AUD 1
0.60 per
momme
¥8,250
per
momme
Obtain by analysing sales prices
achieved and the trend analysis
of the past 12 months of average
sales prices.
¥91.64:
AUD 1
Based on forward Yen price per a
financial institution.
0.60 per
momme
Based on technical assessment
of expected harvest output.
Marketable grade
62%
61%
Discount rate
20%
20%
Mortality
Historical
Historical
Costs to complete
$0.63
$0.58
Based on historical data for pearl
size over the last 12 months
Based on analysis of comparable
primary producers.
Based on historical harvest
mortality rates
Based on historical averages of
costs to complete and sell pearls
per momme.
11.
PROPERTY, PLANT AND EQUIPMENT
(a) Non-Pearling Assets
Plant and equipment
- at cost
- accumulated depreciation
Leasehold improvements
- at cost
- accumulated depreciation
Total non-pearling assets
(b) Pearling project
Land (leasehold and freehold) and buildings
- at cost
- accumulated depreciation
Plant and equipment, vessels, vehicles
- at cost
- accumulated depreciation
12 Months
Ending
30 June 2014
$
6 Months
Ending
30 June 2013
$
2,262,932
(1,142,376)
1,120,555
1,037,198
(301,141)
736,057
1,856,613
1,135,047
(198,265)
936,782
4,261,299
(2,653,420)
1,607,879
2,544,662
4,401,274
1,818,830
(899,219)
919,611
944,630
(252,391)
692,240
1,611,851
1,126,188
(200,644)
925,544
4,786,972
(2,810,913)
1,976,059
2,901,603
4,513,455
The main level 3 inputs used by the group for crops are derived and evaluated
as follows:
Total pearling project
Total property, plant and equipment
Input
2014
2013
Commentary
Included in Pearling project land (leasehold and freehold) and buildings is $311,560 (2013 -
$168,699) which represents construction of buildings in progress at cost.
Estimated life
10 years
10 years
Based on management’s
historical view of the life cycle
of the crops.
Reconciliations of the carrying amount for each class of property, plant and
equipment are set out below:
Flower yield
per ha
2,000kg
2,000kg
Based on technical assessment
of expected harvest output.
Oil Yield per kg of
flower
Farm gate price
per kg
JV Grower Share
Fencing per
hectare
Irrigation per
hectare
60%
60%
Based on historical data for
oil yield
$2,425
$2,500
Based on the average contract
price over the last 12 months.
50% of
profit after
production
and
harvesting
costs
50% of
profit after
production
and
harvesting
costs
$2,000
$2,000
$3,000
$3,000
Based on contract price with
growers
Based on the average contract
price over the last 12 months.
Based on the average contract
price over the last 12 months.
Discount rate applied
to cash flow
3-6%
3-6%
Oil Yield per ha
(Lavender)
Year 1 – nil
Year 2 – 30%
Year 3 – 40%
Year 4:10 –
50%
Year 1 – nil
Year 2 – 10%
Year 3 – 25%
Year 4:10 – 40%
Selling price per kg
(Lavender)
$320
$300
Based on management
assessment of risk
factor
Based on historical
data for oil yield
Based on the average
contract price over the
last 12 months.
(a) Non-Pearling Assets
Plant and equipment
Carrying amount at beginning of the year
Additions
Reclassifications /Disposals
Foreign exchange movement
Depreciation
Carrying amount at end of the year
Leasehold Improvements
Carrying amount at beginning of the year
Additions
Foreign exchange movement
Reclassifications/Disposals
Depreciation
Carrying amount at end of the year
(b) Pearling project
Leasehold land and buildings
Carrying amount at beginning of the year
Additions
Acquisition of pearling operation
Disposals/reclassifications
Depreciation
Foreign exchange movement
Carrying amount at end of the year
919,611
482,805
-
27,814
(309,676)
1,120,555
692,240
128,111
25,457
-
(109,750)
736,058
925,544
236,292
-
-
(39,282)
(185,771)
936,782
557,825
464,269
-
(4,731)
(97,752)
919,611
702,398
11,792
12,738
-
(34,688)
692,240
796,974
79,950
-
(114)
(21,189)
69,923
925,544
PAGE 49
For personal use only A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
11.
PROPERTY, PLANT AND EQUIPMENT (cont.)
13.
BORROWINGS
12 Months
Ending
30 June 2014
$
6 Months
Ending
30 June 2013
$
Plant and equipment, vessels, vehicles. Carrying amount at beginning of the year.
Additions
Acquisition of pearling operation
Disposals / reclassifications
Depreciation
Foreign exchange movement
Carrying amount at end of the year
387,319
-
-
(391,558)
(363,942)
1,607,879
60,184
-
(1,427)
(219,045)
152,795
1,976,059
Total Carrying amount
4,401,275
4,513,454
Reconciliation of depreciation to the Statement of Profit of Loss and Other
Comprehensive Income:
Depreciation charge (Note 11)
Capitalised depreciation charge
Depreciation charge (Note 3)
Balance
(850,266)
547,580
(302,686)
(302,686)
-
(372,674)
236,514
(136,160)
(136,160)
-
Refer note 32 for information on non-current assets pledged as security by the
Group.
12.
TRADE AND OTHER PAYABLES
CURRENT
Trade payables
ESSP accrual*
Other payables and accrued expenses
12 Months
Ending
30 June 2014
$
6 Months
Ending
30 June 2013
$
1,652,259
17,135
1,472,154
3,141,549
559,092
18,883
1,751,249
2,329,224
* $11,905 of the ESSP accrual above is for shares salary sacrificed by Stephen Birkbeck
during the year ended 30 June 2014 under the Atlas South Sea Pearl Employee Share Plan.
(a) Amounts not expected to be settled within the next 12 months
Other payables include accruals for annual leave of $827,853 and $933,945 in
the consolidated entity for 30 June 2014 and 30 June 2013 respectively. The
entire obligation is presented as current, since the Group does not have an
unconditional right to defer settlement. All amounts are expected to be settled
wholly within the next 12 months.
(b) Risk Exposure
Information about the Groups exposure to foreign exchange risk is provided in
note 32.
PAGE 50
12 Months
Ending
30 June
2014
$
6 Months
Ending
30 June
2013
$
3,951,715
2,800
61,651
4,016,165
4,108
994,518
5,014,791
89,665
50,503
140,168
-
140,168
4,226,864
-
126,033
4,352,897
83,900
-
4,436,797
-
52,868
52,868
784,778
837,646
CURRENT
Secured
Bank loan
Other bank loan
Lease liabilities
Total secured current borrowings
Unsecured
Other
Convertible notes
Total current borrowings
NON CURRENT
Secured
Other bank loan
Lease liabilities
Total secured non current borrowings
Unsecured
Convertible notes
Total non current borrowings
(a) Security and fair value disclosure
Information about the security relating to secured liabilities and the fair value is
provided in note 33.
(b) Risk Exposure
Information about the Group’s exposure to risks arising from borrowings is
provided in note 33.
During the prior year reporting period 30 June 2013, Atlas issued Convertible
Notes for a total value of $1,100,000. No new Convertible notes have been
issued in the current period ending 30 June 2014.The Convertible Notes have
a maturity date of 2 years after issue (therefore maturing between January and
June 2015), attract an interest rate of 6% payable six monthly in arrears and
are redeemable for ordinary shares in Atlas at any time during the 10 Business
Days prior to the first anniversary of the Issue Date for the Convertible Notes;
or the Maturity Date of the Convertibles Notes, or such other period as agreed
in writing between the Company and the Noteholder. If the Noteholder
exercises its conversion right, the Company must comply by redeeming all of
the convertibles notes referred to in the Conversion Notice at their Face Value;
and applying the Conversion Amount as subscription funds for the Conversion
Shares which are to be issued to the Noteholder at a price per Conversion Share
equal to the lower of: 5 cents or 90% of the 10 day volume weighted average.
14.
TAX
(a)
Liabilities
CURRENT
Income tax payable
12 Months
Ending
30 June
2014
$
6 Months
Ending
30 June
2013
$
94,060
234,884
NON-CURRENT
Deferred tax liabilities comprises temporary
differences attributable to -
Agricultural and biological assets at fair value
2,636,603
1,324,075
Prepayments
Accrued interest income
Convertible notes
Other
Unrealised foreign exchange gains
749
-
-
2,147
261,898
2,147
-
9,653
84
208,611
Total deferred tax liabilities
2,901,397
1,544,570
For personal use only
N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
14.
TAX (Cont.)
16. CONTRIBUTED EQUITY
(b) Assets
12
Months
Ending
30 June
2014
$
6
Months
Ending
30 June
2013
$
2014
No. of Shares
2013
No. of
shares
2014
$
2013
$
Deferred tax assets comprises temporary differences attributable to -
Issued and fully paid-up capital
319,485,425
281,737,162
32,315,473
30,203,033
Tax allowances relating to property, plant
& equipment
1,059
1,059
Ordinary Shares
Agricultural and biological assets at fair value
2,305,204
1,188,341
Accruals
Provisions
Impairment of assets
Unrealised foreign exchange losses
Other
Tax losses recognised
Total deferred tax assets
-
209,449
-
262,817
204,777
2,983,306
1,616,478
4,599,784
24,300
82,912
-
82,589
205,540
1,584,741
1,351,888
2,936,629
The Company believes that the deferred tax asset relating to tax losses
recognised is available to be carried forward based upon the Company’s
projections of future taxable amounts.
(c)
Reconciliations
The overall movement in deferred tax account is as follows:
Opening balance
(Charge)/credit to statement of profit or loss
and other comprehensive income
Other movements
Closing balance
(1,392,059)
306,326
2,784,120
1,698,387
(29,323)
1,421,382
-
(1,392,059)
15.
PROVISION
CURRENT
Employee benefits
Total current provisions
Number of employees
30 June
2014
$
30 June
2013
$
57,295
57,925
941
92,037
92,037
807
Employee benefits provisions have been recognised in relation to long service
leave for Australian and expatriate employees. The current provision for long
service leave includes all unconditional entitlements where employees have
completed the required period of service and also those where employees are
entitled to pro-rata payments in certain circumstances. The amount presented
as non-current represents amounts where an agreement is in place to pay the
entitlements over a period of time longer than the next 12 months.
Reconciliation of provisions:
Balance at beginning of period
Provision used
Unused provisions reversed
Provisions added
Provisions released
Closing balance
92,037
-
-
-
(34,742)
57,925
1,805
-
(1,746)
91,978
-
92,037
Balance at beginning of period
281,737,162
229,171,072
30,203,033
27,610,085
Shares issued (1)(2)(3)(4)(5)(6)(7)(8) (9)(10)(11)(12)(13)(14)
37,748,263
52,566,090
1,949,968
2,592,948
Balance at end of period
319,485,425
281,737,162
32,153,001
30,203,033
Treasury Shares
Balance at beginning of period
5,301,616
7,964,000
Acquisition of shares by Trust under Plan
Shares released
6,291,051
(4,461,640)
2,931,616
(5,594,000)
Balance at end of period
7,131,027
5,301,616
1.
2.
3.
4.
5.
6.
7.
8.
9.
Atlas undertook a rights issue which closed on 18th of January 2013. Unlisted options
were issued to all those who took up the rights issue. The Option exercise period
closed on 29th January 2014.
On 11 October 2013, 5,462 shares were issued at an issue price of $0.05 after multiple
shareholders exercised their unlisted options acquired in the January 2013 rights issue.
On 6 November 2013, 36,118 shares were issued at an issue price of $0.05 after
multiple shareholders exercised their unlisted options acquired in the January 2013
rights issue.
On 9 December 2013, 333,000 shares were issued at an issue price of $0.05 after
multiple shareholders exercised their unlisted options acquired in the January 2013
rights issue.
On 17 December 2013, 331,050 shares were issued at an issue price of $0.05 after
multiple shareholders exercised their unlisted options acquired in the January 2013
rights issue.
On 17 December 2013, 5,251,969 fully paid ordinary shares were issued at an issue
price of $0.065 to Arrow Pearl Co Pty Ltd, as part of the agency sales agreement with
Arrow pearls for the sale by auction of pearls by Atlas Pearls and Perfumes Ltd.
On 24 December 2013, 619,507 shares were issued at an issue price of $0.05 after
multiple shareholders exercised their unlisted options acquired in the January 2013
rights issue.
On 14 January 2014, 1,244,304 shares were issued at an issue price of $0.05 after
multiple shareholders exercised their unlisted options acquired in the January 2013
rights issue.
On 16 January 2014, 14,180,361 shares were issued at an issue price of $0.05 after
multiple shareholders exercised their unlisted options acquired in the January 2013
rights issue.
10. On 24 January 2014, 2,574,613 shares were issued at an issue price of $0.05 after
multiple shareholders exercised their unlisted options acquired in the January 2013
rights issue.
11. On 31 January 2014, 9,634,325 shares were issued at an issue price of $0.05 after
multiple shareholders exercised their unlisted options acquired in the January 2013
rights issue.
12. On 3 February 2014, 18,934 shares were issued at an issue price of $0.05 after multiple
shareholders exercised their unlisted options acquired in the January 2013 rights
issue.
13. On 5 February 2014, 600,000 shares were issued at an issue price of $0.05 after
multiple shareholders exercised their unlisted options acquired in the January 2013
rights issue.
14. On 4 June 2014, 4,748,031 fully paid ordinary shares were issued at an issue price of
$0.065 to Arrow Pearl Co Pty Ltd, as remuneration for Arrow pearls sold at auction by
Atlas Pearls and Perfumes Ltd.
(i) Rights
Holders of ordinary shares are entitled to receive dividends as declared from
time to time and are entitled to one vote per share at shareholders’ meetings.
In the event of winding up of the Company, ordinary shareholders rank after all
other shareholders (where applicable) and creditors and are fully entitled to any
proceeds of liquidation in proportion to the number of shares held.
Treasury shares are shares in Atlas Pearls and Perfumes Ltd that are held by
the Atlas South Sea Pearl Limited Executive Share Plan Trust for the purpose of
issuing shares under the Atlas South Sea Pearl Employee Share Plan.
PAGE 51
For personal use only A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
16. CONTRIBUTED EQUITY (Cont.)
(ii)
Options
Information relating to the Atlas South Sea Pearl Limited Employee Option Plan,
including details of options issued, exercised and lapsed during the financial
year and the options outstanding at the end of the reporting period, is set out in
note 23. See summary detail below:
1.
2.
3.
On 27 February 2014, 7,500,000 unlisted options were issued to certain
employees and consultants of Atlas Pearls and Perfumes Ltd, pursuant to
the Atlas Pearls and Perfumes Ltd Employee Option Plan, as approved by
the Board on 24 February 2014. The unquoted options are exercisable at
$0.0858 each on or before 31 December 2016, subject to certain vesting
conditions specific to each employee/consultant.
On 4 June 2014, 8,500,000 unlisted options were issued to certain
employees and consultants of Atlas Pearls and Perfumes Ltd, pursuant to
the Atlas Pearls and Perfumes Ltd Employee Option Plan, as approved by
shareholders on 13 May 2014. The unquoted options are exercisable at
$0.095 each on or before 31 December 2016, subject to certain vesting
conditions specific to each employee/consultant.
On 4 June 2014, 10,000,000 unlisted options were issued to Director
Stephen Birkbeck and 500,000 unlisted options to Director Joseph Taylor,
pursuant to the Atlas Pearls and Perfumes Ltd Employee Option Plan, as
approved by shareholders on 13 May 2014. The unquoted options are
exercisable at $0.0858 each on or before 31 December 2016, subject to
certain vesting conditions specific to each director
(iii)
Share Buyback
The share buy-back has been terminated as at the date of this report and no
shares had been bought back during the financial period ended 30 June 2014 or
30 June 2013.
(iv)
Capital Risk Management
The Group’s objectives when managing capital are to safeguard their ability to
continue as a going concern, so that they can continue to provide returns to
shareholders and benefits for other stakeholders and to maintain an optimal
capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the
amount of dividends paid to shareholders, return capital to shareholders, issue
new shares or sell assets to reduce debt.
The Group has no external requirements imposed upon it in relation to capital
structure except those noted in note 32 as part of the covenants relating to the
financing arrangements with Commonwealth Bank.
17.
RESERVES
12
Months
Ending
30 June 2014
6
Months
Ending
30 June 2013
Foreign Currency Translation Reserve
(8,658,779)
(7,866,003)
Employee Share Reserve
Total Reserves
622,574
581,029
(8,036,205)
(7,284,974)
Movements : Foreign Currency Translation Reserve -
Balance at beginning of year
Currency translation differences
arising during the Year
Balance at end of year
(7,866,003)
(9,047,651)
(792,775)
1,181,648
(8,658,778)
(7,866,003)
The foreign currency translation reserve records exchange differences arising on
translation of foreign controlled subsidiaries to the reporting currency.
Employee Share Reserve -
18. RETAINED PROFITS
12 Months
Ending
30 June 2014
$
6 Months
Ending
30 June 2013
$
Reconciliation of retained earnings/(Accumulated losses):
Balance at beginning of year
Net profit/(loss) for the year
Movement in equity distribution account
Dividends paid
Balance at end of year
2,878,610
1,813,922
5,073,255
(2,194,645)
-
-
-
-
4,692,532
2,878,610
19. DIVIDENDS
No dividends have been paid or declared in respect of the 2014 financial year or
the period ended 30 June 2013.
12 Months
Ending
30 June 2014
$
6 Months
Ending
30 June 2013
$
1,278,704
1,278,704
Dividend Franking Account
Franking credits available to
shareholders of the Company for
subsequent financial years based on
a tax rate of 30%.
The above amounts represent the balance of the franking account as at the end
of the financial period adjusted for:
(i) Franking credits that will arise from the payment of the amount of
the provision for income tax;
(ii) Franking debits that will arise from the payment of dividends
recognised as a liability at the reporting date; and
(iii) Franking credits that will arise from the receipt of dividends
recognised as receivables at the reporting date.
20.
OPTIONS
The Company had 26,500,000 options granted over unissued shares at the 30
June 2014 (30 June 2013 – 32,582,005). The 26,500,000 options granted over
unissued shares at 30 June 2014 were issued under the Atlas Pearls and Perfumes
Ltd Employee Option Plan. Information pertaining to the plan including details
of options issued, exercised and lapsed during the financial year and options
outstanding at the end of the reporting period, is set out in note 23.
As part of the rights issue on 18 January 2013 a total of 30,240,735 unlisted
options expiring 29 January 2014 exercisable at $0.05 each were issued pursuant
to the Company’s non-renounceable entitlements Prospectus dated 16
November 2012. An additional 2,452,979 options were issued when the shortfall
was taken up in March and April 2013. Options exercised during the twelve
months ended 30 June 2014 totalled 29,577,673. Options exercised during the
six months ended 30 June 2013 totalled 111,709.
Balance at beginning of period
Movement in Employee Share
Reserve
Balance at end of year
581,029
41,545
581,029
-
581,029
The employee share reserve records the value of equity portion of remuneration
paid to employees in the form of shares or other equity instruments.
622,574
PAGE 52
For personal use only
N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
21.
COMMITMENTS
12 Months
Ending
30 June 2014
$
6 Months
Ending
30 June 2013
$
Commitments for minimum lease payments in relation to non-cancellable operating
leases are payable as follows:
Within one year
Later than one year, but not later than five years
Later than five years
Non - cancellable operating leases
419,247
1,881,569
362,367
2,663,183
375,737
1,976,866
710,794
3,063,397
The Group leases premises under non-cancellable operating leases expiring in
7 years. On renewal the terms of the leases are renegotiated.
There are no capital commitments in place in relation to the acquisition of
property, plant and equipment. Fixed assets are replaced in the normal course
of business operations and the company does not anticipate any material
capital outlay for such replacement costs in the coming year.
22.
CONTINGENCIES
The 2008 tax audit for PT Cendana Indopearls was completed during the
reporting period and a liability in the order of IDR 3,504,206,185 or AUD$350,000
has been assessed by the Indonesian Tax Office. PT Cendana Indopearls are in
agreement with an amount in the order of AUD$50,000 and plan to dispute the
balance of AUD $300,000 via an appeal process.
Atlas Pearls and Perfumes Ltd has a bank guarantee with the Commonwealth
Bank of Australia for AUD$112,153 at 30 June 2014 (30 June 2013 - $106,441).
This guarantee has been taken out to secure the rental of the Atlas Pearls and
Perfumes corporate offices in Claremont, Western Australia.
23.
SHARE BASED PAYMENTS
In May 2006, an employee share plan was established which entitles the Board
of Directors to offer shares to key management personnel within the Group. A
total of 1,100,000 shares were issued during 2007 to six (6) employees including
the managing director at a price of 40 cents per share which was a one (1) cent
and eight (8) cent discount to the market at the dates of issue being 17th April
2007 and 10th May 2007 respectively. An interest free, non-recourse loan was
provided to the key management staff to pay for these shares. This loan will be
repaid by the employees from the proceeds of dividends that they are entitled
to from the ownership of the shares. 50% of the shares vested to the employees
after two (2) years employment from the time of issuing the shares and the
remaining 50% vested to the employees after they have completed three (3)
years of employment from the time of issuing the shares. Employees are only
entitled to the shares if the loan is repaid in full.
1,900,000 shares remain on issue as at 30 June 2014 with debt of $428,500
outstanding by employees from the initial loan of $1,063,500 that was made
when the shares were allocated to employees. Refer note 25 for details of equity
held and loans outstanding to Key Management Personnel.
Shares issued to the employees are acquired and held in trust for the employees.
Shares held by the trust and not yet issued to employees at the end of the
reporting period are shown as treasury shares in the financial statements.
The fair value of shares issued under the scheme is independently determined
using a Black-Scholes pricing model that takes into account the exercise price,
the term of the share, the impact of dilution, the share price at grant date and
expected price volatility of the underlying share, the expected dividend yield
and the risk free interest rate for the term of the share.
There were no shares issued under the plan in 2011. In 2012 the plan was
replaced with a new Employee Salary Sacrifice Share Plan and Non-Executive
Director Fee Salary Sacrifice Share Plan.
At the AGM on the 30 May 2012 it was resolved to cease issuing Shares under
this existing Employee Share Loan Plan that was approved by Shareholders at
the Company’s annual general meeting in May 2006.
This existing Employee Share Loan Plan was replaced by a new Employee Salary
Sacrifice Share Plan and Non-Executive Director Plan at the AGM on the 30 May 2012.
The Atlas Employee Salary Sacrifice Share Plan
On 30 May 2012, the Atlas Employee Salary Sacrifice Share Plan was established.
On the 29th of June 2012 506,000 shares were issued into the Atlas South Sea
Pearl Limited Employee Share Trust at $0.055 per share. Also, on the 4th of
September 2012 5,814,000 shares were issued into the Atlas South Sea Pearl
Limited Employee Share Trust at $0.05 per share.
On 15 March 2013 a further 2,931,616 shares were issued into the Atlas South
Sea Pearl Limited Employee Share Trust at $0.05 per share. During the period
ended 30 June 2013, 5,594,000 shares were issued out of the Atlas South Sea
Pearl Limited Employee Share Trust to employees. Of the 5,594,000 shares issued
out of the trust during the six months ended 30 June 2013, 300,000 shares were
issued to employees who did not salary sacrifice shares but were instead issued
shares out of the trust in lieu of cash bonuses. The total value of the bonuses
issued was $15,000.
During the twelve months ended 30 June 2014 an additional 6,291,051 shares
were acquired on market and issued into the Atlas Pearls and Perfumes Limited
Employee Share Trust and issued out 4,461,640 shares to employees and
contractors. Of the 4,461,640 shares issued out of the trust during the twelve
months ended 30 June 2014, 361,298 shares were issued to employees who did
not salary sacrifice shares but were instead issued shares out of the trust in lieu
of cash bonuses. The total value of the bonuses issued was $23,484.37. A further
1,798,077 were issued to contractors who were issued shares in lieu of cash
payment. The total value settled totalled $98,950.
To participate in the Salary Sacrifice Plan, Eligible Employees are required to
salary sacrifice a minimum of 10% of their annual base salary into Shares. There
is no maximum percentage or value cap to the amount that each Eligible
Employee can sacrifice.
The issue price for Shares under the Salary Sacrifice Plan will be determined from
time to time by the Board of Directors (in their discretion). For the participants
who entered into conditional salary sacrifice arrangements before the AGM on
the 30th of May 2012, the issue price per Share is 5 cents.
The Employee Share Plan is open to Eligible Participants being any Eligible
Employee; or conditional upon the company obtaining any necessary ASIC relief
to extend the operation of ASIC Class Order 03/184 (or similar class order) to them:
i
ii
any Eligible Contractor; or
Eligible Casual Employee,
Who is declared by the Board to be an Eligible Participant for the purposes
of the Plan.
An Eligible Employee means: a full time or part time employee (including an
executive director) of a Group Company.
An Eligible Contractor means:
(a) An individual that has:
i. Performed work for a Group Company, for more than 12 months; and
ii. Received 80% of more of their income in the preceding year from a
Group Company; or
(b) A company where each of the following are satisfied in relation to the company:
i. Throughout the previous 12 months the company has had a
contract in place with a Group Company, for the provision of the
services of an individual (contracting individual) to a Group Company;
ii. The contracting individual has performed work for a Group Company,
for more than 12 months;
The shares rank equally with other fully paid ordinary shares.
iii. The contracting individual has been the only member for the
Where shares are issued to employees of subsidiaries of the Group, the
transactions are treated in accordance with the accounting policy at note 1.15.
At the company’s annual general meeting in May 2007, shareholders approved
the allocation of a maximum of 4,000,000 shares to senior executives under the
employee share plan within three years of the approval of the plan. No shares
were issued in the current year under this allocation.
company for more than 12 months; and;
iv. More than 80% of the aggregate income of the company and the
contracting individual from all sources (other than from each other
in the preceding 12 months was received form a Group Company.
PAGE 53
For personal use only
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
SHARE BASED PAYMENTS (cont.)
23.
The Board may determine the terms and conditions of the Salary Sacrifice
arrangement for which Shares are offered in lieu of that Remuneration.
The number of Shares to be issues, transferred or allocated to the Trustee to be
held on behalf of a Participant will be the dollar amount of the Salary Sacrifice
divided by the issue price per Share outlined in the Invitation. In the case of
fractional entitlements, the number of Shares to be issue, transferred or allocated
to the Trustee to be held on behalf of a Participant will be rounded up to the
nearest whole Share, unless otherwise determined by the Board from time to time.
Shares to be acquired by Eligible Participants under the Salary Sacrifice plan are
held in the trust until such time that the Shares are fully paid for. Shares held by
the trust and not yet issued to employees at the end of the reporting period are
shown as treasury shares in the financial statements. As at 30 June 2014 4,461,640
of the shares issued to the Atlas South Sea Pearl Limited Employee Share Trust had
been issued to Eligible Participants (30 June 2013 – 5,594,000 shares).
The shares rank equally with other fully paid ordinary shares.
Where shares are issued to employees of subsidiaries of the Group, the
transactions are treated in accordance with the accounting policy at note 1.15.
The Atlas Non-Executive Director Fee Sacrifice Share Plan
On the 26 June 2012 828,000 shares were issued into the Atlas South Sea Pearl
Limited Non-Executive Director Trust at $0.05 per share. A further 250,000 shares
were issued on the 4 September 2012 into the Atlas South Sea Pearl Limited
Non-Executive Director Trust at $0.05 per share. All shares have been issued to
recipients from the Atlas South Sea Pearl Limited Non-Executive Director Trust.
The Non-Executive Director Salary Sacrifice Share Plan is open to Eligible
Participants, being any Non-Executive Director who is declared by the Board to
be an Eligible Participant for the purpose of the Plan.
The Company’s Non-Executive Directors will receive a portion of their Director’s
fee in the form of Shares.
The Company agrees to issue or procure the transfer of Shares to eligible Non-
Executive Directors, in lieu of the amount of Directors’ fees that each eligible
Non-Executive Director has agreed to sacrifice from their monthly Directors’ fees
each financial year.
The issue price for Shares under the Salary Sacrifice Plan will be determined from
time to time by the Board of Directors (in their discretion). For the participants
who entered into conditional salary sacrifice arrangements before the AGM on
the 30th of May 2012, the issue price per Share is 5 cents.
Refer to Note 16 for movement in share plan, under treasury shares.
Atlas Pearls and Perfumes Ltd Employee Option Plan
At the EGM on 13 May 2014 it was resolved to approve the Atlas Pearls and
Perfumes Ltd Employee Option Plan. On 24 February 2014, the Board adopted
the Atlas pearls and Perfumes Ltd Employee Option Plan (Plan) under which
eligible participants may be granted Options to acquire Shares in the Company.
The intention of the Plan is to reward and to provide ongoing incentives to
Directors, executives, employees, consultants and contractors of the Company.
The Directors, executives, employees and contractors of the Company have
been, and will continue to be, instrumental in the growth of the Company. The
Directors consider that the plan is an appropriate method to:
a) Reward Directors, executives, employees, consultants and contractors
for their past performance;
b) Provide long term incentives for participation in the Company’s future
growth;
c) Motivate Directors, executives, employees, consultants and contractors
and general loyalty; and
d) Assist to retain the services of valuation Directors, executives, employees,
consultants and contractors.
The Plan will be used as part of the remuneration planning for Directors,
executives, employees and contractors. Under the plan, participants are granted
options which only vest if certain performance standards are met. Participation
in the plan is at the board’s discretion and no individual has a contractual right
to participate in the plan or to receive any guaranteed benefits.
PAGE 54
The Corporate Governance Council Guidelines recommend that remuneration
packages involve a balance between fixed and incentive pay reflecting
short and long-term performance objectives appropriate to the Company’s
circumstances and goals. The Board considers that the Plan will assist the
Company in structuring the remuneration packages of its executives in
accordance with the Guidelines.
The amount of options that will vest depends on the individual’s Key
Performance Indicators. An option which has vested but has not been exercised
will immediately lapse upon the first to occur of:
(i)
Close of business on the Expiry Date;
(ii) The transfer or supported transfer of the Option in breach of Clause 7(a)
of the plan;
(iii) Termination of the Participant’s employment or engagement with the
Company or an Associate Body Corporate on the basis that the
Participant acted fraudulently, dishonestly, in breach of the Participant’s
obligations or otherwise for cause; and
(iv) The day which is six months after an event which gives rise to a vesting
under clauses 4(a) to 4(d) of the plan.
Options are granted under the plan for no consideration. Options granted under
the plan carry no dividend or voting rights. When exercisable, each option is
convertible into one ordinary. The options expire on the 31 December 2016.
The exercise price of options is based on 143% of the volume weighted average
share price at which the company’s shares are traded on the Australian Stock
Exchange (ASX) during the week up to and including the date of the grant.
2014
Average
exercise
price per
share
option
Number
of
options
2013
Average
exercise
price per
share
option
Number
of
options
As at 1 July 2013
Granted during the year
Exercised during the year*
Forfeited during the year
As at 30 June
Vested and exercisable at
30 June 2014
-
0.089
-
-
0.089
-
-
26,500,000
-
-
26,500,000
-
-
-
-
-
-
-
-
-
-
-
-
-
The weighted average exercise price per share option during the year ended 30
June 2014 was $0.089 (2013 – not applicable).
Expiry Date
Exercise
Price
Share
Options
30 June
2014
Share
Options
30 June
2013
25 February 2014
31 December 2016
13 May 2014
2 June 2014
Total
31 December 2016
31 December 2016
0.0858
0.0858
0.0950
7,500,000
10,500,000
8,500,000
26,500,000
Weighted average remaining contractual life of options
outstanding at end of period
2.51 years
-
-
-
-
-
Fair value of options granted
The assessed fair value at grant date of options granted during the year ended
30 June 2014 was $0.20. There were no options granted during the six months
ended 30 June 2013. The fair value at grant date is independently determined
using a Black-Scholes option pricing model that takes into account the exercise
price, the term of the option, the impact of dilution, the share price at grant date
and expected price volatility of the underlying share, the expected dividend
yield and the risk free interest rate for the term of the option.
For personal use only
N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
SHARE BASED PAYMENTS (cont.)
23.
The model inputs for options granted during the year ended 30 June 2014 are
detailed below.
On the 24th of February 2014 7,500,000 options exercisable at $0.0858 each on
or before 31 December 2016 were issued to employees and contractors of the
Company on the terms and conditions set out in the Explanatory Memorandum
ratified at the Extraordinary General Meeting held on the 13th of May 2014. The
options issued on the 24th of February have a fair value of $0.020. This valuation
imputes a total value of approximately $151,720 for the proposed Options. The
value may go up or down as it will depend in part on the future price of a Share.
The Black & Scholes methodology has been used, together with the following
assumptions:
(i) Options are granted for no consideration and vest based on the
individual’s Key Performance Indicators. Vested options are
exercisable for a period of six months after vesting or the earlier of
31 December 2016.
(ii) Exercise price - $0.086;
(iii) Grant date - 24 February 2014;
(iv) Share price at grant date: $0.063
(v) Expected price volatility of the company’s shares: 60%;
(vi) Expected dividend yield: 0%;
(vii) Risk-free interest rate: 3.06%
On the 13th of May 2014 10,000,000 options exercisable at $0.0858 each on or
before 31 December 2016 were issued to Stephen Birkbeck on the terms and
conditions set out in the Explanatory Memorandum ratified at the Extraordinary
General Meeting held on the 13th of May 2014.
On the 13th of May 2014 500,000 options exercisable at $0.0858 each on or
before 31 December 2016 were issued to Joseph Taylor on the terms and
conditions set out in the Explanatory Memorandum ratified at the Extraordinary
General Meeting held on the 13th of May 2014.
The options issued on the 13th of May 2014 have a fair value of $0.020. This
valuation imputes a total value of approximately $214,020 (respectively $203,829
for Mr Birkbeck and $10,191 for Dr Taylor) for the proposed Options. The value
may go up or down as it will depend in part on the future price of a Share.
The Black & Scholes methodology has been used, together with the following
assumptions:
(i) Options are granted for no consideration and vest based on the
individual’s Key Performance Indicators. Vested options are
exercisable for a period of six months after vesting or the earlier of 31
December 2016.
(ii) Exercise price - $0.086;
(iii) Grant date – 13 May 2014;
(iv) Share price at grant date: $0.065
(v) Expected price volatility of the company’s shares: 60%;
(vi) Expected dividend yield: 0%;
(vii) Risk-free interest rate: 3.06%
On the 2nd of June 2014 8,500,000 options exercisable at $0.095 each on or
before 31 December 2016 were issued to employees and contractors of the
Company on the terms and conditions set out in the Explanatory Memorandum
ratified at the Extraordinary General Meeting held on the 13th of May 2014. The
options issued on the 2nd of June 2014 have a fair value of $0.019. This valuation
imputes a total value of approximately $164,017 for the proposed Options. The
value may go up or down as it will depend in part on the future price of a Share.
The Black & Scholes methodology has been used, together with the following
assumptions:
Options are granted for no consideration and vest based on the individual’s Key
Performance Indicators. Vested options are exercisable for a period of six months
after vesting or the earlier of 31 December 2016.
(i) Exercise price - $0.095;
(ii) Grant date – 2 June 2014;
(iii) Share price at grant date: $0.067
(iv) Expected price volatility of the company’s shares: 60%;
(v) Expected dividend yield: 0%;
(vi) Risk-free interest rate: 3.06%
The expected price volatility is based on the historic volatility (based on the
remaining life of the options), adjusted for any expected changes to future
volatility due to publicly available information.
Where options are issued to employees of subsidiaries within the group,
the subsidiaries compensate Atlas Pearls and Perfumes Ltd for the amount
recognised as expense in relation to these options.
Other Share Based Payments
On 15 January 2013, 10,000,000 fully paid ordinary shares were issued at an issue
price of $0.05 as consideration of all of the shares in Essential Oils of Tasmania Pty Ltd,
as announced by the Company on 22 October 2012 and ratified at the 2012 AGM.
On 15 January 2013, 3,333,334 fully paid ordinary shares were issued to
extinguish the existing debt in Essential Oils of Tasmania ($166,000) and increase
the Group’s working capital balance. The 3,333,334 fully paid ordinary shares
were issued at an issue price of $0.05 and rank equally with the Company’s
existing issued shares.
On 1 March 2013, 833,333 shares were issued at an issue price of $0.06 each to
Abermac Pty Ltd the former owner of Essential Oils of Tasmania, as remuneration
for continued services provided in the financial period.
On the 17 December 2013, 5,251,969 shares were issued at an issue price of $0.065
each to Arrow Pearl Co Pty Ltd. Arrow Pearl Co Pty Ltd is an entity controlled by
Stephen Arrow. The purpose of the issue was the reimbursement for the sale of
Arrow Pearl Co Pty Ltd pearls at the December 2013 auction in accordance with
an arrangement to remit the proceeds in Atlas Shares at $0.065 each.
At the Extraordinary General Meeting held on 13 May 2014, the issue of
4,748,031 shares to Arrow Pearl Co Pty Ltd was ratified. The purpose of the
issue was the reimbursement for the sale of Arrow Pearl Co Pty Ltd pearls at
the February 2014 auction in accordance with an arrangement to remit the
proceeds in Atlas Shares at $0.065 each.
Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transactions recognised
during the period as part of employee benefit expense were as follows:
12 Months
Ending
30 June 2014
$
6 Months
Ending
30 June 2013
$
Shares issued under the employee share plan
66,561
66,561
-
-
The share based payment expenses arising from the salary sacrifice share plan
is nil as the plan does not give additional benefit to the employees as shares are
issued in lieu of cash salary and cash bonus. The value of the shares originally
issued to the trust is at the value sacrificed by the employee under the plan.
24.
24.1
Notes to the CASH FLOW STATEMENT
Reconciliation of cash
For the purposes of the statement of cashflows, cash includes cash on hand and
in banks, and investments in money market instruments, net of outstanding
bank overdrafts. Cash at the end of the financial period as shown in the
statement of cashflows is reconciled to the related items in the Statement of
Financial Performance as follows:
12 Months
Ending
30 June
2014
$
6 Months
Ending
30 June
2013
$
Cash at bank (Note 6)
Balances per statement of cashflows
1,665,207
1,665,207
1,767,156
1,767,156
PAGE 55
For personal use only
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
24.
24.2
NOTES TO THE CASH FLOW STATEMENT (cont.)
Reconciliation of profit/(loss) after income tax to net
cash inflow from operating activities
12 Months
Ending
30 June
2014
$
6 Months
Ending
30 June
2013
$
Profit/(loss) after income tax
1,813,922
(2,194,645)
Depreciation and amortisation
Gains/(Losses) on Equity Investments
Share based payments
Gain on sale of intangible
Gain on extinguishment
Foreign exchange (losses) unrealised
Inventory revaluations (losses)
Derivative instrument gains/(losses) unrealised
Gain on bargain
Agricultural asset fair value (losses) and
inventory write-offs
Provision for dividend
302,686
299,971
66,561
-
-
971,954
(11,982)
435,732
-
(63,439)
-
Decrease in trade and other debtors
(1,861,060)
136,160
273,781
65,000
-
(33,333)
(690,139)
15,705
(32,177)
(59,911)
2,907,779
(260,785)
234,162
85,978
Decrease in other assets
(Increase) in inventories
Increase in trade and other creditors
(Decrease) in Provision
Increase in taxes
-
(2,275,043)
(2,238,868)
918,473
(140,834)
(714,236)
64,556
(101,787)
683,257
Net cash (used in) operating activities
(257,294)
(1,145,267)
As at the date of this report the Company has not entered into any non-cash
financing or investing activities except as follows:
•
•
•
•
During the six month period ended 30 June 2014, the Company did
not enter any new loans to acquire property, plant and equipment. The
Company did enter into the following non-cash transactions in acquiring
Essential Oils of Tasmania Ltd on the 15 January 13:
On 15 January 2013, 10,000,000 fully paid ordinary shares were issued at an
issue price of $0.05 as consideration of all of the shares in Essential Oils of
Tasmania Pty Ltd, as announced by the Company on 22 October 2012 and
ratified at the 2012 AGM. The total value of the shares issued was $500,000.
On 15 January 2013, 3,333,334 fully paid ordinary shares were issued to
extinguish the existing debt in Essential Oils of Tasmania and increase the
Group’s working capital balance. The 3,333,334 fully paid ordinary shares
were issued at an issue price of $0.05 and rank equally with the Company’s
existing issued shares. The total value of the shares issued was $166,667.
On 1 March 2013, 833,333 shares were issued at an issue price of $0.06
each to Abermac Pty Ltd the former owner of Essential Oils of Tasmania, as
remuneration for continued services provided in the financial period. The
total value of the shares issued was $50,000.
During the twelve months ended 30 June 2014 Atlas Pearls and Perfumes Ltd
sold pearls on behalf of Arrow Pearls Pty Ltd. Atlas received on consignment
approximately $1,750,000 of loose South Sea Pearls from Steve Arrow on the 5th
of December 2013. Atlas received a sales commission of 5.0% based on the gross
value of the pearls. Atlas paid the net proceeds of pearls sales to Arrow less the
commission, in the form of 50% cash and 50% in shares until 10 million shares
were acquired (capped at $650,000). The shares were priced at $0.065 per share.
Also, during the period ended 30 June 2014, 4,461,640 shares were issued out of
the Atlas South Sea Pearl Limited Employee Share Trust to employees (30 June
2013 - 5,594,000). Of the 4,461,640 shares issued out of the trust, 361,298 shares
were issued to employees who did not salary sacrifice shares but were instead
issued shares out of the trust in lieu of cash bonuses. The total value of the
bonuses issued was $23,484.37. 361,298 shares were issued to employees who
did not salary sacrifice shares but were instead issued shares out of the trust in
PAGE 56
lieu of cash bonuses (30 June 2013 - $300,000). The total value of the bonuses
issued was $23,484 (30 June 2013 - $15,000). A further 1,798,077 were issued
to contractors who were issued shares in lieu of cash payment. The total value
settled totalled $98,950.
During the year ended 30 June 2014, the Company entered into a finance
agreement with Microsoft to finance a new accounting software package
for the group Microsoft Navision. At 30 June 2014 the balance of the loan
was $92,465. There were no other new loans to acquire property, plant and
equipment entered into during the year ended 30 June 2014. During the year
ended 30 June 2014, the Company did not issue any ordinary shares to acquire
any new investments.
24.3
Credit facilities
As at 30 June 2014, the Company had in place a loan facility with the
Commonwealth Bank with a limit of $5,000,000 (30 June 2013 - $5,000,000). This
facility has been partially utilised, see note 33 for further disclosure. Information
about the security relating to secured liabilities and the fair value is provided in
note 32.
25.
a.
RELATED PARTY TRANSACTIONS
Subsidiaries
Interests in subsidiaries are set out in note 28.
b.
Joint venture
World Senses Pty Ltd was formed on the 29th November 2012 as a joint venture
between Nomad Two Worlds Global Trading Pte Ltd and Atlas Pearls and
Perfumes Ltd.
At 30 June 2014, there is loan balance of $140,857 owing from World
Senses to Atlas (30 June 2013 - $258,851). This balance consists of salary and
administration recharges and accounting charges, offset by pearl cosmetic
products and pearl protein extraction assets transferred to Atlas.
At 30 June 2014 an agreement was entered into between Atlas Pearls and
Perfumes Ltd and its joint venture partner Nomad Two Worlds Global trading
Pte Ltd to reallocate a portion of the assets held in World Senses Pty Ltd back
to its respective parent entities. The intellectual property (intangible asset) over
the pearl protein extraction process was transferred to Atlas Pearls and Perfumes
Ltd at its’ net book value of $392,925. The Riji jewellery inventory at 30 June 14
was transferred to Perl Eco Pty Ltd (100% subsidiary of Atlas Pearls and Perfumes
Ltd) at its’ cost of $112,776. The Raw Spirit perfume inventory and Nomad Two
World’s book inventory at 30 June 14 was transferred to Nomad Two Worlds
Global Trading Pte Ltd at their cost of $88,311 and $10,000 respectively.
At 30 June 2014, there is loan balance of $72,961 owing to World Senses from
Perl’Eco. This balance consists of pearl jewellery sold to Perl’ Eco by World Senses
on which $72,961 is the amount due.
Brookfield Tasmania Pty Ltd was formed on the 1 January 2014 as a joint venture
between Westwood Properties Pty Ltd and Atlas Pearls and Perfumes Ltd.
As at 30 June 2014, there is an investment of $22,012 in Brookfield Tasmania Pty Ltd.
c.
Key management personnel compensation -
Short-term employment benefits
Post-employment benefits
Long–term benefits
12 Months
Ending
30 June 2014
$
6 Months
Ending
30 June 2013
$
1,258,575
65,119
37,343
1,361,037
419,758
19,414
-
439,172
Detailed remuneration disclosures are provided in section 4.2 of the
remuneration report.
For personal use only
N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
25.
RELATED PARTY TRANSACTIONS (cont.)
d.
Transactions with other related parties
The following balances are outstanding at the end of the reporting period in
transactions with related parties:
12 Months
Ending
30 June 2014
$
6 Months
Ending
30 June 2013
$
31,058
9,000
40,058
-
-
Current payables (reimbursement of travel)
Director fees payable
e.
Loans to/from related parties
Loans to key management personnel
Beginning of the year
Loans advanced
End of year
375,000
25,000
400,000
375,000
-
375,000
26.
REMUNERATION OF AUDITORS
During the period, the following fees were paid or payable for services provided
by the auditor of the parent entity, its related practices and non-related audit firms:
a. BDO Australia
Audit and other assurance services
Audit and review of financial reports
Total remuneration for audit and other
assurance services
Taxation Services
Tax compliance services and advise
Total remuneration for taxation services
2014
$
2013
$
111,966
111,966
51,962
51,962
74,765
74,765
28,449
28,449
Total remuneration of BDO Australia
163,928
103,214
b. Related practices of BDO Australia
Audit and other assurance services
Audit and review of financial reports
Total remuneration for audit and other
assurance services
Taxation Services
Tax compliance services and advise
Total remuneration for taxation services
Total remuneration of related practices of
BDO Australia
Total remuneration of BDO Australia
and related practices
-
-
-
-
-
-
-
-
-
-
163,928
103,214
PAGE 57
For personal use only
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
27. SEGMENT REPORTING
(a)
Segment information provided to the Board of Directors and management team
(i)
The segment information provided to the Board of Directors and management team for the reportable segments for the period ended 30 June
2014 is as follows:
30 June 2014
Wholesale Loose Pearl
Jewellery
Essential Oils
Australia
$
Indonesia
$
Australia
$
Indonesia
$
Australia
$
All other
segments
$
Total segment revenue
12,040,978
7,944,875
555,755
896,076
2,023,581
Inter-segment revenue
(17,541)
(7,510,548)
-
-
-
Revenue from external customers
12,023,437
434,327
555,755
896,076
2,023,581
Normalised EBITDA
185,168
3,074,888
(185,226)
(27,060)
422,542
Adjusted net operating profit/(loss)
before income tax
(374,017)
2,892,311
(235,238)
(93,835)
368,088
Depreciation and amortisation
109,293
43,167
43,123
51,967
55,136
Revaluation of Biological Assets
-
1,971,114
-
-
321,999
Totals segment assets
13,181,788
17,966,654
1,192,564
956,946
4,084,381
Total assets includes:
Additions to non – current assets (other than
financial assets or deferred tax)
128,458
563,131
40,034
105,070
397,835
Total segment liabilities
(2,030,664)
(784,221)
(23,001)
(181,392)
(1,027,094)
Total
$
23,461,265
(7,528,089)
15,933,176
3,470,312
2,557,308
302,686
2,293,113
37,382,333
1,234,528
(4,046,371)
-
-
-
-
-
-
-
-
-
-
Included within the net operating profit for wholesale loose pearls in Indonesia is an impairment charge of $11,982 in relation to the impairment of oysters
(II)
The segment information provided to the Board of Directors and management team for reportable segments for the year ended 30 June 2013
is as follows.
30 June 2013
Wholesale Loose Pearl
Jewellery
Essential Oils
Australia
$
Indonesia
$
Australia
$
Indonesia
$
Australia
$
All other
segments
$
Total segment revenue
Inter-segment revenue
1,875,635
4,357,536
204,863
399,257
503,076
-
(4,087,760)
-
-
-
Revenue from external customers
1,875,635
269,776
204,863
399,257
503,076
Normalised EBITDA
(1,781,708)
1,355,106
(184,713)
(447,815)
(190,929)
Adjusted net operating profit/(loss) before
income tax
(2,053,237)
991,165
(210,584)
(121,995)
(195,037)
Depreciation and amortisation
59,204
26,116
22,427
23,460
Revaluation of Biological Assets
597,959
735,322
-
-
4,953
36,616
Totals segment assets
8,064,039
20,266,417
990,205
1,088,218
2,532,429
Total assets includes:
Additions to non – current assets (other than
financial assets or deferred tax)
7,476
14,879
140,134
12,256
441,450
Total segment liabilities
(773,822)
(907,729)
(96,161)
(167,658)
645,092
Total
$
7,340,368
(4,087,760)
3,252,608
(1,250,057)
(1,589,688)
136,160
1,369,897
32,941,308
616,195
(2,590,461)
-
-
-
-
-
-
-
-
-
-
Included within the net operating profit for wholesale loose pearls in Indonesia is an impairment charge of $15,705 in relation to the impairment of oysters.
PAGE 58
For personal use only
N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
27. SEGMENT REPORTING (cont.)
(iii) Segment assets
(b) Other segment information
(i)
Segment revenue
Segment revenue reconciles to total revenue from continuing
operations in the statement of profit or loss and other
comprehensive income as follows:
Assets are allocated based on the operations of the
segment and the physical location of the asset.
Reportable segments’ assets are reconciled to total assets
as follows:
30 June
2014
$
30 June
2013
$
37,382,333
533,159
32,941,308
(529,407)
534
3,025
67,896
4,599,784
622
280,984
313,295
2,936,629
(1,763,936)
(267,607)
-
-
40,822,795
35,676,454
30 June
2014
$
30 June
2013
$
4,046,371
-
-
4,800
(94,060)
5,154,959
2,901,397
2,590,461
232,877
-
2,550
234,884
5,274,443
1,544,570
-
12 Months
Ending
30 June 2014
$
6 Months
Ending
30 June 2013
$
23,461,265
(7,528,089)
13,333
336,674
7,340,368
(4,087,760)
18,629
233,888
16,283,183
3,505,125
Segment assets
Intersegment eliminations
Unallocated:
Other
Investments
Joint Venture Loans
Deferred tax assets
Total segment revenue
Intersegment eliminations
Interest income
Other revenues
Total revenue from continuing
operations (note 2)
Major customers
A Japanese wholesaler accounted for 11% of external revenue in the twelve
months to 30 June 2014 (6 months ended 30 June 2013 - 37%). These revenues
are attributable to the Australian wholesale loose pearl segment.
The entity is domiciled in Australia. The result of its revenue from third party
customers in Australia is $907,756 (6 months ended 30 June 2013: $299,243) in
relation to wholesale loose pearl sales. Revenue for wholesale loose pearls from
third party customers based in other countries during the twelve months to 30
June 2014 was $10,981,121 (6 months ended 30 June 2013: $1,577,091). 84%
of the total loose pearl sales revenue during the period ended 30 June 2014 (6
months ended 30 June 2013:68%) was to Japanese based customers.
In relation to retail jewellery sales the above segment reporting is based on the
location of the sale, whether in Australia or Indonesia as the nature of the retail
business relies on one off sales transactions with customers from a variety of
locations.
(ii) Adjusted net operating profit
Fair value adjustments on biological
and agricultural assets
Derivative financial instruments
Total assets as per the statement of financial
position
The total of non-current assets other than financial instruments and deferred tax
assets located in Australia is $2,674,188 (2013: $1,791,365). The total located in
Indonesia is $14,134,400 (2013: $14,553,360).
(iv) Segment liabilities
Liabilities are allocated based on the operations of the segment and
the physical location of the asset.
Reportable segments’ liabilities are reconciled to total liabilities as
follows:
Segment net operating profit/(loss) before income tax reconciliation
to the statement of profit or loss and other comprehensive income. The
Board of Directors and the management team review on a monthly
basis the performance of each segment by analysing the segment’s net
operating profit before tax. A segment’s net operating profit before
tax excludes non-operating income and expense such as interest paid
and received, foreign exchange gains and losses whether realised or
unrealised, fair value gains and losses and impairment charges. A
reconciliation of adjusted net operating profit/(loss) before income tax
is provided as follows:
Segment liabilities
Intersegment eliminations (note 28(a))
Unallocated:
Other
Current tax liabilities
Borrowings
Deferred tax liabilities
Derivative financial instruments
12 Months
Ending
30 June 2014
$
6 Months
Ending
30 June 2013
$
2,557,308
-
63,439
11,982
216,375
(794,303)
(596,160)
1,458,641
(1,589,688)
(2,727)
(2,907,773)
(15,705)
1,286,737
(195,806)
(241,610)
(3,666,572)
Net operating profit /(loss) before tax
Intersegment eliminations
Changes in fair value of biological and
agricultural assets
Impairment expense
Foreign exchange gains
Foreign exchange losses
Other
Profit/(loss) before income tax from
continuing operations
Total liabilities as per the statement of
financial position
12,013,467
9,879,785
(v) Normalised EBITDA reconciliation
Net profit/(loss) before tax
Finance/Interest (rec)/paid
Depreciation/Amortisation
FX (gain)/loss
Agriculture standard revaluation
Inventory write-off
Other non-operating (income)/expense
Gain on derivative instruments
Normalised EBITDA
30 June
2014
$
30 June
2013
$
1,458,642
(3,666,572)
470,755
302,686
221,093
136,160
577,928
(1,090,131)
(63,439)
(11,982)
299,971
435,732
2,907,779
-
273,780
(32,177)
3,470,313
(1,250,058)
PAGE 59
For personal use only
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
28. SUBSIDIARIES
The consolidated financial statements incorporate the assets, liabilities and results of the
following subsidiaries in accordance with the accounting policy described in note 1.7.
Name of entity
Class of
shares
Percentage
owned
Percentage
owned
30 June
2014
30 June
2013
Perl’Eco Pty Ltd(1)
Tansim Pty Ltd
P.T. Cendana Indopearls
P.T. Cahaya Bali (2)
Aspirasi Satria Sdn Bhd
Essential Oils of Tasmania (3)
Ord
Ord
Ord
Ord
Ord
Ord
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Place of
incorporation
Australia
Australia
Indonesia
Indonesia
Malaysia
Australia
1.
2.
Previously named Sharcon Pty Ltd
Bali retail operations have been set up in a separate company structure P.T.
Cahaya Bali as of 1 May 2013 in order to comply with Indonesian rules and
regulations.
3.
Essential Oils of Tasmania Ltd was acquired on 15 January 2013.
The ultimate parent entity, Atlas Pearls and Perfumes Ltd, is incorporated in
Australia.
29.
NON-CURRENT ASSETS – INVESTMENTS
ACCOUNTED FOR USING THE EQUITY METHOD
Joint Ventures’ assets and liabilities
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
12 Months
Ending
30 June 2014
$
6 Months
Ending
30 June 2013
$
294,366
257,118
551,484
41,754
529,808
571,562
679,714
507,496
1,187,210
13,204
593,822
607,026
Net Assets
(20,078)
580,183
Joint Venture’s revenues, expenses and results
Revenues
Expenses
Loss before income tax
Reconciliation to carrying value
Opening net asset 1 July
Profit/(loss) for the period
Closing net assets
Group share in %
Group share in $
Carrying value
113,098
(970,158)
(857,060)
580,183
(600,261)
(20,078)
50%
300,131
-
32,559
(814,792)
(782,233)
1,127,747
32,559
580,183
50%
273,782
280,984
(b)
Contingent liabilities relating to joint ventures
Each of the partners in World Senses Pty Ltd are jointly and severally liable for the
debts of the joint venture. The assets of the joint venture do not exceed its’ debts.
30 June
2014
$
30 June
2013
$
There have been no legal claims lodged against the joint venture. The joint
venture does not have any contingent liabilities in respect of a legal claim
lodged against the joint venture.
Share in World Senses joint venture partnership (note 30)
Share in Brookfield Tasmania joint venture partnership
-
3,025
3,025
280,984
280,984
31.
PARENT ENTITY FINANCIAL INFORMATION
30.
INTERESTS IN JOINT VENTURES
(a)
Joint venture
The parent entity has a 50% interest in World Senses Pty Ltd, which is a resident
in Australia and the principal activity of which is the commercialisation of Atlas
and Essential Oils of Tasmania’s R&D, products and export markets. This vehicle
will commercialise the production of new emerging extracts from Essential Oils
of Tasmania and pearls from Atlas with an intimal focus on pearl micronized
powder, pearl perfume extracts, pearl cosmetic extracts, Perl’fumeTM technology
and Australian indigenous perfume ingredients such as Sandalwood, Boronia
and Fire Tree (Zanthorrhoea preissii).
The parent entity has a 50% interest in Brookfield Tasmania Pty Ltd, which
is a resident in Australia and the principal activity of which is to develop a
manufacturing and tourism facility.
The interest in World Senses Pty Ltd is accounted for in the financial statements
using the equity method of accounting (refer to note 29). The joint venture is
unlisted hence no quoted fair value is disclosed. Information regarding to the
joint venture is set out below.
(a)
Summary financial information
The individual financial statements for the parent entity show the following
aggregate amounts:
Statement of financial position
Current assets
Total assets
Current liabilities
Total liabilities
Shareholders equity
Issued capital
Reserves
Share-based payment reserve
(Accumulated losses)
12 Months
Ending
30 June 2014
$
6 Months
Ending
30 June 2013
$
4,419,122
24,800,754
7,159,650
5,044,219
3,746,564
27,255,307
5,692,923
6,185,797
32,153,002
30,203,033
622,574
(9,714,552)
23,061,024
581,029
(8,005,438)
22,778,624
(Loss ) for the period
(3,304,489)
(1,709,114)
Total comprehensive (loss)
(3,304,489)
(1,709,114)
PAGE 60
For personal use only
N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
31.
PARENT ENTITY FINANCIAL INFORMATION (cont.)
(b)
Contingent liabilities
The parent entity did not have any contingent liabilities as at 30 June 2014 or 30 June 2013
The parent entity did not provide financial guarantees during the period (2013: Nil).
FINANCIAL RISK MANAGEMENT
32.
The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and price risk), credit risk and liquidity risk. The Group’s
overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of
the Group. The Group uses derivative financial instruments such as foreign exchange contracts and options to hedge certain risk exposures. Derivatives are exclusively
used for hedging purposes, ie not as trading or speculative instruments. The Group uses different methods to measure different types of risk to which it is exposed. The
Group uses sensitivity analysis in the case of interest rate and foreign exchange risks and aging analysis for credit risk.
Risk management is carried out by the Board of Directors.
The Group holds the following financial instruments:
Financial Assets
Cash and cash equivalents
Trade and other receivables
Derivative financial instruments
Financial Liabilities
Trade and other payables
Borrowings
Derivative financial instruments
Market Risk
(i)
Foreign exchange risk
30 June 2014
$
30 June 2013
$
1,665,207
2,773,752
-
4,438,959
2,313,695
5,154,959
852,323
8,320,977
1,767,156
578,556
-
2,345,712
1,395,280
5,274,443
404,627
7,074,350
The Group operates internationally and are exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the Japanese Yen,
Indonesian Rupiah, US Dollar and Euro.
Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the entity’s functional
currency and net investments in foreign operations. The risk is measured using sensitivity analysis and cash flow forecasting.
Management manages their foreign exchange risk against their functional currency. Group companies are required to hedge a proportion of their foreign exchange
risk exposure arising from future commercial transactions and recognised assets and liabilities using forward exchange contracts and options under the guidance of
the Board of Directors.
The majority of the Group’s cash reserves are held in Australian banks with AAA ratings.
The Groups exposure to foreign currency risk at the reporting date expressed in Australian dollars, was as follows:
Cash and cash equivalents
Trade and other receivables
Trade and other payables
Borrowings
Forward exchange contracts –
buy foreign currency
Forward exchange contracts –
sell foreign currency
JPY
$
639,550
1,782,738
565,957
2,706,030
-
(26,443)
30 June 2014
USD
$
EUR
$
JPY
$
30 June 2013
USD
$
163,445
256,058
119,872
-
-
-
21,561
-
1,483
-
-
-
31,048
5,032
5,546
4,226,864
-
(14,568)
105,986
34,756
3,637
-
-
-
EUR
$
15,335
2,174
-
-
-
-
PAGE 61
For personal use only
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
FINANCIAL RISK MANAGEMENT (cont.)
32.
Group Sensitivity Analysis
Sensitivity analysis is based on exchange rates in US Dollars, Japanese Yen and Euro increasing or decreasing by 10% and the affect on profit and equity.
Statement of Financial
Position Amount
AUD
Foreign Exchange Rate Risk
2014
2013
-10%
10%
-10%
10%
Profit
Equity
Profit
Equity
Profit
Equity
Profit
Equity
30 June 2014
30 June 2013
Financial Assets
Cash
1,665,207
1,767,156
91,617
Trade and other recievables
2,773,752
578,556
226,533
Derivatives
Financial Liabilities
-
-
-
Trade and other payables
2,313,695
1,395,280
(76,368)
Borrowings
Derivatives
5,154,959
5,274,443
(300,670)
852,323
404,627
(2,938)
Total Increase / (Decrease)
(61,826)
-
-
-
-
-
-
(74,960)
(185,345)
-
62,483
246,003
2,404
-
-
-
-
-
-
16,930
4,421
-
1,020
(411,818)
78,376
(311,071)
-
-
-
-
-
-
(13,930)
(3,617)
-
(835)
431,578
(95,793)
317,482
-
-
-
-
-
-
Majority of the exposure above relates to the borrowings held in Yen.
Trade receivables
Not shown in the table above, is the exposure to exchange movements
on the intercompany loan denominated in Australian dollars made to the
Indonesian subsidiaries. At the period end this loan stood at AUD$2,379,072. The
intercompany loans are eliminated on consolidation. The impact for the current
year on the profit or loss was a loss of $599,763 because the Indonesian Rupiah
weakened against the Australian dollar. If the Indonesian Rupiah strengthens or
weakens against the Australian dollar by 10%, there would be an effect on the
(profit) or loss of ($264,341) or $216,279 respectively.
(ii)
Cash flow and fair value interest rate risk
The Group’s main interest rate risk arises from its borrowings. Given that
borrowings are all due within 12 months and are at fixed interest rates the Group
considers that any fair value interest rate risk or cash flow risk will be immaterial.
(iii)
Price risk
The Group is exposed to fluctuations in pearl prices. This product is not traded as
a commodity on an open market and as such the price risk cannot be hedged.
Credit risk
Credit risk is managed on a group basis. Credit risk arises from cash and cash
equivalents, derivative financial instruments, as well as credit exposures to
wholesale and retail customers, including outstanding receivables. The Group
considers the credit quality of the customer, taking into account its financial
position, past experience and other factors. Sales to retail customers are required
to be settled in cash or using major credit cards, thus mitigating credit risk.
The maximum exposure to credit risk at the reporting date is the carrying
amount of the financial assets as summarised on page 51. For retail customers
without credit rating the Group generally retains title over the goods sold until
payment is received in full.
All cash balances held at banks are held at internationally recognised institutions.
The Australian Government has guaranteed all deposits held with Australian
banks, cash held in Indonesia is not covered by this guarantee. The majority of
other receivables held are with related parties and within the Group. Given this
the credit quality of financial assets that are neither past due or impaired can be
assessed by reference to historical information about default rates.
The credit quality of trade receivables that are neither past due nor impaired can be
assessed by reference to historical information about counterparty default rates.
PAGE 62
30 June
2014
$
30 June
2013
$
Retail customers – no credit history
-
-
Wholesale customers – existing customers with no
defaults in the past
Total trade receivables
Derivative financial assets
Liquidity risk
1,928,369
121,729
1,928,369
121,729
-
-
Prudent liquidity risk management implies maintaining sufficient cash, the
availability of funding through an adequate amount of committed credit
facilities and the ability to close out market positions. The Group manages
liquidity risk by continuously monitoring forecast and actual cash flows
and matching the maturity profiles of financial assets and liabilities. Group
management aims at maintaining flexibility in funding by keeping committed
credit lines available. Surplus funds are generally only invested in instruments
such as term deposits that are highly liquid.
Management monitors rolling forecasts of the Group’s liquidity reserve
(comprising the undrawn borrowing facilities below) and cash and cash
equivalents (note 6) on the basis of expected cash flows. This is generally carried
out by the Board of Directors on a Group basis. In addition, the Group’s liquidity
management policy involves projecting cash flows in major currencies and
considering the level of liquid assets necessary to meet these and monitoring
debt financing plans.
Financing arrangements
The Group had access to the following borrowing facilities at the reporting date.
Fixed rate
Expiring within one year – Foreign currency loan
trade
30 June
2014
$
30 June
2013
$
5,000,000
5,000,000
5,000,000
5,000,000
Bank loans are secured by a registered company charge by Commonwealth
Bank of Australia over the whole of the assets and undertakings including
uncalled capital of Atlas Pearls and Perfumes Ltd and its related entities except
for the shares and assets of Essential Oils of Tasmania Pty Ltd and World Senses
Pty Ltd. The bank loans are provided under a Japanese Yen Domestic Foreign
Currency Advance facility with a fixed interest rate which currently stands at 32.
For personal use only
N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
FINANCIAL RISK MANAGEMENT (cont.)
32.
3.67% expiring on 31 May 2016 and an undrawn Australian Dollar Bills Discount facility with a bank bill rate of BBSY plus a margin of 3.55% repayable one year
from the draw down date. As at the reporting date the Company had drawn down $3,951,715 (30 June 2013: $4,226,864) and had undrawn facilities available of
$1,048,285 (30 June 2013: $773,136). The loans can be drawn at any time and are subject to annual review.
The other bank loan (secured) also provided by Commonwealth Bank of Australia was repaid during the period ended 30 June 2013. A new other bank loan
(unsecured) provided by Microsoft Finance was provided during the year to acquire the accounting software Microsoft Navision; the liability at reporting date was
$92,465.
Lease liabilities have been provided by St George Bank and Esanda and are effectively secured by the rights to the leased assets, recognised in the financial
statements, which revert to the lessor in the event of default. The value of the loans relating to Lease liabilities as at the reporting date was $112,064 (30 June 2013:
$178,901).
During the six month period ended 30 June 2013 Atlas issued Convertible Notes for a total value of $1,100,000. The Convertible Notes have a maturity date of 2 years
after issue, attract an interest rate of 6% payable six monthly in arrears and are redeemable for ordinary shares in Atlas at any time during the 10 Business Days prior
to the first anniversary of the Issue Date for the Convertible Notes; or the Maturity Date of the Convertibles Notes, or such other period as agreed in writing between
the Company and the Noteholder. If the Noteholder exercises its conversion right, the Company must comply by redeeming all of the convertibles notes referred
to in the Conversion Notice at their Face Value; and applying the Conversion Amount as subscription funds for the Conversion Shares which are to be issued to the
Noteholder at a price per Conversion Share equal to the lower of: 5 cents or 90% of the 10 day volume weighted average. If the Noteholder does not exercise its
conversion right the face value is redeemable in cash at the date of expiry.
The company is required to meet three financial undertakings to comply with the lending conditions imposed by the bank as follows: (All covenants have been
meet for the year ended 30 June 2014).
Earnings before interest, tax, depreciation, amortisation and exceptional items (Normalised EBITDA) will be greater than and at least equal to;
$1,500,000 for the 12 months 1 July 2013 to 30 June 2014; and
$1,500,000 for the 12 months 1 July 2014 to 30 June 2015; and
$1,500,000 for the 12 months 1 July 2015 to 30 June 2016
Minimum net worth of the borrower (Atlas) will at all times be greater than $18,000,000; and
The ratio of net worth of the borrower to total tangible assets of the borrower will at all times be equal to or greater than 60%. All the covenants have been met
during the year. The fair value of bank loans equals their carrying amount, as the impact of discounting is not significant. The fair value of convertible notes is
reviewed half-yearly to determine the fair value of the derivative liability component.
Maturities of financial liabilities
The table below analyses the Group’s financial liabilities, net and gross settled derivative financial instruments into relevant maturity groupings based on their
remaining period at the reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cashflows.
Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.
30 June 2014
30 June 2013
CONSOLIDATED
ENTITY
Less than
6 Months
6-12
months
Between 1
& 2 years
Between 2
& 5 years
Total
contractual
cash flows
Carrying
amount
(asset)/
Liabilities
Less than
6 Months
6-12
months
Between 1
& 2 years
Between 2
& 5 years
Total
contractual
cash flows
Carrying
amount
(asset)/
Liabilities
$
$
$
$
$
$
$
$
$
$
$
$
Non-Derivatives
Trade payables
2,313,694
-
-
-
2,313,694
2,313,694
1,371,888
-
-
-
1,371,888
1,371,888
Borrowings
Total non-
derivatives
Derivatives
Net settled
( Non deliverable
forwards)
Gross settled
-(inflow)
-outflow
4,047,184
1,142,848
56,955
55,668
5,302,655
5,154,959
4,364,831
137,966
1,204,618
14,250
5,721,665
5,721,665
6,360,878
1,142,848
56,955
55,668
7,616,349
7,468,653
5,736,719
137,966
1,204,618
14,250
7,093,553
7,093,553
4,546
21,793
1,400,000
2,100,000
(1,395,454)
(2,078,207)
-
-
-
-
-
-
-
-
26,339
26,339
(14,568)
3,500,000
3,500,000
850,000
(3,473,661)
(3,473,661)
(864,568)
26,339
26,339
(14,568)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(14,568)
850,000
(864,568)
(14,568)
Total Derivatives
4,546
21,793
Borrowings, includes the loan to the Commonwealth Bank (CBA), and is classified as an amount due within 6 months. This loan is drawn as a bank bill facility which
has various maturity dates during the period 1 July 2014 to 30 September 2014. Bank bills which expire during the period 1 July 2014 to 30 September 2014 will be
rolled over into a new loan with a revised maturity date within 6-12 months.
PAGE 63
For personal use only
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
FINANCIAL RISK MANAGEMENT (cont.)
32.
(a) Fair value hierarchy
AASB 13 requires disclosure of fair value measurements by level of the following fair value measurement hierarchy:
(a) quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1)
(b) inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly (level 2), and
(c) inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3).
The following table presents the group’s financial assets and financial liabilities measured and recognised at fair value at 30 June 2014 and 30 June 2013 on a
recurring basis:
30 June 2014
Liabilities
Derivative financial instruments
Forward foreign exchange contracts
Total Liabilities
30 June 2013
Liabilities
Derivative financial instruments
Forward foreign exchange contracts
Total Liabilities
LEVEL 1
$
LEVEL 2
$
LEVEL 3
$
LEVEL 1
$
-
-
-
-
-
-
LEVEL 2
$
-
26,339
26,339
-
14,479
14,479
LEVEL 3
$
825,985
-
825,985
390,148
-
390,148
TOTAL
$
TOTAL
$
-
-
-
-
-
-
(b) Valuation techniques used to derive level 2 and level 3 fair values
The fair value of financial instruments that are not traded in an active market (for example, over–the– counter derivatives) is determined using valuation techniques.
These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant
inputs required to fair value an instrument are observable, the instrument is included in level 2.
During the prior reporting period Atlas issued Convertible Notes for a total value of $1,100,000. The Convertible Notes have a maturity date of 2 years after issue
(therefore maturing between January and June 2015), attract an interest rate of 6% payable six monthly in arrears and are redeemable for ordinary shares in Atlas at any
time during the 10 Business Days prior to the first anniversary of the Issue Date for the Convertible Notes; or the Maturity Date of the Convertibles Notes, or such other
period as agreed in writing between the Company and the Noteholder. If the Noteholder exercises its conversion right, the Company must comply by redeeming all
of the convertibles notes referred to in the Conversion Notice at their Face Value; and applying the Conversion Amount as subscription funds for the Conversion Shares
which are to be issued to the Noteholder at a price per Conversion Share equal to the lower of: 5 cents or 90% of the 10 day volume weighted average.
This conversion feature represents an embedded derivative that is required to be fair valued.
The current fair value is governed by the 5 cents conversion rather than the 90% of the 10 day volume weighted average, therefore the derivative has been valued
using the Black-Scholes model. The inputs used in this model are as follows:
30 June 2014
Note
Issue Date
Expiry date
No. Of
Options
Fair Value of
Option
Exercise Price
A
B
C
D
15/01/2013
25/01/2013
01/03/2013
30/05/2013
15/01/2015
25/01/2015
01/03/2015
05/06/2015
10,000,000
2,000,0000
7,000,000
3,000,000
$0.037
$0.037
$0.038
$0.038
$0.050
$0.050
$0.050
$0.050
30 June 2013
Note
Issue Date
Expiry date
No. Of
Options
Fair Value of
Option
Exercise Price
A
B
C
D
15/01/2013
25/01/2013
01/03/2013
30/05/2013
15/01/2015
25/01/2015
01/03/2015
05/06/2015
12,820,513
2,631,578
9,210,526
3,846,153
$0.013
$0.014
$0.014
$0.015
$0.039
$0.038
$0.038
$0.039
All of the resulting fair value estimates are included in level 3.
(i) Transfers between levels 2 and 3 and changes in valuation techniques
Price of
shares on
valuation
date
$0.085
$0.085
$0.085
$0.085
Price of
shares on
valuation
date
$0.041
$0.041
$0.041
$0.041
Expected
Volatility
annualised
60%
60%
60%
60%
Expected
Volatility
annualised
60%
60%
60%
60%
Risk free
interest rate
Dividend
yield
2.56%
2.56%
2.56%
2.56%
-
-
-
-
Risk free
interest rate
Dividend
yield
2.53%
2.53%
2.53%
2.53%
-
-
-
-
There were no transfers between the levels of the fair value hierarchy in the twelve months to 30 June 2014. There were also no changes made to any of the
valuation techniques applied as of 30 June 2013.
PAGE 64
For personal use only
N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
FINANCIAL RISK MANAGEMENT (cont.)
32.
(c) Fair values of other financial instruments
The group also has a number of financial instruments which are not measured
at fair value in the statement of financial position. These had the following fair
values as at 30 June 2014:
(i)
Share based payment consideration
Atlas acquired Essential Oils of Tasmania by way of issuing 10,000,000 fully paid
ordinary shares in Atlas. The fully paid ordinary shares in Atlas issued to the
owners of Essential Oils of Tasmania must be recorded at fair value. The share
price of Atlas at the date of settlement being the 15th of January 2013 was
$0.05. The fair value of the 10,000,000 fully paid ordinary shares is $500,000.
30 June
2014
$
Carrying
amount
30 June
2014
$
Fair value
30 June
2013
$
Carrying
amount
30 June
2013
$
Fair value
(ii)
Revenue and profit contribution
The acquired business contributed revenues of $503,076 and a net loss of
($533,446) to the group for the period 1 January to 30 June 2013.
(iii)
Information not disclosed as not yet available
The Group has reported a provisional gain on acquisition as part of the purchase
of Essential Oils of Tasmania Pty Ltd (see above) as the final assessment of the
fair value of assets is yet to be determined. The group is still in the provisional
accounting period as at 31December 2013.
Non-current borrowings
Bank Loan
Other bank loan
Convertible note
Lease liabilities
-
89,665
994,518
1,863
1,086,046
-
89,665
1,142,214
1,863
1,233,742
28,447
-
784,778
4,312
817,537
28,447
-
1,208,214
4,312
1,204,973
Due to their short-term nature, the carrying amounts of the current receivables,
current payables and current borrowings are assumed to approximate their fair
value.
33.
BUSINESS COMBINATION
Acquisition of Essential Oils of Tasmania during the comparative six month
period ended 30 June 2013.
On 15 January 2013 the parent entity acquired 100% of the issued share capital
of Essential Oils of Tasmania Ltd, a grower and producers of essential oils.
The acquisition is a strategic move for the Group further extending its supply
chain to encompass an established manufacturer of essential oils that has the
technical knowledge to manufacture cosmeceutical products.
Details of the purchase consideration, the net assets acquired and gain on
acquisition are as follows:
Purchase consideration:
Cash paid
Share based payment consideration
(refer below)
Total purchase consideration
$
-
500,000
500,000
The asset and liabilities recognised as a result of the acquisition are as follows:
Cash
Trade receivables
Other current assets
Income tax receivable
Inventories
Biological assets
Land and buildings
Plant and equipment
Other non-current assets
Trade payables
Loans to directors
Borrowings
Deferred tax liability
Net identified assets acquired
Gain on acquisition
Fair value
$
142,221
351,450
30,150
70,124
922,588
430,801
5,980
368,712
24,429
(300,974)
(200,000)
(1,200,000)
(85,570)
559,911
59,911
PAGE 65
For personal use only A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
34.
NEW STANDARDS AND INTERPRETATIONS NOT YET ADOPTED
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective have not been adopted by the Group for
the annual reporting period ending 30 June 2014 unless disclosed in Note 1. The Group’s and the parent entity’s assessment of the impact of these new standards
and interpretations is set out below. The initial application of the following Standards and Interpretations is not expected to have any material impact on the financial
report of the consolidated entity and the company.
AASB
Amendment
Affected Standard(s)
Nature of Change to Accounting Policy
Application Date
of Standard*
Application Date
for Group
AASB 9
Financial Instruments
Changes to classification and measurement
requirements of financial instruments.
1 Jan 17
1 July 17
AASB 2013-9
(issued December
2013)
Amendments to Australian Accounting Standards
– Conceptual Framework, Materiality and Financial
Instruments
AASB 2013-9 makes three amendments to AASB 9
1 Jan 15
1 July 17
AASB 2013-3
Amendments to AASB 136 – Recoverable Amount
Disclosures for Non-Financial Assets
Clarifies disclosure requirements for goodwill and
intangibles
1 Jan 14
1 July 14
IFRS 2
IFRS 3
IFRS 8
IAS 16
IAS 24
IAS 38
Share-based Payment
Business Combinations
Operating Segments
Property, Plant and Equipment
Changes definition of vesting condition
1 July 14
1 July 14
Clarifies Accounting for contingent consideration in a
business combination
1 July 14
1 July 14
Clarifies aggregation of operating segments and
reconciliation of the reportable segment’s assets to the
entity’s assets
Clarifies the computation of accumulated depreciation
when items of property, plant and equipment are
subsequently measured using the revaluation model.
1 July 14
1 July 14
1 July 14
1 July 14
Related Party Disclosures
Changes key management personnel disclosures
1 July 14
1 July 14
Intangible Assets
Clarifies the computation of accumulated amortisation
when intangible assets are subsequently measured
using the revaluation model.
1 July 14
1 July 14
IFRS 13
Fair Value Measurement
Changes the scope of contracts that qualify for the
portfolio exception.
1 July 14
1 July 14
Any other amendments are not applicable to the Group and therefore have no impact.
35.
EVENTS OCCURING AFTER THE REPORTING PERIOD
Mr Nelson Rocher was appointed Alternate Director to Mr Stephen Birkbeck on 18 July 2014.
36.
ECONOMIC DEPENDENCY
All of the company’s pearls are purchased from its wholly owned subsidiary PT Cendana Indopearls.
PAGE 66
For personal use only N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
N O T E S T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T
FOR THE YEAR ENDED 30 JUNE 2014
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
The Directors of the Company declare that:
The financial statements comprising the statement of profit or loss and other comprehensive income, statement of financial
position, statement of cash flows, statement of changes in equity and accompanying notes are in accordance with the
Corporations Act 2001 and :
(i) give a true and fair view of the consolidated entity’s financial position as at 30 June 2014 and of the performance for
the period ended on that date; and
(ii) comply with Accounting Standards, and the Corporations Regulations 2001 and other mandatory professional
reporting requirements.
The Company has included in the notes to the financial statements an explicit and unreserved statement of compliance with
International Financial Reporting Standards.
The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer required by section 295A.
In the Directors opinion there are reasonable grounds to believe that the Company will be able to pay its debts as and when
they become due and payable.
The remuneration disclosures included in the Directors’ Report (as part of audited remuneration report) for the period ended 30
June 2014 comply with section 300A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on behalf of the Directors by:
S.P. Birkbeck
Chairman
Perth, Western Australia
28th August 2014
PAGE 67
For personal use only
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
I N D E P E N D E N T A U D I T O R ’ S R E P O R T
FOR THE YEAR ENDED 30 JUNE 2014
I N D E P E N D E N T A U D I T O R ’ S R E P O R T
FOR THE YEAR ENDED 30 JUNE 2014
PAGE 68
For personal use only I N D E P E N D E N T A U D I T O R ’ S R E P O R T
FOR THE YEAR ENDED 30 JUNE 2014
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
I N D E P E N D E N T A U D I T O R ’ S R E P O R T
FOR THE YEAR ENDED 30 JUNE 2014
PAGE 69
For personal use only A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
A D D I T I O N A L I N F O R M A T I O N - U N A U D I T E D
FOR THE YEAR ENDED 30 JUNE 2014
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
U N A U D I T E D N O R M A L I S E D S T A T E M E N T O F P R O F I T O R L O S S
A N D O T H E R C O M P R E H E N S I V E I N C O M E
FOR THE YEAR ENDED 30 JUNE 2014
NORMALISED EBITDA
Profit/(Loss) for the period
Less: Net Forex Gains
Add: Net Interest
Add: Depreciation/Amortisation
Add: Income tax expense
Add: Other taxes
Add: Revaluation of Biological Assets and Inventory
Add: Other non-operating (income/expense)
Add: Loss on derivative
Normalised EBITDA
12 Months
Ending
30 June 2014
$
12 Months
Ending
30 June 2013
$
1,813,922
577,928
470,775
302,686
(355,280)
-
(75,421)
299,971
435,732
3,470,313
(944,694)
(2,058,701)
(519,086)
243,928
(3,293,213)
(70,015)
5,906,702
404,179
(32,177)
(363,078)
PAGE 70
For personal use only A D D I T I O N A L I N F O R M A T I O N - U N A U D I T E D
FOR THE YEAR ENDED 30 JUNE 2014
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
U N A U D I T E D N O R M A L I S E D S T A T E M E N T O F P R O F I T O R L O S S
A N D O T H E R C O M P R E H E N S I V E I N C O M E
FOR THE YEAR ENDED 30 JUNE 2014
Revenue from continuing operations
Cost of goods sold
Gross profit
Other income
Marketing expenses
Administration expenses
Finance costs
Other expenses
Profit/(Loss) before income tax
Income tax (expense)/benefit
Profit/(Loss) for the period from continuing
operations
Other comprehensive income/(expenses)
Items that will be reclassified as profit or loss:
Exchange differences on translation of foreign
operations
Income tax on items that will be reclassified to
profit or loss
Other comprehensive income/(expenses) for
the period, net of tax
Total comprehensive income/(expenses) for
the period
Profit/(loss) is attributable to:
Owners of the Company
Total comprehensive income/(expenses) is
attributable to:
Owners of the Company
Overall operations :
Basic earnings/(loss) per share (cents)
Diluted earnings per share (cents)
12 Months
Ending
30 June 2014
$
12 Months
Ending
30 June 2013
$
16,283,183
(6,230,257)
10,052,926
1,091,279
(360,364)
(6,814,921)
(513,496)
(1,996,783)
1,458,642
355,280
10,453,703
(4,223,494)
6,230,209
3,376,326
(148,860)
(5,930,665)
(359,517)
(7,405,399)
(4,237,906)
3,293,212
1,813,922
(944,694)
(792,775)
(303,133)
-
-
-
(303,133)
(792,775)
(1,247,827)
1,021,147
(944,694)
1,813,922
(1,247,827)
0.61
0.57
(0.38)
n/a
PAGE 71
For personal use only A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
U N A U D I T E D N O R M A L I S E D S T A T E M E N T O F F I N A N C I A L P O S I T I O N
FOR THE YEAR ENDED 30 JUNE 2014
U N A U D I T E D N O R M A L I S E D S T A T E M E N T O F C H A N G E S I N E Q U I T Y
FOR THE YEAR ENDED 30 JUNE 2014
30 June 2014
$
30 June 2013
$
1,665,207
3,020,985
-
6,114,013
8,414,231
19,214,436
392,875
67,896
3,025
132,093
12,011,412
4,401,274
4,599,784
21,608,359
40,822,795
3,141,549
5,014,791
852,323
(94,060)
57,298
8,971,901
-
140,168
2,901,397
3,041,565
12,013,466
28,809,329
32,153,001
(8,036,205)
4,692,533
28,809,329
1,767,156
1,074,871
-
7,115,790
5,914,682
15,872,499
-
313,926
280,984
223,399
11,535,561
4,513,455
2,936,629
19,803,955
35,676,454
2,329,224
4,436,797
14,479
234,884
92,037
7,107,421
390,148
837,646
1,544,570
2,772,364
9,879,785
25,796,669
30,203,033
(7,284,974)
2,878,610
25,796,669
Current assets
Cash and cash equivalents
Trade and other receivables
Derivative financial instruments
Inventories
Biological assets
Total current assets
Non-current assets
Intangibles
Loans joint venture entities
Equity accounted for investments
Inventories
Biological assets
Property, plant and equipment
Deferred tax assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Borrowings
Derivative financial instruments
Current tax liabilities
Short-term provisions
Total current liabilities
Non-current liabilities
Derivative financial instruments
Borrowings
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained profits/(accumulated losses)
Total equity
PAGE 72
For personal use only U N A U D I T E D N O R M A L I S E D S T A T E M E N T O F F I N A N C I A L P O S I T I O N
FOR THE YEAR ENDED 30 JUNE 2014
U N A U D I T E D N O R M A L I S E D S T A T E M E N T O F C H A N G E S I N E Q U I T Y
FOR THE YEAR ENDED 30 JUNE 2014
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
Consolidated
Attributable to owners of Atlas Pearls and Perfumes Limited
Contributed
equity
Share based
payment
reserve
Foreign
currency
translation
reserve
Retained
earnings/
(accumulated
losses)
Total equity
$
$
$
$
$
30,203,033
581,028
(7,866,003)
2,878,610
Balance at 1 July 2013
Profit/(loss) for the period
Exchange differences on translation of foreign operations
Total comprehensive income for the period
Transactions with owners in their capacity as owners
Contributions of equity, net of transaction costs
1,949,968
Dividends provided for or paid
Employee share scheme
-
-
1,949,968
-
-
-
41,545
41,545
-
1,813,922
(792,775)
(792,775
1,813,922
-
-
-
-
-
-
Balance at 30 June 2014
32,153,001
622,574
(8,658,778)
4,692,532
Balance at 1 July 2012
Profit/(loss) for the period
Exchange differences on translation of foreign operations
Total comprehensive income for the period
Transactions with owners in their capacity as owners
27,666,203
581,028
(7,562,869)
3,823,304
24,507,666
-
(944,694)
(303,133)
-
(944,694)
(303,133)
(303,133)
(944,694)
(1,247,827)
Contributions of equity, net of transaction costs
2,536,830
Dividends provided for or paid
Employee share scheme
-
-
2,536,830
-
-
-
-
-
-
-
-
Balance at 30 June 2013
30,203,033
581,028
(7,866,003)
2,878,610
-
-
-
-
-
-
-
-
-
-
-
-
25,796,669
1,813,922
(792,775)
1,021,147
1,949,968
-
41,545
1,991,513
28,809,329
2,536,830
-
-
2,536,830
25,796,669
PAGE 73
For personal use only A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
U N A U D I T E D N O R M A L I S E D S T A T E M E N T O F C A S H F L O W
FOR THE YEAR ENDED 30 JUNE 2014
A D D I T I O N A L A S X I N F O R M A T I O N
FOR THE YEAR ENDED 30 JUNE 2014
Cash flows from operating activities
Proceeds from pearl, jewellery and oyster sales
Proceeds from essential oil sales
Proceeds from other operating activities
Interest paid
Interest received
Payments to suppliers and employees
Income tax (paid)/received
Net cash used in operating activities
Cash flows from investing activities
Cash obtained on business combination
Payments for property, plant and equipment
Joint venture partnership contributions (paid)
Other loans
Net cash used in investing activities
Cash flows from financing activities
Repayment of borrowings
Proceeds from issue of shares
Share transaction costs
Proceeds from convertible notes
Net cash used in financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial period
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at the end of the financial year
Note
12 Months
Ending
30 June 2014
$
12 Months
Ending
30 June 2013
$
11,858,342
1,738,829
443,514
(204,364)
9,329
(13,743,885)
(359,059)
(257,294)
-
(1,234,528)
(53,971)
(1,288,499)
(329,224)
1,808,715
(30,321)
-
1,449,171
(96,623)
1,767,156
(5,326)
1,665,207
8,485,855
682,947
282,168
(300,472)
30,624
(11,598,895)
2,186,701
(231,072)
142,221
(687,301)
(286,109)
(89,105)
(920,294)
(2,337,833)
1,588,329
(149,611)
1,100,000
200,885
(950,481)
2,719,917
(2,280)
1,767,156
PAGE 74
For personal use only
U N A U D I T E D N O R M A L I S E D S T A T E M E N T O F C A S H F L O W
FOR THE YEAR ENDED 30 JUNE 2014
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
A D D I T I O N A L A S X I N F O R M A T I O N
FOR THE YEAR ENDED 30 JUNE 2014
The following additional information is required by the Australian Securities Exchange. The information is current as at 11 September 2014.
(a) Distribution schedule and number of holders of equity securities as at 11 September 2014
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 –
100,000
100,001 –
and over
Total
Fully Paid Ordinary Shares (ATP)
126
436
358
914
Unlisted Options – 8.58c 31/12/16
Unlisted Options – 9.5c 31/12/16
Convertible Notes
-
-
-
-
-
-
-
-
-
-
-
-
360
11
7
3
2,194
11
7
3
The number of holders holding less than a marketable parcel of fully paid ordinary shares as at 11 September 2014 is 466.
(b) 20 Largest holders of quoted equity securities as at 11 September 2014
The names of the twenty largest holders of fully paid ordinary shares (ASX code: ATP) as at 11 September 2014 are:
Rank
Name
Shares
% of Total
Shares
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
RAINTREE PEARLS & PERFUMES PTY LTD
CHEMCO SUPERANNUATION FUND PTY LTD
SP & K BIRKBECK HOLDINGS PTY LTD
JINGIE INVESTMENTS PTY LTD
ARROW PEARL CO PTY LTD
ABERMAC PTY LTD
WESTWOOD PROPERTIES PTY LTD
FARJOY PTY LTD
MR NELSON MICHEL PIERRE ROCHER
MR CHRIS CARR + MRS BETSY CARR
COAKLEY PASTORAL CO PTY LTD
FIVE TALENTS LIMITED
FORSYTH BARR CUSTODIANS LTD
ATLAS PEARL EMPLOYEE SHARE PLAN PTY LTD
BYRON BAY CELEBRANT PTY LTD
QUEENSRIDGE INVESTMENTS PTY LTD
MR MICHAEL BROWN + MRS CHRISTINE BROWN
MR PAWEL REJ + MRS MIROSLAWA REJ
DORRAN PTY LTD
MR TIMOTHY JAMES MARTIN
24,197,997
22,400,000
18,929,202
14,900,200
11,508,089
10,833,333
8,000,000
7,099,412
6,712,185
5,000,000
5,000,000
4,820,000
4,801,563
4,776,051
4,170,589
3,649,072
3,100,000
3,078,000
3,000,000
2,800,000
7.36
6.82
5.76
4.53
3.50
3.30
2.43
2.16
2.04
1.52
1.52
1.47
1.46
1.45
1.27
1.11
0.94
0.94
0.91
0.85
TOTAL
168,775,693
51.36
Stock Exchange Listing – Listing has been granted for 328,616,452 ordinary fully paid shares of the Company on issue on the Australian Securities Exchange.
The unquoted securities on issue as at 11 September 2014 are detailed below in part (d).
PAGE 75
For personal use only
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
A D D I T I O N A L A S X I N F O R M A T I O N
C O R P O R A T E G O V E R N A N C E S T A T E M E N T 2 0 1 4
(c)
Substantial shareholders
Substantial shareholders in Atlas Pearls and Perfumes Limited and the number of equity securities over which the substantial shareholder has a relevant interest as
disclosed in substantial holding notices provided to the Company are listed below:
Name
W. G. MARTIN & ASSOCIATES *
RAINTREE PEARLS & PERFUMES PTY LTD & ASSOCIATES **
T. J. MARTIN & ASSOCIATES ***
Shares
31,971,600
30,090,855
16,628,145
*
**
***
Includes shares held by Chemco Superannuation Fund Pty Ld and Jingie Investments Pty Ltd.
Includes shares held by Raintree Pearls & Perfumes Pty Ltd and SP & K Birkbeck Holdings Pty Ltd .
Includes shares held by Timothy James Martin and Jingie Investments Pty Ltd.
(d) Unquoted Securities
The number of unquoted securities on issue as at 11 September 2014:
Security
Unlisted options exercisable at 8.58 cents, on or before 31 December 2016.
Unlisted options exercisable at 9.5 cents, on or before 31 December 2016.
Convertible notes.
Number on issue
20,000,000
8,500,000
1,000,000
(e) Names of persons holding more than 20% of a given class of unquoted securities as at 11 September 2014 other than those securities issued under
an employee incentive scheme
Security
Holder Name
Convertible notes
Convertible notes
Chemco Superannuation Fund Pty Ltd
Abermac Pty Ltd
Number of
Securities
500,000
350,000
% Held
50%
35%
(f) Restricted Securities as at 11 September 2014
There were no restricted securities on issue as at 11 September 2014.
(g) Voting Rights
All fully paid ordinary shares carry one vote per ordinary share without restriction.
Unquoted options and convertible notes have no voting rights.
(h) Company Secretary
The Joint Company Secretaries are Mr Stephen Gleeson and Ms Susan Hunter.
(i) Registered Office
The Company’s Registered Office is 47 - 49 Bay View Terrace, Claremont, Western Australia 6010. Telephone: +61 8 9284 4249 Facsimile: +61 8 9284 3031
(j) Share Registry
The Company’s Share Registry is Computershare Investor Services Pty Ltd of Level 2, 45 St Georges Terrace, Perth WA 6000.
Telephone: 1300 557 010 (from within Australia); +61 3 9415 4000 (from outside Australia).
(k) On-Market Buy-back
The Company is not currently performing an on-market buy-back.
PAGE 76
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A D D I T I O N A L A S X I N F O R M A T I O N
C O R P O R A T E G O V E R N A N C E S T A T E M E N T 2 0 1 4
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
The Board of Directors of Atlas Pearls and Perfumes
Ltd (“Atlas” or “the Company”) is responsible for
the corporate governance of the Company and its
subsidiaries and the Board has adopted a manual
of corporate governance policies and procedures
based on control systems and accountability.
The Board of the Company will review the Atlas’
Corporate Governance Plan annually. The Corporate
Governance Plan is available in the corporate
governance information section of the Company’s
website at www.atlaspearlsandperfumes.com.
au. A summary of the Company’s corporate
governance policies and procedures is included in
this Statement.
The Company’s corporate governance policies
and procedures are in line with the ASX Corporate
Governance Council’s Corporate Governance
Principles and Recommendations (2nd Edition) (“the
Principles & Recommendations”). The Company has
followed the Principles & Recommendations where
the Board has considered the recommendation
to be an appropriate benchmark for its
corporate governance practices. Where, after
due consideration by the Board, the Company’s
corporate governance practices depart from the
Principles & Recommendations, the Board has fully
disclosed the departure and the reason for the
adoption of its own practice, in compliance with the
“if not, why not” exception reporting regime.
The third edition of the Corporate Governance
Principles and Recommendations was released on
27 March 2014 and takes effect for a listed entity’s
first full financial year commencing on or after 1 July
2014. During the 30 June 2015 financial year the
Company will review and update their corporate
governance policies and practices.
Further information about the Company’s corporate
governance practices including the information on
the Company’s charters, code of conduct and other
policies and procedures is set out on the Company’s
website.
BOARD OF DIRECTORS
Role of the Board and Management
The Board is responsible for promoting the success
of the Company in a way which ensures that the
interests of shareholders and stakeholders are
promoted and protected. The Board may delegate
some powers and functions to the Managing
Director or CEO for the day-to-day management of
the Company. Powers and functions not delegated
remain with the Board. The key responsibilities and
functions of the Board include the following:
•
•
•
appointment of the Managing Director/
CEO and other senior executives and the
determination of their terms and conditions
including remuneration and termination;
driving the strategic direction of the
Company, ensuring appropriate resources are
available to meet objectives and monitoring
management’s performance;
reviewing and ratifying systems of risk
management and internal compliance
and control, codes of conduct and legal
compliance;
•
•
•
•
•
•
•
•
•
approving and monitoring the progress
of major capital expenditure, capital
management and significant acquisitions and
divestitures;
approving and monitoring the budget and
the adequacy and integrity of financial and
other reporting;
approving the annual and half yearly accounts;
approving significant changes to the
organisational structure;
approving the issue of any shares, options,
equity instruments or other securities in the
Company;
ensuring a high standard of corporate
governance practice and regulatory
compliance and promoting ethical and
responsible decision making;
recommending to shareholders the
appointment of the external auditor as and
when their appointment or re-appointment is
required to be approved by them; and
meeting with the external auditor, at their
request, without management being present.
The Board’s role and the Company’s corporate
governance practices are periodically
reviewed and improved as required.
The role of the senior management of the Company
is to progress the strategic direction provided by the
Board. Senior management will be responsible for
supporting the Board in implementing the running
of the general operations and financial business of
the Company in accordance with the delegated
authorities for expenditure levels and materiality
thresholds in place.
The Company has a Performance Evaluation policy
which outlines the performance evaluation of the
Board, its Committees and its individual Directors.
The Nomination Committee is responsible for
evaluation of the Board its Committees and its
individual Directors, if required, on an annual basis.
No formal reviews of the Board, its Committees and
its individual Directors were undertaken during
the financial year. Following the update of the
Company’s corporate governance policies and
procedures which is planned for the end of the
2014 calendar year, a formal review of the role of the
Board is proposed to be conducted to assess the
performance of the Board over the previous twelve
(12) months and examine ways of assisting the
Board in performing its duties more effectively. The
review may include:
•
•
•
•
comparing the performance of the Board with
the requirements of its Charter;
examination of the Board’s interaction with
management;
the nature of information provided to the
Board by management; and
management’s performance in assisting the
Board to meet its objectives.
A similar formal review will be conducted for each
Committee, if relevant, by the Board with the aim
of assessing the performance of each Committee
and identifying areas where improvements can be
made. A review may also be conducted for each
Director to assess performance of that Director and
to identify areas where improvements can be made.
The Board with assistance from the Remuneration
Committee oversee the performance evaluation
of the executive team. This evaluation is based on
specific criteria, including the performance of the
Company, whether strategic objectives are being
achieved and the development of management and
personnel. Performance and remuneration reviews
of the executive team were conducted during the
financial year and these reviews are undertaken at
least annually. Senior executives are reviewed against
a number of qualitative and quantitative factors
relevant to their role and position.
The Board Charter including matters reserved
for the Board and senior management and the
Performance Evaluation Policy is available on the
Company’s website.
COMPOSITION OF THE BOARD
The Company has adopted a policy on assessing
the independence of Directors which is consistent
with the guidelines detailed in the ASX Principles
& Recommendations and detailed in the Board
Charter and is attached as Annexure A to the
Corporate Governance Plan. The materiality
thresholds in this policy are assessed on a case-
by-case basis, taking into account the relevant
Director’s specific circumstances, rather than
referring to a general materiality threshold.
The Board includes an executive Chairman/CEO, Mr
Stephen Birkbeck, Mr Birkbeck’s alternate Director
Mr Nelson Rocher, and four non-executive Directors,
Mr Geoff Newman, Mr Timothy Martin, Mr Stephen
Arrow and Dr Joseph Taylor. The Board considers
Messrs Newman and Arrow to be independent
based on the criteria for independence included
in the Company’s Policy on Assessing the
Independence of Directors and the ASX Principles &
Recommendations. Mr Birkbeck being an executive
of the Company and a substantial holder via his
controlled entities is not be considered to be
independent. Mr Martin being a substantial holder
via his controlled entities is not considered to be
independent. Dr Taylor provides consulting services
to the Company and is not considered to be
independent. Therefore, the Company currently has
two independent Directors and three Directors who
are not considered to be independent and does not
have a majority of independent Directors.
The role of CEO and Chairman are both fulfilled
by Mr Birkbeck. Mr Birkbeck brings specific skills
and industry experience relevant to the Company.
Given the size of the Company and the size of the
Board, the Board considers that this appointment is
appropriate.
Any changes to the composition of the Board
will be determined by the Board, subject to the
Company’s Constitution, any applicable laws and
the resolutions of Shareholders. The Board will seek
to nominate persons for appointment to the Board
with the appropriate mix of skills and experience
to ensure an effective decision-making body and
PAGE 77
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A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
C O R P O R A T E G O V E R N A N C E S T A T E M E N T 2 0 1 4
C O R P O R A T E G O V E R N A N C E S T A T E M E N T 2 0 1 4
to ensure that the Board is comprised of Directors
who contribute to the successful management of
the Company and discharge their duties having
regard to the law and the highest standards of
corporate governance. The Board should comprise
Directors with a mix of qualifications, experience
and expertise which will assist the Board in fulfilling
its responsibilities, as well as assisting the Company
in achieving growth and delivering value to
shareholders.
As required by the Constitution of Atlas, at the
Company’s annual general meeting in every year,
one-third of the Directors for the time being, or, if
their number is not a multiple of 3, then the number
nearest one-third, shall retire from office, provided
always that no Director (except the Managing
Director) shall hold office for a period in excess of
3 years, or until the third annual general meeting
following his or her appointment, whichever is the
longer, without submitting himself or herself for
re-election. Any Director (except the Managing
Director) appointed by the Directors since the date
of the last annual general meeting must also stand
for re-election at the next annual general meeting
following their appointment. Prior to the Board
proposing re-election of non-executive Directors,
their performance will be evaluated to ensure that
they continue to contribute effectively to the Board.
The Company’s policy for re-election of Directors
and selection and appointment of new Directors
is available in the Board Charter and Nomination
Committee Charter in the Corporate Governance
Plan on the Company’s website at www.
atlaspearlsandperfumes.com.au.
REMUNERATION COMMITTEE
The Board has established a Remuneration
Committee which is comprised of Mr Newman
(Chairman of the Committee and independent
Non-executive Director), Dr Taylor (Non-executive
Director), Mr Timothy Martin (Non-executive
Director) and Mr Birkbeck (Chairman of the Board
and CEO). Mr Birkbeck, in his capacity as CEO
does not attend the Remuneration Committee
Meetings that involve matters that pertain to
him. The Committee does not have a majority
of independent Directors but is chaired by an
independent Director.
To assist the Committee to fulfill its function as the
Remuneration Committee, the Board has adopted a
Remuneration Committee Charter. The Remuneration
Committee Charter is available on the Company’s
website at www.atlaspearlsandperfumes.com.au.
Remuneration of Directors and senior management
is determined with regard to the performance
of the Company, the performance and skills and
experience of the particular person and prevailing
remuneration expectations in the market. Details
of remuneration of Directors and Key Management
Personnel are disclosed in the Remuneration Report.
The performance of the CEO and the executive
team is reviewed annually by the Remuneration
Committee. The Board has engaged the services
of independent remuneration experts in assessing
remuneration levels for the Directors and executives.
The performances of the other staff are reviewed on
an annual basis by the CEO in consultation with the
Remuneration Committee.
A profile of each Director containing their skills,
experience and expertise is set out in the Directors’
Report.
There are no termination or retirement benefits
for non-executive Directors (other than for
superannuation).
STATEMENT CONCERNING
AVAILABILITY OF INDEPENDENT
PROFESSIONAL ADVICE
The Board considers that to assist Directors with
independent judgement a Director may consider
it necessary to obtain independent professional
advice to properly discharge the responsibility of
their office as a Director. Provided the Director first
obtains approval for incurring such expense from
the Chairman, the Company will pay the reasonable
expenses associated with obtaining such advice.
NOMINATION COMMITTEE
Given the present size of the Company, the whole
Board acts as the Nomination Committee. The Board
believes no efficiencies or other benefits could
be gained by establishing a separate Nomination
Committee. To assist the Board to fulfill its function
as the Nomination Committee, the Board has
adopted a Nomination Committee Charter. The
responsibilities of the Committee include the
periodic review and consideration of the structure
and balance of the Board and the making of
recommendations regarding appointments,
retirements and terms of office of Directors.
The Nomination Committee Charter is available on
the Company’s website.
PAGE 78
Executives are prohibited from entering into
transactions or arrangements which limit the
economic risk of participating in unvested
entitlements.
CODE OF CONDUCT
The Company has adopted a Code of Conduct that
outlines how the Company expects its Directors and
employees of the Company to behave and conduct
business in the workplace on a range of issues. The
Company is committed to the highest level of integrity
and ethical standards in all business practices.
The purpose of the Code of Conduct is to provide
a framework for decisions and actions in relation
to ethical conduct in employment. It underpins
the Company’s commitment to integrity and fair
dealing in its business affairs and to a duty of care to
all employees, clients and stakeholders.
It sets out the Company’s expectations of its
Directors and employees with respect to a range
of issues including personal and professional
behaviour, conflicts of interest, public and media
comment, use of Company resources, security of
information, intellectual property and copyright,
discrimination and harassment, corrupt conduct,
occupational health and safety, fair dealing and
insider trading.
A breach of the Code is subject to disciplinary
action which may include punishment under
legislation and/or termination of employment. The
Code of Conduct is available on the Company’s
website at www.atlaspearlsandperfumes.com.au.
ETHICAL STANDARDS
The Board considers that the success of the
Company will be enhanced by a strong ethical
culture within the Company. Accordingly, the
Board is committed to the highest level of integrity
and ethical standards in all business practices.
Employees must conduct themselves in a manner
consistent with current community and corporate
standards and in compliance with all legislation.
CONFLICTS OF INTEREST
In accordance with the Corporations Act 2001,
Directors must keep the Board advised, on an
ongoing basis, of any interest that could potentially
conflict with those of the Company. Where the
Board believes that a significant conflict exists, the
Director concerned does not receive the relevant
Board papers and is not present at the meeting
whilst the item is considered.
GUIDELINES FOR TRADING IN THE
COMPANY’S SECURITIES
The Trading Policy adopted by the Board prohibits
trading in shares by a Director, officer or employee
during certain blackout periods (in particular, prior
to release of the half yearly and annual financial
results) except in exceptional circumstances and
subject to procedures set out in the Guidelines.
Outside of these blackout periods, a Director,
officer or employee must first obtain clearance in
accordance with the Guidelines before trading in
shares. For example:
A Director must receive clearance from the CEO or
Chairman before he may buy or sell shares.
If the Chairman wishes to buy or sell shares he must
first obtain clearance from the Board.
Other officers and employees must receive
clearance from the Managing Director/CEO or
Chairman before they may buy or sell shares.
Directors, officers and employees must observe their
obligations under the Corporations Act 2001 not to
buy or sell shares if in possession of price sensitive
non-public information and that they do not
communicate price sensitive non-public information
to any person who is likely to buy or sell shares or
communicate such information to another party.
The Trading Policy is available on the Company’s
website at www.atlaspearlsandperfumes.com.au.
CONTINUOUS DISCLOSURE
The Company is a “disclosing entity” for the
purposes of Part 1.2A of the Corporations Act 2001.
As such, the Company has a Continuous Disclosure
Policy. The purpose of this Continuous Disclosure
Policy is to ensure the Company complies with
For personal use only
C O R P O R A T E G O V E R N A N C E S T A T E M E N T 2 0 1 4
C O R P O R A T E G O V E R N A N C E S T A T E M E N T 2 0 1 4
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
continuous disclosure requirements arising from
legislation and the Listing Rules of the Australian
Securities Exchange (“ASX”). The Policy sets out the
procedure for:
•
•
•
•
protecting confidential information from
unauthorised disclosure;
identifying material price sensitive information
and reporting it to the Company Secretary for
review;
ensuring the Company achieves best practice
in complying with its continuous disclosure
obligations under legislation and the Listing
Rules; and
ensuring the Company and individual officers
do not contravene legislation or the Listing
Rules.
The Company has obligations under the
Corporations Act 2001 and ASX Listing Rules to
keep the market fully informed of information
which may have a material effect on the price or
value of the Company’s securities and to correct any
material mistake or misinformation in the market.
Atlas discharges these obligations by releasing
information to the ASX in the form of an ASX release
or disclosure in other relevant documents (e.g. the
Annual Report).
The Company recognises that the maintenance
of confidentiality is also of paramount importance
to the Company both to protect its trade secrets
and to prevent any false market for the Company’s
shares from developing.
All relevant information provided to ASX in
compliance with the continuous disclosure
requirements of legislation and the Listing Rules is
promptly posted on the Company’s web site.
The Continuous Disclosure Policy is available on the
Company’s website.
AUDIT COMMITTEE
The Board has established an Audit Committee
which is comprised of Mr Newman (Chairman of
the Committee and independent Non-executive
Director), Mr Arrow (Non-executive Director) and
Dr Taylor (Non-executive Director). The Committee
consists of a majority of independent Non-executive
Directors and is chaired by an independent chair,
who is not the chair of the Board. Mr Newman, the
Chairman of the Committee, has extensive financial
experience. Mr Arrow and Dr Taylor have a good
understanding of business and are financially literate.
The Committee only had two members during
the financial year as Mr Arrow was appointed
subsequent to 30 June 2014 but now has a total of
three members.
To assist the Committee to fulfill its function as the
Audit Committee, the Board has adopted an Audit
Committee Charter.
The Audit Committee provides recommendations
in relation to the initial appointment of the external
auditor and the appointment of a new external
auditor should a vacancy arise. Any appointment of
a new external auditor made by the Board must be
ratified by shareholders at the next annual general
meeting of the Company.
Proposed external auditors must be able to
demonstrate complete independence from the
Company and an ability to maintain independence
through the engagement period. In addition, the
successful candidate for external auditor must have
arrangements in place for the rotation of the lead
audit engagement partner on a regular basis. Other
than these mandatory criteria, the Board may select
an external auditor based on other criteria relevant
to the Company such as references, cost and any
other matters deemed relevant by the Board.
A formal Audit Committee Charter has been
adopted, a copy of which is available on the
Company’s website.
COMMUNICATION TO
SHAREHOLDERS
The Company has a Shareholder Communications
Strategy that promotes effective communication
with shareholders and encourages presentation
of information to shareholders in a clear, concise
and effective manner. The Board aims to ensure
that Shareholders are informed of all major
developments affecting the Company’s state of
affairs. Information will be communicated to
Shareholders through the annual report, half yearly
report, disclosures and announcements made to
the ASX, the annual general meeting and general
meetings and through the Company’s website.
The Company considers general meetings to be an
effective means to communicate with shareholders
and encourages shareholders to attend the
meeting. Information included in the notice of
meeting sent to shareholders will be presented in a
clear, concise and effective manner.
The Shareholder Communications Strategy is
available on the Company’s website.
RISK MANAGEMENT
The Board determines the Company’s “risk profile”
and is responsible for overseeing and approving
risk management strategy and policies, internal
compliance and internal control.
The Board delegates to the CEO responsibility for
implementing the risk management system who
will submit particular matters to the Board for its
approval or review. The Chairman/CEO is required
to report on the management of risk as a standing
agenda item at each Board meeting. This involves
the tabling of a risk register which is monitored and
updated by management periodically.
The responsibility for undertaking and assessing
risk management and internal control effectiveness
is delegated to management. Management is
required to assess risk management and associated
internal compliance and control procedures and
regularly report back to the Board.
The Board will regularly review assessments of the
effectiveness of risk management and internal
compliance and control. The Board also receives an
assurance from management that the Company’s
management of its material business risks is effective.
The Company’s Risk Management Policy is available
on the Company’s website.
INTEGRITY OF FINANCIAL
REPORTING
The Board has received assurance in writing from
Mr Birkbeck, Executive Chairman and CEO and Ms
Danielle Brandenburg, Chief Financial Officer, in
accordance with section 295A of the Corporations
Act 2001 that:
•
•
•
the consolidated financial statements of the
Company and its controlled entities for the
financial year present a true and fair view, in all
material aspects, of the Company’s financial
condition and operational results and are in
accordance with accounting standards;
the above statement is founded on a sound
system of risk management and internal
compliance and control which implements
the policies adopted by the Board; and
the Company’s risk management and
internal compliance and control framework
is operating efficiently and effectively in all
material respects.
DIVERSITY POLICY
The Company recognises the benefits arising
from employee and Board diversity, including
a broader pool of high quality employees,
improving employee retention, accessing different
perspectives and ideas and benefiting from all
available talent. Given the present size of the
Company, the Board has not adopted a Diversity
Policy. The Board believes no efficiencies or
other benefits could be gained by establishing a
formal Diversity Policy. The Board will consider the
adoption of a formal Diversity Policy if deemed
appropriate in future.
Men
Woman
Board
Senior Management
Staff
100%
83%
57%
-
17%
43%
PAGE 79
For personal use only
A T L A S P E A R L S A N D P E R F U M E S L T D A N D I T S S U B S I D I A R I E S
C O R P O R A T E G O V E R N A N C E S T A T E M E N T 2 0 1 4
ASX LISTING RULE DISCLOSURE – EXCEPTION REPORTING
As required by ASX Listing Rules, the following table discloses the extent to which Atlas has not followed the best practice recommendations set by the ASX
Corporate Governance Council’s Corporate Governance Principles and Recommendations.
PRINCIPLE NO.
BEST PRACTICE
COMPLIANCE
REASONS FOR NON-COMPLIANCE
2.1
2.2
2.3
2.4
2.5
3.2
3.3
RECOMMENDATION
A majority of the Board should be
independent directors.
Currently, Atlas has
two independent and
three non-independent
Directors.
The Board considers that the current composition of the Board is appropriate in the context of
the size of the Board and the Company and the scope and scale of the Company’s operations.
Further, the Company considers that each of the non-independent Directors possess skills and
experience suitable for building the Company. The Board may consider the appointment of
independent Directors if deemed appropriate in future.
The Chair should be an
independent Director.
Currently, Atlas has a
non-independent Chair.
The Board considers that the non-independent Chair possesses skills and experience suitable
for leading the Board and considers a non-independent Chair to be appropriate in the context
of the Company’s operations. Mr Birkbeck brings specific skills and industry experience relevant
to the Company. The Board may consider the appointment of an independent Director as the
Chair if deemed appropriate in future.
The role of Chair and CEO should
not be exercised by the same
individual.
Currently, Atlas’ Chair
also fulfils the role of
CEO.
The Board considers Mr Birkbeck brings specific skills and industry experience relevant to
the Company and considers a Chair/CEO to be appropriate in the context of the Company’s
operations and the size of the Board and the Company. The Board may consider splitting the
role of Chairman and CEO/Managing Director if deemed appropriate in future.
The Board should establish a
nomination committee.
Companies should disclose
the process for evaluating the
performance of the Board,
its committee and individual
Directors.
Companies should establish
a diversity policy and include
measurable objectives for
achieving gender diversity for
the Board to assess annually both
the objectives and progress in
achieving them.
Companies should disclose
achievement of measurable
objectives for gender diversity.
The Board has
not established a
nomination committee.
The role of the
nomination committee
is carried out by the full
Board.
The Board did not
undertake a formal
process for the
evaluation of the board,
individual Directors or
committees during the
financial year.
The Board has not
adopted a formal
diversity policy.
Given the present size of the Company and the Board, the whole Board acts as a nomination
committee. The Board believes no efficiencies or other benefits could be gained by establishing
a separate Nomination Committee. However, it is noted the Board has adopted a Nomination
Committee Charter.
The Board plans to undertake a formal process process for evaluating the performance of the
Board, its committees and individual Directors in the coming financial year following the review
of the Company’s corporate governance policies and procedures in line with the third edition of
the Corporate Governance Principles and Recommendations.
Given the present size of the Company, the Board has not adopted a Diversity Policy. The Board
believes no efficiencies or other benefits could be gained by establishing a formal Diversity
Policy. The Board will consider the adoption of a formal Diversity Policy if deemed appropriate
in future given the size of the Company, the Board, the workforce and the activities of the
Company. It is noted that the Company recognises the benefits arising from employee and
Board diversity, including a broader pool of high quality employees, improving employee
retention, accessing different perspectives and ideas and benefiting from all available talent.
Given the size of
the Company, no
measurable objectives
for achieving gender
diversity have been set.
Whilst no measurable objectives have been set for achieving gender diversity, the Company
has disclosed in this Annual Report the proportion of women employees in the Company, in
senior executive positions and on the Board. The Board will consider the setting of measurable
objectives for achieving gender diversity as the size of the Company, Board, workforce and the
activity of the Company increase.
PAGE 80
For personal use only C O R P O R A T E G O V E R N A N C E S T A T E M E N T 2 0 1 4
A T L A S P E A R L S A N D P E R F U M E S • 2 0 1 4
D I R E C T O R Y
Stephen Paul Birkbeck, Joseph James Uel Taylor B.Sc. (Biology), Ph.D, Geoff Newman B.Ec (Hons), M.B.A, F.C.P.A, F.A.I.C.D.
Timothy James Martin B.Arts, M.B.A, G.A.I.C.D., Stephen Arrow and Nelson Rocher.
DIRECTORS
COMPANY SECRETARIES
Susan Hunter B.Com, ACA, F Fin, G.A.I.C.D, A.C.I.S, A.C.S.A.
and Stephen Gleeson B.BUS, CPA
REGISTERED OFFICE
47-49 Bay View Terrace Claremont Western Australia 6010
P.O. Box 1048 Claremont Western Australia 6910
Tel: +61(0)8 9284 4249 Fax: +61 (0)8 9284 3031
Website: www.AtlasPearlsAndPerfumes.com.au
E-mail: atlas@atlaspearlsandperfumes.com.au
AUDITORS
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INVESTOR RELATIONS
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BANKERS
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SHARE REGISTRY
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HOME EXCHANGE
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Exchange Plaza 2 The Esplanade Perth Western Australia 6000
ASX TRADING CODE
ATP
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