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. 

• 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