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 S X A T P - A N N U A L R E P O R T • 2 0 1 7
Raja Ampat • Flores • North BaliFor personal use only Like each pearl, every woman is unique!
FIND THE
ONE...
AS UNIQUE
AS HER.
For personal use only A T L A S P E A R L S
A M E S S A G E F R O M
BEHIND THE SCENES
THE MANAGING DIRECTOR
Each pearl is unique, every year is special
It is always an interesting exercise to deliver an accurate and balanced 12-month snapshot of a 4 year-long
pearling cycle. Each year brings both challenges and rewards, some driven by Mother Nature and others by our
global economy. We have come a long way since 2014/15 but have not yet harvested all the fruits, and certainly
the pearls, which have been seeded and nurtured to date.
Here are a few key team achievements I would like to share with you:
A record number of oysters seeded due for harvest in 2018/19;
•
A significant improvement in hatcheries and juvenile oysters survival;
•
A sustained post-seeding nuclei retention rate;
•
A promising quality improvement in pearl skin and lustre;
•
•
A steep productivity increase in grading and value adding;
• On-going support from the communities surrounding our farms;
•
A strong push in the appreciation of Indonesian pearls by the trade with the support of the Japanese,
American and Indonesian pearl associations;
A solid price recovery at the April and June Atlas private auctions in Kobe, Japan after 6 months of relatively
soft prices backed up by an effective currency hedging strategy;
An effective debt restructuring and tax management process;
A broader connection with customers through a Channel 9 nationwide TV feature, also seen through Netflix,
which showcased our farms in Bali and Flores (700,000 viewers, 141 countries, 14 languages);
A step forward in pearl education with the launch of the “Pearl as One” program and Atlas’ new video;
A carefully crafted collaboration with the West Australian Ballet and partnership with the WA Opera;
A successful launch of the Atlas Brand in Singapore and soon to come in Shanghai and Jakarta.
•
•
•
•
•
•
Sarah, Chihiro, Emma and Diah, our Ambassadors, have successfully spread the Atlas message and company
values this year. They are our ‘pearls’ and together we go forward into the community to reveal our inner beauty,
and to celebrate the magic of the Atlas South Sea pearl.
Going forward, Atlas will remain focussed on quality and productivity gains, whilst staying close to its customers.
This ideal combination fostered by team communication, passion and dedication, will deliver the growth and
profitability that will then lead to sustainability.
Once again thank you to the Atlas team, staff, clients and shareholders alike, for your continuous support and
inspiration.
Yours in pearling,
Pierre Fallourd
Managing Director
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For personal use only
SARAH TILLEKE
Sarah encompasses the beauty of an Atlas South Sea pearl. As a model, Sarah is
known for her versatility and demonstrates both classic and contemporary appeal.
Sarah was one of Atlas Pearls’ first models and Ambassadors. Equally, for Sarah, Atlas
was the first company to book the then 19-year-old for a campaign.
Now at 22, the international model is making a name for herself and not just as a
“token beauty”. Sarah is studying Communications and is also a keen adventurer.
Recently she was one of the last contestants remaining on the Australian Survivor
TV show. Her ability to outwit, outsmart and play the strategic game saw her make
it to the final eight.
Sarah is a wonderful Ambassador for Atlas and, like a pearl, demonstrates an inner
glow and projects beauty from within.
“Pearls are a miracle of nature.
When I wear pearls I feel beautiful, romantic and special.”
Sarah Tilleke
“Pearls are a miracle of
nature. When I wear pearls
I feel beautiful, romantic
and special.”
Photographed on location at Atlas Pearls, Pungu Island farm.
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Did you know?No two pearls are alike, just like every woman is unique & different. Every living pearl is a testimony to its journey.Model, Adventurer & Atlas AmbassadorFor personal use only CHIHIRO NOMURA
Ballet dancer Chihiro Nomura is the perfect balance of grace and strength.
She can be both a delicate beauty and a fierce athlete.
Chihiro was born and studied in Tokyo, Japan. She graduated from the Heinz Bosl
Stiftung Ballet Academy in Munich and has danced for the Norwegian National
Ballet in roles including the Sugar Plum Fairy in the Nutcracker and Aurora
in Sleeping Beauty.
Chihiro moved to Perth and joined West Australian Ballet (WAB) in 2015.
Just this year she was promoted to principal.
Like an elite athlete, Chihiro is in constant training to achieve the fitness and
technique demanded of her performances. The same dedication and commitment
is required to create an Atlas pearl. Chihiro’s inner shine is only enhanced by the
Atlas pearls she wears and loves.
“I love Atlas Pearls because they are so classic and feminine and I love wearing my
Embraced earrings. At a recent photo shoot with Atlas I was able to model a stunning
strand of pearls, so I have been leaving hints with my partner.”
Chihiro Nomura
“I love Atlas Pearls,
they are so classic &
feminine. I love wearing
my Embraced earrings.”
Photographed at the West Australian Ballet’s Maylands Centre
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Ballet Dancer & Atlas social media AmbassadorDid you know?Pearls are the only living gem.For personal use only EMMA PETTEMERIDES
Emma Pettemerides was about 5 years old when she discovered Judy Garland
and became obsessed with singing.
Emma’s extraordinary gift led her to the respected West Australian Academy of
Performing Arts. Emma began her career in London, but has returned to Australia
and is now a soprano with West Australian Opera.
Emma finds great joy in the ability to move people through the power of music.
She loves being a story-teller and being able to take people on a journey.
Her performance highlight to date is singing for the late Dame Joan Sutherland’s
80th birthday in her presence.
And in another life highlight, Emma recently became a new mum to baby Archer.
Just like the journey of a pearl, each woman’s journey is individual and unique.
“Pearls are the ultimate statement piece for any woman.
Timeless and exquisitely beautiful, wearing pearls will always make you feel elegant.
I love that each pearl is unique in colour, shine and shape and it also happens to be
my birth stone.”
Emma Pettemerides
“Pearls are the
ultimate statement
piece for any woman.
Timeless & exquisitely
beautiful.”
Photographed wearing the Atlas Pearls DIVA Collection, at His Majesty’s Theatre, Perth
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Opera Singer, New Mum & Atlas AmbassadorDid you know?Over 3000 hands nurture the journey of an Altas creation into yours. It takes up to four years to create this living gem.For personal use only DIAH RAHAYU
As one of the few Indonesian female surfers on the pro-circuit, Diah has rightly
been described as a “rare pearl”. Diah started surfing when she was 12.
She took up the sport with her father, and then quickly became addicted to
surfing. Now at 23 years of age, Diah is a pro-surfer and sponsored by Rip Curl.
In the very competitive world of surfing, Diah demonstrates incredible drive,
perseverance and strength. She is breaking new ground for many young female
surfers and is an incredible role model for Indonesian women.
As a lover of the ocean, Diah is a perfect advocate for Atlas Pearls and the
Ambassador of the Atlas Pearls “Surfed” Collection.
“I feel truly happy when I wear pearls. I wear pearls because they are natural.
Pearls remind me of the ocean and that is where I feel at home.”
Diah Rahayu
“I feel truly happy
when I wear pearls.
Pearls are natural and
remind me of the ocean,
where I feel at home.”
Photographed on location at Atlas Pearls, Pungu Island farm.
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Did you know?To reach their maximum potential, South Sea pearls require the truly pristine environment of remote areas such as the Indonesian Archipelago. Each pearl reflects the very state of the water and the environment in which they are grown.Pro Surfer & Atlas AmbassadorFor personal use only - Page 11 -
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For personal use only RESULTS FOR ANNOUNCEMENT TO THE MARKET
Atlas Pearls and Perfumes ltd and its subsidiaries
FOR THE YEAR ENDED 30 JUNE 2017
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
Dividends
Compared to actual for
previous
12 months ending
30 June 2016
Down 11%
Down 7%
Down 73%
12 months
ending
30 June2017
$
16,355,404
900,581
434,621
Amount per security
Franked Amount
per security
Dividend per ordinary share in respect of 30 June 2017 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
NTA per ordinary share
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.
Year ended
30 June 2016
$
Year ended
30 June 2017
$
6.1
6.2
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 2017 is attached.
L E T T E R F R O M
THE CHAIRMAN
Dear Shareholder
2016/17 marked a year of consolidation for Atlas and the laying
of the foundations for sustained growth.
Our sales revenue did not match the previous year due to
softened market conditions between October 2016 and
March 2017. Pleasingly, prices firmed during the latter part
of the financial year to levels which would have allowed our
performance to mirror 2015/16 had they been sustained across
the full 12 months.
Importantly, we were able to continue our progress towards a
material uplift in future revenues from our operational reforms
evidenced by improved pearl quality, reduced mortality and a
significant increase in the number of shells seeded.
On the capital structure front, the company has been fortunate
in securing a $3.5m term debt facility from its major shareholder
to replace the prior existing bank short term debt facility. The
loan, which has been approved by the shareholders, is repayable
in a number of instalments through to June 2020. In addition,
Atlas has also been successful in tapping the traditional bank
lending market for an overdraft of $1million to accommodate
the historically slower cash flows in the first part of the year.
Reflecting the new certainty around our funding, we no longer
have an “Emphasis of matter” paragraph relating to our going
concern status in our Audit Report, which I’m sure will be
welcomed by all shareholders.
Last year I wrote that, as we had listed our 50% interest in
Essential Oils of Tasmania (“EOT”) as an asset for sale at the end
of the year and, as it had not sold, we were required to take
a precautionary write down on the value of that investment.
This year, I am pleased to report that the earnings outlook for
this business has improved significantly. New trading revenue
streams have been developed, new commercial arrangements
instituted with growers and new products identified for further
market development. Programs for selling cosmetic products
based on pearl powder and proteins in North America are
also continuing to evolve with a renewed effort scheduled for
November 2017.
We are now confident that EOT will justify the investment the
company made in it and it has the potential to grow into a
significant source of diversified earnings for the company.
Finally, on behalf of my fellow directors, I want again to
acknowledge the contribution of all our employees not only for
the achievements of 2016/17 but for putting in place the human
and financial resources to underwrite future improvements in
performance.
The Board is convinced that the production expansion path we
are now pursuing will ensure both stability and growth in our
future earnings and I am looking forward to sharing with you
the fruits of these initiatives in the coming years.
Geoff Newman
Chairman
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For personal use only
Atlas Pearls and Perfumes ltd and its subsidiaries
Atlas Pearls and Perfumes ltd and its subsidiaries
CORPORATE DIRECTORY
SUMMARY OF KEY FISCAL INDICATORS 2016/17
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
DIRECTORS
AUDITORS
Normalised earnings before interest, tax, depreciation and amortisation (Normalised EBITDA)
Revenue from continuing operation
Geoff NEWMAN
B.Ec (Hons), M.B.A, F.C.P.A, F.A.I.C.D.
Timothy James MARTIN
BA., M.B.A, G.A.I.C.D.
Pierre FALLOURD
B.A, EXECUTIVE M.B.A., G.A.I.C.D.
BDO Audit (WA) Pty Ltd
38 Station Street
Subiaco WA 6008
TAX ADVISERS
RSM Bird Cameron
8 St Georges Terrace
Perth WA 6000
COMPANY SECRETARIES
BANKERS
Susan HUNTER
BCom, ACA, F Fin, GAICD, AGIA
Trevor HARRIS
BCom, CPA, GDip Law_ACG, 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.atlaspearls.com.au
National Australia Bank
100 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
E-mail: atlas@atlaspearls.com.au
ASX Trading Code: ATP
EBITDA margin
Depreciation and 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
Earnings/(loss) before interest and tax (EBIT)
EBIT margin
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 17
$’000
30 June 16
$’000
16,355
1,016
6.21%
(470)
598
(206)
(286)
410
-
1,062
6.5%
(257)
96
901
0.21
26,443
34,178
3,529
26,443
13%
427.9
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%
425.4
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For personal use only
Atlas Pearls and Perfumes ltd and its subsidiaries
DIRECTORS’ REPORT
Atlas Pearls and Perfumes ltd and its subsidiaries
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
Your Directors present their report on the consolidated entity (referred
to hereafter as the Company) consisting of Atlas Pearls and Perfumes
Ltd and the entities it controlled at the end of, or during, the period
ended 30 June 2017.
owner of Arrow Pearl Co Pty Ltd. Mr Arrow previously served on the
board of Atlas Pearls and Perfumes Ltd from 29 June 1999 until 28 May
2008. He was appointed again on 2 January 2014, and resigned his
position on 22 September 2016.
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 – 66)
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 on 16 February 2015
Director since 15 October 2010
Directorships of other listed companies held in the last three years: Nil
TIMOTHY JAMES MARTIN
BA., M.B.A, G.A.I.C.D. (AGE – 45)
NON EXECUTIVE DIRECTOR
Audit and Risk Committee, 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 was previously a director on the board of the Australian Plastics and
Chemicals Industry Association (PACIA) for the past three years.
Appointed Director on 4 February 2013.
Directorships of other listed companies held in the last three years: Nil
Directorships of other listed companies held in the last three years: Nil
PIERRE FALLOURD
B.A, EXECUTIVE M.B.A., G.A.I.C.D. (AGE – 43)
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 for the financial year 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 Pricewaterhouse Coopers 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.
STEPHEN JOHN ARROW (AGE - 57)
Appointed 19 December 2012.
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
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 and Nomination
Committee Meeting
Meetings Held
Whilst in Office
Attended
Meetings Held
Whilst in Office
Attended
Meetings Held
Whilst in Office
Attended
G. Newman
01/07/16 – 30/06/17
T. Martin
S.J. Arrow2
P. Fallourd
01/07/16 – 30/06/17
01/07/16 – 30/06/17
01/07/16 – 30/06/17
4
4
1
4
4
4
1
4
1
1
1
-
1
1
1
-
1
1
-
1
1
1
-
1
1.
2.
On the 27 February the Board resolved that the full Board would act as the Audit and Risk Committee and Remuneration and Nomination Committee effective from that date.
S.J. Arrow resigned on 22 September 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
There were no significant changes in the state of affairs of the Group
during the financial year.
4.2.2 SHAREHOLDER RETURNS
12 Months
Ending
12 Months
Ending
12 Months
Ending
30 June 2017
$’000
30 June 2016
$’000
30 June 2015
$’000
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
2017
$’000
30 June
2016
$’000
Net profit/(loss) after tax
Tax expense/(benefit)
Interest net costs
Depreciation & amortisation
Foreign Exchange (gain)/loss
Agriculture Standard revaluation
(gain)/loss/ pearl adjustments
Other Non-Operating (income)/
expense
901
(96)
257
470
(598)
206
286
Derivative Instrument (gain)/loss
(410)
Impairment of JV loan
Fair value (gain)/loss on EOT assets
(Gain)/Loss on sale of investment
-
-
-
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
Normalised EBITDA
1,016
3,762
(1,235)
Net profit/(loss) after tax
Basic EPS (cents)
Dividends paid
Dividends (per share) (cents)
901
0.21
Nil
Nil
968
0.23
Nil
Nil
(8,134)
(2.40)
Nil
Nil
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
2017
$’000
30 June
2016
$’000
30 June
2015
$’000
34,178
(3,529)
(4,207)
26,443
13%
427.9
6.2
2.6
34,808
(4,225)
(4,759)
25,825
16%
425.4
6.1
3.2
30,942
(4,085)
(2,883)
23,974
17%
425.4
5.6
4.4
There has been an increase in the net assets of the group of $0.62M
in the year ended 30 June 2017 (30 June 2016 - $1.85M increase).
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For personal use only
Atlas Pearls and Perfumes ltd and its subsidiaries
DIRECTORS’ REPORT
Atlas Pearls and Perfumes ltd and its subsidiaries
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
4.2.4 OPERATING RESULTS
Atlas recorded a net profit after tax for the period ended 30 June 2017
of $0.9M, in line with the prior year result. (30 June 2016 – net profit
after tax $0.96M).
The operating revenue for the year ended 30 June 2017 was
$16.4M, compared to the year ended 30 June 2016 - $18.4M. Pearl
sales revenue was $15.4M (30 June 2016 - $16.0M), with retail and
wholesale sales revenue of $0.9M (30 June 2016 - $1.9M).
While pearl quality has remained consistent, market conditions
at a trading level became challenging early in this financial year,
particularly for the company’s high-end product, before a partial
recovery at the company’s April and June Auctions. These market
conditions were also felt at a wholesale and retail level, however the
company holds a more positive market outlook for 2017/18.
The subsequent reduction in revenues was partially off-set by effective,
responsible cost controls. Farm operating costs remained in line with
the prior year despite upward costs pressures in Indonesia generally,
with cost of goods sold values reflect an increase in the number of
pearls sold. Administration and Marketing expenses again remained
consistent with the prior year on aggregate, and the combination of
these cost performance efforts helped ensure the company remained
profitable in 2016/17 despite tough market conditions.
From a Capital perspective, the company raised $3.5M from its
major shareholder during the year to drive the company’s long term
strategic plan and assist with the full repayment of the CBA debt ($4M
at 1 July 2016). The company has now concluded its relationship with
the CBA and is moving forwards with the support of the National
Australia Bank. (NAB)
4.2.5 REVIEW OF OPERATIONS
4.2.5.1 PEARLING
Following on from the efforts in 2015/16, improvements in operational
processes at all levels of Oyster management remained a key focus
during the year.
The return to normal water temperatures at the end of the El Nino
season experienced in 2015/16 has allowed the full effects of hatchery
evolution and juvenile husbandry to be understood, generating
improved spat survival on sea deployment. Juvenile numbers have
increased significantly when compared to June 2016, and the
company expects to see the benefit of improved juvenile husbandry
practices to build on the hatchery results and translate into increased
virgin availability in the coming years.
In terms of seeding performance, the company has injected a
significant number of quality virgin shells sourced from supportive
Indonesian oyster producers, allowing the company to increase its
seeding numbers in the current year while we wait for the oysters
that are the product of the hatchery and juvenile reforms to move
through the 2 year growth cycle prior to seeding.
The outcome of both improved juvenile survival and increased
seeding number is significant increase in the company’s biomass as
at June 30 2017.
Project capital sourced in January 2017 was used to support the shell
purchase program and provide the necessary infrastructure to host
the growing number of Oysters that is the company’s future revenue
stream.
Overall harvest profiles remained in line with those experienced
towards the end of 2015/16, however pearl quality is beginning
to show the benefits of seeding and husbandry reforms and the
company is optimistic that this will continue to evolve and result in a
steady flow of high quality goods into the market.
4.2.5.2 PEARLING VALUE ADDED
Wholesale and retail pearl markets struggled in 2016/17, reflecting
the market changes at a trading level as well as global economic
factors impacting discretionary spending in western economies. The
company’s traditional pathways to non-trading markets performed
poorly and showed only limited appetite for quality product, with
most sales generated from mid-range goods at less than premium
price points. As a result of these market conditions, more pearls were
sold via trading avenues, realising value but returning lower margins.
Ongoing refinements in matching our jewellery design offering to
international market demands, and value adding non-traditional
product categories remains an opportunity in the sector and will be
pursued in 2017/18.
The company is now well advanced in efforts to both re-open
old markets in the USA and Middle East and evolve our wholesale
offering by seeking partnerships with high end department stores
and jewellery chains internationally. Private sales made available to
VIP customers of aligned company’s also remains an area expected
to add value.
The company remains committed to a strong retail presence, with
refined efforts to build the Atlas brand ongoing.
4.2.5.3 NATURAL EXTRACTS
Essential Oils of Tasmania (EOT) was retained in the Atlas portfolio last
year as a 50% owned subsidiary, and has been subject to a material
evolution. The appointment of a new CEO and the re-negotiation of
the company’s farming contracts has changed the business model
to a more collaborative approach with the Tasmanian growers and is
considered much more sustainable in the long term.
In a further sign on the company’s evolution, EOT has begun a
relationship with a USA based direct marketing company to develop
a market pathway for Tasmanian oils separate from the company’s
traditional trading markets. This has resulted in significant sales of
locally sourced Tasmanian native species Kunzea and Southern
Rosalina Oil into US markets and has been instrumental in the
company achieving record sales in 2016/17. Of the company’s two
major product lines, Peppermint pricing struggled, impacted by
strong US seasonal production volumes, while traditional fennel
markets remain strong.
A broadening of the EOT product offering and ongoing development
of alternate market pathways remains the focus for 2017/18.
4.2.5.4 AUDIT OPINION
The financial report has been audited independently and received an
unmodified opinion. Refer to page 56 for the Independent Auditors
Report and Opinion.
4.2.5.5 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
2017
2016
2015
21
476
544
19
1,060
22
422
444
19
907
18
430
435
22
905
No dividends were declared and paid by the Company during period
ended 30 June 2017 (2016 – nil).
6. Events Since the End of the Financial Year
There have been no material events since the end of the financial year.
7. Likely Developments and Expected
Result of Operations
The company expects to continue to refine its pearling operations
towards industry best practice. The long term strategic plan will
continue to drive a growth agenda and both JV and diversification
strategies will be assessed in 2017/18.
Pearl volumes to the market will be approximately the same as 2016/17
while the increased bio-mass generated in the current year matures.
Financial performance will be quality and market dependant.
Efforts to evolve the operations in Tasmania will continue.
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, are detailed in Section 13.5.6 of the
Remuneration Report.
9. Options
During the year end 30 June 2015 5,500,000 unlisted options were
issued to certain employees of Atlas Pearls and Perfumes Ltd,
pursuant to the Atlas Pearls and Perfumes Ltd Employee Option Plan.
These options 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
the 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 2017.
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 G Newman, Mr T Martin, and Mr P Fallourd and the
following former directors; Mr S Arrow, 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 $32,500 (2016 - $22,110) 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.
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:
AUDIT SERVICES
BDO Australian Firm:
30 June
2017
30 June
2016
$
$
Audit and review of financial reports
94,349
86,000
BDO Indonesian Firm:
Audit and review of financial reports
Total remuneration for audit services
OTHER SERVICES
Total remuneration for other services
35,704
17,011
130,053
103,011
18,544
18,544
40,000
40,000
- Page 19 -
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Atlas Pearls and Perfumes ltd and its subsidiaries
DIRECTORS’ REPORT
Atlas Pearls and Perfumes ltd and its subsidiaries
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
13.1.3
EXECUTIVE REMUNERATION POLICY AND FRAMEWORK
(CONTINUED...)
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 13.2 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 2017 the Company did not
engage any remuneration consultants.
Voting and comments made that the Company’s 2016
Annual General Meeting.
Atlas Pearls and Perfumes Ltd received more than 98% of “yes” votes on
its remuneration report for the 2016 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.
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. Renumeration Report (Audited)
The directors are pleased to present your Company’s 2017 remuneration
report which sets out remuneration information for Atlas Pearls and
Perfumes Ltd’s non-executive directors, executive directors and other
key management personnel.
NAME
POSITION
Non-executive and executive directors
G. Newman
Independent Non-Executive Chairman
T. Martin
S. Arrow
Non-Executive Director
Independent Non-Executive Director (until 22 September 2016)
P. Fallourd
Managing Director
Other key management personnel
M. Longhurst
Chief Operations Officer Pt Cendana Indopearl
T. Harris
Chief Financial Officer
Changes since the end of the reporting period
There have been no changes to the remuneration of key management
personnel after 30 June 2017.
13.1 REMUNERATION GOVERNANCE
13.1.1 ROLE OF THE REMUNERATION AND NOMINATION
COMMITTEE
The remuneration and nomination committee is a committee of the
board. It is primarily responsible for making recommendations to the
board on:
•
•
Non-executive director fees
Remuneration levels of executive directors and other key
management personnel
The over-archiving executive remuneration framework and
operation of the incentive plan, and
Key performance indicators and performance hurdles for the
executive team.
•
•
Their objective is to ensure that remuneration policies and structures
are fair and competitive and aligned with the long-term interest of
the company.
Assessing performance and claw-back of remuneration
The remuneration committee is responsible for assessing performance
against KPIs and determining the STI and LTI to be paid. To assist
in this assessment, the committee receives detailed reports on
performance from management which are based on independently
verifiably data such as financial measures, market share and data from
independently run surveys.
In the event of serious misconduct or a material misstatement in the
company’s financial statements, the remuneration committee can
cancel or defer performance-based remuneration and may also claw
back performance-based remuneration paid in previous financial years.
13.1.2
NON-EXECUTIVE DIRECTOR REMUNERATION POLICY
Fees and payments to non-executive directors reflect the demands
which are made on, and the responsibilities of, the directors. Non-
executive directors’ fees are reviewed annually by the Board.
Consideration is given to the remuneration of comparable companies
when setting fee levels.
The Non-Executive Directors’ aggregate annual remuneration may
not exceed $350,000 which is periodically recommended for approval
by shareholders. This limit was approved by shareholders at the
Annual General Meeting on 30th May 2007. In the period ending 30
June 2017, the total non-executive directors’ fees including retirement
benefit contributions were $139,404.
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 $21,900 per annum including Superannuation
payable for directors’ duties.
•
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.
•
•
•
The executive remuneration framework has three components;
•
•
Base pay and benefits, including superannuation
Short-term performance incentives (refer 13.3 for individual
detail), and
Long-term incentives through participation in the Atlas South Sea
Pearl Limited Employee Share Plan and employee option 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 of this report. Short or medium cash incentives are
- Page 21 -
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For personal use only
Atlas Pearls and Perfumes ltd and its subsidiaries
DIRECTORS’ REPORT
Atlas Pearls and Perfumes ltd and its subsidiaries
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
13. Renumeration Report (Audited) (continued...)
13.2 DETAILS OF REMUNERATION
The following tables show details of the remuneration received by the directors and the key management personnel of the Group for the current
and previous financial period.
Name
Short term benefits
Cash
salary &
fees
Salary
Sacrifice
for
shares
Short term
incentive
cash bonus
Non-cash
monetary
benefit
Total cash
salary,
fees and
short term
benefits
Post-
employment
benefits
Long term
benefits
Super-
annuation
benefit
Long
service
leave
Share based
compensation
Total
Bonus
Shares
Options
$
$
$
$
$
$
$
$
$
$
Directors(Non-Executive)
G. Newman 3,4
T. Martin 4
S. Arrow 4,6
2017
2016
2017
2016
2017
2016
Directors (Executive)
P. Fallourd 4,5,7,8,9
Total
Total
2017
2016
2017
2016
78,000
78,000
50,114
50,114
11,290
50,000
240,000
219,712
379,404
397,826
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9,615
48,000
-
-
9,615
48,000
Other Key Management Personnel
R. Satchell 1,4,8,9
2017
2016
-
-
191,570
12,205
-
-
-
-
-
30,000
-
30,000
-
-
-
-
-
-
-
-
D. Brandenburg2,4,8,9
2017
T. Harris 2,9
M. Longhurst 1,5,8,9
Total
Total
2016
2017
2016
2017
2016
2017
2016
Grand Total 2017
2017
Grand Total 2016
2016
-
61,379
185,693
159,567
206,608
169,004
392,301
581,520
771,705
979,346
-
-
-
-
-
-
-
-
-
-
-
78,000
78,000
50,114
50,114
11,290
50,000
240,000
277,327
379,404
455,441
-
18,490
222,265
-
-
-
-
22,500
20,432
22,500
38,922
22,500
-
61,379
185,693
189,567
229,108
219,436
414,801
692,647
794,205
-
-
-
-
-
-
22,800
21,786
22,800
21,786
-
-
-
5,831
17,641
15,159
-
-
17,641
20,990
40,441
42,779
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10,925
28,899
10,925
28,899
78,000
78,000
50,114
50,114
11,290
50,000
273,725
328,012
413,129
506,126
-
-
(24,764)
197,501
-
(19,983)
8,194
8,216
5,463
14,783
13,657
(21,748)
24,582
-
47,227
211,528
212,942
234,571
234,219
446,099
691,889
859,228
7,151
1,198,015
12,205
60,000
-
-
21,820
108,000
38,922
1,148,088
Notes:
1.
2.
3.
4.
5.
6.
7.
8.
9.
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.
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 2015.
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.
A number of key management took part in the 2016 and 2015 salary sacrifice schemes. In 2015, Mr P Fallourd $9,615 and R Satchell $12,205 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. 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. Mr S Arrow resigned 22 September 2016.
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.
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.
Share based remuneration related to Options, relates to options issued in prior periods, being recognised over the respective vesting period.
13.2 DETAILS OF REMUNERATION (CONTINUED...)
13.2.1 DETAILS OF REMUNERATION – PERFORMANCE ANALYSIS
The following table indicates the percentage of remuneration
relating to options and performance:
Name
P Fallourd
T Harris
M Longhurst
30 June 2017
30 June 2016
% Performance
% Performance
3.99%
3.87%
2.33%
23.44%
17.95%
19.12%
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
2017
12
months
2016
12
months
2015
12
months
2014
6
months
2013
900,581
968,103 (8,134,049)
1,813,922 (2,194,645)
0.21
-
0.23
-
(2.4)
-
0.61
-
(0.81)
-
(19%)
(27%)
(48%)
53%
(25%)
3%
12%
-0.8%
4.4%
0.0%
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:
13.3.1 MR PIERRE FALLOURD
(MANAGING DIRECTOR – APPOINTED 4 JANUARY 2016.
CEO – APPOINTED 26 NOVEMBER 2014)
•
•
•
•
Base salary for the 2017 financial period of $240,900 per annum
inclusive of superannuation, reviewed annually.
Directors fees of $21,900 per annum including superannuation,
payable from appointment (4 Jan 2016).
Short-term incentive plan based on % of Normalised EBITDA
for 2016/17, where Normalised EBITDA is greater than $3.8m.
The bonus is inclusive of taxes and super. No bonus has been
accrued as payable for 16/17.
Termination conditions - either party may terminate the contract
of employment by giving three months’ notice or a lesser amount
as mutually agreed.
13.3.2
MR TREVOR HARRIS
(CHIEF FINANCIAL OFFICER – APPOINTED 31 AUGUST 2015)
•
•
Base salary for the 2017 financial period of $190,000 per annum
inclusive of superannuation
At 1 January 2017, Base salary was adjusted to $200,000 per
annum inclusive of superannuation.
•
•
Short-term incentive plan based on % of Normalised EBITDA
for 2016/17, where Normalised EBITDA is greater than $3.8m.
The bonus is inclusive of taxes and super. No bonus has been
accrued as payable for 16/17.
Termination conditions - either party may terminate the contract
of employment by giving three months’ notice or a lesser
amount as mutually agreed.
13.3.3
MR MARK LONGHURST
(CHIEF OPERATING OFFICER – APPOINTED 1 MARCH 2016)
•
•
•
•
Base salary for the 2017 financial period of $200,000 per annum
inclusive of superannuation.
Non-Financial allowances related to living in Indonesia are also
included, to a maximum allowance of $22,500 annually.
Short-term incentive plan based on % of Normalised EBITDA
for 2016/17, where Normalised EBITDA is greater than $3.8m.
The bonus is inclusive of taxes and super. No bonus has been
accrued as payable for 16/17.
Termination conditions - either party may terminate the contract
of employment by giving six months’ notice or a lesser amount
as mutually agreed.
13.3.4
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
The Company has obtained a new debt financing package of $3.5m
from Tim Martin (Non-Executive Director) and the Martin Family (related
party) during the June 2017 financial year. The Loan is repayable in
staged payments to be completed by 30 June 2020. An interest charge
of 7.5% is payable quarterly on the loan balance. The Martin Family
facility is currently not secured but it is the intention of the Company
to provide a second priority charge to the lenders on the company’s
assets. The provision of this security is dependent on approval by the
shareholders.
As at 30 June 2017, interest accrued and payable on Loans from related
parties is $1,233 (30 June 2016 – nil)
13.4.2
OPTIONS
•
Performance options were issued to directors and key
management personnel during the financial period end 30
June 2015. The options were issued at nil cost to employees and
will respectively expire on 31 December 2018. The options are
exercisable based on the completion of KPI’s specific to each
individual.
- Page 23 -
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Atlas Pearls and Perfumes ltd and its subsidiaries
DIRECTORS’ REPORT
Atlas Pearls and Perfumes ltd and its subsidiaries
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
13. Renumeration Report (Audited) (continued...)
13.4
ADDITIONAL INFORMATION OF THE REMUNERATION REPORT (CONTINUED...)
13.4.3
OTHER KEY MANAGEMENT PERSONNEL TRANSACTIONS
•
•
During the year end, pearl sales of $34,936 were made to Arrow Pearl Pty Ltd, of which Stephen Arrow (former non-executive director) is a
director. There was a balance of $nil receivable at year end (30 June 2016 - $7,455).
As at 30 June 2017, Director Fees of $8,236 are payable (30 June 2016 - $78,900).
13.5
SHARE BASED PAYMENTS COMPENSATION
13.5.1
EMPLOYEE SALARY SACRIFICE SHARE PLAN
There was no salary sacrifice scheme undertaken for the year ended 30 June 2017. The details below relate to the issuing of shares to directors
and key management personnel in the past 12 months under the Employee Salary Sacrifice Share Plan, for salary sacrificed during the year
ended 30 June 2016 and year ended 30 June 2015. Please refer to Note 18 in the financial statements for details of the Atlas Employee Salary
Sacrifice Share Plan.
Name
Date of
Entrance
Entitlement
No. of Shares
No. of Shares
to be Issued
Date of
Issue
Shares
Forfeited in
the year
Pierre Fallourd
17/11/14
213,667
213,667
28/11/16
Pierre Fallourd
17/11/14
341,889
341,889
28/11/16
0%
0%
Financial
Year in
which shares
vested
2016 – 100%
2015 – 100%
Nature of
shares
Share issue
price
Total Value
Salary
Sacrificed
Ordinary
Shares
Ordinary
Shares
$0.045
$9,615
$0.045
$15,385
13.5.2
NON-EXECUTIVE DIRECTOR FEE SACRIFICE SHARE PLAN
Please refer to Note 18 in the financial statements for details.
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
Date of
Entrance
Entitlement
No. of Shares
No. of Shares
Issued
Date of
Issue
Shares
Vested to
end of
2017
Shares
Forfeited in
the year
Financial
Year in which
shares vested
Nature of
shares
Share
issue
price
Total Value
Salary
Sacrificed
Joseph Taylor
1/11/14
164,289
164,289
28/11/16
100%
Geoff Newman
1/11/14
716,289
716,289
28/11/16
100%
Tim Martin
1/11/14
518,512
518,512
28/11/16
100%
Stephen Arrow
1/11/14
518,512
518,512
28/11/16
100%
0%
0%
0%
0%
2016 – 100%
2016 – 100%
2016 – 100%
2016 – 100%
Ordinary
Shares
Ordinary
Shares
Ordinary
Shares
Ordinary
Shares
$0.045
7,393
$0.045
32,233
$0.045
23,333
$0.045
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:
13.5
SHARE BASED PAYMENTS COMPENSATION
(CONTINUED...)
The details relating to the equity instruments held by key management
personnel are as follows:
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
c.)
1.
2.
Options and rights granted as compensation.
There were no options issued to key management
personnel as remuneration during the year ended 30 June
2017.
Option holdings
There are 4,500,000 options on issue to Key Management
personal at 30 June 2016. None were issued during the year
ended 30 June 2017.
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 18 and in
the Remuneration Report contained at section 13 of the
Directors’ Report.
13.5.6
The details relating to the equity instruments held by key
management personnel are as follows:
Option holding
The number of options over ordinary shares in the parent
entity held during the twelve months ended 30 June 2017
by each director and other members of key management
personnel of the consolidated entity, including their
personally related parties, is set out below:
Balance
01/07/16
Granted
Exercised
Expired/
forfeited/
other(1)
Balance
30/06/17
Parent Entity
Directors
Mr G. Newman
Mr T. Martin
Mr S. Arrow
-
-
-
Mr P. Fallourd
2,000,000
Other Key
Management
Personnel
Mr T. Harris
Mr M. Longhurst
Notes –
1,500,000
1,000,000
4,500,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,000,000
1,500,000
1,000,000
4,500,000
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.
Balance
01/07/16
Granted as
Compen-
sation(4)
Options
Exercised
Other
Changes (2)
Balance
30/06/17
This is the end of the Audited Remuneration Report.
Parent Entity
Directors
Mr G. Newman
1,847,154
Mr T. Martin(1)
107,585,667
Mr S. Arrow(3)
Mr P. Fallourd
13,809,707
3,311,206
716,289
518,512
518,512
555,556
Other Key
Management
Personnel
Mr T. Harris
Mr M. Longhurst
-
-
-
-
126,553,734
2,308,869
-
-
-
-
-
-
-
-
2,563,443
222,371
108,326,550
-
-
-
-
14,328,219
3,866,762
-
-
222,371 129,084,974
Notes –
1.
4,997,428 shares are directly held by Mr T Martin. The balance of 103,329,122 shares,
are related party share holdings.
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.
Mr. S Arrow resigned on 22 September 2016. At this date, 518,512 were owing to
him in lieu of fees salary sacrificed. These shares were issued in November 2016
post approval at the Annual General Meeting.
Share issued as compensation to the Directors were in lieu of fees salary sacrificed.
14. Auditor’s Independance Declaration
A copy of the auditor’s independence declaration as required under
section 307C of the Corporations Act 2001 is set out on page 27.
Signed in accordance with a resolution of the Directors.
Geoffrey Newman
Chairman
28 August 2017
Name
Date of Grant
Entitlement
No. of Options
Vesting
Date
Expiry Date
Shares
Forfeited in
the year
Financial
Year in which
shares vest
Pierre Fallourd1
30/06/15
2,000,000
30/6/18
31/12/18
Trevor Harris1
30/06/15
1,500,000
30/6/18
31/12/18
Mark Longhurst1
30/06/15
1,000,000
30/06/18
31/12/18
0%
0%
0%
2018
2018
2018
Nature of
shares
Ordinary
Shares
Ordinary
Shares
Ordinary
Shares
Value Per
Options at 30
June 17
Value Per
Options at 30
June 16
Option
Exercise
Price
$21,880
$10,955
$0.059
$16,410
$8,216
$0.059
$10,940
$5,478
$0.059
2.
3.
4.
1. These unlisted options were approved by the Board of Directors on 29 May 2015
- Page 25 -
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Atlas Pearls and Perfumes ltd and its subsidiaries
Atlas Pearls and Perfumes ltd and its subsidiaries
AUDITOR’S INDEPENDANCE
DECLARATION
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
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
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 not be reclassified as profit or loss:
Revaluation of land and buildings
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
Note
2017
$
2016
$
1
1
2
2
2
9
16,355,404
18,434,855
(8,938,039)
(8,152,468)
7,417,365
10,282,387
1,800,532
(484,778)
1,324,354
(234,896)
(6,144,142)
(6,270,373)
(462,683)
57,074
(263,441)
(414,270)
1,992,520
(165,036)
(931,695)
(3,618,346)
(183,744)
804,487
(109,195)
2,787,145
96,094
(1,819,042)
900,581
968,103
179,179
-
(645,139)
(465,960)
617,216
617,216
434,621
1,585,319
900,581
968,103
Total comprehensive income/(losses) is attributable to: Owners of the Company
434,621
1,585,319
Overall operations:
Earnings per share for profit/(loss) from continuing operations attributable to the ordinary equity holders of the Company
Basic earnings profit/(loss) per share (cents)
Diluted earnings per share (cents)
12
12
0.21
0.21
0.23
0.23
The above Consolidated Statement of Profit or Loss and OCI should be read in conjunction with the accompanying notes.
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Atlas Pearls and Perfumes ltd and its subsidiaries
Atlas Pearls and Perfumes ltd and its subsidiaries
CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
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
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
(Accumulated losses)
Total equity
Note
5
8
11
4
3
20
21
4
3
14
9
7
10
11
9
10
9
16
17
2017
$
2016
$
2,184,968
4,343,407
856,382
156,639
1,508,465
8,728,104
726,993
-
2,949,908
5,331,477
Balance at 1 July 2015
Profit for the year
13,434,558
13,351,785
Exchange differences on translation of foreign operations
17
-
161,969
Transactions with owners in their capacity as owner
Total comprehensive income for the period
Attributable to owners of Atlas Pearls and Perfumes Ltd
Contributed
equity
Revaluation
Reserve
Share based
payment
reserve
Foreign
currency
translation
reserve
(Accumulated
loss)
Total
equity
Note
$
$
$
$
$
$
36,465,656
-
-
-
232,880
-
36,698,536
36,698,536
-
-
-
-
158,879
-
-
-
-
-
-
-
-
-
-
179,179
179,179
-
-
682,341
(9,732,299)
(3,441,517)
23,974,181
-
-
-
-
32,264
-
968,103
968,103
617,216
-
968,103
1,585,319
-
-
232,880
32,264
617,216
617,216
-
-
714,605
(9,115,083)
(2,473,414)
25,824,644
714,605
(9,115,083)
(2,473,414)
25,824,644
-
-
-
-
-
24,582
-
900,581
900,581
(645,139)
-
-
-
(645,139)
900,581
(645,139)
179,179
434,621
-
-
-
-
158,879
24,582
36,857,415
179,179
739,187
(9,760,222)
(1,572,833)
26,442,726
Contributions of equity, net of transaction costs
Employee share scheme
Balance at 30 June 2016
Balances at 1 July 2016
Profit for the year
Exchange differences on translation of foreign operations
Revaluation of property, plant and equipment
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 2017
16
17
17
17
16
17
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
1,226,871
1,016,456
-
108,901
183,744
199,393
10,471,069
12,118,179
5,298,579
3,638,436
4,740,815
3,035,807
20,743,856
21,456,363
34,178,414
34,808,148
2,612,940
278,722
-
260,538
2,528,685
4,191,016
253,324
661,111
3,152,200
7,634,136
3,250,000
1,316,458
17,030
4,583,488
7,735,688
33,553
1,315,815
-
1,349,368
8,983,504
26,442,726
25,824,644
36,857,415
36,698,536
(8,841,856)
(8,400,478)
(1,572,833)
(2,473,414)
26,442,726
25,824,644
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
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Atlas Pearls and Perfumes ltd and its subsidiaries
Atlas Pearls and Perfumes ltd and its subsidiaries
CONSOLIDATED STATEMENT OF CASH FLOWS
NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
Note
2017
$
2016
$
1. Revenue from continuing operations
and other income
15,875,707
17,646,039
1.1 REVENUE FROM CONTINUING OPERATIONS
16,301,591
18,042,174
Impairment of Joint venture loan Essential
Oils of Tasmania
2017
$
2016
$
53,813
-
57,335
335,346
2.2 OTHER EXPENSES
Loss on foreign exchange
Loss on derivative financial instruments
Impairment of other receivables
Provision for employee entitlements
Share option expense
Other
Total other expenses
2.3 FINANCE COSTS
Interest and finance charges payable
Total finance costs
2017
$
2016
$
733,814
1,693,104
-
-
116,760
267,570
315,158
413,824
-
816,028
24,582
56,539
32,265
80,397
931,695
3,618,346
2017
$
2016
$
462,683
462,683
414,270
414,270
Cash flows from operating activities
Proceeds from pearl, jewellery and oyster sales
Proceeds from other operating activities
Interest paid
Interest received
Payments to suppliers and employees
R&D tax credit cash received
Income tax (paid)
Net cash (used) in operating activities
5
Cash flows from investing activities
Payments for property, plant and equipment
Joint venture partnership contributions (paid)
Net cash (used) in investing activities
Cash flows from financing activities
Net repayment of borrowings
Proceeds from borrowings
Net cash (used) in financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at the end of the financial year
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
402,952
(310,669)
8,183
396,504
(332,676)
12,062
(15,529,227)
(14,681,056)
-
(517,023)
(70,077)
(1,307,180)
(221,748)
(1,528,928)
339,826
(893,471)
2,487,228
(451,502)
(170,196)
(621,698)
(3,990,904)
(222,297)
3,500,000
-
(490,904)
(222,297)
(2,089,909)
4,343,407
(68,530)
1,643,233
2,632,311
67,863
5
2,184,968
4,343,407
Sales Revenue
Sale of goods
Other Revenue
Interest income
Other revenues
Total revenue from continuing operations
16,355,404
18,434,855
1.2 OTHER INCOME
Foreign exchange gains
Grant funds
Research and development tax offset
Gain on derivative financial instruments
2017
$
1,331,955
58,614
-
409,963
2016
$
943,012
41,516
339,826
-
Total other income
1,800,532
1,324,354
SIGNIFICANT ACCOUNTING POLICY
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.
b) Interest Income is recognised as it accrues.
2. Profit/(Loss) before income tax Includes
the Following Specific Items
2.1 ADMINISTRATION EXPENSES FROM ORDINARY ACTIVITIES
Salaries and wages
Depreciation property, plant and equipment and
amortisation of intangible assets
Operating lease rental costs
Compliance and Accounting
Other
Total administration expenses
2017
$
2016
$
3,530,469
3,699,586
470,030
522,288
474,951
398,575
504,894
556,026
1,146,404
1,111,292
6,144,142
6,270,373
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Atlas Pearls and Perfumes ltd and its subsidiaries
Atlas Pearls and Perfumes ltd and its subsidiaries
NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
3. Biological Assets
CURRENT
Oysters – at fair value
NON CURRENT
Oysters – at fair value
2017
2016
8,728,104
5,331,477
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 key production inputs
are confirmed with the relevant executives and agreed with the Board
of Directors every six months. These are listed in below:
8,728,104
5,331,477
3.1 KEY PRODUCTION ASSUMPTIONS
10,471,069
12,118,179
10,471,069
12,118,179
The key assumptions utilised to determine the fair market value of
oysters are detailed below:
Total Biological Assets
19,199,173
17,449,656
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 details of the Biological
Assets that are held by the Group as at period end are as follows:
Input
2017
2016
Commentary
Average
selling price
¥12,300
per
momme
¥13,000
per
momme
Obtained by analysing sales prices
achieved and the trend analysis of the
past 12 months of average sales prices.
Yen Exchange rate
¥86.15:
AUD 1
¥76.93:
AUD 1
Based on forward Yen price per a
financial institution.
Nature: Oysters (Pinctada maxima)
Average Pearl size
0.49
0.49
2017
No.
2016
No.
Proportion of
Marketable grade
48%
Discount rate
20%
50%
20%
Based on technical assessment of
expected harvest output, and taking into
account historical actual results over the
past 12 months
Based on historical data for pearl grade
over the last 12 months
Based on analysis of comparable primary
producers.
Quantity held within the Group operations: -
Juvenile and mature oysters which are not seeded
1,035,169
Nucleated oysters
950,588
638,977
764,864
1,985,757
1,403,841
During the year ended 30 June 2017, the Group harvested 374,046
(2016: 351,557) pearls. No significant events occurred which impacted
on oyster mortalities during the financial year.
SIGNIFICANT ACCOUNTING POLICY
Agricultural assets include pearl oysters, both seeded and unseeded. Seeded 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. The fair value of
unseeded oysters is determined by reference to market prices for this type of asset
in Indonesia.
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 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.
Mortality
Historical
Historical Based on historical harvest mortality rates
Average unseeded
oyster value
$1.50
$1.61
Based on independent valuation
Costs to complete
$0.76
$0.80
Based on historical averages of costs to
complete and sell pearls per momme.
3.2
SENSITIVITY ANALYSIS - OYSTERS
The following tables summarise the potential impact of changes in
the key non-production related variables on the oyster valuation:
Selling Price (¥/momme)
-10%
¥11,182
(Sellable Grade)
¥1,451
(Commercial Grade)
No Change
¥12,300
(Sellable Grade)
¥1,596
(Commercial Grade
+10%
¥13,530
(Sellable Grade)
¥1,756
(Commercial Grade)
Discount rate
Profit $
Profit $
Profit $
22%
20%
18.18%
($2,375,103)
($2,418,057)
($2,458,679)
$94,757
-
$21,427
$2,811,603
$2,779,722
$2,749,543
Selling Price (¥/momme)
-10%
¥11,182
(Sellable Grade)
¥1,451
(Commercial Grade)
No Change
¥12,300
(Sellable Grade)
¥1,596
(Commercial Grade)
+10%
¥13,530
(Sellable Grade)
¥1,75
(Commercial Grade)
Profit $
Profit $
Profit $
($4,710,638)
($2,418,057)
($2,464,763)
-
$113,860
$2,842,184
$5,699
$2,779,722
$5,843,342
FX rate
¥94.77
¥86.15
¥78.32
3.2
SENSITIVITY ANALYSIS - OYSTERS (CONTINUED...)
Cash not available for use
Marketable Grade
-10%
No Change
+10%
44%
(Sellable Grade)
48%
(Sellable Grade)
53%
(Sellable Grade)
56%
(Commercial Grade)
52
(Commercial Grade)
47%
(Commercial Grade)
Av. Weight
Profit $
Profit $
Profit $
0.54
0.49
0.45
$651,402
($1,867,882)
($4,158,140)
$2,768,855
-
($2,408,179)
$5,098,054
$2,174,529
($483,221)
2017
$
2016
$
495,532
1,411,216
939,062
-
73,871
1,306,538
(100,000)
332,154
Profit/(loss) after income tax
1,508,465
2,949,908
Depreciation and amortisation
108,901
199,393
(Gains)/Losses on Equity Investments
Investment income
Share based payments
1,617,366
3,149,301
Foreign exchange (gain)/losses unrealised
The Group has cash held as a guarantee as part of their obligations
under their lease agreement totalling $100,000 (2016: $100,000).
5.1 NOTES TO THE CASH FLOW STATEMENT
5.1.1 RECONCILIATION OF CASH
For the purposes of the statement of cashflows, and in line with the
accounting policy, 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.
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 noted above.
5.1.2 RECONCILIATION OF PROFIT/(LOSS) AFTER INCOME TAX
TO NET CASH INFLOW FROM OPERATING ACTIVITIES
2017
$
2016
$
900,581
470,030
183,744
(57,896)
24,582
(16,644)
-
(409,963)
968,103
398,575
321,657
(331,872)
32,265
750,093
718,724
267,570
206,367
(1,827,484)
(130,366)
(340,220)
53,223
50,042
(164,971)
(813,412)
460,260
590,314
Impairment of JV loan
Derivative instrument (gains)/losses unrealised
Agricultural asset fair value (gains)/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/(decrease) in taxes
(1,003,557)
1,117,406
Net cash obtained/(used in) operating
activities
(70,077)
2,487,228
As at the date of this report the Company has not entered into any
non-cash financing or investing activities.
4. Inventories
CURRENT
Pearls
Jewellery
Jewellery obsolescence provision
Other inventory
NON CURRENT
Nuclei
Total Inventory
SIGNIFICANT ACCOUNTING POLICY
Pearls: Pearl inventory is held at cost and value assessed based on the cost of oyster
stock at time of harvest. At each reporting date, pearl inventory is reviewed to ensure
it is valued at the lower of cost and net realisable value. At 30 June 2017, a write off
of pearl stocks of $263,441 has been recorded (30 June 2016- $165,036) to bring the
value in line with the assessed net realisable value.
Nuclei: Quantities on hand at the period end are valued at the lower of cost and net
realisable value.
Other: Including jewellery, cosmetics, fuel, mechanical parts and farm spares at the
period end are valued at the lower of cost and net realisable value.
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.
5. Cash and Cash Equivalents
5.1.3 CREDIT FACILITIES
Cash at bank
Balances per statement of cash-flows
Risk exposure
2017
$
2,184,968
2,184,968
2016
$
4,343,407
4,343,407
The Group’s exposure to interest rate risk is disclosed in note 6. The
maximum exposure to credit risk at the reporting date is the carrying
amount of each class of cash and cash equivalents mentioned above.
As at 30 June 2017, the Company had in place a bank overdraft loan
facility with the National Australia Bank with a limit of $1,000,000.
As at 30 June 2016, the Company had a $4,000,000 facility in place
with the Commonwealth Bank of Australia. This facility was repaid
in full during the year end 30 June 2017 and all debt facilities with
the Commonwealth Bank of Australia have now been closed. See
note 6 for further disclosure on current banking and debt facility
arrangements. Information about the security relating to secured
liabilities and the fair value is also provided in note 6.
- Page 33 -
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Atlas Pearls and Perfumes ltd and its subsidiaries
Atlas Pearls and Perfumes ltd and its subsidiaries
NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
6. 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, i.e.
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 and Senior management.
The Group holds the following financial instruments:
2017
$
2016
$
2,184,968
4,343,407
326,396
156,639
287,642
-
2,668,003
4,631,049
525,009
976,754
3,528,722
4,224,569
-
253,324
4,053,731
5,454,647
FINANCIAL ASSETS
Cash and cash equivalents
Trade and other receivables
Derivative financial instruments
FINANCIAL LIABILITIES
Trade and other payables
Borrowings
Derivative financial instruments
6.1 MARKET RISK
(i) Foreign exchange risk
The Group operates internationally and is 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.
6. 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 effect on profit
and equity.
Statement of Financial
Position Amount
AUD
2017
2016
Foreign Exchange Rate Risk
30 June 2017
30 June 2016
-10%
10%
-10%
10%
Profit
Equity
Profit
Equity
Profit
Equity
Profit
Equity
FINANCIAL ASSETS
Cash
2,184,968
4,343,407
5,249
Trade and other receivables
326,396
287,642
20,650
Derivatives
156,639
-
17,404
FINANCIAL LIABILITIES
Trade and other payables
525,009
976,754
(4,091)
Borrowings
3,528,722
4,224,569
Derivatives
-
253,324
-
-
-
-
-
-
-
-
(4,294)
(16,895)
(14,240)
3,347
-
-
Total Increase/(Decrease)
39,212
-
(32,082)
-
-
-
-
-
-
-
71,190
7,164
-
(5,333)
(217,226)
(28,147)
(172,352)
-
-
-
-
-
-
-
(58,247)
(5,861)
-
4,363
177,731
23,030
141,016
-
-
-
-
-
-
In prior years the majority of the exposure in the Company related to
the borrowings held in Yen. As at 30 June 17 all Yen borrowings have
been settled. Current borrowings are all held in AUD.
Not shown in the table above, is the exposure to exchange movements
on the intercompany loans made to the Indonesian subsidiaries. The
loans are held in IDR and revalued to AUD at each year end. At 30 June
2017 this loan stood at AUD$2,463,005. 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. All
borrowings are currently repayable by 30 June 2020 and are at fixed
interest rates. As such 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.
6.2 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 35.
For retail customers without credit rating the Group generally retains
title over the goods sold until payment is received in full.
All cash balances held at banks are held at internationally recognised
institutions. The Australian Government has guaranteed all deposits
held with Australian banks, cash held in Indonesia is not covered by
this guarantee. The majority of other receivables held are with related
parties and within the Group. Given this the credit quality of financial
assets that are neither past due or impaired can be assessed by
reference to historical information about default rates.
- Page 35 -
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For personal use only
Atlas Pearls and Perfumes ltd and its subsidiaries
Atlas Pearls and Perfumes ltd and its subsidiaries
NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
6. Financial Risk Management (continued...)
6.2 CREDIT RISK (CONTINUED...)
TRADE RECEIVABLES
2017
$
2016
$
Retail customers – no credit history
-
•
-
Wholesale customers –
existing customers with no defaults in the past
Total trade receivables
Derivative financial assets
6.3 LIQUIDITY RISK
348,437
243,821
305,348
156,639
243,821
-
Prudent liquidity risk management implies maintaining sufficient cash,
the availability of funding through an adequate amount of committed
credit facilities and the ability to close out market positions. The Group
manages liquidity risk by continuously monitoring forecast and actual
cash flows and matching the maturity profiles of financial assets
and liabilities. Group management aims at maintaining flexibility in
funding by keeping committed credit lines available. Surplus funds are
generally only invested in instruments such as term deposits that are
highly liquid. Management monitors rolling forecasts of the Group’s
liquidity reserve (comprising the undrawn borrowing facilities below)
and cash and cash equivalents (Note 5) on the basis of expected cash
flows. This is generally carried out by the Senior Management and 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.
6.4 FINANCING ARRANGEMENTS
The Group had access to the following borrowing facilities at the
reporting date.
•
•
FIXED RATE
Foreign currency loan trade (CBA)
Overdraft facility (NAB)
2017
$
2016
$
-
4,000,000
1,000,000
-
1,000,000
4,000,000
•
During the year ended 30 June 2017 the Company’s debt position
has been restructured. As at 30 June 2016, the Company had
a $4,000,000 facility in place with the Commonwealth Bank of
Australia (CBA). This was fully drawn down at this date and due
for repayment by 30 June 2017. This loan facility was 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 CBA loan was fully repaid by 30 June 2017 and the security
position has been discharged.
•
The Company secured a new debt financing package of $3,500,000
from Mr. Tim Martin (Non-Executive Director) and the Martin
Family, a related party. $1.5m of this facility was drawn down in
January 2017, with a further $2m secured in June 17. The loan is
repayable over a 3 year period at a 7.5% interest rate, in staged
repayments to be completed by 30 June 2020.
6.5
MATURITIES OF FINANCIAL LIABILITIES AND DERIVATIVE FINANCIAL INSTRUMENTS
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.
Subject to shareholder approval, the loan agreement with
the Martin Family will contain a convertibility provision. The
outstanding debt and interest will only be convertible into ordinary
shares in the event the Company defaults on its repayment terms
as noted above, with convertibility being at the lender’s option. In
that event, the conversion price will be at a 15% discount to 30 day
VWAP, with a minimum conversion price of 1.5c
In addition to the financing package noted above, the Company
has agreed a new facility with the National Australia Bank (NAB).
The NAB has taken over from CBA as the Company’s transactional
banker and provided a $1,000,000 working capital overdraft facility.
The overdraft facility will be secured by a registered company
charge over the Company’s Assets. As at 30 June 2017, no amount
has been drawn down on this facility.
The Martin facility is currently not secured, but it is the intention
of the Company to seek approval from the shareholders for a
General Security Deed in relation to the debt, that will rank as
a second priority charge over the Company’s assets, behind the
NAB facility. A General Meeting has been called for September
2017 to attend to this matter.
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 Month
6-12
months
Between
1 & 2 years
Between
2 & 5 years
Total
contractual
cash flows
Carrying
amount
(asset)/
Liabilities
30 June 2017
30 June 2016
$
$
$
$
$
$
$
$
$
$
$
$
NON-DERIVATIVES
Trade payables
Borrowings
TOTAL
NON-DERIATIVES
DERIVATIVES
Net settled (Non
deliverable forwards)
Gross settled
-(inflow)
-outflow
TOTAL
DERIVATIVES
525,009
-
-
-
525,009
525,009
973,995
-
-
22,057
256,665
1,500,000
1,750,000
3,528,722
3,528,722
55,061
4,135,955
33,553
-
-
973,995
973,995
4,224,569
4,224,569
547,066
256,665 1,500,000 1,750,000 4,053,731 4,053,731 1,029,056 4,135,955
33,553
- 5,198,564 5,198,564
156,639
3,300,000
(3,143,361)
156,639
-
-
-
-
-
-
-
-
-
-
-
-
156,639
156,639
(99,368)
(153,957)
3,300,000
3,300,000
3,000,000
7,500,000
(3,143,361)
(3,143,361)
(3,099,368)
(7,653,957)
156,639
156,639
(99,368)
(153,957)
-
-
-
-
-
-
-
-
(253,325)
(253,325)
10,500,000
10,500,000
(253,325)
(253,325)
(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/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 2017 and 30
June 2016 on a recurring basis:
30 JUNE 2017
Assets
Forward foreign exchange contracts
Total Assets
Liabilities
Total Liabilities
30 JUNE 2016
Assets
Total Assets
Liabilities
Forward foreign exchange contracts
Total Liabilities
LEVEL 1
$
LEVEL 2
$
LEVEL 3
$
TOTAL
$
LEVEL 1
$
-
-
-
-
-
-
-
-
LEVEL 2
$
156,639
156,639
-
-
-
-
(253,325)
(253,325)
LEVEL 3
$
-
-
-
-
-
-
-
-
TOTAL
$
-
-
-
-
-
-
(253,325)
(253,325)
- Page 37 -
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For personal use only
Atlas Pearls and Perfumes ltd and its subsidiaries
Atlas Pearls and Perfumes ltd and its subsidiaries
NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
8. Trade and Other Receivables
9. Tax
6. Financial Risk Management (continued...)
MATURITIES OF FINANCIAL LIABILITIES AND
6.5
DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED...)
(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 2017 there are
no level 3 related instruments in place.
(i)
Transfers between levels 2 and 3 and changes in
valuation techniques
There were no transfers between the levels of the fair value hierarchy
in the period ended 30 June 2017. There were also no changes made
to any of the valuation techniques applied as of 30 June 2016.
Fair values of other financial instruments
(c.)
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 2017:
CURRENT
Trade receivables
Provision for impairment
Net trade receivables
Sundry debtors & prepayments
Total trade & other receivables
2017
$
2016
$
349,331
(43,090)
306,241
550,141
856,382
245,218
-
245,218
481,775
726,993
(a.)
Impaired trade receivables
At 30 June 2017, an impairment of $43,090 has been booked in
relation to trade receivables. This relates to debts owing from two
wholesale customers that are past due by more than 3 months and
which management have deemed are at risk of not being collected.
Management are actively pursuing recovery of the debt.
(b.) Past due but not impaired
As at 30 June 2017, trade receivables of $52,726 (2016: $134,491) 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 these customers
no impairment has been recognised in the financial period. The
ageing analysis of these trade receivables is as follows:
NON-CURRENT BORROWINGS
Debt Financing
Other bank loan
2017
$
Carrying
amount
2017
$
Fair
value
2016
$
Carrying
amount
2016
$
Fair
value
3,250,000 3,250,000
-
-
3,250,000 3,250,000
-
33,553
33,553
-
33,553
33,553
Up to one month
2-3 months
3 months and above
(c.) Risk exposure
2017
$
2016
$
53,546
3,180
-
74,795
37,536
22,160
56,726
134,491
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.
7. Trade and Other Payables
The maximum exposure to credit risk at the reporting date is the
carrying amount of each class of receivables mentioned above. Refer
to note 6 for more information on the risk management policy of the
Group and the credit quality of the entity’s trade receivables.
SIGNIFICANT ACCOUNTING POLICY
2017
$
2016
$
Trade receivables are recognised at fair value less provision for impairment. All
trade receivables are generally due for settlement within 30-60 days.
CURRENT
Trade payables
ESSP accrual
Other payables and accrued expenses
Total trade and other payables
520,963
-
325,930
160,147
2,091,977
2,042,608
2,612,940
2,528,685
Other payables include accruals for annual leave and employee
benefits of $1,647,565, and $1,614,554 in the consolidated entity for
30 June 2017 and 30 June 2016 respectively. The entire obligation is
presented as current, since the Group does not have an unconditional
right to defer settlement.
SIGNIFICANT ACCOUNTING POLICY
Trade Payables represent liabilities for goods and services provided to the group prior to
the end of the financial period which are unpaid. These amounts are unsecured and are
usually settled within 30 days of recognition.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are
known to be uncollectible are written off by reducing the carrying amount directly. An
allowance account – provision for impairment of trade receivables, is used when there is
objective evidence that the Group will not be able to collect all amounts due according
to the original terms of the receivables.
Significant financial difficulties of the debtor, financial reorganisation, and default and
delinquency in payments, more than 30 days overdue, are considered indicators that
the trade receivable is impaired. The Group also considers the long-term history of the
debtor. The amount of the impairment allowance is the difference between the assets
carrying amount and the present value of estimated future cash flows, discounted at the
effective interest rate. Cash flows relating to short term receivables are not discounted if
the effect of discounting is immaterial.
The amount of the impairment loss is recognised in the statement of profit or loss and
other comprehensive income within other expenses. When a trade receivable for which
an impairment allowance had been recognised becomes uncollectible in a subsequent
period, it is written off against the allowance account. Subsequent recoveries of
amounts previously written off are credited against other expenses in the statement of
profit or loss and other comprehensive income.
9.1 INCOME TAX EXPENSE
9.2 TAX ASSETS AND LIABILITIES
(a.) The components of tax expense/(benefit) comprise:
(a.) Liabilities
2017
$
2016
$
Current tax
Deferred tax
Prior period under provision
505,893
(601,986)
-
569,759
642,838
606,445
(96,094)
1,819,042
CURRENT
Income tax payable
NON-CURRENT
2017
$
2016
$
260,538
661,111
(b.) Deferred income tax (revenue) expense included in income tax expense comprises:
Deferred tax liabilities comprises temporary differences attributable to -
Decrease/(increase) in deferred tax assets
(excluding tax losses) (note 9.2)
(Decrease)/increase in deferred tax liabilities
(note 9.2)
(602,629)
299,807
643
343,031
(601,986)
642,838
(c.) Numerical reconciliation of income tax expense to prima facie tax payable:
Agricultural and biological assets at fair value
1,268,744
1,254,475
Prepayments
Investment in subsidiary
Current derivative instruments
Unrealised foreign exchange gains
Total deferred tax liabilities
718
-
46,996
-
529
11,302
48,111
1,398
1,316,458
1,315,815
Profit/(loss) before income tax expense
Tax at the Australian tax rate of 30%
804,487
241,346
2,787,145
836,143
(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
Other
Tax losses recognised
Total deferred tax assets
25,432
33,366
69,731
20,250
396,717
-
303,219
47,150
862,499
2,775,937
44,796
39,134
433,982
69,287
588,888
62,184
1,271,637
1,764,170
3,638,436
3,035,807
The Company believes that the deferred tax asset relating to tax losses recognised is
available to be carried forward based upon the Company’s projections of future taxable
amounts.
(c.) Reconciliations
The overall movement in deferred tax account is as follows:
Opening balance
(Charge)/credit to statement of profit or loss and
other comprehensive income
Other movements
Closing balance
1,719,996
2,362,384
603,271
43,224
(1,285)
(685,611)
2,321,982
1,719,996
Tax effect of amounts which are not deductible in calculating taxable income:
Non-deductible expenses
Sundry items
Difference in overseas tax rates
Research and development tax offset
De-recognition of assets
Income tax under(over) provided in prior years
66,750
22,322
(93,566)
-
400,840
(699,454)
285,375
(169,467)
(111,159)
371,705
-
606,445
Income tax expense/(benefit)
(96,094)
1,819,042
Weighted average effective tax rates
-12%
65%
(d.) Deferred income tax at 30 June relates to the following:
Deferred tax liabilities
Fair value adjustment on biological assets
Prepayments
Derivative financial instruments
Investment in subsidiary
Unrealised foreign exchange gain
Deferred tax assets
Difference in accounting and tax depreciation
Stock
Accruals
Provisions
Foreign exchange losses
Other
Tax losses
Investment
Intangible Asset
14,270
189
(1,120)
(11,302)
(1,394)
(7,934)
24,935
(18,884)
(37,265)
1,286,879
(15,036)
(275,111)
(285,669)
(69,287)
498,131
474
(80,271)
(76,697)
1,394
(1,498)
(451,340)
17,151
(138,966)
(145,758)
(31,100)
117,523
299,716
34,465
Deferred tax (income)
603,271
43,224
For details of the franking account, refer to Note 13.
- Page 39 -
- Page 40 -
For personal use only
Atlas Pearls and Perfumes ltd and its subsidiaries
Atlas Pearls and Perfumes ltd and its subsidiaries
NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
9. Tax (continued...)
11. Derivative Financial Instruments
12. Earnings Profit /(Loss) per share (continued...)
SIGNIFICANT ACCOUNTING POLICY
The income tax expense or benefit 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.
10. Borrowings
CURRENT
Bank loan
Other loans
Lease liabilities
Total current borrowings
NON CURRENT
Other loans
Total non-current borrowings
Total borrowings
2017
$
2016
$
-
4,075,722
278,722
-
110,122
5,172
278,722
4,191,016
3,250,000
3,250,000
3,528,722
33,553
33,553
4,224,569
Refer to Note 6.4 for disclosures on financing arrangements currently in place.
SIGNIFICANT ACCOUNTING POLICY
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.
2017
$
2016
$
Derivative financial assets
Forward foreign exchange contracts
156,639
-
Derivative financial liabilities
Forward foreign exchange contracts
-
253,324
SIGNIFICANT ACCOUNTING POLICY
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. 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 6).
Derivative financial assets and liabilities comprise forward exchange contracts. Gains
and losses arising from changes in fair value of foreign exchange hedging contracts 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 2017 the Group did not enter
into any forward exchange contracts to purchase Indonesian Rupiah. The sale of pearls
is denominated in Japanese Yen and so the Group has entered into forward exchange
contracts and options to sell Japanese Yen and receive Australian Dollars.
12. Earnings Profit /(Loss) per share
Basic earnings/(loss) per share (cents per share)
Diluted earnings per share (cents per share)
12.1 EARNINGS RECONCILIATION
Net profit/(loss) used for basic earnings
After tax effect of dilutive securities
Diluted earnings/(loss)
2017
$
0.21
0.21
2016
$
0.23
0.23
900,581
968,103
-
-
900,581
968,103
Weighted average number of ordinary shares
outstanding during the period used for
calculation of basic earnings per share
421,525,077
415,837,428
Adjustments for calculation of diluted earnings
per share: options
5,500,000
5,500,000
Weighted average number of potential ordinary
shares outstanding during the period used for
calculation of diluted earnings per share
427,025,077
421,337,428
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 2017 as potential ordinary shares which may
have a dilutive effect on the profit of the Consolidated Group.
Ordinary shares issued to employees under the Employee Share
Plan are considered to be potential ordinary shares and have been
included in the determination of diluted earnings per share to the
extent that they are dilutive.
SIGNIFICANT ACCOUNTING POLICY
Basic earnings per share
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. Refer to Note 12.1 for further detail.
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. Refer to Note 12.1 for further detail.
13. Dividends
Dividend Franking Account
2017
$
2016
$
Franking credits available to shareholders of the
Company for subsequent financial years based on a tax
rate of 30%.
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.
SIGNIFICANT ACCOUNTING POLICY
A 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.
No dividends have been paid or declared in respect of the 2017 financial year or the
period ended 30 June 2016.
- Page 41 -
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Atlas Pearls and Perfumes ltd and its subsidiaries
Atlas Pearls and Perfumes ltd and its subsidiaries
NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
14. Property, plant and equipment
Reconciliation of depreciation to the Statement of Profit or Loss and
Other Comprehensive Income:
(a) Non-Pearling Assets
Plant and equipment
- at cost
- accumulated depreciation
Leasehold improvements
- at cost
- accumulated depreciation
Total non-pearling assets
(b) Pearling project
Land (leasehold and freehold) and buildings
- at cost
- accumulated depreciation
Plant and equipment, vessels, vehicles
- at cost
- accumulated depreciation
Total pearling project
Total property, plant and equipment
2017
$
2016
$
1,137,838
(782,898)
354,940
1,045,347
(586,044)
459,303
814,243
1,120,324
(662,406)
457,918
1,062,714
(518,820)
543,894
1,001,812
2,861,215
(391,702)
2,469,513
1,679,552
(352,219)
1,327,333
6,361,985
(4,347,162)
2,014,823
4,484,336
5,298,579
6,421,575
(4,009,905)
2,411,670
3,739,003
4,740,815
Included in Pearling project land (leasehold and freehold) and buildings is $1,519,873
(2016 - $466,488) 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 the beginning of the year
Additions
Reclassifications/Disposals
Depreciation
Foreign exchange movement
Carrying amount at the endof the year
Leasehold Improvements
Carrying amount at the beginning of the year
Additions
Foreign exchange movements
Reclassifications/Disposals
Depreciation
Carrying amount at the end of the year
(b.) Pearling project
Leasehold land and buildings
Carrying amount at beginning of the year
Additions
Revaluation of freehold land
Disposals/reclassifications
Depreciation
Foreign exchange movement
Carrying amount at end of the year
Plant and equipment, vessels, vehicles
Carrying amount at beginning of the year
Additions
Disposals / reclassifications
Depreciation
Depreciation write offs
Foreign exchange movement
Carrying amount at end of the year
457,918
21,518
-
(107,936)
(16,560)
354,940
543,894
-
(8,525)
-
(76,066)
459,303
1,327,333
1,073,500
179,179
-
(54,376)
(56,123)
2,469,513
2,411,670
212,164
-
(506,807)
-
(102,204)
2,014,823
584,276
18,550
-
(145,541)
633
457,918
612,288
-
8,714
-
(77,108)
543,894
1,107,622
138,311
-
87,082
(52,805)
47,123
1,327,333
2,169,100
294,642
257,788
(500,897)
99,231
91,806
2,411,670
Total Carrying amount
5,298,579
4,740,815
Depreciation charge (Note 14)
Capitalised depreciation charge
Depreciation of PPE
Depreciation of PPE
Amortisation of Intangible Asset
Depreciation charge (Note 2)
2017
$
2016
$
(745,185)
(776,350)
437,124
492,347
(308,061)
(284,003)
(308,061)
(161,969)
(470,030)
(284,004)
(114,571)
(398,575)
SIGNIFICANT ACCOUNTING POLICY
Each class of property, plant & equipment is stated at historical cost less, where
applicable, any accumulated depreciation and impairment losses. The carrying value
of property, plant and equipment and their useful lives are reviewed annually by
management 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 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 unchanged: Freehold
Land (5-10%), Leasehold land & buildings improvements (5-10%), Vessels (10%), and
Plant and Equipment (10-50%).
15. 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 detailed throughout the financial statements and
in the prior period except as detailed below:
Inter-entity sales
Inter-entity sales are recognised based on an internally set transfer
price. These transactions are eliminated within the internal reports.
The revenue from external parties reported to the chief operating
decision maker is measured in a manner consistent with that in the
statement of profit or loss and other comprehensive income.
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.
(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 2017 is as follows:
30 June 2017
Wholesale
Loose Pearl
Jewellery
Australia
$
Indonesia
$
Australia
$
Indonesia
$
Total
$
15,343,728
12,141,560
370,470
351,104 28,206,862
-
(11,905,271)
-
-(11,905,271)
15,343,728
236,289
370,470
351,104 16,301,591
(288,056)
1,843,201
(394,221)
(145,670)
1,015,254
(938,190)
1,719,381
(433,026)
(161,670)
186,495
309,420
106,455
38,125
16,030
470,030
(ii)
The segment information provided to the Board of Directors
and management team for the reportable segments for the year
ended 30 June 2016 is as follows:
30 June 2016
Wholesale Loose Pearl
Jewellery
Total
Australia
Indonesia
Australia
Indonesia
$
$
$
$
$
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)
Total segment
liabilities
16,783,473
12,568,397
490,503
412,516
30,254,889
-
(12,212,715)
-
-
(12,212,715)
16,783,473
355,682
490,503
412,516 18,042,174
1,418,525
2,560,972
(232,410)
14,441
3,761,528
1,440,441
1,460,736
(279,796)
(10,123)
2,611,258
274,418
61,157
45,346
17,654
398,575
-
(1,827,483)
-
-
(1,827,483)
6,700,678 22,587,105
759,263
708,839 30,755,885
13,386
432,952
4,020
1,144
451,502
(984,754)
(1,728,711)
(30,846)
(11,827)
(2,756,138)
-
57,074
-
-
57,074
(b.) Other segment information
(i) Segment revenue
3,267,839 24,722,448
450,387
871,896 29,312,571
Segment revenue reconciles to total revenue from continuing
operations in the statement of profit or loss and other
comprehensive income as follows:
-
1,464,843
3,109
18,409
1,486,361
(656,239)
(1,914,665)
(34,023)
(20,594)
(2,625,521)
Total segment revenue
Intersegment eliminations
Interest income
Other revenues
2017
$
2016
$
28,206,862
30,254,889
(11,905,271)
(12,212,715)
53,813
-
57,335
335,346
Total revenue from continuing operations (Note 1)
16,355,404
18,434,855
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)
Total segment
liabilities
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For personal use only
Atlas Pearls and Perfumes ltd and its subsidiaries
Atlas Pearls and Perfumes ltd and its subsidiaries
NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
15. Segment reporting (continued...)
Major customers
A Japanese wholesaler accounted for 10% of external revenue in the
period ended 30 June 2017 (2016 - 19%). The top three Japanese
customers accounted for 27% of revenue in the current period. 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 $599,528 (2016: $653,152) 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 2017 was $14,748,723 (2016: $15,389,416). 89% of the
total loose pearl sales revenue during the period ended 30 June 2017
(2016: 86%) 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 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 operating profit before tax
Intersegment eliminations
Changes in fair value of biological and agricultural assets
JV Impairment expense
Foreign exchange gains
Foreign exchange losses
Other
2017
$
186,495
-
(206,367)
-
1,331,955
(733,814)
226,218
2016
$
2,611,258
-
1,827,483
(918,724)
105,780
(855,872)
17,220
Profit/(loss) before income tax from continuing
operations
804,487
2,787,145
(iii)
Segment assets
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:
The total of non-current assets other than financial instruments and
deferred tax assets located in Australia is $1,139,452 (2016: $951,381).
The total located in Indonesia is $16,389,934 (2016: $16,268,975).
(iv)
Segment liabilities
Liabilities are allocated based on the operations of the segment and
the physical location of the asset.
Reportable segments’ liabilities are reconciled to total liabilities as
follows:
Segment liabilities
Unallocated:
Current tax liabilities
Borrowings
Deferred tax liabilities
Other
Total liabilities as per the
statement of financial position
(v) Normalised EBITDA reconciliation
Net profit before tax
Finance/Interest paid
Depreciation/Amortisation
FX (gain)/loss
Agriculture standard revaluation
Other non-operating (income)/expense
Gain on derivative instruments
Impairment of Joint Venture investment
Other taxes/penalties (land tax/fees)
2017
$
2016
$
2,625,521
2,756,138
260,538
3,528,722
1,316,453
4,454
661,111
4,224,569
1,315,815
25,871
7,735,688
8,983,504
2017
$
804,487
256,886
470,030
(598,095)
206,367
285,812
(409,963)
-
-
2016
$
2,787,145
288,459
398,575
750,092
(1,827,483)
90,240
267,570
816,028
190,902
Normalised EBITDA
1,015,524
3,761,528
16. Contributed Equity
2017
No. of
Shares
2016
No. of
shares
2017
$
2016
$
Issued and fully paid-up capital 422,909,620 419,380,906 38,857,415
36,698,536
Ordinary Shares
Balance at beginning of period 419,380,906 414,327,191 36,698,536
36,465,656
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.
2.
During the year ended 30 June 2017, 1,055,556 Treasury
shares were issued over the course of the year to employees
as part the Atlas employee share salary sacrifice plan (30
June 2016: 5,053,715).
On the 28 November 2016, 2,473,158 in fully paid ordinary
shares were issued to past and present Directors of the
Company in lieu of payment of Directors’ fees, at a deemed
issue price of $0.045, in accordance with shareholder
approval at the Annual General Meeting of Shareholders
held on 31 October 2016.
(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.
(ii) Options
There are 5,500,000 unlisted options on issue at 30 June 2017.
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 18.
(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 13% at 30 June 2017 (16% at 30 June 2016).
The Group has no external requirements imposed upon it in relation
to capital structure.
Shares issued (1)(2)
Share transaction costs
-
-
-
-
3,528,714
5,053,715
158,879
232,880
SIGNIFICANT ACCOUNTING POLICY
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.
Balance at end of period
422,909,620 419,380,906 36,857,415
36,698,536
Segment assets
Unallocated:
Joint Venture Loans
Deferred tax assets
Total assets as per the statement of financial
position
2017
$
2016
$
Treasury Shares
29,312,571
30,755,885
Balance at beginning of period
6,017,694
11,071,409
1,227,407
3,638,436
1,016,456
3,035,807
Acquisition of shares by Trust
under Plan
-
-
Shares released
(1,055,556)
(5,053,715)
34,178,414
34,808,148
Balance at end of period
4,962,138
6,017,694
17. Reserves
Foreign Currency Translation Reserve
(9,760,222)
(9,115,083)
2017
$
2016
$
Employee Share Reserve
Revaluation Reserve
Total Reserves
Movements:
Foreign Currency Translation Reserve(1) -
Balance at beginning of year
Currency translation differences arising during
the Year
Balance at end of year
.
Employee Share Reserve(2) -
739,188
179,179
714,605
-
(8,841,856)
(8,400,478)
(9,115,083)
(9,732,299)
(645,139)
617,216
(9,760,222)
(9,115,083)
Balance at beginning of period
Movement in Employee Share Reserve
Balance at end of year
714,605
24,582
739,187
682,341
32,264
714,605
Revaluation Reserve(3) -
Balance at beginning of period
Movement in Revaluation Reserve
Balance at end of year
-
179,179
179,179
-
-
-
1.
2.
3.
The foreign currency translation reserve records exchange differences arising on
translation of foreign controlled subsidiaries to the reporting currency.
The employee share reserve records the value of equity portion of remuneration
paid to employees in the form of shares or other equity instruments.
The revaluation reserve records the value of increase in the carrying value of assets
as a result of revaluation.
18. Share Based Payments and Options
18.1 EMPLOYEE SALARY SACRIFICE SHARE PLAN
On 30 May 2012, the Atlas Employee Salary Sacrifice Share Plan was
established. 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.
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 shares rank equally with other fully paid ordinary shares.
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).
- Page 45 -
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For personal use only
Atlas Pearls and Perfumes ltd and its subsidiaries
Atlas Pearls and Perfumes ltd and its subsidiaries
NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
18. Share Based Payments and Options
(continued...)
18.1 EMPLOYEE SALARY SACRIFICE SHARE PLAN
(CONTINUED...)
The Employee Share Plan is open to Eligible Participants being any
Eligible Employee; or conditional upon the company obtaining any
necessary ASIC relief to extend the operation of ASIC Class Order
03/184 (or similar class order) to them:
any Eligible Contractor; or
i.
Eligible Casual Employee,
ii.
Who is declared by the Board to be an Eligible Participant for the
purposes of the Plan. An Eligible Employee means: a full time or part
time employee (including an executive director) of a Group Company.
An Eligible Contractor means:
(a.) An individual that has:
i. Performed work for a Group Company, for more than 12
months; and
ii. Received 80% of more of their income in the preceding year
from a Group Company; or
(b.) A company where each of the following are satisfied in relation
to the company:
i. Throughout the previous 12 months the company has had
a contract in place with a Group Company, for the provision
of the services of an individual (contracting individual) to a
Group Company;
ii. The contracting individual has performed work for a
Group Company, for more than 12 months;
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 nearest whole Share, unless
otherwise determined by the Board from time to time.
Refer to Note 16 for disclosures on the movement in Employee and
Non-Executive share plans, under treasury shares.
18.3 ATLAS PEARLS AND PERFUMES LTD EMPLOYEE
OPTION PLAN
At the EGM on 13 May 2014 it was resolved by the shareholders 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
Directors consider that the plan is an appropriate method to:
(a.) Reward Directors, executives, employees, consultants and
contractors for their past performance;
(b.) Provide long term incentives for participation in the Company’s
future growth;
(c.) Motivate Directors, executives, employees, consultants and
contractors and general loyalty; and
(d.) Assist to retain the services of valuation Directors, executives,
employees, consultants and contractors.
The Plan will be used as part of the remuneration planning for Directors,
executives, employees and contractors. Under the plan, participants
are granted options which only vest if certain performance
standards are met. Participation in the plan is at the board’s discretion
and no individual has a contractual right to participate in the plan or
to receive any guaranteed benefits.
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;
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
(iii)
(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.
18.2 NON-EXECUTIVE DIRECTOR FEE SACRIFICE SHARE PLAN
Options on Issue
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).
On the 30th of June 2015 5,500,000 options exercisable at $0.059 each,
on or before 31 December 2018 (expiry date), 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.
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 share. The
exercise price of options is based on 143% (June 2016: 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.
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:
0.066
5,500,000
Shares issued under the employee share plan
Option expense
2017
$
2016
$
-
24,582
24,582
-
32,265
32,265
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.
SIGNIFICANT ACCOUNTING POLICY
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.
19. Subsidiaries
The consolidated financial statements incorporate the assets,
liabilities and results of the following subsidiaries in accordance with
the accounting policy described in note 27.4.
Name of entity
Class of
shares
Percentage
owned
Percentage
owned
Place of
incorporation
30 June 2017 30 June 2016
Perl’Eco Pty Ltd
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
The ultimate parent entity, Atlas Pearls and Perfumes Ltd, is
incorporated in Australia.
2015 Average
exercise price per
share option
Number of options
0.066
5,500,000
-
-
-
-
-
-
As at 1 July 2016
Granted during the year
Exercised during the year
Forfeited during the year
As at 30 June 2017
There were no options issued during the year ended 30 June 2017
(2016: nil).
Issue Date
Expiry
Date
Exercise
Price
Share Options
30 June 2017
Share Options
30 June 2016
30 June 2015
31 December
2018
0.0590
5,500,000
5,500,000
Total
5,500,000
5,500,000
Weighted average remaining contractual life
of options outstanding at end of period
0.6 years
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). 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 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 are detailed below.
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) Expected price volatility of the company’s shares: 60%;
(vi) Expected dividend yield: 0%;
(vii) Risk-free interest rate: 3.06%
The expected price volatility is based on the historic volatility (based
on the remaining life of the options), adjusted for any expected
changes to future volatility due to publicly available information.
Where options are issued to employees of subsidiaries within the
group, the subsidiaries compensate Atlas Pearls and Perfumes Ltd for
the amount recognised as expense in relation to these options.
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Atlas Pearls and Perfumes ltd and its subsidiaries
Atlas Pearls and Perfumes ltd and its subsidiaries
NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
20. Related Party Transactions
(a.) Subsidiaries
Interests in subsidiaries are set out in note 19.
(b.)
Joint ventures
World Senses Pty Ltd (World Senses) 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 2017, there is a net loan balance of $698,212 owing from
World Senses to Atlas (30 June 2016 - $698,212). This balance consists
of salary and administration recharges and accounting charges, offset
by pearl cosmetic products, pearl jewellery and pearl protein extraction
assets transferred to Atlas. 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 (EOT) was 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 2017, there is a loan balance of $2,042,450 (30 June 2016:
$1,832,284) 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 was 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 2017, there is a loan balance of $449 (30 June 2016: $200)
owing from Brookfield Tasmania Pty Ltd.
Due from World Senses
Due to World Senses
Impairment of World Senses asset
Due from EOT
Impairment of EOT Receivable
Due from Brookfield Tasmania Pty Ltd
2017
$
2016
$
771,173
(72,961)
771,173
(72,961)
(698,212)
(698,212)
2,042,450
1,832,284
(816,028)
(816,028)
449
200
1,226,871
1,016,456
(c.) Key management personnel compensation -
Detailed remuneration disclosures are provided in section 13.2 of the
remuneration report.
Short-term employment benefits
Post-employment benefits
Share based compensation
2017
$
2016
$
(794,205)
1,148,088
40,441
24,582
42,776
7,151
859,228
1,198,015
(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)
2017
$
2016
$
8,286
-
8,286
78,900
7,455
86,355
(e.) Loans from Related Parties
Refer to Note 6.4 for detailed disclosures on financing arrangements.
Loans detailed below are accounted for under current and non-
current liabilities (see note 10).
Beginning of the year
Loans advanced from
Interest charged
Interest paid
End of year
2016
$
2017
$
-
3,500,000
49,623
(48,390)
3,501,233
21. Investments Accounted for using
the Equity Method
2017
$
2016
$
Share in World Senses joint venture partnership
Share in Brookfield Tasmania joint venture partnership
Share in Essential Oils of Tasmania joint venture
partnership
-
-
-
-
22. Interests in Joint Ventures
(a.)
Joint venture
-
-
-
-
-
-
-
183,744
183,744
World Senses
Joint Ventures’ assets and liabilities
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
2017
$
2016
$
304,334
441,333
745,667
302,386
623,443
925,829
41,791
2,375,450
2,417,241
40,490
1,760,292
1,800,782
(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.
Net assets
(1,671,574)
(874,953)
Joint Venture’s revenues, expenses and results
23. Parent Entity Financial Information
Revenues
Expenses
Profit/(loss) for the period
Reconciliation to carrying value
Opening net asset 1 July
Profit/(loss) for the period
Closing net liabilities
Group’s share in %
Group share in $
Carrying value
Essential Oils of Tasmania
Joint Ventures’ assets and liabilities
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
8,165
(622,676)
(614,511)
20,143
(445,066)
(424,923)
(874,952)
(614,511)
(1,489,463)
(450,029)
(424,923)
(874,952)
50%
50%
(307,256)
(212,462)
-
-
2017
$
2016
$
3,031,525
3,957,157
1,061,804
389,859
4,093,329
4,347,016
340,446
476,586
3,894,684
3,503,564
4,235,130
3,980,150
(a.) Summary financial information
The individual financial statements for the parent entity show the
following aggregate amounts:
Statement of financial position
Current assets
Total assets
Current liabilities
Total liabilities
Shareholders’ equity
Issued capital
Reserves
Share-based payment reserve
(Accumulated losses)
2017
$
2016
$
2,852,239
26,803,398
3,650,070
4,800,932
5,459,755
27,804,960
7,936,513
5,820,593
36,857,417
36,698,541
739,188
714,606
(15,759,497)
(14,973,372)
21,837,108
22,439,775
(Loss) for the period
(165,359)
(455,408)
Total comprehensive (loss)
(165,359)
(455,408)
Net assets
(141,801)
366,866
(b.) Summary financial information
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.
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.
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 21). The joint venture is unlisted
hence no quoted fair value is disclosed. Information regarding to the
joint ventures are set out in the next column.
Joint Venture’s revenues, expenses and results
Revenues
Expenses
Profit/(loss) for the period
Reconciliation to carrying value
Opening net asset 1 July
Profit/(loss) for the period
Closing net assets (liabilities)
Group’s share in %
Group share in profit/(loss)
Carrying value
3,227,576
3,029,452
(4,213,771)
(3,247,842)
(986,195)
(218,390)
844,395
1,062,785
(986,195)
(218,390)
(141,800)
844,395
50%
50%
(493,098)
(109,195)
-
183,744
The parent entity did not have any contingent liabilities as at 30 June
2017 or 30 June 2016.
The parent entity did not provide financial guarantees during the
period (2016: Nil).
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Atlas Pearls and Perfumes ltd and its subsidiaries
Atlas Pearls and Perfumes ltd and its subsidiaries
NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
23. Parent Entity Financial Information
25. Contingencies
27.2 HISTORICAL COST CONVENTION
•
SIGNIFICANT ACCOUNTING POLICY
The financial information for the parent entity, Atlas Pearls and Perfumes Ltd, has
been prepared on the same basis as the consolidated financial statements, except as
set out below:
Investments in subsidiaries
Investments in subsidiaries are accounted for at cost in the financial statements of
Atlas Pearls and Perfumes Ltd.
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.
The company’s historical tax affairs are regularly subject to audit by
the Indonesian Tax Office and this process remains ongoing. There
is a 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. Currently there are no periods
under review.
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:
24. Commitments
AUDIT SERVICES
BDO Australia (WA) Pty Ltd
2017
$
2016
$
Audit and other assurance services
Audit and review of financial reports
Commitments for minimum lease payments in relation to
non-cancellable operating leases are payable as follows:
KAP Tanubrata Sutanto Fahmi Babang & Rekan (BDO)
Audit and review of financial reports
Within one year
344,740
432,506
Total remuneration for audit and other assurance services
Later than one year, but not later than five years
1,066,427
1,481,950
Other Services
Later than five years
-
-
Other review
1,411,167
1,914,456
Total remuneration for other services
Non - cancellable operating leases
Total remuneration of BDO Australia for audit and
other related services
2017
$
2016
$
94,349
86,000
35,704
130,053
17,011
103,011
18,544
18,544
40,000
40,000
148,596
143,011
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 had a bank guarantee with the
Commonwealth Bank of Australia for AUD$100,000 at 30 June 2017
(30 June 2016: $100,000). This guarantee has been taken out to
secure the rental of the Atlas Pearls and Perfumes corporate offices in
Claremont, Western Australia.
SIGNIFICANT ACCOUNTING POLICY
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.
27. Accounting Policies
27.1 BASIS OF PREPARATION
These general purpose financial statements have been prepared
in accordance with Australian Accounting Standards, and other
authoritative pronouncements of the Australian Accounting Standards
Board, IFRS 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 28 August 2017. 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.
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.
27.3 NEW AND AMENDED STANDARDS ADOPTED
BY THE GROUP
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 2017 unless
disclosed separately. The Group’s and the parent entity’s assessment of
the impact of these new standards and interpretations is set out below.
AASB 16 - To the extent that the Company, as lessee, has significant
operating leases outstanding at the date of initial application, 1
July 2019, right-of-use assets will be recognised for the amount
of the unamortised portion of the useful life, and lease liabilities
will be recognised at the present value of the outstanding lease
payments.
Thereafter EBITDA will increase as a result of operating lease expenses
currently included in EBITDA which will be recognised instead as
amortisation of the right-of-use asset, and interest expense on the
lease liability. However, there will be an overall reduction in net profit
before tax in the early years of a lease because the amortisation and
interest charges will exceed the current straight-line expense incurred
under AASB 117 Leases. This trend will reverse in the later years.
Atlas has identified the following lease where this standard change
will have an impact:
•
Claremont office lease held by the parent entity
AASB
Amendment
Affected
Standard(s)
Nature of Change to
Accounting Policy
Application
Date of
Standard*
Application
Date for
Group
Any other amendments are not applicable to the Group and therefore
have no impact.
1 Jan 18
1 July 18
27.4 PRINCIPLES OF CONSOLIDATION
1 Jan 17
1 July 17
1 Jan 19
1 July 19
AASB 9
Financial
Instruments
AASB 15
Revenue from
Contracts with
Customers
AASB 16
Leases
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.
AASB 16 eliminates the
operating and finance
lease classifications
for lessees currently
accounted for under
AASB 117 Leases. Leases
with terms greater
than 12 months, unless
the underlying asset
is immaterial, will be
recognised as a lease
liability and a right of use
asset in the statement of
financial position.
Impact on initial application:
•
•
AASB 9 - The Company enters into forward hedge contracts to
manage foreign currency risk but it currently does not apply
hedge accounting. These derivative instruments are fair valued
at each reporting date and gain or loss recognised in the
statement of profit or loss and other comprehensive income. It
is expected that the application of the new amendments will
not have an impact on the entity’s financial statements.
AASB 15 – The Company does not currently enter into revenue
contracts that will be affected by changes to this standard. It is
expected that the application of the new amendments will not
have an impact on the entity’s financial statements.
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 2017 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.
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Atlas Pearls and Perfumes ltd and its subsidiaries
Atlas Pearls and Perfumes ltd and its subsidiaries
NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
27.
Accounting Policies (continued...)
27.6 FOREIGN CURRENCY TRANSLATION
27.7 COMPARATIVE FIGURES
27.4 PRINCIPLES OF CONSOLIDATION (CONTINUED...)
(a.) Functional and presentation currency
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. When the group’s share of losses in an equity-accounted
investment equals or exceeds its interest in the entity, including any
other unsecured long-term receivables, the group does not recognise
further losses, unless it has incurred obligations or made payments on
behalf of the other entity.
Unrealised gains on transactions between the group and its associates
and joint ventures are eliminated to the extent of the group’s interest
in these entities. Unrealised losses are also eliminated unless the
transaction provides evidence of an impairment of the asset transferred.
Accounting policies of equity accounted investees have been changed
where necessary to ensure consistency with the policies adopted by
the group. The group treats transactions with non-controlling interests
that do not result in a loss of control as transactions with equity owners
of the group. A change in ownership interest results in an adjustment
between the carrying amounts of the controlling and non-controlling
interests to reflect their relative interests in the subsidiary. Any difference
between the amount of the adjustment to non-controlling interests
and any consideration paid or received is recognised in a separate
reserve within equity attributable to the owners.
27.5 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 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. Actual results may differ
from these estimates under different assumptions and conditions and
may materially affect financial results or the financial position reported
in future periods.
The areas involving a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant to the financial
statements are detailed below:
(a.) Determination of market value of biological assets – see note 3
(b.) Write off of inventories – see note 4
(c.) Impairment of debtors – see note 8
(d.) Impairment of joint venture receivables – see note 22
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:
•
Assets and liabilities for each statement of financial position
presented are translated at the closing rate at the date of that
statement of financial position;
Income and expenses for each statement of profit or loss
and other comprehensive income are translated at average
exchange rates;
and all resulting exchange differences are recognised as a
separate component of equity.
•
•
On consolidation, exchange differences arising from the translation
of any net investment in foreign entities, and of borrowings and other
currency instruments designated as hedges of such investments,
are taken to shareholders’ equity. When a foreign operation is sold
or borrowings are repaid, a proportional share of such exchange
differences are recognised in the statement of profit or loss and other
comprehensive income as part of the gain or loss on sale.
When required by Accounting Standards, comparative figures have
been adjusted to conform to changes in presentation for the current
financial period.
27.8 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.
27.9
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 18.
27.10 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.
27.11 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.
28. Events occuring after the reporting period
There have been no material events since the end of the financial year.
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For personal use only Atlas Pearls and Perfumes ltd and its subsidiaries
DIRECTORS’ DECLARATION
Atlas Pearls and Perfumes ltd and its subsidiaries
AUDITORS REPORT
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
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)
(ii)
give a true and fair view of the consolidated entity’s financial position as at 30 June 2017 and of the performance for the
period ended on that date; and
comply with Accounting Standards, and the Corporations Regulations 2001 and other mandatory professional reporting
requirements.
the Company has included in the notes to the financial statements an explicit and unreserved statement of compliance with
International Financial Reporting Standards.
the Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer required by section 295A.
in the Directors opinion there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable.
the remuneration disclosures included in the Directors’ Report (as part of audited remuneration report) for the period ended 30 June
2017 comply with section 300A of the Corporations Act 2001.
(b.)
(c.)
(d.)
(e.)
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
28 August 2017
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For personal use only
Atlas Pearls and Perfumes ltd and its subsidiaries
AUDITORS REPORT
Atlas Pearls and Perfumes ltd and its subsidiaries
AUDITORS REPORT
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
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For personal use only Atlas Pearls and Perfumes ltd and its subsidiaries
AUDITORS REPORT
Atlas Pearls and Perfumes ltd and its subsidiaries
ADDITIONAL ASX INFORMATION
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
The following additional information is required by the Australian Securities Exchange. The information is current as at 13 September 2017.
(a.) Distribution schedule and number of holders of equity securities as at 13 September 2017
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – and over
Fully Paid Ordinary
Shares (ATP)
Unlisted Options –
5.9c 31/12/18
129
-
404
-
311
-
806
-
371
4
Total
2,021
4
The number of holders holding less than a marketable parcel of fully paid ordinary shares as at 13 September 2017 is 1,037.
(b.) 20 Largest holders of quoted equity securities as at 13 September 2017
The names of the twenty largest holders of fully paid ordinary shares (ASX code: ATP) as at 13 September 2017 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
CHEMCO SUPERANNUATION FUND PTY LTD
RAINTREE PEARLS & PERFUMES PTY LTD
SP & K BIRKBECK HOLDINGS PTY LTD
JINGIE INVESTMENTS PTY LTD
ABERMAC PTY LTD
ARROW PEARL CO PTY LTD
WESTWOOD PROPERTIES PTY LTD
FARJOY PTY LTD
MR NELSON MICHEL PIERRE ROCHER
FIVE TALENTS LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
MR PAUL MICHAEL BUTCHER
CHEMBANK PTY LIMITED
FORSYTH BARR CUSTODIANS LTD
COAKLEY PASTORAL CO PTY LTD
MISS KRISTIE BIRKBECK
QUEENSRIDGE INVESTMENTS PTY LTD
MR TIMOTHY JAMES MARTIN
MS JENNIFER MICHELLE ROUGHAN
TOTAL
53,048,882
32,400,000
22,339,228
20,529,202
17,880,240
17,833,333
13,809,707
8,000,000
7,099,412
6,712,185
5,620,000
5,486,717
5,000,000
5,000,000
4,880,651
4,744,717
3,818,536
3,549,072
3,540,883
3,360,000
12.40
7.57
5.22
4.80
4.18
4.17
3.23
1.87
1.66
1.57
1.31
1.28
1.17
1.17
1.14
1.11
0.89
0.83
0.83
0.79
244,652,765
57.19
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For personal use only
Atlas Pearls and Perfumes ltd and its subsidiaries
ADDITIONAL ASX INFORMATION
FOR THE YEAR ENDED 30 JUNE 2017
Stock Exchange Listing – Listing has been granted for 427,871,758 ordinary fully paid shares of the Company on issue on the Australian Securities
Exchange.
The unquoted securities on issue as at 13 September 2017 are detailed below in part (d).
(c.) Substantial shareholders
Substantial shareholders in Atlas Pearls and Perfumes Limited and the number of equity securities over which the substantial shareholder has a
relevant interest as disclosed in substantial holding notices provided to the Company are listed below:
NAME
Boneyard Investments Pty Ltd & Associates *
Raintree Pearls & Perfumes Pty Ltd & Associates **
SHARES
112,345,667
30,090,855
% VOTING POWER
27.09%
13.12%
*
**
Includes shares held by Boneyard Investments Pty Ltd, Chemco Superannuation Fund Pty Ltd, Jingie Investments Pty Ltd, T. Martin, T. & W. Martin, J. Martin and J & B Martin.
Includes shares held by Raintree Pearls & Perfumes Pty Ltd and SP & K Birkbeck Holdings Pty Ltd .
(d.) Unquoted Securities
The number of unquoted securities on issue as at 13 September 2017:
SECURITY
Unlisted options exercisable at 5.9 cents, on or before 31 December 2018.
NUMBER ON ISSUE
5,500,000
(e.) Holder Details of Unquoted Securities
All unquoted securities were issued under an employee incentive scheme. Therefore, no disclosure is required in relation to people that hold
more than 20% of a given class of unquoted securities as at 13 September 2017.
(f.) Restricted Securities as at 13 September 2017
There were no restricted securities on issue as at 13 September 2017.
(g.) Voting Rights
All fully paid ordinary shares carry one vote per ordinary share without restriction.
Unquoted options have no voting rights.
(h.) On-Market Buy-back
The Company is not currently performing an on-market buy-back.
(i.) 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 https://www.atlaspearls.com.au/pages/corporate-governance .
- Page 61 -
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BALI, Seminyak
FARM BOUTIQUES
NORTH BALI, Penyabangan
FLORES, Labuan Bajo, Pungu Island
RAJA AMPAT, Alyui Bay
FARMS
EAST NUSA TENGGARA, Lembata Bay
EAST NUSA TENGGARA, Alor Bay
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