Dear Shareholder, 1. Corporate I am pleased to be able to present the March 2003 update as your new Chairman, having taken over from Alex Kerr at the beginning of this year. As you will be aware, Alex is stepping down from his position as Director at the company’s next Annual General Meeting to be held on 21st May. Alex has been a director of Atlas Pacific Ltd since August 1993 and Chairman of the Board since May 1997. His involvement in this pearling venture predates his participation with Atlas Pacific and the company has benefited greatly from his stewardship and dedication. I take this opportunity on behalf of the current directors, shareholders and staff to thank Alex for his contribution to the Company and to wish him well in his future pursuits. We have also announced the retirement of our Indonesia based Director, Pak R.P. Poernomo from the Board of Atlas Pacific Ltd after more than seven years of service. Pak Poernomo will retire from the Board of the holding company at our May Annual General Meeting but will continue as President Director of the company’s Indonesian subsidiary, PT Cendana Indopearls. The company’s 2002 annual report was lodged with the Australian Stock Exchange on 27th March and this, along with the notice of meeting, will be forwarded to you before the end of April. Included with this update is a form which allows you to elect not to receive an annual report in the future. The cost to the company is considerable to produce and distribute the annual report. Some investors have more than one holding in the company which means that they receive multiple copies of the annual report and other correspondence. We would encourage multiple holdings to be amalgamated into a single parcel. If you require any information regarding the amalgamation of separate shareholdings, please contact our Company Secretary on the numbers below or the share registry, Computershare Investor Services by telephone (+61 8 9323 2000), facsimile (+61 8 9323 2096) or email perth.services@computershare.com.au. We would also recommend that where there are cases of multiple holdings, an election be made not to receive the annual report for all but one of these holdings. The annual report and all other relevant company information including ASX announcements are available on our web site (www.atlaspacific.com.au). The election not to receive the annual report is voluntary and can be reversed at any time. You will still receive all other security holding mailings including shareholder updates, notices of meeting and proxy forms if you make this election. The financial results for the Company’s 2002 fiscal year were reported in March 2003. The net profit after tax of $3,499,017 was below expectations. However, the Company has a strong balance sheet and is now in a position where it is essentially debt free with no outstanding options or other dilutionary securities. It is our intention to build on this sound base with strategies in place to increase the productivity of the company’s assets, which in turn should improve the revenue and net profit of the company. Having experienced an increase in the number of shares over the last 18 months through the conversion of 24,538,022 convertible notes and exercise of 8,521,215 options, the company’s objective is to ensure that the return on shareholder funds is increased to reflect the extra capital that has been employed. The company’s pearling business continues to operate at a relatively low cost compared to its peers and the lack of quota restrictions will continue to be advantageous in terms of allowing further growth. Strategies have been developed to provide the basis for expansion in pearl production but this will remain dependant upon factors such as the successful growth of juvenile oysters for seeding. Geographic diversification within Indonesia and other South-East Asian regions will provide a means of spreading sovereign and climatic risk that is experienced with the reliance on a single site as the company has done in the past. During the first quarter of this year the company has achieved sales to the value of $4.1 million. This includes sales from an auction which was held in Sydney in February at which the overall results were quite encouraging for the industry as a whole. With the global economic uncertainty and the current war in Iraq, the demand profile for pearls into the future is uncertain. The company has announced a one (1) cent fully franked dividend per share which will be paid on 30th April. The notice of meeting for this year’s Annual General Meeting provides information relating to a proposed Dividend Reinvestment Plan (DRP) which will allow shareholders to elect to reinvest their dividends and attain a discount of 5% on the issue price. If approved, this DRP will become effective for dividends payable after May this year. The farm at Alyui Bay in Papua continues to accommodate a growing population of mature seeded oysters. The seeding program for this year is running to plan and includes the first group of share-farm oysters that we have acquired through a joint venture arrangement with another Indonesian pearl farmer. Under this arrangement, we have been provided with mature oysters to seed and farm and upon the sale of these goods, the proceeds will be divided equally. The advantage of this arrangement is that the production cycle of pearls is reduced by two years (being the time that it would take to grow the oyster to maturity) and the company does not bear the risk or cost of raising the juvenile oysters to the point where they can be seeded. A third camp is close to completion at a location called Saylo in Alyui Bay. This will be the final infrastructure that will be developed at this site and it will allow an expanded seeding program to be carried out over a wider area of the water lease. The development of the joint venture hatchery and grow-out facility in Northern Bali is proving to be a successful diversification for the company. The hatchery has been able to produce several batches of spat which have been placed at sea. Recent wet weather has contributed to a reduction in the number of the spat from these spawnings and steps are being taken to limit these losses. Management believes that there will still be sufficient numbers of juvenile oysters grown to a suitable size to allow transportation to Waigeo Island to meet seeding targets in 2004/5. Spawnings will continue at this site while conditions are favourable. Negotiations are continuing to open further production facilities in Indonesia under shared arrangements. Details of these will be provided as and when these negotiations are finalised. We seek your feedback as to the type of information you find useful in these shareholder updates. I look forward to the challenges that being the Chairman of this company will bring and to contributing to the future prosperity of all the stakeholders.
Wally James Chairman 31 March 2003 |
