ATLAS PEARLS LTD — Interim / Quarterly Report 2021

Apr 29, 2021

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ASX Release 30 April 2021

Atlas Pearls: March 2021 Quarterly Update and Appendix 4C

Atlas Pearls Ltd (ASX: ATP) (“Atlas” or “the Company”) today announces an update for the Quarter Ending March 2021.

January to March 2021 Quarterly Results

Key items to note for the quarter are:

• Sales events for the quarter delivered revenue of $3m and significant cost savings have been made.

• New distribution networks that the Company has established as a result of COVID restrictions have generated revenue from new customers. The Company estimates that new customers comprise approximately 15% of revenue.

• The Company continues to have a multipronged approach to sales which include Online Pre-Auction Sales, Online Auction Events, Physical Auction of low-grade pearls and Private sales through physical inspection of pearls. Having the multifaceted sales approach has aided continuous stock movement and cash inflows despite COVID-19 restrictions and challenges.

• Global market conditions have shown improvement reflective from above valuation sold prices through Online Auctions and private sales.

• The Company’s harvest schedule remains in line with expectations. During the quarter, a total of 72,000 pearls were harvested.

• The Company spent $3.1m on pearling operations including $0.9m on product manufacturing and operating costs and $1.6m on staff costs. Please refer to section 1 of the Appendix 4C.

• Related party payments during the quarter total $83k which relates to the payment of Interest and Director Fees. Please refer to section 6 of the Appendix 4C.

April to June 2021 Outlook

Key items of note for April to June 2021 are:

• The Company’s next online auction is scheduled for 17 & 18 May and will include stock from all grow out farms; Alor, Pungu, Banyu Biru and Alyui.

• New pearls are becoming consistently available through the online buy now function.

• Private sales will continue to maintain client relationships,

• A 24-month harvest cultivation schedule will continue to be supported.

• 177,000 pearls are expected to be harvested in the June quarter which represents one third of the Company’s projected full year production.

This ASX announcement was approved for release by the Board of Atlas Pearls Ltd.

Investor & Media Queries:

Geoff Newman Executive Chairman Telephone: +61 8 9284 4249 Email: atlas@atlaspearls.com.au

END

ABOUT ATLAS PEARLS LTD

Atlas Pearls Ltd (ASX: ATP) is an Australian listed pearling business with core operations in Indonesia established in 1992. Atlas has earned an enviable reputation as a world leading pearl producer of “the queen of all gems”, the South Sea pearl, specialising in high quality white and silver pearls. Atlas operates pearl farms spread across the Indonesian archipelago, including Bali, Flores, and West Papua. Atlas is a fully integrated business including hatchery, seeding, harvesting, grading, trading, design and manufacturing capabilities to sell directly to customers through wholesale partners and via its retail outlets.

Atlas has been involved since its inception in managing active community relationships in Indonesia in the areas of environment protection, education and alternative livelihood programs.

26 Railway Road, Subiaco, WA 6008, Australia • PO Box 248, Subiaco, WA 6904, Australia

Telephone: (61) (8) 9284 4249 • Facsimile: (61) (8) 9284 3031 • Website: Atlaspearls.com.au

• Email: atlas@atlaspearls.com.au

Appendix 4C Quarterly report for entities subject to Listing Rule 4.7B

Appendix 4C

Quarterly report for entities subject to Listing Rule 4.7B

Name of entity

ATLAS PEARLS LTD

ABN

32 009 220 053

Quarter ended (“current quarter”)

31 March 2021

Consolidated statement of cash flows	Current quarter $A’000	Year to date (9 months) $A’000
1. Cash flows from operating activities 1.1 Receipts from customers 1.2 Payments for (a) research and development (b) product manufacturing and operating costs (c) advertising and marketing (d) leased assets (e) staff costs (f) administration and corporate costs 1.3 Dividends received (see note 3) 1.4 Interest received 1.5 Interest and other costs of finance paid 1.6 Income taxes paid 1.7 Government grants and tax incentives 1.8 Other (provide details if material) 1.9 Net cash from / (used in) operating activities	2,995 - (854) (39) - (1,635) (354) - - (96) (147) - -	9,853 - (3,510) (159) (204) (4,731) (1,000) - 2 (309) (436) - -
	(130)	(494)
2. Cash flows from investing activities 2.1 Payments to acquire: (a) property, plant and equipment (b) businesses (c) investments (d) intellectual property (e) other non-current assets	(199) - - - -	(833) - - - -

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Appendix 4C Quarterly report for entities subject to Listing Rule 4.7B

Consolidated statement of cash flows	Current quarter $A’000	Year to date (9 months) $A’000
2.2 Proceeds from disposal of: (a) property, plant and equipment (b) businesses (see item 10) (c) investments (d) intellectual property (e) other non-current assets 2.3 Cash flows from loans to other entities 2.4 Dividends received (see note 3) 2.5 Other (provide details if material) 2.6 Net cash from / (used in) investing activities	- - - - - - - -	- - - - - - - -
	(199)	(833)
3. Cash flows from financing activities 3.1 Proceeds from issues of shares 3.2 Proceeds from issue of convertible notes 3.3 Proceeds from exercise of share options 3.4 Transaction costs related to issues of shares, convertible notes or options 3.5 Proceeds from borrowings 3.6 Repayment of borrowings 3.7 Transaction costs related to loans and borrowings 3.8 Dividends paid 3.9 Other (provide details if material) Repayment of Lease Liabilities 3.10 Net cash from / (used in) financing activities	- - - - 49 (644) (6) - (84)	- - - - 3,664 (1,781) (66) - (268)
	(685)	1,549
4. Net increase / (decrease) in cash and cash equivalents for the period 4.1 Cash and cash equivalents at beginning of quarter/year to date 4.2 Net cash from / (used in) operating activities (item 1.9 above) 4.3 Net cash from / (used in) investing activities (item 2.6 above) 4.4 Net cash from / (used in) financing activities (item 3.10 above)	2,042 (130) (199) (685)	718 (494) (833) 1,549

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Appendix 4C Quarterly report for entities subject to Listing Rule 4.7B

Consolidated statement of cash flows	Current quarter $A’000	Year to date (9 months) $A’000
4.5 Effect of movement in exchange rates on cash held 4.6 Cash and cash equivalents at end of quarter	(45)	43
	983	983

5. Reconciliation of cash and cash equivalents at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts	Current quarter $A’000	Previous quarter $A’000
5.1 Bank balances 5.2 Call deposits 5.3 Bank overdrafts 5.4 Other (bank guarantee) 5.5 Cash and cash equivalents at end of quarter (should equal item 4.6 above)	853 - - 130	1,942 - - 100
	983	2,042

6. Payments to related parties of the entity and their associates 6.1 Aggregate amount of payments to related parties and their associates included in item 1 6.2 Aggregate amount of payments to related parties and their associates included in item 2	Current quarter $A'000
	(96)
	-

Note: if any amounts are shown in items 6.1 or 6.2, your quarterly activity report must include a description of, and an explanation for, such payments

Interest Payment ($83) Payment of Director Fees ($13k)

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Appendix 4C Quarterly report for entities subject to Listing Rule 4.7B

7. Financing facilities Note: the term “facility’ includes all forms of financing arrangements available to the entity. Add notes as necessary for an understanding of the sources of finance available to the entity. Total facility amount at quarter end $A’000 7.1 Loan facilities - NAB Business Overdraft 1,500 - Short Term Loan 291 - Shareholder Loan 4,500 - NAB COVID-19 SME Loan 222 7.2 Credit standby arrangements - 7.3 Other (please specify) 46 7.4 Total financing facilities 6,559 7.5 Unused financing facilities available at quarter end	Total facility amount at quarter end $A’000	Amount drawn at quarter end $A’000
	1,500	1,219
	291	291
	4,500	4,500
	222	222
	-	-
	46	46
	6,559	6,278
		281

• 7.6 Include in the box below a description of each facility above, including the lender, interest rate, maturity date and whether it is secured or unsecured. If any additional financing facilities have been entered into or are proposed to be entered into after quarter end, include a note providing details of those facilities as well.

Loan facilities include;

• AUD equivalent of JPY 24.5m provided by a Commercial Partner

• Shareholder loan of $4.5m, fully drawn down at 31 December, provided by Boneyard which is repayable in staged repayments by 30 September 2022 at 7.5% fixed interest

• NAB COVID-19 SME Loan payable by 30 June 2023 at 4.5% variable interest

• Other loans are insurance premium funding payable within 12 months

8. Estimated cash available for future operating activities	$A’000
8.1 Net cash from / (used in) operating activities (Item 1.9) 8.2 Cash and cash equivalents at quarter end (Item 4.6) 8.3 Unused finance facilities available at quarter end (Item 7.5) 8.4 Total available funding (Item 8.2 + Item 8.3) 8.5 Estimated quarters of funding available (Item 8.4 divided by Item 8.1)	(130) 983 281 1,264
	9.7
8.6 If Item 8.5 is less than 2 quarters, please provide answers to the following questions:

1. Does the entity expect that it will continue to have the current level of net operating cash flows for the time being and, if not, why not?

Answer:

1. Has the entity taken any steps, or does it propose to take any steps, to raise further cash to fund its operations and, if so, what are those steps and how likely does it believe that they will be successful?

Answer:

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Appendix 4C Quarterly report for entities subject to Listing Rule 4.7B

1. Does the entity expect to be able to continue its operations and to meet its business objectives and, if so, on what basis?

Answer:

Compliance statement

• 1 This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A.

• 2 This statement gives a true and fair view of the matters disclosed.

Date: 30 April 2021

Authorised by: The Board of Atlas Pearls Ltd

(Name of body or officer authorising release – see note 4)

Notes

1. This quarterly cash flow report and the accompanying activity report provide a basis for informing the market about the entity’s activities for the past quarter, how they have been financed and the effect this has had on its cash position. An entity that wishes to disclose additional information over and above the minimum required under the Listing Rules is encouraged to do so.

2. If this quarterly cash flow report has been prepared in accordance with Australian Accounting Standards, the definitions in, and provisions of, AASB 107: Statement of Cash Flows apply to this report. If this quarterly cash flow report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standard applies to this report.

3. Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity.

4. If this report has been authorised for release to the market by your board of directors, you can insert here: “By the board”. If it has been authorised for release to the market by a committee of your board of directors, you can insert here: “By the [ name of board committee – eg Audit and Risk Committee ]”. If it has been authorised for release to the market by a disclosure committee, you can insert here: “By the Disclosure Committee”.

5. If this report has been authorised for release to the market by your board of directors and you wish to hold yourself out as complying with recommendation 4.2 of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations , the board should have received a declaration from its CEO and CFO that, in their opinion, the financial records of the entity have been properly maintained, that this report complies with the appropriate accounting standards and gives a true and fair view of the cash flows of the entity, and that their opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.

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