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 6
For personal use only Nature’s creation...from our hands to your heart.
The Journey • 5
Financial Report • 15
Corporate Directory • 16
Letter from the Chairman • 17
Summary of Fiscal Indicators • 18
Managing Director’s Report • 19
Directors’ Report • 20
Independance Report • 31
Financials • 32
PAGE 3
For personal use only T H E A T L A S P E A R L S J O U R N E Y
R E S P E C T A N D I N T E G R I T Y O F A L L T H E P E O P L E W E I N T E R A C T W I T H , A S W E L L
A S T H E R E L I G I O N S , C U L T U R E S , B E L I E F S A N D L A W S O F T H E C O U N T R I E S
W H E R E T H E G R O U P O P E R A T E S I S E X P E C T E D A T A L L T I M E S .
Atlas employs more than 800 people.
Our staff originate from 10 different nationalities, cultures and religions.
PAGE 5
For personal use only T H E A T L A S P E A R L S J O U R N E Y
Atlas Alyui farm, Raja Ampat.
P A S S I O N A N D C O M M I T M E N T A R E T H E K E Y D R I V E R S
T O W A R D S C R E A T I N G , A D D I N G A N D D E L I V E R I N G
S U P E R I O R Q U A L I T Y A L O N G O U R V A L U E C H A I N .
Atlas Pearls has two decades of pearling history and is considered a world leader in eco-pearling.
The company operates five pearl farms throughout the Indonesian Archipelago.
These nutrient-rich waters produce some of the world’s best silver and white South Sea pearls.
It is a 6-day boat trip from Bali to our most remote pearl farm in Alyui, West Papua.
PAGE 6
Atlas North Bali farm.
Atlas Pungu farm, Labuan Bajo.
Atlas Lembata farm, Nusa Tenggara.
For personal use only T H E A T L A S P E A R L S J O U R N E Y
C A R E A N D U N D E R S T A N D I N G M U S T P R E V A I L I N O U R D E A L I N G S
W I T H T H E P E O P L E A N D A N I M A L S W E L O O K A F T E R .
The journey of a pearl can take up to 5 years from hatchery to harvest.
Each pearl is a living testimony of this journey and will reflect the influence man and nature had
over the life of each mother of pearl oyster harvested.
PAGE 9
For personal use only T H E A T L A S P E A R L S J O U R N E Y
T O G E T H E R W E H A V E T H E P O W E R T O E X P O N E N T I A L L Y
M U L T I P L Y T H E I M P A C T A N D M E A N I N G O F I N D I V I D U A L
P E R F O R M A N C E .
During its lifetime each oyster is handled or moved over 600 times.
3000 hands will nurture an Atlas creation before it is delivered to your hands.
PAGE 10
Atlas Pearl Farm - North Bali.
For personal use only T H E A T L A S P E A R L S J O U R N E Y
Atlas Youth Ambassador
Diah Rahayu - Pro Surfer - Indonesia
I N T U I T I O N A N D I N I T I A T I V E S W I L L B E E N C O U R A G E D A T A L L T I M E S I N O U R
Q U E S T T O W A R D S E X C E L L E N C E .
The beauty and soul of the South Sea pearl is our inspiration. • We are driven by innovation and embrace positive changes.
PAGE 13
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
F I N A N C I A L R E P O R T
FOR THE YEAR ENDED 30 JUNE 2016
RESULTS FOR ANNOUNCEMENT TO THE MARKET
Consolidated Financial Results
Total revenue from ordinary activities
Profit from ordinary activities after tax attributable to the owners
of Atlas Pearls and Perfumes Ltd
Net Profit attributable to the owners of Atlas Pearls and Perfumes Ltd
Up 117%
Compared to actual
for previous
12 months ending
30 June 2015
12 months ending
30 June 2016
$
Up 52%
Up 112%
18,434,855
968,103
1,585,319
Dividends
Amount per security
Franked Amount per security
Dividend per ordinary share in respect of 30 June 2016 financial period
0.0 cents
0.0 cents
Commentary on results for the financial period
Refer to the Annual Report attached.
Consolidated Statement of Profit or Loss and Other
Comprehensive Income
Refer to the Annual Report attached.
Consolidated Statement of Financial Position
Refer to the Annual Report attached.
Consolidated Statement of Change in Equity
Refer to the Annual Report attached.
Consolidated Statement of Cash Flow
Refer to the Annual Report attached.
Dividend
It is not proposed to pay dividends
Net tangible assets per security
Year ended
30 June 2015
$
NTA per ordinary share
5.6
Year ended
30 June 2016
$
5.9
Control gained or lost over entities during the financial year:
No control gained or lost during the financial year.
Other Information
Refer to the Annual Report attached.
Commentary on results for the period
Refer to the Annual Report attached.
Audit
The accounts have been audited and an unqualified opinion has been issued
Attachments
The Annual Report of Atlas Pearls and Perfumes Limited for the year ended 30 June 2016 is attached.
Atlas Pearl Farm - Pungu, Labuan Bajo.
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PAGE 15
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 R P O R AT E D I R E C T O R Y
FOR THE YEAR ENDED 30 JUNE 2016
L E T T E R F R O M T H E C H A I R M A N
FOR THE YEAR ENDED 30 JUNE 2016
DIRECTORS
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 John ARROW
Pierre FALLOURD
M.B.A
CHIEF FINANCIAL OFFICER
Trevor HARRIS
BCom, CPA, GDip Law_ACG, AGIA
COMPANY SECRETARY
Susan HUNTER
BCom, ACA, F Fin, GAICD, AGIA
REGISTERED OFFICE
47-49 Bay View Terrace
Claremont
Western Australia 6010
P.O. Box 1048
Claremont
Western Australia 6910
Telephone: +61(0)8 9284 4249
Facsimile: +61 (0)8 9284 3031
Website: http://www.atlaspearlsandperfumes.com.au
E-mail: atlas@atlaspearlsandperfumes.com.au
AUDITORS
BDO Audit (WA) Pty Ltd
38 Station Street
Subiaco WA 6008
TAX ADVISERS
RSM Bird Cameron
8 St Georges Terrace
Perth WA 6000
BANKERS
Commonwealth Bank of Australia
150 St Georges Terrace
Perth
Western Australia 6000
SHARE REGISTRY
Computershare (WA) Pty Ltd
Level 11,
172 St George’s Terrace
Perth
Western Australia 6000
HOME EXCHANGE
Australian Securities Exchange Ltd
Exchange Plaza
2 The Esplanade
Perth
Western Australia 6000
ASX Trading Code: ATP
Dear Shareholder
It is pleasing to write to you in this, my second year as Chairman, to
report that Atlas has enjoyed a strong re-bound in earnings over the
course of the 2015/16 year.
This year’s financial result of a positive $3.76m EBITDA represents a
significant improvement over 2014/15. This is very heartening for the
board, and a fitting recognition of the efforts of the Atlas Pearls’ team.
As encouraging as the re-bound is, it is important to acknowledge
that the 2015/16 result was aided by some favorable external factors –
particularly:
1.
Improving pearl market and client appreciation of our pearls, and
2. An increase in reported revenues realised due to the
strengthening of the Japanese yen against the Australian dollar.
Together with effective cost management and an engaged team,
these influences have helped our core financial performance recover
back to historical levels. I firmly believe that the issues of 2014 are now
well behind us.
As most of us know this is a business with a 4 year production cycle,
and perhaps of more significance than this year’s financial recovery
is the groundwork that has been done to secure the future of the
company and provide a platform for growth.
The impacts of changes in seeding and husbandry practices in 2015
has resulted in consistently improved post op seeding retention and
oyster survival, and has the potential to result in increasing harvest
volumes. In addition, while our expectations around enhanced pearl
quality from these changes are yet to be reflected in reported financial
results, harvest of the first of the crops to benefit from these changes
will occur from December this year.
From a corporate perspective, we again have a “matter of emphasis”
note in this report relating to our debt facilities with CBA. The
reduction of our debt facility from $5M to $4M though our own
profitability is a significant achievement of the last year, however the
core of the debt remains. As advised to the market in June 2016, the
company’s CBA facilities have been extended to June 2017 and Atlas
will again reduce borrowings and net debt over the course of this year.
It is however clear that if we are to make the most of the opportunities
ahead of us, we must take innovative approaches to making our
capital structure more robust. The company has started on this
process and our improved performance, coupled with our significant
footprint in Asia, opens up partnering opportunities to do this.
Having said that, I want to assure all shareholders that the Board is
acutely aware of the commitment and loyalty shown by shareholders
in the past, and we will do our best to manage an outcome which has
the minimum dilutive effect on your existing investment.
Finally, on behalf of my fellow directors, I want to acknowledge the
incredible performance of our skilled and dedicated employees over
the past two years. Over that period, and many longer, they have
shared the highs and lows of the company’s financial performance
along with you, our shareholders. Throughout they have shown an
unwavering commitment to your company’s future, and their loyalty
and knowledge is the company’s greatest asset. The year ahead will
present both new challenges and opportunities, and with strong,
supportive leadership from our Managing Director Pierre Fallourd, our
CFO Trevor Harris, our COO Mark Longhurst, and our Sales Manager
Tim Jones, we now have in place an outstanding team of people to
capitalize on the bright future ahead of us.
Current evolutions at a hatchery level are also promising and are
expected to provide further opportunities for organic growth in
seeding numbers 2 to 3 years from now.
Geoff Newman
Chairman
On a separate topic, the board has assessed its position on our 50%
owned subsidiary Essential Oils of Tasmania (EOT) based on evaluation
of offers to purchase our interest. It is our opinion that the company
adds more strategic value as a diversified revenue stream than the
offers reflect. The board has taken a prudent approach to valuing
our interest in this year’s accounts, but remains confident in the
future possibilities. As a result, Atlas intends to retain this interest and
together with our Tasmanian partner expand the company’s footprint
and grow the business into a significant provider of world class
products into major international markets.
30th August 2016
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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
S U M M A R Y O F K E Y F I S C A L I N D I C AT O R S 2 0 1 5 / 1 6
FOR THE YEAR ENDED 30 JUNE 2016
M A N A G I N G D I R E C T O R ’ S R E P O R T
FOR THE YEAR ENDED 30 JUNE 2016
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) gains/(losses)
Other non-operating (costs)/benefits
Derivative instruments gains/(losses)
Impairment of joint venture loan
Fair value gain/(loss) on EOT assets
Gain/(Loss) on sale of investment
Earnings/(loss) before interest and tax (EBIT)
EBIT margin
Finance/interest net costs/(income)
Tax benefit/(expense)
Net Profit/(Loss) 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)
30 June 16
$’000
30 June 15
$’000
18,434
3,762
20.4%
(399)
(750)
1,827
(281)
(268)
(816)
-
-
3,076
16.7%
288
(1,819)
968
0.23
25,162
34,808
4,225
25,825
16%
425.40
12,118
(1,235)
(10.2%)
(589)
792
(6,697)
496
656
(149)
(245)
(245)
(7,215)
(59.5%)
398
(521)
(8,134)
(2.40)
23,974
30,942
4,085
23,974
17%
425.40
My main focus as CEO of Atlas since being appointed on 24 November
2014, and now as Managing Director of both Atlas Pearls and Perfumes
and its subsidiary PT Cendana Indopearls in Indonesia, has been to
build and maintain a solid communication bridge between the group’s
operations in Indonesia, Western Australia and Tasmania.
FOCUS AND CONSOLIDATE
Last year was very much about focusing and consolidating the
company’s core pearling business, by applying pearling best practices,
re- aligning processes and further engaging people. Reshaping our
corporate structure has allowed Atlas Pearls to trim overheads by $856,
000 or 11% . Overall operating expenses were reduced from $7 million
in 2014/15 to $6 million in 2015/16.
The first wave of reforms were geared towards shell management.
This, along with strong demand and favourable JPY/ AUD exchange
rates, delivered a 52% turnover increase, and a 400% EBITDA increase
to reach $18.4m and $3.76m respectively, as well as a return to a more
historically “normalised” oyster stock valuation.
SHARE AND SUSTAIN
People are driving changes and handling challenges as a result of the
agility of the organization and its ability to consistently create value.
Effective communication is the key to an efficient value chain along
which synergies can be developed. At the centre of this value chain
are skilled, inspired and aligned people.
Significant efforts have been invested to provide the right skillset and
depth of knowledge to the organization by bringing in the right talent.
While simultaneously ,providing opportunities for the growth of local
and expat staff..
Atlas has been able to double its pearl production every 5 years since
it harvested 50,000 pearls in 2000 to reach 300,000 plus in 2015.
The past 12 months have demonstrated the ability of the Atlas team
to turn around the business and further to that, build the foundations
on which the company will grow. Atlas is now well-positioned to take
hold of its solid competitive advantage.
This year is about anchoring the company on solid foundations to
ensure both quantity and quality targets are hit consistently.
Two more waves of improvements are expected between 2017 and
2020 when, subject to seeding and hatchery reforms, oysters reach
harvest time.
We can now consider Atlas Pearls and Perfumes’ growth over the
next 5 and 10 years with more confidence thanks to the alignment
and engagement of its people, further pearl quantity and quality
improvements and overarching strong market support.
Thank you and well done to the Atlas team.
REVEAL AND DELIVER
Our ability to add value to our core product and to aim at the right
market, at the right time has been another prime area of focus.
Trading revenues grew an outstanding 92% to reach a record $15.4
million. The combined revenue of value added activities –primarily
wholesale and retail- grew 23% to reach a record $2.3million.
Pierre Fallourd
Managing Director
The streamlining of our jewellery operations led to a significant
inventory reduction by $1 million, or 79%, to align inventory level
to the 600 days target, making Atlas pearl jewellery a profitable and
attractive proposition to retailers and end consumers alike.
Atlas’ perfume arm, Essential Oils of Tasmania, also delivered a record
revenue year with a 20% increase to reach $2.5m in revenue and is also
aiming at growing more value added activities to boost income.
Going forward, cost efficient sales and marketing initiatives will
continue to drive Atlas value added endeavours.
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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
D I R E C T O R S ’ R E P O R T
FOR THE YEAR ENDED 30 JUNE 2016
D I R E C T O R S ’ R E P O R T
FOR THE YEAR ENDED 30 JUNE 2016
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 Pearl Limited) and the entities it
controlled at the end of, or during, the period ended 30 June 2016.
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
1. DIRECTORS
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:
GEOFF NEWMAN
B.EC (HONS),M.B.A, F.C.P.A ,F.A.I.C.D. (AGE – 65)
INDEPENDENT NON EXECUTIVE CHAIRMAN (Chair of Audit and Risk
Committee, Chair of Remuneration and Nomination 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.
Appointed Chairman 16 February 2015
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: Nil
TIMOTHY JAMES MARTIN
B.ARTS, M.B.A, G.A.I.C.D. (AGE – 44)
NON EXECUTIVE DIRECTOR (Remuneration and Nomination Committee)
Tim Martin has been an Executive Manager at Coogee Chemicals Pty
Ltd since 2005, held the position of Managing Director from 2012 –
2015 and was appointed Executive Chairman in July 2015.
Prior to working at Coogee Tim worked in management roles within
the packaged food manufacturing sector - supplying to national
supermarket chains, and has ongoing interests in commercial property
development.
He is also a director on the board of the Australian Plastics and
Chemicals Industry Association (PACIA).
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 - 56)
INDEPENDENT NON EXECUTIVE DIRECTOR (Audit and Risk Committee)
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.
PIERRE FALLOURD, M.B.A (AGE – 42)
MANAGING DIRECTOR (CEO)
Mr Fallourd has over 15 years’ experience in pearling and is highly
recognised in the pearl and jewellery industry for his role in
developing and marketing Golden Pearls globally. He is a specialist in
managing the pearl value chain and maximising the use and value of
each pearl harvested. Pierre is fundamental to Atlas’ cradle to cradle
strategy of extracting and maximising all aspects of the pearl and its
by-products. Mr Fallourd joined the company in March 2013 as vice
president pearling and has been CEO of Atlas since November 2014.
Appointed Managing Director 4 January 2016
Directorships of other listed companies held in the last three years: Nil
2. COMPANY SECRETARY
The role of Company Secretary at the end of the financial period was
shared by Mr Trevor Harris and Ms Susan Hunter.
TREVOR HARRIS
BCOM, CPA, GDIP COMP LAW_ACG, AGIA
Mr Harris joined Atlas on 31 August 2015 as Chief Financial Officer and
was appointed joint Company Secretary 4 January 2016. Mr. Harris has
over 20 years’ experience in financial management in a wide variety of
industry sectors. As well as being a qualified CPA accountant, he holds
a postgraduate qualification in Commercial Law and is a Chartered
Company Secretary. Mr Harris has filled multi-disciplinary roles with
companies such as Alcyone Resources Ltd, Shield Mining Ltd, Sphere
Minerals Limited, BGC Australia and Toll Holdings.
Appointed 4 January 2016.
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 and Risk
Committee
Meetings
Remuneration
Committee
Meeting
Meetings
Held
Whilst in
Office
Attended
Meetings
Held
Whilst in
Office
Meetings
Held
Whilst in
Office
G. Newman
T. Martin
S.J. Arrow
P. Fallourd1
01/07/15 –
30/06/16
01/07/15 –
30/06/16
01/07/15 –
30/06/16
04/01/16 –
30/06/16
6
6
6
3
Notes:
6
6
6
3
2
2
2
-
2
2
2
-
-
-
-
-
-
-
-
-
1 P Fallourd was appointed to the board on the 4th January 2016.
4. PRINCIPAL ACTIVITIES AND REVIEW OF
OPERATIONS
4.1 PRINCIPAL ACTIVITIES
Atlas Pearls and Perfumes is a Company that produces South Sea
Pearls, with farming operations throughout Indonesia, and retail stores
in Perth and Bali. The company also has a 50% interest in Essential Oils
of Tasmania, a company providing essential oils, pearl shell by-products
and perfumes to local and international markets.
4.2 REVIEW OF OPERATIONS AND SIGNIFICANT CHANGES
IN THE STATE OF AFFAIRS
4.2.1 SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Significant changes in the state of affairs of the Group during the
financial year were as follows:
On 30 August, Ms Danielle Brandenburg resigned as Chief Financial
Officer and Joint Company Secretary, and was replaced as Chief
Financial Officer by Mr Trevor Harris. On 4 January 2016, Mr Pierre
Fallourd, Chief Executive Officer, was appointed to the Board of
Directors in the position of Managing Director. On 4 January 2016, Mr
Trevor Harris, Chief Financial Officer, was appointed to the position of
Joint Company Secretary. On 20 June 2016, the company announced
the successful extension of its’ Debt facility with CBA for a further 12
months to 30 June 2017.
4.2.2 SHAREHOLDER RETURNS
12 Months
Ending
30 June
2016
$’000
12 Months
Ending
30 June
2015
$’000
12 Months
Ending
30 June
2014
$’000
968
0.23
Nil
Nil
(8,134)
(2.40)
Nil
Nil
1,814
0.61
Nil
Nil
Net profit/(loss) after tax
Basic EPS (cents)
Dividends paid
Dividends (per share) (cents)
The adjustments from NPAT to arrive at reported Normalised EBITDA
for these periods are shown below:
12 Months
Ending
12 Months
Ending
12 Months
Ending
30 June
2016
$’000
968
1,819
288
399
750
(1,827)
281
-
268
816
-
-
30 June
2015
$’000
(8,134)
521
398
589
(792)
6,697
(497)
-
(656)
149
245
245
30 June
2014
$’000
1,814
(355)
471
303
578
(63)
300
(12)
436
-
-
-
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
Impairment of JV loan
Fair value (gain)/loss on EOT assets
(Gain)/Loss on sale of investment
Normalised EBITDA
3,762
(1,235)
3,470
4.2.3 FINANCIAL POSITION
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
2016
$’000
30 June
2015
$’000
34,808
(4,225)
(4,759)
25,825
16%
425.4
5.9
3.2
30,942
(4,085)
(2,883)
23,974
17%
425.4
5.6
4.4
30 June
2014
$’000
40,823
(5,155)
(6,859)
28,809
18%
326.62
8.7
8.5
There has been an increase in the net assets of the group of $1.85M in
the year ended 30 June 2016 (30 June 2015 - $4.8M decrease).
4.2.4 OPERATING RESULTS
Atlas recorded a net profit after tax for the period ended 30 June 2016
of $0.96M, an increase of $9.1M (30 June 2015 – net loss after tax $8.1M).
The operating revenue for the year ended 30 June 2016 was $18.4M,
compared to the year ended 30 June 2015 - $12.1M. Pearl sales
revenue was $16.0M (30 June 2015 - $8.7M), with retail and wholesale
sales revenue of $1.9M (30 June 2015 - $1.4M). Client appreciation for
a consistent Atlas product has driven healthy yen/momme pricing at
Auction, and favourable movements in the exchange rate between
the Japanese Yen and the Australian Dollar have further increased
gains over this financial year. Subsequent to the consolidation of Retail
stores to four in May / June 2015, 2015/16 retail sales decreased by
10%, but overall operating margins improved significantly due to the
rationalisation of costs.
Gross Profit percentage overall improved to 54% in 2016 from 50% in
2015. This gain was predominantly due to revenue gains as operating
costs remain well controlled and within predicted ranges.
Other operating expenses fell from $7M in 2014/15 to $6M in 2015/16
as a result of management restructuring and cost cutting efforts in the
prior year.
The company also reduced its core debt with the CBA from $5M to $4M.
PAGE 20
PAGE 21
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
D I R E C T O R S ’ R E P O R T
FOR THE YEAR ENDED 30 JUNE 2016
D I R E C T O R S ’ R E P O R T
FOR THE YEAR ENDED 30 JUNE 2016
4.2.5
REVIEW OF OPERATIONS
4.2.5.3 DIVERSIFICATION AND PEARLING BY-PRODUCTS
6. EVENTS SINCE THE END OF THE FINANCIAL YEAR
4.2.5.1 PEARLING
Pearling operations in Indonesia continue to perform effectively.
Unusually warm waters in the growing areas driven by an El Nino
effect was effectively managed by the farming teams resulting in
negligible seeded stock losses.
Impacts were felt in juvenile and virgin stocks, with water temperatures
causing increased losses on sea deployment from hatchery. This had
implications for 2017/18 numbers available for seeding, however
stock has been sourced from external providers in the same area and
internal growth targets are now expected to be met.
Improvements in seeding processes and shell husbandry made in
2015 are now effectively embedded as standard operating procedures,
and the company continues to evaluate the effectiveness of second
operations. The initial shells to benefit from these improved seeding
techniques are scheduled to be harvested in December 2016.
The second wave of improvements are now focused at a Hatchery
level. With spat survival a key measure in predicting the availability
of seedable oysters in any year, improvements in this part of the
supply chain are critical in the efforts to grow harvest volumes. New
and experienced staff members from Australia have been recruited
to roll out industry leading food production systems, and review
hatchery practices all the way to sea deployment. At the same time
our hatchery sites are being reviewed in terms of marine environment,
with alternate/additional sites continually being evaluated.
Harvest profiles continue to recover from 2014/15, with gains seen
in most quality parameters. This was clearly reflected in two record
auction results in March and June of this year. With the 16/17 harvest
falling heavily in the first half of 2017, the company is becoming more
and more confident that auction results in the New Year will continue
to reflect the improving harvest profile.
4.2.5.2 PEARLING VALUE ADDED
The Company has continued this year with its efforts to maximise the
value of its pearl harvest by customising its offerings at wholesale and
retail levels, both domestically and internationally. While promoting
our own wholesale sales, the Company is also engaged at an industry
level to increase the value perception of South Sea Pearls and re-open
international markets such as South East Asia and the USA.
On a retail level, the company undertook a re-structure of its Bail retail
offering in June of 2015, closing three retail stores in Bail, retaining one
retail store in Seminyak, and four farm based industrial tourism stores.
The Flagship store remains on Bayview Terrace in Claremont, Western
Australia.
The results of this structure this year has been a minor decline in
sales volumes, but a significant increase in overall performance of the
retail division due to the reduced cost base. As disclosed last year, the
company continued to reduce the holdings of older, slower moving
inventory via promotions and significant discounts. This process is
complete, and the coming year is expected to benefit fully from the
release of new capsule collections, designed both internally and in
collaboration with international designers. The company remains
committed to a strong retail presence, with refined efforts to build the
Atlas brand ongoing.
During the year, the Company evaluated its options in the area of
diversification of its revenue stream. The company remains committed
to generating the maximum value from each Oyster, and the
commercialisation of Mother of Pearl By-Products is a key opportunity.
Pursuit of commercial outcomes by becoming a key supplier of pearl
powder and proteins into the international cosmeceutical market
remains of significant strategic value, and in conjunction with our
partner Nomad Two Worlds, the company is well advanced to achieve
this in the next 2 years.
4.2.5.4 NATURAL EXTRACTS
As part of the company’s ongoing focus on core business detailed in last
year’s annual report, the company placed its 50% ownership in Essential
Oils of Tasmania (EOT) as for sale during the year. After the evaluation of
numerous offers, strategic discussions at a board level and discussions
with our partner Westwood holdings, the Company has decided against
a sale and made a fresh commitment to develop EOT as a strong
diversified revenue stream. The Board of Atlas has taken a prudent
approach to the valuation of Atlas’s interest EOT in this year’s accounts,
but is driving a strategic assessment of the businesses operations.
EOT will now transition from being a direct farmer to a 100% contract
farming model, leveraging its relationships within the Tasmanian
Farming Industry and reducing capital costs. Material increases in
capacity are being negotiated to deliver economies of scale for
products competing in the bulk sector, while at the same time efforts
are being made to refine and expand the company’s footprint in high
margin retailed niche products, both domestically and internationally.
A number of research projects using Tasmanian grown by-products
from other farming industries are expected to deliver commercial
outcomes in the next year, and EOT’s role in the production of pearl
powder and protein has the potential to add further value as product
development moves to market release. A place in the evolving
Medicinal Cannabis industry remains a medium term strategic vision.
4.2.5.5 AUDIT OPINION
The financial report has been audited independently and received an
unmodified opinion with an emphasis of matter on going concern.
Refer to Note 1.33 in the Notes to the Financial Statements for further
detail on going concern. Refer to page 65 for the Independent Auditors
Report and Opinion.
4.2.5.6 PERSONNEL
Staff numbers at the end of the year were as follows:
Expatriates – Indonesia
Indonesian nationals – permanent
Indonesian nationals – part time
Australia
Total Personnel
5. DIVIDENDS
2016
22
422
444
19
907
2015
18
430
435
22
905
2014
21
536
341
43
941
No dividends were declared and paid by the Company during period
ended 30 June 2016 (2015 – nil).
There have been no material events since the end of the financial year.
7. LIKELY DEVELOPMENTS AND EXPECTED RESULTS
OF OPERATIONS
The company expects to both consolidate and evolve the gains made
across the business this year.
Oysters for harvest over the next 2 years are in the water, so the focus
will be on shell care and cost control and client management to
see the best possible outcomes over that period. As detailed above,
the first of the harvests made under our new seeding practices are
scheduled to be harvested from December 16 onwards and will
provide significant feedback on the success of the changes.
Looking forward further, current efforts at a hatchery level have the
possibility of delivering increases in seedable oysters 2 years from now,
providing an internal platform for growth. In the interim the company
will also evaluate JV opportunities within the Indonesian archipelago
with local oyster growers to boost oyster holdings. The company
intends to pursue a growth agenda while retaining a quality focus.
At a corporate level, the company will continue to reduce its debt
position via repayments to the CBA from internal cash flows, and
evaluate opportunities to restructure any remaining debt with minimal
impacts on existing stakeholders.
8. DIRECTORS’ INTERESTS
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
Direct
-
-
4,256,545
3,311,206
Indirect
1,847,154
13,809,707
103,329,122
Direct
-
-
-
2,000,000
Indirect
-
-
-
-
G. Newman
S. Arrow
T. Martin(1)
P. Fallourd
1.
17,880,240 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. The
balance of the indirect shares are held by related parties of Mr T Martin.
9. OPTIONS
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.
During the year end 30 June 2015 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. 2,000,000 of the unquoted options are exercisable at
$0.0858 on or before 31 December 2016 subject to vesting conditions
specific to the consultant. 5,500,000 are exercisable at $0.059, on or
before 31 December 2018, subject to the following vesting conditions;
achieving a minimum A$2.75m average normalised EBITDA for 3 years
ended 30 June 2018, and that the employee remains directly engaged
as an employee of Atlas Pearls and Perfumes Ltd until 30 June 2018.
There were no listed or unlisted options issued during the year ended
30 June 2016.
During the year ended 30 June 2016, of the 28,500,000 options with
performance conditions maturing at 30 June 2016, none were deemed
vested, as no individual met their respective performance conditions
in relation to said options. As such, all options were lapsed/forfeited as
at 30 June 2016. At 30 June 2016, the total quantity of unlisted options
on issue is 5,500,000.
10. INDEMNIFICATION AND INSURANCE OF
DIRECTORS AND OFFICERS
10.1 INDEMNIFICATION
The Company has agreed to indemnify the following current directors
of the Company; Mr S Arrow, Mr G Newman, Mr T Martin, and Mr P
Fallourd and the following former directors; Mr S Birkbeck, Dr J Taylor, 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.
10.2 INSURANCE PREMIUMS
Since the end of the previous financial year the Company has paid
insurance premiums of $22,110 (2015 - $16,440) in respect of directors’
and officers’ liability and legal expenses insurance contracts, for current
and former Directors and Officers.
11. NON-AUDIT SERVICES
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
and Risk 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 22
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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
D I R E C T O R S ’ R E P O R T
FOR THE YEAR ENDED 30 JUNE 2016
D I R E C T O R S ’ R E P O R T
FOR THE YEAR ENDED 30 JUNE 2016
NON AUDIT SERVICES CONTINUED...
11.
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:
Chief Financial Officer – T Harris
Mr T Harris’ contract was renegotiated on the 1 July 2016. Base
salary for the 2016/17 financial year of $190,000, inclusive of 9.5%
superannuation, reviewed annually.
AUDIT SERVICES
BDO Australian Firm:
30 June
2016
30 June
2015
13.1
REMUNERATION GOVERNANCE
$
$
13.1.1
ROLE OF THE REMUNERATION AND NOMINATION
COMMITTEE
Audit and review of financial reports
86,000
86,000
BDO Indonesian Firm:
Audit and review of financial reports
Total remuneration for audit services
17,011
103,011
16,379
102,379
OTHER SERVICES
Total remuneration for other services
40,000
40,000
TAXATION SERVICES
BDO Australian Firm:
Tax compliance services and advice
Related practices of BDO Australian Firm
Total remuneration for taxation services
-
-
37,919
-
37,919
The remuneration and nomination committee is a committee on 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.
Total remuneration for non-audit and taxation
services
40,000
37,919
13.1.2 NON-EXECUTIVE DIRECTOR REMUNERATION POLICY
12. 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 taking 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.
13. REMUNERATION REPORT (AUDITED)
The directors are pleased to present your Company’s 2016
remuneration report which sets out remuneration information for Atlas
Pearls and Perfumes Ltd’s non-executive directors, executive directors
and other key management personnel.
Position
Name
Non-executive and executive directors
G. Newman
T. Martin
S. Arrow
Independent Non-Executive Chairman
Non-Executive Director
Independent Non-Executive Director
P. Fallourd
Managing Director (Chief Executive Officer
until 4 January 2016)
Other key management personnel
R. Satchell
M Longhurst
Chief Operations Officer Pt Cendana Indopearl (23
January 2015 – 20 April 2016).
Chief Operations Officer Pt Cendana Indopearl
(From 1 March 2016).
D Brandenburg
T Harris
Chief Financial Officer (until 30 August 2015)
Chief Financial Officer (from 31 August 2015)
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 2016;
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
2016, the total non-executive directors’ fees including retirement
benefit contributions were $178,114.
The following fees have applied:
•
•
Base fees for Non-Executive Directors - $50,000 per annum
The Independent Non-Executive Chairman’s fee is $78,000 per
annum
The Managing Directors base package is $240,900, with an
additional $20,000 per annum payable for directors’ duties from 4
January 2016
•
13.1.3
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
•
•
•
PAGE 24
13.1.3
EXECUTIVE REMUNERATION POLICY AND
FRAMEWORK CONTINUED...
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 13.2 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 13.5 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.
•
Use of remuneration consultants
During the financial year ended 30 June 2016 the Company did not
engage any remuneration consultants.
Voting and comments made that the Company’s 2015 Annual
General Meeting.
Atlas Pearls and Perfumes Ltd received more than 98% of “yes” votes on
its remuneration report for the 2015 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.
PAGE 25
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
D I R E C T O R S ’ R E P O R T
FOR THE YEAR ENDED 30 JUNE 2016
D I R E C T O R S ’ R E P O R T
FOR THE YEAR ENDED 30 JUNE 2016
13.2 DETAILS OF REMUNERATION
13.2 DETAILS OF REMUNERATION CONTINUED...
13.2.1 DETAILS OF REMUNERATION – PERFORMANCE
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
Total cash
salary, fees
and short
Post-
employ-
ment
benefits
Long term
benefits
Share based
compensation
Total
Salary
Sacrifice for
shares
Short term
incentive
cash bonus
Non-cash
monetary
benefit
term
benefits
Super-
annuation
benefit
Long
service
leave
Bonus
Shares
Options
$
$
$
$
$
$
$
$
$
$
J.J.U. Taylor 1, 8,9,14,15
Directors(Non-Executive)
G. Newman 5,8
2016
2015
2016
2015
2016
2015
2016
2015
S. Arrow 8,10
T. Martin 6,8
Directors (Executive)
S.P. Birkbeck 1,2,8,14,15
N. Rocher 13,14,15
P. Fallourd 7,8,11,16
Total
Total
2016
2015
2016
2015
2016
2015
2016
2015
78,000
19,334
-
86,358
50,114
16,667
50,000
16,667
-
168,937
-
51,971
219,712
117,263
397,826
477,197
Other Key Management Personnel
S Gleeson 4,9,14
R Satchell 3,14
JS Jorgensen 3,8,14
D Brandenburg4,7,8,14
2016
2015
2016
2015
2016
2015
2016
2015
S Mackay-Coghill7,12,14 2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
Total
Total
Grand Total 2016
Grand Total 2015
M Longhurst3,7,16
T Harris4,7,8,16
-
173,944
-
133,269
191,570
120,000
61,379
145,494
-
31,638
159,567
-
169,004
-
581,520
604,345
979,346
1,081,542
-
32,233
-
7,393
-
23,333
-
23,333
-
38,095
-
-
9,615
65,385
9,615
189,772
-
-
-
-
12,205
9,795
-
14,247
-
-
-
-
-
-
12,205
24,042
21,820
213,814
-
-
-
-
-
-
-
-
-
-
48,000
-
48,000
-
-
-
-
-
-
10,000
-
4,301
-
-
30,000
-
30,000
-
60,000
14,301
108,000
14,301
-
-
-
-
-
-
-
-
-
-
-
-
-
-
78,000
51,567
-
93,751
50,114
40,000
50,000
40,000
-
207,032
-
51,971
277,327
182,648
455,441
666,969
-
-
-
-
18,490
16,208
-
-
-
-
-
-
20,432
-
38,922
16,208
38,922
16,208
-
173,944
-
133,269
222,265
156,003
61,379
164,042
-
31,638
189,567
-
219,436
-
692,647
658,896
1,148,088
1,325,865
-
-
-
8,906
-
-
-
17,833
-
4,937
21,786
17,352
21,786
49,028
-
20,591
-
10,423
-
2,192
5,831
15,584
-
3,010
15,159
-
-
-
20,990
51,800
42,776
100,828
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7,500
-
7,500
-
15,000
-
-
-
-
-
5,000
-
7,500
-
-
-
-
-
-
-
12,500
-
27,500
-
-
-
(628)
-
-
-
-
-
(12,559)
-
(2,974)
28,899
17,895
28,899
1,734
78,000
51,567
-
102,029
50,114
40,000
50,000
40,000
-
212,306
-
61,434
328,012
225,395
506,126
732,731
-
(6,660)
-
(1,487)
(24,764)
9,279
(19,983)
18,559
-
(1,424)
8,216
-
14,783
-
(21,748)
18,267
-
187,875
-
142,205
197,501
172,474
47,227
205,685
-
33,224
212,942
-
234,219
-
691,889
741,463
7,151 1,198,015
20,001 1,474,194
Notes:
1.
2.
3.
4.
5.
6.
7.
8.
Dr J Taylor and Mr S Birkbeck are Directors of the Company’s Malaysian subsidiary
Aspirasi Satria Sdn Bhd.
Mr S Birkbeck was 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 S Birkbeck resigned as Chief Executive Officer on 25 November
2014. Mr S Birkbeck resigned as Executive Chairman on 16 February 2015.
Mr J Jorgensen was a key management personnel of the Group and was appointed
to the position of Chief Operating Officer (COO) in September 2010. Mr J Jorgensen
was the Chief Operations Officer of the Company’s Indonesian subsidiary, P.T.
Cendana Indopearls. Mr J Jorgensen’s contract as Chief Operating Officer terminated
on 23 January 2015. Mr R Satchell was appointed as Chief Operations Officer on the
23 January 2015. Mr Satchell resigned 20 April 2016. Mr M Longhurst took over as
Chief Operations Officer following Mr Satchell’s resignation.
Mr S Gleeson was appointed Chief Financial Officer on 1 February 2012. Mr S
Gleeson resigned as Chief Financial Officer on 1 July 2014. Mr S Gleeson’s contract
was terminated on 16 April 2015. D Brandenburg was appointed Chief Financial
Officer on 1 July 2014. D Brandenburg resigned 30 August 2015. T Harris was
appointed Chief Financial Officer on 31 August 2016.
Mr G Newman was appointed 15 October 2010 as Non-Executive Director. Mr G
Newman was appointed as Non-Executive Chairman on 16 February 2015. Mr T
Martin was appointed 4 February 2013 as Non-Executive Director.
Bonuses were accrued for T Harris, M Longhurst and P Fallourd based on milestones
achieved during the period. These are all variable bonuses dependant on year
end results. Refer to Note 13.3 Service Agreements for further detail on short term
incentive plan for each KMP. In 2015, D Brandenburg and R Satchell were paid
bonuses.
A number of key management took part in the 2016 and 2015 salary sacrifice
schemes. In 2016, Mr P Fallourd $9,615 and R Satchell $12,438 participated in the
salary sacrifice scheme which finished on 25 December 2015. In 2015, Mr P Fallourd,
Ms D Brandenburg and Mr R Satchell all participated in the salary sacrifice scheme.
Mr G Newman, Mr T Martin, and Mr S Arrow salary sacrificed all director fees from 1
November 2014 to 30 June 2015. Dr J Taylor salary sacrificed all director fees from
1 November 2014 to 16 February 2015 (date of his resignation). Fees accrued under
the plan as at 30 June 2016 for the directors were; G Newman $32,233; Mr T Martin
$23,333; Mr S Arrow $23,333 and Dr J Taylor $7,393.
Non-Monetary benefits of other key management personnel included
accommodation allowances, school fees and medical expenses, as per individual
employment contracts.
Mr S Arrow appointed as Non-Executive Director on 2 January 2014.
9.
10. Mr P Fallourd appointed as Vice President of Pearling on 1 May 2014. Mr P Fallourd
was appointed as Chief Executive Officer on 26 November 2015. Mr P. Fallourd was
appointed Managing Director on 4 January 2016.
11. Ms S Mackay-Coghill resigned as Vice President Jewellery, Cosmetics & Perfume on 7
November 2014. Ms S Mackay-Coghil worked on contract with the Company until 31
December 2014 but was not considered to be a Key Management Personnel after 7
November 2014.
12. Mr N Rocher appointed as an alternate director to S Birkbeck on 18 July 2014. Mr N
Rocher resigned as alternate director on 16 February 2015.
13. Option benefit related expenses recognised in June 2015 year end have been
reversed in 2016 for all those employees who have left the employment of the
company during the year and are no longer eligible for to realise these options.
14. Mr S Birkbeck resigned as a director on 16 February 2915. He did not earn any
remuneration during the 2015/2016 financial year. Mr N Rocher resigned as alternate
director on 16 February 2015. He did not earn any remuneration during the 2015/2016
financial year. Mr J Taylor resigned as a non-executive director on 16 February 2015. He
did not earn any remuneration during the 2015/2016 financial year.
Share based remuneration related to Options, relates to options issued in prior
15.
periods, being recognised over the respective vesting period.
ANALYSIS
The following table indicates the percentage of remuneration relating
to options and performance:
Name
J Taylor
S Birkbeck
N Rocher
P Fallourd
S Gleeson
J Jorgensen
R Satchell
D Brandenburg
T Harris1
M Longhurst2
30 June 2016
% Performance
0.00%
0.00%
0.00%
23.44%
0.00%
0.00%
0.00%
0.00%
17.95%
19.12%
30 June 2015
% Performance
0.00%
0.00%
7.37%
11.27%
0.00%
0.00%
14.08%
14.76%
N/A
N/A
1.
T Harris was appointed Chief Financial Officer on 31 August 2015
and not considered Key Management Personnel during the year
ended 30 June 2015
2. M Longhurst was appointed COO on 1 March 2016 and not
considered Key Management Personnel during the year ended 30
June 2015.
13.2.2 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
2016
12
months
2015
12
months
2014
6
months
2013
12
months
2012
968,103 (8,134,049)
1,813,922 (2,194,645)
1,406,150
0.23
(2.4)
0.61
(0.81)
0.68
-
-
-
-
-
(27%)
(48%)
53%
(25%)
(60%)
12%
-0.8%
4.4%
0.0%
2.6%
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 %
13.3
SERVICE AGREEMENTS
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:
PAGE 26
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
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
FOR THE YEAR ENDED 30 JUNE 2016
D I R E C T O R S ’ R E P O R T
FOR THE YEAR ENDED 30 JUNE 2016
13.3.1 Mr Pierre Fallourd
13.3.5 Mr Mark Longhurst
13.5
SHARE BASED PAYMENTS COMPENSATION
•
•
•
•
(Managing Director appointed 4 January 2016.
CEO – appointed 26 November 2014)
Base salary for the 2016 financial period of $240,900 per annum
inclusive of superannuation, reviewed annually.
Directors fees of $20,000 per annum, payable from appointment
(4 Jan 2016)
Short-term incentive plan of 8% of Normalised EBITDA for
2015/2016, where Normalised EBITDA is greater than $1.7m, this
is capped at a maximum bonus of $48,000. The bonus is inclusive
of taxes and super.
Termination conditions - either party may terminate the contract
of employment by giving three months’ notice or a lesser amount
as mutually agreed.
•
•
•
•
(Chief Operating Officer – Appointed 1 March 2016)
Base salary of $150,000 per annum inclusive of superannuation
from 1 June 2016
Base salary was adjusted to $200,000 at 1 March 2016 on
appointment as COO, and also subject to various non-financial
allowances relating to living in Indonesia.
Short-term incentive plan of 5% of Normalised EBITDA for the
15/16, where Normalised EBITDA is greater than $1.7m, this is
capped at a maximum bonus of $30,000. The bonus is inclusive
of taxes.
Termination conditions - either party may terminate the contract
of employment by giving six months’ notice or a lesser amount as
mutually agreed.
13.3.2 Mr Richard Satchell
(Chief Operations Officer – appointed 23 January 2015;
Resigned 20 April 2016)
• Mr R Satchell was appointed Chief Operations Officer 23 January
•
•
•
2015. He was previously appointed General Manager Strategy.
Base salary for the 2016 financial period of $160,000 per annum
reviewed annually and also subject to various non-financial
allowances relating to living in Indonesia.
Short-term incentive plan of 5% of Normalised EBITDA for the 15/16,
where Normalised EBITDA is greater than $1.7m, this is capped at a
maximum bonus of $30,000. The bonus is inclusive of taxes. Bonus
is not payable where employee’s employment terminates before 30
June 2016.
Termination conditions – either party may terminate the contract
of employment by giving two months’ notice or a lesser amount
as mutually agreed.
13.3.6 OTHER NON - EXECUTIVES (STANDARD CONTRACTS)
•
•
Contract terminates on retirement.
The Company may terminate the executive’s employment
agreement by providing two months’ written notice or providing
payment in lieu of the notice period.
Not entitled to any special termination payments under these
contracts.
•
13.4
ADDITIONAL INFORMATION OF THE
REMUNERATION REPORT
13.4.1
LOANS TO DIRECTORS AND EXECUTIVES
There are no loans in place with directors or other key management
personal as at 30 June 2016.
13.4.2 OPTIONS
13.3.3 Mrs Danielle Brandenburg
(Chief Financial Officer – appointed 1 July 2014 –
Resigned 30 August 2015)
•
•
Base salary for the 2016 financial period of $175,000 per annum
inclusive of superannuation, reviewed annually.
Termination conditions - either party may terminate the contract
of employment by giving six months’ notice or a lesser amount as
mutually agreed.
Performance options were issued to directors and key management
personnel during the financial period end 30 June 2015 and 30
June 2014. The options were issued at nil cost to employees and will
respectively expire on 31 December 2018 and 31 December 2016. The
options are exercisable based on the completion of KPI’s specific to
each individual. At 30 June 2016, the KPIs in relation to the 2014 issued
options were not met; thus all were deemed expired/forfeited on this
date. See table at 13.5.4 for details.
13.3.4 Mr Trevor Harris
•
•
•
•
(Chief Financial Officer – Appointed 31 August 2015)
Base salary for the 2016 financial period of $175,000 per annum
inclusive of superannuation, reviewed annually.
At 1 July 2016, Base salary was adjusted to $190,000 per annum
inclusive of super.
Short-term incentive plan of 5% of Normalised EBITDA for the
15/16, where Normalised EBITDA is greater than $1.7m, this is
capped at a maximum bonus of $30,000. The bonus is inclusive
of taxes and super.
Termination conditions - either party may terminate the contract
of employment by giving three months’ notice or a lesser amount
as mutually agreed.
13.4.3 OTHER KEY MANAGEMENT PERSONNEL TRANSACTIONS
$78,900 of the ESSP accrual at 30 June 2016 is for shares salary
•
sacrificed by the Directors during the year ended 30 June 2015
under the Atlas South Sea Pearl Non-Executive Director Share
Plan; Tim Martin $23,333, Stephen Arrow $23,333, Geoff Newman
$32,233. During the twelve months ended 30 June 2016 none of
the directors’ salary sacrificed into the Non - Executive Director Fee
Salary Sacrifice Share plan. Shares will be issued to Directors post
approval at the 2016 AGM.
$46,818 of the ESSP accrual at 30 June 2016 is for shares salary
sacrificed by the Other Key Management Personnel during the year
ended 30 June 2015 under the Atlas South Sea Pearl Employee
Share Plan; Pierre Fallourd $15,385 ($50,000 already issued out of
total salary sacrifice of $65,385); Joseph Taylor $7,393.
During the period, sales of individual pearls of small quantities were
made to some staff and Directors on normal commercial terms.
•
•
13.5.1
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 2016 AND YEAR ENDED 30 JUNE
2015. PLEASE REFER TO NOTE 23 IN THE FINANCIAL STATEMENTS FOR DETAILS OF THE ATLAS EMPLOYEE SALARY
SACRIFICE SHARE PLAN.
Name
Richard Satchell
Pierre Fallourd
Date of
Entrance
15/12/14
17/11/14
Entitlement
No. of
Shares
No. of
Shares to be
Issued
271,222
213,667
271,222
-
Date of
Issue
23/02/16
-
Shares
Vested to
June 2016
Shares
Forfeited in
the year
Financial
Year in which
shares vested
Nature of
shares
100%
100%
0%
0%
2016 – 100% Ordinary Shares
2016 – 100% Ordinary Shares
Share
issue
price
$0.045
$0.045
Total Value
Salary
Sacrificed
$12,205
$9,615
Name
Pierre Fallourd
Richard Satchell
Pierre Fallourd
Date of
Entrance
17/11/14
15/12/14
26/09/14
Entitlement
No. of
Shares
341,889
217,667
625,000
No. of
Shares to
be Issued
-
217,667
625,000
Date of
Issue
-
23/02/16
26/09/14
Shares
Vested to
June 2015
100%
100%
100%
Shares
Forfeited in
the year
0%
0%
0%
13.5.2
THE ATLAS NON-EXECUTIVE DIRECTOR FEE SACRIFICE SHARE PLAN
Please refer to Note 23 in the financial statements for details.
Financial
Year in
which shares
vested
Nature of
shares
2015 – 100% Ordinary Shares
2016 – 100% Ordinary Shares
2015 – 100% Ordinary Shares
Share
issue
price
$0.045
$0.045
$0.080
Total Value
Salary
Sacrificed
$15,385
$9,795
$50,000
13.5.3
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
Tim Martin
Stephen Arrow
Date of
Entrance
1/11/14
1/11/14
1/11/14
1/11/14
Entitlement
No. of
Shares
164,289
716,289
518,512
518,512
No. of
Shares
Issued
-
-
-
-
Date of
Issue
-
-
-
-
Shares
Vested
to end of
2015
100%
100%
100%
100%
Shares
Forfeited in
the year
0%
0%
0%
0%
Financial
Year in
which
shares
vested
Nature of
shares
2016 – 100% Ordinary Shares
2016 – 100% Ordinary Shares
2016 – 100% Ordinary Shares
2016 – 100% Ordinary Shares
Share
issue
price
$0.045
$0.045
$0.045
$0.045
Total Value
Salary
Sacrificed
7,393
32,233
23,333
23,333
Notes –These shares were issued under the NED plan described above directly to the NEDs, for past services rendered.
13.5.4
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 Birkbeck1,4
Joseph Taylor1,4
Stephen Gleeson2,4
Stephen Gleeson1,4
Pierre Fallourd2,4
Pierre Fallourd1,4
Pierre Fallourd3
Nelson Rocher2,4
Jan Jorgensen2,4
Danielle Brandenburg1,4
Sonia McKay-Coghill1,4
Richard Satchell1,4
Richard Satchell3,4
Trevor Harris3
Mark Longhurst1,4
Mark Longhurst3
Date of
Grant
13/05/14
13/05/14
24/02/14
02/06/14
24/02/14
02/06/14
30/06/15
24/02/14
24/02/14
02/06/14
02/06/14
02/06/14
30/06/15
30/06/15
02/06/14
30/06/15
Entitlement
Vesting
No. of
Date
Options
30/6/16
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
30/6/18
2,000,000
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
1,000,000
30/6/18
1,000,000
30/6/18
1,500,000
1,000,000 30/06/16
1,000,000 30/06/18
Expiry
Date
31/12/16
31/12/16
31/12/16
31/12/16
31/12/16
31/12/16
31/12/18
31/12/16
31/12/16
31/12/16
31/12/16
31/12/16
31/12/18
31/12/18
31/12/18
31/12/18
Shares
Forfeited
in the
year
100%
100%
100%
100%
100%
100%
0%
100%
100%
100%
100%
100%
100%
0%
100%
0%
Financial
Year in
which
shares
vest
2016
2016
2016
2016
2016
2016
2018
2016
2016
2016
2016
2016
2018
2018
2016
2018
Nature of
shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Value Per
Options at
30 June 16
Value Per
Options at
30 June 15
$nil
$nil
$nil
$nil
$20,229
$19,296
$10,955
$nil
$nil
$nil
$nil
$nil
$nil
$8,216
$19,296
$5,478
$nil
$nil
$nil
$nil
$11,590
$9,991
$nil
$nil
$nil
$18,559
$nil
$9,279
$nil
$nil
$nil
$nil
Option
Exercise
Price
$0.0858
$0.0858
$0.0858
$0.095
$0.0858
$0.095
$0.059
$0.0858
$0.0858
$0.095
$0.095
$0.095
$0.059
$0.059
$0.095
$0.059
Notes –
1.
2.
3.
4.
These unlisted options were approved by the shareholders at the EGM held on 13 May 2014
These unlisted options were approved by the Board of Directors on 24 February 2014
These unlisted options were approved by the Board of Directors on 29 May 2015
KPIs in relation to the options were not met – options forfeited
PAGE 28
PAGE 29
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
D I R E C T O R S ’ R E P O R T
FOR THE YEAR ENDED 30 JUNE 2016
I N D E P E N D A N C E R E P O R T
FOR THE YEAR ENDED 30 JUNE 2016
13.5.5
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. Options and rights granted as compensation
There were 3,000,000 options issued to key management
personnel as remuneration during the year ended 30 June
2015. None were issued during the year ended 30 June 2016.
2. Option holdings
There were 8,000,000 options on issue to key management
personnel during the period ended 30 June 2015. There are
4,500,000 options on issue to Key Management personal at
30 June 2016 (see 13.5.6 c).
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 13 of the Directors’ Report.
Balance
01/07/15
Granted
as Comp-
ensation
Options
Exercised
Other
Changes
(1)
Balance
30/06/16
Parent Entity Directors
Mr G. Newman
Mr T. Martin(4)
Mr S. Arrow
Mr P. Fallourd
1,847,154
107,585,667
13,809,707
3,311,206
-
-
-
-
Other key management personnel
Mr. R. Satchell(2)
Mr T. Harris(3)
Mr M.
Longhurst(3)
111,111
-
-
126,664,845
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,847,154
107,585,667
13,809,707
3,311,206
(111,111)
-
-
-
-
-
The details relating to the equity instruments held by key
management personnel are as follows:
C. Option holding
The number of options over ordinary shares in the parent entity held
during the twelve months ended 30 June 2016 by each director and
other members of key management personnel of the consolidated
entity, including their personally related parties, is set out below:
Balance
01/07/15
Granted Exercised
Expired/
forfeited/
other(1)
Balance
30/06/16
Parent Entity Directors
Mr G. Newman
Mr T. Martin
Mr S. Arrow
-
-
-
Mr P. Fallourd(4)
4,000,000
Other key management personnel
Ms D. Brandenburg
2,000,000
Mr R. Satchell(2)
Mr T. Harris(3)
2,000,000
1,500,000
Mr M. Longhurst(3)(4)
2,000,000
11,500,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2,000,000) 2,000,000
(2,000,000)
(2,000,000)
-
-
- 1,500,000
(1,000,000) 1,000,000
(7,000,000) 4,500,000
Notes:
1. 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
2. Director/KMP retired or resigned in the financial period
3. Director/KMP appointed in the period
4. Options forfeited due to performance criteria attached to options
exercise not being met by 30 June 2016.
This is the end of the Audited Remuneration Report.
AUDITOR’S 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 31.
(111,111)
126,553,734
Signed in accordance with a resolution of the Directors.
Notes:
1.
2.
3.
4.
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
4,256,545 shares are directly held by Mr T Martin. The balance of 103,329,122 shares
are related party share holdings.
Geoffrey Newman
Chairman
30th August 2016
PAGE 30
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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 AT E D S TAT 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
C O N S O L I D AT E D S TAT 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 2016
FOR THE YEAR ENDED 30 JUNE 2016
Revenue from continuing operations
Cost of goods sold
Gross profit
Other income
Marketing expenses
Administration expenses
Finance costs
Change in fair value less husbandry costs of oysters
Write-off of pearl and jewellery costs
Other expenses
Loss on sale of investment
Share of equity accounted investment
Profit/(Loss) before income tax
Income tax (charge)/benefit current year
Profit/(Loss) after income tax 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:
Owners of the Company
Overall operations:
2016
$
2015
$
Note
2
2
3
3
3
30
4
18,434,855
12,118,312
(8,152,468)
(5,891,435)
10,282,387
1,324,354
(234,896)
6,226,877
3,824,188
(454,199)
(6,270,373)
(7,407,977)
(414,270)
(473,131)
1,992,520
(5,489,228)
(165,036)
(1,386,517)
(3,618,346)
(2,220,528)
-
(245,234)
(109,195)
12,940
2,787,145
(7,612,809)
(1,819,042)
(521,240)
968,103
(8,134,049)
617,216
(1,073,521)
617,216
(1,073,521)
1,585,319
(9,207,570)
968,103
(8,134,049)
1,585,319
(9,207,570)
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 per share (cents)
5
5
0.23
(2.40)
0.23
-
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.
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
Total current liabilities
Non-current liabilities
Borrowings
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
(Accumulated losses)
Total equity
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
Note
2016
$
2015
$
6
7
8
9
10
12
25
29
9
10
11
15
13
14
8
15
14
15
16
17
18
4,343,407
726,993
-
2,949,908
5,331,477
13,351,785
2,632,311
562,021
14,245
3,030,227
3,565,680
9,804,484
161,969
1,016,456
276,854
1,597,015
183,744
292,940
199,393
12,118,179
4,740,815
3,035,807
21,456,363
34,808,148
2,528,685
4,191,016
253,324
661,111
7,634,136
33,553
1,315,815
1,349,368
8,983,504
173,510
10,988,645
4,473,286
3,335,614
21,137,864
30,942,348
1,685,124
3,954,527
-
225,528
5,865,179
130,208
972,780
1,102,988
6,968,167
25,824,644
23,974,181
36,698,536
(8,400,478)
(2,473,414)
25,824,644
36,465,656
(9,049,958)
(3,441,517)
23,974,181
PAGE 32
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
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 AT E D S TAT E M E N T O F C H A N G E D I N E Q U I T Y
C O N S O L I D AT E D S TAT E M E N T O F C A S H F L O W S
FOR THE YEAR ENDED 30 JUNE 2016
FOR THE YEAR ENDED 30 JUNE 2016
Balance at 1 July 2014
(Loss) for the period
Exchange differences on translation of foreign operations
Total comprehensive (loss) for the period
Transactions with owners in their capacity as owners
Contributions of equity, net of transaction costs
Employee share scheme
Balance at 30 June 2015
Balances at 1 July 2015
Profit for the year
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
Employee share scheme
Balance at 30 June 2016
18
17
16
17
18
17
16
17
Attributable to owners of Atlas Pearls and Perfumes Ltd
Contributed
equity
Share
based payment
reserve
Foreign currency
translation
reserve
(Accumulated
loss)
Note
$
$
$
32,153,001
622,574
(8,658,778)
-
-
-
-
-
-
-
(1,073,521)
(1,073,521)
$
4,692,532
(8,134,049)
-
(8,134,049)
Total
equity
$
28,809,329
(8,134,049)
(1,073,521)
(9,207,570)
4,312,655
59,767
4,312,655
-
36,465,656
59,767
682,341
-
-
(9,732,299)
(3,441,517)
23,974,181
36,465,656
682,341
(9,732,299)
(3,441,517)
23,974,181
-
-
-
232,880
-
36,698,536
-
-
-
-
32,264
714,605
-
617,216
617,216
-
-
968,103
-
968,103
-
-
968,103
617,216
1,585,319
232,880
32,264
(9,115,083)
(2,473,414)
25,824,644
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
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
Net Income tax (paid)
Net cash provided in operating activities
Cash flows from investing activities
Cash on sale of EOT investment
Payments for property, plant and equipment
Joint venture partnership contributions (paid)
Net cash provided/(used) in investing activities
Cash flows from financing activities
Repayment of borrowings
Proceeds from issue of shares
Share transaction costs
Net cash used in financing activities
Net increase 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
Note
2016
$
2015
$
17,646,039
-
396,504
(332,676)
12,062
(14,681,056)
(553,645)
12,916,087
1,544,324
441,896
(406,295)
8,867
(13,904,890)
(98,545)
24.2
2,487,228
501,444
-
(451,502)
(170,196)
280,000
(2,081,934)
(537,041)
(621,698)
(2,338,975)
(222,297)
-
-
(222,297)
(75,707)
3,160,563
(263,066)
2,821,790
1,643,233
2,632,311
984,259
1,665,207
67,863
(17,155)
Cash and cash equivalents at the end of the financial year
6
4,343,407
2,632,311
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
PAGE 34
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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 PA R T O F T H E C O N S O L I D AT E D F I N A N C I A L S T AT E M E N T S
N O T E S T O A N D F O R M I N G PA R T O F T H E C O N S O L I D AT E D F I N A N C I A L S T AT E M E N T S
FOR THE YEAR ENDED 30 JUNE 2016
FOR THE YEAR ENDED 30 JUNE 2016
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
30 August 2016. 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
2015 affected any of the amounts recognised in the current period or
any prior period and are not likely to affect future periods.
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 1.32.
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 2016 and the results of its subsidiaries
for the 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 statement of profit or loss and other
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
Joint venture entities continued...
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.
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.
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)
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.
(b) Nuclei - quantities on hand at the period end are valued at the
lower of cost and net realisable value.
(c) Oysters – refer note 1.9.
(d) 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 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, 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 2016 are provided at Note 10.
1.10 PROPERTY, PLANT & EQUIPMENT
Each class of property, plant & equipment is stated at historical cost less,
where applicable, any accumulated depreciation and impairment losses.
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 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:
Class of fixed asset
Freehold land
Leasehold land & buildings & improvements
Vessels
Plant & equipment
Depreciation rate
2015
2016
5-10%
5-10%
5-10%
5-10%
10%
10%
10-50%
10-50%
PAGE 36
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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 PA R T O F T H E C O N S O L I D AT E D F I N A N C I A L S T AT E M E N T S
N O T E S T O A N D F O R M I N G PA R T O F T H E C O N S O L I D AT E D F I N A N C I A L S T AT E M E N T S
FOR THE YEAR ENDED 30 JUNE 2016
FOR THE YEAR ENDED 30 JUNE 2016
1. STATEMENT OF SIGNIFICANT ACCOUNTING
POLICIES CONTINUED...
Loans and receivables and held-to-maturity investments are carried at
amortised cost using the effective interest rate method.
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.
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 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 FOREIGN CURRENCY TRANSLATION
(a) 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.
All foreign exchange gains and losses are presented in the Statement
of Profit or 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:
1. 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.
2.
3.
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:
(a)
Sales Revenue comprises of revenue earned from the sale of
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.
Interest Income is recognised as it accrues
(b)
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.
PAGE 38
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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 PA R T O F T H E C O N S O L I D AT E D F I N A N C I A L S T AT E M E N T S
N O T E S T O A N D F O R M I N G PA R T O F T H E C O N S O L I D AT E D F I N A N C I A L S T AT E M E N T S
FOR THE YEAR ENDED 30 JUNE 2016
FOR THE YEAR ENDED 30 JUNE 2016
1. STATEMENT OF SIGNIFICANT ACCOUNTING
1.25 DIVIDENDS
1.29 SEGMENT REPORTING CONTINUED...
Critical judgements in applying the entity’s accounting policies
POLICIES CONTINUED...
1.20 TRADE RECEIVABLES CONTINUED...
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 CONTRIBUTED EQUITY
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.
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.
1.26 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.
1.27 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 415,837,428.
(b) Diluted earnings per share
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
diluted earnings per share calculation is 421,337,428.
1.28 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 sale
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.
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
When required by Accounting Standards, comparative figures have
been adjusted to conform to changes in presentation for the current
financial period.
1.31 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.
1.32 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.
Key estimates – Impairment
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.
– Doubtful debts provision
No provision has been recognised in respect of receivables owed to
the group for the year ended 30 30 June 2016 or 30 June 2015.
– Impairment of joint venture receivables
A provision has been recognised in respect of the receivable owed to
the group from its joint venture entity, Essential Oils of Tasmania Pty
Ltd, of $816,028 for the year ended 30 June 2016 (30 June 2015 - $nil).
– Impairment of jewellery
A provision for jewellery obsolesce of $100,000 is held on the balance
sheet in respect of the jewellery inventory holdings held by the group at
30 June 16. Judgement has been made in determining the amount of the
provision based on the sales profile and recoverable value of jewellery.
– Write-off of pearl inventories and jewellery
There was a write-off of $165,036 as at 30 June 2016
(30 June 2015 – $1,386,517).
– 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 9.
Key assumptions that have been used to determine the fair market
value of the oysters at 30 June 2016 are as follows:
Average selling price for pearls1
¥ exchange rate
Average pearl size
Proportion of market grade pearls
Discount rate applied to cash flow
Mortality & Rejection rates
Average unseeded oyster value
30 June 2016
30 June 2015
¥13,000
per momme
¥12,000
per momme
¥76.53:AUD1.00
0.49 momme
50%
20%
¥93.96:AUD1.00
0.55 momme
52%
20%
Historical
comparison
$1.85
Historical
comparison
$1.47
Sellable Actual Results for the year ended 30 June 2016
01/07/15 –
31/12/15
01/01/16-
30/06/16
Total Weight Sold (Momme)
33,282
50,312
Total
83,594
Average ¥/Momme
¥14,958
per momme
¥14,328
per momme
¥14,579
per momme
Total No. of Pearls sold
66,043
99,869
165,912
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.
PAGE 40
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 PA R T O F T H E C O N S O L I D AT E D F I N A N C I A L S T AT E M E N T S
N O T E S T O A N D F O R M I N G PA R T O F T H E C O N S O L I D AT E D F I N A N C I A L S T AT E M E N T S
FOR THE YEAR ENDED 30 JUNE 2016
FOR THE YEAR ENDED 30 JUNE 2016
1. STATEMENT OF SIGNIFICANT ACCOUNTING
POLICIES CONTINUED...
1.32 CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
CONTINUED...
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.
1.33 GOING CONCERN
The financial statements have been prepared on the going concern
basis, which contemplates continuity of normal business activities and
the realisation of assets and the settlement of liabilities in the ordinary
course of the business.
The net profit after tax for the Group for the year ended 30 June 2016
amounted to a profit of $0.97m (year ended 30 June 2015 $8.1m loss).
At 30 June 2016 the Group had a working capital balance of $5.7m
(2015: $3.9m); $5.3m (2015: $3.5m) of this balance comprised of
unharvested oysters due for harvest during the next 12 months. As
at the 30 June 2016 the Group had a net asset position of $25.8m
(2015: $24m); $17.4m (2015: $14.6m) of this balance comprised of
unharvested oysters.
The company extended debt facilities with CBA in June 2015, with an
agreed repayment plan of $1m over the course of the year to June
2016. This repayment plan was met in full.
The company has announced it has agreed, on all material terms, with
the Commonwealth Bank of Australia for an extension of its current
Debt Facility through to 30 June 2017. This will entail:
- Continuation of the existing covenants;
Annual Normalised EBITDA greater than $1.5m.
•
• Minimum net worth of AUD $18m
•
Ratio of net-worth equal to or greater than 60%
- Atlas to provide CBA with monthly updates on debt repayment
activities and trading updates.
- Principle repayment plan of $4m during the FY16/17 with the
schedule of repayments as follows:
Date of Repayment
31 October 2016
31 December 2016
28 April 2017
30 June 2017
Total
Repayment Amount
$250,000
$250,000
$1,250,000
$2,250,000
$4,000,000
The new agreement is expected to formalised and signed off with CBA
in September 2017.
However, without:
•
the refinancing of existing credit and debt facilities of the Group
by 30 June 2017;
the international market for wholesale loose white south sea
pearls maintaining existing demand levels and pricing;
the Group meeting its auction forecasts;
the Group generating profitable operations with positive cash flows;
the realisation of assets at amounts greater than their carrying
values, and/or
the raising of debt or equity
•
•
•
•
•
There is a material uncertainty that may cast significant doubt over the
groups’ ability to continue as a going concern and therefore it may be
required to realise its assets and extinguish its liabilities other than in
the ordinary course of business, and at amounts that different from
those in the financial statements.
On this basis and considering the options available to the Group, the
directors declared on page 64 that there are reasonable grounds to
believe that the Group can pay its debts, as and when they fall due.
These financial statements do not include any adjustments relating
to the recovery and classification of recorded asset amounts or the
amounts or classification of liabilities and appropriate disclosure that
may be necessary should the Group be unable to continue as a going
concern.
2. REVENUE FROM CONTINUING OPERATIONS
Consolidated
2016
$
2015
$
18,042,174
11,774,319
57,335
335,346
18,434,855
9,411
334,582
12,118,312
Sales Revenue
Sale of goods
Other Revenue
Interest income
Other revenues
Revenue
Other Income
Foreign exchange (losses)/gains realised
Foreign exchange (losses)/gains unrealised
Foreign exchange gains - financial instrument
Gain on conversion of convertible note
Gain on sale of assets
Grant funds
Research and development tax offset
EOT Crop Revaluation
Other Income
477,213
465,799
-
-
-
41,516
339,826
-
1,324,354
591,556
1,119,368
14,245
656,440
1,663
521,768
752,044
167,104
3,824,188
3. PROFIT/(LOSS) BEFORE INCOME TAX INCLUDES THE
FOLLOWING SPECIFIC ITEMS
2016
$
2015
$
Administration expenses from ordinary activities
Salaries and wages
Depreciation property, plant and equipment
Operating lease rental costs
Compliance and finance
Other
3,699,586
398,575
504,894
556,026
1,111,292
6,270,373
Other expenses
Loss on foreign exchange realised
Loss on foreign exchange unrealised
Loss on derivative financial instruments
Provision for employee entitlements
Write off of property, plan and equipment
Write-down on investments
Impairment of Joint venture loan Essential
Oils of Tasmania
Impairment of other receivables
Share option expense
Other
Finance costs
Interest and finance charges payable
Net loss/(profit) on foreign currency
derivatives not qualifying as hedges
4,442,619
588,557
673,159
821,506
882,136
7,407,977
363,456
569,438
-
(6,290)
259,537
245,234
-
364,067
59,768
155,787
2,220,528
1,333,085
360,019
267,570
413,824
-
-
816,028
315,158
32,265
80,397
3,618,346
414,270
414,270
473,131
473,131
267,570
(14,245)
2016
$
2015
$
4. INCOME TAX EXPENSE
a) The components of tax expense/(benefit) comprise:
Current tax
Deferred tax
Prior period under provision (note 4(e))
569,759
642,838
606,445
1,155,519
(634,279)
-
1,819,042
521,240
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)
299,807
1,294,338
343,031
(1,928,617)
642,838
(634,279)
c) Numerical reconciliation of income tax
expense to prima facie tax payable:
Profit/(loss) before income tax expense
Tax at the Australian tax rate of 30%
2,787,145
836,143
(7,612,809)
(2,283,843)
Tax effect of amounts which are not
deductible in calculating taxable income:
Loss of tax benefits on deconsolidation of
subsidiary
-
202,036
Non-deductible expenses
Sundry items
Permanent Differences (Indonesia)
Foreign timing difference no longer recognised
Difference in overseas tax rates
Research and development tax offset
Income tax under provided in prior years
Income tax expense/(benefit)
285,375
(169,467)
-
-
(111,159)
371,705
606,445
1,819,042
374,174
(352,908)
(528)
2,038,871
17,007
526,431
-
521,240
Weighted average effective tax rates
65%
(7%)
d) Deferred income tax at 30 June relates to the following:
Deferred tax liabilities
Other
-
(2,147)
Fair value adjustment on biological assets and
agricultural produce
Prepayments
Derivative financial instruments
Investment in subsidiary
Unrealised foreign exchange gain
498,131 (1,880,258)
474
(80,271)
(76,697)
1,394
(696)
128,382
87,999
(261,898)
Deferred tax assets
Difference in accounting and tax depreciation
Stock
Accruals
Provisions
Unrealised foreign exchange losses
Other
Tax losses
Investment
Intangible Asset
(1,498)
(451,340)
17,151
(138,966)
(145,758)
(31,100)
117,523
299,716
34,465
33,805
(1,809,069)
21,983
363,499
(117,059)
(111,490)
30,169
289,172
34,821
Deferred tax (income)
43,224 (3,192,787)
For details of the franking account, refer to Note 19.
PAGE 42
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 PA R T O F T H E C O N S O L I D AT E D F I N A N C I A L S T AT E M E N T S
N O T E S T O A N D F O R M I N G PA R T O F T H E C O N S O L I D AT E D F I N A N C I A L S T AT E M E N T S
FOR THE YEAR ENDED 30 JUNE 2016
FOR THE YEAR ENDED 30 JUNE 2016
4. INCOME TAX EXPENSE CONTINUED...
(b) Past due but not impaired
e) During the period the company received assessments in relation
to the PT. Cendana Indopearl tax returns in relation to the 2008, 2011
and 2012 calendar years. The net result of the assessments, including
penalties, was a charge of $606,445; this has been brought to account
in the income tax charge for the year ending 30 June 2016. Please refer
to note 22 for contingencies in relation to historical tax affairs.
As at 30 June 2016, trade receivables of $134,491 (2015: $211,586)
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:
5. EARNINGS /(LOSS) PER SHARE
Basic earnings/(loss) per share (cents per share)
Diluted earnings per share (cents per share)
Earnings reconciliation
Net profit/(loss) used for basic earnings
After tax effect of dilutive securities
Diluted earnings/(loss)
Weighted average number of ordinary shares
outstanding during the period used for calculation
of basic earnings per share
Adjustments for calculation of diluted earnings per
share: options
Weighted average number of potential ordinary
shares outstanding during the period used for
calculation of diluted earnings per share
2016
$
0.23
0.23
2015
$
(2.40)
-
968,103 (8,134,049)
968,103 (8,134,049)
Up to one month
2-3 months
3 months and above
2016
$
2015
$
74,795
37,536
22,160
134,491
164,917
11,205
35,464
211,586
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
415,837,428 339,521,538
5,500,000
-
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
421,337,428 339,521,538
The Group’s exposure to interest rate risk and foreign exchange risk in
relation to trade and other receivables is disclosed in note 32.
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 2016 as potential ordinary shares which may
have a dilutive effect on the profit of the Consolidated Group.
(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.
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.
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.
6. CASH AND CASH EQUIVALENTS
Cash at bank
Interest rate risk exposure
2016
$
2015
$
4,343,407
4,343,407
2,632,311
2,632,311
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.
Cash not available for use
The Group has cash held as a guarantee as part of their obligations
under their lease agreement totalling $100,000 (2015: $100,000).
7. TRADE & OTHER RECEIVABLES
CURRENT
Trade receivables
Sundry debtors & prepayments
(a)
Impaired trade receivables
2016
$
2015
$
245,218
481,775
726,993
236,146
325,875
562,021
There were no impaired trade receivables for the group during the
period ended 30 June 2016 or 30 June 2015.
Derivative financial liabilities
Forward foreign exchange contracts
253,324
-
(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. 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. During the period ended
30 June 2016 the Group did not enter into any forward exchange
contracts to purchase Indonesian Rupiah. The sale of pearls is
8. DERIVATIVE FINANCIAL INSTRUMENTS CONTINUED...
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
CURRENT
Pearls – at fair value
2016
$
2015
$
1,411,216
904,501
Essential oil finished products – at cost
-
Other – at cost
Jewellery
Jewellery Obsolescence provision
Pearl Meat
Mother of Pearl
Farm Consumables & Fuel
Cosmetics
NON CURRENT
Nuclei – at cost
1,306,538
(100,000)
128
15,348
284,580
32,098
1,338,692
2,616,673
(823,434)
3,172
30,302
255,652
43,361
2,125,726
2,949,908
3,030,227
199,393
173,510
TOTAL INVENTORY
3,149,301
3,203,737
Inventories write-off expense of $165,036 (2015: $1,386,517) is included
on the face of the statement of profit or loss and other comprehensive
income. Write-off of pearls occurred when reviewing net realisable
value versus cost.
CURRENT
Oysters – at fair value
NON CURRENT
Oysters – at fair value
2016
$
2015
$
5,331,477
3,565,680
5,331,477
3,565,680
12,118,179 10,988,645
Quantity held within the Group operations: -
Juvenile and mature oysters which are not
seeded
Nucleated oysters
2016
2015
No.
No.
638,977
1,872,916
764,864
1,403,841
750,954
2,623,870
During the period ended 30 June 2016, the Group harvested 351,557
(2015: 296,040) pearls. A reconciliation of the movement in the fair
market value of the oysters during the period is reflected as follows:
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 1.32. The following table summarises the potential
impact of changes in the key non-production related variables:
Selling Price (¥/momme)
-10%
No Change
+10%
¥11,818
(Sellable Grade)
¥1,091
(Commercial Grade)
¥13,000
(Sellable Grade)
¥1,200
(Commercial Grade)
¥14,300
(Sellable Grade)
¥1,320
(Commercial Grade)
Discount rate
22%
20%
18.18%
Profit $
($2,427,362)
($2,187,204)
($1,961,109)
Profit $
Profit $
($278,045)
-
$261,802
$2,086,019
$2,405,736
$2,706,812
Selling Price (¥/momme)
-10%
No Change
+10%
¥11,818
(Sellable Grade)
¥1,09
(Commercial Grade)
¥13,000
(Sellable Grade)
¥1,200 (Commercial
Grade)
¥14,300
(Sellable Grade)
¥1,320
(Commercial Grade)
FX rate
¥84.18
¥76.53
¥69.57
Profit $
($4,054,873)
($2,187,204)
Profit $
($2,054,451)
-
($156,334)
$2,233,975
Profit $
$145,839
$2,405,736
$4,863,108
12,118,179 10,988,645
-10%
No Change
+10%
Marketable Grade
Total Biological Assets
17,449,656 14,554,325
45%
(Sellable Grade)
55%
(Commercial Grade)
50%
(Sellable Grade)
50%
(Commercial Grade)
55%
(Sellable Grade)
45%
(Commercial Grade)
During the period ended 30 June 2016 no significant events occurred
which impacted on oyster mortalities.
The details of the Biological Assets that are held by the Group as at
period end are as follows:
Av. Weight
0.54
0.49
0.45
Profit $
Profit $
Profit $
$363,660
$2,405,736
($1,856,432)
($3,874,698)
-
($2,187,032)
$4,652,019
$2,042,075
($330,600)
Nature: Oysters (Pinctada Maxima)
8. DERIVATIVE FINANCIAL INSTRUMENTS
2016
$
2015
$
Derivative financial assets
Forward foreign exchange contracts
-
14,245
10. BIOLOGICAL ASSETS
PAGE 44
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 PA R T O F T H E C O N S O L I D AT E D F I N A N C I A L S T AT E M E N T S
N O T E S T O A N D F O R M I N G PA R T O F T H E C O N S O L I D AT E D F I N A N C I A L S T AT E M E N T S
FOR THE YEAR ENDED 30 JUNE 2016
FOR THE YEAR ENDED 30 JUNE 2016
10. BIOLOGICAL ASSETS CONTINUED...
11. PROPERTY, PLANT AND EQUIPMENT
11. PROPERTY, PLANT AND EQUIPMENT CONTINUED...
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.
Level 3 analysis: The finance and operations departments undertake the
valuation of the oysters. 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. The main level 3 inputs used by the group
for oysters are derived and evaluated as follows:
Input
2016
2015
Commentary
Average selling
price
¥13,000 per
momme
¥12,000 per
momme
Yen Exchange
rate
¥76.93: AUD 1
¥93.96: AUD 1
Average Pearl
size
0.49
0.55 per
momme
Marketable
grade
50%
52%
Discount rate
20%
20%
Mortality
Historical
Historical
Costs to
complete
$0.80
$0.80
Obtain by
analysing sales
prices achieved
and the trend
analysis of the
past 12 months
of average sales
prices.
Based on
forward Yen
price per
a financial
institution.
Based on
technical
assessment
of expected
harvest output.
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.
(a) Non-Pearling Assets
Plant and equipment
- at cost
- accumulated depreciation
- EOT asset delist upon deconsolidation
Leasehold improvements
- at cost
- accumulated depreciation
- EOT asset delist upon deconsolidation
Total non-pearling assets
2016
$
2015
$
1,120,324
(662,406)
-
457,918
2,740,519
(1,404,238)
(752,005)
584,276
1,062,714
(518,820)
-
543,894
1,001,812
1,314,614
(660,424)
(41,905)
612,285
1,196,561
(b) Pearling project
Land (leasehold and freehold) and buildings
- at cost
- accumulated depreciation
Plant and equipment, vessels, vehicles
- at cost
- accumulated depreciation
Total pearling project
Total property, plant and equipment
1,679,552
(352,219)
1,327,333
1,394,817
(287,195)
1,107,622
6,421,575
(4,009,905)
2,411,670
3,739,003
4,740,815
5,630,093
(3,460,990)
2,169,103
3,276,725
4,473,286
Included in Pearling project land (leasehold and freehold) and buildings is
$466,488 (2015 - $317,680) which represents construction of buildings in
progress at cost.
Reconciliations of the carrying amount for each class of property, plant and
equipment are set out below:
(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
548,276
18,550
-
633
(145,541)
457,918
1,120,555
557,871
(771,007)
(9,478)
(313,665)
584,276
612,288
-
8,714
-
(77,108)
543,894
1,107,622
138,311
87,082
(52,805)
47,123
1,327,333
736,058
331,293
(157,298)
(204,066)
(93,699)
612,288
936,782
412,238
-
-
(341,113)
99,715
1,107,622
PAGE 46
2016
$
2015
$
4,075,722
110,122
5,172
4,191,016
3,816,805
122,204
15,518
3,954,527
-
-
4,191,016
-
-
3,954,527
33,553
-
33,553
-
33,553
125,036
5,172
130,208
-
130,208
Plant and equipment, vessels, vehicles
Carrying amount at beginning of the year
Additions
Acquisition of pearling operation
Disposals / reclassifications
Depreciation
Depreciation write offs
Foreign exchange movement
Carrying amount at end of the year
14. BORROWINGS
CURRENT
Secured
Bank loan
Other bank loan
Lease liabilities
Total secured current borrowings
Unsecured
Other
Convertible notes
Total current borrowings
2016
$
2,169,100
294,642
257,788
(500,897)
99,231
91,806
2,411,670
2015
$
1,607,879
915,911
-
-
(525,128)
170,438
2,169,100
Total Carrying amount
4,740,815
4,473,286
Reconciliation of depreciation to the Statement of Profit or Loss and
Other Comprehensive Income:
Depreciation charge (Note 11)
Capitalised depreciation charge
Depreciation charge (Note 3)
Balance
(776,350)
377,775
(398,575)
(1,273,605)
685,048
(588,557)
(398,575)
-
(588,557)
-
Refer note 32 for information on non-current assets pledged as
security by the Group.
12. INTANGIBLE ASSETS
Pearl infusion intangible asset
- at cost
- accumulated amortisation
Carrying value
13. TRADE AND OTHER PAYABLES
CURRENT
Trade payables
ESSP accrual
Other payables and accrued expenses
2016
$
2015
$
572,855
(410,886)
161,969
572,855
(296,001)
276,854
2016
$
2015
$
325,930
160,147
2,042,608
2,528,685
304,744
264,300
1,116,080
1,685,124
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 32.
(b) Risk Exposure
Information about the Group’s exposure to risks arising from borrowings
is provided in note 32.
15. TAX
(a) Liabilities
CURRENT
2016
$
2015
$
Income tax payable
661,111
225,528
NON-CURRENT
Deferred tax liabilities comprises temporary
differences attributable to -
Agricultural and biological assets at fair value
Prepayments
Investment in subsidiary
Current derivative instruments
Unrealised foreign exchange gains
Total deferred tax liabilities
1,254,475
529
11,302
48,111
1,398
1,315,815
756,345
54
87,999
128,382
-
972,780
(a) Amounts not expected to be settled within the next
12 months
Other payables include accruals for annual leave of $1,614,554 and
$1,024,240 in the consolidated entity for 30 June 2016 and 30 June
2015 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.
(b) Assets
Deferred tax assets comprises temporary differences
attributable to -
Tax allowances relating to property, plant &
equipment
Agricultural and biological assets at fair value
Accruals
Provisions
Intangible asset
Impairment of loans
Unrealised foreign exchange losses
Other
Tax losses recognised
Total deferred tax assets
PAGE 47
33,366
34,864
44,796
39,134
433,982
69,287
588,888
-
62,184
1,271,637
1,764,170
3,035,807
496,135
21,983
572,948
34,821
289,172
145,758
93,287
1,688,968
1,646,647
3,335,615
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 PA R T O F T H E C O N S O L I D AT E D F I N A N C I A L S T AT E M E N T S
N O T E S T O A N D F O R M I N G PA R T O F T H E C O N S O L I D AT E D F I N A N C I A L S T AT E M E N T S
FOR THE YEAR ENDED 30 JUNE 2016
FOR THE YEAR ENDED 30 JUNE 2016
15. TAX CONTINUED...
4. On 1 May 2015, 69,123,612 shares were issued at an issue price
(ii) Options continued...
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
2016
$
2015
$
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
2,362,384
1,698,387
43,224
3,192,787
(685,611)
1,719,996
(2,528,790)
2,362,384
2016
No. of
Shares
2015
No. of
shares
2016
2015
$
$
16. CONTRIBUTED EQUITY
Issued and fully paid-up capital 419,380,906 414,327,191
36,698,536
36,465,656
Ordinary Shares
Balance at beginning of period 414,327,191 319,485,425
36,465,656
32,153,001
Shares issued (1)(2)(3)(4)(5)(6)(7)
5,053,715
94,841,766
232,880
4,704,603
Share transaction costs
-
-
-
(391,948)
Balance at end of period
419,380,906 414,327,191
36,698,536
36,465,656
Treasury Shares
Balance at beginning of period
Acquisition of shares by Trust
under Plan
11,071,409
7,131,027
-
7,000,000
Shares released
(5,053,715)
(3,059,618)
Balance at end of period
6,017,694
11,071,409
Treasury shares are shares in Atlas Pearls and Perfumes Ltd that are held
by the Atlas Pearls and Perfumes Ltd Executive Share Plan Trust for the
purpose of issuing shares under the Atlas South Sea Pearl Employee
share plan.
1. On 10 September 2014, 2,000,000 shares were issued at an issue
price of $0.05 to a convertible note noteholder, who elected to
exercise its conversion right and redeem all of its convertible
notes to ordinary shares. The shares were issued at the lower of 5
cents or 90% of the 10 day volume weighted average in line with
the convertible note agreement.
2. On 2 March 2015, 7,000,000 shares were issued at an issue price
of $0.05 to a convertible note noteholder, who elected to exercise
its conversion right and redeem all of its convertible notes to
ordinary shares. The shares were issued at the lower of 5 cents
or 90% of the 10 day volume weighted average in line with the
convertible note agreement.
3. On 10 March 2015, 10,000,000 shares were issued at an issue price
of $0.05 to a convertible note noteholder, who elected to exercise
its conversion right and redeem all of its convertible notes to
ordinary shares. The shares were issued at the lower of 5 cents
or 90% of the 10 day volume weighted average in line with the
convertible note agreement.
of $0.045. 16,074,730 shares were issued to multiple shareholders
under the fully underwritten 1 for 5 non-renounceable pro rata
entitlement offer of fully paid ordinary shares. A further 53,048,882
were issued to the underwriter of the entitlement offer.
5. On 26 May 2015, 7,000,000 shares were issued at an issue price
of $0.045 into the Atlas South Sea Pearl Employee share plan.
3,059,618 treasury shares were issued during the year. Only when
shares are issued are they recognised in the ordinary shares
balance.
6. On 30 June 2015, 3,658,536 shares were issued at an issue price of
$0.041 to a convertible note noteholder, who elected to exercise
its conversion right and redeem all of its convertible notes to
ordinary shares. The shares were issued at the lower of 5 cents
or 90% of the 10 day volume weighted average in line with the
convertible note agreement.
7.
Total shares issued during the year ended June 2016 is 5,053,715
(all of which were Treasury shares issued over the course of
the year to employees as part the Atlas employee share salary
sacrifice plan).
(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.
(ii) Options
1.
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:
2. 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.
3. 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.
2016
$
2015
$
(9,115,083)
714,605
(8,400,478)
(9,732,299)
682,341
(9,049,958)
4. On 4 June 2014, 10,000,000 unlisted options were issued to
former Director Stephen Birkbeck and 500,000 unlisted options
to former 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
17. RESERVES
Foreign Currency Translation Reserve
Employee Share Reserve
Total Reserves
Movements:
Foreign Currency Translation Reserve -
5. On 15 August 2014, 2,000,000 unlisted options were issued to
certain 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 $0.0858 each on or before 31 December 2016,
subject to certain vesting conditions specific to each employee/
consultant
Balance at beginning of year
(9,732,299)
(8,658,778)
Currency translation differences arising during
the Year
Balance at end of year
617,216 (1,073,521)
(9,115,083)
(9,732,299)
The foreign currency translation reserve records
exchange differences arising on translation of foreign
controlled subsidiaries to the reporting currency.
6. On 30 June 2015, 5,500,000 unlisted options were issued to
Employee Share Reserve -
certain employees 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 $0.059 each on or before 31 December 2018,
subject to certain vesting conditions specific to each employee/
consultant.
Balance at beginning of period
Movement in Employee Share Reserve
Balance at end of year
682,341
32,264
714,605
622,574
59,767
682,341
The employee share reserve records the value of
equity portion of remuneration paid to employees in
the form of shares or other equity instruments.
7. During the year ended 30 June 2016, of the 28,500,000 options
18. (ACCUMULATED LOSSES)
with performance conditions maturing at 30 June 2016, none
were deemed vested, as no individual met their respective
performance conditions in relation to said options. As such, all
options were lapsed/forfeited as at 30 June 2016. At 30 June 2016,
the total quantity of unlisted options on issue is 5,500,000.
(iii) 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 a net gearing ratio of 17% at 30 June 2016 (14% at 30 June 2015).
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.
Reconciliation of (Accumulated losses):
Balance at beginning of year
Net profit/(loss) for the year
Balance at end of year
19. DIVIDENDS
2016
$
2015
$
(3,441,517)
4,692,532
968,103 (8,134,049)
(3,441,517)
(2,473,414)
No dividends have been paid or declared in respect of the 2016
financial year or the period ended 30 June 2015.
Dividend Franking Account
Franking credits available to shareholders of the
Company for subsequent financial years based on a
tax rate of 30%.
2016
$
2015
$
1,278,704
1,278,704
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.
PAGE 48
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 PA R T O F T H E C O N S O L I D AT E D F I N A N C I A L S T AT E M E N T S
N O T E S T O A N D F O R M I N G PA R T O F T H E C O N S O L I D AT E D F I N A N C I A L S T AT E M E N T S
FOR THE YEAR ENDED 30 JUNE 2016
FOR THE YEAR ENDED 30 JUNE 2016
20. OPTIONS
The Company had 5,500,000 options granted over unissued shares at
the 30 June 2016 (30 June 2015 – 34,000,000). The 5,500,000 options
granted over unissued shares at 30 June 2016 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.
21. COMMITMENTS
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
2016
$
2015
$
432,506
1,481,950
-
1,914,456
432,468
1,900,161
-
2,332,629
Non - cancellable operating leases
The Group leases premises under non-cancellable operating
leases expiring in 5 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.
Other commitments/guarantees
Atlas Pearls and Perfumes Ltd has a bank guarantee with the
Commonwealth Bank of Australia for AUD$100,000 at 30 June 2015 (30
June 2015: $100,000). This guarantee has been taken out to secure the
rental of the Atlas Pearls and Perfumes corporate offices in Claremont,
Western Australia.
22. CONTINGENCIES
The company’s historical tax affairs are regularly subject to audit by
the Indonesian Tax Office and this process remains ongoing. There
is the possibility that this review programme may result in future tax
liabilities in relation to prior year tax returns. All assessments received
to date have been brought to account, but no provision has been
booked in relation to periods currently under review due to the
inherent uncertainty of the outcomes.
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 2016 with debt of
$375,000 outstanding by employees from the initial loan of $1,063,500
that was made when the shares were allocated to employees.
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.
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.
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 period 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 period 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. 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 period ended 30 June 2015 an additional 7,000,000 shares
were issued into the Atlas Pearls and Perfumes Limited Employee
Share Trust, whilst 3,059,618 shares were issued out to employees and
contractors. Of the 3,059,618 shares issued out of the trust during the
period ended 30 June 2015, 461,111 shares were issued to employees
who did not salary sacrifice shares but were instead issued shares out
The Atlas Employee Salary Sacrifice Share Plan Continued...
of the trust in lieu of cash bonuses. The total value of the bonuses
issued was $32,500. A further 1,171,968 were issued to contractors
who were issued shares in lieu of cash payment. The total value
settled totalled $76,746.
During the period ended 30 June 2016, 5,053,715 shares were issued
out to employees as part of the 2015 salary sacrifice scheme.
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 2015
salary sacrifice scheme an issue price of 4.5 cents was approved by the
Board of Directors.
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
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 2016, 5,053,715 of the shares issued
to the Atlas South Sea Pearl Limited Employee Share Trust had been
issued to Eligible Participants (30 June 2015: 3,059,618 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 1.16.
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).
(b) A company where each of the following are satisfied in relation
Refer to Note 16 for movement in share plan, under treasury shares.
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;
iii. The contracting individual has been the only member for
the 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.
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
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.
PAGE 50
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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 PA R T O F T H E C O N S O L I D AT E D F I N A N C I A L S T AT E M E N T S
N O T E S T O A N D F O R M I N G PA R T O F T H E C O N S O L I D AT E D F I N A N C I A L S T AT E M E N T S
FOR THE YEAR ENDED 30 JUNE 2016
FOR THE YEAR ENDED 30 JUNE 2016
23. SHARE BASED PAYMENTS CONTINUED...
Atlas Pearls and Perfumes Ltd Employee Option Plan Continued...
Issue Date
Expiry Date
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.
24 February 2014 31 December 2016
31 December 2016
13 May 2014
31 December 2016
2 June 2014
31 December 2016
15 August 2014
30 June 2015
31 December 2018
Total
Exercise
Price
0.0858
0.0858
0.0950
0.0858
0.0590
Share
Options
30 June
2016
-
-
-
-
5,500,000
5,500,000
Share
Options
30 June
2015
7,500,000
10,500,000
8,500,000
2,000,000
5,500,000
34,000,000
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)
(ii)
Close of business on the Expiry Date;
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 and 31 December 2018.
The exercise price of options is based on 143% (June 2015: 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.
2015
Average
exercise
price per
share
option
0.066
-
-
-
0.066
-
Number
of
options
7,500,000
-
-
2,000,000
5,500,000
2014
Average
exercise
price per
share
option
Number
of
options
0.089 26,500,000
-
-
-
-
- 26,500,000
-
-
-
-
-
As at 1 July 2015
Granted during the year
Exercised during the year
Forfeited during the year
As at 30 June
Vested and exercisable at
30 June 2016
There were no options issued during the year ended 30 June 2016.
Of the 28,500,000 maturing at 30 June 2016, none are exercisable as
performance conditions attached have not been met.
Weighted average remaining contractual life of
options outstanding at end of period
1.8 years 0.6-1.8 years
Fair value of options granted
The assessed fair value at grant date of options granted during the
year ended 30 June 2015 was $0.16 (5,500,000 options) and $0.51
(2,000,000) (2014: $0.20). 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.
The model inputs for options granted during the year ended 30 June
2015 and 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)
(vi) Expected dividend yield: 0%;
(Vii) Risk-free interest rate: 3.06%
Expected price volatility of the company’s shares: 60%;
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.
Fair value of options granted Continued...
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)
(vi) Expected dividend yield: 0%;
(vii) Risk-free interest rate: 3.06%
Expected price volatility of the company’s shares: 60%;
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:
(i) Options are granted for no consideration and vest based on the
individual’s Key Performance Indicators. Vested options ar
exercisable for a period of six months after vesting or the earlier of 31
December 2016.
(ii)
Exercise price - $0.095;
(iii) Grant date – 2 June 2014;
(iv) Share price at grant date: $0.067
(v)
(vi) Expected dividend yield: 0%;
(vii) Risk-free interest rate: 3.06%
Expected price volatility of the company’s shares: 60%;
On the 15th of August 2014 2,000,000 options exercisable at $0.0858
each on or before 31 December 2016 were issued to a contractor 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 15th August 2014
have a fair value of $0.51. This valuation imputes a total value of
approximately $101,609 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.
Exercise price - $0.0858;
(ii)
(iii) Grant date – 15 August 2014;
(iv) Share price at grant date: $0.11
(v)
(vi) Expected dividend yield: 0%;
(vii) Risk-free interest rate: 3.06%
Expected price volatility of the company’s shares: 60%;
On the 30th of June 2015 5,500,000 options exercisable at $0.059
each on or before 31 December 2018 were issued to employees 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 30th June 2015
have a fair value of $0.016. This valuation imputes a total value of
approximately $90,215 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 2018.
(ii)
Exercise price - $0.0590;
(iii) Grant date – 30 June 2015;
(iv) Share price at grant date: $0.044
(v)
(vi) Expected dividend yield: 0%;
(vii) Risk-free interest rate: 3.06%
Expected price volatility of the company’s shares: 60%;
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.
Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transactions and
option related valuation expenses recognised during the period as
part of employee benefit expense were as follows:
Shares issued under the employee share plan
Option expense
2016
$
-
32,265
32,265
2015
$
27,500
59,768
87,268
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. NOTES TO THE CASH FLOW STATEMENT
24.1 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:
Cash at bank (Note 6)
Balances per statement of cashflows
2016
$
2015
$
4,343,407
4,343,407
2,632,311
2,632,311
PAGE 52
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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 PA R T O F T H E C O N S O L I D AT E D F I N A N C I A L S T AT E M E N T S
N O T E S T O A N D F O R M I N G PA R T O F T H E C O N S O L I D AT E D F I N A N C I A L S T AT E M E N T S
FOR THE YEAR ENDED 30 JUNE 2016
FOR THE YEAR ENDED 30 JUNE 2016
24. NOTES TO THE CASH FLOW STATEMENT CONTINUED...
25. RELATED PARTY TRANSACTIONS
25. RELATED PARTY TRANSACTIONS CONTINUED...
24.2 RECONCILIATION OF PROFIT/(LOSS) AFTER INCOME TAX TO
a.
Subsidiaries
NET CASH INFLOW FROM OPERATING ACTIVITIES
Profit/(loss) after income tax
Depreciation and amortisation
(Gains)/Losses on Equity Investments
Investment income
Share based payments
Foreign exchange (losses) unrealised
Impairment of JV loan
Derivative instrument gains/(losses) unrealised
Agricultural asset fair value (losses) and inventory
write-offs
Decrease/(increase) in trade and other debtors
Decrease/(increase) in inventories
(Decrease)/Increase in trade and other creditors
Increase/(Decrease) in Provision
Increase in taxes
2016
$
2015
$
968,103 (8,134,049)
588,557
398,575
202,036
321,657
-
(331,872)
59,767
32,265
547,021
750,093
149,091
718,724
(656,440)
267,570
(1,827,484)
(164,971)
(813,412)
6,697,385
2,373,152
454,190
460,260 (1,595,637)
139,091
590,314
(322,720)
1,117,406
Net cash obtained/(used in) operating activities
2,487,228
501,444
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 year ended 30 June 2016 5,053,715 shares were issued
out of the Atlas South Sea Pearl Limited Employee Share Trust to
employees and contractors (30 June 2015: 3,059,618). Of the 5,053,715
shares issued out of the trust, no shares (2015: 461,111) 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 $nil (2015: $32,500). During the year ended 30
June 2016 no shares (2015: 1,171,968) were issued to contractors who
were issued shares in lieu of cash payment. The total value settled
totalled $nil (2015: $76,746).
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 2016
the balance of the loan was $143,676 (30 June 2015: $247,240). There
were no other new loans to acquire property, plant and equipment
entered into during the year ended 30 June 2016. During the year
ended 30 June 2016, the Company did not issue any ordinary shares to
acquire any new investments.
During the year ended 30 June 2015, convertible notes were
redeemed for ordinary shares. The shares were issued at the lower of 5
cents or 90% of the 10 day volume weighted average in line with the
convertible note agreement. The convertible notes were fair valued on
maturity and a derivative instrument fair value gain of $656,440 realised.
There were no such transactions in the year ended 30 June 2016.
24.3 CREDIT FACILITIES
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 2016, there is loan balance of $771,173 owing from World
Senses to Atlas (30 June 2015 - $456,015). 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 2016, there is loan balance of $72,961 (30 June
2015: $72,961) owing to World Senses from Perl’Eco. This balance
consists of pearl jewellery sold to Perl’ Eco by World Senses. The net
loan receivable balance for the Atlas group from World Senses of
$698,212 has been fully impaired due to the net liability position of the
World Senses Pty Ltd accounts.
Essential Oils of Tasmania Pty Ltd acquired in January 2013 as a 100%
subsidiary. On 20th April 2015 50% of the investment in the entity
was sold to Westwood Properties Pty Ltd. Post this sale Essential Oils
of Tasmania has been deemed a joint venture and has been equity
accounted for.
As at 30 June 2016, there is a loan balance of $1,832,284 (30 June 2015:
$1,596,815) owing from Essential Oils of Tasmania Pty Ltd to Atlas.
This balance consists of admin and expense recharges, and funding
advances. A provision for impairment of $816,028 has been booked
against the loan for the year ending 30 June 2016 as a result of a review
conducted on the recoverability of the intercompany receivable. The
provision represents a write-down to the director’s best estimate of the
recoverable value and is deemed a prudent assessment.
The parent entity has a 50% interest in Brookfield Tasmania Pty Ltd.
At 30 June 2016, there is loan balance of $200 (30 June 2015: $200)
owing from Brookfield Tasmania Pty Ltd. This balance relates to money
advanced to Brookfield Tasmania Pty Ltd to cover bank fees.
Due from World Senses
Due to World Senses
Impairment of World Senses asset
Due from Essential Oils of Tasmania
Impairment of Essential Oils of Tasmania Receivable
Due from Brookfield Tasmania Pty Ltd
2016
$
771,173
(72,961)
(698,212)
1,832,284
(816,028)
200
1,016,456
2015
$
456,015
(72,961)
(383,054)
1,596,815
-
200
1,597,015
Key management personnel compensation -
c.
Detailed remuneration disclosures are provided in section 13.2 of the
remuneration report.
As at 30 June 2016, the Company had in place a loan facility with
the Commonwealth Bank with a limit of $4,000,000 (30 June 2015 -
$5,000,000). This facility has been fully utilised, see note 32 for further
disclosure. Information about the security relating to secured liabilities
and the fair value is provided in note 32.
Short-term employment benefits
Post-employment benefits
Long Term benefits
Share based compensation
2016
$
1,148,088
42,776
-
7,151
1,198,015
2015
$
1,325,865
100,828
20,001
27,500
1,474,194
d. Transactions with other related parties
The following balances are outstanding at the end of the reporting period in
transactions with related parties:
Director fees payable
Current receivables (wholesale purchase of jewellery)
e.
Loans to/from related parties
Loans to key management personnel
Beginning of the year
Loans advanced
Loans repaid
End of year
2016
$
78,900
7,455
86,355
2015
$
78,900
35,000
113,900
2016
$
2015
$
-
-
-
-
25,000
-
(25,000)
-
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) AUDIT SERVICES
BDO Australia
Audit and other assurance services
Audit and review of financial reports
BDO Indonesia
Audit and review of financial reports
Total remuneration for audit and other assurance services
Other Services
Other review
Total remuneration for other services
2016
$
2015
$
86,000
86,000
17,011
103,011
16,379
102,379
40,000
40,000
-
-
Total remuneration of BDO Australia for audit
and other related services
143,011
102,379
b) TAXATION SERVICES
BDO Australia
Tax compliance services and advise
Total remuneration for taxation services
Total remuneration for taxation services
Total Remuneration Audit, Taxation and other
related services
-
-
-
37,919
37,919
37,919
143,011
140,298
PAGE 54
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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 PA R T O F T H E C O N S O L I D AT E D F I N A N C I A L S T AT E M E N T S
N O T E S T O A N D F O R M I N G PA R T O F T H E C O N S O L I D AT E D F I N A N C I A L S T AT E M E N T S
FOR THE YEAR ENDED 30 JUNE 2016
FOR THE YEAR ENDED 30 JUNE 2016
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 2016 is as follows:
30 June 2016
Wholesale Loose Pearl
Jewellery
Essential Oils
All other
segments
Total
Australia
Indonesia
Australia
Indonesia
Australia
Total segment revenue
Inter-segment revenue
Revenue from external customers
Normalised EBITDA
Adjusted net operating profit/(loss)
before income tax
Depreciation and amortisation
Revaluation of Biological Assets
Totals segment assets
Total assets include:
Additions to non – current assets (other
than financial assets or deferred tax)
$
$
16,783,473
12,568,397
-
(12,212,715)
16,783,473
1,418,525
355,682
2,560,972
$
490,503
-
490,503
(232,410)
$
412,516
-
412,516
14,441
1,440,441
1,460,736
(279,796)
(10,123)
274,418
61,157
-
(1,827,483)
6,700,678
22,587,105
45,346
-
759,263
17,654
-
708,839
13,386
432,952
4,020
1,144
Total segment liabilities
(984,754)
(1,728,711)
(30,846)
(11,827)
$
$
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
30,254,889
(12,212,715)
18,042,174
3,761,528
2,611,258
398,575
(1,827,483)
30,755,885
451,502
(2,756,138)
(ii) The segment information provided to the Board of Directors and management team for the reportable segments for the year ended 30 June 2015 is as follows:
30 June 2015
Wholesale Loose Pearl
Jewellery
Essential Oils
All other
segments
Total
Total segment revenue
Inter-segment revenue
Revenue from external customers
Normalised EBITDA
Adjusted net operating profit/(loss)
before income tax
Depreciation and amortisation
Revaluation of Biological Assets
Totals segment assets
Total assets include:
Additions to non – current assets (other
than financial assets or deferred tax)
Australia
Indonesia
Australia
Indonesia
Australia
$
8,697,181
-
8,738,163
(1,715,598)
$
9,132,094
(8,875,225)
298,484
770,330
$
555,144
-
555,144
(290,162)
$
$
$
592,988
1,589,540
-
592,988
(197,745)
-
1,589,540
198,507
(2,675,153)
805,565
(340,106)
(446,009)
135,881
267,311
-
177,137
6,864,489
46,289
-
4,672,176
18,945,577
1,541,652
232,354
2,075,193
4,379
41,807
-
850,314
338,289
(8,357)
56,013
(167,104)
-
314,142
-
$
20,566,947
(8,875,225)
11,774,319
(1,234,668)
(2,519,822)
588,557
6,697,385
26,009,719
2,964,357
(1,685,124)
-
-
-
-
-
-
-
-
-
-
Total segment liabilities
(685,300)
(968,320)
(23,147)
(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:
Total segment revenue
Intersegment eliminations
Interest income
Other revenues
Total revenue from continuing
operations (Note 2)
2016
$
30,254,889
(12,212,715)
57,335
335,346
2015
$
20,649,544
(8,875,225)
9,411
334,582
18,434,855
12,118,312
2016
$
2,756,138
2015
$
1,685,124
661,111
4,224,569
1,315,815
25,871
225,529
4,084,734
972,780
-
8,983,504
6,968,167
2016
$
2015
$
288,459
398,575
750,092
(1,827,483)
-
90,240
267,570
816,028
190,902
2,787,145 (7,612,809)
397,426
588,557
(792,275)
6,697,385
149,091
(5,603)
(656,440)
-
-
3,761,528 (1,234,668)
27. SEGMENT REPORTING CONTINUED...
(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:
Major customers
A Japanese wholesaler accounted for 19% of external revenue in
the period ended 30 June 2016 (2015 - 12%). 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 $653,152 (2015: $627,605) in relation
to wholesale loose pearl sales. Revenue for wholesale loose pearls
from third party customers based in other countries during the period
ended 30 June 2016 was $15,389,416 (2015: $8,034,402). 86% of the
total loose pearl sales revenue during the period ended 30 June 2016
(2015: 83%) were 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
Segment liabilities
Unallocated:
Current tax liabilities
Borrowings
Deferred tax liabilities
Other
Total liabilities as per the statement of financial
position
(v) Normalised EBITDA reconciliation
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:
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
Impairment of Joint Venture investment
Other taxes/penalties (land tax/fees)
Normalised EBITDA
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 1.6.
Name of entity
Class of
shares
Percentage
owned
Percentage
owned
Place of
incorporation
30 June
2016
30 June
2015
Perl’Eco Pty Ltd(1)
Tansim Pty Ltd
P.T. Cendana Indopearls
Aspirasi Satria Sdn Bhd
Ord
Ord
Ord
Ord
100%
100%
100%
100%
100%
100%
100%
100%
Australia
Australia
Indonesia
Malaysia
(1) Previously named Sharcon Pty Ltd
The ultimate parent entity, Atlas Pearls and Perfumes Ltd, is
incorporated in Australia.
Net operating profit /(loss) before tax
Intersegment eliminations
Changes in fair value of biological and
agricultural assets
JV Impairment expense
Foreign exchange gains
Foreign exchange losses
Other
Profit/(loss) before income tax from continuing
operations
(iii) Segment assets
2016
$
2015
$
2,611,258 (2,519,822)
-
-
1,827,483 (6,697,385)
(918,724)
105,780
(855,872)
17,220
(149,091)
1,325,765
(533,490)
961,214
2,787,145 (7,612,809)
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:
Segment assets
Unallocated:
Joint Venture Loans
Deferred tax assets
Total assets as per the statement of financial
position
2016
$
2015
$
30,755,885 26,009,719
1,016,456
3,035,807
1,597,015
3,335,614
34,808,148 30,942,348
The total of non-current assets other than financial instruments and
deferred tax assets located in Australia is $951,381 (2015: $1,253,739).
The total located in Indonesia is $16,268,975 (2015: $14,658,559).
PAGE 56
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 PA R T O F T H E C O N S O L I D AT E D F I N A N C I A L S T AT E M E N T S
N O T E S T O A N D F O R M I N G PA R T O F T H E C O N S O L I D AT E D F I N A N C I A L S T AT E M E N T S
FOR THE YEAR ENDED 30 JUNE 2016
FOR THE YEAR ENDED 30 JUNE 2016
29. NON-CURRENT ASSETS – INVESTMENTS ACCOUNTED
Essential Oils of Tasmania
FOR USING THE EQUITY METHOD
Share in World Senses joint venture partnership
Share in Brookfield Tasmania joint venture
partnership
Share in Essential Oils of Tasmania joint venture
partnership
2016
$
2015
$
-
-
-
-
Joint Ventures’ assets and liabilities
Current assets
Non-current assets
Total assets
183,744
183,744
292,940
292,940
Current liabilities
Non-current liabilities
Total liabilities
30. INTERESTS IN JOINT VENTURES
Net assets
2016
$
2015
$
3,957,157
389,859
4,347,016
2,903,227
1,843,737
4,746,964
476,586
3,503,564
3,980,150
1,106,322
3,054,762
4,161,084
366,866
585,880
Joint Venture’s revenues, expenses and results
Revenues
Expenses
Profit/(loss) for the period
3,029,452
(3,247,842)
(218,390)
2,142,671
(1,789,035)
353,636
(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.
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.
Reconciliation to carrying value
Opening net asset 1 July
Profit/(loss) for the period
Closing net assets
The parent entity has a 50% interest in Essential Oils of Tasmania Pty
Ltd, which is a resident in Australia and the principal activity of which is
to grow and produce essential oils.
Group’s share in %
Group share in $
Carrying value
1,062,785
(218,390)
844,395
-
1,062,785
1,062,785
50%
(109,195)
183,744
50%
292,940
292,940
-
-
-
-
(218,390)
(109,195)
353,636
32,380
386,016
360,137
25,879
12,940
Share of Equity accounted investment
Profit/(loss) before income tax
Income tax
Profit/(loss) after tax
Profit for the period to 20 April 2015
Profit/(loss) post sale of interest
Group share of Profit/(loss)
(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.
Each of the partners in Essential Oils of Tasmania 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.
There have been no legal claims lodged against the joint ventures.
The joint ventures do not have any contingent liabilities in respect of a
legal claim lodged against the joint venture
The interest in World Senses Pty Ltd and Essential Oils of Tasmania
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 ventures are set out below.
World Senses
Joint Ventures’ assets and liabilities
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
2016
$
2015
$
302,386
623,443
925,829
294,262
441,333
735,595
40,490
1,760,292
1,800,782
40,490
1,145,134
1,185,624
(874,953)
(450,029)
Joint Venture’s revenues, expenses and results
Revenues
Expenses
Profit/(loss) for the period
20,143
(445,066)
(424,923)
-
(429,951)
(429,951)
Reconciliation to carrying value
Opening net asset 1 July
Profit/(loss) for the period
Closing net assets
Group’s share in %
Group share in $
Carrying value
(450,029)
(424,923)
(874,952)
(20,078)
(429,951)
(450,029)
50%
(212,462)
-
50%
(214,975)
-
PAGE 58
31. PARENT ENTITY FINANCIAL INFORMATION
(a) Summary financial information
MARKET RISK
(i)
Foreign exchange risk
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)
2016
$
2015
$
5,459,755
27,804,960
7,936,513
5,820,593
3,484,479
27,541,788
7,482,837
5,367,163
36,698,541
36,465,658
714,606
(14,973,372)
22,439,775
682,341
(12,158,169)
24,989,830
(Loss) for the period
(455,408)
(2,815,205)
Total comprehensive (loss)
(455,408)
(2,815,205)
(b) Contingent liabilities
The parent entity did not have any contingent liabilities as at 30 June
2016 or 30 June 2015.
The parent entity did not provide financial guarantees during the
period (2015: Nil).
32. FINANCIAL RISK MANAGEMENT
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:
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:
30 June 2016
30 June 2015
JPY
$
USD
$
EUR
$
JPY
$
USD
$
EUR
$
499,418 134,141
7,154 1,210,196
71,281
651
(225)
64,700
(7,197) (40,800)
-
-
71,546
-
(3,261)
(4,058)
Cash and cash
equivalents
Trade and other
receivables
Trade and other
payables
Borrowings
(1,955,037)
Forward exchange
contracts – buy
foreign currency
Forward exchange
contracts – sell
foreign currency
-
(253,325)
-
-
-
- (709,238)
14,245
-
-
-
-
-
-
-
-
-
-
Financial Assets
Cash and cash equivalents
Trade and other receivables
Derivative financial instruments
Financial Liabilities
Trade and other payables
Borrowings
Derivative financial instruments
2016
$
2015
$
4,343,668
287,642
-
4,631,310
2,632,311
354,845
14,245
3,001,401
976,754
4,224,569
253,324
5,454,647
759,971
4,084,734
-
4,844,705
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 PA R T O F T H E C O N S O L I D AT E D F I N A N C I A L S T AT E M E N T S
N O T E S T O A N D F O R M I N G PA R T O F T H E C O N S O L I D AT E D F I N A N C I A L S T AT E M E N T S
FOR THE YEAR ENDED 30 JUNE 2016
FOR THE YEAR ENDED 30 JUNE 2016
32. FINANCIAL RISK MANAGEMENT Continued...
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.
Foreign Exchange Rate Risk
30 June 2016
30 June 2015
-10%
10%
-10%
10%
Profit
Equity
Profit
Equity
Profit
Equity
Profit
Equity
Statement of Financial
Position Amount
AUD
2016
2015
Financial Assets
Cash
4,343,668
2,632,311
71,190
Trade and other receivables
287,642
354,845
7,164
Derivatives
-
14,245
-
Financial Liabilities
Trade and other payables
976,754
759,971
(5,333)
Borrowings
4,224,569
4,084,734
(217,226)
Derivatives
253,324
-
(28,147)
Total Increase/(Decrease)
(172,352)
Majority of the exposure above relates to the borrowings held in Yen.
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$5,376,067. The intercompany loans are eliminated
on consolidation.
(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 89. For
-
-
-
-
-
-
-
(58,247)
(5,861)
-
4,363
177,731
23,030
141,016
-
-
-
-
-
-
-
142,459
7,950
1,583
(813)
(78,804)
-
72,375
-
-
-
-
-
-
-
(116,557)
(6,504)
(1,295)
665
64,476
-
(59,215)
-
-
-
-
-
-
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.
TRADE RECEIVABLES
Retail customers – no credit history
Wholesale customers –
existing customers with no defaults in the past
Total trade receivables
Derivative financial assets
2016
$
-
243,821
243,821
-
2015
$
-
202,050
202,050
-
LIQUIDITY RISK
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
32. FINANCIAL RISK MANAGEMENT Continued...
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 Company will be required to meet three financial undertakings to
comply with the lending conditions imposed by the bank as follows:
•
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 2016 to 30 June 2017
• 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%.
The Group had access to the following borrowing facilities at the
reporting date.
Normalised EBITDA for the 12 months ended 30 June 2016 was a profit
of $3.6m, the covenant for this period was a profit of $1.5m.
A new other bank loan (unsecured) provided by Microsoft Finance
was provided during the year ended 30 June 2014 to acquire the
accounting software Microsoft Navision. Further loans were drawn
down during the year ended 30 June 2015 in relation to Microsoft
Navision expenditure. The liability at 30 June 2016 was $143,676 (2015:
$247,240).
Lease liabilities provided by St George Bank were 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 $5,172 (30
June 2015: $20,689).
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.
Fixed rate
Expiring within one year –
Foreign currency loan trade
2016
$
2015
$
4,000,000
5,000,000
4,000,000
5,000,000
The bank loan with the Commonwealth Bank of Australia (“CBA”) has
been renegotiated in principle and the facility is due to be extended
until the 30 June 2017. The new facility agreement is currently being
finalised with sign off by all parties expected in September 2017.
The current bank loan is secured by a registered company charge by
CBA over the whole of the assets and undertaking 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 loan provided under a Japanese Yen Domestic Foreign
Currency Advance facility has a facility limit equivalent to
AUD$1,875,000. As at 30 June 2016 the facility had been fully drawn
down. This facility is subject to a fixed interest rate plus the Japanese
BBSY. As at 30 June 2016 this fixed interest rate was 6.08%. Under the
new facility agreement, the fixed interest rate is 6.58%. This facilty
expires on 30 June 2017.
The bank loan provided under an Australian Dollar Bills Discount facility
has a facility limit of AUD $2,125,000. As at 30 June 2016 the company
had drawn down $2,120,000. This facility is subject to a fixed interest rate
plus LIBOR. As at 30 June 2016 this fixed interest rate was 6.08%. Under
the new facility agreement, the fixed interest rate is 6.58%.
The facility is also subject to a monthly line fee of 0.05% calculated
on the facility limit, A$4,000,000. The new facility will also attract an
establishment fee of A$32,127 plus legal costs of A$2,500 in July 2016
& A$30,000 in December 2016 and an ongoing monthly management
fee of A$4,825.
The Company has agreed to the following principal repayments of its
debt facility with CBA:
Date of Repayment
31 October 2016
30 December 2016
28 April 2017
30 June 2017
Total
Repayment Amount
$250,000
$250,000
$1,250,000
$2,250,000
$4,000,000
The new agreement is expected to be formalised and signed off with
CBA in September 2017
PAGE 60
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 PA R T O F T H E C O N S O L I D AT E D F I N A N C I A L S T AT E M E N T S
N O T E S T O A N D F O R M I N G PA R T O F T H E C O N S O L I D AT E D F I N A N C I A L S T AT E M E N T S
FOR THE YEAR ENDED 30 JUNE 2016
FOR THE YEAR ENDED 30 JUNE 2016
32. FINANCIAL RISK MANAGEMENT Continued...
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.
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
30 June 2016
30 June 2015
$
$
$
$
$
$
$
$
$
$
$
$
Non-Derivatives
Trade payables
Borrowings
Total non-
derivatives
Derivatives
Net settled
(Non deliverable
forwards)
Gross settled
-(inflow)
-outflow
Total Derivatives
973,995
-
55,061 4,135,955
-
33,553
-
-
973,995
4,224,569
973,995
4,224,569
759,971
67,883
-
3,886,644
-
130,208
-
-
759,971
4,084,735
759,971
4,084,735
1,029,057 4,135,955
33,553
- 5,198,564 5,198,564
827,854 3,886,644
130,208
- 4,844,706 4,844,706
(99,368)
(153,957)
(253,325)
(253,325)
33,443
(19,198)
3,000,000 7,500,000
(3,099,368) (7,653,957)
(153,957)
(99,368)
-
-
-
- 10,500,000 10,500,000
4,200,000
- (10,753,325) (10,753,325) (4,166,557)
33,443
-
(253,325)
(253,325)
600,000
(619,198)
(19,198)
-
-
-
-
-
-
-
-
14,245
14,245
4,800,000
4,800,000
(4,785,755) (4,785,755)
14,245
14,245
Borrowings include the loan to the Commonwealth Bank (CBA), and is
classified as an amount due between 6-12 months. This loan is drawn
as a bank bill facility which has a maturity date of 30 June 2017.
(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 2016 and 30
June 2015 on a recurring basis:
30 June 2016
LEVEL 1
$
LEVEL 2
$
LEVEL 3
$
TOTAL
$
30 June 2015
LEVEL 1
$
LEVEL 2
$
LEVEL 3
$
TOTAL
$
Liabilities
Derivative financial
instruments
Forward foreign
exchange contracts
Total Liabilities
-
-
-
-
14,245
14,245
-
-
-
-
14,245
14,245
(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. If one or more of the significant inputs is not based on
observable market data, the instrument is included in level 3. This is
the case for unlisted equity securities. As at 30 June 2016 there are no
level 3 related instruments in place.
Liabilities
Derivative financial
instruments
Forward foreign
exchange contracts
Total Liabilities
-
-
-
(253,325)
(253,325)
-
-
-
(253,325)
-
(253,325)
32. FINANCIAL RISK MANAGEMENT Continued...
(i) Transfers between levels 2 and 3 and changes in valuation
Any other amendments are not applicable to the Group and therefore
have no impact.
34. EVENTS OCCURING AFTER THE REPORTING PERIOD
There have been no material events since the end of the financial year.
techniques
There were no transfers between the levels of the fair value hierarchy
in the period ended 30 June 2016. There were also no changes made
to any of the valuation techniques applied as of 30 June 2015.
There were no transfers between the levels of the fair value hierarchy
in the period ended 30 June 2016. There were also no changes made
to any of the valuation techniques applied as of 30 June 2015.
(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 2016:
2016
$
2016
$
2015
$
2015
$
Carrying
amount
Fair value
Carrying
amount
Fair value
-
33,553
-
-
33,553
-
33,553
-
-
33,553
-
125,036
-
-
125,036
-
125,036
-
-
125,036
Non-current
borrowings
Bank Loan
Other bank loan
Convertible note
Lease liabilities
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. 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
2016 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
AASB 16
Revenue from
Contracts with
Customers
Changes to
classification and
measurement
requirements
of financial
instruments.
Revenue will be
recognised when
control of the
goods or services is
transferred, rather
than on transfer of
risks and rewards
as is currently the
case under IAS 18
Revenue.
1 Jan 18
1 July 18
1 Jan 17
1 July 17
PAGE 62
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
I N D E P E N D A N C E A U D I T O R ’ S R E P O R T
FOR THE YEAR ENDED 30 JUNE 2016
D I R E C T O R S ’ D E C L A R AT I O N
FOR THE YEAR ENDED 30 JUNE 2016
The Directors of the Company declare that:
a)
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 2016 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.
b)
c)
d)
e)
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 2016
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:
Geoffrey Newman
Chairman
Perth, Western Australia
30th August 2016
PAGE 64
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 AT I O N
FOR THE YEAR ENDED 30 JUNE 2016
A D D I T I O N A L A S X I N F O R M AT I O N
FOR THE YEAR ENDED 30 JUNE 2016
ADDITIONAL ASX INFORMATION
The following additional information is required by the Australian Securities Exchange. The information is current as at 31 August 2016.
(d)
Unquoted Securities
(l) Corporate Governance
The Board of Atlas Pearls and Perfumes Limited is committed to
achieving and demonstrating the highest standards of Corporate
Governance. The Board is responsible to its Shareholders for the
performance of the Company and seeks to communicate extensively
with Shareholders. The Board believes that sound Corporate
Governance practices will assist in the creation of Shareholder wealth
and provide accountability. In accordance with ASX Listing Rule
4.10.3, the Company has elected to disclose its Corporate Governance
policies and its compliance with them on its website, rather than in
the Annual Report. Accordingly, information about the Company’s
Corporate Governance practices is set out on the Company’s website
at www.atlaspearlsandperfumes.com.au.
(a)
Distribution schedule and number of holders of equity securities as at 31 August 2016
The number of unquoted securities on issue as at 31 August 2016:
Fully Paid Ordinary Shares (ATP)
Unlisted Options – 5.9c 31/12/18
127
-
413
-
317
-
850
-
369
4
2,076
4
Unlisted options exercisable at 5.9 cents, on or
before 31 December 2018.
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – and over
Total
Security
Number on issue
5,500,000
The number of holders holding less than a marketable parcel of fully paid ordinary shares as at 31 August 2016 is 1,032.
(b)
20 Largest holders of quoted equity securities as at 31 August 2016
The names of the twenty largest holders of fully paid ordinary shares (ASX code: ATP) as at 31 August 2016 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
Boneyard Investments Pty Ltd
Raintree Pearls & Perfumes Pty Ltd
Chemco Superannuation Fund Pty Ltd
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