A T L A S P E A R L S L T D - A S X : A T P - A N N U A L R E P O R T 2 0 2 3
Producing the world’s finest South Sea pearls sustainably
and respectfully, while caring for our environment, people,
communities, and shareholders.
- C H A I R M A N ’ S A D D R E S S -
Dear fellow Shareholders, on behalf of the Board of Directors of Atlas
Pearls Ltd, I am pleased to present to you the Company’s 2023 Annual
Report.
FY23 was a year of significant achievements for the Company with
sales in excess of $27.2M, normalised EBITDA (earnings before interest
and tax) of $9.8M, and retirement of the $1.1M final tranche of the
Boneyard debt facility, leaving the Company free of debt and with a
cash balance of $7.8M at financial year end.
Continuing strong demand and high prices for South Sea pearls was a
major contributor to the record performance which, combined with the
wider reach and more competitive on-line sales platform, saw prices in
some categories two to three times higher than in the recent past.
Results would have been significantly better if the annual harvest
of pearls had aligned more closely with the historical trend of the
internal quality index measure. However, a portion of the quality issue
is attributable to smaller pearl size rather than imperfections on the
traditional grading scale, and these smaller but otherwise high-quality
pearls have ready markets in both China and Japan.
Pearl quality, which was thought to be impacted by a particular
breeding cohort, reached a low point in the middle of the year. We
have seen a stabilisation and modest improvement in recent months,
with some harvests featuring broodstock from third parties crossed
with our own population. These will be important markers for the
breeding research work initiated during FY23.
2 | ATLAS PEARLS | Annual Report 2023
Our improved financial position has enabled the Company to position
itself for future growth by:
•
Appointing new key personnel to fill some strategic gaps in the
management team.
Commencing the scoping and design of a new vessel to improve
productivity.
Better understanding our markets and identifying the
opportunities to grow into them.
Commencing negotiations to acquire a new farm site.
Formalising our extensive environmental, social and governance
(ESG) program to better communicate to all stakeholders the
considerable work we do within the communities where we
operate.
•
•
•
•
Understandably, our shareholders have raised questions around
capital management prospects, given our improved performance.
The Board has not formulated a dividend policy at this time, due to
the inherent uncertainties of aquaculture, the need to fund future
operating costs between sales events, and the cyclical swings
typical in the luxury goods market. However, in view of the positive
earnings reported this year, the Board has resolved to declare a special
dividend of 0.35 cents per share (franked to 100%) and payable on 26
September 2023. We will continue to evaluate a dividend policy, but
for now consider that the payment of special dividends will be the
preferred policy, as and when favourable market circumstances allow.
The last few years have seen a remarkable turnaround in the
Company’s fortunes, and I want to thank all of our employees for their
contribution to our significantly improved financial position. I also
want to thank our shareholders who have stuck with us through the
lean years, and I look forward to your ongoing support.
Sincerely
Geoff Newman
Chairman - 30 August 2023
- C H A I R M A N ’ S A D D R E S S -
- C E O R E V I E W O F O P E R A T I O N S -
- C E O R E V I E W O F O P E R A T I O N S -
Operationally, it was a strong
production year with the
number of pearls harvested
exceeding 540,000. Improved
profits were as a result of
the strong market demand,
where average price increased,
coupled with a lower cost of
goods sold for the year vs FY22.
This profit result was aided by a reduction in aggregated capitalised
costs of oysters across the four-year growth cycle. This current four-year
cycle included the period of COVID-19, during which our Company
implemented a low-cost model to ensure we were as lean as possible.
While we recognise that this necessary approach is not a sustainable
long-term strategy, it is important to note that the combination of
higher average prices and reduced production costs contributed
significantly to gross margin, and consequently, our profit result.
As indicated in last year’s report, the quality of pearls produced in
the second half of FY22 trended downwards. This trend has persisted
throughout the current year, primarily driven by a decline in the
average pearl size in H1. This reduction in size significantly impacts our
perception of quality and how it is measured.
Although we have seen a stabilisation and modest improvement in
this measure over H2 FY23, there remains work to be done. During
the year the uptick in global demand for pearls has resulted in price
increases. These price increases have more than offset the reduction
in average size, leading to the attainment of our highest average price
for pearls in many years.
As foreshadowed in last year’s report, we have repaid the last of our
outstanding debt of $1.125M, concluding the year in a strong financial
position, with cash in the bank of $7.8M. Furthermore, we have
successfully secured an increase of our overdraft facility to $2.5M to
provide us with working capital flexibility to better manage our sales
cycles and to maximise opportunities.
In view of the improved results in FY23 the Board has resolved to
declare a special dividend of 0.35 cents per share (franked to 100%)
and payable on 26 September 2023.
Atlas’ Pearls performance over the year is largely attributable to the
ongoing work and dedication of the entire team across all facets of
the business. Their collective efforts were instrumental in executing
the initiatives that we identified from an operational and sales
perspective. This year, we held two impactful workshops convening
senior leaders from operations, sales, and finance. These sessions were
pivotal in determining the strategic focal points essential for realising
our operational budget goals, whilst also aligning with our longer-
term strategy, and are now a permanent fixture in our annual calendar
of events.
SALES INITIATIVES
Atlas Pearls is committed to building and executing a strategy that
positions us as a multi-channel distribution company, that looks
to maximise the value of every pearl that we grow and harvest.
This includes our traditional auctions, which have been refined to
now be hybrid auctions, allowing customers to physically inspect
goods, whilst also allowing remote participants to engage through
our online platform. Beyond auctions, pearls are made available for
purchase online between events, which has increased customer
reach and created competitive tension. This online visibility has
generated opportunities to new markets and customers. Furthermore,
over the course of the year, we re-engaged with our Australian and
international wholesale customers to offer a range of value-add
products comprising matched pairs, pearl strands, and a selection of
loose pearls.
We have reopened our farm retail operations at North Bali and
Alyui. To further expand our retail presence, we eagerly anticipate
the reopening of the Pungu retail store in early FY24. Additionally,
we are developing a ‘Farm Tour’ experience for our customers that
will provide them with invaluable insights into the intricacies of
pearl farming and granting a glimpse into our operations. Beyond
the technical aspects, this tour also serves as a conduit to highlight
the sustainability of pearls and our operations, showcasing our
commitment to the environment, our workforce, and all stakeholders.
This immersive experience will epitomise our aspiration to foster a
connection between our customers, our pearls, and our collective
vision for a sustainable future.
OPERATIONS INITIATIVES
Over the year, progress has been made in a series of pivotal
improvements and strategic initiatives aimed at achieving consistency
in pearl quality, and improving operational efficiency and productivity.
They align with our long-term growth strategy and include:
GENETICS AUDIT
We have a genetics program to understand the breadth of diversity
within our broodstock. This initiative commenced with the sampling
of approximately 3,500 oysters to enable genetic sequencing of the
oysters. This data will be used in a breeding matrix to maximise the
diversity of our broodstock to strategically optimise crosses on an
individual basis. While this is a long-term project, spanning five to
eight years before it will drive substantial change and improvement,
it will enrich our understanding and enhancement of oyster genetics.
The outcomes of this initiative will pave the way for tangible benefits
for our business going forward in the short and longer term.
Annual Report 2023 | ATLAS PEARLS | 5
CONDITIONING SYSTEM
In pursuit of better gamete conditioning during spawning, we have
embarked on trials for an advanced ‘conditioning system’. Through
these trials, we aim to establish robust processes that facilitate
enhanced control over our spawning cohorts’ physical condition. This
will empower us to select oysters from specific families for targeted
crossbreeding, thereby further leveraging the benefits of the genetic
audit. This initiative underscores our commitment to staying at the
forefront of technological and genetic innovation.
DATA CAPTURE
We’ve initiated a data capture project to centralise, in a cloud-hosted
database, almost 250 unique data fields over the four-year life cycle
of each production cohort. The aim is to consolidate all the data
points that we have across multiple farms and hatcheries into the
centralised database. This concerted effort will enable us to extract
actionable insights to facilitate informed decisions going forward. In
addition to capturing real-time data, we’ve embarked on the tedious
but necessary step of inputting historical data. This will equip us with
the means to monitor trends and outcomes in certain key areas of our
operations, ushering in data-driven precision to our endeavours.
ESG/SUSTAINABILITY AND COMMUNITY ENGAGEMENT (CSR)
Atlas Pearls has a longstanding commitment to supporting
our villages, stakeholders, and communities around our farms.
Recognising our role as both neighbours and key employers in our
operational areas, we have embarked on the early stages of an ESG
(Environmental, Social, and Governance)/sustainability initiative.
This will build on the foundation of existing data concerning our
environmental impact and ongoing environmental initiatives. The
initiative’s scope includes the establishment of a centralised co-
ordination and measurement system for our already substantial
Corporate Social Responsibility (CSR) programs, as well as our
continuous improvement in the realms of ESG and sustainability.
NEW OPERATIONS VESSEL
Following preliminary Board approval, we will start shortly
construction of a steel vessel that will replace some of our aging fleet.
This new vessel is designed to replace existing vessels responsible for
transporting seeded shell from our hatcheries and nurseries to our
designated grow-out sites. Beyond transportation, it is engineered to
facilitate on-board oyster harvesting and seeding activities, within an
enhanced
6 | ATLAS PEARLS | Annual Report 2023
operating environment. The vessel will also offer accommodations for
our technical team who go from site to site performing crucial harvest
and seeding operations. This investment underscores our dedication
to leveraging technology for improved efficiency, operational
excellence, and a heightened working environment. It will also reduce
the capital intensity at new sites as the mobile infrastructure can
service multiple sites due to our staggered harvesting schedules.
NEW SITE DISCUSSIONS
We are currently engaged in discussions regarding a potential new
farming site. Although our discussions have yielded promising
results thus far, there remain some governmental and administrative
approvals to be navigated before the finalisation of this endeavour.
Our commitment to rigorous due diligence is evident as we work to
secure all necessary approvals and pave the way for this exciting new
venture. Once approvals are received, we will start to build seeded
oyster stocks at this grow-out site, but we will not see harvested pearls
from this operations until FY26.
We acknowledge the hard work and dedication from our committed
management team who have demonstrated exceptional
commitment in executing the strategy into tangible actions, and
deftly navigating through periods of change. It is important to
emphasise that Atlas Pearls thrives on a culture of continuous
improvement and evolution, not just in terms of the perspective of
our standard operating procedures related to our oysters, but also in
how we view and measure the key aspects of our business.
Our focus remains on the production and distribution of the highest
quality, ethically produced, and luxurious pearls in the world, a
testament to our commitment to both uncompromising luxury
and responsible practices that safeguard our environment and the
communities we touch.
Michael Ricci
CEO - 30 August 2023
Oyster nursery North Bali farm site.
- A B O U T A T L A S P E A R L S -
Over the past 30 years, Atlas Pearls has become one of the world’s
largest producers and distributor of the highly sought-after,
white and silver South Sea pearls. Operating across 7 farming locations
throughout the South Seas, the Company employs more than 1,200
people and in 2023 harvested more than 540,000 pearls.
Atlas Pearls commenced farming in 1993, with its first farm located
in Kupang - East Nusa Tenggara and has since gone on to establish
a total of 7 farming sites. These locations stretch from the national
parks of East Java and as far east as Alyui Bay, Raja Ampat.
Atlas Pearls operates on the fundamental principles of producing the
most valued South Sea pearls through ethical, sustainable, and non-
extractive processes whereby each pearl is direct from the source.
Through rigorous breeding programs, the Company is able to
maintain a supply of healthy, genetically managed oyster stocks,
which can then be transported to different farm sites where they
grow into healthy mature oysters ready for pearl production.
The movement of oysters between farm sites also enables stock to
be positioned in the best possible conditions for their growth, and
diversifies the risk of environmental risk factors such as algae and
water temperature changes.
With oysters thriving in pristine waters, each farm site works tirelessly
with staff and the local community to continuously improve and
maintain the health of the oceans in which we operate. Through
education and active participation in a range of environmental
programs, benefits to both the pearls and local communities are
observed.
Working across such great distance relies heavily on the support
of our experienced workforce of more than 1,200 people. Each
farming operation requires a dedicated team who work directly with
the oysters from seeding, cleaning, maintaining, and harvesting,
alongside operational staff who perform the roles of security,
maintenance, engineering, catering, and administration. For many,
these remote farm sites provide invaluable employment and training.
South Sea pearl farming is a delicate balance of nature and nurture as
the Company continues to strive to supply the best quality pearls to
the market, whilst leaving a positive environmental footprint.
Annual Report 2023 | ATLAS PEARLS | 9
Financial report highlights 2023
Chart Title
The Company currently employes more
than 1,200 staff across 2 offices and 7
pearl farms.
Expatriates - Indonesia
Australia
Indonesian Nationals (permanent)
Indonesian Nationals (part time)
The current gender
breakdown across the
Company’s personnel is
36% Female and 64%
Male.
36%
64%
Expatriates – Indonesia
Indonesian nationals – permanent
547,755 pearls were
harvested in FY23.
Indonesian nationals – part time
Australia
$6.2m
Record revenue
achieved at a single
sales event.
4%
The Company currently has a combined total of
2,865,641 juvenile and mature
oysters, an increase of 4% since 2019.
2019
2020
2021
2022
2023
Pearl production has increased by 16%
since 2019 to 547,755 in 2023.
Nucleated oyster stocks have increased 17%
from 2019 to 1,349,236 in 2023.
2019
t
2020
t
2021
t
2022
t
2023
t
4%
Atlas Pearls‘ shift to a more diversified distribution channel has seen
an overall change in customer geographical regions as the Company
continues to adjust it‘s sales strategy.
Operating expenses have increased
4% from 2019 to $6.5M in 2023.
10 | ATLAS PEARLS | Annual Report 2023
Summary of fiscal indicators
Revenue from contracts with customers
Net profit after tax
Tax expense
Finance/interest net costs
Depreciation and amortisation
Net foreign exchange loss
Agriculture standard revaluation (gain)
Normalised EBITDA1
EBITDA margin
Basic earnings per share (cents)
Cash and cash equivalents
Assets
NTA
NTA per share (cents)
Debt (current and non-current)
Shareholder funds
Debt/shareholder funds (%)
Number of shares on issue (million)
Share price at year end (cents)
30 JUNE 23
$’000
30 JUNE 22
$’000
27,200
9,088
626
60
291
382
(641)
9,805
36%
2.14
7,845
40,066
34,084
8.0
-
21,508
4,592
836
238
312
612
(2,336)
4,254
20%
1.08
2,995
31,516
24,356
5.7
1,125
34,084
24,375
0%
427.9
4.2
5%
427.9
3.6
1.
Atlas Pearls uses ‘normalised EBITDA’ to comment on its financial performance and is used internally to evaluate performance. Normalised EBITDA is a non-IFRS financial measure. Non-IFRS
measures of financial performance are unaudited. Refer to note 5 for a reconciliation to statutory earnings.
Annual Report 2023 | ATLAS PEARLS | 11
Directors’ Report
The Directors present their report on the consolidated entity consisting of Atlas Pearls Ltd and the entities it controlled at the end of, or during, the
year ended 30 June 2023. Referred to hereafter as, the Company, Atlas Pearls, or the Group.
Directors
1.
The following were Directors of Atlas Pearls for all of the financial year and up to the date of this report.
GEOFFREY (Geoff) NEWMAN | BEc (Hons), MBA, FCPA, FAICD
CHAIRMAN
TIMOTHY (Tim) MARTIN | BA, MBA, GAICD
NON-EXECUTIVE DIRECTOR
Geoff has more than 30 years’ experience in finance, marketing, and
general management roles within the resources sector.
In 1995, after managing Bunnings Pulpwood operations, he joined
Coogee Chemicals Pty Ltd as Commercial Manager and was
appointed to the Board as Finance Director the following year.
Until August 2005, Geoff was Finance Director/Chief Financial Officer
and Company Secretary of both Coogee Chemicals Pty Ltd and its oil
and gas subsidiary, Coogee Resources Pty Ltd, before retiring from the
Coogee Group in June 2006.
APPOINTMENTS:
Chairman - 13/07/2022
Executive Chairman - 01/10/2019
Chairman - 16/02/2015
Director - 15/10/2010
Directorships of other listed companies held in the last three years: Nil
CADELL BUSS | MBA, MPM, GAICD
INDEPENDENT NON-EXECUTIVE DIRECTOR
Cadell is a multi-industry senior executive with over 20 years’
experience locally and internationally in marketing, project
development, and equity capital markets.
Cadell was the CEO of Western Australia’s longest serving stockbroking
firm, DJ Carmichael, and has consulted to a number of ASX listed
companies with African-based assets. Cadell was previously Project and
Finance Director with Luso Global Mining, an angel investor to African-
based mining and exploration companies. Cadell is also the founder
and Managing Director of Chilwa Minerals Limited (ASX: CHW).
Cadell has a Masters degree in Project Management, an MBA from
Murdoch University, Perth, and is a graduate of the Australian Institute
of Company Directors.
APPOINTMENTS: Director - 01/02/2018
Directorships of other listed companies held in the last three years:
Chilwa Minerals Limited (Managing Director appointed 01/02/2022)
12 | ATLAS PEARLS | Annual Report 2023
Tim has been an executive manager at Coogee Chemicals Pty Ltd
since 2005. He 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.
In 2013, Tim graduated from Harvard University completing their OPM
(Owner/President Management) Program.
Tim is a former Director of Plastics and Chemicals Industries Association
(PACIA) and a former Director of the Kwinana Industries Council.
APPOINTMENTS: Director - 04/02/2013
Directorships of other listed companies held in the last three years: Nil
JOSÉ MARTINS | BAcc, GAICD
INDEPENDENT NON-EXECUTIVE DIRECTOR
José is a highly regarded finance executive with over 25 years’
experience in the management of public and private companies.
He has previously held CFO roles with Macmahon Holdings
Limited, Ausdrill Limited (now part of Perenti), and Alliance Mining
Commodities Limited.
José qualified as a Chartered Accountant in South Africa, and holds
a Bachelor of Accountancy (with distinction) from the University of
Witwatersrand, Johannesburg, and is a graduate of the Australian
Institute of Company Directors.
APPOINTMENTS: Director - 17/05/2023
Directorships of other listed companies held in the last three years:
GenusPlus Group Limited (Non-Executive Director appointed 03/01/2018)
2.
Company Secretary
SUSAN PARK | BCom, ACA, F Fin, FGIA, FCG, GAICD
COMPANY SECRETARY
Susan has over 25 years’ experience in the corporate finance sector.
She is the founder and Managing Director of consulting firm, Park
Advisory, which specialises in the provision of corporate governance
and company secretarial advice to ASX listed companies, and has held
senior executive roles at Ernst & Young and PricewaterhouseCoopers
in the Corporate Finance divisions, and at Bankwest in the Strategy
and Ventures division. Susan holds a Bachelor of Commerce from the
University of Western Australia majoring in Accounting and Finance, is
a Member of the Chartered Accountants Australia and New Zealand, a
Fellow of the Financial Services Institute of Australasia and a graduate
Member of the Australian Institute of Company Directors. She is also
a Fellow of the Governance Institute of Australia and the Chartered
Governance Institute.
APPOINTMENTS: Company Secretary - 19/12/2012
Indonesia
Alyui Bay
Banyubiru
North Bali
Pungu
West
Lembata
Lembata
Alor
The South Seas
1. EAST JAVA, Banyubiru
2. NORTH BALI, Penyabangan
3. FLORES, Labuan Bajo, Pungu Island
4. EAST NUSA TENGGARA, West Lembata
5. EAST NUSA TENGGARA, Lembata Bay
6. EAST NUSA TENGGARA, Alor Bay
7. RAJA AMPAT, Alyui Bay
ATLAS PEARLS FARMING OPERATIONS
Pearling Operations
Australia
3.
3.1
Principal activities
PRINCIPAL ACTIVITIES
5.
5.1
Financial review
SHAREHOLDER RETURNS
Atlas Pearls produces South Sea pearls, with pearling operations
located throughout Indonesia (refer 3.2). Pearls produced are sold
through a multi-faceted distribution network. No significant changes
in the nature of Atlas Pearls principal activities occurred during the
year ended 30 June 2023.
3.2
ABOUT ATLAS PEARLS
Over the past 30 years Atlas Pearls has become one of the world’s
largest producers of the highly sought after white and silver South Sea
pearls. Operating across 7 farming locations throughout the South
Seas and employing more than 1,200 people, the Company harvested
more than 547,755 pearls this year.
Net profit after tax
Basic EPS (cents)
Dividends paid
Dividends (per share) (cents)
30 June
2023
$’000
30 June
2022
$’000
30 June
2021
$’000
9,088
2.14
Nil
Nil
4,592
1.08
Nil
Nil
6,720
1.58
Nil
Nil
The adjustments from net profit after tax to arrive at reported
normalised EBITDA for these years are shown below:
4.
Directors’ meetings
The attendance at meetings of the Company’s Directors including
meetings of committees of Directors is shown below:
Net profit after tax
Tax expense
Interest net costs
Director
Period
Directors’ meetings
Depreciation and amortisation
Meetings
held whilst in
office
Attended
Geoff Newman
1 July 22 - 30 June 23
Tim Martin
1 July 22 - 30 June 23
Cadell Buss
1 July 22 - 30 June 23
José Martins
1 July 22 - 30 June 23
5
5
5
-
5
5
5
-
30 June
2023
$’000
30 June
2022
$’000
30 June
2021
$’000
9,088
4,592
626
60
291
382
836
238
312
612
6,720
1,356
444
473
445
Net foreign exchange loss
Agriculture standard revaluation (gain)
(641)
(2,336)
(3,989)
Other non-operating expenses
-
-
Normalised EBITDA
9,805
4,254
180
5,628
Annual Report 2023 | ATLAS PEARLS | 13
Directors’ Report
5.2
FINANCIAL POSITION
Total assets
Debt (current and non-current)
Other liabilities
Shareholder funds / net assets
Debt / shareholder funds
Number of shares on issue (million)
Net tangible assets per share (cents)
Share price at reporting date (cents)
30 June
2023
$’000
30 June
2022
$’000
30 June
2021
$’000
40,066
-
(5,982)
34,084
0%
427.9
8.0
4.2
31,516
(1,125)
(6,016)
24,375
5%
427.9
5.7
3.6
28,052
(4,199)
(5,428)
18,425
23%
427.9
4.3
1.5
There has been an increase in the net assets of the Group of $9.7M in
the year ended 30 June 2023 (30 June 2022: $6M increase).
5.2.1 OPERATING RESULTS
The Company is pleased to announce a net profit before tax of $9.7M
and a reported inflow of cash from operating activities for the year
ended 30 June 2023 of $8.4M.
Atlas Pearls continued evolving its sales distribution plan, learning
from each sales event and enhancing the current strategy to meet its
customer’s needs, ensuring each pearl is reaching its potential.
At an operational level, the farms continue to work assiduously to
ensure oyster health is optimised. The passion and dedication shown
by all employees translates to beautiful, coveted, South Sea pearls.
The operating revenue for the year ended 30 June 2023 was
$27.2M, an increase of $5.7M on prior year (30 June 2022: $21.5M).
Administration, finance, and marketing expenses were $6.5M, an
increase of $0.8M on prior year (30 June 2022: $5.7M).
5.2.2 REVIEW OF OPERATIONS
5.2.2.1 PEARLING
The Company harvested 547,755 pearls during the period.
The downward trend in pearl quality reported in last year’s annual repot
persisted, primarily driven by a decline in the average size of the pearls
produced in H1. It should be noted that the inherent quality remains
good, however, the reduction in average size has exerted a downward
pressure on the overall weight sold in FY23. Further upside is possible
in FY24 with some harvests featuring broodstock from third parties
crossed with our own population.
5.2.2.2
PEARLING VALUE ADDED
Atlas Pearls continues to review and refine its sales strategy with the
core objective of ensuring each pearl achieves maximum return. This
strategy involves directing pearls through different sales channels
whilst also being available online to reach customers globally. This
hybrid approach achieves not only reach but competitive tension
across the different markets. The Company will continually review and
refine to adapt to changing markets.
For a detailed review of operations please refer to the CEO’s review of
operations on page 5.
5.2.3 AUDIT OPINION
The financial report has been audited independently and received an
unmodified opinion. Refer to page 22 for the Independent Auditors
Report and page 55 onwards for the Auditors Opinion.
14 | ATLAS PEARLS | Annual Report 2023
5.2.4 PERSONNEL
Staff numbers at the end of the year were as follows:
INDONESIAN NATIONALS PART TIME - 675
EXPATRIATES
INDONESIA - 20
INDONESIAN NATIONALS PERMANENT - 521
AUSTRALIA - 14
Dividends
6.
In view of the positive earnings reported for the year ended 30 June
2023, the Board has resolved to declare a special dividend of 0.35
cents per share (franked to 100%). No dividends were declared or paid
during the year ended 2023 or in the previous financial year.
The Board has not formulated a dividend policy due to the inherent
uncertainties of aquaculture, the need to fund future operating costs
between sales events, and the cyclical swings typical in the luxury
goods market. The Board will continue to evaluate a dividend policy,
however the payment of special dividends will be the preferred policy,
as and when favourable market circumstances allow.
Key dates:
•
Record date for determining entitlement to special dividend:
05 September 2023
Date the special dividend is payable: 26 September 2023
•
Events since the end of the financial year
7.
On 30 August 2023, the Company declared a final fully franked special
dividend of 0.035 cents per share. The total value of the payment is
$1.5M. The record date is 05 September 2023 with a payment date of
26 September 2023.
Other than the matter disclosed above, there have been no other
significant events after balance date which require disclosure.
Likely developments and expected
8.
results of operations
The Company endeavours to host oysters in optimal growing
locations whilst creating diversification for risk mitigation.
The Company remains committed to the multi-faceted approach to
the distribution of the pearls, with the plan to continue increasing
customer reach.
9.
The relevant interest of each current Director in the share capital of
the Company, as notified by the Directors to the Australian Securities
Exchange in accordance with S205G (1) of the Corporations Act
2001, at the date of this report, are detailed in Section 14.5.3 of the
Remuneration Report.
Directors’ interests
10. Options
During the year ended 30 June 2023, there were no unquoted options
issued to employees (30 June 2022: 18,758,055), pursuant to the Atlas
Pearls Ltd Employee Share and Incentive Plan.
Refer to note 23.2 for further information.
11.
Indemnification and insurance of
Directors and officers
11.1
INDEMNIFICATION
The Company has agreed to indemnify all current and former
Directors and officers of the Company against all liabilities to another
person (other than the Company or a related body corporate) that
may arise from their position as Directors and officers of the Company,
except where the liability arises out of conduct which involves
negligence, default, breach of duty, or a lack of good faith. The
agreement stipulates that the Company will meet the full amount of
any such liabilities, including costs and expenses.
11.2
INSURANCE PREMIUMS
During the financial year the Company has paid insurance premiums
of $33,244 (30 June 2022: $27,750) in respect of Directors’ and officers’
liability and legal expenses insurance contracts, for current and former
Directors and officers.
12. Audit and 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 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 or services
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 Company, its related practices and non-related audit
firms during the year ended 30 June:
30 June
2023
$
30 June
2022
$
BDO AUSTRALIAN FIRM
Audit and review of financial reports
119,710
96,370
ESG consulting services
BDO INDONESIAN FIRM
16,995
-
Audit and review of financial reports
49,377
52,562
Total remuneration for audit services
169,087
148,932
Total remuneration for other services
16,995
-
13. Proceedings on behalf of the company
No person has applied under section 237 of the Corporations Act 2001
for leave of court to bring proceedings on behalf of the Company or
to intervene in any proceedings to which the Company is a party for
the purpose of 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 year.
14. Remuneration report (audited)
The Directors are pleased to present your Company’s 2023
remuneration report, which sets out remuneration information for
Atlas Pearls’ Directors and other Key Management Personnel. The
information provided in this Remuneration Report has been audited
as required by section 308(c) of the Corporations Act 2001.
Name
Directors
Position
Geoff Newman
Executive Chairman, from 1 October to 12 July 2022
Non-Executive Chairman, from 13 July 2022
Tim Martin
Cadell Buss
José Martins
Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director, appointed 17
May 2023
Other Key Management Personnel
Michael Ricci
Chief Executive Officer
Mark Longhurst
Chief Operations Officer, resigned 31 December 2022
Diana Kubicki
Chief Financial Officer, resigned 09 June 2023
Gemma Cann
Chief Financial Officer, appointed 17 July 2023
14.1 REMUNERATION GOVERNANCE
14.1.1 ROLE OF THE BOARD IN REMUNERATION GOVERNANCE
Remuneration governance is the responsibility of the full Board.
Primary responsibilities include recommendations for;
•
•
Non-Executive Director fees,
Remuneration levels of Executive Directors and other Key
Management Personnel,
The overarching Executive remuneration framework and the
operation of incentive plans, and
Key performance indicators (‘KPIs’) and performance hurdles for
the Executive team.
•
•
The objective is to ensure that remuneration policies and structures
are fair and competitive, and are aligned with the long-term interests
of the Company.
Assessing performance and claw-back remuneration
KPIs are set annually, with a certain level of consultation with Key
Management Personnel. The measures are specifically tailored to
the area everyone is involved in and has a level of control over. The
KPIs target areas the Board believes hold greater potential for group
expansion and profit, covering financial and non-financial, as well
as short and long-term goals. The level set for each KPI is based on
budgeted figures for the Group and respective industry standards.
Performance in relation to the KPIs is assessed annually, with bonuses
being awarded depending on the number and deemed difficulty of
the KPIs achieved. Following the assessment, the KPIs are reviewed
by the Board considering the desired and actual outcomes, and their
efficiency is assessed in relation to the Group’s goals and shareholder
wealth, before the KPIs are set for the following year.
In the event of serious misconduct or a material misstatement
in the Company’s financial statements, the Board may cancel or
defer performance-based remuneration and may also claw-back
performance-based remuneration paid in previous financial years.
Annual Report 2023 | ATLAS PEARLS | 15
Directors’ Report
14.1.2 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 $500,000 (30 June 2022: $500,000) which is periodically
recommended for approval by shareholders. This limit was approved
by shareholders at the Extraordinary General Meeting on 29 April
2022. In the year ending 30 June 2023, the total Non-Executive
Directors’ fees including retirement benefit contributions were
$312,809 (30 June 2022: $122,578).
The base fees for Non-Executive Directors are $72,150 per annum
(inclusive of superannuation) (30 June 2022: $71,825 (inclusive of
superannuation)).
14.1.3 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.
•
•
•
Executive remuneration framework has three components;
•
•
Base pay and benefits
Short-term performance incentives (refer section 14.3 for
individual detail), and
Long-term incentives through participation in the Atlas Pearls Ltd
Employee Share and Incentive 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.
The Atlas Pearls Ltd Employee Share and Incentive Plan (Plan) provides
some senior executives with incentive over and above their base
salary (refer section 14.2). The allocation of shares or options under the
Plan is not subject to performance conditions of the Company. The
reasons for establishing the Plan were:
•
To align the interests of senior executives with shareholders.
The Plan 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.
•
Short-term Incentives
The Atlas Pearls’ Ltd Salaried Employee Bonus Scheme (‘STI Plan’)
is maintained as the primary financial reward for employee
performance. The underlying principle of the STI Plan is;
The greater a salaried employee’s ability to influence overall group and
individual department results, the greater the “at risk” component of
their remuneration package should be.
The employee’s designated bonus level is expressed as percentage of
base salary and determines the maximum bonus payment possible
for the employee year-on-year. Calculation of the employee’s actual
bonus payment takes into consideration:
•
•
•
the business results of the Company overall;
the results of the department in which the participant works;
the employee’s individual results against their established
quantitative and qualitative KPIs.
The Board shall retain absolute discretion over how the bonus
program operates, who participates in it, and all bonus payments
generated by it.
The structure of the STI Plan relating to senior executives is outlined in the table below:
Feature
Description
Max opportunity
CEO: 15% of FTE fixed remuneration
Other senior executives: 15% of fixed remuneration
The STI metrics align with the Group’s strategic priorities of market competitiveness, operational excellence, shareholder value, and
fostering talented and engaged people.
Performance metrics
Metric
Target
Weighting
Reason for selection
Consolidated EBITDA
Budget1
Individual performance
metrics
Specific to
individuals2
70%
30%
Reflects improvements in both revenue and cost control
Targeted metrics have been chosen that are critical to individual roles and
which support the Group’s strategic objectives.
Delivery of STI
100% of the STI award is paid in cash no later than three months following the end of the financial year.
Board discretion
The Board has discretion to adjust remuneration outcomes up or down to prevent any inappropriate reward outcomes.
1.
2.
The budget for consolidated EBITDA is set as a dollar figure by the Board on an annual basis. The actual EBITDA results achieved are expressed as a percentage of the relevant budget figure.
The bonus outcomes are calculated on a sliding scale, with the minimum payment at 90% of budget and maximum payment at 115% of budget
Individual KPIs are established and agreed between the employee and their manager. This is done either at the annual performance appraisal each year for existing employees, or soon after
commencement of employment for new employees.
16 | ATLAS PEARLS | Annual Report 2023
Use of remuneration consultants
During the financial year ended 30 June 2023 the Company did not engage any remuneration consultants.
Voting and comments made at the Company’s 2022 Annual General Meeting
Atlas Pearls received 99.19% of ‘yes’ votes on adoption of the renumeration report for the 2022 financial year. 76.21% of ‘yes’ votes were received
on the resolution to re-elect Geoff Newman as Director. The Company did not receive any specific feedback at the Annual General Meeting 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.
14.2
DETAILS OF REMUNERATION
The following tables show details of the remuneration received by the Directors and the Key Management Personnel (KMP) of the Group for the
current and previous financial period.
s
e
e
f
d
n
a
y
r
a
l
a
s
h
s
a
C
$
e
m
a
N
Directors (Non-executive)
Geoff Newman1
Tim Martin
Cadell Buss
José Martins2
2023
2022
2023
2022
2023
2022
2023
2022
120,129
218,469
71,825
61,328
71,825
61,250
8,036
-
Other Key Management Personnel
Michael Ricci3
Mark Longhurst4
Diana Kubicki5
TOTAL 2023
TOTAL 2022
2023
2022
2023
2022
2023
2022
2023
2022
249,574
4,308
152,630
247,885
221,483
205,977
895,502
799,217
m
r
e
t
-
t
r
o
h
S
s
t
fi
e
n
e
b
r
o
f
e
c
fi
i
r
c
a
s
$
s
e
r
a
h
s
y
r
a
l
a
S
m
r
e
t
-
t
r
o
h
S
h
s
a
c
e
v
i
t
n
e
c
n
i
$
s
u
n
o
b
m
r
e
t
-
t
r
o
h
s
d
n
a
s
t
fi
e
n
e
b
s
e
e
f
,
y
r
a
l
a
s
h
s
a
c
l
a
t
o
T
h
s
a
c
-
n
o
N
y
r
a
t
e
n
o
m
6
t
fi
e
n
e
b
$
$
t
n
e
m
y
o
p
m
e
l
s
t
fi
e
n
e
b
-
t
s
o
P
n
o
i
t
a
u
n
n
a
r
e
p
u
S
t
fi
e
n
e
b
$
m
r
e
t
-
g
n
o
L
s
t
fi
e
n
e
b
e
v
a
e
l
e
c
i
v
r
e
s
g
n
o
L
$
n
o
i
t
a
s
n
e
p
m
o
c
d
e
s
a
b
-
e
r
a
h
S
s
u
n
o
B
s
e
r
a
h
S
$
7
s
n
o
i
t
p
O
$
l
a
t
o
T
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
26,040
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
120,129
218,469
12,906
21,947
71,825
61,328
71,825
61,250
8,036
-
-
-
-
-
844
-
-
-
-
-
-
-
-
-
275,614
28,549
2,812
4,308
431
11,123
163,753
39,875
287,760
-
-
-
-
-
221,483
22,820
(11,376)
205,977
26,040
11,123
932,665
-
39,875
839,092
21,172
65,119
43,550
-
(8,564)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
27,244
160,279
15,246
255,662
-
-
-
-
-
-
-
-
71,825
61,328
71,825
61,250
8,880
-
306,975
4,739
6,045
169,798
5,641
293,401
5,064
237,991
4,905
232,054
38,353
1,027,573
25,792
908,434
1.
2.
3.
4.
5.
6.
7.
Geoff Newman was Executive Chairman until 12 July 2022, thereafter assuming the role of Non-Executive Chairman.
José Martins was appointed Non-Executive Director on 17 May 2023.
Michael Ricci was appointed Chief Executive Officer on 13 June 2022.
Mark Longhurst ceased as a KMP with effect from 31 December 2022.
Diana Kubicki resigned as CFO on 09 June 2023.
Non-Monetary benefits of other KMP includes overseas living allowances as per individual employment contracts.
Share-based remuneration related to options being recognised over the respective vesting period.
Annual Report 2023 | ATLAS PEARLS | 17
Directors’ Report
14.2.1 DETAILS OF REMUNERATION – PERFORMANCE ANALYSIS
The following table indicates the percentage of remuneration relating
to options and performance:
Name
Geoff Newman
Michael Ricci
Mark Longhurst
(ceased as KMP 31 December 2022)
Diana Kubicki (resigned 09 June 2023)
30 June 2023
% Performance
30 June 2022
% Performance
17%
9.42%
3.56%
2.13%
5.96%
0%
1.92%
2.11%
14.2.2 RELATIONSHIP BETWEEN REMUNERATION AND ATLAS
PEARLS’ PERFORMANCE
The following table shows performance indicators as prescribed by
the Corporations Act 2001 over the past five reporting periods:
30 June
2023
30 June
2022
30 June
2021
30 June
2020
30 June
2019
9,087,744
4,591,551
6,719,924 (8,076,827)
(3,582,461)
2.14
1.08
1.58
(1.90)
(0.84)
-
-
-
-
-
17%
140%
200%
(38%)
(67%)
0.8%
0.6%
0.1%
(0.2%)
(2.5%)
Profit/(loss) for
the year
Basic earnings
per share
Dividend
payments
Increase/
(decrease) in
share price
Total KMP
incentives as
percentage of
profit/(loss) %
14.3
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 Officer other KMPs are also
formalised in service agreements.
Details of KMP service agreements are set out below:
14.3.1 MICHAEL RICCI (Chief Executive Officer)
Michael has been engaged as Chief Executive Officer of the Group
pursuant to an employment agreement between the Group and
Michael (Ricci Agreement).
The total annual remuneration payable to Michael under the
Ricci Agreement is a salary of $248,000 per annum (exclusive of
superannuation) (2022: $224,000) on a part-time basis of four days
per week. Michael is also entitled to participate in STIs of up to 15%
(2022: 15%) of the base salary and LTIs, as determined by the Board.
An STI bonus of $26,040 has been accrued in respect of the financial
year ended 30 June 2023 (30 June 2022: nil) under the STI Plan,
representing a 70% achievement of the maximum bonus payable.
The Ricci Agreement commenced on 13 June 2022 and employment
under the Ricci Agreement will continue until terminated in
accordance with the Ricci Agreement (Term). During the Term, the
Ricci Agreement may be terminated by the Group at any time:
• by three months written notice to Michael, at which time the Group
will immediately pay Michael 3 months base salary in lieu; or
• by summary notice in circumstances where Michael neglects to
perform his duties or comply with reasonable or proper direction
or engages in serious misconduct.
18 | ATLAS PEARLS | Annual Report 2023
• Otherwise, the Ricci Agreement may be terminated by Michael
at any time for any reason by giving not less than three months’
notice in writing to the Group.
Michael is also subject to restrictions in relation to the use of
confidential information during and after his employment with the
Group ceases, being directly or indirectly involved in a competing
business during the continuance of his employment with the Group,
and for a period of 12 months after his employment with the Group
ceases, on terms which are otherwise considered standard for
agreements of this nature.
The Ricci Agreement contains additional provisions considered
standard for agreements of this nature.
14.3.2 MARK LONGHURST (Chief Operations Officer)
Mark resigned from the position of Chief Operations Officer on
31 December 2022.
The total remuneration payable to Mark was a base salary for the 2023
financial year of $230,000 per annum (exclusive of superannuation)
(2022: $230,000) and non-financial allowances related to living in
Indonesia are also included, to a maximum allowance of $22,500
annually. No bonus has been accrued in respect of the financial year
ended 30 June 2023.
14.3.3 MS DIANA KUBICKI (Chief Financial Officer)
Diana resigned from the position of Chief Financial Officer on
09 June 2023.
The total remuneration payable to Diana was a base salary for
the 2023 financial year of $220,000 per annum (inclusive of
superannuation)(2022: $190,000). No bonus has been accrued in
respect of the financial year ended 30 June 2023.
14.3.4 GEMMA CANN (Chief Financial Officer)
Gemma was promoted to Chief Financial Officer of the Group with
effect from 17 July 2023, pursuant to an employment agreement
between the Group and Gemma (Cann Agreement).
The total annual remuneration payable to Gemma under the
Cann Agreement is a salary of $180,000 per annum (exclusive of
superannuation). Gemma is also entitled to participate in STIs of up to
15% of the base salary and LTIs, as determined by the Board.
The Cann Agreement commenced on 17 July 2023 and employment
under the Cann Agreement will continue until terminated in
accordance with the Cann Agreement (Term). During the Term, the
Cann Agreement may be terminated by the Group at any time:
•
by three months’ written notice to Gemma, at which time the
Group will immediately pay Gemma 3 months’ base salary in
lieu; or
by summary notice in circumstances where Gemma neglects
to perform her duties or comply with reasonable or proper
direction or engages in serious misconduct.
•
Otherwise, the Cann Agreement may be terminated by Gemma at
any time for any reason by giving not less than three months’ notice in
writing to the Group.
Gemma is also subject to restrictions in relation to the use of
confidential information during and after her employment with the
Group ceases, being directly or indirectly involved in a competing
business during the continuance of her employment with the
Group, and for a period of 12 months after her employment with the
Group ceases, on terms which are otherwise considered standard for
agreements of this nature.
The Cann Agreement contains additional provisions considered
standard for agreements of this nature.
14.4 ADDITIONAL INFORMATION OF THE REMUNERATION
14.5
SHARE-BASED PAYMENTS COMPENSATION
REPORT
14.4.1 LOANS FROM DIRECTORS AND EXECUTIVES
During the year, the Company repaid its debt funding from Boneyard
Investments Pty Ltd, a related party of Tim Martin (Non-Executive
Director). As at 30 June 2023 the balance of the loan was nil (30 June
2022: $1.125M).
Refer to note 16.4 for further details of the loan arrangement.
14.4.2 OPTIONS
No options were issued to KMP during the financial year end 30 June
2023 (30 June 2022: 4,955,301 options).
Refer to section 23.2 for details of options on issue.
14.4.3 OTHER KMP TRANSACTIONS
As at 30 June 2023, Director fees of $13,948 are payable (30 June 2022:
$5,417).
14.5.1 EMPLOYEE SALARY SACRIFICE SHARE PLAN
There was no salary sacrifice scheme undertaken for the year ended
30 June 2023.
14.5.2 PERFORMANCE OPTIONS
The details relating to performance options allocated to KMP under
the Atlas Pearls Ltd Employee Share and Incentive Plan are shown in
the table below.
The fair value at grant date is independently determined using
a Hoadley Trading and Investment valuation model, which takes
into account the exercise price, the term of the option, the impact
of dilution, the share price at grant date and expected volatility of
the underlying share, the expected dividend yield, and the risk free
interest rate for the term of the option.
t
n
a
r
g
f
o
e
t
a
D
s
n
o
i
t
p
o
f
o
.
o
N
t
n
e
m
e
l
t
i
t
n
E
e
t
a
d
g
n
i
t
s
e
V
n
i
r
a
e
y
l
a
i
c
n
a
n
i
F
t
s
e
v
s
n
o
i
t
p
o
h
c
i
h
w
e
t
a
d
y
r
i
p
x
E
e
m
a
N
Geoff Newman1
29/04/22
510,478
30/06/22
30/09/24
Mark Longhurst1,2
24/05/22
257,055
30/06/22
30/09/24
Diana Kubicki1,3
24/05/22
223,526
30/06/22
30/09/24
Geoff Newman1
29/04/22
765,718
30/06/23
30/09/24
Mark Longhurst1,2
24/05/22
385,583
30/06/23
30/09/24
Diana Kubicki1,3
24/05/22
335,290
30/06/23
30/09/24
Geoff Newman1
29/04/22
1,276,196
30/06/24
30/09/24
Mark Longhurst1,2
24/05/22
642,639
30/06/24
30/09/24
Diana Kubicki1,3
24/04/22
558,816
30/06/24
20/09/24
2022
2023
2023
2023
2023
2023
2024
2024
2024
t
a
e
c
i
r
p
e
r
a
h
S
e
t
a
d
t
n
a
r
g
$0.047
$0.042
e
s
i
c
r
e
x
e
n
o
i
t
p
O
e
c
i
r
p
$0.065
$0.065
$0.042
$0.065
$0.047
$0.042
$0.070
$0.070
$0.042
$0.070
$0.047
$0.042
$0.075
$0.075
$0.042
$0.075
y
t
i
l
i
t
a
l
o
V
100%
100%
100%
100%
100%
100%
100%
100%
100%
e
t
a
r
e
e
r
f
k
s
i
R
t
n
a
r
g
t
a
s
n
o
i
t
p
o
f
o
e
u
l
a
v
l
a
t
o
T
e
t
a
d
e
u
l
a
v
r
i
a
F
2.45%
$10,618
$0.0208
2.53%
2.53%
$4,524
$0.0176
$3,934
$0.0176
2.45%
$16,616
$0.0217
2.53%
2.53%
$6,941
$0.0180
$6,035
$0.0180
2.45%
$28,332
$0.0222
2.53%
$11,825
$0.0184
2.53%
$10,282
$0.0184
Notes:
These unlisted options were approved at the EGM on 29 April 2022 and are subject to the employee remaining engaged as an employee at the date of the prescribed vesting date.
1.
2. Mark Longhurst ceased as a KMP with effect from 31 December 2022.
3. Diana Kubicki resigned as CFO on 9 June 2023. Unlisted options issued to Diana Kubicki on 24/05/22 with a vesting date of 30/06/24 will therefore be forfeited as she will not meet the
vesting criteria noted in note 1. above. Under the terms of the Atlas Pearls Ltd Employee Share and Incentive Plan, Diana Kubicki has 3 months from the date of her resignation to
exercise the options that have vested before they are forfeited, unless the board exercises its discretion otherwise.
Annual Report 2023 | ATLAS PEARLS | 19
Directors’ Report
14.5.3 EQUITY INSTRUMENTS
(C)
OPTION HOLDING
The details relating to the equity instruments held by KMP are as follows:
(A)
EQUITY INSTRUMENT DISCLOSURES
RELATING TO KMP
Options and rights granted as compensation:
There were no options issued to KMP as remuneration during the year
ended 30 June 2023 (30 June 2022: 5,877,347).
(B)
SHAREHOLDINGS
The number of shares in the Company held during the financial year by each
Director and the other KMP of the Group, including their personally related
parties, are set out below:
2
2
/
7
0
/
1
0
e
c
n
a
l
a
B
Directors
Geoff Newman1
2,563,443
Tim Martin2
Cadell Buss3
Michael Ricci4
110,184,995
1,337,000
-
114,085,438
n
o
i
t
a
s
n
e
p
m
o
c
s
a
d
e
t
n
a
r
G
-
-
-
-
-
d
e
s
i
c
r
e
x
e
s
n
o
i
t
p
O
d
e
r
i
u
q
c
A
3
2
/
6
0
/
0
3
e
c
n
a
l
a
B
-
-
-
-
-
-
-
2,563,443
110,184,995
1,337,000
512,800
512,800
- 512,800
114,598,238
Notes:
1.
2.
3.
4.
1,847,154 shares held by Mr Geoffrey Grosvenor Newman & Mrs Cheryl Louise Newman
and 716,289 shares held by Mrs Cheryl Louise Newman & Mr
Geoffrey Grosvenor Newman .
54,907,327 shares are held by Boneyard Investments Pty Ltd, 32,400,000 shares are held
by Chemco Superannuation Fund Pty Ltd , 17,880,240
shares are held by Jingie Investments Pty Ltd, and 1,000,000 shares are held by Mr
Timothy James Martin and Mr William Gordon Martin
of which Tim Martin is a beneficiary, and the remaining balance of 3,997,428 shares are
held personally by Tim Martin.
Shares are held by Cadon Holdings Pty Ltd of which Cadell Buss is a
beneficiary.
Shares were acquired on market and are held by M&K Ricci Pty Ltd of which Michael Ricci is a beneficiary.
The number of options over ordinary shares in the parent entity held
during the year ended 30 June 2023 by each Director and other KMP
of the Group, including their personally related parties, is set out below:
2
2
/
7
0
/
1
0
e
c
n
a
l
a
B
d
e
s
i
c
r
e
x
E
d
e
t
n
a
r
G
Directors
Geoff Newman
2,552,392
-
-
Other Key Management Personnel
Mark Longhurst2
1,285,277
D Kubicki3
1,117,632
4,955,301
-
-
-
-
-
-
P
M
K
s
a
d
e
c
n
e
m
m
o
c
/
d
e
s
a
e
C
3
2
/
6
0
/
0
3
e
c
n
a
l
a
B
1
d
e
t
s
e
V
y
l
l
u
F
-
2,552,392
1,276,196
(1,285,277)
(1,117,632)
-
-
642,638
558,816
d
e
s
p
a
L
/
d
e
t
fi
r
o
F
-
-
-
- (2,402,909) 2,552,392 2,477,650
Notes:
1.
1,486,591 Options vested 30 June 2023 (30 June 2022: 991,059).
2. Mark Longhurst ceased as KMP with effect from 31 December 2022.
3. Diana Kubicki resigned on 09 June 2023.
15. Rounding of amounts
The Company is of a kind referred to in ASIC Legislative Instrument
2016/191, relating to the ‘rounding off’ of amounts in the Directors’
report and financial report. Amounts in the Directors’ report and
financial report have been rounded off to the nearest thousand dollars
in accordance with the instrument.
This is the end of the Audited Remuneration Report.
20 | ATLAS PEARLS | Annual Report 2023
16. Auditor’s independence declaration
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 22.
Signed in accordance with a resolution of the Directors.
Geoff Newman
Chairman - 30 August 2023
Annual Report 2023 | ATLAS PEARLS | 21
Tel: +61 8 6382 4600
Tel: +61 8 6382 4600
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
Fax: +61 8 6382 4601
Fax: +61 8 6382 4601
www.bdo.com.au
www.bdo.com.au
www.bdo.com.au
Level 9, Mia Yellagonga Tower 2
38 Station Street
5 Spring St
Subiaco, WA 6008
Perth, WA 6000
PO Box 700 West Perth WA 6872
PO Box 700 West Perth WA 6872
Australia
Australia
DECLARATION OF INDEPENDENCE BY JARRAD PRUE TO THE DIRECTORS OF ATLAS PEARLS LIMITED
As lead auditor of Atlas Pearls Limited for the year ended 30 June 2023, I declare that, to the best of
my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Atlas Pearls Limited and the entities it controlled during the period.
Jarrad Prue
Director
BDO Audit (WA) Pty Ltd
Perth
30 August 2023
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia
Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO
International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability
limited by a scheme approved under Professional Standards Legislation.
Transferring baby oysters to nets ready for going to sea.
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Revenue from contracts with customers
Cost of goods sold
GROSS PROFIT
Administration expenses
Finance costs
Marketing expenses
Change in fair value less husbandry costs of oysters
Other expenses
Other income
PROFIT BEFORE INCOME TAX
Income tax expense
PROFIT AFTER INCOME TAX
OTHER COMPREHENSIVE INCOME
Items that will be reclassified as profit or loss:
Exchange differences on translation of foreign operations
OTHER COMPREHENSIVE INCOME NET OF TAXES
TOTAL COMPREHENSIVE INCOME
PROFIT IS ATTRIBUTABLE TO:
Owners of the Company
TOTAL COMPREHENSIVE INCOME IS ATTRIBUTABLE TO :
Owners of the Company
EARNINGS PER SHARE
ATTRIBUTABLE TO THE ORDINARY EQUITY HOLDERS OF THE COMPANY
Basic earnings per share (cents)
Diluted earnings per share (cents)
Notes
2023
$
2022
$
3
5
5
4
5
3
7
6
6
27,200,159
21,507,913
(10,897,065)
(11,569,737)
16,303,094
9,938,176
(6,021,303)
(5,000,982)
(74,213)
(399,911)
641,493
(249,842)
(435,167)
2,336,115
(921,161)
(1,465,813)
185,890
9,713,889
(626,145)
9,087,744
305,180
5,427,667
(836,116)
4,591,551
446,144
446,144
9,533,888
1,280,099
1,280,099
5,871,650
9,087,744
9,533,888
5,871,650
2.14
2.14
1.08
1.08
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.
24 | ATLAS PEARLS | Annual Report 2023
Consolidated Statement of Financial Position
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Biological assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Intangibles
Biological assets
Property, plant and equipment
Right-of-use assets
Deferred tax assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Provisions
Borrowings
Lease liabilities
Current tax liabilities
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Lease liabilities
Deferred tax liabilities
Provisions
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Retained earnings / (accumulated losses)
TOTAL EQUITY
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
Notes
2023
$
2022
$
8
9
4
4
11
7
10
10
7
7
10
13
14
7,845,286
300,619
3,319,854
8,916,104
2,995,131
240,047
3,167,940
9,763,861
20,381,863
16,166,979
-
11,340,618
6,928,730
617,588
797,111
19,684,047
40,065,910
757,374
2,971,185
-
63,572
124,098
18,561
7,883,366
5,905,882
686,707
854,108
15,348,624
31,515,603
810,715
2,731,110
1,125,000
58,048
398,583
3,916,229
5,123,456
159,559
1,860,885
45,186
2,065,630
5,981,859
220,998
1,766,697
29,616
2,017,311
7,140,767
34,084,051
24,374,836
36,857,415
36,857,415
(7,744,682)
(8,366,153)
4,971,318
(4,116,426)
34,084,051
24,374,836
Annual Report 2023 | ATLAS PEARLS | 25
Consolidated Statement of Changes in Equity
Attributable to owner of Atlas Pearls
d
e
t
u
b
i
r
t
n
o
C
y
t
i
u
q
e
Notes
$
n
o
i
t
a
u
l
a
v
e
R
e
v
r
e
s
e
r
$
e
r
a
h
s
e
e
y
o
p
m
E
l
e
v
r
e
s
e
r
$
y
c
n
e
r
r
u
c
n
g
e
r
o
F
i
e
v
r
e
s
e
r
n
o
i
t
a
l
s
n
a
r
t
$
i
s
g
n
n
r
a
e
d
e
n
i
a
t
e
R
d
e
t
a
l
u
m
u
c
c
a
(
$
)
s
e
s
s
o
l
y
t
i
u
q
e
l
a
t
o
T
$
BALANCES AT 1 JULY 2022
Net profit for the year
Exchange differences on translation of foreign operations
14
Total comprehensive income
Transactions with owners in their capacity as owners
Share-based payments
Balance at 30 June 2023
14
36,857,415
179,179
989,514
(9,534,846)
(4,116,426)
24,374,836
-
-
-
-
-
-
-
-
-
-
-
-
9,087,744
9,087,744
446,144
-
446,141
446,144
9,087,744
9,533,885
175,327
-
-
175,327
36,857,415
179,179
1,164,842
(9,088,702)
4,971,318
34,084,051
BALANCES AT 1 JULY 2021
Net profit for the year
Exchange differences on translation of foreign operations
14
Total comprehensive income
Transactions with owners in their capacity as owners
Share-based payments
Balance at 30 June 2022
14
36,857,415
179,179
911,083 (10,814,945)
(8,707,977)
18,424,755
-
-
-
-
-
-
-
-
-
-
-
-
4,591,551
4,591,551
1,280,099
-
1,280,099
1,280,099
4,591,551
5,871,650
78,431
-
-
78,431
36,857,415
179,179
989,514
(9,534,846)
(4,116,426)
24,374,836
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
26 | ATLAS PEARLS | Annual Report 2023
Consolidated Statement of Cash Flows
CASH FLOWS FROM OPERATING ACTIVITIES
Proceeds from pearl and jewellery sales
Proceeds from pearl by-product sales
Payments to suppliers and employees
Income tax paid
Interest paid
Interest received
Notes
2023
$
2022
$
26,243,479
20,982,624
594,162
838,216
(17,572,442)
(15,710,705)
(767,211)
(920,381)
(62,063)
(215,713)
14,067
11,751
Net cash inflow from operating activities
8
8,449,992
4,985,792
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for property, plant and equipment
Net cash outflow from investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of borrowings
Proceeds from borrowings
Repayment of lease liabilities
Net cash outflow from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effects of exchange rate changes on cash and cash equivalents
(2,155,311)
(1,600,828)
(2,155,311)
(1,600,828)
(1,812,806)
(3,628,515)
687,806
(130,484)
556,207
(79,454)
(1,255,484)
(3,151,762)
5,039,197
233,202
2,995,131
3,022,311
(189,042)
(260,382)
CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR
8
7,845,286
2,995,131
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
Annual Report 2023 | ATLAS PEARLS | 27
Index of notes to the consolidated financial statements
PART A Basis of preparation
PART B Financial performance
1. Basis of preparation
2. Segment reporting
3. Revenue from contracts with customers
and other income
4. Biological assets
5. Expenses
6. Earnings per share
7. Tax
PART C Tax
PART D Cash flow information
8. Cash and cash equivalents
PART E Working capital
9.
Inventories
10. Payables
PART F Non-financial assets and liabilities
11. Property, plant and equipment
PART G Funding, capital management and equity
12. Borrowings
13. Contributed equity
14. Reserves
15. Dividends
PART H Risk management
16. Risk management
PART I
Unrecognised items
17. Events occurring after the reporting period
PART J Other
18. Commitments
19. Contingencies
20. Subsidiaries
21. Related party transactions
22. Parent entity financial information
23. Share-based payments
24. Remuneration of auditors
25. Accounting policies
29
29
31
32
34
34
35
37
37
37
38
39
40
40
40
41
45
45
45
45
46
46
47
48
49
Notes to the consolidated financial statements
PART A - Basis of preparation
PART B - Financial performance
1.
1.1
Basis of preparation
BASIS OF PREPARATION
The financial statements cover the consolidated entity of Atlas
Pearls Ltd and its subsidiaries. Atlas Pearls is a listed public Company,
incorporated and domiciled in Australia.
A description of the nature of the consolidated entity’s operations
and its principal activities is included in the review of operations and
activities in the Directors’ report, which, is not part of these financial
statements. The financial statements were authorised for issue by the
Directors on 30 August 2023. The Directors have the power to amend
and reissue the financial statements.
These general purpose financial statements have been prepared
in accordance with Australian Accounting Standards, and other
authoritative pronouncements of the Australian Accounting Standards
Board (AASB), IFRS, and the Corporations Act 2001. Atlas Pearls is a
for-profit entity for the purpose of preparing financial statements.
These financial statements have been prepared under the historical
cost basis, financial assets and liabilities (including derivative
instruments) at fair value through profit or loss, and biological assets
and inventories at fair value less cost to sell.
The accounting policies are consistent with those disclosed in
the 2022 financial statements, except for the impact of all new or
amended standards and interpretations.
1.2
CRITICAL ACCOUNTING ESTIMATES
The preparation of financial statements requires the use of certain
critical accounting estimates. It also requires management to
exercise its judgment 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)
(b) Write off of inventories – see note 9
(c)
Property, plant and equipment depreciation rates - see note 11
Determination of market value of biological assets – see note 4
Segment reporting
2.
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.
DISAGGREGATION OF REVENUE
The Group derives revenue from the transfer of goods at a point in
time in major product lines and geographical regions as shown below.
The operating segments are identified by management based on the
location in which the product is sold, whether Australia or Indonesia.
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 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 on a cost-plus arrangement as per
the Advance Pricing Agreement (APA), which was effective 1 July
2017 through to 30 June 2021. The transfer price terms per the APA
are between 11.8% and 16.47%. The Company has applied for an
extension of the current APA agreement for a further five years, which
is being reviewed by the respective tax authorities. At report date
the agreement was still being negotiated. Atlas Pearls has chosen
to prepare its accounts in line with the previous APA agreement
until a new agreement has been signed. These transactions are
eliminated within the internal reports. The revenue from external
parties, reported to the chief operating decision makers 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.
Segment revenue reconciles to total revenue from contracts with
customers in the statement of profit or loss and other comprehensive
income as follows:
2023
2022
Total segment revenue
46,877,358
40,160,833
Inter-segment eliminations
(19,677,199) (18,652,920)
Total revenue from contracts with
customers (note 3)
27,200,159 21,507,913
Annual Report 2023 | ATLAS PEARLS | 29
Notes to the consolidated financial statements
2.1
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 year ended
30 June 2023 is as follows:
30 June 2023
Total segment revenue
Inter-segment revenue
Revenue from external customers
Timing of revenue recognition
At a point in time
Over time
Normalised EBITDA
Adjusted net opertating profit before income tax
Depreciation and amortisation
Revaluation of biological assets
TOTAL SEGMENT ASSETS
Total assets include:
Additions to non-current assets
TOTAL SEGMENT LIABILITIES
Loose pearls and by-product
Australia
$
Indonesia
$
Total
$
26,365,847
20,511,511
46,877,358
-
(19,677,199)
(19,677,199)
26,365,847
834,312
27,200,159
26,365,847
834,312
27,200,159
-
-
-
26,365,847
834,312
27,200,159
7,073,425
2,731,616
6,859,569
2,594,382
111,962
-
178,982
641,493
9,805,041
9,453,951
290,944
641,493
7,651,584
31,616,644
39,268,228
31,322
2,123,989
2,155,311
(628,574)
(3,145,171)
(3,773,745)
(ii)
The segment information provided to the Board of Directors and management team for the reportable segments for the year ended
30 June 2022 is as follows:
Loose pearls and by-product
Australia
$
Indonesia
$
Total
$
20,565,831
19,595,002
40,160,833
-
(18,652,920)
(18,652,920)
20,565,831
942,082
21,507,913
20,565,831
942,082
21,507,913
-
-
-
20,565,831
942,082
21,507,913
1,287,569
3,062,661
1,085,453
2,777,063
116,055
196,203
-
2,336,115
4,191,144
3,703,431
312,258
2,336,115
2,276,144
28,384,770
30,660,914
31,237
1,548,641
1,579,878
(479,227)
(3,092,214)
(3,571,441)
30 June 2022
Total segment revenue
Inter-segment revenue
Revenue from external customers
Timing of revenue recognition
At a point in time
Over time
Normalised EBITDA
Adjusted net opertating profit before income tax
Depreciation and amortisation
Revaluation of biological assets
TOTAL SEGMENT ASSETS
Total assets include:
Additions to non–current assets
TOTAL SEGMENT LIABILITIES
30 | ATLAS PEARLS | Annual Report 2023
2.2
OTHER SEGMENT INFORMATION
(iv)
Normalised EBITDA reconciliation
(i)
Adjusted net operating profit
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 expenses
such as interest paid and received, foreign exchange gains and
losses whether realised or unrealised, fair value gains and losses, and
impairment charges.
A reconciliation of adjusted net operating profit/(loss) before income
tax is provided as follows:
Segment net operating profit before tax
9,453,951
3,703,431
2023
$
2022
$
Net profit before tax
Finance/interest paid
Depreciation/amortisation
Foreign exchange loss
2023
$
2022
$
9,713,889
5,427,667
60,146
290,944
381,555
237,971
312,258
611,879
Agriculture standard revaluation (gain)
(641,493)
(2,336,115)
NORMALISED EBITDA
9,805,041
4,253,660
3.
3.1
Revenue
REVENUE FROM CONTRACTS WITH CUSTOMERS
2023
$
2022
$
641,493
2,336,115
171,823
174,198
(553,378)
(786,077)
9,713,889
5,427,667
Sale of goods
27,200,159
21,507,913
TOTAL REVENUE FROM CONTRACTS
WITH CUSTOMERS
3.2
OTHER INCOME
27,200,159
21,507,913
Changes in fair value of biological and
agricultural assets
Foreign exchange gains
Foreign exchange losses
TOTAL PROFIT BEFORE
INCOME TAX FROM OPERATIONS
(ii)
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:
Segment assets
Unallocated:
Joint venture loans
Deferred tax assets
TOTAL ASSETS AS PER THE STATEMENT
OF FINANCIAL POSITION
2023
$
2022
$
39,268,228
30,660,914
571
582
797,111
854,108
40,065,910
31,515,604
The total of non-current assets other than financial instruments and
deferred tax assets located in Australia is $703,964 (30 June 2022:
$786,159). The total located in Indonesia is $15,590,296 (30 June 2022:
$12,551,975).
(iii)
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:
Segement liabilities
Unallocated:
Current tax liabilities
Borrowings
Lease liabilities
Deferred tax liabilities
TOTAL LIABILITIES AS PER THE
STATEMENT OF FINANCIAL POSITION
2023
$
2022
$
3,773,745
3,571,441
124,098
398,583
-
1,125,000
223,131
279,046
1,860,885
1,776,697
5,981,859
7,140,768
Foreign exchange gains
Interest income
Other
TOTAL OTHER INCOME
2023
$
171,823
14,067
-
185,890
2022
$
174,198
11,751
119,112
305,180
SIGNIFICANT ACCOUNTING POLICY
Revenue from contracts with customers
Revenue is recognised when the Group transfers control of
products to a customer at the amount to which the Group
expects to be entitled. Revenue shall be measured at the fair
value of the consideration received or receivable. The amount
of revenue arising on a transaction is usually determined by
an agreement between the Group and the customer.
Government Grants
Government grants relating to costs are deferred and
recognised in profit or loss over the period necessary to
match them with the loss they are intended to compensate.
Sale of Goods - Wholesale
The Group produces and sells pearls in the wholesale market.
Revenue from the sale of goods is recognised at a point
in time when control of the product is transferred to the
customer, which is typically on delivery.
Sale of Goods - Retail
The Group operates an online retail store and farm experience
stores selling pearl jewellery. Revenue from the sale of goods is
recognised when the Group transfers control of the product to
the customer, which is typically at the point of sale.
Annual Report 2023 | ATLAS PEARLS | 31
Notes to the consolidated financial statements
SIGNIFICANT JUDGEMENT
Fair value should reflect market participant views and
market data at the measurement date under current market
conditions. The valuation of oysters contains both observable
and unobservable inputs. The Group carefully considered
these inputs when assessing the fair value of oyster stocks. A
fair valuation uplift of $641,493 (2022: $2,336,115 increase) is
included in the valuation of biological assets.
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, the
the harvesting of the pearls, and realisation of cash receipts from the
sale to third parties. The Group ensures that it maintains sufficient
working capital to sustain its operations through any delays in cash
flow that may be reasonably foreseen.
Level 3 analysis: The finance and operations departments undertake
the valuation of the oysters. The calculations are considered to be
level 3 fair values, as described in note 16.5. 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 note 4.1.
4.
Biological assets
Current
Oysters – at fair value
2023
$
2022
$
8,916,104
9,763,861
TOTAL CURRENT BIOLOGICAL ASSETS
8,916,104
9,763,861
Oysters – at fair value
11,340,618
7,883,366
TOTAL NON-CURRENT BIOLOGICAL ASSETS
11,340,618
7,883,366
TOTAL BIOLOGICAL ASSETS
20,256,722
17,647,227
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:
Biological Assets
Juvenile and mature oysters
Nucleated oysters
1,800,000
1,600,000
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
-
700,000
600,000
500,000
400,000
300,000
200,000
100,000
-
2023
2022
Pearls Harvested
2023
2022
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.
32 | ATLAS PEARLS | Annual Report 2023
4.1
KEY PRODUCTION ASSUMPTIONS
The key assumptions utilised to determine the fair market value of oysters are detailed below:
Input
2023
2022
2023 Assumptions
2022 Assumptions
Average selling price
¥15,518
¥11,250
Based on sale prices achieved over prior
three reporting periods.
Based on sale prices achieved in current
reporting period.
Yen exchange rate
¥95.97
¥93.79
No change to prior period.
Based on forward Yen price per a financial
institution.
Average pearl size
Proportion of marketable grade
Discount rate
Mortality
0.38
34%
20%
16%
0.43
38%
Based on harvest results achieved over prior
five reporting periods.
Based on harvest results achieved over prior
three reporting periods.
Based on harvest results achieved over prior
five reporting periods.
Based on harvest results achieved over prior
three reporting periods.
20%
No change to prior period.
Based on analysis of comparable primary
producers.
12%
No change to prior period.
Based on current harvest mortality rates.
Average unseeded oyster value
$1.91
$1.76
No change to prior period.
Based on historical independent valuation.
Costs to complete
$0.59
$0.69
No change to prior period.
Based on current average.
4.2
SENSITIVITY ANALYSIS - OYSTERS
The following tables summarise the potential impact of changes in the key non-production related variables on the oyster valuation:
Average selling price (¥/Momme)
-10%
¥13,966 (Sellable grade)
¥2,008 (Commercial grade)
No change
¥15,518 (Sellable grade)
¥2,231 (Commercial grade)
+10%
¥17,070 (Sellable grade)
¥2,454 (Commercial grade)
Discount rate
22%
20%
18%
Profit $
(3,206,133)
(2,927,864)
(2,638,362)
Profit $
(337,714)
-
351,526
Profit $
2,530,704
2,927,864
3,341,413
Average selling price (¥/Momme)
-10%
¥13,966 (Sellable grade)
¥2,008 (Commercial grade)
No change
¥15,518 (Sellable grade)
¥2,231 (Commercial grade)
+10%
¥17,070 (Sellable grade)
¥2,454 (Commercial grade)
Profit $
(5,615,830)
(2,927,864)
451,092
-10%
31% (Sellable %)
22% (Commercial %)
Profit $
686,851
(2,037,285)
(4,761,420)
Profit $
(2,986,629)
-
3,754,395
Sellable %
No change
34% (Sellable %)
24% (Commercial %)
Profit $
2,927,864
-
(2,927,864)
Profit $
(357,428)
2,927,864
7,057,699
+10%
38% (Sellable %)
27% (Commercial %)
Profit $
5,169,847
2,038,166
(1,093,515)
FX rate
¥105.57
¥95.97
¥86.37
Av. weight
0.42
0.38
0.34
Annual Report 2023 | ATLAS PEARLS | 33
Notes to the consolidated financial statements
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 2023 as potential ordinary shares, which may
have a dilutive effect on the profit of the Group.
Ordinary shares issued to employees under the Atlas Pearls Ltd
Employee Share and Incentive 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.
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.
5.
5.1
Expenses
ADMINISTRATION EXPENSES
Salaries and wages
4,134,894
3,501,850
Depreciation property, plant and equipment
234,616
154,536
2023
$
2022
$
Amortisation of intangible asset
Amortisation of right-of-use asset
Occupancy costs
Compliance and accounting
Travel
Other
-
56,328
115,370
450,595
386,595
642,905
86,262
71,460
67,920
395,130
224,288
499,538
TOTAL ADMINISTRATION EXPENSES
6,021,303
5,000,982
5.2
FINANCE COSTS
Interest and finance charges payable
Interest from lease liabilities
TOTAL FINANCE COSTS
5.3
OTHER EXPENSES
Loss on foreign exchange
Provision for employee entitlements
Share option expense (refer to note 23)
Other
2023
$
2022
$
55,893
18,320
74,213
231,747
18,095
249,842
2023
$
553,378
86,558
175,328
105,897
2022
$
786,075
226,175
78,430
375,133
TOTAL OTHER EXPENSES
921,161
1,465,813
6.
Earnings
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
6.1
EARNINGS RECONCILIATION
2023
$
2.14
2.14
2023
$
2022
$
1.08
1.08
2022
$
Net profit used for basic earnings
9,087,744
4,591,551
Weighted average number of ordinary shares
outstanding during the period used for
calculation of basic earnings per share
Adjustments for calculation of diluted
earnings per share
Weighted average number of potential
ordinary shares outstanding during the
year used for calculation of diluted earings
per share
2023
$
2022
$
424,809,620
424,871,758
18,689,466
18,758,055
443,499,086
443,567,675
34 | ATLAS PEARLS | Annual Report 2023
PART C - Tax
7.
7.1
Tax
INCOME TAX EXPENSE
(A) THE COMPONENTS OF TAX EXPENSE/(BENEFIT) COMPRISE:
Current tax
Deferred tax
Prior period (over) provision
INCOME TAX EXPENSE
(B) DEFERRED INCOME TAX (REVENUE) EXPENSE INCLUDED IN INCOME TAX EXPENSE COMPRISES:
Decrease/(increase) in deferred tax assets (excluding tax losses) (note 7.2)
(Decrease)/increase in deferred tax liabilities (note 7.2)
Decrease/(increase) in opening balances
DEFERRED TAX EXPENSE
(C) NUMERICAL RECONCILIATION OF INCOME TAX EXPENSE TO PRIMA FACIE TAX PAYABLE:
Profit before income tax expense
Tax at the Australian tax rate of 25% (30 June 2022 : 26%)
Tax effect of amounts which are not deductible in calculating taxable income:
Non-deductible expenses
Sundry items
Permanent differences
Difference in overseas tax rates
Income tax (over) provided in previous years
Utilisation of tax losses
INCOME TAX EXPENSE
Weighted average effective tax rates
(D) DEFERRED INCOME TAX AT 30 JUNE RELATES TO THE FOLLOWING:
Deferred tax liabilities
Fair value adjustment on biological assets
Prepayments
Other
Deferred tax assets
Difference in accounting and tax depreciation
Stock
Accruals
Provisions
Other
DEFERRED (INCOME)
For details of the franking account, refer to Note 15
2023
$
2022
$
474,957
314,179
(162,994)
626,145
56,997
94,188
162,994
314,179
388,692
731,916
(284,492)
836,116
(63,034)
510,497
284,492
731,915
9,713,889
2,428,471
5,427,667
1,356,917
64,642
(14,840)
6,475
(64,767)
(162,994)
(1,630,842)
626,145
6%
28,530
(23,671)
64,166
(53,302)
(284,492)
(252,032)
836,116
15%
(133,390)
(604,734)
5,189
34,012
(69,422)
(58,404)
(25,685)
86,144
10,371
(151,185)
(10,001)
104,277
34,972
92,764
(6,705)
(52,052)
(5,946)
(447,425)
Annual Report 2023 | ATLAS PEARLS | 35
Notes to the consolidated financial statements
7.2
TAX ASSETS AND LIABILITIES
(A) LIABILITIES
CURRENT
Income tax payable
NON-CURRENT
Deferred tax liabilities comprises of temporary differences attributable to:
Agricultural and biological assets at fair value
Prepayments
Other
TOTAL DEFERRED TAX LIABILITIES
(B) ASSETS
Deferred tax assets comprises of temporary differences attributable to:
Agricultural and biological assets at fair value
Accruals
Provisions
Tax allowances relating property, plant and equipment
Other
Previously recognised deferred tax assets
Tax losses recognised
TOTAL DEFERRED TAX ASSETS
(C) RECONCILIATIONS
The overall movement in deferred tax account is as follows:
Opening balance
(Charge) to statement of profit or loss and other comprehensive income
Decrease in opening balances
CLOSING BALANCE
2023
$
2022
$
124,098
398,583
1,839,386
1,705,996
4,971
16,528
10,160
50,541
1,860,885
1,766,697
34,360
-
629,859
50,516
82,376
797,111
-
-
92,764
25,685
543,715
119,938
72,006
854,108
-
-
797,111
854,108
(912,583)
(314,179)
162,994
(465,159)
(731,916)
284,492
(1,063,768)
(912,583)
SIGNIFICANT JUDGEMENT
Deferred tax assets
Deferred tax assets and liabilities have been bought to account after considering the level of tax losses carried forward and available
to the Group against future taxable profits and the probability within the future that taxable profits will be available against which the
benefits of the deductible temporary difference can be claimed.
Losses can be carried forward indefinitely and have no expiry date. The balance of losses available to the Group at 30 June 2023 is
$9,042,671 (30 June 2022: $15,556,038).
36 | ATLAS PEARLS | Annual Report 2023
PART D - Cash flow information
PART E - Working capital
8.
Cash and cash equivalents
9.
Inventories
2023
$
2022
$
Cash at bank
7,845,286
2,995,131
Pearls
BALANCES PER STATEMENT OF
CASH FLOWS
7,845,286
2,995,131
Jewellery
TOTAL INVENTORY
2023
$
2022
$
3,017,706
2,925,746
302,148
242,194
3,319,854
3,167,940
Risk exposure
The Group’s exposure to interest rate risk is disclosed in note 16. The
maximum exposure to credit risk at the reporting date is the carrying
amount of each class of cash and cash equivalents mentioned above.
Cash not available for use
The Group has cash held as a guarantee as part of their obligations
under their lease agreements totalling $29,889 (30 June 2022: $29,696).
8.1
NOTES TO THE CASH FLOW STATEMENT
8.1.1 RECONCILIATION OF CASH
For the purposes of the statement of cash flows, 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 of 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 cash-flows is reconciled to the related items in the statement of
financial performance as noted above.
8.1.2 RECONCILIATION OF PROFIT/(LOSS) AFTER INCOME TAX
TO NET CASH INFLOW FROM OPERATING ACTIVITIES
NUMBER OF PEARLS ON HAND
100,174
127,761
SIGNIFICANT JUDGEMENT
Pearl and jewellery inventory is held at cost and value
assessed based on the fair value 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 2023, nil write off of pearl stocks has been
recorded (30 June 2022: $nil).
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.
10. Payables
Current
Provisions
Trade payables
Other payables and accrued expenses
2023
$
2022
$
2,971,185
2,731,110
659,440
97,934
311,792
498,923
2023
$
2022
$
TOTAL CURRENT PAYABLES
3,728,559
3,541,825
9,087,744
4,591,551
Other payables and accrued expenses
TOTAL NON-CURRENT PAYABLES
45,186
45,186
29,616
29,616
Profit after income tax
Depreciation and amortisation
Share-based payments
Foreign exchange (gain) unrealised
Income tax expense
290,944
175,328
(253,472)
626,145
312,258
78,430
(591,443)
836,116
Agricultural asset fair value (gains)/losses
(641,493)
(2,336,115)
Decrease/(increase) in trade and other
debtors
(145,896)
200,621
Decrease/(increase) in inventories
(1,325,938)
1,970,318
(Decrease)/increase in trade and other
creditors
Increase/(decrease) in provision
Increase/(decrease) in taxes
NET CASH OBTAINED IN OPERATING
ACTIVITIES
(1,252)
321,125
15,570
622,312
50,352
(447,424)
8,449,992
4,985,792
As at the date of this report the Company has not entered into any
non-cash financing or investing activities.
8.1.3 CREDIT FACILITIES
As at 30 June 2023 the Company had in place a bank overdraft loan
facility with the National Australia Bank with a limit of $2.5M (30 June
2022: $1.5M).
TOTAL PAYABLES
3,773,745
3,571,441
Non-current other payables comprise of accrued long service leave for
employees with more than five years tenure with the Company.
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.
Annual Report 2023 | ATLAS PEARLS | 37
Notes to the consolidated financial statements
PART F - Fixed assets and liabilities
11. Property, plant and equipment
2023
$
2022
$
2023
$
2022
$
(B) PEARLING PROJECT
Leasehold land and buildings
Carrying amount at beginning of the year
1,698,651
1,690,761
(A) NON-PEARLING ASSETS
Plant and equipment
- at cost
594,421
651,707
Reclassifications/disposals
Additions
- accumulated depreciation
(503,130)
(558,591)
Depreciation
91,291
93,116
Foreign exchange movement
1,640,577
1,289,707
(840,576)
(1,280,895)
(129,835)
(105,788)
48,504
104,866
Leasehold improvements
- at cost
299,596
292,801
- accumulated depreciation
(262,169)
(235,126)
Total non-pearling assets
37,427
128,718
57,675
150,791
Carrying amount at end of the year
2,417,321
1,698,651
Plant and equipment, vessels, and vehicles
Carrying amount at beginning of the year
4,056,439
3,268,783
(B) PEARLING PROJECT
Land (leasehold and freehold) and buildings
Additions
Reclassifications/disposals
Depreciation
- at cost
3,388,595
2,516,730
Foreign exchange movement
- accumulated depreciation
(971,274)
(818,079)
Carrying amount at end of the year
2,417,321
1,698,651
TOTAL CARRYING AMOUNT
Plant and equipment, vessels, vehicles
476,365
258,932
840,576
1,225,389
(1,106,516)
(899,288)
115,827
4,382,691
6,928,730
202,623
4,056,439
5,905,882
- at cost
13,680,437
12,020,273
- accumulated depreciation
(9,297,746)
(7,963,833)
Reconciliation of depreciation to the Statement of Profit or Loss and
Other Comprehensive Income:
2023
$
2022
$
Depreciation charge
(1,296,223)
(1,067,684)
Capitalised depreciation charge
1,117,934
898,108
Depreciation of property, plant and
equipment (PPE)
(234,616)
(169,576)
Depreciation of PPE
Amortisation of intangible asset
Amortisation of Right-Of-Use Asset
(234,616)
(169,576)
-
(56,328)
(86,263)
(56,419)
DEPRECIATION CHARGE (NOTE 5)
(290,944)
(312,258)
Total pearling project
4,382,691
6,800,012
TOTAL PROPERTY, PLANT AND EQUIPMENT
6,928,730
4,056,440
5,755,091
5,905,882
Reconciliations of the carrying amount for each class of property,
plant and equipment are set out below:
(A) NON-PEARLING ASSETS
Plant and equipment
Carrying amount at beginning of the year
Additions
Reclassifications/disposals
Depreciation
Foreign exchange movement
Carrying amount at end of the year
Leasehold Improvements
2023
$
2022
$
93,116
38,369
(3,552)
96,826
31,237
(1,996)
(38,637)
(35,471)
1,995
91,291
2,520
93,116
Carrying amount at beginning of the year
57,675
82,617
Additions
Reclassifications/disposals
Depreciation
Foreign exchange movement
Carrying amount at end of the year
-
-
-
-
(21,235)
(27,137)
987
37,427
2,195
57,675
38 | ATLAS PEARLS | Annual Report 2023
SIGNIFICANT JUDGEMENT
Each class of property, plant and 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 entity
includes the cost of materials and direct labour. Repairs and
maintenance carried out on the assets are expensed unless
there is a future 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 and Buildings improvements (5-10%), Vessels
(10%), and Plant and Equipment (10-50%). Depreciation on
property, plant and equipment which are directly related to
Biological Assets are capitalised to the carrying amount of
Biological Assets.
The estimations of useful lives, residual values and
depreciation methods require significant management
judgements and are regularly reviewed. If they need to be
modified, the depreciation and amortisation expense is
accounted for prospectively from the date of the assessment
until the end of the revised useful life (for both the current
and future years).
Construction in Progress
Included in pearling project land (leasehold and freehold)
and buildings is $1,073,298 (30 June 2022: $604,961) which
represents construction of buildings in progress at cost. These
expenses will be capitalised within property, plant and
equipment when a project is completed.
PART G - Funding, capital management
and equity
12. Borrowings
Current
Other loans
TOTAL CURRENT BORROWINGS
Non current
Other loans
TOTAL NON-CURRENT BORROWINGS
TOTAL BORROWINGS
2023
$
2022
$
-
-
-
-
-
1,125,000
1,125,000
-
-
1,125,000
Refer to Note 16.4 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 drawdown 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, canceled 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.
Annual Report 2023 | ATLAS PEARLS | 39
Notes to the consolidated financial statements
13. Contributed equity
2023
No. of
shares
2022
No. of
shares
2023
$
2022
$
427,871,758
427,871,758 36,857,415
36,857,415
427,871,758
427,871,758 36,857,415
36,857,415
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.
-
-
-
-
-
-
-
-
14. Reserves
Issued and fully
paid-up capital
Ordinary shares
Balance at
beginning of year
Shares issued
Share transaction
costs
Balance at end
of year
Treasury shares
Balance at
beginning of year
Shares released
Balance at end
of year
427,871,758
427,871,758 36,857,415
36,857,415
3,062,138
3,062,138
-
-
3,062,138
3,062,138
Treasury shares are shares in Atlas Pearls that are held by the Atlas
Pearls Ltd Executive Share Plan Trust for the purpose of issuing shares
under the Atlas South Sea Pearl Employee share plan. No treasury
shares were issued during the financial year ended 30 June 2023.
(30 June 2022: nil).
(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 18,366,884 unlisted options on issue at 30 June 2023 (2022:
18,758,055). Information relating to the Atlas Pearls Ltd Employee
Share and Incentive Plan, including details of options issued, exercised
and lapsed during the financial year and the options outstanding at
the end of the reporting period are set out in note 23.
(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 nil at 30 June 2023 (30 June 2022 : 5%)
2023
$
2022
$
Foreign currency translation reserve
(9,088,702)
(9,534,846)
Employee share reserve
Revaluation reserve
Total reserves
Movements:
Foreign currency translation reserve1
1,164,842
179,179
989,514
179,179
(7,744,681)
(8,366,153)
Balance at beginning of year
(9,534,846)
(10,814,945)
Currency translation differences arising
during the year
446,144
1,280,099
Balance at end of year
(9,088,702)
(9,534,846)
Employee share reserve2
Balance at beginning of year
Movement in employee share reserve
Balance at end of year
Revaluation reserve3
Balance at beginning of year
Balance at end of year
989,514
175,328
1,164,842
179,179
179,179
911,083
78,431
989,514
179,179
179,179
NOTES:
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.
15. Dividends
Dividend franking account
Franking credits available to shareholders of
the Company for subsequent financial years
based on a tax rate of 25%
2023
$
2022
$
1,305,572
1,305,572
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;
Franking debits that will arise from the payment of dividends
recognised as a liability at the reporting date; and
The Group has no external requirements imposed upon it in relation
to capital structure.
(ii)
(iii) Franking credits that will arise from the receipt of dividends
recognised as receivables at the reporting date.
40 | ATLAS PEARLS | Annual Report 2023
PART H - Risk management
16. Risk management
16.1 MATERIAL BUSINESS RISKS
Atlas Pearls’ approach to managing risk is documented in a Corporate
Risk Register reviewed and approved by the Board of Directors. The
risk register seeks to ensure that risk management is embedded
throughout the business and managed in a structured and systematic
manner. The risk registry is reviewed regularly by the Board and is
evaluated and updated as the Company’s business model evolves and
underlying risks change.
The Board has overall responsibility for managing the organisation’s
risks, and monitors management’s actions to ensure they are in line
with Company policy.
The following is a summary of the key continuing significant
operational risks facing the business and the way in which Atlas Pearls
manages these risks:
(I)
CORPORATE
The Company manages a number of corporate risks such as safety,
recruitment and retention of key employees, tax, foreign exchange,
purchasing and procurement, potential lower than anticipated
return on capital invested and potential lower underlying earnings.
All the aforementioned risks are managed through Atlas Pearls’ risk
management framework, which includes review and monitoring by
management, and the Board.
(II)
MATERIAL CONTRACTS
Atlas Pearls may enter into contracts with suppliers that exceed $1M.
Some of the key risks associated with these material contracts include
cash flow management, contract management, performance and
quality of the services being delivered, and reputation. Atlas Pearls
manages these material contracts with steering committee reviews,
operating reviews, and other strict project management practices.
External legal counsel may be involved. Atlas Pearls negotiates
favourable payment terms and reviews financial risk to manage cash
flow as effectively as possible.
(III)
CONSUMER PREFERENCES AND PRICING RISK
Atlas Pearls has exposure to pricing risk in relation to the sale of
pearls, specifically the weakening of customer demand resulting in
the softening of pearl prices. This risk also encompasses the volatility
from shifts in consumer preferences. To address these challenges, we
have implemented a multi-channel sales approach that provides the
ability to diversify our market presence by creating alternative revenue
streams. Additionally, the Company consistently monitors the market,
staying attuned to shifts in customer preferences and price trends. By
closely tracking these indicators, we can proactively adjust our pricing
strategy and sales and marketing efforts to align with evolving market
conditions.
(IV)
COMPETITION
To address the risk associated with market competition, Atlas
Pearls has developed strategies on multiple fronts. The Company
continuously invests in research and development activities, to
maintain our reputation as a producer of quality pearls, and to
innovate and differentiate our products from competitors. We
prioritise maintaining strong relationships with our customers, built on
trust, quality, and excellence. Atlas Pearls maintains a pricing structure
that takes into account market dynamics and competitive positioning.
The Company also reviews and assesses industry trends and emerging
competitors, allowing Atlas Pearls to proactively adapt our strategies
to remain one of the world’s largest producers and distributor of
South Sea pearls.
(V)
OPERATIONAL RISK
Operational risk pertaining to pearl quality are an ongoing risk to
Atlas Pearls. The Company’s proactive approach involves measures
like reviewing seeding procedures and grow-out times, diversifying
hatchery brood stock, refining the hatchery spawning strategy, and
genetic analysis of broodstock. These risks necessitate the Company
applying continuous procedural control at every phase of spat and
pearl production. Complementary initiatives encompass a genetics
project, probiotics research, and broodstock conditioning. These
strategies are closely monitored, with oyster growth and genetics
reporting being actively tracked to ensure effective risk management
aligned with the Company’s broader risk framework.
(VI)
COST CONTROLS, INFLATION, AND SUPPLY CHAIN
CONSTRAINTS
Rising input costs and supply chain constraints have the potential to
reduce profit margins where those costs cannot be recovered from
customers. Significant input costs include labour, components and
materials, and fuel. Atlas Pearls has the ability to recover costs through
the selling price of pearls. The Company sources components and
equipment from multiple suppliers and vendors, allowing us to get
the most competitive pricing on various input components. The
Company employs centralised logistics and purchasing personnel
to co-ordinate the movement of components and materials across
the Company’s pearl farms, and the pricing of those items. Senior
management monitors the effectiveness of this process regularly.
(VII)
POLITICAL, REGULATORY AND COMPLIANCE
Atlas Pearls is a global company and operates in numerous countries
around the world. The Company must comply with a range of
governance requirements which are conditions of its ASX listing.
New or evolving regulations and international standards are outside
the Company’s control and can often be complex and difficult to
predict. The potential development of international opportunities
can be jeopardised by changes to fiscal or regulatory regimes, adverse
changes to tax laws and the application thereof, or changes to existing
political, judicial or administrative policies, and changing community
expectations. Atlas Pearls seeks to manage and minimise this risk
through its existing risk management framework including Board
approved governance policies which are subject to regular review.
(VIII) ANTI-BRIBERY AND CORRUPTION
Atlas Pearls’ business activities and operations are located in
jurisdictions with varying degrees of political, economic and judicial
stability, including an inherently high risk of bribery and corruption.
This exposes Atlas Pearls to the risk of unauthorised payments, or
offers of payments, to or by employees or agents that could be
in violation of applicable anti-corruption laws. Atlas Pearls has a
clear Anti-Bribery and Corruption Policy and internal controls and
procedures to protect against such risks. However, there can be no
assurances that such controls, policies and procedures will absolutely
protect Atlas Pearls from potentially improper or criminal acts.
(IX)
ENVIRONMENTAL, SOCIAL, GOVERNANCE (ESG)
Atlas Pearls has a longstanding commitment to supporting our
villages, stakeholders, and communities around our farms. Building on
our ongoing environmental initiatives, and in a conscious approach
to building a sustainable business, the Board has begun the process
of developing a reporting framework to manage and monitor
the Company’s ESG impact. The Company continues to monitor
and review future impacts as new information and data becomes
available.
Annual Report 2023 | ATLAS PEARLS | 41
Notes to the consolidated financial statements
(II)
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 (‘JPY’), Indonesian Rupiah (‘IDR’) and US
Dollar (‘USD’). Foreign exchange risk arises from future commercial
transactions, 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.
The Group manages their foreign exchange risk against their
functional currency. Group companies review exposure on a regular
basis and will undertake hedging, if deemed appropriate, under
guidance of the Board of Directors. The majority of the Group’s cash
reserves are held in Australian banks with AAA ratings.
16.2 FINANCIAL RISK
(I)
FINANCIAL RISK
The Group’s activities expose it to a variety of financial risks (including
currency risk, interest rate risk, and price risk), credit risk, and liquidity
risk. The Group uses sensitivity analysis in the case of interest rate
and foreign exchange risks and ageing analysis for credit risk. Risk
management is carried out by the Board of Directors and senior
management.
The Group holds the following financial instruments:
2023
$
2022
$
Financial assets
Cash and cash equivalents
7,845,286
2,995,131
Trade and other receivables
300,619
240,047
TOTAL FINANCIAL ASSETS
8,145,905
3,235,178
Financial liabilities
Trade and other payables
Lease liabilities
Borrowings
706,253
223,132
450,214
279,046
-
1,125,000
TOTAL FINANCIAL LIABILITIES
929,385
1,854,260
GROUP SENSITIVITY ANALYSIS
Sensitivity analysis is based on exchange rates in USD and JPY increasing or decreasing by 10% and the effect on profit and equity.
Statement of financial
position amount AUD
Foreign exchange rate risk
30 June 2023
30 June 2022
-10%
10%
-10%
10%
2023
2022
Profit
Equity
Profit
Equity
Profit
Equity
Profit
Equity
Financial assets
Cash
7,845,286
2,995,131
622,701
Trade and other receivables
300,619
240,047
1,857
Financial liabilities
Trade and other payables
706,253
450,214
(2,820)
Borrowings
-
1,125,000
-
Total Increase/(Decrease)
621,738
-
-
-
-
-
(509,483)
(1,519)
2,307
-
(508,695)
-
-
-
-
-
117,148
4,520
(171)
-
121,497
-
-
-
-
-
(95,848)
(3,698)
140
-
(99,406)
-
-
-
-
-
Trade debtors relates to sales made in JPY and USD. Current
borrowings are all held in AUD. Not shown in the table above is the
exposure to exchange movements on the inter-company loans made
to the Indonesian subsidiaries. The loans are held in IDR and revalued
to AUD at each year end. The loan balance as at 30 June 2023 was
$3,690,050 (30 June 2022: $4,590,938). The inter-company loans are
eliminated on consolidation.
(iii)
CASH FLOW AND FAIR VALUE INTEREST RATE RISK
The Group’s main interest rate risk arises from its borrowings, which
were repaid on 30 September 2022. As such the Group considers that
any fair value interest rate risk or cash flow risk will be immaterial.
(iv)
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.
16.3 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 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 below.
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.
42 | ATLAS PEARLS | Annual Report 2023
16.5
FINANCING ARRANGEMENTS
The Group had access to the following borrowing facilities at the
reporting date.
Overdraft facility (NAB)
Loans
2023
$
2,500,000
-
2,500,000
2022
$
1,500,000
1,125,000
2,625,000
During the year ended 30 June 2023, the Company increased the
$1.5M working capital overdraft facility by a further $1.0M to $2.5M
with the National Australia Bank (NAB). The overdraft facility will be
secured by a registered company charge over the Company’s assets.
As at 30 June 2023 no amount has been drawn down on this facility
(30 June 2022: nil).
On 27 August 2020, the Group entered into a $4.5M loan agreement with
Boneyard Investments Pty Ltd (Boneyard) whereby Boneyard has agreed
to make a revolving loan facility available to Atlas Pearls at an interest rate
of 7.5% per annum. The loan was repaid in full and the loan finalised on
30 September 2022.
Impairment of financial assets
The Group hold trade receivables that are subject to the expected
credit loss model. While cash and cash equivalents are also subject to
the impairment requirements of AASB 9, the identified impairment
loss was immaterial.
Trade receivables
The Group applies the AASB 9 simplified approach to measuring the
expected credit losses, which uses a lifetime expected loss allowance
for all trade receivables. The expected credit losses have been grouped
based on shared credit risk characteristics and the days past due.
The assessment for expected credit losses requires a degree of
estimation and judgement. It is based on the lifetime expected credit
loss, grouped based on days overdue, and makes assumptions to
allocate an overall expected credit loss rate for each group. These
assumptions include recent sales experience, historical collection
rates, and forward-looking information that is available. The allowance
for expected credit losses is calculated based on the information
available at the time of preparation. The actual credit losses in future
years may be higher or lower.
Major purchases are invoiced as cash on delivery (COD). Smaller
accounts are provided 30-day credit terms and are usually paid by
their due date.
On that basis, the loss allowance as at 30 June 2023 and 30 June 2022
was determined to be nil.
Trade receivables are written off when there is no reasonable
expectation of recovery. Indicators that there is no reasonable
expectation of recovery include, amongst others, the failure of a debtor
to engage in a repayment plan with the Group and failure to make
contractual payments for a period of greater than 120 days past due.
Impairment losses on trade receivables are presented as net
impairment losses within operating profit. Subsequent recoveries of
amounts previously written off are credited against the same line item.
2023
$
2022
$
TRADE RECEIVABLES
Existing customers with no previous defaults
31,265
72,437
16.4
LIQUIDITY RISK
Prudent liquidity risk management implies maintaining sufficient cash,
the availability of funding through an adequate amount of committed
credit facilities, and the ability to close out market positions. The
Group manages liquidity risk by continuously monitoring forecast
and actual cash flows, and matching the maturity profiles of financial
assets and liabilities. Management aims at maintaining flexibility in
funding by keeping committed credit lines available. Surplus funds are
generally only invested in instruments such as on call 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 8) 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.
Annual Report 2023 | ATLAS PEARLS | 43
Notes to the consolidated financial statements
16.5 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
un-discounted cash flows.
Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.
30 June 2023
30 June 2022
s
h
t
n
o
m
6
n
a
h
t
s
s
e
L
$
s
h
t
n
o
m
2
1
-
6
$
s
r
a
e
Y
2
d
n
a
1
n
e
e
w
t
e
B
$
s
r
a
e
Y
5
d
n
a
2
n
e
e
w
t
e
B
$
l
a
u
t
c
a
r
t
n
o
c
l
a
t
o
T
s
w
o
fl
h
s
a
c
$
t
n
u
o
m
a
g
n
i
y
r
r
a
C
s
e
i
t
i
l
i
b
a
i
l
/
)
t
e
s
s
a
(
$
s
h
t
n
o
m
6
n
a
h
t
s
s
e
L
$
s
h
t
n
o
m
2
1
-
6
$
s
r
a
e
Y
2
d
n
a
1
n
e
e
w
t
e
B
$
s
r
a
e
Y
5
d
n
a
2
n
e
e
w
t
e
B
$
l
a
u
t
c
a
r
t
n
o
c
l
a
t
o
T
s
w
o
fl
h
s
a
c
$
t
n
u
o
m
a
g
n
i
y
r
r
a
C
s
e
i
t
i
l
i
b
a
i
l
/
)
t
e
s
s
a
(
$
706,253
-
-
-
-
-
- 706,253
706,253
450,214
-
-
- 1,125,000
-
-
-
-
-
450,214
450,214
- 1,125,000 1,125,000
30,553
33,021
69,878
89,680
223,132
223,132
27,634
29,972
63,427
158,012
279,046
279,046
Consolidated entity
Non-derivatives
Trade payables
Borrowings
Lease liabilities
TOTAL NON-DERIVATIVES
736,806
33,021
69,878
89,680 929,385 1,858,770 1,602,848
29,972
63,427
158,012 1,854,260 3,708,519
(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)
(c)
inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly (level 2), and
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 2023 and 30 June
2022 on a recurring basis:
30 June 2023
Level 1
Level 2
Level 3
$
$
$
Total
$
30 June 2022
Level 1
Level 2
Level 3
$
$
$
Total
$
Assets
Biological assets
TOTAL ASSETS
-
-
-
-
20,256,723
20,256,723
Biological assets
20,256,723
20,256,723
TOTAL ASSETS
-
-
-
-
17,647,227
17,647,227
17,647,227
17,647,227
Assets
VALUATION TECHNIQUES USED TO DERIVE LEVEL 2 AND
(B)
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.
The Group is exposed to financial risk in respect of its involvement
in primary production, which consists of 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
expenditure of cash in relation to the operation of the farm and the
harvesting of the pearls, and realisation of cash receipts from sales to
third parties. The Group ensures that it maintains sufficient working
capital to ensure that it can sustain its operation through any delays in
cash flow that may be reasonably foreseen.
Level 3 analysis: The finance and operations departments undertake
the valuation of the oysters. The calculations are considered to be
level 3 fair values. The data is taken from internal management
reporting and work completed by the executive within the respective
field teams to determine the material inputs in 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 point (C) below.
(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 2023 or 30 June 2022.
44 | ATLAS PEARLS | Annual Report 2023
(C)
FAIR VALUE MEASUREMENTS USING SIGNIFICANT
UNOBSERVABLE INPUTS (LEVEL 3)
PART I - Unrecognised items
The following table presents the changes in level 3 instruments for the
period ended 30 June 2023:
2023
$
2022
$
Changes in fair value of oyster stock
Opening balances 30 June 2022
17,647,227
17,244,175
Due to new stock
Due to mortalities
Due to ageing
Due to harvests
2,868,438
3,384,465
(3,988,080)
(3,347,124)
5,248,493
8,056,028
(5,935,534)
(6,854,583)
Due to price changes
4,416,179
(835,734)
CLOSING BALANCE AT 30 JUNE 2023
20,256,723
17,647,227
The key assumptions utilised to determine the fair market value of
oysters are detailed in note 4.1.
(D)
FAIR VALUES OF OTHER FINANCIAL INSTRUMENTS
The Group also has no financial instruments (2022: one) which are not
measured at fair value in the statement of financial position with the
following fair value as at 30 June 2023:
2023
2023
2022
2022
Carrying
amount
Fair value
Carrying
amount
Fair value
-
-
-
-
-
-
-
-
1,125,000
1,125,000
1,125,000
1,125,000
Bank Loan
Debt financing
TOTAL NON-CURRENT
BORROWING
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.
17. Events occurring after the reporting period
On 30 August 2023, the Company declared a final fully franked special
dividend of 0.035 cents per share. The total value of the payment is
$1.5M. The record date is 05 September 2023 with a payment date of
26 September 2023.
Other than the matter disclosed above, there have been no other
significant events after balance date which require disclosure.
18. Commitments
Atlas Pearls had one bank guarantee with the National Bank of
Australia (NAB) for a total of $29,889 at 30 June 2023 (30 June 2022:
$29,814). This guarantee has been taken out to secure the rental of the
Atlas Pearls corporate office in Subiaco, Western Australia.
19. Contingencies
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 program may result in future tax liabilities in
relation to prior year tax returns. All assessments received to date have
been brought to account.
PART J - Other
20. Subsidiaries
The consolidated financial statements incorporate the assets, liabilities
and results of the following subsidiaries in accordance with the
accounting policy described in note 25.2.
f
o
e
m
a
N
y
t
i
t
n
e
Perl’Eco Pty Ltd
Tansim Pty Ltd
Atlas Pearls Employee
Share Plan Pty Ltd
World Senses Pty Ltd*
P.T. Cendana Indopearls
P.T Disthi Mutiara Suci
P.T Cahaya Bali
Aspirasi Satria Sdn Bhd*
* dormant
s
e
r
a
h
s
f
o
s
s
a
l
C
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Percentage owned
e
n
u
J
0
3
3
2
0
2
100%
100%
e
n
u
J
0
3
2
2
0
2
100%
100%
n
o
i
t
a
r
o
p
r
o
c
n
i
f
o
e
c
a
l
P
Australia
Australia
100%
100%
Australia
50%
100%
100%
100%
100%
50%
100%
100%
100%
100%
Australia
Indonesia
Indonesia
Indonesia
Malaysia
The ultimate parent entity, Atlas Pearls Ltd, is incorporated in Australia.
Annual Report 2023 | ATLAS PEARLS | 45
Notes to the consolidated financial statements
21. Related party transactions
22. Parent entity financial information
SUBSIDIARIES
(A)
Interests in subsidiaries are set out in note 20.
KEY MANAGEMENT PERSONNEL
(B)
Detailed remuneration disclosures are provided in section 14.2 of the
Directors Report.
2023
$
2022
$
Short-term employment benefits
932,665
962,664
Long-term employment benefits
Post-employment benefits
Share-based compensation
(8,564)
65,119
38,553
12,692
57,357
29,839
1,027,573
1,062,552
(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
2023
$
2022
$
9,579,655
4,181,629
22,309,522
16,645,451
3,372,330
3,520,390
4,364,229
4,555,013
36,857,417
36,857,417
(c)
TRANSACTIONS WITH OTHER RELATED PARTIES
Share-based payment reserve
1,164,842
989,514
Director fees payable1
Expatriate medical insurance expenses2
2023
$
2022
$
1,706
11,123
12,829
5,417
10,543
15,960
Accumulated losses
PROFIT FOR THE YEAR
TOTAL COMPREHENSIVE PROFIT
(B)
CONTINGENT LIABILITIES
(25,756,494)
(26,627,963)
12,265,765
11,218,970
6,523,367
6,523,367
871,110
871,110
1. Non-Executive Director, Tim Martin is a director of Boneyard Investments Pty Ltd (note 17.4)
and a substantial shareholder of the Company (Additional ASX information: note (C)).
2. Expatriate medical insurance expenses relating to the spouse of Mark Longhurst, KMP until
31 December 2022.
The parent entity did not have any contingent liabilities as at 30 June
2023 (30 June 2022: nil). The parent entity did not provide financial
guarantees during the year (30 June 2022: nil).
(D)
LOANS FROM RELATED PARTIES
Refer to Note 16.4 for detailed disclosures on financing arrangements.
Loans detailed below are accounted for under current and non-current
liabilities (see note 12).
Beginning of the year
Loans advanced from
Principal repayments
Interest charged
Interest paid
END OF YEAR
2023
$
2022
$
1,125,000
4,000,000
-
-
(1,125,000)
(2,875,000)
21,267
(21,267)
-
184,777
(184,777)
1,125,000
(E)
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.
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.
SIGNIFICANT ACCOUNTING POLICY
The financial information for the parent entity, Atlas Pearls,
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 reviewed at each
reporting period for impairment indicators.
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.
46 | ATLAS PEARLS | Annual Report 2023
23. Share-based payments and options
23.1
EMPLOYEE SHARE PLAN
At the Extraordinary General Meeting on 29 April 2022 it was resolved
by the shareholders to approve the Atlas Pearls Ltd Employee Share
and Incentive Plan (Plan) and the issues of options to former Executive
Chairman, Geoff Newman. The Board adopted the 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, and employees for their past
performance
(b) Provide long-term incentives for participation in the Company’s
future growth
(c) Motivate Directors, Executives, employees, and generate loyalty;
and
(d) Assist to retain the services of valued Directors, Executives, and
employees
The Plan will be used as part of the remuneration planning for
Directors, Executives and employees. Under the Plan, participants are
granted options which can only vest if specific performance hurdles
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 receive
any guaranteed benefits.
I.
16,205,663 Options granted to employees (“ESOP”)
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 circumstance 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.
An option which has not vested will immediately lapse upon the first
to occur of:
I.
II.
The expiry of the option period;
If an eligible person’s employment or engagement with the
Company ceases because of an uncontrollable event, six months
(or such other period as the Board will in its absolute discretion
determine) from the date on which the eligible person ceased
that employment or engagement
If an eligible Person’s employment or engagement with the
Company ceases because of a controllable event, the last day of
any period specified in clause 25(b), subject to clause 25(a).
III.
23.2 OPTIONS ON ISSUE
The Group has the following equity compensation arrangements to
renumerate Directors, Executives and employees of the Group;
II.
2,552,392 Options granted to Atlas Pearls former Executive Chairman, Geoff Newman (“EC”)
Grant date
Vesting date
Expiry date
Options issued
Exercise price
Remaining at 30 June 2023
Grant date
Vesting date
Expiry date
Options issued
Exercise price
Remaining at 30 June 2023
Tranche 1
27 May 2022
30 June 2022
ESOP
Tranche 2
27 May 2022
30 June 2023
Tranche 3
27 May 2022
30 June 2024
30 September 2024
30 September 2024
30 September 2024
2,796,311
$0.065
2,718,077
4,194,474
$0.070
4,077,123
Tranche 1
29 April 2022
30 June 2022
EC
Tranche 2
29 April 2022
30 June 2023
9,214,878
$0.075
8,460,476
Tranche 3
29 April 2022
30 June 2024
30 September 2024
30 September 2024
30 September 2024
510,478
$0.065
510,478
765,718
$0.070
765,718
1,276,196
$0.075
1,276,196
Annual Report 2023 | ATLAS PEARLS | 47
Notes to the consolidated financial statements
MEASUREMENT OF FAIR VALUE
The fair value at grant date is independently determined using a Hoadley Trading and Investment valuation model, which 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.
Fair value at grant date
Share price at grant date
Exercise price
Volume weighted average
Expected future volatility
Risk free rate
Dividend yield
ESOP
EC
Tranche 1
Tranche 2
Tranche 3
Tranche 1
Tranche 2
Tranche 3
$0.0176
$0.0180
$0.0184
$0.0208
$0.0217
$0.0222
$0.042
$0.065
125%
100%
2.53%
Nil
$0.042
$0.070
133.3%
100%
2.53%
Nil
$0.042
$0.075
142.8%
100%
2.53%
Nil
$0.047
$0.065
125%
100%
2.45%
Nil
$0.047
$0.070
133.3%
100%
2.45%
Nil
$0.047
$0.075
142.8%
100%
2.45%
Nil
SHARES REMAINING AT YEAR END
The following options remain outstanding at year end.
24. Remuneration of Auditors
Balance at 30 June 2022
16,205,663
2,552,392
ESOP
EC
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:
BDO Australian firm
Audit and review of financial reports
ESG consulting services
BDO Indonesian firm
30 June
2023
$
30 June
2022
$
119,710
16,995
96,370
-
Audit and review of financial reports
49,377
52,562
TOTAL REMUNERATION FOR AUDIT SERVICES
169,087
148,932
TOTAL REMUNERATION FOR OTHER SERVICES
16,995
-
Granted during the period
Exercised during the period
Expired during the period
-
-
-
Forfeited during the period
(949,987)
-
-
-
-
BALANCE AT 30 JUNE 2023
15,255,676
2,552,392
The following share-based payment expenses were recognised to
profit and loss.
ESOP Options
EC Options
TOTAL SHARED-BASED
PAYMENT EXPENSE
2023
2022
148,084
27,244
15,246
63,185
175,328
78,431
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
and Incentive 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.
48 | ATLAS PEARLS | Annual Report 2023
25. Accounting policies
25.1 NEW AND AMENDED STANDARDS ADOPTED BY THE GROUP
The Group has applied the following standards and amendments for the
first time for their annual reporting period commencing 1 January 2023:
•
•
•
AASB 2020-1 Amendments to Australian Accounting Standards –
Classification of Liabilities as Current or Non-Current [AASB 101],
and
AASB 2021-2 Amendments to Australian Accounting Standards
– Disclosure of Accounting Policies and Definition of Accounting
Estimates
AASB 2021-5 Amendments to Australian Accounting Standards –
Deferred Tax Related to Assets and Liabilities Arising from a Single
Transaction.
The amendments listed above did not have any impact on the
amounts recognised in prior periods and are not expected to
significantly affect the current or future periods.
Certain new accounting standards, amendments to accounting
standards and interpretations have been published that are not
mandatory for 30 June 2023 reporting periods and have not been
adopted early by the Group. These standards, amendments or
interpretations are not expected to have a material impact on the
entity in the current or future reporting periods and on foreseeable
future transactions.
25.2 PRINCIPLES OF CONSOLIDATION
The consolidated financial statements incorporate the assets and
liabilities of all subsidiaries of Atlas Pearls as at 30 June 2023, and the
results of its subsidiaries for the period then ended. Atlas Pearls 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
de-consolidated 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.
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.
25.3
FOREIGN CURRENCY TRANSLATION
(A)
FUNCTIONAL AND PRESENTATION CURRENCY
Items included in the financial statements of each of the subsidiaries
within the Group’s entities are measured using the currency of the
primary economic environment in which the entity operates (“the
functional currency’). The consolidated financial statements are
presented in Australian dollars, which is Atlas Pearls 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.
Annual Report 2023 | ATLAS PEARLS | 49
Notes to the consolidated financial statements
(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.
25.4 COMPARATIVE FIGURES
When required by Accounting Standards, comparative figures have
been adjusted to conform to changes in presentation for the current
financial period.
25.5
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.
25.6
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, LONG SERVICE
LEAVE AND SUPERANNUATION
Provision is made for the Group’s liability for employee entitlements
arising from services rendered by employees to reporting date.
Employee entitlements expected to be settled within one year,
together with entitlements arising from wages and salaries, annual
leave, and sick leave, which will be settled after one year, have been
measured at their nominal amount. Other employee entitlements
payable later than one year have been measured at the present
value of the estimated future cash outflows to be made for those
50 | ATLAS PEARLS | Annual Report 2023
entitlements. Liabilities due to be paid within 12 months of the
reporting date are recognised in other payables. The liability for long
service is recognised in the provision for employee benefits.
Contributions are made by the Group to employee superannuation
funds and are charged as expenses when incurred.
25.7 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.
25.8 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.
25.9
FINANCIAL INSTRUMENTS
CLASSIFICATION AND MEASUREMENT
Except for certain trade receivables the Group initially measures a
financial asset at its fair value plus, in the case of a financial asset not at
fair value through profit or loss, transaction costs.
Under AASB 9 financial assets are subsequently measured at fair value
through profit or loss (FVPL), amortised cost, or fair value through
other comprehensive income (FVOCI). The classification is based on
two criteria: The Group’s business model for managing the assets;
and whether the instruments’ contractual cash flows represent
‘solely payments of principal and interest’ on the principal amount
outstanding (the ‘SPPI criterion’).
The new classification and measurement of the Group’s financial
assets are, as follows:
Debt instruments at amortised cost, for financial assets that are held
within a business model with the objective to hold the financial assets
in order to collect contractual cash flows that meet the ‘SPPI criterion’.
This category includes the Group’s trade and other receivables and
long-term loan receivable.
IMPAIRMENT
The Group assesses, on a forward-looking basis, the expected credit
losses (ECLs) associated with its debt instruments carried at amortised
cost and FVOCI. ECLs are based on the difference between the
contractual cash flows due in accordance with the contract and
all the cash flows that the Group expects to receive. The shortfall is
then discounted at an approximation to the asset’s original effective
interest rate.
For trade receivables, the Group has applied the standard’s simplified
approach and has calculated ECLs based on lifetime expected
credit losses. The Group has established a provision matrix that is
based on the Group’s historical credit loss experience, adjusted for
forward-looking factors specific to the debtors and the economic
environment. The loss allowance calculated for 30 June 2023 is
$nil due to past history with customers who have never previously
defaulted on amounts due.
For other debt financial assets, including long-term loan receivables,
the ECL is based on either the 12-month or lifetime ECL. The 12-month
ECL is the portion of lifetime ECLs that results from default events on
a financial instrument that are possible within 12 months after the
reporting date. When there has been a significant increase in credit
risk since origination, the allowance will be based on the lifetime ECL.
In all cases, the Group considers that there has been a significant
increase in credit risk when contractual payments are more than 30
days past due.
The Group considers a financial asset in default when contractual
payment are 90 days past due. However, in certain cases, the Group
may also consider a financial asset to be in default when internal or
external information indicates that the Group is unlikely to receive the
outstanding contractual amounts in full before taking into account
any credit enhancements held by the Group.
25.10
INCOME TAX
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 assets and liabilities have been bought to account after
considering the level of tax losses carried forward and available to the
Group against future taxable profits, and the probability within the
future that taxable profits will be available against which the benefits
of the deductible temporary difference can be claimed.
25.11 LEASES LIABILITIES
The Group leases offices in Subiaco, Western Australia and Sanur,
Indonesia. As the leases are of real estate, the Group has elected not to
separate the lease and non-lease components and instead accounts
for these as a single lease component. Lease terms are negotiated
on an individual basis and contain a wide range of different terms
and conditions. The lease agreements do not impose any covenants
other that the security interests in the leased assets that are held by
the lessor. Leased assets may not be used as security for borrowing
purposes.
A lease liability is recognised at the commencement date of a lease.
The lease liability is initially recognised at the present value of the
lease payments to be made over the term of the lease, discounted
using the interest rate implicit in the lease or, if that rate cannot be
readily determined, the consolidated entity’s incremental borrowing
rate. Lease payments comprise of fixed payments less any lease
incentives receivable, variable lease payments that depend on an
index or a rate, amounts expected to be paid under residual value
guarantees, exercise price of a purchase option when the exercise
of the option is reasonably certain to occur, and any anticipated
termination penalties. The variable lease payments that do not
depend on an index or a rate are expensed in the period in which
they are incurred.
Lease liabilities are measured at amortised cost using the effective
interest method. The carrying amounts are remeasured if there is a
change in the following: future lease payments arising from a change
in an index or a rate used; residual guarantee; lease term; certainty of
a purchase option and termination penalties. When a lease liability is
remeasured, an adjustment is made to the corresponding right-of-
use asset, or to profit or loss if the carrying amount of the right-of-use
asset is fully written down.
25.12 RIGHT-OF-USE ASSETS
A right-of-use asset is recognised at the commencement date of a
lease. The right-of-use asset is measured at cost, which comprises
the initial amount of the lease liability, adjusted for, as applicable, any
lease payments made at or before the commencement date net of
any lease incentives received, any initial direct costs incurred, and,
except where included in the cost of inventories, an estimate of costs
expected to be incurred for dismantling and removing the underlying
asset, and restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the
unexpired period of the lease or the estimated useful life of the asset,
whichever is the shorter. Where the consolidated entity expects to
obtain ownership of the leased asset at the end of the lease term, the
depreciation is over its estimated useful life. Right-of-use assets are
subject to impairment or adjusted for any remeasurement of lease
liabilities.
The Group has elected not to recognise a right-of-use asset and
corresponding lease liability for short-term leases with terms of 12
months or less, and leases of low-value assets. Lease payments on
these assets are expensed to profit or loss as incurred. Low-value
assets comprise IT equipment and vehicles.
Leases relating to the farms in Indonesia have been recognised as
right-of-use assets and are amortised over the life of the lease. There
is no lease liability as the leases have all been prepaid on inception of
the agreements.
25.13 TRADE RECEIVABLES
The Group’s customers are required to pay in accordance with agreed
payment terms. Depending on the capture of the sales, settlement
terms are either cash on delivery or 30 days from the date of invoice. Trade
receivables are recognised initially at the amount of consideration that is
unconditional unless they contain significant financing components,
when they are recognised at fair value. The Group holds the trade
receivables with the objective to collect the contractual cash flows
and therefore measures them subsequently at amortised costs using
the effective interest method.
Annual Report 2023 | ATLAS PEARLS | 51
Directors’ Declaration
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 2023 and of the performance for
the year ended on that date; and
comply with Accounting Standards, and the Corporations Act 2001 and other mandatory professional reporting
requirements.
(b)
(c)
(e)
the Company has included in the notes to the financial statements an explicit and unreserved statement of compliance with International
Financial Reporting Standards.
the Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer required by section 295A.
in the Directors opinion there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become
due and payable.
the remuneration disclosures included in the Directors’ Report (as part of audited remuneration report) for the year ended 30 June 2023
comply with section 300A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on behalf of the Directors by:
Geoff Newman
Chairman - 30 August 2023
52 | ATLAS PEARLS | Annual Report 2023
Additional ASX information
The following additional information is required by the Australian Securities Exchange. The information is current as at 14 August 2023.
(A)
DISTRIBUTION SCHEDULE AND NUMBER OF HOLDERS OF EQUITY SECURITIES AS AT 14 AUGUST 2023
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 –
100,000
100,001 – and
over
Ordinary Fully Paid Shares
139
372
268
Unlisted options: 6.5 cents,
exp 30/09/2024
Unlisted options: 7.0 cents,
exp 30/09/2024
Unlisted options: 7.5 cents,
exp 30/09/2024
-
-
-
-
-
-
-
-
-
736
11
3
-
331
14
22
29
The number of holders holding less than a marketable parcel of fully paid ordinary shares as at 14 August 2023 is 801.
(B)
20 LARGEST HOLDERS OF QUOTED EQUITY SECURITIES AS AT 14 AUGUST 2023
The names of the twenty largest holders of fully paid ordinary shares (ASX: ATP) as at 14 August 2023 are:
Total
1,846
25
25
29
Rank
Name
Shares
% of 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
Citicorp Nominees Pty Limited
HSBC Custody Nominees (Australia) Limited
Jingie Investments Pty Ltd
ABERMAC Pty Ltd
Morckstow Pty Ltd
Westwood Properties Pty Ltd
BNP Paribas Noms Pty Ltd
Mr Wesley Rtherford + Mrs Sian Rutherford
Mr Tingyao Xu
Ten Talents (2020) Limited
Chembank Pty Limited
Mr Cameron Beavis
Mr Paul Michael Butcher
Miss Kristie Birkbeck
Queensridge Investments Pty Ltd
Mr Timothy James Martin
Ms Jennifer Michelle Roughan
Mr Pierre Fallourd
Total
54,907,327
32,400,000
30,281,853
28,192,363
17,880,240
17,833,333
8,000,000
8,000,000
7,953,027
6,300,000
5,580,000
5,120,000
5,000,000
4,500,000
4,067,208
3,818,536
3,549,072
3,540,883
3,360,000
3,311,206
12.83
7.57
7.2
6.59
4.18
4.17
1.87
1.87
1.77
1.47
1.30
1.20
1.17
1.05
0.95
0.89
0.83
0.83
0.79
0.77
253,775,048
59.31
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.
(C)
SUBSTANTIAL SHAREHOLDERS IN ATLAS PEARLS LTD 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 and
Associates *
Shares
114,944,995
% Voting Power
27.09%
Date of Notice
4 May 2015
1.
*Includes shares held by Boneyard Investments Pty Ltd, Chemco Superannuation Fund Pty Ltd, Jingie Investments Pty Ltd, T. Martin, T. and W. Martin, J. Martin and J and B Martin.
Annual Report 2023 | ATLAS PEARLS | 53
Additional ASX information
(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 14 August 2023.
(F)
RESTRICTED SECURITIES AS AT 14 AUGUST 2022
There were no restricted securities on issue as at 14 August 2023.
(G)
VOTING RIGHTS
All fully paid ordinary shares carry one vote per ordinary share without restriction.
(H)
ON-MARKET BUY-BACK
The Company is not currently performing an on-market buy-back.
(I)
CORPORATE GOVERNANCE
The Board of Atlas Pearls Ltd 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
54 | ATLAS PEARLS | Annual Report 2023
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
Level 9, Mia Yellagonga Tower 2
5 Spring Street
Perth, WA 6000
PO Box 700 West Perth WA 6872
Australia
INDEPENDENT AUDITOR'S REPORT
To the members of Atlas Pearls Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Atlas Pearls Limited (the Company) and its subsidiaries (the
Group), which comprises the consolidated statement of financial position as at 30 June 2023, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement
of changes in equity and the consolidated statement of cash flows for the year then ended, and notes
to the financial report, including a summary of significant accounting policies and the directors’
declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i)
(ii)
Giving a true and fair view of the Group’s financial position as at 30 June 2023 and of its
financial performance for the year ended on that date; and
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the Financial
Report section of our report. We are independent of the Group in accordance with the Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code)
that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia
Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO
International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability
limited by a scheme approved under Professional Standards Legislation.
Accounting for Biological Assets
Key audit matter
How the matter was addressed in our audit
The Group’s biological assets, as disclosed in Note 4 to
Our audit procedures included, but were not limited
the financial report, was a key audit matter as the
to:
calculation of the fair value of the oysters requires
significant estimates and judgements by management.
The Australian Accounting Standards require biological
assets to be measured at fair value less costs to sell or,
in the absence of a fair value, at cost less impairment.
•
•
Considering the appropriateness of the valuation
methodology against the relevant Australian
Accounting Standards;
In conjunction with our valuation specialist,
reviewing the accuracy and integrity of
The Group have valued the biological assets at fair
management’s fair value model and the
value less costs to sell. The valuation requires
discount rate used by management;
management’s judgement in relation to estimating the
future selling prices, exchange rates, pearl size,
portion of marketable grade, mortality, costs to
complete and discount rate.
•
Attending the physical stocktake procedures and
verifying a sample of oysters on hand at
reporting date and agreeing this to the fair
value model;
•
Assessing the key inputs contained within the
fair value model, including the future selling
prices, incorporating any potential impact of
recent economic conditions, exchange rates,
pearl size, portion of marketable grade,
mortality and costs to complete; and
•
Evaluating the adequacy of the related
disclosure in Note 4 to the financial report.
Other information
The directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 30 June 2023, but does not include the
financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 15 to 20 of the directors’ report for the
year ended 30 June 2023.
In our opinion, the Remuneration Report of Atlas Pearls Limited, for the year ended 30 June 2023,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
BDO Audit (WA) Pty Ltd
Jarrad Prue
Director
Perth
30 August 2023
AUSTRALIA
HEAD OFFICE
26 Railway Road, Subiaco 6008, Western Australia
PO BOX: 248 Subiaco, Western Australia 6904
TEL.+61 8 9284 4249
EMAIL. atlas@atlaspearls.com.au
INDONESIA
HEAD OFFICE
Pertokoan Sanur Raya 18-19. Jl Bypass Ngurah Rai, Sanur, 80227 Bali
TEL. +62 361 284455
EMAIL. atlas@atlaspearls.com.au
FARM SITES
EAST JAVA, Banyu Biru
NORTH BALI, Penyabangan
FLORES, Labuan Bajo, Pungu Island
EAST NUSA TENGGARA, West Lembata
EAST NUSA TENGGARA, Lembata Bay
EAST NUSA TENGGARA, Alor Bay
RAJA AMPAT, Alyui Bay
Continue reading text version or see original annual report in PDF
format above