##### Table of Contents

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 20-F



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| ̈ |  | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
|- |  | ----------------------------------------------------------------------------------------------



OR



|x |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- |  | ------------------------------------------------------------------------------------



For the fiscal year ended December 31, 2002



OR



| ̈ |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- |  | ----------------------------------------------------------------------------------------



For the transition period from 
to



Commission file number 0-28186



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ATLAS PACIFIC LIMITED

(Exact Name of Registrant as Specified in its Charter)



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WESTERN AUSTRALIA,
AUSTRALIA

(Jurisdiction of incorporation or organization)



6 ROUS HEAD ROAD, NORTH FREMANTLE, WESTERN AUSTRALIA 6159

(Address of principal executive offices)



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Securities registered or to be registered pursuant to Section 12(b) of the
Act:



|Title of each class |  | Name of each exchange on which registered
|------------------- |  | -----------------------------------------
|None                |  | None                                     



Securities
registered or to be registered pursuant to Section 12(g) of the Act:



Ordinary Shares of Common Stock, as evidenced by American Depositary Shares* as evidenced by American Depository Receipts (Title of Class)



Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:



None



The Company had 87,810,256 Ordinary Shares of Common Stock outstanding as of December 31, 2002.



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* Each American Depository Share represents 20 Ordinary Shares of Common Stock.



Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.



Yes        x      No ̈



Indicate by check mark which financial statement item the registrant has
elected to follow.



Item 17  x     Item 18 ̈



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TABLE OF CONTENTS



|             |  |          |  |                                                                              |  | Page
|------------ |  | -------- |  | ---------------------------------------------------------------------------- |  | ----
|             | 
|INTRODUCTION |  | 1       
|             | 
|PART I       |  | 3       
|             |  |          | 
|             |  | ITEM 1.  |  | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS                        |  | 3   
|             |  |          | 
|             |  | ITEM 2.  |  | OFFER STATISTICS AND EXPECTED TIMETABLE                                      |  | 3   
|             |  |          | 
|             |  | ITEM 3.  |  | KEY INFORMATION                                                              |  | 3   
|             |  |          | 
|             |  | ITEM 4.  |  | INFORMATION ON THE COMPANY                                                   |  | 8   
|             |  |          | 
|             |  | ITEM 5.  |  | OPERATING AND FINANCIAL REVIEW AND PROSPECTS                                 |  | 20  
|             |  |          | 
|             |  | ITEM 6.  |  | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES                                   |  | 26  
|             |  |          | 
|             |  | ITEM 7.  |  | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS                            |  | 31  
|             |  |          | 
|             |  | ITEM 8.  |  | FINANCIAL INFORMATION                                                        |  | 32  
|             |  |          | 
|             |  | ITEM 9.  |  | THE OFFER AND LISTING                                                        |  | 33  
|             |  |          | 
|             |  | ITEM 10. |  | ADDITIONAL INFORMATION                                                       |  | 35  
|             |  |          | 
|             |  | ITEM 11. |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                   |  | 43  
|             |  |          | 
|             |  | ITEM 12. |  | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES                       |  | 45  
|             | 
|PART II      |  | 46      
|             |  |          | 
|             |  | ITEM 13  |  | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES                              |  | 46  
|             |  |          | 
|             |  | ITEM 14. |  | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |  | 46  
|             |  |          | 
|             |  | ITEM 15. |  | CONTROLS AND PROCEDURES                                                      |  | 46  
|             |  |          | 
|             |  | ITEM 16. |  | [RESERVED]                                                                   |  | 46  
|             | 
|PART III     |  | 47      
|             |  |          | 
|             |  | ITEM 17. |  | FINANCIAL STATEMENTS                                                         |  | 47  
|             |  |          | 
|             |  | ITEM 18. |  | FINANCIAL STATEMENTS                                                         |  | 47  
|             |  |          | 
|             |  | ITEM 19. |  | EXHIBITS                                                                     |  | 48  



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INTRODUCTION



Currency of Presentation and Definitions



As used herein, except as the context otherwise requires, the term Company refers to Atlas Pacific Limited, an Australian corporation, and its subsidiaries.
The term ADRs refers to the American Depositary Receipts of the Company, which evidence ownership of American Depositary Shares (ADSs) of the Company. Each ADR evidences ownership of a specified number of ADSs and each ADS
evidences ownership of 20 ordinary shares of the Companys common stock (the Shares).



The Companys fiscal year ends on December 31 of each year. References in this document to a particular year are to the fiscal year unless otherwise indicated.



The Company furnishes the Bank of New York, as depositary for its ADSs (the
Depositary), with annual reports containing audited consolidated financial statements and an opinion thereon by the Companys independent public accountants. Such financial statements have been audited in accordance with Australian
auditing standards. The Depositary makes such reports available for inspection by the record holders of ADRs. The Company also furnishes the Depositary with financial statements prepared in accordance with Australian Accounting Standards
(AAS), which are required to be furnished to shareholders under Australian law. AAS differs from U.S. Generally Accepted Accounting Principles (US GAAP) in certain material respects. Accordingly, the Companys audited
consolidated financial statements include a reconciliation of certain line items to US GAAP See Item 17. Financial StatementsNote 33 to Financial Statements.



The Company publishes its consolidated financial statements expressed in Australian Dollars.
In this document, references to US dollars or US$ are to the currency of the United States of America and references to Australian Dollars or A$ or AUD are to the currency of Australia.
Solely for convenience, this annual report on Form 20-F contains translations of certain Australian dollar amounts into US dollars at specified rates. These translations should not be construed as representations that the Australian dollar amounts
actually represent such US dollar amounts or could have been or could be converted into US dollars at the rates indicated or any other rates. Unless otherwise indicated, the translation of Australian dollars into US dollars has been made at the rate
of A$1.00 = US$0.5625 the Noon Buying Rate in New York City for cable transfers in Australian dollars as certified for customs purposes by the Federal Reserve Bank of New York (the Noon Buying Rate) on December 31, 2002. For information
regarding rates of exchange between Australian dollars and US dollars for 1998 to the present, see Item 3. Selected Financial Consolidated DataExchange Rates.



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Forward Looking Statements



This Annual Report contains forward-looking statements as that term is used in
the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on current expectations rather than historical facts and they are indicated by words or phrases such as anticipate, estimate,
expect, project, believe, intend, envision, and similar words or phrases. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause
actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Some of the factors that would affect our financial performance,
cause actual results to differ from our estimates, or underlie such forward-looking statements, are set forth in various places in this report, including but not limited to Item 3.D Risk Factors.



These risks include, but are not limited to, the economic and socio-political climate in the
areas in which the Company operates; storms, weather patterns, water pollution or other events which increase the projected mortality rate or decrease the projected quality of the Companys oysters and pearls; changes in the worldwide supply
and demand for South Sea pearls; increases in labor costs in Indonesia and general economic factors in markets where the Company plans to sell its pearls; and the exchange rate of Japanese Yen, which is the predominant currency for dealing in
pearls, against the AUD and other currencies.



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PART I



|ITEM 1. |  | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
|------- |  | -----------------------------------------------------



Not required.



|ITEM 2. |  | OFFER STATISTICS AND EXPECTED TIMETABLE
|------- |  | ---------------------------------------



Not required.



|ITEM 3. |  | KEY INFORMATION
|------- |  | ---------------



| | A. |  | Selected Consolidated Financial Data
| | -- |  | ------------------------------------



The selected consolidated financial information set forth below has been derived from the Companys audited financial statements and the notes thereto contained
elsewhere herein. Such financial statements have been prepared in accordance with AAS, should be read in conjunction with, and are qualified in their entirety by reference to, the Companys audited consolidated financial statements and notes
thereto. The financial results should not be construed as indicative of financial results for subsequent periods. See Item 4. Information on the Company and Item 5. Operating and Financial Review and Prospects.



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|                                                                                                |  | Years Ended December 31, |  
|----------------------------------------------------------------------------------------------- |  | ------------------------ | -
|Income Statement Data                                                                           |  | 2002(1) (US$)            |  
|Australian Accounting Principles:(2)                                                            |  |                          |  
|Revenue                                                                                         |  | 6,379,565                |  
|Net income (loss) from continuing operations                                                    |  | 1,968,197                |  
|Net income (loss) from operations                                                               |  | 1,968,197                |  
|Net income (loss)                                                                               |  | 1,968,197                |  
|Net income (loss) per share-basic                                                               |  | 0.0238                   |  
|Net income (loss) per share-diluted                                                             |  | 0.0227                   |  
|Weighted average number of ordinary shares outstanding                                          |  | 82,724,884               |  
|Weighted average number of diluted shares outstanding                                           |  | 87,910,235               |  
|U.S. Generally Accepted Accounting Principles:                                                  |  |                          |  
|Revenue                                                                                         |  | 6,379,565                |  
|Amortization of goodwill                                                                        |  | 141,715                  |  
|Gain/(loss) on foreign exchange derivatives                                                     |  | (3,554                   | )
|Stock Options issued to employees                                                               |  | (20,475                  | )
|Capitalization of administration costs                                                          |  | 273,950                  |  
|Net income (loss)                                                                               |  | 2,359,835                |  
|Net income (loss) per share  basic (before cumulative effect of change in accounting policy)   |  | 0.0285                   |  
|Net income (loss) per share  basic (after cumulative effect of change in accounting policy)    |  | 0.0285                   |  
|Net income (loss) per share  diluted (before cumulative effect of change in accounting policy) |  | 0.0264                   |  
|Net income (loss) per share  diluted (after cumulative effect of change in accounting policy)  |  | 0.0264                   |  
|Weighted average number of basic ordinary shares outstanding                                    |  | 82,724,884               |  
|Weighted average number of diluted shares outstanding                                           |  | 89,284,659               |  



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|                                                                |  | Years Ended December 31, |  
|--------------------------------------------------------------- |  | ------------------------ | -
|Balance Sheet Data                                              |  | 2002(1) (US$)            |  
|Australian Accounting Principles(2)                             |  |                          |  
|Cash and cash equivalents                                       |  | 3,442,392                |  
|Total assets                                                    |  | 13,339,958               |  
|Total current liabilities                                       |  | 1,563,924                |  
|Long-term debt and capital lease obligations                    |  |                         |  
|Shareholders equity (excluding minority interests) (AAP)(2)    |  | 11,776,034               |  
|U.S. Generally Accepted Accounting Principles:                  |  |                          |  
|                                                                |  |                          |  
|Goodwill (Note 33.2 Financial Statement)                        |  | 141,717                  |  
|Financial instruments (Note 33.5 Financial Statements)          |  | 112,102                  |  
|Inventory (Note 33.8 Financial Statements)                      |  | (334,663                 | )
|Total assets                                                    |  | 13,259,115               |  
|Total current liabilities                                       |  | 1,563,924                |  
|Long-term debt and capital lease obligations                    |  |                         |  
|Shareholders equity (excluding minority interests)(US GAAP)(2) |  | 11,695,191               |  
|Dividends paid per share                                        |  | 0.0225                   |  

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|(1) |  | U.S. dollar amounts have been translated at the Noon Buying Rate on December 31, 2002 of A$1.00 = US$0.5625. Such translations are provided for information purposes only.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) |  | The Companys financial statements have been prepared in accordance with AAS. Certain line items have been reconciled to US GAAP to assist U.S. persons in evaluating such data.
The complete reconciliation of such line items is set forth in Item 17. Financial Statements  Note 33 to Financial Statements.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Exchange Rates



Solely for informational purposes, this annual report contains translations of certain Australian dollar amounts into or from US dollars at
a specified rate. See Introduction. These translations should not be construed as representations that the Australian dollar amounts represent the US dollar amounts indicated, or could be converted into or from US dollars at the rate
indicated. The exchange rate on July 15, 2003 was A$1.00 = US$0.6518



The
following table sets forth, for the months indicated, certain information concerning the Noon Buying Rate for Australian dollars expressed in US dollars per A$1.00:



|Month Ending      |  | High   |  | Low   
|----------------- |  | ------ |  | ------
|December 31, 2002 |  | 0.5660 |  | 0.5589
|January 31, 2003  |  | 0.5922 |  | 0.5629
|February 28, 2003 |  | 0.6075 |  | 0.5843
|March 31, 2003    |  | 0.6161 |  | 0.5905
|April 30, 2003    |  | 0.6262 |  | 0.5970
|May 31, 2003      |  | 0.6585 |  | 0.6298



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The following table sets forth, for the years indicated, certain information concerning the Noon Buying Rate for
Australian dollars expressed in US dollars per A$1.00:



|Year Ended December 31, |  | Average(1)
|----------------------- |  | ----------
|1998                    |  | 0.6291    
|1999                    |  | 0.6457    
|2000                    |  | 0.5757    
|2001                    |  | 0.5117    
|2002                    |  | 0.5448    

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|(1) |  | Represents the average of the Noon Buying Rates on the last day of each month during the relevant period.
|--- |  | ---------------------------------------------------------------------------------------------------------



| | B. |  | Capitalization and Indebtedness
| | -- |  | -------------------------------



Not required.



| | C. |  | Reasons for the Offer and Use of Proceeds
| | -- |  | -----------------------------------------



Not required.



| | D. |  | Risk Factors
| | -- |  | ------------



The Companys business, financial condition and operating results could be adversely affected by any of the following factors. The risks and
uncertainties described below are not the only ones that the Company faces. Additional risks and uncertainties not currently known to the Companys management, or that the Companys management currently thinks are immaterial, may also
impair the Companys business operations.



The
Companys operations are based in Indonesia, which has been subject to recent economic and socio-political unrest. Some parts of Indonesia have experienced social, ethnic and economic disruption. In November 1999, the Company abandoned one
of its cultivation sites in part due to increasing unrest in the area. The province of Papua, where the Companys water leases are located, is agitating for independence. The Company monitors the socio-political situation closely. In the event
of civil unrest, there is an evacuation plan in place to protect the Companys employees. Security personnel are employed to provide protection to employees and company assets to the best of their ability. It is difficult to predict what will
occur. If the employees are forced to leave the project, the Company does not expect it will be able to salvage any of the oysters or pearls and this will have a material adverse effect on the Companys business, operations and financial
condition.



The cultivation process for South Sea pearls
requires certain environmental conditions. Any change in weather or water conditions could have a material adverse effect on the Companys pearl production. The cultivation process depends on certain environmental factors, including
consistently warm sea water temperature, fully saline water conditions, adequate tidal flow to distribute the food supply and availability of phytoplankton food. There are only a few areas in the world that meet such requirements. The water areas
encompassed by the Companys water leases present ideal conditions for pearl cultivation. The conditions in these areas, however, are subject to change based on normal weather patterns. The



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Company has no control over these weather patterns. In 2002, weather patterns caused by El Niñoaffected the Companys ability to raise
juvenile oyster. As a result the Company has had to obtain juvenile oyster from other sources. The Company anticipates that its rearing of oysters will continue to be affected by natural weather patterns. There can be no assurances that if these
weather patterns continue the Company will have access to other sources of oysters for the pearl cultivation process or if available, will be available on favorable terms. The failure to maintain an adequate supply of juvenile oysters for nucleation
could have a material adverse effect on the Companys pearl cultivation process.



The Companys oysters are sensitive to disease.The Companys oysters are placed in panels and baskets in the sea. Although, the Companys employees continuously clean the oysters, certain
foreign organisms can enter the oyster and eat the oyster or cause diseases. The cultivation process for pearls takes approximately two years from the time the oyster is seeded; therefore, the loss of oysters due to disease could have a material
adverse effect on the Companys production process and generation of revenue.



The sale of pearls is dependent upon a strong economy. The sale of pearls is sensitive to fluctuations in the global economic cycle. The Companys pearls compete with several other types of jewelry such as
precious metals and precious gem stones for consumer disposable income. Unfavorable general economic conditions have an adverse effect on consumer spending for such items, and therefore on the Companys sales.



The price for pearls is subject to fluctuation based on supply and
quality.The price that the Company can obtain for its pearls is significantly dependent on the supply of pearls and their quality. Due to the small number of cultivators of South Sea pearls, it is difficult to predict how many pearls will be
available for sale in any given year. In addition, although the Company closely monitors its pearl cultivation process, it is difficult to predict the quality of pearls that will be harvested in any given year. Significant increases in the supply of
pearls or decreases in the quality of the Companys pearls could have a material adverse effect on the Companys revenues.



The Company is dependent on a small number of key expatriate managers. The Companys cultivation process is very technical. The Company
depends on a small number of key expatriate managers who supervise the cultivation process. Due in part to the remote location of the Companys pearl farms, the Company has limited access to a skilled work force, and the replacement of these
managers could be difficult. The loss of the services of any of these individuals could materially and adversely affect the Companys pearl production, business and financial condition.



The Company is exposedto fluctuations in exchange rates. The
majority of the revenues the Company derives from the sale of its pearls occurs in Japanese Yen. The Companys revenues are reported, however, in Australian Dollars. Fluctuation in the exchange rate of Japanese Yen to the Australian Dollar
could have a material adverse effect on the Companys revenues.



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|ITEM 4. |  | INFORMATION ON THE COMPANY
|------- |  | --------------------------



A. History and Development of the Company



Atlas Pacific Limited is incorporated as a public company in Australia and operates under the Corporations Act 2001. The company operates under an Australian Company
Number 009 220 053 and an Australian Business Number 32 009 220 053. The Company is listed on the Australian Stock Exchange (ASX), which is governed by the ASX Listing Rules. The Companys domicile is Australia and its registered
office and principal place of business is 6 Rous Head Road, North Fremantle, Western Australia 6159 (tel +61 8 9336 7955, fax +61 8 9336 7966).



The Company was incorporated on February 28, 1987 as Atlas Pacific Gold N.L. for the purpose of acquiring all of the capital stock in Sharcon, a company that owned
options to acquire mineral and precious metal mining tenements. In June 1987, the Company raised A$5 million through an Australian public offering and, shortly thereafter, listed its shares on the ASX. The Company used the proceeds from this
offering to acquire the stock of Sharcon and to explore the existence of gold and other precious and semiprecious metals in mining tenements in Western Australia and New Zealand.



From 1987 through 1988, the Company explored various mining tenements and sought proposals to mine those locations that the Company believed
to contain ore deposits. The Company never commenced mining due to the closure of a nearby ore treatment facility, which the Company planned to use to process the ore. Between 1988 and 1993, the Company sold most of its mining interests and
investigated other potential business opportunities. The Company did not generate revenue from its mining operations and has disposed of all its mining interests. It no longer pursues mineral exploration activities.



In 1993, the Company invested in the Indonesian pearling project (the Pearling
Project) with a number of other joint venturers. The Pearling Project operates an oyster hatchery and farm for the purpose of cultivating South Sea pearls. See Business Overview  Pearling. On January 20, 1994, the Company
changed its status from a No Liability (NL) company to a company limited by shares and changed its name to Atlas Pacific Limited.



PT Cendana Indopearls (Cendana), an Indonesian-approved foreign investment company, owns and operates the Pearling Project. The Company acquired a 75%
interest in the Pearling Project by purchasing all of the capital stock of Tansim Pty Ltd., an Australian corporation (Tansim), in June 1993. Simultaneously, Tansim purchased additional capital stock from other Cendana shareholders so
that it owned a 75% interest in Cendana. Tansim purchased the remaining 25% interest in Cendana from the other shareholders in exchange for 5,375,000 Shares and options to purchase an aggregate of 8,062,500 Shares of the Company in October 1999.
Following Indonesian government approval of the transaction, the shares and options were issued on October 14, 1999. During 2002, 7,996,215 of these options were exercised at a price of A$0.30 each, and on October 14, 2002, the remaining 66,285
options were cancelled.



In March 1999, the Company raised approximately
A$3,703,201 through the issuance of convertible notes at A$0.15 per note. The Company issued a total of 24,688,009 convertible notes. The purpose of the issuance was to provide ongoing working capital, fund new pearling



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assets and relocate the Companys Indonesian pearling operations from Kupang to Waigeo Island. The majority of these notes (23,806,942) were converted
into Shares during the year 2001 and an additional 731,080 notes were converted into Shares during 2002. In March 2002, the remaining 149,987 of notes were redeemed by the Company for their face value.



The Companys principal focus remains on pearl production in Indonesia. At December 31,
2002, 57% (A$13.5 million) of the Companys total assets were employed in Indonesia, principally in oyster stocks, plant and equipment.



During the last and current financial years, the Company did not received an indication of any public takeover offers by third parties in respect of the Companys
Shares or by the Company in respect of other companies shares.



B. Business Overview  Pearling



Introduction



A pearl is a lustrous
concretion produced by certain bivalve mollusks including mussels and oysters. Natural pearls consist almost entirely of nacre, which is the substance forming the inner layers of the mollusk shells. Nacre, also referred to as mother-of-pearl, is
composed primarily of aragonite crystals. The pearl is an abnormal growth resulting from the invasion of the body of the mollusk by a minute particle of foreign matter, or nucleus, such as a fine grain of sand. The particle acts as an
irritant in the mollusk and becomes coated with layer upon layer of nacreous material. Approximately 30% of cultivated mollusks reject the nucleus and do not produce pearls. Both marine and freshwater mollusks produce pearls, and the most commonly
used mollusk for the production of pearls is the oyster.



There are several
types of pearls cultivated around the world. The four major categories of cultured pearls are (1) Akoya pearls produced in the seas around China and Japan, (2) freshwater pearls produced mainly in China, (3) South Sea pearls produced primarily in
Australia, Indonesia, Philippines, and Myanmar, and (4) black South Sea pearls produced in Tahiti and several other Pacific Islands. Prices of pearls vary enormously. The retail value of a good quality 8 millimeter Akoya necklace with approximately
55 pearls could be A$2,000 (US$1,023), whereas the retail price of a good quality South Sea pearl necklace of approximately 25 pearls could be several hundred thousand dollars. The same size necklaces of inferior quality pearls could retail for as
little as US$100 and US$1,000, respectively.



There are several factors which
determine the value of a pearl. These factors include size, shape, color, skin quality and lustre. As the size of a pearl increases, its value increases exponentially. With respect to shape, the most valuable pearls are spherical. Half-round, button
and drop shapes are less valuable than spherical pearls, but are still considered to be quality pearls. Circles and irregular shaped pearls, or baroques, are the least valuable shapes of pearls.



Pearl coloration varies widely, with the most valuable shade being gold. South Sea pearls may
be silver, cream, yellow or gold. The Pinctada maxima oyster, which the Company uses, produces pearls colored from silver through to gold. There are two varieties of this oyster. The silver lip variety produces the valuable silver-white pearl
and the gold lip variety produces cream, yellow and highly sought after gold colored pearls. Another species of oyster, Pinctada margerifera,



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produces pearls which are referred to as black pearls, ranging in color from purple through green and black/gray.



The final significant determinant of pearl value is skin quality and lustre. The less
blemishes and pit marks the greater the value of the pearl. Lustre refers to the appearance of a pearls surface judged by its brilliance and ability to reflect light. The greater the lustre, the more valuable the pearl.



Pearl Cultivation



Pearls have been cultured successfully since 1920 using a process developed in Japan in
which the oysters are nucleated or seeded. In this process, a nucleus is introduced into the oyster and the oyster then deposits layers of nacre around the bead. This process takes approximately two years for South Sea
pearls. Today, cultured South Sea pearls are not easily distinguished from naturally occurring pearls.



Pearl cultivation traditionally relied on the availability of wild oysters, or shell, which were nucleated to form pearls. However, hatchery-reared oysters have become an increasingly popular means of cultivating
pearls. By using hatchery-reared oysters, pearl farmers are able to control oyster breeding to improve the quality of the oysters that will be nucleated. This, in turn, produces higher quality pearls.



Pearls have been successfully cultivated in Japan, China, Tahiti, the Cook Islands, Myanmar,
Australia, the Philippines and Indonesia. Ideal conditions for the Pinctada maxima oyster, which produces the South Sea pearl, exist in certain select regions of the worlds equatorial and tropical waters located 20 degrees north and
south of the equator between Myanmar in the west and Northern Australia and the Indonesian province of West Papua (formerly Irian Jaya) in the east. Indonesia lies in the middle of this region. These regions provide the following natural
environmental factors necessary to cultivate pearls: the availability of phytoplankton food upon which the filter feeding oysters rely; adequate tidal flow to distribute the supply of food; warmer sea water temperatures without abrupt fluctuations
of more than a few degrees and fully saline, as opposed to brackish, water conditions.



The South Seas Pearl Industry



Australia is the largest and most experienced producer of South Sea pearls. The pearling industry in Australia produces approximately A$200 million per annum, or
approximately 60% in value, of the worlds supply of South Sea pearls. The bulk of Australian pearls are produced in Western Australia. Western Australia manages the industry on a quota system with a total permitted annual catch of 520,000 wild
shell shared among sixteen pearl oyster licenses. The quota is not divided equally, and the two largest pearling operators control over 50% of the quota. Family groups or small partnerships tightly control the licenses. The authorities in Western
Australia have issued a license to only one new participant since 1989.



Although the technology is available to introduce hatchery programs in Western Australia, high production costs, particularly labor costs, have limited the development of such programs. In addition, Western Australia recently extended its
quota system to embrace hatchery-reared oysters in addition to wild shell. Because of the fixed quota system and restrictive hatchery



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policy, expansion opportunities for Australian pearl producers are limited. Profitability is also restricted. The only ways to increase profitability are
through improvement in pearl quality or reduction in costs of production. Thus, the Australian pearling industry is virtually closed to new participants unless they are prepared to acquire an existing operation.



By comparison, the pearling industry in Indonesia is relatively unregulated. The Indonesian
government has issued South Sea pearling licenses to approximately 97 companies. Through natural attrition of businesses the number of functioning pearl businesses in Indonesia has dropped to around 48, most of which are small concerns. Due to a
lesser abundance of wild shell and lower labor costs, there is much heavier emphasis on breeding programs in Indonesia than in Australia.



Despite temporary setbacks, production in Indonesia has grown substantially in the last 10 years. The value of such production is less than that of Australia due to the
lower quality and size of the pearls. The Company believes that within the next decade, Indonesia could overtake Australia as the worlds major producer of silver and gold South Sea pearls because the Indonesian pearling industry is
significantly less regulated than in Australia and technological improvements in the Indonesian cultivation process are taking place.



The Company also believes that the pearling conditions in Indonesia offer some advantages to those in Australia. The waters are warmer for a longer period of time, which
facilitates a longer growing season for the pearls. This can result in larger, more valuable pearls. There is also less variation in water temperature throughout the year, which may produce healthier pearl oysters.



The Indonesian government continues to encourage foreign investment by establishing a
favorable investment vehicle. This investment structure, known as a PMA company, offers investors, among other things, tax concessions and remissions on duty of essential imports. Likewise, Indonesia does not levy sales tax on exported
products, which includes the Companys pearls.



There can be no
assurances, however, that the Indonesian pearl production will continue to grow to the point where it will overtake Australia as the worlds largest producer of South Sea pearls or that the Indonesian government will maintain favorable
investing vehicles for foreign investments.



The Pearling
Project



General



In 1990, a group of joint venture parties commissioned an extensive marine review and survey
to locate the best possible pearl farm site within a narrow belt of equatorial waters centered on the Indonesian Islands and Northern Australia. Based on the results of such study, they chose a location for the pearl farm at Lelindo Point, West
Timor, Indonesia in 1991 and commenced construction in 1992. On October 16, 1992, Ardindo Nusa, on behalf of the Joint Venture, entered into a lease for five hectares (12.3 acres) of land at Lelindo Point. The Joint Venture constructed a hatchery,
laboratory, administrative offices, workshop, store room and accommodations for expatriate managers on such land. The Venturers began commercial production of oysters at the hatchery in 1993.



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On September 4, 1994, the Joint Venture entered into an additional lease for 0.3 hectares (0.74 acres) of land located on
Kambing Island overlooking the nursery, (collectively, with the Lelindo Point land lease, Kupang). In addition, on September 8, 1995, Cendana received Presidential approval for its water leases. These waters were used as a nursery for
young oysters. See Item 4.D Information on the Company  Property, Plant and Equipment.



During 1998, the Kupang area became a less desirable location for the Companys operations and the Company began to develop facilities at Waigeo Island, in the province of Papua. By the end of January 1999, the
Company had reduced its operations at the Kupang facility to hatchery and grow-out facilities only. The majority of the nucleated oysters were successfully transported to the Companys new pearl farm at Waigeo Island. During November 1999, the
Company decided to close down the Kupang facility and concentrate its resources on its pearl farming activities at the Companys newer facility in Papua. Land-based industrial development near the Kupang facility, an increased number of ships
traveling past the farm leases and pearl farm security issues all contributed to reducing the attractiveness of the Kupang site in West Timor. In addition, the influx of militia from East Timor following the deployment of UN Interfet forces in
September seriously compromised the safety of the Kupang-based personnel. In December 2000, the Company finalized negotiations with an Indonesian company for the sub-lease of the land, buildings and water leases comprising the Kupang facility for a
period of five years.



During 1997, Cendana entered into water leases for
approximately 2,500 hectares at Alyui Bay, Waigeo Island, Papua (formerly known as Irian Jaya) in northern Indonesia. Cendana also entered into a land lease for five hectares near these water leases. The leases are for 25 years and expire in
September 30, 2022. The Company developed the site as a pearl farm and hatchery and began relocating nucleated oysters to this site in 1997. See Item 4.D Information on the Company  Property, Plant and Equipment.



Alyui Bay has proven to be a successful pearl farming site. The Company commenced commercial
pearl harvests at this site in 1999, with an excellent quality of pearls being produced. Significant infrastructure has been developed at Alyui Bay including three accommodation camps, a modern hatchery, engineering workshop, fuel storage, operating
shed and boat building facilities. The farm accesses some of its labor force from a nearby village while in excess of 150 staff are accommodated at the farm camps in fully equipped facilities.



In July 2002, the Company secured a 70% interest in a hatchery and associated sea leases at
Banyupoh on the Indonesian island of Bali. Equipment from the original Kupang hatchery was re-commissioned for use at this facility at minimal cost. A technological breakthrough in September 2002 saw production at Banyupoh fast-tracked when the
Company successfully transferred live larvae from Alyui Bay to the newly upgraded facility. These larvae have successfully grown into healthy juvenile oysters in the waters adjacent to the Banyupoh hatchery.



Several successful spawnings using specially selected Alyui Bay broodstock have resulted in
commercial batches of juvenile oysters being produced. Apart from the obvious benefit of providing a viable alternative source of pearl oysters to the main pearling center of Alyui Bay, this new venture, with its close proximity to Denpasar, its
ready and available workforce, and its cheaper infrastructure costs, has great potential to reduce the Companys cost of juvenile oyster production.



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The Company monitors the socio-political situation in Indonesia closely. Unrest in Kupang was one of the reasons for the
closure of the Kupang facility and the Companys decision to transfer all resources to the Waigeo site. Indonesia continues to experience social, ethnic and economic disruption. The province of Papua where the Companys pearling leases are
located is agitating for independence. It is difficult to predict how these forces will influence the Pearling Project. The Company attempts to manage this issue by maintaining good relations with employees, nearby village communities, regional and
provincial authorities and the community at large. The tragic events that occurred in Bali in October 2002 are a clear reminder of the volatile world in which we now live. The Company continues to work hard in the critical areas of government
liaison, community relations and security. The Company is proud of the success it has had in improving the access of local communities to facilities such as medical care, education, transportation and better general living standards.



In the event civil unrest threatens the Companys farms at Waigeo Island or North Bali,
there is an evacuation plan in place to protect the expatriate and Indonesian national employees. If the expatriates are forced to leave, the Company does not expect that any of the Pearling Project could be salvaged.



Oyster Growth and Pearl Cultivation.



Traditionally, pearl cultivation has relied upon the availability of wild shell. The
Pearling Project, however, operates a modern hatchery located at Waigeo Island in which oysters are grown to cultivate pearls. By using hatchery-reared oysters instead of wild shell, the project scientists are able to control breeding to improve the
overall health and quality of the oysters. Only the best oysters are selected for cultivation, which in turn produces higher quality pearls.



The cultivation of pearls is a long and labor intensive process which starts with the spawning of adult oysters in the summer months. Approximately two dozen adult
oysters are placed in tanks in the hatchery where they spawn to produce oyster larvae. The larvae remain in the hatchery tanks where they swim and feed on algae. After approximately three weeks, the larvae stop swimming and settle on netting
material located in the tank. The larvae attach themselves to the nets and continue to grow and feed on increasing amounts of algae. After about one month the larvae are large enough to be seen with the naked eye and mature enough to be moved out of
the hatchery. The netting on which they have been growing is placed in a protective mesh and moved to the nursery in the open waters off Alyui Bay. The waters are rich in nutrients so that the juvenile oysters, or spat, are able to grow
quickly. The netting is suspended from long lines strung between floats in the water. The spat are left in these net structures for approximately three to four months. As the spat continue to grow on the netting, the nursery workers
continually thin out the spat and place them on additional sheets of netting.



Eventually the spat reach a size at which they are large enough to be placed in 28 pocket panels. These panels consist of a metal frame covered in netting that has been divided into 28 separate pockets. These panels are moved
out of the nursery area to various locations of the open-water pearl farms where the spat continue to grow. By placing the spat in different locations, the Company is able to reduce the risk of losing an entire crop due to the presence of adverse
conditions in any one area.



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After approximately a year to fifteen months, the spat, now shell, are too large for the 28 pocket panels and are placed
into larger eight pocket panels. The shell remain in the eight pocket panels until they are ready to be nucleated at 21-24 months of age.



When the shell are ready to be nucleated, they are brought to an operations room located nearby. Technicians then perform the exacting surgical procedure of placing a
nucleus in the oyster. The first step involves opening the oyster so that a nucleus can be implanted. This is accomplished by a procedure referred to as pegging the shell. Workers wedge wooden pegs in the shells as they open and close
during their normal feeding process. By opening the oysters in this manner instead of forcing them open, the strong muscle which holds the shell together is not torn, which is fatal to an oyster. After the oyster has been opened to a certain width,
the oyster is ready for surgery.



The oyster is placed on an operating table
where technicians carefully insert a nucleus composed of a bead made from the shell of a freshwater mussel into the oyster. In addition, they insert a small piece of nacreous tissue, known as saibo tissue, from a donor oyster. Nacreous
producing tissue is naturally found only on the outer lip of the oyster. Therefore, this tissue must also be inserted at the same location as the nucleus in order to produce a pearl. Approximately one out of every 20 oysters is used as a donor from
which the nacreous producing tissue is taken.



After the oysters have been
nucleated, they are placed in baskets and returned to the ocean where they are hung from the long lines. From the time of nucleation, it takes approximately two years to develop a pearl of 10 to 12 millimeters in diameter. If the pearl is of good
quality, at the same time the pearl is extracted, the oyster may be re-nucleated with another bead of the same size as the pearl which was extracted. This second harvest may produces a larger pearl of approximately 15 to 16 millimeters in diameter
in another two years. Results from this re-operating process at Alyui Bay have proved disappointing and in the future the practice will be limited to oysters that produce exceptional pearls and are in very good health at the time of the harvest of
the first pearl.



Throughout the entire process, workers continuously clean the
shell, the panels, baskets and the long lines because naturally occurring marine growth will compete with the oysters for food. In addition, foreign organisms can enter the oysters and either eat the oysters or cause disease. Finally, under normal
conditions, approximately 30% of the oysters will reject the nucleus and an additional 10% to 20% die. The oysters are x-rayed approximately eight months after being nucleated to determine which ones have rejected the nucleus. Any shell which reject
the nucleus can be re-nucleated. Sometimes the oyster will reject the nucleus but the saibo tissue is retained and a pearl forms around this. A pearl formed in this manner is called a keshi pearl. This is a seedless pearl and it will
usually have a slightly irregular shape.



As indicated above, the
environment has enormous influence over the success of pearling. Successful pearling requires careful consideration of environmental issues and the Company strives to ensure that its activities have a minimal impact on the environment. The Company
maintains a high standard in relation to environmental issues and adheres strictly to the guidelines established in the environmental report it submitted to the Indonesian Authorities in 2000 as part of its application to obtain a permanent
operating license.



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Towards the end of 2001, the Alyui Bay site came under the influence of El Niño, which has had a dramatic
influence on the agricultural sector in Australia and parts of South East Asia. The production of juvenile oysters, the lifeblood of the Companys pearling operation, was severely curtailed by this event. The Company took immediate action and
was able to produce commercial quantities of juvenile pearl oysters through an arrangement with a third party hatchery.



By mid-2002, the El Niño effect was being felt by a number of pearl producers throughout Indonesia and, as 2002 progressed, it became clear that the
unfavourable environmental conditions were not going to be short-lived. Very few juvenile oysters that were the progeny of the Alyui hatchery were successfully reared to maturity during 2002. The Company secured oysters for the 2003 operating season
through the third-party hatchery arrangement, the purchase of mature oysters from other Indonesian pearl farms and the development of share-farming arrangements. Under the share-farm arrangements, other entities provided juvenile oysters for seeding
and farming, and the proceeds from their sales will be divided between the Company and the oyster supplier.



Although the Company believes that El Niño conditions will diminish as 2003 progresses, the Company will continue to take steps to reduce the risks to future production as a result of insufficient
juvenile oysters being available.



Pearl Sales and Revenue



The Company completed its first pearl harvest in 1995. Harvests of
commercial size commenced in 1997. The majority of the Companys pearls are sold at auctions held twice per year by Pearlautore International Pty Ltd in Sydney. Pearlautore International receives a commission of between 5% and 25% for cleaning,
grading, valuing and selling the Companys product. The Company has appointed Pearlautore International as the exclusive valuer and distributor of its South Sea pearls until December 31, 2003. These auctions are usually held in February and
early September. Due to the timing of these events, pearls harvested from January through July can be presented for sale in the year of harvest, and the majority of pearls harvested after July are presented for sale at auction the following year. As
the bulk of the Companys pearls are harvested between November and January, some pearls harvested during 2001 were offered for sale in 2002.



Although the Company distributes all of its pearls through Pearlautore International, a variety of wholesale customers from many geographical locations purchase the
Companys pearls. Therefore, the Company does not rely on a single customer to purchase all of its pearls.



Pearls are classified into two categories. Sellable goods are made up of higher quality pearls in sizes of 9 mm in diameter or greater and are represented in
quality by grades A, B and C1. Commercial goods, although still of value, are made up of lower quality pearls and are a combination of grade C2 and below and all pearls under 9 mm in diameter. The vast majority of pearls sold by the
Company are sellable goods.



During 2000, the Company commenced
sales of oyster meat and mother of pearl oyster shell. The Company has experienced difficulty establishing strong markets for these products. The Company does not anticipate significant revenue from these sales in 2003.



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Competition and Markets



Competition in the South Sea pearling industry is becoming more intense. The Company competes with other South Sea pearl farmers in
Australia, Indonesia, the Philippines and other Southeastern Asian regions. Many of these pearlers have significantly greater financial resources and experience, and are better known than the Company. To a limited degree, the Company also competes
with producers of less expensive types of pearls such as the Akoya and freshwater pearls produced in Japan and China, respectively. The Company also competes for consumer disposable jewelry dollars with producers of other types of gems such as
diamonds, other precious stones and precious metals such as gold. Public demand for fine jewelry, including South Sea pearls, is also influenced by general economic conditions.



Based on world markets for pearls, the Company believes the demand for South Sea pearls is balanced with supply although there is a
continued downward trend in the price of pearls. There can be no assurance, however, that the South Sea pearl industry will not experience an imbalance between supply and demand. The Company cannot predict future demand nor what effect increases in
the supply of South Sea pearls will have on the market price for such pearls.



Up until the last decade, approximately 90% of Australias South Sea pearl production was sold in Japan. This amount has been reduced as the demand for such pearls has increased in the emerging markets of Hong Kong, South Korea,
Singapore, Taiwan, Europe and North America. Sales of South Sea pearls are primarily made to the gem jewelry trade.



The Company offers its pearls in all the major world markets without placing too much reliance on any one geographic market. The Companys principal markets are
Japan, Hong Kong, Europe and North America.



Foreign
Investment Regulations in Indonesia



In Indonesia, all proposed foreign
investment and expansion projects require the prior approval of the BKPM, Indonesias equivalent of a foreign investment review board. A company may seek such approval by filing an investment plan with the BKPM, which contains information
regarding the Companys share capital, loan capital, technical assistance agreements, and proposed joint venture agreements. Under applicable laws and regulations, the BKPM generally requires a foreign promoter of such a project to include a
local joint-venture partner.



In July 1993, approval was sought from the BKPM
for participation by foreign investors in the Pearling Project. A Joint Venture Agreement and an application to form Cendana as an approved foreign investment company, or PMA company, was lodged with the BKPM. These agreements were filed in December
1993. Following their approval in 1994, Cendana filed its Articles of Association with the Indonesian Ministry of Justice, which were approved in December 1994.



The laws and regulations applicable to PMA companies have, at frequent intervals since 1986, progressively relaxed the restrictions that were imposed by the Indonesian
Law on Foreign Capital Investment of 1967. These reform packages were intended to encourage foreign investment in Indonesia and to boost exports. In 1999, the BKPM granted permission for the Indonesian company, Cendana, to become a fully
foreign-owned company.



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Foreign Trade Regulations in Indonesia



In general, Indonesian government policy protects local interests. In 1990, however, the
government implemented certain reforms aimed at facilitating the flow of imports and exports into and out of Indonesia. With respect to imports, the deregulation plan included the replacement of non-tariff barriers into Indonesia with tariffs.



There are no restrictions on the export of pearls from Indonesia and no export
tax is payable. Indonesia, however, does impose a provincial retribution tax, which is applicable to the export of pearls. These payments amount to approximately 1.5% of the export value of pearls.



Indonesia has no exchange controls; therefore, foreigners are able to move funds freely in
and out of the country through accounts denominated in local or foreign currency.



Government Regulation



Australia



The activities of the Company
are subject to numerous laws and regulations, including those described herein.



The Australian Corporations and Securities Legislation (ACSL) is the main body of law governing companies incorporated in Australia, such as the Company. The Australian Securities and Investments Commission is an Australian
government instrumentality that administratively enforces the ACSL. The ACSL covers matters such as directors duties and responsibilities, preparation of accounts, auditor control, issue and transfer of shares, control of shareholders
meetings, rights of minority interests, amendments to capital structure, preparation and filing of public documents such as annual reports, changes in directors and changes to capital.



The Australian Stock Exchange imposes listing rules on all listed companies, such as the Company. The rules cover such issues as immediate
notification to the market of relevant information, periodic financial reporting and the prior approval of shareholder reports by the Australian Stock Exchange.



The Company believes that it is in material compliance with the foregoing Australian laws and regulations and with the rules of the Australian Stock Exchange.



Indonesia



Indonesian laws require Cendana to obtain certain tax identification numbers and
miscellaneous occupational licenses. Cendana has obtained all licenses from the BKPM, including its permanent operating license for the now-dormant Kupang site and a permanent operating license for the Waigeo site, which was granted during 2000. The
BKPM also requires Cendana to have its accounts audited annually by an Indonesian public accountant. Cendana complies with this requirement. Indonesia maintains other laws relating to corporate governance that are similar to laws of other
jurisdictions. The Company believes that Cendana is in material compliance with these laws and with other applicable Indonesian laws and regulations.



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C. Organization Structure



Atlas Pacific Limited owns all of the capital stock of Tansim Pty Ltd, an Australian company, which in turn owns all of the
capital stock of the Indonesian company, PT Cendana Indopearls. The functional relationship of the groups structure is described in the table below.



ATLAS PACIFIC LTD  Australian Company



|Functions                                                    |  | Assets                                                                                                           |  | Risks                                                                                                                          
|------------------------------------------------------------ |  | ---------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------
|1.      Marketing of pearls  cleaning, sorting and grading. |  | 1.      Marketing agreements and established marketing network.                                                  |  | 1.      Fluctuations in pearl market prices, fluctuations in exchange rates Yen/A$ and marketing
requirements.                 
|                                                             |  |                                                                                                                 
|2.      General business administration                      |  | 2.      Professional management and technical support with access to industry and business best
practice.        |  | 2.      Investment in S.E. Asia and aquaculture industry; market maker and investor/banker
reaction/perception of the business.
|                                                             |  |                                                                                                                 
|3.      Financial reporting and public relations             |  | 3.      Listed on Australian and International stock exchanges, relationships with investment
brokers and banks. |  |                                                                                                                                



TANSIM PTY LTD (100% owned by Atlas
Pacific Ltd)  Australian Company



|Functions                                         |  | Assets                                      |  | Risks                                        
|------------------------------------------------- |  | ------------------------------------------- |  | ---------------------------------------------
|1.      Holds investment in PT Cendana Indopearls |  | 1.      Investment in PT Cendana Indopearls |  | 1.      Unable to recover value of investment
|                                                  |  |                                            
|2.      Provided original project finance.        |  |                                             |  |                                              



PT CENDANA INDOPEARLS (100% owned by
Tansim Pty Ltd )  Indonesian Company



|Functions                                                                       |  | Assets                                                                                                                                           |                                    | Risks                                                                                                               
|------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------ | ---------------------------------- | --------------------------------------------------------------------------------------------------------------------
|1.      Breeding/hatchery                                                       |  | 1.      Operational personnel                                                                                                                    |                                    | 1.      Environmental and climatic variations  spat and oyster losses.                                             
|                                                                                |  |                                                                                                                                                 
|2.      Oyster farming                                                          |  | 2.      Fixed assets                                                                                                                             |                                    | 2.      Remote location  limits access to skilled workforce and emergency services, makes
logistics more difficult.
|                                                                                |  |                                                                                                                                                 
|3.      Seeding / nucleation                                                    |  |       Boats       Farm equipment       Hatchery buildings & equipment       Nucleation equipment       Accommodation/support infrastructure |                                    | 3.      Security and socio-political issues.                                                                        
|4.      Pearl harvesting                                                        |  |                                                                                                                                                  | 4.      Limited access to capital.
|5.      Administration of operations, security, logistics, community relations. |  |                                                                                                                                                  |                                   



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##### Table of Contents

| | D. |  | Property, plant and equipment.
| | -- |  | ------------------------------



The Company leases executive office space in the suburb of North Fremantle, Western Australia, from Arrow Pearling Co Pty Ltd with whom it shares the premises. This lease
commenced on September 1, 2001 and is for a period of three years. Pursuant to the terms of the lease, the rent is subject to increase based on changes in the Consumer Price Index. The Company currently pays A$36,144 annually for the North Fremantle
office space and has an option to renew the lease for an additional three years at the expiration of the lease.



On October 6, 1992, the Joint Venture (which later became PT Cendana Indopearls) entered into a 20-year lease for five hectares (12.3 acres) of land at Lelindo Point and
constructed a hatchery, laboratory, administrative offices, workshop, store room and accommodations for expatriate managers. On September 4, 1994, it entered into a 10-year lease for 0.3 hectares (0.74 acres) of land located on Kambing Island
overlooking the nursery. Ardindo Nusa entered into these land leases on behalf of the Joint Venture. Pursuant to the Sale Agreement, the Joint Venture agreed to transfer all assets, including the land leases, to Cendana. Accordinlgy, Ardindo Nusa
assigned all beneficial interest in the leases and any extensions thereof to the Company.



On March 10, 1993, Cendana entered into water leases, which leases were later amended. On September 4, 1995, Cendana received Presidential approval for its water leases. The various water leases are located within a
four mile radius of the Kupang hatchery and total 7.25 square kilometers (2.8 square miles). The leases are for a term of 30 years. Cendana used these waters as a nursery for young oysters and as a pearl farm for the nucleated oysters prior to the
closure of the Kupang facilities in November 1999.



During November 1999, the
Company decided to close the facility at Kupang. See Item 4. Information on the Company  The Pearling Project. In December 2000, the Company finalized negotiations with an Indonesian company for the sub-lease of the land, buildings
and water leases comprising the Kupang facility for a period of five years. The sub-lease commenced on February 2001. Cendana receives A$63,924 (US$34,800) per annum under the sub-lease. Pursuant to the terms of the sub-lease, Cendana will transfer
all of its beneficial interest in the land and water leases, and the building relating to the Kupang facility, to the sub-lessee upon the payment of all of the sub-lease payments due for the five year sub-lease period.



The Indonesian government owns all of the land and water upon which the Kupang pearl farm was
located and leases the property to Cendana for a fee of A$8,400 per annum. All of the government leases are conditioned upon Cendana meeting certain requirements, including the development and use of the leased property for pearling operations. The
sub-lease arrangement fulfills the Indonesian governments conditions. The Company remains primarily liable for the annual lease payments to be made to the government.



Cendana also has water leases that commenced on September 30, 1997 encompassing approximately 2,500 hectares (6,200 acres) on Waigeo Island,
which is near a town called Sorong in the Papua (formerly Irian Jaya) region of Indonesia. The leases are for a term of 25 years and expire on September 30, 2022. This site is approximately 1,500 kilometers north of Kupang in a remote area with
excellent waters for pearl farming. It was a condition to the Indonesia governments agreement to enter into the leases that the Company construct and operate a hatchery at the site. The Company completed construction of its hatchery during
1998.



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The hatchery had its initial production run in December 1998. The new facility has the potential to hold as many as 2.5
million baby oysters at any one time. The leased waters have the capacity to hold up to one million mature adult oysters. The Company moved its operations and all of its equipment to this site in November 1999 when it closed its facility in Kupang.



In addition to the hatchery, the Company has constructed an office, workshop,
accommodation buildings and a fuel storage facility at the Waigeo site. The Company also has a fleet of approximately 25 work vessels of various sizes and two medium size wooden hull transportation ships. A significant part of the farm
infrastructure is made up of longlines, floats and panels, which accommodate the oysters while they are being farmed. The Company has expended approximately A$3.8 million since 1997 to construct and purchase the capital improvements described above
at the Alyui Bay farm. These expenditures were funded from the Companys own cash reserves. Although the facilities continue to be developed, the main infrastructure at the Waigeo site is now complete.



In 1998, the Company leased approximately five hectares (12.3 acres) of land and 2,000
hectares (4,920 acres) of water at the Alyui Bay site. The Company pays 3,000,000 Indonesian Rupiah per annum (A$600) to the Kawe Tribe at Selpele village for the 25-year water and land lease, which both expire on July 1, 2023. The Company believes
that it is in compliance with all of the terms of the lease.



In July 2002, the
Company entered into a joint venture with PT Horiko Abadi (Abadi) whereby it secured an interest in a small hatchery and associated sea leases in Northern Bali at Banyupoh (the Bali Hatchery Joint Venture). The infrastructure
at Banyupoh occupies approximately 2 hectares (4.9 acres), and is relatively simple but has been sufficient for several successful oyster spawnings. In addition to the hatchery, there is a simple grading shed, accommodations for four employees and
an office. Abadi owns all of the land and buildings located at Banyupoh. In addition, Abadi owns the majority of the equipment on the farm. The Company transferred its equipment from the original Kupang hatchery, which was re-commissioned for use at
this facility at minimal cost, to the farm and pays A$30,000 annually for the use of the land, buildings and water leases. The farm has a sea lease for approximately 38 hectares (93 acres) in area. Abadi pays 62,500,000 Indonesian Rupiah (A$12,500)
per annum for the water lease in Banyupoh, and the leases expire in 2026. The Bali Hatchery Joint Venture uses the water leases to hold longline systems to accommodate the juvenile oysters once they leave the land-based hatchery.



|ITEM 5. |  | OPERATING AND FINANCIAL REVIEW AND PROSPECTS 
|------- |  | ----------------------------------------------



The Companys consolidated financial statements are prepared in accordance with AAS. Certain line items of such financial statements have been reconciled to US GAAP
to assist U.S. persons in evaluating such data. See Item 17. Financial Statements  Note 33 to Financial Statements. The following discussion references only the amounts computed in accordance with AAS.



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Overview



The following is an analysis of the Companys results of operations, liquidity and
capital resources. To the extent that such analysis contains statements that are not of a historical nature, such statements are forward-looking statements, which involve risks and uncertainties. See Introduction  Forward Looking
Statements.



In order to produce pearls the Company must maintain an
ongoing supply of oysters. The natural cycle of the oyster dictates that it is approximately four years from the spawning of the oyster until the production of a pearl. See Item 4.B. Business Overview. The Company capitalizes the costs
associated with the rearing, husbandry and nucleating of an oyster over the pearl production cycle. These capitalized costs are disclosed in the financial statements as Self Generating and Regenerating Assets. Upon the harvesting of the
oyster and the production of the pearl, an appropriate portion of this cost is transferred to the pearl inventory and ultimately to the cost of goods sold.



Total income derived by the Company from different sources during its most recent three fiscal years is set forth in the following table:



|                                   |  | 2002       |  | 2001       |  | 2000     
|---------------------------------- |  | ---------- |  | ---------- |  | ---------
|                                   |  | A$         |  | A$         |  | A$       
|Interest received                  |  | 364,886    |  | 199,181    |  | 202,970  
|Sales of oysters                   |  | 0          |  | 0          |  | 212,050  
|Sales of pearls                    |  | 10,581,317 |  | 10,856,678 |  | 6,501,117
|Sales of oyster shell and meat     |  | 17,495     |  | 53,819     |  | 28,980   
|Revenue from joint venture partner |  | 85,922     |  | 162,148    |  | 303,266  
|Foreign exchange gain              |  | 182,039    |  | 0          |  | 0        
|Miscellaneous                      |  | 109,789    |  | 64,158     |  | 1,795    
|                                   |  |            |  |            |  |          
|                                   |  | 11,341,448 |  | 11,335,984 |  | 7,250,178
|                                   |  |            |  |            |  |          



In addition, the following table
summarizes the results of the Companys pearl, oyster, oyster meat and shell sales for its last three fiscal years:



|Detail                           |  | 2002 |           | 2001 |   | 2000      |  | 1999* |           | 1998*
|-------------------------------- |  | ---- | --------- | ---- | - | --------- |  | ----- | --------- | -----
|Revenue from sale of pearls      |  |      |           |      |   |           |  |       |           |      
|Sellable Grade Pearls:           |  |      |           |      |   |           |  |       |           |      
|Value (A$)                       |  | $    | 9,851,511 |      | $ | 9,910,471 |  | $     | 6,322,474 |      
|Quantity (No.)                   |  |      | 47,508    |      |   | 47,380    |  |       | 35,093    |      
|Weight (Momme)                   |  |      | 29,324    |      |   | 31,356    |  |       | 22,969    |      
|Average price per momme (A$)     |  | $    | 336       |      | $ | 316       |  | $     | 275       |      
|Average weight per pearl (momme) |  |      | 0.617     |      |   | 0.662     |  |       | 0.655     |      
|Commercial Grade Pearls:         |  |      |           |      |   |           |  |       |           |      
|Value (A$)                       |  | $    | 583,727   |      | $ | 464,907   |  | $     | 174,207   |      



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|Detail                                        |  | 2002 |         | 2001 |   | 2000    |  | 1999* |         | 1998*
|--------------------------------------------- |  | ---- | ------- | ---- | - | ------- |  | ----- | ------- | -----
|Quantity (No)                                 |  |      | 22,630  |      |   | 18,575  |  |       | 3,796   |      
|Weight (Momme)                                |  |      | 12,791  |      |   | 9,660   |  |       | 2,180   |      
|Keshi (seedless) pearls:                      |  |      |         |      |   |         |  |       |         |      
|Value (A$)                                    |  | $    | 146,079 |      | $ | 481,300 |  | $     | 4,436   |      
|Weight (Momme)                                |  |      | 1,232   |      |   | 2,993   |  |       | 60      |      
|Revenue from sale of oyster shell & meat (A$) |  | $    | 17,495  |      | $ | 53,819  |  | $     | 28,980  |      
|Revenue from sale of juvenile oysters (A$)    |  | $    |        |      | $ |        |  | $     | 212,814 |      



| | A. |  | Operating Results
| | -- |  | -----------------



2002 Compared to 2001



The Companys revenues for 2002 were A$11,341,448, which represented an increase of A$5,464 compared to 2001 revenue. This increase was due primarily to an increase
in interest income and a foreign exchange gain. The increase in interest income of A$165,705 resulted from increased cash reserves held in deposit accounts and the foreign exchange gain of A$182,039 related to income generated from foreign exchange
contracts and derivative products the Company employs to hedge its foreign currency exchange risk.



The Companys revenue from the sale of pearls was A$10,581,317 in 2002 as compared to A$10,856,678 in 2001, a decrease of approximately 2.5%. Pearls are sold by weight, and revenue in 2002 declined due to the
smaller product the Company harvested in the second part of 2002 compared to the earlier harvest in January. This decline was offset in part by the increase in the average price per pearl. The average price per momme has trended upwards over the
last three years, which is an indication of the improvement in the quality of the Companys pearls. The increase in price is not indicative of the overall pearl market, which has stayed relatively flat over this period.



The Company nucleated 200,000 oysters 2002 compared with 238,000 in 2001. This decline will
adversely affect the number of pearls the Company can expect to harvest in the future. The number of oysters re-operated after harvest or as a result of rejecting the first nucleus was reduced in 2002 due to the poorer quality of pearls that were
produced from this type of operation to date. The Company will focus its attention on increasing the number of virgin oysters used in future seeding programs to target higher production of quality pearls. Thus, the Company will require more
juvenile oysters in the future.



The costs of good sold declined in 2002 to
A$2,493,667, from A$2,807,400 in 2001. This cost reduction was primarily due to the effect of a change in accounting principles that affected how the Company accounted for the administration expenses associated with its Indonesian operations. Prior
to 2002, administration costs and royalty payments due to Arrow Pearling Company were capitalized and considered to form part of the manufacturing cost of the pearls. Commencing in 2002, the Company began expensing administration costs for the
Indonesian



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operation and including these expenses in administration expenses. These expenses amounted to A$668,264 in 2002. This change in accounting treatment reduced
the Companys cost of goods sold in 2002 and increased its administration costs by the same amount in 2002. Also commencing in 2002, the Company began expensing the royalty payments due to Arrow Pearling as part of the cost of good sold in the
year such royalty payments were made. In 2002, the royalty payments amount to A$238,661. Without giving effect to this change in accounting principles, the cost of good sold increased in 2002 by A$354,531, or 13%, from 2001. This increase was
primarily due to an increase in the accumulated costs associated with the pearls that were harvested and sold during 2002. As the pearl farm has expanded over the last five years of operations, the costs of operations has increased at a faster rate
than the increase in production of pearls.



Administration expenses for 2002
were A$2,013,500, which represented an increase of A$833,585 compared to 2001. This significant increase is the result of the change in the accounting treatment of these costs in Indonesia, as described above. Without giving effect to this change in
accounting principles, administration expenses increased in 2002 by A$165,321, or 14%, from 2001. This increase was primarily due to increased labor cost in Australia and Indonesia, increased insurance costs and higher professional fees.



The borrowing costs of the Company declined from A$345,154 in 2001 to A$3,295
in 2002 as holders of the Companys convertible notes converted them into equity. All of the Companys notes had been converted or redeemed by March 2002.



The Company achieved a pre-tax operating profit of A$5,617,033 in 2002 compared to a pre-tax operating profit of A$5,702,355 in 2001. This
decrease of A$85,322, or 1%, is primarily due to the slight decline in total revenue and the slight increase in expenses that occurred in 2002.



The income tax expense of the Company increased significantly over the past three years from nil in 2000 to A$1,551,585 in 2001, and to A$2,118,016 in 2002. This increase
occurred as the Companys pre-tax operating profit increased, and as the Company exhausted its accrued tax credits and prior loss carryforwards that reduced its 2000 and 2001 tax liability. In 2002, the Company also incurred a taxable foreign
exchange gain in Indonesia as a result of revaluing the inter-company loan from Tansim Pty Ltd to PT Cendana Indopearls. The inter-company loan is denominated in Australian Dollars, and the unrealized gain or loss on this loan is assessable for tax
purposes in Indonesia. As a result of the movement of these currencies, there is an effect on the taxable gain or loss for the Company. The Company will continue to pay income tax on exchange rate gains and claim deductions for tax purposes on
foreign exchange rate losses in Indonesia in the future.



The Company
produced a net income of approximately A$3,500,000 for 2002, compared to a net income of approximately A$4,150,000 for 2001, due to the increased tax liability described above.



2001 Compared to 2000



The Companys revenues for 2001 were A$11,335,984, which represented an increase of A$4,085,806, or 56%, compared to 2000 revenue. The
Companys revenue from the sale of pearls was A$10,856,678 in 2001 as compared to A$6,501,117 in 2000, an increase of



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approximately 67%. The increase in revenue was due primarily to the pearl harvest being larger than in the previous year and of better quality than in the
previous year. In 2001, the Company sold 65,955 pearls compared to 38,889 pearls sold in 2000, an increase of 53%.



The Company achieved a pre-tax operating profit of A$5,702,355 in 2001 compared to a pre-tax operating profit of A$2,472,159 in 2000. This increase of A$3,230,196, or
131%, is primarily due to the increase in revenue from the sale of an increased number of pearls harvested in 2001. The Companys net profit for 2001 was A$4,150,770 as compared to a net profit of A$2,472,159 in 2000. No tax was paid in
relation to the fiscal year 2000.



| | Future |  | Business Potential and Constraints
| | ------ |  | ----------------------------------



The Company is focused on growing its business and is making a significant effort to ensure that it has a continuous supply of oysters for its Alyui Bay facility. The
Company is also investigating alternative areas for growing oysters and pearls. The development of the Bali hatchery joint venture and other potential joint venture initiatives that the Company is exploring represent positive steps towards achieving
this goal. As the Company develops additional ventures it will have the opportunity to structure production to better suit the differing environmental and production conditions that prevail at a given site.



The Company believes that improved pearl production techniques will ensure that it continues
to bring high quality product to the market. The absence of production quotas in Indonesia ensures that the quantity of oysters that the Company can nucleate is limited mainly by the Companys ability to produce juvenile oysters rather than
government regulation. This provides the Company with a competitive advantage not available to the Companys Australian competitors. The quantity and quality of the Companys pearl production is also determined by the techniques it employs
in the nucleation and husbandry of its oysters. Climatic and environmental conditions will affect its future results; these factors can only be managed but not controlled by the Company.



The Company continues to monitor the movement of foreign exchange rates against the Australian Dollar, especially that of the Japanese Yen,
which is the currency in which most of the Companys revenue is denominated. The Company uses forward foreign exchange contracts and some derivative products, with terms of not more than two years, to hedge these risks. Derivative financial
instruments are not held for speculative purposes. Although the Company makes efforts to limit its exposure to adverse movements in the Japanese Yen against the Australian Dollar, these exchange rates are subject to market influences over which the
Company has no influence. The Company does not hedge the risks associated with foreign exchange movements between the Australian Dollar and the Indonesian Rupiah.



Many Asia Pacific countries, including Indonesia, are experiencing economic difficulties including liquidity problems, volatility in prices
and significant slowdowns in business activity. Operating costs, including wages, employee amenities and fuel, have been subject to inflationary pressure, with increases in excess of 10% over the past 2 to 3 years. The Companys operations will
continue to be affected, into the foreseeable future, by Indonesias economic condition. The ability of the Company to sell its assets in Indonesia depends to a large extent on events beyond



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the Companys control. If the Company was forced to abandon its pearl farms due to political unrest, the Company would likely not recover any of its
investment in its Indonesian assets.



Resolution of the adverse economic
conditions that exist in Indonesia depend to a large degree on fiscal and monetary measures that may be taken by the Indonesian government. Such actions are beyond the Companys control, and the Company cannot predict whether the government
will be successful in initiating and achieving economic recovery. The Company also cannot determine the future effects that the ongoing adverse economic conditions may have on the Companys liquidity and earnings, as well as on its Indonesian
customers (for pearl meat and Mother of Pearl shell) and suppliers.



| | B. |  | Liquidity and Capital Resources
| | -- |  | -------------------------------



The Companys net cash provided from operations was approximately $A2,000,000 for 2002. This was a reduction of approximately A$1,100,000 from the net cash provided
in 2001 of approximately $A3,100,000. This decrease was primarily due to the $A1,900,000 increase in income tax paid by the Company in 2002 compared to 2001, as described previously. The Company had cash and receivables of approximately $A 7,300,000
at December 31, 2002, which is similar to its position of approximately $A7,400,000 in cash and receivables at December 31, 2001. Working capital, as measured by current assets less current liabilities, was approximately $A10,100,000 at December 31,
2002, an improvement of approximately $A2,340,000 compared to working capital at the end of 2001. The improvement in working capital is due primarily to the increase in cash and inventory at the end of 2002.



The balance of the Companys outstanding convertible notes were converted into ordinary
stock or redeemed on March 23, 2002. As a result, the Company has no interest-bearing debt obligations.



The Company does not have any lines of credit or other readily available sources of funds with which to fund its activities except for revenue from its operations. Based on current production estimates and anticipated
prices for its pearls, the Company believes that it has sufficient working capital for its present requirements.



During 2002, the Company raised approximately $A2,500,000 from the exercise of outstanding options to purchase its Shares. At December 31, 2002, the Company did not have
any options to purchase Shares outstanding.



The Company paid two dividends
during 2002 that totaled $A3,402,484, compared to one dividend for $A1,507,399 in 2001, which was the Companys maiden dividend. The Company also paid a dividend of $A0.01 per Share in April 2003. The Company has not yet determined whether it
will pay additional dividends during 2003. In deciding whether to declare a dividend, the Company compares the amount of its profits to its anticipated cash needs for ongoing working capital, taxes and anticipated capital expenditures, and evaluates
these conclusions in view of global environmental, political and market uncertainties.



The Company does not have any present plans for any capital expenditure.



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| | C. |  | Research and Development
| | -- |  | ------------------------



As part of its ordinary operations, the Company continues to test and monitor shell growth rates, pearl growth rates, pearl quality, hatchery cleanliness and the
suitability of the surrounding waters as to temperature, pollution and water currents. The Companys in-house marine scientists also continually study and test innovative ways to improve shell husbandry, and consequently, the production of
quality pearls.



The Company provides research opportunities for promising
Indonesian and Australian students in conjunction with universities and fisheries departments.



Expenditures incurred on research and development in the Companys last three fiscal years have been treated as ordinary operating expenses, and are expensed when incurred. Expenses that are identified as pearl
production costs are capitalized. See Overview and Item 17. Financial Statements.



| | D. |  | Trend Information
| | -- |  | -----------------



The Companys pearl farm and operations are now well established. In 2002, the Company experienced the negative impact of climatic and environmental factors, such as El Nino, that reduced the size of the
pearls the Company produced in its 2002 harvest. In addition, these factors adversely affected the Companys production of juvenile oysters required for future pearl production. Although the Company has implemented a number of initiatives to
assure that it has an adequate supply of oysters for future pearl production, and although the influence of El Nino is expected to decline in 2003, the Company does not anticipate that the number of pearls it will harvest during the next two
years will increase at the rate previously expected, and the growth rate will be marginal for the next few years. Assuming that the Company succeeds in increasing the number of oysters it seeds in the next few years, the Company expects that its
production of pearls will also increase in the longer term.



The decline in
recent years in the prices for South Sea pearls, arising partly from large quantities being offered for sale on world markets, has in part been offset by greater demand for the quality of pearls produced by the Company. The Company continues to
target the production of pearls it believes will be most sought after by the market and believes that the continued increase in the quality and quantity of pearls that the Company expects to harvest in 2003 and beyond will offset the risk of lower
market prices.



|ITEM 6. |  | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
|------- |  | ------------------------------------------



| | A. |  | Directors and Senior Management
| | -- |  | -------------------------------



The following sets forth the names of the members of the Companys Board of Directors and its senior management. Generally, each member of the Board of Directors
serves for a three-year term. Such term may be shortened, in certain instances, in accordance with the Companys Constitution and the ACSL. The term of office of a certain number of Directors expires each year; consequently, the number of
Directors who stand for re-election each year may vary. The Companys executive officers are appointed by, and serve at the pleasure of, the Board.



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WALTER FREDERICK JAMES, M.I.E. (Aust), F.A.I.C.D. (60 years old). Mr. James has served on the Board of Directors
since March 23, 1999 and was appointed Chairman of the Board on January 1, 2003. He is a member of the Companys audit committee. Mr. James has considerable experience in commerce as a director of public and private companies and is the
Principal of the business consulting firm, W.F. James & Associates Pty Ltd, specializing in general management and corporate re-structuring. He is a director of several private companies.



GEORGE ROBERT WARWICK SNOW, B.Ec, F.A.I.C.D. (58 years old). Mr. Snow has served as a
director since October 28, 1997 and is its Deputy Chairman. Mr. Snow is a graduate in Economics from the Australian National University and has had 28 years experience in finance, property development, real estate management and equity finance. Mr.
Snow is the managing director of the Sydney-based Dampier Investment Group Pty Limited, an equity financier involved in strategic company management. He is also the Chairman of Biron Capital Limited.



ALEXANDER MCBRIDE KERR, B.A., B.Sc. (Econ), M.A., Ph.D. (82 years old).Professor Kerr
has served on the Board of Directors since August 31, 1993 and was its Chairman from May 30, 1997 to December 31, 2002. He also serves as the chairman of the audit committee. Professor Kerr has worked as a consultant on economic development in
twenty different countries spanning Europe, the Americas, the Middle East, Asia, South East-Asia and the Pacific Islands for various governments and international agencies including ECAFE, OECD, Colombo Plan, UNDP, ESCAP, and ILO. He has been a
visiting professor and visiting fellow at several universities in America, Thailand and Indonesia and has published many professional articles and several books on the development of specific regions including Western Australia and the Indian Ocean
region. He has been Deputy Vice-Chancellor of Murdoch University, Deputy Chairman of Challenge Bank, Chairman of the Western Australian Consumer Affairs Council, a director of the Joondalup Development Corporation and a director of National Oil N.L.
He is currently Chairman of Bio-management Systems Pty Ltd and a Commissioner of P.T. Cendana Indopearls through which the Pearling Project is conducted. He has worked extensively in Indonesia since 1970. Professor Kerr retired as a director of the
Company at the Companys Annual General Meeting in May 2003.



STEPHEN
JOHN ARROW (42 years old).Mr. Arrow has served as a director since June 29, 1999. Mr. Arrow has 23 years experience in the pearling industry in Western Australia and the Northern Territory and is managing director and owner of Arrow Pearl Co
Pty Ltd, Western Pearlers Pty Ltd, and a Director and co-owner of Dampier Pearling Co Pty Ltd.



ADMIRAL RADEN PANDJI POERNOMO (76 years old).Admiral Poernomo has been a member of the Board of Directors since November 30, 1995. Retired First Admiral R.P. Poernomo is the Companys Jakarta-based
director. A former Commander in Chief of the Indonesian Fleet, Admiral Poernomo is responsible for senior government liaison at both the central and provincial level. He is the Vice Chairman of the Indonesian Pearl Culture Association, and a member
of the Board of The Indonesian Fisheries Federation. He is also the Vice Chairman of the International Relations Institute of the Jakarta Chamber of Commerce and Industry. Admiral Poernomo is the President and Director of the Indonesian PMA (Foreign
Investment) company, P.T. Cendana Indopearls, through which the Pearling Project is conducted.



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Admiral Poernomo retired as a Director of the Company at the Companys Annual General Meeting in May 2003. Admiral Poernomo will remain on the Board of
the Indonesian subsidiary company, PT Cendana Indopearls.



JOSEPH JAMES UEL
TAYLOR, B.Sc. (Biology), Ph.D. (36 years old). Dr. Taylor was appointed to the Companys Board of Directors on September 13, 2000. He was appointed to the role of managing director effective September 1, 2001. Dr. Taylor is a marine
biologist and aquaculturist whose Ph.D. research specialized in the husbandry of Pinctada-maxima pearl oysters. Since 1989, Dr. Taylor has been involved in the management of aquaculture operations, mainly associated with South Sea pearl
farming. He has acquired extensive knowledge about the biology of pearl oysters and has presented many research papers on this subject. Dr. Taylor commenced employment with the Company in 1996 and has overseen the development of the project to its
current level of production.



SIMON CHARLES BUNBURY ADAMS, B.Bus, M.Acc,
ACIS (37 years old). Mr. Adams was appointed as the Chief Financial Officer and Companys Secretary on February 1, 2001. He has more than nine years experience in corporate management in the industries of pearling, mining and engineering.
He has been employed with the Company for over six years.



DAVID RICHARD
SCHONELL, B.Sc (Acquatic Biology) (34 years old). Mr. Schonell was appointed to the position of Project Manager in September 2001. He commenced employment with the Company in 1995 and has held various managerial positions in the areas of
hatchery, farm and administration. Mr. Schonell resigned from the Company in September 2002.



JAN SEIR JORGENSEN, Certificate in Aquaculture, NASDS Diver (36 years old). Mr. Jorgensen was appointed to the position of Project Manager in November 2002. He has been employed with the Company since May 1994
and has held various positions in Indonesian pearling operation in the areas of hatchery, farm and administration.



There are no arrangements or understandings with major shareholders, customers, suppliers or others by which any director or member of senior management was appointed to
his position. There are no family relationships between any directors or executive officers and any other directors or executive officers.



| | B. |  | Compensation
| | -- |  | ------------



The total remuneration paid to each of the Companys directors for services in all capacities during 2002 is set forth below:



|            |  | RESPONSIBILITIES A$                          |  | DIRECTORSFEES A$ |        | OTHER A$ |   | SUPER-ANNUATION A$ |  | TOTAL A$
|----------- |  | -------------------------------------------- |  | ---------------- | ------ | -------- | - | ------------------ |  | --------
|A.M. Kerr   |  | Chairman, AuditCommittee, ExecutiveCommittee |  | $                | 64,800 |          |   |                   |  |         
|G.R.W. Snow |  | Deputy Chairman,Executive Committee          |  | $                | 33,750 |          |   |                   |  | $       
|S.J. Arrow  |  | Non-Executive Director                       |  | $                | 30,000 |          |   |                   |  | $       
|W.F. James  |  | Non-Executive Director,Audit Committee       |  | $                | 33,750 |          | $ | 9,360              |  | $       



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|              |  | RESPONSIBILITIES A$                   |  | DIRECTORSFEES A$ |        | OTHER A$ |   | SUPER-ANNUATION A$ |  | TOTAL A$
|------------- |  | ------------------------------------- |  | ---------------- | ------ | -------- | - | ------------------ |  | --------
|R.P. Poernomo |  | Non-Executive Director                |  | $                | 30,000 |          | $ | 24,095             |  |         
|J.J.U. Taylor |  | Managing Director,Executive Committee |  |                  |       |          | $ | 162,000            |  | $       



There are no agreements between the
Company and any director which provide for benefits upon termination or retirement.



During 2002, the Company made compulsory superannuation contributions (retirement benefit contributions) based on a percentage of salary for its Australian employees and executive officers. These plans are Australian mandated retirement
plans.



Dr. Taylor exercised options to purchase 200,000 ordinary shares in the
Company. The exercise price of the options was A$0.30 per Share.



| | C. |  | Board Practices
| | -- |  | ---------------



|Name                        |  | Position with the Company                                 |  | Term Expires |    
|--------------------------- |  | --------------------------------------------------------- |  | ------------ | ---
|Alexander McBride Kerr      |  | Chairman of the Board until December 31,2002 and Director |  | 2003         | (1)
|Raden Pandji Poernomo       |  | Director                                                  |  | 2003         | (1)
|George Robert Warwick Snow  |  | Director                                                  |  | 2003         |    
|Walter Frederick James      |  | Chairman of the Board since January 1,2003 and Director   |  | 2004         |    
|Joseph James Taylor         |  | Managing Director                                         |  | 2004         | (2)
|Stephen John Arrow          |  | Director                                                  |  | 2005         |    
|Simon Charles Bunbury Adams |  | Chief Financial Officer and & Secretary                   |  |             | (3)
|Jan Seir Jorgensen          |  | Project Manager                                           |  |             | (3)

---

|(1) |  | Prof. Kerr and Admiral Poernomo retired as a director at the Companys Annual General Meeting in May 2003. No additional directors were elected to fill the vacancy created by
Prof. Kerrs and Admiral Poernomos retirement.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) |  | The Constitution of the Company stipulates that the managing director does not have to retire by rotation. Mr. Taylors employment contract does not have a fixed term.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) |  | This is an executive position within the Company which is not subject to shareholder approval on a rotational basis.
|--- |  | --------------------------------------------------------------------------------------------------------------------



There are no agreements between the Company and any director which provide for benefits upon
termination or retirement.



In 2002, the Company established an audit
committee, the members of which were Mr. James and Prof. Kerr. The role of the committee is to advise on the establishment and maintenance of a framework of internal control in relation to the financial reporting of the business activities. The



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committee strives to set procedures that will cause the financial information prepared for use by the Board in determining policies or for its inclusion in
the financial report to be of the highest quality and reliability possible. The committee, from time to time, will invite the External Auditor, the Managing Director, the Financial Controller and the Company Accountant to provide information at its
meetings. Upon retirement of Prof. Kerr as a director, the Board has determined the full board will act as the audit committee.



| | D. |  | Employees
| | -- |  | ---------



|Number of Employees                                      |  | 2002 |  | 2001 |  | 2000
|-------------------------------------------------------- |  | ---- |  | ---- |  | ----
|Australia  management, administration and support       |  | 5    |  | 5    |  | 5   
|Indonesia                                               |  |      |  |      |  |     
|Expatriates  management, technical support and security |  | 8    |  | 12   |  | 9   
|Indonesian locals                                        |  | 245  |  | 232  |  | 144 
|Management and security                                  |  | 35   |  |     |  | N/A 
|Technical  nucleation/hatchery                          |  | N/A  |  | 13   |  | 14  
|General oyster husbandry                                 |  | 116  |  | 71   |  | 61  
|Building and maintenance                                 |  | N/A  |  | 11   |  | 13  
|Mechanical and engineering                               |  | 10   |  | 12   |  | 8   
|Trade specialists                                        |  | 25   |  | 24   |  | 6   
|Hatchery personnel                                       |  | 5    |  | 8    |  | N/A 
|Administration and logistics                             |  | 54   |  | 46   |  | 14  
|Domestics                                                |  | N/A  |  | 27   |  | 12  
|Transport and shipping                                   |  | N/A  |  | 20   |  | 16  

---

|N/A |  |  Not Allocated
|--- |  | ---------------



The number of trained Indonesian pearl technicians was increased during 2002 in preparation for the increased workload that will result from an expectation of nucleating more oysters in the future.



A greater emphasis has been placed on training and recruiting Indonesian nationals to fill
technical and managerial roles. Indonesian nationals now hold senior positions in security, accounting and engineering.



| | E. |  | Share Ownership
| | -- |  | ---------------



The following table sets forth the number of ordinary shares of common stock and the percentage of total ordinary shares outstanding beneficially owned by each of the Companys directors and officers as of June
17, 2003.



|Name                       |  | No. of Shares Beneficially Owned |  | Percentage of Shares Outstanding |  
|-------------------------- |  | -------------------------------- |  | -------------------------------- | -
|Alex McBride Kerr          |  | 1,206,630                        |  | 1.37                             | %
|Raden Pandji Poernomo      |  | 1,265,000                        |  | 1.44                             | %
|George Robert Warwick Snow |  | 14,025,744                       |  | 15.97                            | %
|Walter Frederick James     |  |                                 |  |                                 |  
|Joseph James Uel Taylor    |  | 65,000                           |  | 0.07                             | %



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|Name                   |  | No. of Shares Beneficially Owned |  | Percentage of Shares Outstanding |  
|---------------------- |  | -------------------------------- |  | -------------------------------- | -
|Stephen John Arrow     |  | 1,952,934                        |  | 2.22                             | %
|Walter Frederick James |  |                                 |  |                                 |  



There are currently no outstanding
options to purchase Shares of the Company. In addition, there are currently no arrangements involving the issuance of capital of the Company to employees.



|ITEM 7. |  | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
|------- |  | -------------------------------------------------



| | A. |  | Major Shareholders
| | -- |  | ------------------



The following table sets out certain information with respect to each person or group of affiliated persons who is currently known to the Company to be the beneficial owner of 5% or more of the Shares of the Company.



|Title of Class  |  | Identity of Person or Group          |  | Amount Owned |  | Percentage of Class(1) |  
|--------------- |  | ------------------------------------ |  | ------------ |  | ---------------------- | -
|Ordinary Shares |  | Dampier Investment Group Pty Ltd.(2) |  | 14,025,744   |  | 15.97                  | %

---

|(1) |  | Based on 87,810,254 Shares outstanding as of May 14, 2003.
|--- |  | ----------------------------------------------------------

|(2) |  | The beneficial owner of the shares held by the Dampier Investment Group is Mr.George Snow.
|--- |  | ------------------------------------------------------------------------------------------



In 2001, the Dampier Investment Group Pty Ltd. (Dampier) acquired 4,758,581 Ordinary Shares of pursuant the conversion of
Convertible Notes. All Shares owned by Dampier have the same voting rights.



To
the best of the Companys knowledge, it is not owned or controlled, directly or indirectly, by another corporation or by any foreign government.



To the best of the Companys knowledge, there are no agreements in place which could result in a change of control of the Company.



As of April 30, 2003, 2,416,750 Ordinary Shares or 2.8%, were held of record by 218 persons
with U.S. addresses. In addition, 416 persons with U.S. addresses were record holders of 116,310 American Depository Shares as of April 22, 2003. Accordingly, the Company has a minimum of 634 U.S. record holders, who own at least 4,742,950 or 5.4%,
of the Companys Ordinary Shares.



| | B. |  | Related Party Transactions
| | -- |  | --------------------------



Admiral R.P. Poernomo received A$37,095 and A$30,736 in each of 2002 and 2001, respectively, for providing office facilities and administration services for the
Companys Indonesian subsidiary in Jakarta, Indonesia.



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The Company has an agreement with WF James & Associates Pty Ltd (WF James & Associates), a company
associated with Mr. W.F. James, a director of the Company, pursuant to which WF James & Associates provides consulting services to the Company. The Company paid a total of A$9,360 and A$16,500 in each of 2002 and 2001, respectively, for the work
provided by WF James & Associates.



In March 1999, the Company entered into
a consulting agreement with Arrow Pearl Co Pty Ltd (Arrow), a company associated with Mr. Arrow, a director of the Company, under which staff of the Company are to be trained as pearl operation technicians at the Indonesian pearl farm.
The Company paid Arrow A$232,061 and A$297,886 during 2002 and 2001, respectively, under the terms of the agreement. The agreement is for a term of five years and automatically renews for an additional five years unless terminated by either party.



In June 2001, the Company entered into an agreement with Arrow pursuant to
which is sub-leases office space. The Company now shares space with Arrow Pearl Company Pty Ltd and pays it A$36,144 annually for the use of the space, which is subject to increase based on changes in the Consumer Price Index. The Company paid
A$8,750 in lease payments in 2001. In addition, the Company paid Arrow A$7,858 to reimburse the cost of shared office facilities. See Item 4. Information on the Company  Property, Plant and Equipment.



During the year, sales of individual pearls of small quantities were made to some staff and
directors on normal commercial terms.



| | C. |  | Interest of Experts and Counsel
| | -- |  | -------------------------------



Not required.



|ITEM 8. |  | FINANCIAL INFORMATION
|------- |  | ---------------------



| | A. |  | Consolidated Statements and Other Financial Information
| | -- |  | -------------------------------------------------------



Please see Item 17 for a list of the financial statements filed as part of this Annual Report.



Legal Proceedings



The Company is not a party to any material legal proceedings, and was not a party to any
material legal proceedings during 2002.



Dividend Policy



The Company paid two dividends during 2002 that totaled $A3,402,484, compared to one dividend for $A1,507,399 in 2001, which was the Companys maiden dividend. The Company also paid a dividend of $A0.01 per Share in April 2003. The
Company has not yet determined whether it will pay additional dividends during 2003. In deciding whether to declare a dividend, the Company compares the amount of its profits to its anticipated cash needs for ongoing working capital, taxes and
anticipated capital expenditures, and evaluates these conclusions in view of global environmental, political and market uncertainties.



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| | B. |  | Significant Changes
| | -- |  | -------------------



There have been no significant subsequent events following the close of 2002 up to the date of this Annual Report that are known to us and which require disclosure in this Annual Report.



|ITEM 9. |  | THE OFFER AND LISTING
|------- |  | ---------------------



| | Trading |  | Market for American Depository receipts (ADRs)
| | ------- |  | ----------------------------------------------



The Shares trade in the United States in the form of ADRs issued by the Bank of New York. Each ADR represents a specified number of ADSs, which each evidence ownership of
20 Shares of the Company. On May 31, 1995, the Companys ADRs began trading on the over-the-counter bulletin board service of the National Association of Securities Dealers under the symbol APCFY. On September 12, 1996, the Companys ADRs
were listed and began trading on the SmallCap Market of the National Association of Securities Dealers, Inc. under the symbol APCFY. The quotations set forth below represent the high and low closing bid prices of the Companys ADRs for the
periods specified and, are inter-dealer quotations, without retail mark-ups, mark-downs or commissions, do not necessarily represent actual transactions, and may reflect only fluctuations in exchange rates between the United States and Australia:



|For the Year Ended: |  | High Closing Bid Price |  | Low Closing Bid Price
|------------------- |  | ---------------------- |  | ---------------------
|                    |  | (US$)                  |  | (US$)                
|1998                |  | 4.25                   |  | 1.75                 
|1999                |  | 5.00                   |  | 1.66                 
|2000                |  | 4.38                   |  | 1.88                 
|2001                |  | 4.09                   |  | 2.00                 
|2002                |  | 5.55                   |  | 3.60                 



|For the Period:         |  | High Closing Bid Price |  | Low Closing Bid Price
|----------------------- |  | ---------------------- |  | ---------------------
|                        |  | (US$)                  |  | (US$)                
|2001                    |  |                        |  |                      
|January 1  March 31    |  | 3.00                   |  | 2.00                 
|April 1  June 30       |  | 2.93                   |  | 2.00                 
|July 1  September 30   |  | 3.34                   |  | 2.10                 
|October 1  December 31 |  | 4.09                   |  | 2.52                 
|                        |  |                       
|2002                    |  |                        |  |                      
|January 1  March 31    |  | 5.13                   |  | 3.60                 
|April 1  June 30       |  | 5.55                   |  | 4.70                 
|July 1  September 30   |  | 5.06                   |  | 4.33                 
|October 1  December 31 |  | 4.70                   |  | 4.19                 



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|For the Months Ending: |  | High Closing Bid Price |  | Low Closing Bid Price
|---------------------- |  | ---------------------- |  | ---------------------
|                       |  | (US$)                  |  | (US$)                
|                       |  |                       
|December 31, 2002      |  | 4.60                   |  | 4.25                 
|January 31, 2003       |  | 4.91                   |  | 4.60                 
|February 28, 2003      |  | 4.79                   |  | 4.30                 
|March 31, 2003         |  | 4.61                   |  | 3.50                 
|April 30, 2003         |  | 4.05                   |  | 3.25                 
|May 31, 2003           |  | 4.29                   |  | 3.90                 



The principal non-United States
trading market for the Shares is the Australian Stock Exchange. The Company cannot practicably determine what percentage of its Shares traded on the Australian Stock Exchange are held by U.S. persons. The quotations set forth below represent the
high and low closing sales prices of the Companys Shares during the periods indicated:



|For the Year Ended: |  | High Closing Bid Price |  | Low Closing Bid Price
|------------------- |  | ---------------------- |  | ---------------------
|                    |  | (A$)                   |  | (A$)                 
|                    |  |                       
|1998                |  | 0.33                   |  | 0.16                 
|1999                |  | 0.39                   |  | 0.12                 
|2000                |  | 0.36                   |  | 0.18                 
|2001                |  | 0.42                   |  | 0.18                 
|2002                |  | 0.52                   |  | 0.35                 



|For the period:         |  | High Closing Sale Price |  | Low Closing Sale Price
|----------------------- |  | ----------------------- |  | ----------------------
|                        |  | (A$)                    |  | (A$)                  
|                        |  |                        
|2001                    |  |                         |  |                       
|January 1  March 31    |  | 0.25                    |  | 0.18                  
|April 1  June 30       |  | 0.28                    |  | 0.21                  
|July 1 September 30    |  | 0.30                    |  | 0.24                  
|October 1 December 31  |  | 0.42                    |  | 0.26                  
|                        |  |                        
|2002                    |  |                         |  |                       
|January 1  March 31    |  | 0.52                    |  | 0.35                  
|April 1  June 30       |  | 0.51                    |  | 0.42                  
|July 1  September 30   |  | 0.49                    |  | 0.41                  
|October 1  December 31 |  | 0.45                    |  | 0.36                  



|For the Months Ending: |  | High Closing Bid Price |  | Low Closing Bid Price
|---------------------- |  | ---------------------- |  | ---------------------
|                       |  | (A$)                   |  | (A$)                 
|                       |  |                       
|December 31, 2002      |  | 0.40                   |  | 0.39                 
|January 31, 2003       |  | 0.39                   |  | 0.37                 
|February 28, 2003      |  | 0.39                   |  | 0.29                 
|March 31, 2003         |  | 0.37                   |  | 0.31                 
|April 30, 2003         |  | 0.32                   |  | 0.27                 
|May 31, 2003           |  | 0.30                   |  | 0.30                 



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|ITEM 10. |  | ADDITIONAL INFORMATION
|-------- |  | ----------------------



| | A. |  | Share Capital
| | -- |  | -------------



Not required.



| | B. |  | Memorandum and Articles of Association
| | -- |  | --------------------------------------



A description of the Companys Constitution is contained in Item 10B of its Annual Report on Form 20-F for the fiscal year ended December 31, 2001 (Registration
No.000-28186), which was filed with the commission on July 18, 2002. Item 10B of the Companys 2001 Annual Report is incorporated by reference herein.



| | C. |  | Material Contracts
| | -- |  | ------------------



The Banyupoh Bali Hatchery Joint Venture



In July 2002, the Company entered into an agreement with PT Horiko Abadi for a 70% interest in a pearl oyster hatchery and associated sea leases in Northern Bali,
Indonesia. The Company re-commissioned equipment from its original Kupang hatchery at minimal costs to use at this facility. The Company contributes its share of 70% to the funding for the operation and receives 70% of the production of juvenile
pearl oysters from the operation. The agreement is for an initial term of three years with an option to extend the arrangement for an additional year if mutually agreed. See Item 4. Information on the Company-Property, Plant and
Equipment.



Lease agreement between the Company and
Arrow Pearl Co Pty Ltd



On July 30, 2001, the Company entered into a lease
agreement with Arrow Pearl Co Pty Ltd for office space at 6 Rous Head Road, North Fremantle, Western Australia. The lease arrangement commenced on September 1, 2001 and is for a period of three years. Mr. Stephen Arrow is a director of both the
Company and Arrow Pearl Co Pty Ltd. Pursuant to the terms of the lease, the rent is subject to increase based on annual changes in the Consumer Price Index. The Company currently pays A$36,144 annually. See Item 4. Information on the
Company-Property, Plant and Equipment and Item 7. Major Shareholders and Related Party Transactions.



Distribution agreement between the Company and Pearlautore International Pty Ltd



The Company has appointed Pearlautore International Pty Ltd as its exclusive valuer and distributor of South Sea Pearls. The agreement
commenced January 1, 2000 for an initial term of two years, and was extended on May 3, 2001 until December 31, 2003. Pearlautore International Pty Ltd receives a commission of between 5% and 25% for cleaning, grading, valuing and selling the
Companys pearls.



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Employment agreement between the Company and Dr. Joseph James Uel Taylor



The Company and Dr. Taylor entered into an employment agreement effective September 1, 2001,
pursuant to which Dr. Taylor will serve as the Companys Managing Director. The Agreement provides for the payment of approximately A$250,000 in salary. The agreement may be terminated by either party upon four months notice. Dr. Taylor
was previously employed as the Companys Project Manager. See Item 6. Directors, Senior Management and Employees.



Directors Access, Insurance and Indemnity Deed between the Company and each Director



On May 29, 2003, the Company entered into a contract with each of its directors whereby the
Company indemnifies each director against all liabilities to another person (other than the Company or a related body corporate) that may arise from his position as a director, except where the liability arises out of conduct which involves
negligence, default, breach of duty or a lack of good faith. The agreement states that the Company will pay the full amount of any such liabilities, including advancing amounts the director to pay for the costs and expenses of defending any such
action.



Memorandum of Understanding between the
Company and PT Timor Otsuki Mutiara



On January 9, 2001, an agreement was
reached between the Company and PT Timor Otsuki Mutiara for the lease of the Companys facilities at Kupang. PT Timor Otsuki Mutiara pays the Company US$2900 per month for five years, at the end of which time the Company will assign the lease
rights of the Kupang facility to PT Timor Otsuki Mutiara.



| | D. |  | Exchange Controls and Other Limitations Affecting Security Holders
| | -- |  | ------------------------------------------------------------------



Australia has largely abolished exchange controls on investment transactions. The Australian dollar is freely convertible into U.S. dollars. In addition, there are
currently no specific rules or limitations regarding the export from Australia of profits, dividends, capital, or similar funds belonging to foreign investors, except that certain payments to non-residents must be reported to the Australian Cash
Transaction Reports Agency, which monitors such transactions.



The Australian
Foreign Acquisitions Act (the Act) sets forth limitations on the rights of non-Australian residents to own or vote the ordinary shares of an Australian company. The Act permits the Commonwealth Treasurer to examine acquisitions and
arrangements that could result in foreign persons controlling an Australian business. The Commonwealth Treasurer may prohibit a proposed takeover if it would lead to a change of control of a business where the resultant control would be against the
national interest. The Act contains divestiture provisions to ensure it can be enforced, as well as stringent monetary-penalty provisions for breaches and the making of false or misleading statements.



The Act requires the prior approval of the Commonwealth Treasurer for certain classes of
persons to enter into an agreement to acquire shares of an Australian company, if, after the acquisition, such person or corporation would hold a substantial interest in such corporation, as explained herein. The foregoing approval requirement
applies to the following classes of persons: (i) any natural person not ordinarily resident in Australia, (ii) any corporation in which



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either a natural person not ordinarily resident in Australia or a foreign corporation (as defined in the Act) holds a substantial interest, and (iii) two or
more such persons or corporations which hold an aggregate substantial interest.



A person holds a substantial interest in a corporation if the holder alone or together with any associates (as defined in the Act) controls 15% or more of the voting power in the corporation or holds 15% or more of the issued
shares in that corporation. Two or more persons hold an aggregate substantial interest in a corporation if they, together with any associates (as so defined), control 40% or more of the voting power, or own 40% or more of the issued shares, in such
corporation.



The Act requires foreign persons or foreign-controlled entities
to give 40 days notice to the Commonwealth Treasurer of a proposal to acquire or increase (or offer to acquire or increase) a single interest of 15% or more of the ownership or voting power of an Australian company. If two or more foreign
persons or foreign-controlled entities are acting together, the threshold is 40% in the aggregate.



The Constitution of the Company does not contain any additional limitations on a nonresidents right to hold or vote the Companys securities.



| | E. |  | Taxation
| | -- |  | --------



The following discussion summarizes certain U.S. federal and Australian tax consequences of the ownership of Shares (or ADRs representing them) by a person (U.S. Portfolio Stockholder) that: (i) is a
citizen or resident of the U.S., a U.S. corporation or that otherwise will be subject to U.S. federal income tax on a net income basis in respect of the Shares or ADRs; (ii) is not a resident of Australia for Australian tax purposes; (iii) has not,
within the preceding 5 years, beneficially owned 10% of the issued capital or voting stock in the Company; and (iv) has not used the Shares or ADRs in carrying on a trade or business, wholly or partly through a permanent establishment in Australia.



The statements regarding U.S. and Australian tax laws set forth herein are
based on those laws as in force on the date of this document and are subject to changes to those laws subsequent to the date of this document that may affect the tax consequences described herein (some of which may have retroactive effect). This
summary is not exhaustive of all possible tax considerations and investors are advised to satisfy themselves as to the overall tax consequences, including specifically the consequences under U.S., state, local and other laws, of the acquisition,
ownership and disposition of Shares or ADRs by consulting their own tax advisors.



Taxation of Gains on Sale



A U.S. Portfolio Stockholder is not subject to Australian income tax on the sale of its Shares or ADRs in the Company.



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Passive Foreign Investment Company Status



The following discussion of passive foreign investment
companies (PFICs) is of particular interest for U.S. Portfolio Stockholders in 2002 whose holding period in their Shares or ADRs extends back to 1996.



A foreign corporation is classified as a passive foreign investment company (a PFIC) in any year in which at least 75 percent of
its gross income is passive income, or in which a at least 50 percent of its assets produce passive income. Passive income includes interest income from cash holdings and profits from the sale of marketable securities, even if derived from an active
business. During 1995 and 1996, substantially all of the Companys gross income was passive income derived from the sale of its investment securities and from interest income. Therefore, the Company has determined that it was a PFIC during 1995
and 1996. However, the Company has not been a PFIC since 1996. While no absolute assurance can be given, the Company believes that it most likely will have a sufficiently high percentage of non-passive gross income (sales minus cost of sales)
derived from the sale of pearls, and sufficiently high percentage of assets producing non-passive income, for 2003 and for the foreseeable period thereafter, to avoid PFIC status in 2003 and for the foreseeable period thereafter.



However, under a special once a PFIC  always a PFIC rule contained in the
Internal Revenue Code, if a foreign corporation is a PFIC during any year in which a U.S. shareholder owned shares or ADRs in that foreign corporation, that U.S. shareholder forever continues to be subject to the special adverse PFIC tax regime with
respect to those ADRs or Shares, even if the foreign corporation is no longer a PFIC, unless a special purging election has been made. Thus, a U.S. Portfolio Stockholder who owned Shares or ADRs in 1996 will be subject to the special
PFIC rules on gain from the sale of those Shares or ADRs, even if they are sold in 2003 or thereafter, and even if the Company is not a PFIC during 2003 and thereafter, unless that U.S. Portfolio Stockholder has made the special purging
election. By contrast, a U.S. Portfolio Stockholder whose holding period in its Shares or ADRs began after 1996 will not be subject to the PFIC rules, if, as anticipated by the Company, the Company is no longer a PFIC during 2003 and thereafter.



Under the PFIC rules applicable in 2003 and thereafter to a U.S. Portfolio
Stockholder who owned Shares or ADRs in 1996 but does not make a purging election, that U.S. Portfolio Stockholder who sells the Shares or ADRs at a gain, whether in 2003 or thereafter, will be subject to a special additional tax. To
compute this additional tax, (i) the gain is allocated ratably over the U.S. Portfolio Stockholders holding period for the ADRs or Shares, (ii) the amount allocated to the current taxable year is taxed as ordinary income, and (iii) the amount
allocated to other taxable years is taxed at the highest applicable marginal rate in effect for each year and an interest charge is imposed to recover the deemed benefit from the deferred payment of the tax attributable to each year. Such a U.S.
Portfolio Stockholder will also be subject to a special additional tax on certain excess distributions from the Company, will be denied a step-up in tax basis on Shares and ADRs on the death of a U.S. individual shareholder, and will be required to
comply with burdensome annual reporting requirements.



A U.S. Portfolio
Stockholder in 2003 who owned Shares or ADRs in 1996 could have avoided the once a PFIC  always a PFIC rule, and thus avoided the PFIC rules for post-1996 years, by making a purging election. To make the purging
election the U.S. Portfolio Stockholder



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must generally have included the election on an amended tax return for 1996 within three years of the due date, as extended, for the U.S. Portfolio
Stockholders 1996 tax return, that is, generally in 2000. Additional information concerning the purging election is found in Treasury Regulation 1.1297-3T.



Another election that in some cases can reduce the adverse impact of the PFIC rules is the qualified electing fund election. The
qualified electing fund election would require the U.S. Portfolio Stockholder to provide an analysis of the Companys earnings on a U.S. tax basis, and the Company will not provide this analysis. Therefore, the Company expects that the
qualified electing fund election will not be available to its U.S. Portfolio Stockholders.



Another election that in some cases is available to a U.S. shareholder of a PFIC is the mark-to-market election. Under this election, the excess of the fair market value of the PFIC stock at the end of the tax year
over its adjusted basis (as increased to reflect net previous inclusions of mark-to-market gains over previous mark-to-market losses) is included as ordinary income in the current year.



If adjusted basis of the PFIC stock at the end of the tax year over its adjusted basis (as increased to reflect net previous inclusions of
mark-to-market gains over previous mark-to-market recognized losses) exceeds the fair market value of the PFIC stock at the end of the tax year, this excess is deductible as ordinary income, but only to the extent of net previous inclusions of
mark-to-market gains over previous mark-to-market losses. Losses on sale of PFIC stock are also treated as ordinary losses, and not capital losses, but likewise only to the extent of net previous inclusions of mark-to-market gains over previous
mark-to-market losses.



The mark-to-market election is available to open-end
U.S. mutual funds, and to closed-end U.S. mutual funds that publish net asset valuations at least annually, whether or not the PFIC stock is viewed as regularly traded on Nasdaq or a qualifying foreign stock exchange. Therefore, open-end U.S. mutual
funds, and closed-end U.S. funds that publish net asset valuations at least annually, are eligible to elect mark-to-market treatment for the Companys Shares or ADRs that the fund has owned since 1996.



The mark-to-market election is available to U.S. shareholders that are neither open-end U.S.
mutual funds nor closed-end U.S. mutual funds that publish net asset valuations at least annually, only if the PFIC stock is regularly traded either on Nasdaq, or on another U.S. or foreign stock exchange characterized as qualified by the U.S.
Treasury Department. Regulation 1.1296(e)-1, issued in 2000, states that ADRs in a PFIC are viewed as regularly traded on NASDAQ, and therefore eligible for the mark-to-market election, if the ADRs are traded, in more than de minimus
quantities, on Nasdaq at least 15 days during each calendar quarter. Regulation 1.1296(e)-1 does not define what constitutes a de minimus quantity of traded PFIC shares. Trades that have as one of their principal purposes qualifying ADRs
for the mark-to-market election are ignored.



Similarly, Regulation 1.1296(e)-1
further provides that stock in a PFIC is viewed as regularly traded on a qualified foreign stock exchange if the stock is traded, in more than de minimus quantities, on that qualified foreign stock exchange at least 15 days during each
calendar quarter. However, trades on that foreign stock exchange that have as one of their principal purposes qualifying the PFIC stock for the mark-to-market election are ignored.



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The foreign stock exchange itself is viewed as qualified, thus permitting the mark-to-market election to be available for
stock in PFICs that are regularly traded on that foreign stock exchange, only if that foreign stock exchange meets certain criteria. The foreign stock exchange must have trading volume, listing, financial disclosure, and other requirements. These
requirements must be designed to prevent fraudulent and manipulative acts and practices, to remove impediments to and perfect the mechanism of a free and open market, and to protect investors. The laws of the foreign country in which the foreign
stock exchange is located and the rules of the foreign stock exchange must ensure that these requirements are actually enforced. The rules of the foreign exchange must ensure the active trading of listed stocks. If an exchange in a foreign country
has more than one tier or market level on which the stock may be separately listed or traded, such tier is treated as a separate stock exchange.



Suppose PFIC stock is traded on a qualified foreign stock exchange, so that the PFIC stock qualifies for the mark-to-market election. Suppose, however, that the
PFICs ADRs are not regularly traded on NASDAQ, so the PFICs ADRs are not, when viewed separately, eligible for the mark-to-market election. Regulation 1.1296(e)-1 does not address whether the PFICs ADRs will qualify for the
mark-to-market election by reason of the eligibility for the mark-to-mark election of the underlying PFIC stock. The Company believes that its Shares have traded, and will continue to trade, on the Australian Stock Exchange, in bona fide trades of
more than de minimus quantities during more than 15 days of each quarter. The Company also believes that the Australian Stock Exchange constitutes a qualified foreign stock exchange for purposes of Regulation 1.1296(e)-1. However, these conclusions
are subject to some uncertainties since Regulation 1.1296(e)-1 does not define de minimus trade or designate which foreign stock exchanges are viewed as qualified. Moreover, the Company notes that its ADRs have not traded on
Nasdaq during more than 15 days of each quarter. Therefore, it is unclear whether a U.S. Portfolio Stockholder is eligible to elect mark-to-market treatment for the Companys Shares or ADRs that the U.S. Portfolio Stockholder has owned since
1996.



In 2002, the U.S. Treasury Department issued Proposed Regulation
1.1296-1, concerning the mark-to-market election. Proposed Regulation 1.1296-1(j) states that Proposed Regulation 1.1296-1 is to be effective as of the date final regulations are published in the Federal Register. As of June 23, 2003, no final
regulations had been published in the Federal Register.



Proposed Regulation
1.1296-1(h) provides generally that a U.S. stockholder of a PFIC that qualifies for the mark-to-market election must, unless it obtains an IRS ruling permitting a late election, make the mark-to-market election on a timely filed (including
extensions) tax return for the first year of the election. For the first year of the mark-to-market election, Proposed Regulation 1.1296-1(i) requires the U.S. stockholder to recognize any excess of the ending-year value of the PFIC stock over its
basis to the stockholder as gain on PFIC stock, which, as described above, triggers special ordinary income characterization and an interest surcharge to the U.S. stockholder. In such event, the U.S. stockholders tax basis is increased by the
gain so included. Proposed Regulation 1.1296-1(f) provides that so long as the foreign corporation thereafter no longer meets the PFIC tests (under which a foreign corporation is generally classified as a PFIC when at least 75 percent of its gross
income is passive income, or when at least 50 percent of its assets produce passive income) the PFIC rules and mark-to-market requirement will no longer apply. However, if the foreign corporation once again meets the PFIC tests, then the PFIC rules,
including the mark-to-market election, will once again apply to the



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U.S. stockholder. Thus, for example, under Proposed Regulation 1.1296-1(h)(2)(ii), appreciation economically attributable to intervening non-PFIC years could
be triggered into income in the next PFIC year, and be subject to the PFIC special ordinary income characterization and an interest surcharge because of the mark-to-market election. This suspension of the PFIC rules and mark-to-market election
following the first election year, so long as the foreign corporation avoids the PFIC tests, has been characterized by commentators as an important and unexpected aspect of Proposed Regulation 1.1296-1. See A Closer Look at the New U.S. PFIC
Regulations, 27 Tax Notes International 1001 (2002).



Thus, for example,
if the Proposed Regulations were hypothetically adopted as final in November 2003, then if a U.S. Portfolio Stockholder, whose holding period in its Atlas ADRs extends back to 1996, made a timely 2003 mark-to-market election for its Atlas ADRs on
the U.S. Portfolio Stockholders 2003 tax return timely filed in 2004, and if the Internal Revenue Service accepted that Atlas ADRs could be the subject of such election, then the results to such U.S. Portfolio Stockholder would generally be as
follows: If the U.S. Portfolio Stockholders tax basis in its Atlas ADRs were smaller than the ending 2003 market value of the Atlas ADRs, 2003 gain would be recognized, and be subject to 2003 special ordinary income characterization plus
interest surcharge, but the basis of the Atlas ADRs, beginning in 2004, would be stepped-up to the year-end 2003 value. Beginning in 2004, so long as Atlas no longer met the PFIC tests, which is Atlas expectation, the U.S. Portfolio
Stockholders shares would no longer be subject to the PFIC rules. However, if, contrary to Atlas expectation, if Atlas became a PFIC during 2004 or thereafter, the PFIC rules would once again apply to the Atlas ADRs.



The foregoing is a general summary of the implications of the PFIC rules. Special rules may
apply to specific types of investors, such as dealers in securities. The PFIC rules have been amended frequently, and future amendments are quite possible. U.S. Portfolio Stockholders in 2003 whose holding period in its Shares or ADRs extends back
to 1996 should consult their own tax advisers as to the potential application of the PFIC rules as well as the impact of any proposed legislation that could affect them.



Taxation of Dividends



The Company paid dividends in 2002 has continued paying dividends in 2003. The
Companys dividends to its U.S. Portfolio Stockholders would be exempt from Australian dividend withholding tax to the extent such dividends are considered to be franked for Australian tax purposes. A dividend is considered to be
franked to the extent that such dividend is paid out of the Companys income on which Australian corporate tax has been levied. Even if not franked, a dividend will be exempt from Australian dividend withholding tax if
it is paid out of the Companys non-Australian-source dividend income and the Company specifies a foreign dividend account declaration percentage for such purpose. The Company anticipates that when it pays dividends, such dividends
would likely be either franked, or paid from the Companys non-Australian source dividend income as specified in the foreign dividend account declaration percentage, and therefore would be exempt from Australian dividend withholding
tax.



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If, however, dividends are paid by the Company that are not franked, nor paid from the Companys
non-Australian source dividend income as specified in the foreign dividend account declaration percentage, such dividend would then be subject to Australian dividend withholding tax. However, in accordance with the provisions of the Australia/United
States Income Tax Treaty, Australian withholding tax on dividend income derived by a U.S. shareholder would be limited to 15% of the gross amount of the dividend. Subject to certain limitations, any Australian dividend withholding tax may be claimed
as a credit against the federal income tax liability of the U.S. shareholder. The overall limitation on non-U.S. taxes eligible for U.S. credit is calculated separately with respect to specific classes, or baskets of income. For this
purpose, dividends distributed by the Company will generally constitute passive income or, in the case of certain U.S. Portfolio Stockholders, financial services income. The U.S. tax credits allowable with respect to each
income basket cannot exceed the U.S. federal income tax payable with respect to such income. The consequences of the separate limitation calculation will depend on the nature and sources of each U.S. Portfolio Stockholders income and the
deductions allocable thereto.



Distributions on the Shares or ADRs will
constitute dividends for U.S. federal income tax purposes to the extent paid out of current or accumulated earnings and profits of the Company, as determined for U.S. federal income tax purposes. If the Company pays a dividend, such dividend would
likely be paid in Australian dollars. The amount of dividend income for a U.S. Portfolio Stockholder will be the U.S. dollar value of the dividend payment on the date of receipt, even if the dividend is not converted into U.S. dollars. Gain or loss,
if any, realized on a sale or other disposition of Australian dollars will be ordinary income or loss to the U.S. Portfolio Stockholder. Dividends paid by the Company will not be eligible for the inter-corporate dividends received
deduction allowed to U.S. corporations.



As mentioned above in connection with
the PFIC discussion, an excess distribution by the Company on a Share or ADR that was owned by the U.S. Portfolio Stockholder recipient during 1996 or any subsequent year in which the Company is a PFIC may be subject to additional U.S. taxes. An
excess distribution generally includes any annual distribution in excess of 125 percent of the average distributions received by the U.S. Portfolio Stockholder from the PFIC stock during the three preceding taxable years.



Estate and Gift Tax



Australia does not impose any estate, inheritance or gift taxes.
Therefore, no Australian estate tax, inheritance tax or gift tax will be imposed on the death of, or upon a lifetime gift by, a U.S. Portfolio Stockholder.



| | F. |  | Dividends and Paying Agents
| | -- |  | ---------------------------



Not required.



| | G. |  | Statement by Experts.
| | -- |  | ---------------------



Not required.



42



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##### Table of Contents

| | H. |  | Documents on Display
| | -- |  | --------------------



The Company files annual and semi-annual reports and other information with the SEC. You may read and copy any report or document the Company files, including the exhibits, at the SECs public reference rooms
located at 450 Fifth Street, N.W., Washington, D.C. 20549; and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms. Such materials can also be
obtained on the SECs site on the internet at http://www.sec.gov.



The Company will also provide without charge to each person, including any beneficial owner, upon written or oral request of that person, a copy of any and all of the information that has been incorporated by reference in this Annual
Report. Please direct such requests to the Managing Director, Atlas Pacific Limited, 6 Rous Head Road, North Fremantle, Western Australia, telephone number (61) (8) 9336-7955 or facsimile number (61) (8) 9336-7966.



| | I. |  | Subsidiary Information
| | -- |  | ----------------------



Not required.



|ITEM 11. |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|-------- |  | ----------------------------------------------------------



The following table sets forth the types of instruments held by the Company that are subject to fluctuation in interest rates as of December 31, 2002 and the terms of
such instruments:



|                         |  | Fair Value at Dec. 31, 2002 |  | Fair Value at Dec. 31, 2001 |   |  | Terms                                                                                                                            
|------------------------ |  | --------------------------- |  | --------------------------- | - |  | ---------------------------------------------------------------------------------------------------------------------------------
|                         |  | A$                          |  | A$                          |   |  |                                                                                                                                  
|Cash in hand and at bank |  | 1,310,919                   |  | 184,558                     |   |  | Current account with interest receivable at 4.49% (2001  1.75%) and cash on hand                                                
|Fixed Term Deposit       |  | 1,181,499                   |  | 230,254                     |   |  | Interest receivable at 4.75% (2001  4.27%) maturing within one month                                                            
|Bank Bond                |  | 1,027,390                   |  |                            |   |  | Interest receivable at 5.23% maturing within nine months                                                                         
|Bills of Exchange        |  | 2,600,000                   |  | 5,170,796                   |   |  | Interest receivable at 4.80% (2001  4.28%) maturing within one month                                                            
|                         |  |                             |  |                             |   |  |                                                                                                                                  
|                         |  | 6,119,808                   |  | 5,585,608                   |   |  |                                                                                                                                  
|Convertible Notes        |  |                            |  | (132,160                    | ) |  | Interest payable at 12.5%, notes convertible at option of holder any time up to March 23, 2002 into one Share for each note held.
|                         |  |                             |  |                             |   |  |                                                                                                                                  
|                         |  | 6,119,808                   |  | 5,453,448                   |   |  |                                                                                                                                  
|                         |  |                             |  |                             |   |  |                                                                                                                                  



The carrying amount of trade accounts
payable and trade accounts receivable approximate their fair values. See Item 17. Financial Statements  Note 32  Additional Financial Instruments Disclosure.



43



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##### Table of Contents

The Australian dollar equivalents of unhedged amounts payable or receivable in foreign currencies, calculated at year end
exchange rates, are as follows:



|                   |  | 2002      |  | 2001     
|------------------ |  | --------- |  | ---------
|                   |  | A$        |  | A$       
|Amount receivable: |  |           |  |          
|Indonesia Rupiah   |  | 44,834    |  | 9,304    
|Japanese Yen       |  | 824,629   |  | 1,628,843
|US Dollars         |  | 191,037   |  | 98,642   
|                   |  |           |  |          
|                   |  | 1,060,500 |  | 1,736,789
|                   |  |           |  |          
|Amounts Payable:   |  |           |  |          
|Indonesian Rupiah  |  | 614,866   |  | 619,221  
|US Dollars         |  | 35,721    |  | 102,513  
|                   |  |           |  |          
|                   |  | 650,587   |  | 721,743  
|                   |  |           |  |          



Commodity Price Risk



The Company is subject to the risk of price changes in the pearl market. The market price of South Sea Pearls is determined at auction held throughout the year. The prevailing market price is largely determined by the
quality and the quantity of pearls available. This commodity price risk is not actively managed by the Company.



Foreign Currency Exchange Rate Risk



The Companys functional currency is Australian Dollars although a portion of the
business is transacted in foreign currencies. The Company is exposed to foreign currency fluctuations as a result of operations in Indonesia and receipt of pearl sales proceeds predominantly in Japanese Yen.



The Company operates pearl farms in Indonesia. As a result a significant proportion of the
Companys ongoing operating expenses are incurred in Indonesian Rupiah. Accordingly, the Company is exposed to the risk of adverse changes occurring in the Indonesian Rupiah/Australian Dollar exchange rate. The Companys investment in its
Indonesian subsidiary is accounted for by the temporal method of foreign exchange conversion and gains and losses are taken in to the Companys current years financial statements. There is no hedging against this investment.



Nearly all pearl sales are denominated in Japanese Yen. The Company has entered into
foreign exchange contracts to hedge certain anticipated sale commitments denominated in foreign currencies, particularly Japanese Yen. The terms of these commitments are not more than 24 months. See Item 17. Financial Statements  Note 32
to Financial Statements.



The net foreign exchange gain/(loss) incurred,
as a result of movements of both the Japanese Yen and the Indonesian Rupiah against the Australian Dollar, in 2000, 2001 and 2002 was (A$88,644), (A$8,488) and A$187,284, respectively.



44



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##### Table of Contents

The Companys policy is to enter into forward foreign exchange contracts to hedge a portion of foreign currency
sales (up to a maximum of 75%) expected within the following 12 months. The amount of anticipated future sales is forecast in light of current conditions in foreign markets and experience in the pearling industry.



The following table sets out the gross value in Australian Dollars to be received under
foreign currency contracts in Australian Dollars, the weighted average contracted exchange rates and the settlement periods of outstanding contracts for the Company (as at December 31):



|                                            |  | Weighted averageexchange rate |  | Gross ValueA$
|------------------------------------------- |  | ----------------------------- |  | -------------
|                                            |  | 2002                          |  | 2001         
|Sell Japanese Yen                           |  |                               |  |              
|Settlement Period  Not later than one year |  | 66.13                         |  | 62.93        
|One to two years                            |  | 64.62                         |  |             



These forward exchange contracts are
hedging anticipated sales that are due within 12 months. Any unrealized gains and losses on the hedging contracts, together with the costs of the contracts, will be recognized in the financial statements at the time the underlying transaction
occurs. The gross unrecognized gains and losses as of December 31, 2002 and 2001 on hedges of foreign currency sales anticipated to take place in the future set forth below:



|                        |  | Gains A$ |  | Losses A$
|----------------------- |  | -------- |  | ---------
|                        |  | 2002     |  | 2001     
|Expected Sale Year      |  |          |  |          
|Not later than one year |  | 172,174  |  | 205,610  
|One to two years        |  | 55,688   |  |         



The future income of the Company may
be adversely affected by adverse movements in the Japanese Yen/Australian Dollar exchange rate.



|ITEM 12. |  | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
|-------- |  | ------------------------------------------------------



Not required.



45



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##### Table of Contents

PART II



|ITEM 13. |  | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
|-------- |  | -----------------------------------------------



There has been no default of any indebtedness nor is there any arrearage in the payment of dividends.



|ITEM 14. |  | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
|-------- |  | ----------------------------------------------------------------------------



There have been no changes to the instruments defining the rights of the holders of any class of registered securities, and the rights of
holders of the registered securities have not been altered by the issuance or modification of any other class of securities. There are no restrictions on working capital and no removal or substitution of assets securing any class of the
Companys registered securities.



|ITEM 15. |  | CONTROLS AND PROCEDURES
|-------- |  | -----------------------



|(a) |  | Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the
effectiveness of the design and operation the Companys disclosure controls and procedures, as such term is defined under Rule 13a-14(c) promulgated under the Securities Act of 1934, as amended, within the 90 day period preceding the filing
date of this report. Based on this evaluation, our principal executive officer and principal financial officer concluded that the Companys disclosure controls and procedures have been designed and are being operated in a manner that provides
reasonable assurance that the information required to be disclosed by the Company in reports filed under the securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SECs rules
and forms. A control system, no matter how well designed and operated, cannot provide absolute assurance that the objective of the control issues and instances of fraud, if any, within a company have been detected.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(b) |  | There have been no significant changes (including corrective actions with regard to significant deficiencies or material weakness) in our internal controls or in other factors that
could significantly affect these controls subsequent to the date of the evaluation referenced in paragraph (a) above.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|ITEM 16. |  | [RESERVED]
|-------- |  | ----------



46



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##### Table of Contents

PART III



|ITEM 17. |  | FINANCIAL STATEMENTS
|-------- |  | --------------------



The following Financial Statements are filed as part of this Annual Report.



|(i) 2002 Fiscal Year                                                                      |  |     
|----------------------------------------------------------------------------------------- |  | ----
|                                                                                          | 
|Independent Auditors Report to the Members                                               |  | F-1 
|                                                                                          | 
|Profit and Loss Account for the year ended December 31, 2002                              |  | F-2 
|                                                                                          | 
|Balance Sheet for the year as at December 31, 2002                                        |  | F-3 
|                                                                                          | 
|Statement of Cash Flows for the financial year ended December 31, 2002                    |  | F-4 
|                                                                                          | 
|Notes to and forming part of theFinancial Statements for the year ended December 31, 2002 |  | F-5 
|                                                                                          | 
|(ii) 2001 Fiscal Year                                                                     |  |     
|                                                                                          | 
|Declaration by Directors                                                                  |  | F-36
|                                                                                          | 
|Profit and Loss Account for the year ended December 31, 2001                              |  | F-37
|                                                                                          | 
|Balance Sheet for the year as at December 31, 2001                                        |  | F-38
|                                                                                          | 
|Statement of Cash Flows for the financial year ended December 31, 2001                    |  | F-39
|                                                                                          | 
|Notes to and forming part of theFinancial Statements for the year ended December 31, 2001 |  | F-40



|ITEM 18. |  | FINANCIAL STATEMENTS
|-------- |  | --------------------



Not required.



47



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##### Table of Contents

|ITEM 19. |  | EXHIBITS
|-------- |  | --------



|  |  |      
|- |  | -----
|1 |  | i.   
|  |  |      
|2 |  | i.   
|  |  |      
|  |  | ii.  
|  |  |      
|  |  | iii. 
|  |  |      
|4 |  | i.   
|  |  |      
|  |  | ii.  
|  |  |      
|  |  | iii. 
|  |  |      
|  |  | iv.  
|  |  |      
|  |  | v.   
|  |  |      
|  |  | vi.  
|  |  |      
|  |  | vii. 
|  |  |      
|  |  | viii.
|  |  |      
|  |  | ix.  
|  |  |      
|  |  | x.   
|  |  |      
|  |  | xi.  



48



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##### Table of Contents

|   |  |       
|-- |  | ------
|   |  | xii.  
|   |  |       
|   |  | xiii. 
|   |  |       
|   |  | xiv.  
|   |  |       
|   |  | xv.   
|   |  |       
|   |  | xvi.  
|   |  |       
|   |  | xvii. 
|   |  |       
|   |  | xviii.
|   |  |       
|   |  | xix.  
|   |  |       
|   |  | xx.   
|   |  |       
|8  |  | i.    
|   |  |       
|12 |  | i.    
|   |  |       
|   |  | ii.   

---

|(1) |  | Previously filed as an Exhibit of the number shown in parenthesis on the Registrants Registration Statement on Form 20-F (File No. 0-28186) and incorporated herein by
reference.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) |  | Previously filed as an Exhibit of the number shown in parenthesis to the Registrants Annual Report on Form 20-F for the year ended December 31, 1996 and incorporated herein by
reference.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) |  | Previously filed as an Exhibit of the number shown in parenthesis to the Registrants Annual Report on Form 20-F for the year ended December 31, 1997 and incorporated herein by
reference.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(4) |  | Previously filed as an Exhibit of the number shown in parenthesis to the Registrants Annual Report on Form 20-F for the year ended December 31, 1998 and incorporated herein by
reference.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



49



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##### Table of Contents

|(5) |  | Previously filed as an exhibit of the number shown in parenthesis to the Registrants Annual Report on Form 20-F for the year ended December 31, 1999 and incorporated herein by
reference.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(6) |  | Previously filed as an exhibit of the number shown in parenthesis to the Registrants Annual Report on Form 20-F for the year ended December 31, 2000 and incorporated herein by
reference
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(7) |  | Previously filed as an exhibit of the number shown in parenthesis to the Registrants Annual Report on Form 20-F for the year ended December 31, 2001 and incorporated herein by
reference.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(8) |  | Filed herewith.
|--- |  | ---------------



50



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##### Table of Contents

SIGNATURES



The Registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and has duly caused and authorized the undersigned to sign this annual
report on its behalf.



ATLAS PACIFIC LIMITED/s/ W F JamesW.F. James, ChairmanDated: July 15, 2003




51



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##### Table of Contents

ATLAS PACIFIC LIMITED AND ITS CONTROLLED ENTITIES



REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT



We have audited the accompanying consolidated statement of financial position of Atlas
Pacific Limited (the Company) as of December 31, 2002, 2001 and 2000 and the related consolidated statements of financial performance, and statement of cash flows. These financial statements are the responsibility of the management of
Atlas Pacific Limited. Our responsibility is to express an opinion on these financial statements based on our audit.



We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.



In our opinion, the consolidated financial statements referred to above present fairly, in
all material respects, the financial position of Atlas Pacific Limited as of December 31, 2002, 2001 and 2000 and the results of its operations and its cash flows for each of three years in the period ended December 31, 2002, in conformity with
accounting principles generally accepted in the Australia.



As described in
Note 33, the US GAAP reconciliation for 2001 and 2000 has been restated to reflect the fair value of a foreign currency derivative instrument and compensation related to stock options issued to employees, and the reversal of certain administrative
costs capitalised into inventory.



|                  |  | /s/    G.F. Brayshaw 
|----------------- |  | ---------------------
|                  |  |                      
|Perth             |  | BDO                  
|Western Australia |  | Chartered Accountants
|22 July 2003      |  |                      





F-1



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##### Table of Contents

Statements of financial performance

Atlas Pacific Limited and its Controlled Entities

For the years ended 31
December

(Australian Dollars)



|                                                                                                      |  |      |  | CONSOLIDATED |  
|----------------------------------------------------------------------------------------------------- |  | ---- |  | ------------ | -
|                                                                                                      |  | Note |  | 2002         |  
|                                                                                                      |  |      |  | $            |  
|Revenue from sale of goods                                                                            |  | 2    |  | 10,598,812   |  
|Other revenues from ordinary activities                                                               |  | 2    |  | 742,636      |  
|                                                                                                      |  |      |  |              |  
|Total revenue                                                                                         |  | 2    |  | 11,341,448   |  
|                                                                                                      |  |      |  |              |  
|Expenses from ordinary activities                                                                     |  |      |  |              |  
|Cost of goods sold                                                                                    |  |      |  | (2,493,667   | )
|Marketing expenses                                                                                    |  |      |  | (859,184     | )
|Administration expenses                                                                               |  |      |  | (2,013,500   | )
|Borrowing costs                                                                                       |  | 3    |  | (3,295       | )
|Other expenses from ordinary activities                                                               |  |      |  | (354,769     | )
|                                                                                                      |  |      |  |              |  
|Total expenses                                                                                        |  |      |  | (5,724,415   | )
|                                                                                                      |  |      |  |              |  
|Profit from ordinary activities before related income tax expense                                     |  |      |  | 5,617,033    |  
|Income tax expense relating to ordinary activities                                                    |  | 4    |  | (2,118,016   | )
|                                                                                                      |  |      |  |              |  
|Profit from ordinary activities after related income tax attributable to members of the parent entity |  | 17   |  | 3,499,017    |  
|                                                                                                      |  |      |  |              |  
|Basic earnings per share                                                                              |  | 5    |  | 0.0423       |  
|                                                                                                      |  |      |  |              |  
|Diluted earnings per share                                                                            |  | 5    |  | 0.0403       |  
|                                                                                                      |  |      |  |              |  



The accompanying notes
form part of these financial statements.



F-2



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##### Table of Contents

Statements of financial position

Atlas Pacific Limited and its Controlled Entities

As at 31 December

(Australian Dollars)



|                                        |  |      |  | CONSOLIDATED | 
|--------------------------------------- |  | ---- |  | ------------ | 
|                                        |  | Note |  | 2002         | 
|                                        |  |      |  | $            | 
|Current assets                          |  |      |  |              | 
|Cash assets                             |  | 6    |  | 6,119,808    | 
|Receivables                             |  | 7    |  | 1,182,741    | 
|Inventories                             |  | 8    |  | 2,924,061    | 
|Self-generating and regenerating assets |  | 9    |  | 2,671,601    | 
|                                        |  |      |  |              | 
|Total current assets                    |  |      |  | 12,898,211   | 
|                                        |  |      |  |              | 
|Non-current assets                      |  |      |  |              | 
|                                        |  |      |  |             
|Receivables                             |  | 7    |  |             | 
|Inventories                             |  | 8    |  | 145,237      | 
|Self-generating and regenerating assets |  | 9    |  | 8,203,530    | 
|Property, plant and equipment           |  | 11   |  | 2,194,935    | 
|Intangible assets                       |  | 12   |  | 247,776      | 
|Deferred Tax Asset                      |  | 4    |  | 25,792       | 
|                                        |  |      |  |              | 
|Total non-current assets                |  |      |  | 10,817,270   | 
|                                        |  |      |  |              | 
|Total assets                            |  |      |  | 23,715,481   | 
|                                        |  |      |  |              | 
|Current liabilities                     |  |      |  |              | 
|                                        |  |      |  |             
|Payables                                |  | 13   |  | 935,500      | 
|Interest-bearing liabilities            |  | 14   |  |             | 
|Current tax liabilities                 |  | 4    |  | 1,720,422    | 
|Provisions                              |  | 15   |  | 124,387      | 
|                                        |  |      |  |              | 
|Total current liabilities               |  |      |  | 2,780,309    | 
|                                        |  |      |  |              | 
|Non-current liabilities                 |  |      |  |              | 
|                                        |  |      |  |             
|Interest-bearing liabilities            |  | 14   |  |             | 
|Deferred tax liabilities                |  | 4    |  |             | 
|                                        |  |      |  |              | 
|Total non-current liabilities           |  |      |  |             | 
|                                        |  |      |  |              | 
|Total liabilities                       |  |      |  | 2,780,309    | 
|                                        |  |      |  |              | 
|Net assets                              |  |      |  | 20,935,172   | 
|                                        |  |      |  |              | 
|Equity                                  |  |      |  |              | 
|                                        |  |      |  |             
|Contributed equity                      |  | 16   |  | 18,849,092   | 
|Retained profits                        |  | 17   |  | 2,086,080    | 
|                                        |  |      |  |              | 
|Total equity                            |  |      |  | 20,935,172   | 
|                                        |  |      |  |              | 



The accompanying notes
form part of these financial statements.



F-3



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##### Table of Contents

Statement of cash flows

Atlas Pacific Limited and its Controlled Entities

For the years ended 31
December

(Australian Dollars)



|                                                                                    |  | CONSOLIDATED |  
|----------------------------------------------------------------------------------- |  | ------------ | -
|                                                                                    |  | 2002         |  
|                                                                                    |  | $            |  
|Cash flows from operating activities                                                |  |              |  
|Proceeds from pearl and oyster sales                                                |  | 11,289,725   |  
|Proceeds from other operating activities                                            |  | 30,037       |  
|Interest paid                                                                       |  | (7,731       | )
|Interest and bill discounts received                                                |  | 364,886      |  
|Payments to suppliers                                                               |  | (7,734,691   | )
|Income tax paid                                                                     |  | (1,938,119   | )
|                                                                                    |  |              |  
|Net cash provided by/(used in) operating activities (Note 22.2)                     |  | 2,004,107    |  
|                                                                                    |  |              |  
|Cash flows from investing activities                                                |  |              |  
|Advances to controlled entities                                                     |  |             |  
|Payments for property, plant and equipment                                          |  | (617,118     | )
|Proceeds on disposal of fixed assets                                                |  | 15,828       |  
|                                                                                    |  |              |  
|Net cash provided by/(used in) investing activities                                 |  | (601,290     | )
|                                                                                    |  |              |  
|Cash flows from financing activities                                                |  |              |  
|Dividend Payment                                                                    |  | (3,402,484   | )
|Receipts from conversion of options                                                 |  | 2,556,365    |  
|Repayment of convertible notes                                                      |  | (22,498      | )
|                                                                                    |  |              |  
|Net cash provided by/(used in) financing activities                                 |  | (868,617     | )
|                                                                                    |  |              |  
|Net increase/(decrease) in cash held                                                |  | 534,200      |  
|Cash at the beginning of the financial year                                         |  | 5,585,608    |  
|Effects of exchange rate changes on the balances of cash held in foreign currencies |  |             |  
|                                                                                    |  |              |  
|Cash and term deposits at the end of the financial year (Note 22.1)                 |  | 6,119,808    |  
|                                                                                    |  |              |  



The accompanying notes
form part of these financial statements.



F-4



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##### Table of Contents

ATLAS PACIFIC LIMITED AND ITS CONTROLLED ENTITIES



NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS



FOR THE YEAR ENDED 31 DECEMBER 2002, 2001 AND 2000



(Australian Dollars)



|1. |  | Statement of significant accounting policies
|-- |  | --------------------------------------------



| | 1.1 |  | Basis of preparation
| | --- |  | --------------------



This general purpose financial report has been prepared in accordance with Accounting Standards and other mandatory professional reporting requirements
and the Corporations Act 2001.



The financial statements have
been prepared under the historical cost convention and except where stated, they do not take into account changing money values or fair values of non-current assets. The accounting policies relating to the financial statements are consistent with
those applied in the previous year unless otherwise stated.



| | 1.2 |  | Comparative amounts
| | --- |  | -------------------



Where necessary, the figures for the previous year have been reclassified to facilitate comparison.



| | 1.3 |  | Principles of consolidation
| | --- |  | ---------------------------



The financial statements of the economic entity comprise consolidated accounts of Atlas Pacific Limited and all controlled entities within the meaning of
the Corporations Act. All intercompany balances and unrealised profits resulting from intra-group transactions have been eliminated.



Where a controlled entity is acquired during a year, its results are included only from the date of acquisition. Where there is loss of control of a
controlled entity during a year, its results are included only for that period of the year during which the parent entity had control.



In the instance of the acquisition of a controlled entity, the cost method of accounting is used for all acquisitions of assets regardless of whether
shares or other assets are acquired. Cost is determined as the fair value apportionment, at the date of acquisition, of the purchase consideration plus costs incidental to the acquisition.



| | 1.4 |  | Inventories
| | --- |  | -----------



| | (a) |  | Pearlsquantity of pearls as harvested and processed are valued at the lower of cost or net market value.
| | --- |  | ---------------------------------------------------------------------------------------------------------



| | (b) |  | Nucleiquantities on hand at the year end are valued at cost.
| | --- |  | -------------------------------------------------------------



| | 1.5 |  | Self-generating and regenerating assets (SGARAs)
| | --- |  | ------------------------------------------------



The Consolidated Entity has applied AASB1037 Self-Generating and Regenerating Assets (SGARAs). The standard requires that all inventory which is a
non-human living asset is to be treated separately from other inventory. SGARAs must be measured at net market value and the increment/(decrement) in net market values of the SGARAs is to be recognised as revenue/(expense) in the statement of
financial performance.



The value of the SGARAs is only
recognised when it can be measured reliably.



F-5



---

##### Table of Contents

Pearls, although not a living organism, are a product of an oyster which is classified as a SGARA and as
such, they too are classified as a SGARA at the time that they are harvested. In the opinion of the Directors, the most reliable valuation methodology for the pearls that are defined as a product of a SGARA is the net market value for the pearls
based on the price at which they are sold by PT Cendana Indopearls to Atlas Pacific Ltd. Once the pearls are sold by PT Cendana Indopearls, they cease to become a SGARA under the definition in the accounting standard.



Oysters are a living organism which meet the definition of a SGARA. There is
no market for pearl oysters by which a reliable valuation comparison of this category of the SGARA can be made. Given the uncertainty and risk that exists in the process of producing a pearl and other risk factors specific to the operations of the
economic entity, the Directors believe that the most appropriate market valuation for the oysters is their cost of production to date. Cost is the total direct hatchery and farm operations and includes the cost of oyster purchases and nuclei used in
seeding operations.



The details of the SGARAs that are held
by the economic entity as at 31 December 2002 are provided at Note 9.



| | 1.6 |  | Revenue recognition
| | --- |  | -------------------



| | (a) |  | Sales Revenue  comprised of revenue earned from the sale of products or services to entities outside the consolidated entity. Sales revenue is recognised when the goods are
provided or when the fee in respect of services provided is receivable.
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) |  | Interest Income  recognised as it accrues.
| | --- |  | -------------------------------------------



| | (c) |  | Asset Sales Revenue  comprises the gross proceeds of the assets. The profit and loss on disposal of assets is brought to account at the date on which an unconditional contract
is signed.
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (d) |  | Inventory Revaluation  in accordance with accounting standard AASB1037 Self-Generating and Regenerating Assets, any increase in the net market value of these assets are
recognised as revenue at the time of the revaluation.
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 1.7 |  | Investments
| | --- |  | -----------



Long term investments are stated at cost or valuation, less a provision for diminution in value, as assessed by the Directors annually to ensure that the
carrying amount is not in excess of recoverable amount. The recoverable amount is assessed from the shares current market value or the underlying net assets in the particular entities. The expected net cash flows from investments have not been
discounted to their present value in determining the recoverable amounts.



| | 1.8 |  | Valuation of non-current assets
| | --- |  | -------------------------------



In determining the recoverable amounts of non-current assets, the expected net cash flows arising from the continued use and subsequent disposal of those
assets have not been discounted to their present value.



The
carrying amount of non-current assets are reviewed to determine whether they are in excess of their recoverable amount at balance date. If the carrying amount of a non-current asset exceeds the recoverable amount, the asset is written down to the
lower amount and the write-down is included in the profit and loss statement.



F-6



---

##### Table of Contents

| | 1.9 |  | Depreciation
| | --- |  | ------------



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.



The depreciation
rates used for each class of depreciable assets are:



|                                          |  | Depreciation rate |  
|----------------------------------------- |  | ----------------- | -
|Class of fixed asset                      |  | 2002              |  
|Leasehold land & buildings & improvements |  | 5-10              | %
|Vessels                                   |  | 10                | %
|Plant & equipment                         |  | 20-50             | %



| | 1.10 |  | Goodwill
| | ---- |  | --------



Goodwill and goodwill on consolidation are initially recorded at the amount by which the purchase price for a business or for an ownership interest in a
controlled entity exceeds the fair value attributed to its net assets at date of acquisition. Both purchased goodwill and goodwill on consolidation are amortised on a straight line basis over the period of 5 years. The balances are reviewed annually
and any balance representing future benefits for which the realisation is considered to be no longer probable are written off.



| | 1.11 |  | Foreign currency translations
| | ---- |  | -----------------------------



| | (a) |  | Translations
| | --- |  | ------------



The Company considers that the operations of the Indonesian subsidiary are integrated with those of the parent entity and therefore the temporal method of
accounting for foreign exchange conversion has been adopted, whereby,



| | (i) |  | monetary items are converted at the exchange rate applicable at the year end;
| | --- |  | -----------------------------------------------------------------------------



| | (ii) |  | other pearling project assets and liabilities are converted at the exchange rate applicable at the time of transaction, and
| | ---- |  | ---------------------------------------------------------------------------------------------------------------------------



| | (iii) |  | gains and losses on transactions are taken to the current years profit and loss account.
| | ----- |  | -----------------------------------------------------------------------------------------



| | (b) |  | Hedges
| | --- |  | ------



Gains or losses on hedges of specific commitments including those relating to the price of particular goods or services to be purchased or sold, are to be deferred and included in the measurement of the purchase or
sale transaction.



| | 1.12 |  | Income tax
| | ---- |  | ----------



The liability method of tax-effect accounting has been adopted, whereby:



| | (a) |  | the income tax (expense)/benefit in the profit and loss account is determined by applying the current tax rate to operating profit/(loss) after allowing for permanent differences,
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) |  | a provision for deferred income tax is created for
| | --- |  | --------------------------------------------------



| | (i) |  | expenses which are currently deductible in determining taxable income but which have not been taken up in arriving at the operating profit, and
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------



| | (ii) |  | revenue which has been included in operating profit but which is not yet assessable for tax,
| | ---- |  | --------------------------------------------------------------------------------------------



| | (c) |  | a future income tax benefit is brought to account for
| | --- |  | -----------------------------------------------------



| | (i) |  | expenses which have been taken up in arriving at the operating profit but are
| | --- |  | -----------------------------------------------------------------------------



F-7



---

##### Table of Contents

| |  |  | not currently deductible for income tax purposes, and
| |  |  | -----------------------------------------------------



| | (ii) |  | revenue which is currently assessable for tax but which has not yet been included in operating profit,
| | ---- |  | ------------------------------------------------------------------------------------------------------



| | (iii) |  | income tax losses carried forward.
| | ----- |  | ----------------------------------



Future income tax benefits are not brought to account unless realisation of the benefits is virtually certain.



Realisation is contingent upon



| | (i) |  | deriving future assessable income of a nature and of an amount sufficient to enable the benefit of the deductions for the losses to be realised,
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------



| | (ii) |  | the company continuing to comply with the conditions for deductibility imposed by the law, and
| | ---- |  | ----------------------------------------------------------------------------------------------



| | (iii) |  | no changes in the legislation which would adversely affect realisation of the benefit of the losses.
| | ----- |  | ----------------------------------------------------------------------------------------------------



| | 1.13 |  | Bills of exchange
| | ---- |  | -----------------



Bills of exchange have been purchased in the market at a discount to face value. The bills are carried at an amount representing cost and a portion of the
discount recognised as income on an effective yield basis. The discount brought to account each period is accounted for as interest received.



| | 1.14 |  | Trade and other creditors
| | ---- |  | -------------------------



These amounts represent liabilities for goods and services provided to the economic entity prior to the end of the financial year and which are unpaid.
The amounts are unsecured and are usually paid within 30 days of recognition.



| | 1.15 |  | Trade and other debtors
| | ---- |  | -----------------------



The collectibility of debts is assessed at balance date and specific provision is made for any doubtful accounts.



| | 1.16 |  | Interests in joint ventures
| | ---- |  | ---------------------------



The economic entitys share of the assets, liabilities, revenue and expenses of joint ventures are included in the appropriate items of the
consolidated balance sheet and profit and loss account.



| | 1.17 |  | Employee entitlements
| | ---- |  | ---------------------



Provision is made for the Companys liability for employee entitlements arising from services rendered by employees to balance 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 entitlements.



Where the Company has granted options to employees, the costs incurred in administering this allocation are expensed as incurred. Other than these costs,
the allocation does not result in any expense to the consolidated entity.



Contributions are made by the economic entity to employee superannuation funds and are charged as expenses when incurred.



| | 1.18 |  | Derivatives
| | ---- |  | -----------



The consolidated entity is exposed to changes in foreign exchange rates from its activities. The consolidated entity uses forward foreign exchange
contracts to hedge



F-8



---

##### Table of Contents

these risks. Derivative financial instruments are not held for speculative purposes. Derivative financial instruments designated as hedges are accounted for
on the same basis as the underlying exposure. The accounting for forward foreign exchange contract is set out in Note 1.11 (b).



|                                          |  | Consolidated
|----------------------------------------- |  | ------------
|                                          |  | 2002        
|                                          |  | $           
|2.      Revenue from ordinary activities  |  |             
|Revenue from operating activities         |  |             
|Sales revenue                             |  | 10,598,812  
|                                          |  |             
|Revenue from joint venture partners       |  | 85,922      
|Interest received  other parties         |  | 364,886     
|Total other revenues                      |  | 227,904     
|                                          |  |             
|                                          |  | 11,277,524  
|                                          |  |             
|Revenue from outside operating activities |  |             
|Insurance proceeds received               |  |            
|Property rental                           |  | 63,924      
|                                          |  |             
|                                          |  | 63,924      
|                                          |  |             
|Total revenue                             |  | 11,341,448  
|                                          |  |             



|                                                                                                           |  | Consolidated |  
|---------------------------------------------------------------------------------------------------------- |  | ------------ | -
|                                                                                                           |  | 2002         |  
|                                                                                                           |  | $            |  
|3.      Profit from ordinary activities before income tax expense                                          |  |              |  
|                                                                                                           |  |              |  
|The operating result before income tax has been determined after charging/(crediting) the following items: |  |              |  
|                                                                                                           |  |              |  
|Borrowing Costs                                                                                            |  |              |  
|Interest paid  other corporations                                                                         |  | 3,295        |  
|                                                                                                           |  |              |  
|Operating lease rental costs                                                                               |  | 57,137       |  
|                                                                                                           |  |              |  
|Movements in provisions                                                                                    |  |              |  
|Depreciation property, plant and equipment                                                                 |  | 17,566       |  
|Amortisation of goodwill on acquisition of minority interest                                               |  | 251,941      |  
|Provision for employee entitlements                                                                        |  | 42,374       |  
|                                                                                                           |  |              |  
|Net expense/(benefit) resulting from movement in provisions                                                |  | 311,881      |  
|                                                                                                           |  |              |  
|Net foreign exchange (gain)/loss                                                                           |  | (187,284     | )
|                                                                                                           |  |              |  
|Loss/(profit) on disposal of fixed assets                                                                  |  | (15,828      | )
|                                                                                                           |  |              |  



F-9



---

##### Table of Contents

|4.      Income tax                                                                             |  |           |   |  |           |   |  |          |  
|---------------------------------------------------------------------------------------------- |  | --------- | - |  | --------- | - |  | -------- | -
|                                                                                               |  |           |  
|a)      Income Tax Expense                                                                     |  |           |   |  |           |   |  |          |  
|Prima facie tax expense calculated at 30% on the profit from ordinary activities (2000 at 34%) |  | 1,685,110 |   |  | 1,710,705 |   |  | 840,534  |  
|Tax effect of permanent differences:                                                           |  |           |   |  |           |   |  |          |  
|Non deductible expenses                                                                        |  | 43,458    |   |  | 5,549     |   |  | 2,347    |  
|Non assessable income                                                                          |  |          |   |  |          |   |  | (233,320 | )
|Restatement of closing trading stock                                                           |  |          |   |  | 38,268    |   |  |         |  
|Amortisation of goodwill                                                                       |  | 75,582    |   |  | 74,957    |   |  | 84,952   |  
|Foreign currency movements                                                                     |  | 293,404   |   |  |          |   |  |         |  
|Other deductible items                                                                         |  |          |   |  |          |   |  | (614,173 | )
|Foreign tax credits utilised                                                                   |  |          |   |  |          |   |  | (233,435 | )
|Inventory valuation adjustment                                                                 |  |          |   |  | 159,170   |   |  |         |  
|Prior year losses not previously recorded as future tax benefits recouped                      |  | (50,630   | ) |  | (414,890  | ) |  | (13,593  | )
|(Future income tax benefit)/provision for deferred tax not previously brought to account       |  | 71,092    |   |  | (22,174   | ) |  | 166,688  |  
|                                                                                               |  |           |   |  |           |   |  |          |  
|Income tax attributable to operating result                                                    |  | 2,118,016 |   |  | 1,551,585 |   |  |         |  
|                                                                                               |  |           |   |  |           |   |  |          |  



|                                                                                               |  | Consolidated
|---------------------------------------------------------------------------------------------- |  | ------------
|                                                                                               |  | 2002        
|                                                                                               |  | $           
|Income tax expense attributable to profit from ordinary activities is made up of movements in: |  |             
|Current income tax provision                                                                   |  | 2,124,078   
|Deferred income tax provision                                                                  |  | (1,877      
|Future income tax benefit                                                                      |  | (4,185      
|                                                                                               |  |             
|                                                                                               |  | 2,118,016   
|                                                                                               |  |             
|b)      Current tax liability                                                                  |  |             
|Provision for current income tax                                                               |  |             
|Balance at beginning of year                                                                   |  | 1,534,461   
|Income tax paid                                                                                |  | (1,981,713  
|Current year income tax provision                                                              |  | 2,167,674   
|Taxes  Other                                                                                  |  |            
|                                                                                               |  |             
|                                                                                               |  | 1,720,422   
|                                                                                               |  |             
|c)      Deferred tax liability                                                                 |  |             
|Provision for deferred income tax at the applicable rate of 30% (2000 at 34%)                  |  |            
|                                                                                               |  |             
|d)      Deferred Tax Asset                                                                     |  |             
|Future income tax benefit at the applicable rate of 30% (2000 at 34%)                          |  | 25,792      
|                                                                                               |  |             



F-10



---

##### Table of Contents

|Future income tax benefits not taken to account                                                                                         |  |         |  |         |  |        
|--------------------------------------------------------------------------------------------------------------------------------------- |  | ------- |  | ------- |  | -------
|The potential benefits of which will be realised only if the conditions occur for deductibility (set out in Note 1.12), are as
follows: |  |         |  |         |  |        
|  Revenue Tax losses (current year)                                                                                                    |  |        |  |        |  | 166,688
|  Revenue Tax losses (prior years)                                                                                                     |  |        |  |        |  | 32,561 
|  Capital losses (prior years)                                                                                                         |  | 304,247 |  | 304,247 |  | 344,813



The prior year losses recouped by the
economic entity include losses for a subsidiary which were not previously available to the economic entity and therefore not previously recognised.



For details of the franking account, refer to Note 18.



|                                             |  | Consolidated
|-------------------------------------------- |  | ------------
|                                             |  | 2002        
|                                             |  | Cents       
|5.      Earnings per share                   |  |             
|                                             |  |             
|Basic earnings per share (cents per share)   |  | 4.23        
|                                             |  |             
|Diluted earnings per share (cents per share) |  | 4.03        
|                                             |  |             
|                                             |  | $           
|Earnings reconciliation                      |  |             
|                                             |  |             
|Net profit used for basic earnings           |  | 3,499,017   
|                                             |  |             
|After tax effect of dilutive securities      |  | 46,902      
|                                             |  |             
|                                             |  |             
|Diluted earnings                             |  | 3,545,919   
|                                             |  |             



|                                                                                                                                    |  | 2002       |  | 2001       |  | 2000      
|----------------------------------------------------------------------------------------------------------------------------------- |  | ---------- |  | ---------- |  | ----------
|                                                                                                                                    |  | No.        |  | No.        |  | No.       
|Weighted average number of ordinary shares outstanding during the year used for calculation of basic earnings per share             |  | 82,724,884 |  | 61,013,243 |  | 54,751,017
|Weighted average number of potential ordinary shares outstanding during the year used for calculation of diluted earnings per share |  | 87,910,235 |  | 88,026,526 |  | 88,264,874



Diluted earnings per share is
calculated after taking into consideration all options and convertible notes on issue that remain unconverted at 31 December as potential ordinary shares.



F-11



---

##### Table of Contents

|                    |  | Consolidated
|------------------- |  | ------------
|                    |  | 2002        
|                    |  | $           
|6.      Cash assets |  |             
|                    |  |             
|Cash at bank        |  | 2,492,418   
|                    |  |             
|Bills of exchange   |  | 2,600,000   
|                    |  |             
|Bank bonds          |  | 1,027,390   
|                    |  |             
|                    |  | 6,119,808   
|                    |  |             



Bills of exchange
mature within 30 days and pay interest at rate of 4.80% (2001  4.28%, 2000  6.26%).



Bank bonds carry a coupon rate of 5.75%. They are redeemable at any time for cash based on current market interest rates.



At 31 December 2001 the company had a fixed term deposit of $230,254 (2000
$135,159) which matured during the year. This deposit formed security for the Companys forward cover hedging contracts and was recorded with sundry debtors and prepayments (note 7).



|                                           |  | Consolidated
|------------------------------------------ |  | ------------
|                                           |  | 2002        
|                                           |  | $           
|7.      Receivables                        |  |             
|CURRENT                                    |  |             
|Trade debtors                              |  | 937,931     
|Sundry debtors & prepayments               |  | 244,810     
|                                           |  |             
|                                           |  | 1,182,741   
|                                           |  |             
|NON CURRENT                                |  |             
|Amount receivable from controlled entities |  |            
|Provision for loss on loans                |  |            
|                                           |  |             
|                                           |  |            
|                                           |  |             



|                    |  | Consolidated
|------------------- |  | ------------
|                    |  | 2002        
|                    |  | $           
|8.      Inventories |  |             
|CURRENT             |  |             
|                    |  |             
|Pearls              |  | 2,924,061   
|                    |  |             
|NON CURRENT         |  |             
|Nuclei              |  | 145,237     
|                    |  |             
|Total inventory     |  | 3,069,298   
|                    |  |             



F-12



---

##### Table of Contents

|                                                         |  | Consolidated
|-------------------------------------------------------- |  | ------------
|                                                         |  | 2002        
|                                                         |  | $           
|9.      Self-generating and regenerating assets (SGARAs) |  |             
|CURRENT                                                  |  |             
|                                                         |  |             
|Oysters                                                  |  | 2,671,601   
|                                                         |  |             
|NON CURRENT                                              |  |             
|                                                         |  |             
|Oysters                                                  |  | 8,203,530   
|                                                         |  |             
|Total SGARAs                                             |  | 10,875,131  
|                                                         |  |             



Included in the above mentioned oyster stock values are joint venture stocks as follows:



|                            |  | Consolidated
|--------------------------- |  | ------------
|                            |  | 2002        
|                            |  | $           
|CURRENT                     |  |             
|                            |  |             
|Joint Venture Oysters       |  | 20,159      
|                            |  |             
|NON CURRENT                 |  |             
|                            |  |             
|Joint Venture Oysters       |  |            
|                            |  |             
|Total Joint Venture Oysters |  | 20,159      
|                            |  |             



The
details of the SGARAs that are held by the economic entity as at year end are as follows:



Nature of SGARAs:- Oysters (Pinctada Maxima)



|                                                             |  | 2002    |  | 2001   
|------------------------------------------------------------ |  | ------- |  | -------
|                                                             |  | No.     |  | No.    
|                                                             |  |        
|Held within the economic entities operations:                |  |         |  |        
|                                                             |  |        
|Juvenile oysters which are not nucleated                     |  | 384,622 |  | 362,940
|                                                             |  |        
|Nucleated oysters                                            |  | 285,853 |  | 261,393
|                                                             |  |        
|Other oysters used for broodstock, saibo tissue and research |  | 3,219   |  | 2,314  
|                                                             |  |        
|Economic entities share held within joint operations:        |  |         |  |        
|                                                             |  |        
|Nucleated oysters                                            |  | 1,715   |  | 37,318 



F-13



---

##### Table of Contents

In addition the company has a right to 70% of the juvenile oyster production from a joint hatchery operation in Bali
which has a carrying value in non current oysters of $152,107 (2001 $nil). These oysters are not recognised in stock until they are greater than 6 months of age. Up until that age, they are at greater risk of mortality through natural causes which
means that they cannot be relied upon as stock.



The hatchery, land and water
leases are owned by an Indonesian company called PT Horiko Abadi which is unrelated to the Atlas Group other than through the commercial arrangement. PT Cendana Indopearls has paid a lease fee for the use of the facilities for three years and in
addition, it contributes 70% of the operating costs for the facility.



|                                                               |  | 2002 |     | 2001 |   | 2000
|-------------------------------------------------------------- |  | ---- | --- | ---- | - | ----
|Change increment in net market value during the financial year |  | $    | nil |      | $ | nil 



The Consolidated Entity applied
AASB1037 Self-Generating and Regenerating Assets (SGARAs) for the first time in the financial year ended 31 December 2001. The standard requires inventory which falls under the definition of this standard to be treated separately from other
inventory. SGARAs must be measured at net market value and the increment/(decrement) in net market values of the SGARAs is to be recognised as revenue/(expense) in the statement of financial performance.



The value of the SGARAs is only recognised when it can be measured reliably. The only effect
of this standard on the accounts is to show this class of assets separately to other inventory items. It does not have an effect on the operation result of the company.



Pearls, although not a living organism, are a product of a SGARA at the time that they are harvested, and in the opinion of the Directors,
the most reliable valuation methodology for the pearls that are defined as a product of a SGARA is the net market value for the pearls based on the price at which they are sold by PT Cendana Indopearls to Atlas Pacific Ltd. Once the pearls are sold
by PT Cendana Indopearls, they cease to become a SGARA under the definition in the accounting standard.



Oysters are a living organism which meet the definition of a SGARA. There is no market for pearl oysters by which a reliable valuation comparison of this category of the SGARA can be made. Given the uncertainty and
risk that exists on the process of producing a pearl and other risk factors specific to the operations of the Economic Entity, the Directors believe that the most appropriate market valuation for the oysters is their cost of production to date.



This treatment is not materially different from that applied in prior years.



|                                  |  | Consolidated
|--------------------------------- |  | ------------
|                                  |  | 2002        
|                                  |  | $           
|10.    Investments                |  |             
|Controlled entities               |  |             
| unlisted shares (see Note 29)   |  |            
|Provision for diminution in value |  |            
|                                  |  |             
|                                  |  |            
|                                  |  |             



F-14



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##### Table of Contents

|                                       |  | Consolidated |  
|-------------------------------------- |  | ------------ | -
|                                       |  | 2002         |  
|                                       |  | $            |  
|11.    Property, plant and equipment   |  |              |  
|(a)    General                         |  |              |  
|Plant and equipment                    |  |              |  
| at cost                              |  | 74,107       |  
| accumulated depreciation             |  | (62,020      | )
|                                       |  |              |  
|                                       |  | 12,087       |  
|                                       |  |              |  
|(b)    Pearling project                |  |              |  
|Leasehold land and buildings           |  |              |  
| at cost                              |  | 907,266      |  
| accumulated depreciation             |  | (282,922     | )
|                                       |  |              |  
|                                       |  | 624,344      |  
|                                       |  |              |  
|Plant and equipment, vessels, vehicles |  |              |  
| at cost                              |  | 5,690,261    |  
| accumulated depreciation             |  | (4,131,757   | )
|                                       |  |              |  
|                                       |  | 1,558,504    |  
|                                       |  |              |  
|Total pearling project                 |  | 2,182,848    |  
|                                       |  |              |  
|Total property, plant and equipment    |  | 2,194,935    |  
|                                       |  |              |  



Included in Pearling Project leasehold
land and buildings is $93,665 (2001  $17,547, 2000  $24,790), being construction in progress at cost.



|Reconciliations of the carrying amount for each class of property, plant and equipment are set out below: |  |        |   |  |         |   |  |         |  
|--------------------------------------------------------------------------------------------------------- |  | ------ | - |  | ------- | - |  | ------- | -
|(a)    General                                                                                            |  |        |   |  |         |   |  |         |  
|                                                                                                          |  |        |  
|Carrying amount at beginning of the year                                                                  |  | 7,902  |   |  | 11,025  |   |  | 23,619  |  
|                                                                                                          |  |        |  
|Additions                                                                                                 |  | 8,507  |   |  | 7,494   |   |  | 2,000   |  
|                                                                                                          |  |        |  
|Depreciation                                                                                              |  | (4,322 | ) |  | (10,617 | ) |  | (14,594 | )
|                                                                                                          |  |        |   |  |         |   |  |         |  
|Carrying amount at end of the year                                                                        |  | 12,087 |   |  | 7,902   |   |  | 11,025  |  
|                                                                                                          |  |        |   |  |         |   |  |         |  



F-15



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##### Table of Contents

|                                         |  | Consolidated |  
|---------------------------------------- |  | ------------ | -
|                                         |  | 2002         |  
|                                         |  | $            |  
|(b)    Pearling project                  |  |              |  
|Leasehold land and buildings             |  |              |  
|Carrying amount at beginning of the year |  | 615,504      |  
|Additions                                |  | 99,572       |  
|Depreciation                             |  | (90,732      | )
|                                         |  |              |  
|Carrying amount at end of the year       |  | 624,344      |  
|                                         |  |              |  
|Plant and equipment, vessels, vehicles   |  |              |  
|Carrying amount at beginning of the year |  | 1,679,030    |  
|Additions                                |  | 516,115      |  
|Disposals                                |  |             |  
|Depreciation                             |  | (636,641     | )
|                                         |  |              |  
|Carrying amount at end of the year       |  | 1,558,504    |  
|                                         |  |              |  



|12.    Intangible assets                                                                    |  |            |   |  |           |   |  |           |  
|------------------------------------------------------------------------------------------- |  | ---------- | - |  | --------- | - |  | --------- | -
|                                                                                            |  |            |  
|Goodwill associated with acquisition of 25% investment in P.T. Cendana Indopearls  at cost |  | 1,249,292  |   |  | 1,249,292 |   |  | 1,249,292 |  
|Accumulated amortisation                                                                    |  | (1,001,516 | ) |  | (749,575  | ) |  | (499,716  | )
|                                                                                            |  |            |   |  |           |   |  |           |  
|                                                                                            |  | 247,776    |   |  | 499,717   |   |  | 749,576   |  
|                                                                                            |  |            |   |  |           |   |  |           |  



|13.    Payables |  |         |  |           |  |          
|--------------- |  | ------- |  | --------- |  | ---------
|                |  |         | 
|CURRENT         |  |         |  |           |  |          
|Trade creditors |  | 81,052  |  | 55,581    |  | 642,637  
|Other creditors |  | 854,448 |  | 1,098,124 |  | 518,710  
|                |  |         |  |           |  |          
|                |  | 935,500 |  | 1,153,705 |  | 1,161,347
|                |  |         |  |           |  |          



F-16



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##### Table of Contents

|                                    |  | Consolidated
|----------------------------------- |  | ------------
|                                    |  | 2002        
|                                    |  | $           
|14.    Interest-bearing liabilities |  |             
|                                    |  |             
|CURRENT                             |  |             
|Interest due on convertible notes   |  |            
|Convertible notes                   |  |            
|                                    |  |             
|                                    |  |            
|                                    |  |             
|NON CURRENT                         |  |             
|Convertible notes                   |  |            
|                                    |  |             



On 22 March 1999, the
Company issued 24,688,009 redeemable notes, each having a face value of 15 cents. The notes were convertible at the option of the holder, at any time up to 23 March 2002, into ordinary shares of the Company on the basis of one share for each note
held.



|15.    Provisions     |  |         |  |         |  |        
|--------------------- |  | ------- |  | ------- |  | -------
|                      |  |         | 
|CURRENT               |  |         |  |         |  |        
|Employee entitlements |  | 124,387 |  | 160,885 |  | 129,305
|                      |  |         |  |         |  |        
|Number of employees   |  | 13      |  | 17      |  | 16     



Employee entitlements
relate to holiday pay accrual for all employees of Atlas Pacific Ltd and all expatriate employees of PT Cendana Indopearls. There are no material accruals in relation to the 244 (2001  179, 2000  168) Indonesian employees of PT Cendana
Indopearls.



|16.    Contributed equity                                                                                                  |  |            |  |            |  |           
|-------------------------------------------------------------------------------------------------------------------------- |  | ---------- |  | ---------- |  | ----------
|                                                                                                                           |  |            | 
|Issued and paid-up capital 87,810,254 ordinary shares (2001: 78,557,959 ordinary shares, 2000: 54,751,017 ordinary
shares) |  | 18,849,092 |  | 16,183,065 |  | 12,612,024
|                                                                                                                           |  |            |  |            |  |           
|Reconciliation of Contributed Equity                                                                                       |  |            |  |            |  |           
|Balance at beginning of year                                                                                               |  | 16,183,065 |  | 12,612,024 |  | 12,612,024
|Shares issued                                                                                                              |  |            |  |            |  |           
|731,080 (2001  23,806,942, 2000  nil) convertible notes with 15 cent face value converted                                |  | 109,662    |  | 3,571,041  |  |          
|8,521,215 (2001  nil, 2000  nil) options exercised at 30 cents each                                                      |  | 2,556,365  |  |           |  |          
|                                                                                                                           |  |            |  |            |  |           
|Balance at end of year                                                                                                     |  | 18,849,092 |  | 16,183,065 |  | 12,612,024
|                                                                                                                           |  |            |  |            |  |           



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. Note 19 gives details of the shares that are reserved for issuance under option.



F-17



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##### Table of Contents

|                                                        |  | Consolidated |  
|------------------------------------------------------- |  | ------------ | -
|                                                        |  | 2002         |  
|                                                        |  | $            |  
|17.    Retained profits                                 |  |              |  
|Reconciliation of Retained Earnings                     |  |              |  
|Balance at beginning of year                            |  | 1,993,541    |  
|Net profit attributable to members of the parent entity |  | 3,499,017    |  
|Dividends Paid                                          |  | (3,406,478   | )
|                                                        |  |              |  
|Balance at end of year                                  |  | 2,086,080    |  
|                                                        |  |              |  



|18. |  | Dividends
|--- |  | ---------



|                                                                          |  | Cents perShare |  | Total Amount |  | PercentageFranked |  
|------------------------------------------------------------------------- |  | -------------- |  | ------------ |  | ----------------- | -
|                                                                          |  |                |  | $            |  |                   |  
|Dividends paid and not provided for in previous years by the Company are: |  |                |  |              |  |                   |  
|2002                                                                      |  |                |  |              |  |                   |  
|Paid 26 April 2002                                                        |  | 2.0            |  | 1,650,274    |  | 50                | %
|Paid 25 October 2002                                                      |  | 2.0            |  | 1,756,204    |  | 100               | %
|                                                                          |  |                |  |              |  |                   |  
|                                                                          |  |                |  | 3,406,478    |  |                   |  
|                                                                          |  |                |  |              |  |                   |  
|2001                                                                      |  |                |  |              |  |                   |  
|Paid 5 November 2001                                                      |  | 2.0            |  | 1,570,399    |  | Nil               |  
|                                                                          |  |                |  |              |  |                   |  
|2000                                                                      |  |                |  |              |  |                   |  
|Nil                                                                       |  |               |  |             |  |                  |  
|                                                                          |  |                |  |              |  |                   |  



|                                                                                         |  | 2002      |  | 2001    |  | 2000
|---------------------------------------------------------------------------------------- |  | --------- |  | ------- |  | ----
|                                                                                         |  | $         |  | $       |  | $   
|Dividend Franking Account                                                                |  |           |  |         |  |     
|Franking credits available to shareholders of the Company for subsequent financial years |  | 2,042,723 |  | 194,488 |  |    
|                                                                                         |  |           |  |         |  |     



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##### Table of Contents

|19.    Options                                                                   |  |            |   |  |           |   |  |          
|-------------------------------------------------------------------------------- |  | ---------- | - |  | --------- | - |  | ---------
|                                                                                 |  | 2002       |   |  | 2001      |   |  | 2000     
|                                                                                 |  | No.        |   |  | No.       |   |  | No.      
|(a)    Exercisable between 14 October 1999 and 14 October 2002 at 30 cents each  |  |            |   |  |           |   |  |          
|Outstanding at beginning of year                                                 |  | 8,062,500  |   |  | 8,062,500 |   |  | 8,062,500
|Exercised during the year                                                        |  | (7,996,215 | ) |  |          |   |  |         
|Cancelled/forfeited during the year                                              |  | (66,285    | ) |  |          |   |  |         
|                                                                                 |  |            |   |  |           |   |  |          
|Outstanding at year end                                                          |  |           |   |  | 8,062,500 |   |  | 8,062,500
|                                                                                 |  |            |   |  |           |   |  |          
|(b)    Exercisable between 1 January 2001 and 31 December 2002 at 30 cents each. |  |            |   |  |           |   |  |          
|Outstanding at beginning of year                                                 |  | 525,000    |   |  | 800,000   |   |  |         
|Issued during the year                                                           |  |           |   |  |          |   |  | 800,000  
|Exercised during the year                                                        |  | (525,000   | ) |  |          |   |  |         
|Cancelled/Forfeited during the year                                              |  |           |   |  | (275,000  | ) |  |         
|                                                                                 |  |            |   |  |           |   |  |          
|Outstanding at year end                                                          |  |           |   |  | 525,000   |   |  | 800,000  
|                                                                                 |  |            |   |  |           |   |  |          
|(c)    Exercisable between 1 January 2001 and 1 January 2003 at 42 cents each    |  |            |   |  |           |   |  |          
|Outstanding at beginning of year                                                 |  |           |   |  | 200,000   |   |  |         
|Issued during the year                                                           |  |           |   |  |          |   |  | 200,000  
|Cancelled/Forfeited during the year                                              |  |           |   |  | (200,000  | ) |  |         
|                                                                                 |  |            |   |  |           |   |  |          
|Outstanding at year end                                                          |  |           |   |  |          |   |  | 200,000  
|                                                                                 |  |            |   |  |           |   |  |          
|(d)    Exercisable between 1 January 2002 and 1 January 2004 at 34.5 cents each  |  |            |   |  |           |   |  |          
|Outstanding at beginning of year                                                 |  |           |   |  |          |   |  |         
|Issued during the year                                                           |  |           |   |  | 170,000   |   |  |         
|Cancelled/Forfeited during the year                                              |  |           |   |  | (170,000  | ) |  |         
|                                                                                 |  |            |   |  |           |   |  |          
|Outstanding at year end                                                          |  |           |   |  |          |   |  |         
|                                                                                 |  |            |   |  |           |   |  |          
|Total number of options outstanding at year-end.                                 |  |           |   |  | 8,587,500 |   |  | 9,062,500
|                                                                                 |  |            |   |  |           |   |  |          



F-19



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##### Table of Contents

|20. |  | Commitments
|--- |  | -----------



The Company has entered into leases for office premises. Commitments for lease payments contracted for but not provided for are as follows:



|                         |  | 2002   |  | 2001   |  | 2000  
|------------------------ |  | ------ |  | ------ |  | ------
|                         |  | $      |  | $      |  | $     
|Not longer than one year |  | 27,108 |  | 35,000 |  | 35,707
|1-2 years                |  |       |  | 26,250 |  | 20,829
|                         |  |        |  |        |  |       
|                         |  | 27,108 |  | 61,250 |  | 56,536
|                         |  |        |  |        |  |       



The amounts do not
take into account rental reviews that are provided for in the lease contract or the renewal of property leases.



At 31 December 2002 PT Cendana Indopearls had an agreement to purchase 71,300 oysters for a total consideration of ¥28,530,800 (A$423,998). These
oysters were delivered to the Companys farm in Alyui Bay in January 2003.



|21. |  | Contingent liabilities
|--- |  | ----------------------



There are no contingent liabilities that the Directors are aware of at the date of this report.



|22. |  | Notes to the statement of cash flows
|--- |  | ------------------------------------



| | 22.1 |  | Reconciliation of cash
| | ---- |  | ----------------------



For the purposes of the statement of cash flows, cash includes cash on hand and in banks, and investments in money market instruments, net of outstanding
bank overdrafts. Cash at the end of the financial year as shown in the statement of cash flows is reconciled to the related items in the balance sheet as follows:-



|                             |  | Consolidated
|---------------------------- |  | ------------
|                             |  | 2002        
|                             |  | $           
|Cash at bank (Note 6)        |  | 2,492,418   
|Bills of exchange (Note 6)   |  | 2,600,000   
|Bank bonds (Note 6)          |  | 1,027,390   
|                             |  |             
|Cash per balance sheet       |  | 6,119,808   
|Short term deposits (Note 7) |  |            
|                             |  |             
|Cash and cash equivalents    |  | 6,119,808   
|                             |  |             



|22.2 |  | Reconciliation of net cash from operating activities to Operating profit after income tax
|---- |  | -----------------------------------------------------------------------------------------



|Operating profit after income tax                      |  | 3,499,017  |   |  | 4,150,770  |   |  | 2,472,159  |  
|------------------------------------------------------ |  | ---------- | - |  | ---------- | - |  | ---------- | -
|Inventories                                            |  | (3,054,338 | ) |  | (2,002,298 | ) |  | (2,300,625 | )
|Increase/(decrease) in interest accrual                |  | (4,436     | ) |  | (121,118   | ) |  | (266,326   | )
|Non cash changes in debtors, prepayments and creditors |  | 459,732    |   |  | (1,422,297 | ) |  | 52,097     |  
|Provision for depreciation                             |  | 724,619    |   |  | 699,606    |   |  | 912,425    |  
|Provision for employee entitlements                    |  | (36,499    | ) |  | 3,848      |   |  | 9,675      |  
|Amortisation of goodwill                               |  | 251,941    |   |  | 249,858    |   |  | 249,858    |  



F-20



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##### Table of Contents

|(Profit)/loss on disposal of fixed assets           |  | (15,828   | ) |  |          |  | (524      | )
|--------------------------------------------------- |  | --------- | - |  | --------- |  | --------- | -
|Increase/(decrease) in taxes payable                |  | 179,899   |   |  | 1,536,338 |  |          |  
|Foreign exchange differences                        |  |          |   |  | 63,744    |  | 6,435     |  
|                                                    |  |           |   |  |           |  |           |  
|Net cash provided by/(used in) operating activities |  | 2,004,107 |   |  | 3,158,451 |  | 1,135,174 |  
|                                                    |  |           |   |  |           |  |           |  



| | 22.3 |  | Credit facilities
| | ---- |  | -----------------



The Company has no overdraft or credit facilities at 31 December 2002.



|23. |  | Directors remuneration
|--- |  | -----------------------



|Amounts received or due and receivable by Directors of the Company   |  | 454,756 |  | 524,108 |  | 412,777
|-------------------------------------------------------------------- |  | ------- |  | ------- |  | -------
|                                                                     |  |         |  |         |  |        
|                                                                     |  |         | 
|Number of Directors of Atlas Pacific Limited whose remuneration was: |  | 2002    |  | 2001    |  | 2000   
|                                                                     |  | No.     |  | No.     |  | No.    
|$10,000 to $19,999                                                   |  | 1       |  | 3       |  | 4      
|$30,000 to $39,999                                                   |  | 2       |  | 2       |  | 1      
|$40,000 to $49,999                                                   |  | 1       |  | 1       |  | 1      
|$50,000 to $59,999                                                   |  | 1       |  |        |  | 1      
|$60,000 to $69,999                                                   |  | 1       |  |        |  |       
|$110,000 to $119,999                                                 |  |        |  | 1       |  |       
|$180,000 to $189,999                                                 |  | 1       |  |        |  |       
|$200,000 to $209,999                                                 |  |        |  |        |  | 1      
|$210,000 to $219,999                                                 |  |        |  | 1       |  |       



|24. |  | Related party transactions
|--- |  | --------------------------



DIRECTORS



The names of each person holding the position of director of Atlas Pacific Limited during the financial year are Messrs S.J. Arrow, W.F. James, A.M. Kerr, R.P. Poernomo,
G.R.W. Snow and J.J.U. Taylor.



Details of Directors remuneration are set
out in note 23.



DIRECTORS TRANSACTIONS WITH THE COMPANY OR ITS CONTROLLED
ENTITIES



Admiral R.P. Poernomo received a fee on normal commercial terms of
the equivalent of $37,095 (2001  $30,736) for providing office facilities and administration services for the Companys Indonesian subsidiary in Jakarta, Indonesia.



During the year, WF James & Associates Pty Ltd, a company associated with Mr W.F. James, carried out consultancy work for the Company to
the value of $9,360 (2001  $16,500). These services were provided on commercial terms.



The Company has an agreement with Arrow Pearling Co Pty Ltd, a company of which Mr S.J. Arrow is Managing Director and major shareholder, to sub-lease office space on commercial terms. Rent of $35,000 (2001 part year
$8,750) was paid during the year. In addition Arrow Pearling Co Pty Ltd received $7,858 to reimburse the cost of shared office facilities.



F-21



---

##### Table of Contents

The Company also has a consultancy agreement with Arrow Pearling Co Pty Ltd under which staff of the economic entity are
trained as pearl operation technicians at the Indonesian pearl farm. During the year, $232,061 (2001$297,886) was payable to Arrow Pearling Co Pty Ltd as consulting fees. This agreement was entered into prior to Mr Arrow becoming a Director of
the Company. It was entered into on commercial terms.



During the year, sales
of individual pearls of small quantities were made to some staff and Directors on normal commercial terms.



DIRECTORS HOLDINGS OF SHARES AND SHARE OPTIONS



The aggregate number of shares, share options and convertible notes held directly, indirectly or beneficially in the Company by Directors or their director-related entities at December 31 :



|                                   |  | 2002       |  | 2001      
|---------------------------------- |  | ---------- |  | ----------
|                                   |  | Number     |  | Number    
|Ordinary shares                    |  | 18,665,308 |  | 18,256,693
|Options  expired 14 October 2002  |  |           |  | 3,352,335 
|Options  expired 31 December 2002 |  |           |  | 200,000   



DIRECTORS TRANSACTIONS IN SHARES
AND SHARE OPTIONS



During the year 3,552,335 of the options granted to
Directors and their director-related entities were exercised. 3,173,147 shares held directly or indirectly by Directors were sold during the year.



TRANSACTIONS WITH NON-DIRECTOR RELATED PARTIES



The Company purchases pearls from its wholly owned controlled entity P.T. Cendana Indopearls. These transactions are in the normal course of business.



31 December 2001



Biron Capital Limited (formerly Biron Corporation Limited), a company in which Mr G.R.W. Snow is a substantial shareholder and Director, sub
leased office space and provided administrative services to the Company on commercial terms during the last financial year. In the year ended 31 December 2001, an amount of $25,650 (9 months) was paid for these services (2000$41,061).



Admiral R.P. Poernomo received a fee on normal commercial terms of the
equivalent of $30,736 (2000$21,001) for providing office facilities and administration services for the Indonesian subsidiary in Jakarta.



During the year, WF James & Associates Pty Ltd, a company which is associated with Mr. W.F. James, carried out consultancy work for the Company to the value of
$16,500. These services were provided on commercial terms.



During the year,
the Company entered into a lease agreement with Arrow Pearling Co Pty Ltd, a company of which Mr. S.J. Arrow is Managing Director and major shareholder, to sub-lease office space on commercial terms. This agreement commenced on 1 October and during
the year, an amount of $8,750 was paid for this facility.



The Company entered
into a Consultancy Agreement with Arrow Pearling Co Pty Ltd on 3 March 1999 under which staff of the economic entity are to be trained as pearl operation technicians at the Indonesian pearl farm. During the 2001 year, $297,886 (2000$187,964)
was payable to this company as consulting fees. This agreement was entered into prior to Mr. Arrow becoming a Director of the Company. It was entered into on commercial terms.



The Company purchases pearls from P.T. Cendana Indopearls. These transactions are in the normal course of business.



F-22



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##### Table of Contents

During the year, sales of individual pearls of small quantities were made to some staff and Directors on normal
commercial terms.



The aggregate number of shares, share options and
convertible notes held directly, indirectly or beneficially in the Company by Directors or their director-related entities at 31stDecember is:



|                           |  | 2001       |  | 2000      
|-------------------------- |  | ---------- |  | ----------
|                           |  | Number     |  | Number    
|Ordinary shares            |  | 18,256,693 |  | 14,436,045
|Convertible Notes          |  |           |  | 4,858,581 
|Options  14 October 2002  |  | 3,352,335  |  | 3,352,335 
|Options  31 December 2002 |  | 200,000    |  | 200,000   
|Options  1 January 2003   |  |           |  | 200,000   



40,000 shares held by Directors were
sold between the year ended 31 December 2002 and the date of this report.



|                                                                                                                                                                                                        |  | Consolidated
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------
|                                                                                                                                                                                                        |  | 2002        
|                                                                                                                                                                                                        |  | $           
|25.    Remuneration of executives                                                                                                                                                                       |  |             
|                                                                                                                                                                                                        |  |             
|Income received or due and receivable by Australian based executive officers (including executive directors) of the economic
entity, from all entities in the economic entity and any related entities. |  | 180,000     
|                                                                                                                                                                                                        |  |             
|                                                                                                                                                                                                        |  |             
|                                                                                                                                                                                                        |  | No.         
|The number of executive officers whose income was within the following bands                                                                                                                            |  |             
|$140,000  $149,999                                                                                                                                                                                     |  |            
|$180,000  $189,999                                                                                                                                                                                     |  | 1           
|$200,000  $209,999                                                                                                                                                                                     |  |            
|$210,000  $219,999                                                                                                                                                                                     |  |            



31 December 2002  It is the
opinion of the Board that none of the companys offices other than the Managing Director meet the definition of Executive Officer under Section 9 of the Corporations Act 2001.



|                                                            |  | 2002   |  | 2001   |  | 2000  
|----------------------------------------------------------- |  | ------ |  | ------ |  | ------
|                                                            |  | $      |  | $      |  | $     
|26.    Remuneration of auditors                             |  |        |  |        |  |       
|                                                            |  |        | 
|Amounts received or due and receivable by the auditors for: |  |        |  |        |  |       
|Auditing or reviewing financial statements                  |  |        |  |        |  |       
|Auditors of the Company                                     |  | 24,998 |  | 15,750 |  | 14,955
|Other auditors                                              |  | 62,162 |  | 47,041 |  | 29,908



F-23



---

##### Table of Contents

|                        |  |        |  |        |  |        
|----------------------- |  | ------ |  | ------ |  | -------
|                        |  | 87,160 |  | 62,791 |  | 44,863 
|                        |  |        |  |        |  |        
|Other Services          |  |        |  |        |  |        
|Auditors of the Company |  |       |  | 7,764  |  | 42,708 
|Other auditors          |  | 70,459 |  | 55,269 |  | 67,310 
|                        |  |        |  |        |  |        
|                        |  | 70,459 |  | 63,033 |  | 110,018
|                        |  |        |  |        |  |        



|27. |  | Segment reporting
|--- |  | -----------------



|(a) |  | Business
|--- |  | --------



The economic entity operates predominantly in the pearling industry in the geographic regions of Australia and Indonesia. Unallocated items represent amounts that do not directly relate to the pearling activities.



|(b) |  | Geographical
|--- |  | ------------



|                                                  |  | Indonesia  |  | Australia  |  | Eliminations |   |  | Total      |  
|------------------------------------------------- |  | ---------- |  | ---------- |  | ------------ | - |  | ---------- | -
|                                                  |  | $          |  | $          |  | $            |   |  | $          |  
|2002                                              |  |            |  |            |  |              |   |  |            |  
|Revenue                                           |  |            |  |            |  |              |   |  |            |  
|External segment revenue                          |  | 103,417    |  | 10,603,213 |  |             |   |  | 10,706,630 |  
|Inter-segment revenue                             |  | 5,069,768  |  |           |  | (5,069,768   | ) |  |           |  
|                                                  |  |            |  |            |  |              |   |  |            |  
|Total segment revenue                             |  | 5,173,185  |  | 10,603,213 |  | (5,069,768   | ) |  | 10,706,630 |  
|Other unallocated revenue                         |  |            |  |            |  |              |   |  | 634,818    |  
|                                                  |  |            |  |            |  |              |   |  |            |  
|Total revenue                                     |  |            |  |            |  |              |   |  | 11,341,448 |  
|                                                  |  |            |  |            |  |              |   |  |            |  
|Result                                            |  |            |  |            |  |              |   |  |            |  
|Segment result                                    |  | 349,363    |  | 6,574,753  |  | (291,034     | ) |  | 6,633,082  |  
|Unallocated corporate expenses                    |  |            |  |            |  |              |   |  | (1,016,049 | )
|                                                  |  |            |  |            |  |              |   |  |            |  
|Profit from ordinary activities before income tax |  |            |  |            |  |              |   |  | 5,617,033  |  
|Income tax expense                                |  |            |  |            |  |              |   |  | (2,118,016 | )
|                                                  |  |            |  |            |  |              |   |  |            |  
|Net profit                                        |  |            |  |            |  |              |   |  | 3,499,017  |  
|                                                  |  |            |  |            |  |              |   |  |            |  
|Depreciation and amortisation                     |  | 988,459    |  | 4,516      |  |              |   |  | 992,975    |  
|Other non-cash expenses                           |  | 17,488     |  | 24,886     |  |              |   |  | 42,374     |  
|                                                  |  |            |  |           
|Assets                                            |  |            |  |            |  |              |   |  |            |  
|Segment assets                                    |  | 13,537,058 |  | 3,743,913  |  | 247,776      |   |  | 17,528,747 |  
|Unallocated corporate assets                      |  | 200,426    |  | 5,986,308  |  |             |   |  | 6,186,734  |  
|                                                  |  |            |  |            |  |              |   |  |            |  
|Consolidated total assets                         |  | 13,737,484 |  | 9,730,221  |  | 247,776      |   |  | 23,715,481 |  
|                                                  |  |            |  |            |  |              |   |  |            |  
|Liabilities                                       |  |            |  |            |  |              |   |  |            |  
|Segment liabilities                               |  | 699,147    |  | 291,946    |  |              |   |  | 991,093    |  
|Unallocated corporate liabilities                 |  | 407,776    |  | 1,381,440  |  |              |   |  | 1,789,216  |  
|                                                  |  |            |  |            |  |              |   |  |            |  
|Consolidated total liabilities                    |  | 1,106,923  |  | 1,673,386  |  |              |   |  | 2,780,309  |  
|                                                  |  |            |  |            |  |              |   |  |            |  
|Acquisitions of non-current assets                |  | 615,687    |  |           |  |             |   |  | 615,687    |  



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##### Table of Contents

|Unallocated acquisitions of non - current assets |  | 8,507  
|------------------------------------------------ |  | -------
|                                                 |  |        
|                                                 |  | 624,194
|                                                 |  |        



(b)
Geographical (continued)



|                                                  |  | Indonesia  |   |  | Australia  |  | Eliminations |   |  | Total      |  
|------------------------------------------------- |  | ---------- | - |  | ---------- |  | ------------ | - |  | ---------- | -
|                                                  |  | $          |   |  | $          |  | $            |   |  | $          |  
|2001                                              |  |            |   |  |            |  |              |   |  |            |  
|Revenue                                           |  |            |   |  |            |  |              |   |  |            |  
|External segment revenue                          |  | 204,742    |   |  | 10,867,903 |  |             |   |  | 11,072,645 |  
|Inter-segment revenue                             |  | 3,720,940  |   |  |           |  | (3,720,940   | ) |  |           |  
|                                                  |  |            |   |  |            |  |              |   |  |            |  
|Total segment revenue                             |  | 3,925,682  |   |  | 10,867,903 |  | (3,720,940   | ) |  | 11,072,645 |  
|Other unallocated revenue                         |  |            |   |  |            |  |              |   |  | 263,339    |  
|                                                  |  |            |   |  |            |  |              |   |  |            |  
|Total revenue                                     |  |            |   |  |            |  |              |   |  | 11,335,984 |  
|                                                  |  |            |   |  |            |  |              |   |  |            |  
|Result                                            |  |            |   |  |            |  |              |   |  |            |  
|Segment result                                    |  | 1,607,377  |   |  | 6,869,103  |  | (1,779,783   | ) |  | 6,696,697  |  
|Unallocated corporate expenses                    |  |            |   |  |            |  |              |   |  | (994,342   | )
|Profit from ordinary activities before income tax |  |            |   |  |            |  |              |   |  | 5,702,355  |  
|Income tax expense                                |  |            |   |  |            |  |              |   |  | (1,551,585 | )
|                                                  |  |            |   |  |            |  |              |   |  |            |  
|Net profit                                        |  |            |   |  |            |  |              |   |  | 4,150,770  |  
|                                                  |  |            |   |  |            |  |              |   |  |            |  
|Depreciation and amortisation                     |  | 949,464    |   |  | 10,617     |  |             |   |  | 960,081    |  
|Other non-cash expenses                           |  | (13,206    | ) |  | 17,053     |  |             |   |  | 3,847      |  
|                                                  |  |            |   | 
|Assets                                            |  |            |   |  |            |  |              |   |  |            |  
|Segment assets                                    |  | 12,375,517 |   |  | 2,647,758  |  | 499,717      |   |  | 15,522,992 |  
|Unallocated corporate assets                      |  | 30,777     |   |  | 5,610,361  |  |             |   |  | 5,641,138  |  
|                                                  |  |            |   |  |            |  |              |   |  |            |  
|Consolidated total assets                         |  | 12,406,294 |   |  | 8,258,119  |  | 499,717      |   |  | 21,164,130 |  
|                                                  |  |            |   |  |            |  |              |   |  |            |  
|Liabilities                                       |  |            |   |  |            |  |              |   |  |            |  
|Segment liabilities                               |  | 813,915    |   |  | 448,616    |  |             |   |  | 1,262,531  |  
|Unallocated corporate liabilities                 |  |           |   |  | 1,724,993  |  |             |   |  | 1,724,993  |  
|                                                  |  |            |   |  |            |  |              |   |  |            |  
|Consolidated total liabilities                    |  | 813,915    |   |  | 2,173,609  |  |             |   |  | 2,987,524  |  
|                                                  |  |            |   |  |            |  |              |   |  |            |  
|Acquisitions of non-current assets                |  | 454,094    |   |  |            |  |              |   |  | 454,094    |  
|Unallocated acquisitions of non-current assets    |  |            |   |  |            |  |              |   |  | 7,494      |  
|                                                  |  |            |   |  |            |  |              |   |  |            |  
|                                                  |  |            |   |  |            |  |              |   |  | 461,588    |  
|                                                  |  |            |   |  |            |  |              |   |  |            |  
|2000                                              |  |            |   |  |            |  |              |   |  |            |  
|Revenue outside the economic entity               |  | 540,840    |   |  | 6,709,338  |  |             |   |  | 7,250,178  |  
|Intersegment revenue                              |  | 5,978,769  |   |  | 1,568,498  |  | (7,547,267   | ) |  |           |  
|                                                  |  |            |   |  |            |  |              |   |  |            |  
|Total revenue                                     |  | 6,519,609  |   |  | 8,277,836  |  | (7,547,267   | ) |  | 7,250,178  |  
|                                                  |  |            |   |  |            |  |              |   |  |            |  



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##### Table of Contents

|Segment operating profit/(loss)   |  | 5,023,968  |  | (2,301,951 | ) |  |  |  | 2,722,017  |  
|--------------------------------- |  | ---------- |  | ---------- | - |  | - |  | ---------- | -
|Unallocated expenses              |  |            |  |            |   |  |   |  | (249,858   | )
|                                  |  |            |  |            |   |  |   |  |            |  
|Operating profit after income tax |  |            |  |            |   |  |   |  | 2,472,159  |  
|                                  |  |            |  |            |   |  |   |  |            |  
|Segment assets                    |  | 11,584,387 |  | 5,560,214  |   |  |   |  | 17,144,601 |  



28. Economic dependency



The majority of the companys pearls are sold at
auction through an arrangement with Pearlautore International Pty Ltd in Sydney. Pearls at the auctions are sold to a number of wholesale customers with a wide geographic spread.



All of the companys pearls are purchased from its wholly owned subsidiary PT Cendana Indopearls.



29. Controlled entities



|                        |  | % owned |   |  |      |   | Book value ofCompanysinvestment
|----------------------- |  | ------- | - |  | ---- | - | --------------------------------
|                        |  | 2002    |   |  | 2001 |   |                                 
|                        |  |         |   |  |      |   |                                 
|Sharcon Pty Ltd         |  | 100     | % |  | 100  | % |                                 
|Tansim Pty Ltd          |  | 100     | % |  | 100  | % |                                 
|P.T. Cendana Indopearls |  | 100     | % |  | 100  | % |                                 
|                        |  |         |   |  |      |   |                                 
|                        |  |         |   |  |      |   |                                 
|                        |  |         |   |  |      |   |                                 



The ultimate parent
entity, Atlas Pacific Limited, is incorporated in Australia.



30. Post
balance date events



31 December 2002



Subsequent to the year end, an auction was held at which the outstanding
stock of pearls at the year end, were offered for sale. As a result of sales from this auction, as well as sales prior to and after this auction, 32,978 pearls and 2.97 kg of keshi pearls were sold which realised sales revenue of $4.0 million.



In March 2003, a dividend of one (1.0) cent per share, fully
franked, was declared by the Directors. This dividend is payable on 30 April 2003.



31 December 2001



Subsequent to the year end, an auction was held by Pearlautore International in Sydney at which the outstanding stock of pearls at the year end, as well as pearls from a harvest which took place in January, were offered for sale. As a
result of sales from this auction, as well as sales prior to and after this auction, nearly 42,700 pearls were sold which has realised sales revenue of $7.69 million. There are approximately 740 pearls remaining on hand.



Since the year end, a further 731,080 secured convertible notes have been
converted to shares. The remaining 149,987 notes will be redeemed ($22,498) as a result of no election being made to convert them to shares by 23 March 2002.



In March 2002, a final dividend of two (2) cents per share, franked to one (1) cent, was announced. This dividend is payable in April 2002.



The results of significant operation activities are made available to
shareholders and other interested parties through announcements to the Australian and NASDAQ Stock Exchanges.



F-26



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##### Table of Contents

31. Amounts payable/receivable in foreign currencies



The Australian dollar equivalents of unhedged amounts payable or receivable in foreign
currencies, calculated at year end exchange rates, are as follows:



|                   |  | CONSOLIDATED |  
|------------------ |  | ------------ | -
|                   |  | 2002         |  
|                   |  | $            |  
|Amount receivable: |  |              |  
|Indonesian Rupiah  |  | 44,834       |  
|Japanese Yen       |  | 824,629      |  
|US Dollars         |  | 191,037      |  
|                   |  |              |  
|                   |  | 1,060,500    |  
|                   |  |              |  
|Amounts payable:   |  |              |  
|Indonesian Rupiah  |  | (614,866     | )
|US Dollars         |  | (35,721      | )
|                   |  |              |  
|                   |  | (650,587     | )
|                   |  |              |  



32. Additional financial
instruments disclosure



|(a) |  | Net fair value of financial assets and liabilities
|--- |  | --------------------------------------------------



The net fair value of cash, cash equivalents and no-interest bearing monetary financial assets and liabilities approximates their carrying value.



|(b) |  | Interest rate risk
|--- |  | ------------------



The economic entitys exposure to interest rate risk and the effective weighted average interest rate for each class of financial asset and financial
liability is set out below. Exposures arise predominantly from assets and liabilities bearing variable interest rates as the economic entity intends to hold fixed rate assets and liabilities to maturity.



F-27



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##### Table of Contents

|                                  |  | Note |  |       |                | Floatinginterestrate |  | Fixed interest rate maturing in |   |  | Non interestbearing |   |  | Total      |  
|--------------------------------- |  | ---- |  | ----- | -------------- | -------------------- |  | ------------------------------- | - |  | ------------------- | - |  | ---------- | -
|                                  |  |      |  |       | 1 year or less |                      |  | 1-3 years                       |   |  |                    
|                                  |  |      |  | %     |                | $                    |  | $                               |   |  |                     |   |  | $          |  
|2002                              |  |      |  |       |                |                      |  |                                 |   |  |                     |   |  |            |  
|Financial Assets                  |  |      |  |       |                |                      |  |                                 |   |  |                     |   |  |            |  
|Cash                              |  | 6    |  | 4.80  |                | 1,273,827            |  | 4,808,889                       |   |  |                    |   |  | 37,092     |  
|Receivables                       |  | 7    |  | 0.00  |                |                     |  |                                |   |  |                    |   |  | 1,182,741  |  
|                                  |  |      |  |       |                | 1,273,827            |  | 4,808,889                       |   |  |                    |   |  | 1,219,833  |  
|                                  |  |      |  |       |                |                      |  |                                 |   |  |                     |   |  |            |  
|Financial Liabilities             |  |      |  |       |                |                      |  |                                 |   |  |                     |   |  |            |  
|Payables                          |  | 13   |  | 0.00  |                |                     |  |                                |   |  |                    |   |  | (935,500   | )
|                                  |  |      |  |       |                |                      |  |                                 |   |  |                     |   |  |            |  
|                                  |  |      |  |       |                |                     |  |                                |   |  |                    |   |  | (935,500   | )
|                                  |  |      |  |       |                |                      |  |                                 |   |  |                     |   |  |            |  
|Net Financial Asset/(Liabilities) |  |      |  |       |                | 1,273,827            |  | 4,808,889                       |   |  |                    |   |  | 284,333    |  
|                                  |  |      |  |       |                |                      |  |                                 |   |  |                     |   |  |            |  
|2001                              |  |      |  |       |                |                      |  |                                 |   |  |                     |   |  |            |  
|Financial Assets                  |  |      |  |       |                |                      |  |                                 |   |  |                     |   |  |            |  
|Cash                              |  | 6    |  | 4.41  |                | 175,379              |  | 5,170,796                       |   |  |                    |   |  | 9,179      |  
|Receivables                       |  | 7    |  | 0.48  |                |                     |  | 230,254                         |   |  |                    |   |  | 1,864,673  |  
|                                  |  |      |  |       |                |                      |  |                                 |   |  |                     |   |  |            |  
|                                  |  |      |  |       |                | 175,379              |  | 5,401,050                       |   |  |                    |   |  | 1,873,852  |  
|                                  |  |      |  |       |                |                      |  |                                 |   |  |                     |   |  |            |  
|Financial Liabilities             |  |      |  |       |                |                      |  |                                 |   |  |                     |   |  |            |  
|Payables                          |  | 13   |  | 0.00  |                |                     |  |                                |   |  |                    |   |  | (1,153,705 | )
|Convertible notes                 |  | 14   |  | 12.50 |                |                     |  | (136,596                        | ) |  |                    |   |  |           |  
|                                  |  |      |  |       |                |                      |  |                                 |   |  |                     |   |  |            |  
|                                  |  |      |  |       |                |                     |  | (136,596                        | ) |  |                    |   |  | (1,153,705 | )
|                                  |  |      |  |       |                |                      |  |                                 |   |  |                     |   |  |            |  
|Net Financial Asset/(Liabilities) |  |      |  |       |                | 175,379              |  | 5,264,454                       |   |  |                    |   |  | 720,147    |  
|                                  |  |      |  |       |                |                      |  |                                 |   |  |                     |   |  |            |  
|2000                              |  |      |  |       |                |                      |  |                                 |   |  |                     |   |  |            |  
|Financial Assets                  |  |      |  |       |                |                      |  |                                 |   |  |                     |   |  |            |  
|Cash                              |  | 6    |  | 6.40  |                | 211,518              |  | 4,095,197                       |   |  |                    |   |  | 13,182     |  
|Receivables                       |  | 7    |  | 1.55  |                |                     |  | 135,159                         |   |  |                    |   |  | 443,895    |  
|                                  |  |      |  |       |                |                      |  |                                 |   |  |                     |   |  |            |  
|                                  |  |      |  |       |                | 211,518              |  | 4,230,356                       |   |  |                    |   |  | 457,077    |  
|                                  |  |      |  |       |                |                      |  |                                 |   |  |                     |   |  |            |  
|Financial Liabilities             |  |      |  |       |                |                      |  |                                 |   |  |                     |   |  |            |  
|Payables                          |  | 13   |  | 0.00  |                |                     |  |                                |   |  |                    |   |  | (1,286,901 | )
|Convertible notes                 |  | 14   |  | 12.50 |                |                     |  |                                |   |  | (3,703,201          | ) |  |           |  
|                                  |  |      |  |       |                |                      |  |                                 |   |  |                     |   |  |            |  
|                                  |  |      |  |       |                |                     |  |                                |   |  | (3,703,201          | ) |  | (1,286,901 | )
|                                  |  |      |  |       |                |                      |  |                                 |   |  |                     |   |  |            |  
|Net Financial Asset/(Liabilities) |  |      |  |       |                | 211,518              |  | 4,230,356                       |   |  | (3,703,201          | ) |  | (829,824   | )
|                                  |  |      |  |       |                |                      |  |                                 |   |  |                     |   |  |            |  



F-28



---

##### Table of Contents

|                                                     |  |      |  | CONSOLIDATED |  
|---------------------------------------------------- |  | ---- |  | ------------ | -
|Reconciliation of net financial assets to net assets |  | Note |  | 2002         |  
|                                                     |  |      |  | $            |  
|Net financial assets/(liabilities) as above          |  |      |  | 6,367,049    |  
|Non-financial assets & liabilities                   |  |      |  |              |  
|- Inventories                                        |  | 8    |  | 3,069,298    |  
|- SGARAs                                            |  | 9    |  | 10,875,131   |  
|- Property, plant & equipment                        |  | 11   |  | 2,194,935    |  
|- Intangibles                                        |  | 12   |  | 247,776      |  
|- Tax liability/benefit (net)                        |  | 4    |  | (1,694,630   | )
|- Provisions                                         |  | 15   |  | (124,387     | )
|                                                     |  |      |  |              |  
|Net assets per balance sheet                         |  |      |  | 20,935,172   |  
|                                                     |  |      |  |              |  



(c)
Foreign Exchange Risk



The consolidated entity has entered
into foreign exchange contracts to hedge certain anticipated sale commitments denominated in foreign currencies, particularly Japanese Yen. The terms of these commitments are not more than 16 months.



The consolidated entitys policy is to enter into forward foreign
exchange contracts to hedge a proportion of foreign currency sales expected in the future. The amount of anticipated future sales is forecast in light of current conditions in foreign markets and experience in the pearling industry.



The following table sets out the gross value to be received under foreign
currency contracts, the weighted average contracted exchange rates and the settlement periods of outstanding contracts for the consolidated entity.



|                        |  | 2002                  |  | 2001  |  | 2000  |  | 2002      |  | 2001      |  | 2001     
|----------------------- |  | --------------------- |  | ----- |  | ----- |  | --------- |  | --------- |  | ---------
|                        |  | Weighted average rate |  | AUD   |  | AUD   |  | AUD      
|Sell Japanese Yen       |  |                       |  |       |  |       |  |           |  |           |  |          
|Not later than one year |  | 66.13                 |  | 62.93 |  | 62.20 |  | 9,939,247 |  | 3,343,802 |  | 3,336,143
|One to two years        |  | 64.62                 |  |      |  |      |  | 1,500,000 |  |          |  |         



These forward
exchange contracts are hedging anticipated sales that are due within 12 months. Any unrealised gains and losses on the hedging contracts, together with the costs of the contracts, will be recognised in the financial statements at the time the
underlying transaction occurs. The gross unrecognised gains and losses on hedges of anticipated foreign currency sales for the consolidated entity are as follows:



|                        |  | 2002      |  |            | 2001 |  | 2000     
|----------------------- |  | --------- |  | ---------- | ---- |  | ---------
|                        |  | Gains AUD |  | Losses AUD |      |  | Gains AUD
|Not later than one year |  | 172,174   |  | (28,570    | )    |  | 205,610  
|One to two years        |  | 55,688    |  |           |      |  |         



(d) Credit risk
exposure



F-29



---

##### Table of Contents

The credit risk on financial assets of the economic entity which have been recognised on the balance
sheet, other than investments in shares, is the carrying amount, net of any provision for doubtful debts. The consolidated entity minimises concentration of credit risk by undertaking transactions with a large number of customers and counterparties
in various countries.



Credit risk on off-balance sheet
derivative contracts is minimised as counterparties are recognised financial intermediaries with acceptable credit ratings determined by a recognised rating agency.



33. Significant differences between Australian GAAP and US GAAP



The above referred to standards and requirements differ in certain respects from US GAAP. However, the differences which had
a significant effect on the consolidated net income and shareholders equity of Atlas Pacific Ltd in previous years no longer exist, due to changes in the accounting conventions used in the Companys Australian accounts. While this is not a
comprehensive summary of all differences between Australian Accounting Practice (Australian GAAP) and US GAAP, other differences are not likely to have a significant effect on the consolidated net income or shareholders equity of the group.



The figures for 2001 have been restated to reflect the fair
value of a foreign currency derivative instrument and compensation related to stock options issued to employees. In prior periods, these US GAAP differences were not reflected. These differences result in a $230,078 increase in net income, a
$277,328 increase in equity and a $277,328 incresae in total assets.



The effect on the statement of performance and the statement of position from the adjustments that are required to reflect US GAAP for the above stated accounts are as follows:



|                                                                                    |  | YEARS ENDED 31 DECEMBER |  
|----------------------------------------------------------------------------------- |  | ----------------------- | -
|                                                                                    |  | 2002                    |  
|STATEMENT OF PERFORMANCE                                                            |  |                         |  
|                                                                                    |  |                         |  
|Net income under Australian GAAP                                                    |  | 3,499,017               |  
|                                                                                    |  |                         |  
|33.2 Amortisation of Goodwill                                                       |  | 251,941                 |  
|                                                                                    |  |                         |  
|33.4 Stock Option issue to employees                                                |  | (36,400                 | )
|                                                                                    |  |                         |  
|33.5 Change in Fair Value of Derivative Instruments                                 |  | (6,316                  | )
|                                                                                    |  |                         |  
|33.8 Capitalisation of Administration Expenses to Inventory                         |  | 487,022                 |  
|                                                                                    |  |                         |  
|Net income before cumulative effect of change in Accounting Principal under US GAAP |  | 4,195,262               |  
|                                                                                    |  |                         |  
|Cumulative effect of change in Accounting Principal                                 |  |                        |  
|                                                                                    |  |                         |  
|Net income under US GAAP                                                            |  | 4,195,262               |  



F-30



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##### Table of Contents

|                                                            |  | YEARS ENDED 31 DECEMBER |  
|----------------------------------------------------------- |  | ----------------------- | -
|                                                            |  | 2002                    |  
|STATEMENT OF POSITION                                       |  |                         |  
|                                                            |  |                         |  
|Equity                                                      |  |                         |  
|                                                            |  |                         |  
|Australian GAAP                                             |  | 20,935,172              |  
|                                                            |  |                         |  
|33.2 Goodwill                                               |  | 251,941                 |  
|                                                            |  |                         |  
|33.5 Financial Instruments                                  |  | 199,292                 |  
|                                                            |  |                         |  
|33.8 Capitalisation of Administration Expenses to Inventory |  | (594,956                | )
|                                                            |  |                         |  
|US GAAP                                                     |  | 20,791,449              |  
|                                                            |  |                         |  
|Total Assets                                                |  |                         |  
|                                                            |  |                         |  
|Australian GAAP                                             |  | 23,715,481              |  
|                                                            |  |                         |  
|33.2 Goodwill                                               |  | 251,941                 |  
|                                                            |  |                         |  
|33.5 Financial Instruments                                  |  | 199,292                 |  
|                                                            |  |                         |  
|33.8 Capitalisation of Administration Expenses to Inventory |  | (594,956                | )
|                                                            |  |                         |  
|US GAAP                                                     |  | 23,571,758              |  



33.1 DEVELOPMENT COST



Under Australian GAAP, development costs such as those relating to the
establishment of a pearl farm, can be capitalised and amortised when commercial production is achieved. For US GAAP purposes, such research and development cost is written off when incurred. In 1997, the Company wrote off all development costs
incurred to date as an abnormal item, and therefore the Companys accounting treatment of these costs is now consistent with US GAAP.



33.2 GOODWILL



Under Australian GAAP, goodwill relating to the acquisition of a business is written off on a straight line basis over the period during which the benefits of the goodwill are expected to arise which cannot be greater
than 20 years. Effective from 1 January 2002, goodwill may not be amortised under US GAAP. Consequently, there is an adjustment required to the accounts and this is reflected as described in note 33 above.



33.3 VALUATION OF INVENTORY



For US GAAP purposes inventory is valued at the lower of cost or fair market value.
Australian GAAP requires inventory to be valued at the lower of cost and net of realisable value. For the purpose of preparation of the primary financial statements, no difference exists between the different methods of valuing inventory.



Under Australian GAAP, special disclosures are required in relation to
inventory which is classified as a Self-Generating or Regenerating Asset (SGARA). This disclosure is included in the annual report but has not effect on the accounting treatment of the inventory for the Company.



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33.4 STOCK OPTION ISSUES



During 2000, the Company repriced its stock options from A$0.40 to A$0.30, the then quoted market price. Under US GAAP, these options are accounted for as variable
options from that time forward and must be marked to market through income until they are exercised, forfeited, or expire.



Exercise price of options:            A$0.30



|                                      |  | As atDecember 31,2002 |  | As atDecember 31,2001 |  | As atDecember 31,2000
|------------------------------------- |  | --------------------- |  | --------------------- |  | ---------------------
|Number of options on issue            |  | 1                    |  | 525,0002              |  | 800,000              
|Share Price (December 31)             |  | A$0.390               |  | A$0.390               |  | A$0.245              
|March 28, 2002                        |  | A$0.460               |  |                       |  |                      
|April 19, 2002                        |  | A$0.495               |  |                       |  |                      
|September 30, 2002                    |  | A$0.425               |  |                       |  |                      
|Change in value attributed to options |  | A$36,400              |  | A$47,250              |  |                     

---

|1. |  | 525,000 options exercised during 2002-
|-- |  | --------------------------------------



175,000  March 28, 2002



170,000  April 19, 2002



180,000  September 30, 2002



|2. |  | 275,000 options forfeited during 2001.
|-- |  | --------------------------------------



33.5 GAINS AND LOSSES ON FOREIGN EXCHANGE CONTRACTS



In accordance with FAS 133 US GAAP requires that the loss or gain on Forward Exchange Contracts (FECs) noted in Note 32 above must be recognised in the statement of
performance of the Company. The adjustment to the statement of performance and statement of position has been recognised from January 1, 2001 and this difference is as follows:



|                                            |  | 2002    |   |  | 2001    |  | 2000
|------------------------------------------- |  | ------- | - |  | ------- |  | ----
|                                            |  | $       |   |  | $       |  | $   
|Fair Value of Forward Exchange Contracts    |  | 199,292 |   |  | 205,610 |  |    
|Gain/(Loss) from Forward Exchange Contracts |  | (6,318  | ) |  | 205,610 |  |    



FAS 133 was required to be adopted
from January 1, 2001 and therefore a cumulative effect of change in accounting principal was booked upon adoption.



33.6 EARNINGS PER SHARE



The calculation of diluted earnings per share under US GAAP differs from that under Australian GAAP. Under US GAAP common stock equivalents are not included in diluted earnings per shares unless they are considered
dilutive. Also, under US GAAP the treasury stock method is used to calculate the dilutive effect of stock options.



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|                                                                     |  | YEARS ENDED 31 DECEMBER
|-------------------------------------------------------------------- |  | -----------------------
|                                                                     |  | 2002                   
|                                                                     |  | (cents)                
|                                                                     |  |                        
|Basic Earnings per share under                                       |  |                        
|Aust GAAP                                                            |  | 4.23                   
|US GAAP (before cumulative effect of change in Accounting Principal) |  | 5.07                   
|US GAAP (after effect of change in Accounting Principal)             |  | 5.07                   
|                                                                     |  |                        
|Earnings per ADR under US GAAP 20 shares equivalent to 1 ADR        |  |                        
|before change in Acc. Princ.                                         |  | 101.43                 
|after change in Acc. Princ.                                          |  | 101.43                 
|                                                                     |  |                        
|Diluted Earnings per share under                                     |  |                        
|                                                                     |  |                        
|Aust GAAP                                                            |  | 4.03                   
|                                                                     |  |                        
|US GAAP (before cumulative effect of change in Accounting Principal) |  | 4.70                   
|                                                                     |  |                        
|US GAAP (after effect of change in Accounting Principal)             |  | 4.70                   
|                                                                     |  |                        
|Earnings per ADR under US GAAP 20 shares equivalent to 1 ADR        |  |                        
|before change in Acc. Princ.                                         |  | 94.03                  
|after change in Acc. Princ.                                          |  | 94.03                  
|                                                                     |  |                        
|Reconciliation of Diluted Earnings                                   |  |                        
|                                                                     |  |                        
|Before cumulative effect of change in Accounting Principal           |  |                        
|                                                                     |  |                        
|Net Profit  Basic EPS (USGAAP)                                      |  | 4,195,262              
|                                                                     |  |                        
|Add Back Interest on Convertible Notes                               |  | 2,276                  
|                                                                     |  |                        
|Net Profit  Diluted EPS (US GAAP)                                   |  | 4,197,538              
|                                                                     |  |                        
|Outstanding Shares  Basic EPS                                       |  | 82,724,884             
|                                                                     |  |                        
|Add dilutive options (US GAAP)                                       |  | 6,535,281              
|                                                                     |  |                        
|Add dilutive convertible notes (US GAAP)                             |  | 24,494                 
|                                                                     |  |                        
|Outstanding Shares  Diluted EPS (US GAAP)                           |  | 89,284,659             



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After cumulative effect of change in Accounting Principal



|                                           |  | YEARS ENDED 31 DECEMBER
|------------------------------------------ |  | -----------------------
|                                           |  | 2002                   
|                                           |  | (cents)                
|Net Profit  Basic EPS (USGAAP)            |  | 4,195,262              
|                                           |  |                        
|Add Back Interest on Convertible Notes     |  | 2,276                  
|                                           |  |                        
|Net Profit  Diluted EPS (US GAAP)         |  | 4,197,538              
|                                           |  |                        
|Outstanding Shares  Basic EPS             |  | 82,724,884             
|                                           |  |                        
|Add dilutive options (US GAAP)             |  | 6,535,281              
|                                           |  |                        
|Add dilutive convertible notes (US GAAP)   |  | 24,494                 
|                                           |  |                        
|Outstanding Shares  Diluted EPS (US GAAP) |  | 89,284,659             



33.7 SHARE OPTION PLANS



The Company has no formal process for the inclusion of share options in
the remuneration of its employees or executives. Options have in the past been issued as part of the remuneration of employees and executives. At 31 December 2002 there are no outstanding share options issued by the Company.



In the year ended December 31, 1999 8,062,000 options exercisable at 30 cents each between
October 14, 1999 and October 14, 2002 were granted as part consideration for the acquisition of the remaining 25% minority shareholding of the companys subsidiary PT Cendana Indopearls. During the year ended 31 December 2002 7,996,215 of these
options were converted and the balance of 66,285 expired and were forfeited.



During 2000, the Company repriced 675,000 stock options from A$0.40 to A$0.30, the then quoted market price. Under US GAAP, the options are accounted for as variable options from that point forward and must be marked to market through
income until they are exercised, forfeited, or expire. All of these stock options were exercised in 2002.



In the year ended December 31, 2000 200,000 options exercisable at 42 cents between January 1, 2001 and January 1, 2003 were granted to the then Managing Director as part of his remuneration, these were
forfeited/cancelled in the year ended 31 December 2001.



In the year ended
December 31, 2001 170,000 options exercisable at 34.5 cents between January 1, 2002 and December 31, 2003 were granted to the then Managing Director as part of his remuneration, these were forfeited/cancelled in the year ended 31 December 2001.



Movements in options issued are set out in the financial statements for the
years ended 31 December and are included as part of this document at Note 19.



Share Capital



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|                                                                                           |  | 2002            |  | 2001       |  | 2000           
|------------------------------------------------------------------------------------------ |  | --------------- |  | ---------- |  | ---------------
|Issued and subscribed ordinary shares                                                      |  | Number ofShares |  | A$         |  | Number ofShares
|Balance, beginning of year                                                                 |  | 78,557,959      |  | 16,183,065 |  | 54,751,017     
|Issue of ordinary shares pursuant to options exercised at 30 cents each                    |  | 8,521,215       |  | 2,556,365  |  |               
|Issue of ordinary shares through conversion of Secured Convertible Notes (debt) to equity. |  | 731,080         |  | 109,662    |  | 23,806,942     
|Balance at end of year                                                                     |  | 87,810,254      |  | 18,849,092 |  | 78,557,959     



33.8 Capitalisation of
Administration Expenses



The Company has capitalised expenditure into
inventory which is of an administrative nature for the years 2000 and 2001. These costs were capitalised because they form part of the cost of running the Indonesian company which is dedicated to the production of pearls. Under ARB 43, expenditure
which is of an administrative nature may not be capitalised to inventory and must be expensed in the period that it is incurred. The adjustment required to reflect this change is as follows:



|                                  |  | YEARS ENDED 31 DECEMBER |         
|--------------------------------- |  | ----------------------- | --------
|                                  |  | 2002                    |         
|Administration costs capitalised  |  |                         |        
|                                  |  |                         |         
|Cumulative effect on Total Assets |  | $                       | (594,956
|                                  |  |                         |         
|Cumulative effect on Equity       |  | $                       | (594,956
|                                  |  |                         |         
|Effect on Net Income              |  | $                       | 487,022 



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ATLAS PACIFIC LIMITED AND ITS CONTROLLED ENTITIES

DECLARATION BY DIRECTORS

In the opinion of the Directors:

(a)  the financial statements set out on pages 15 to 42:

     (i)  give a true and fair view of the consolidated entity's financial
          position as at 31 December 2001 and the performance as represented by
          the results of its operations and its cash flows for the year ended on
          that date; and

     (ii) are in accordance with the Corporations Act 2001 and comply with
          Accounting Standards and the Corporations Regulations 2001, and other
          mandatory professional reporting requirements; and

(b)  at the date of this declaration there are reasonable grounds to believe
     that the company will be able to pay its debts as and when they become due
     and payable.

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:

Signed in accordance with a resolution of the Directors


/s/ A. M. Kerr
A.McB, KERR
Director

28 March 2002
Perth, Western Australia

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##### Table of Contents

Statements of financial performance
                Atlas Pacific Limited and its Controlled Entities
                       For the year ended 31 December 2001

                                                         Note             CONSOLIDATED                    THE COMPANY
                                                                     2001             2000           2001             2000
                                                                       $               $               $                $
-----------------------------------------------------------------------------------------------------------------------------
Revenue from sale of goods                                3        11,072,645       7,046,177     10,867,904       6,511,507
Revenue from rendering of services                        3                 -               -              -         440,962
Other revenues from ordinary activities                   3           263,339         204,001        201,970         197,830
                                                                  ------------------------------------------------------------
Total revenue                                                      11,335,984       7,250,178     11,069,874       7,150,299
                                                                  ------------------------------------------------------------
Expenses from ordinary activities
Cost of goods sold                                                 (2,807,400)     (2,414,427)    (2,853,666)     (5,733,533)
Marketing expenses                                                   (848,684)       (418,288)      (743,425)       (378,429)
Administration expenses                                            (1,179,915)     (1,139,601)    (1,157,311)     (1,087,952)
Borrowing costs                                           4(b)       (345,154)       (462,901)      (345,154)       (462,901)
Other expenses from ordinary activities                              (452,476)       (342,802)      (156,924)         (1,323)
Significant item - Reversal of provision                  4(a)              -               -              -       2,514,866
                                                                  -----------------------------------------------------------
Total expenses                                                     (5,633,629)     (4,778,019)    (5,256,480)     (5,149,272)
                                                                  ------------------------------------------------------------
Profit from ordinary activities before related
income tax expense                                                  5,702,355       2,472,159      5,813,394       2,001,027

Income tax (expense)/benefit relating
to ordinary activities                                    5        (1,551,585)              -     (1,551,585)              -
                                                                  ------------------------------------------------------------
Profit from ordinary activities after related
income tax attributable to members of the
parent entity                                            18         4,150,770       2,472,159      4,261,809       2,001,027
                                                                  ============================================================

Basic earnings per share                                  6              6.80            4.52
                                                                  =============================
Diluted earnings per share                                6              5.10            3.27
                                                                  =============================

The accompanying notes form part of these financial statements.

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##### Table of Contents

Statements of financial position
                Atlas Pacific Limited and its Controlled Entities
                             As at 31 December 2001

                                                                  CONSOLIDATED                   THE COMPANY
                                                              2001            2000           2001           2000
                                                  Note          $              $               $              $
-------------------------------------------------------------------------------------------------------------------
Current assets

Cash assets                                         7       5,355,354       4,319,897      5,324,577      4,203,573
Receivables                                         8       2,094,927         579,054      1,885,118        319,825
Inventories                                         9       1,082,324         276,215      1,146,475        276,215
Self generating and regenerating assets            10       2,217,376       1,804,712              -              -
                                                          ----------------------------------------------------------
Total current assets                                       10,749,981       6,979,878      8,356,170      4,799,613
                                                          ----------------------------------------------------------
Non-current assets

Receivables                                         8               -               -     12,194,347     11,594,088
Inventories                                         9         100,498         327,571              -              -
Self generating and regenerating assets            10       7,489,891       6,479,292              -              -
Property, plant and equipment                      12       2,302,436       2,608,284          7,902         11,025
Intangible assets                                  13         499,717         749,576              -              -
Deferred tax asset                                  5          21,607               -         21,607              -
                                                          ----------------------------------------------------------
Total non-current assets                                   10,414,149      10,164,723     12,223,856     11,605,113
                                                          ----------------------------------------------------------
Total assets                                               21,164,130      17,144,601     20,580,026     16,404,726
                                                          ==========================================================
Current liabilities

Payables                                           14       1,153,705       1,161,347        448,615        371,763
Interest-bearing liabilities                       15         136,596         125,554        136,596        125,554
Current tax liabilities                             5       1,534,461               -      1,534,461              -
Provisions                                         16         160,885         129,305         52,059         60,241
                                                          ----------------------------------------------------------
Total current liabilities                                   2,985,647       1,416,206      2,171,731        557,558
                                                          ----------------------------------------------------------
Non-current liabilities

Interest-bearing liabilities                       15               -       3,703,201              -      3,703,201
Deferred tax liabilities                            5           1,877               -          1,877              -
                                                          ----------------------------------------------------------
Total non-current liabilities                                   1,877       3,703,201          1,877      3,703,201
                                                          ----------------------------------------------------------
Total liabilities                                           2,987,524       5,119,407      2,173,608      4,260,759
                                                          ==========================================================

Net assets                                                 18,176,606      12,025,194     18,406,418     12,143,967
                                                          ==========================================================
Equity

Contributed equity                                 17      16,183,065      12,612,024     16,183,065     12,612,024
Accumulated profits/(losses)                       18       1,993,541        (586,830)     2,223,353       (468,057)
                                                          ----------------------------------------------------------

Total equity                                               18,176,606      12,025,194     18,406,418     12,143,967
                                                          ==========================================================

The accompanying notes form part of these financial statements.

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Statement of cash flows
                Atlas Pacific Limited and its Controlled Entities
                       For the year ended 31 December 2001


                                                                       Consolidated                   The Company
                                                                   2001            2000           2001           2000

                                                                     $               $              $              $
Cash flows from operating activities
    Proceeds from other operating activities                       64,158              -         11,128              -
    Interest paid                                                (466,272)      (729,227)      (466,272)      (729,227)
    Interest and bill discounts received                          199,181        202,970        190,842        197,830
    Payments to suppliers                                      (6,258,041)    (5,157,850)    (1,980,359)    (1,332,542)
    Income tax paid                                               (32,442)       (28,765)       (36,854)       (28,765)
    Proceeds from pearl and oyster sales                        9,651,867      6,848,046      9,397,706      6,456,685
                                                              ---------------------------------------------------------

    Net cash provided by/(used in) operating
    activities (Note 23.2)                                      3,158,451      1,135,174      7,116,191      4,563,981
                                                              ---------------------------------------------------------
Cash flows from investing activities
    Advances to controlled entities                                     -              -     (4,321,199)    (4,155,261)
    Payments for property, plant and equipment                   (461,588)      (700,599)        (7,494)        (2,000)
    Proceeds on disposal of fixed assets                                -          1,031              -              -
                                                              ---------------------------------------------------------
    Net cash provided by/(used in) investing
    activities                                                   (461,588)      (699,568)    (4,328,693)    (4,157,261)
                                                              ---------------------------------------------------------
Cash flows from financing activities

    Dividend payment                                           (1,570,399)             -     (1,570,399)             -
                                                              ---------------------------------------------------------
    Net cash provided by financing activities                  (1,570,399)             -     (1,570,399)             -
                                                              ---------------------------------------------------------

Net increase/(decrease) in cash held                            1,126,464        435,606      1,217,099        406,720
Cash at the beginning of the financial year                     4,455,056      4,025,885      4,338,732      3,933,336
Effects of exchange rate changes on the balances of cash
held in foreign currencies                                          4,088         (6,435)        (1,000)        (1,324)
                                                              ---------------------------------------------------------
Cash and term deposits at the end of the financial year
(Note 23.1)                                                     5,585,608      4,455,056      5,554,831      4,338,732
                                                              =========================================================

The statement of cash flows is to be read in conjunction with the following
notes.

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ATLAS PACIFIC LIMITED AND ITS CONTROLLED ENTITIES

              NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

                     FOR THE YEAR ENDED 31ST DECEMBER 2001

1.   ACCOUNTING POLICIES

     1.1  Basis of Accounting

          This general purpose financial report has been prepared in accordance
          with Accounting Standards and other mandatory professional reporting
          requirements and the Corporations Act 2001.

          The financial statements have been prepared under the historical cost
          convention and except where stated, they do not take into account
          changing money values or fair values of non-current assets. The
          accounting policies relating to the financial statements are
          consistent with those applied in the previous year unless otherwise
          stated (refer note 2).

     1.2  Reclassification of Financial Information

          Some line items and subtotals reported in the previous financial year
          have been reclassified and repositioned in the financial statements as
          a result of adopting the revised accounting standard AASB 1018
          Statement of Financial Performance, AASB 1034 Financial Report
          Presentation and Disclosure and AASB 1040 Statement of Financial
          Position.

          Adoption of these standards has resulted in the transfer of the
          reconciliation of opening to closing retained profits from the face of
          the statement of financial performance to note 18. Revenue and expense
          items that were previously disclosed as abnormal have been
          reclassified as individual significant items.

     1.3  Principles of Consolidation

          The financial statements of the economic entity comprise consolidated
          accounts of Atlas Pacific Limited and all controlled entities within
          the meaning of the Corporations Act. All intercompany balances and
          unrealised profits resulting from intra-group transactions have been
          eliminated.

          Where a controlled entity is acquired during a year, its results are
          included only from the date of acquisition. Where there is loss of
          control of a controlled entity during a year, its results are included
          only for that period of the year during which the parent entity had
          control.

          In the instance of the acquisition of a controlled entity, the cost
          method of accounting is used for all acquisitions of assets regardless
          of whether shares or other assets are acquired. Cost is determined as
          the fair value apportionment, at the date of acquisition, of the
          purchase consideration plus costs incidental to the acquisition.

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1.4  Inventories

          (a)  Pearls - quantity of pearls as harvested and processed are valued
               at the lower of cost or net market value.

          (b)  Nuclei - quantities on hand at the year end are valued at cost.

     1.5  Self-Generating and Regenerating Assets (SGARAs) - Refer Note 2

          (a)  Oysters up to the date of harvest - quantities on hand at the
               year end are valued at cost on the basis that this is the most
               appropriate estimate of net realisable value. Cost is the total
               farm, hatchery, and Indonesian administrative expenses excluding
               interest together with the cost of oyster purchases and cost of
               nuclei used in seeding operations.

          (b)  Pearls are considered to be a product of a SGARA at the time that
               they are harvested from the oyster. At this point, they are
               considered to be included as a part of inventory at a value as
               described in note 2.

     1.6  Revenue Recognition

          (a)  Sales Revenue - comprised of revenue earned from the sale of
               products or services to entities outside the consolidated entity.
               Sales revenue is recognised when the goods are provided or when
               the fee in respect of services provided is receivable.

          (b)  Interest Income - is recognised as it accrues.

          (c)  Asset Sales Revenue - comprises the gross proceeds of the assets.
               The profit and loss on disposal of assets is brought to account
               at the date on which an unconditional contract is signed.

          (d)  Inventory Revaluation - in accordance with accounting standard
               AASB1037 Self-Generating and Regenerating Assets, any increase in
               the net market value of these assets are recognised as revenue at
               the time of the revaluation.

     1.7  Investments

          Long term investments are stated at cost or valuation, less a
          provision for diminution in value, as assessed by the Directors
          annually to ensure that the carrying amount is not in excess of
          recoverable amount. The recoverable amount is assessed from the
          shares' current market value or the underlying net assets in the
          particular entities. The expected net cash flows from investments have
          not been discounted to their present value in determining the
          recoverable amounts.

     1.8  Valuation of Non Current Assets

          In determining the recoverable amounts of non-current assets, the
          expected net cash flows arising from the continued use and subsequent
          disposal of those assets have not been discounted to their present
          value.

          The carrying amount of non-current assets are reviewed to determine
          whether they are in excess of their recoverable amount at balance
          date. If the carrying amount of a non-current asset exceeds the
          recoverable amount, the asset is written down to the lower amount and
          the write-down is included in the profit and loss statement.

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1.9  Depreciation

           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.

           The depreciation rates used for each class of depreciable assets are:

           Class of fixed asset                                      Depreciation Rate
                                                                  2001             2000
           Leasehold land & buildings & improvements              5-10%            5-10%
           Vessels                                                  10%              10%
           Plant & equipment                                     20-50%           20-50%

           The depreciation rates of leasehold land, buildings and improvements
           and plant and equipment were increased during last year to more
           accurately reflect their estimated useful lives.

      1.10 Goodwill

           Goodwill and goodwill on consolidation are initially recorded at the
           amount by which the purchase price for a business or for an ownership
           interest in a controlled entity exceeds the fair value attributed to
           its net assets at date of acquisition. Both purchased goodwill and
           goodwill on consolidation are amortised on a straight line basis over
           the period of 5 years. The balances are reviewed annually and any
           balance representing future benefits for which the realisation is
           considered to be no longer probable are written off.

      1.11 Foreign Currency Translations

           (a)    Translations

                  The Company considers that the operations of the Indonesian
                  subsidiary are integrated with those of the parent entity and
                  therefore the temporal method of accounting for foreign
                  exchange conversion has been adopted, whereby,

                    (i)   monetary items are converted at the exchange rate
                          applicable at the year end;

                    (ii)  other pearling project assets and liabilities are
                          converted at the exchange rate applicable at the time
                          of transaction, and

                    (iii) gains and losses on transactions are taken to the
                          current year's profit and loss account.

           (b)    Hedges

                  Gains or losses on hedges of specific commitments including
                  those relating to the price of particular goods or services to
                  be purchased or sold, are to be deferred and included in the
                  measurement of the purchase or sale transaction.

      1.12 Income tax

           The liability method of tax-effect accounting has been adopted,
           whereby

           (a)    the income tax (expense)/benefit in the profit and loss
                  account is determined by applying the current tax rate to
                  operating profit/(loss) after allowing for permanent
                  differences,

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##### Table of Contents

(b)    a provision for deferred income tax is created for
                  (i)   expenses which are currently deductible in determining
                        taxable income but which have not been taken up in
                        arriving at the operating profit, and
                  (ii)  revenue which has been included in operating profit but
                        which is not yet assessable for tax,

           (c)    a future income tax benefit is brought to account for
                  (i)   expenses which have been taken up in arriving at the
                        operating profit but are not currently deductible for
                        income tax purposes, and
                  (ii)  revenue which is currently assessable for tax but which
                        has not yet been included in operating profit,
                  (iii) income tax losses carried forward.

           Future income tax benefits are not brought to account unless
           realisation of the benefits is virtually certain.

           Realisation is contingent upon

                  (i)   deriving future assessable income of a nature and of an
                        amount sufficient to enable the benefit of the
                        deductions for the losses to be realised,
                  (ii)  the company continuing to comply with the conditions for
                        deductibility imposed by the law, and
                  (iii) no changes in the legislation which would adversely
                        affect realisation of the benefit of the losses.

      1.13 Bills of Exchange

           Bills of exchange have been purchased in the market at a discount to
           face value. The bills are carried at an amount representing cost and
           a portion of the discount recognised as income on an effective yield
           basis. The discount brought to account each period is accounted for
           as interest received.

      1.14 Trade and Other Creditors

           These amounts represent liabilities for goods and services provided
           to the economic entity prior to the end of the financial year and
           which are unpaid. The amounts are unsecured and are usually paid
           within 30 days of recognition.

      1.15 Trade and Other Debtors

           The collectibility of debts is assessed at balance date and specific
           provision is made for any doubtful accounts.

      1.16 Interests in Joint Ventures

           The economic entity's share of the assets, liabilities, revenue and
           expenses of joint ventures are included in the appropriate items of
           the consolidated balance sheet and profit and loss account. Details
           of the economic entity's interests are shown in Note 30.

      1.17 Employee Entitlements

           Provision is made for the Company's liability for employee
           entitlements arising from services rendered by employees to balance
           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 entitlements.

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Where the Company has granted options to employees, the costs
           incurred in administering this allocation are expensed as incurred.
           Other than these costs, the allocation does not result in any expense
           to the consolidated entity.

           Contributions are made by the economic entity to employee
           superannuation funds and are charged as expenses when incurred.

      1.18 Derivatives

           The consolidated entity is exposed to changes in foreign exchange
           rates from its activities. The consolidated entity uses forward
           foreign exchange contracts to hedge these risks. Derivative financial
           instruments are not held for speculative purposes. Derivative
           financial instruments designated as hedges are accounted for on the
           same basis as the underlying exposure. The accounting for forward
           foreign exchange contract is set out in Note 1.11 (b).

      1.19 Comparative Amounts

           Where necessary, the figures for the previous year have been
           reclassified to facilitate comparison.

2.    INITIAL ADOPTION OF NEW ACCOUNTING POLICY

      The Consolidated Entity has applied AASB1037 Self-Generating and
      Regenerating Assets (SGARAs) for the first time in the financial year
      ended 31 December 2001. The standard requires inventory which falls under
      the definition of this standard to be treated separately from other
      inventory. SGARAs must be measured at net market value and the
      increment/(decrement) in net market values of the SGARAs is to be
      recognised as revenue/(expense) in the statement of financial performance.

      The value of the SGARAs is only recognised when it can be measured
      reliably.

      Pearls, although not a living organism, are a product of a SGARA at the
      time that they are harvested, and in the opinion of the Directors, the
      most reliable valuation methodology for the pearls that are defined as a
      product of a SGARA is the net market value for the pearls based on the
      price at which they are sold by PT Cendana Indopearls to Atlas Pacific
      Ltd. Once the pearls are sold by PT Cendana Indopearls, they cease to
      become a SGARA under the definition in the accounting standard.

      Oysters are a living organism which meet the definition of a SGARA. There
      is no market for pearl oysters by which a reliable valuation comparison of
      this category of the SGARA can be made. Given the uncertainty and risk
      that exists on the process of producing a pearl and other risk factors
      specific to the operations of the Economic Entity, the Directors believe
      that the most appropriate market valuation for the oysters is their cost
      of production to date.

      This treatment is not materially different from that applied in prior
      years.

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The details of the SGARAs that are held by the Economic Entity as at 31
     December 2001 are as follows:

     Nature of SGARA:-   Oysters (Pinctada Maxima)

                                                                                                 Number
                                                                                                 ------
     Quantity of goods held at period end:
     Juvenile Oysters located at Waigeo Island which are not nucleated                          362,940
     Nucleated Oysters due for harvest in 2002/3 located at Waigeo Island                       261,393
     Other oysters located at Waigeo Island which are used for
        Broodstock, Saibo tissue and Research                                                     2,314
     Nucleated Oysters due for harvest in 2002/3 located at joint
        Operations farms                                                                         37,318

                                                                                               Value A$
                                                                                               --------
     Net Market Value of SGARAs at period end:
     Current Assets                                                                          $2,241,663
     Non-Current Assets                                                                      $7,538,466

     Change increment in Net Market Value during financial period                                  $nil


                                                                Consolidated                   The Company
                                                             2001           2000           2001           2000
                                                              $              $              $              $
  3.  REVENUE
      Revenue from operating activities
         Sales revenue                                    10,910,497     6,742,911      10,867,904      6,511,507
         Revenue from joint venture partners                 162,148       303,266               -              -
         Interest received - other parties                   199,181       202,970         190,842        197,830
         Project administration costs - recovered
         from controlled entities                                  -             -               -        440,962
                                                         ---------------------------------------------------------
                                                          11,271,826     7,249,147      11,058,746      7,150,299
                                                         ---------------------------------------------------------



      Revenue from outside operating activities
         Insurance proceeds received                          11,128             -          11,128              -
         Property rental                                      53,030             -               -              -
         Proceeds on sale of fixed assets                          -         1,031               -              -
                                                         ---------------------------------------------------------
                                                              64,158         1,031          11,128              -
                                                         ---------------------------------------------------------
      Total revenue                                       11,335,984     7,250,178      11,069,874      7,150,299
                                                         =========================================================

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Consolidated                The Company
                                                                 2001           2000        2001           2000
                                                                  $              $           $              $
  4.   OPERATING RESULT
   (a)  Individual significant items included in
        profit from ordinary activities before
        income tax expense
         Reversal of provision for diminution in
         value of loans to subsidiaries                               -             -            -     (2,514,866)

   (b)  The operating result before income
        tax has been determined after
        charging/(crediting) the following
        items:

      Borrowing Costs
         Interest paid - other corporations                     345,154       462,901      345,154        462,901
                                                               ----------------------------------------------------

      Operating lease rental costs                               75,459        38,699       32,875         35,061
                                                               ----------------------------------------------------

      Movements in provisions
         Depreciation property, plant and
         equipment                                              699,606       912,425       10,617         14,594
         Amortisation of goodwill on
         acquisition of minority interest                       249,858       249,858            -              -
         Provision for employee entitlements                      3,847         9,675       17,053         22,724
                                                               ----------------------------------------------------
      Net expense/(benefit) resulting from
      movement in provisions                                    953,311     1,171,958       27,670         37,318
                                                               ----------------------------------------------------

      Net foreign exchange (gain)/loss                            8,488        88,644      (32,678)         1,324
                                                               ----------------------------------------------------

      Loss/(profit) on disposal of fixed assets                       -          (524)           -              -
                                                               ----------------------------------------------------

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Consolidated                   The Company
                                                               2001            2000          2001           2000
                                                                 $              $              $             $
  5. INCOME TAX

  a) Income Tax Expense
     The prima facie tax payable on the result for
     the year differs from the income tax provided
     in the accounts and is reconciled as follows:
     Operating profit after extraordinary and
     abnormal items and before tax                           5,702,351     2,472,159      5,813,392     2,001,027
                                                       -----------------------------------------------------------
     Prima facie tax expense at 30% (2000 - 34%)             1,710,705       840,534      1,744,018       680,349
     Tax effect of permanent differences:
     Non deductible expenses                                     5,549         2,347          5,549         2,347
     Non assessable income                                           -      (233,320)             -             -
     Provision for diminution in value of loan to
     related entities                                                -             -              -      (855,054)
     Restatement of closing trading stock                       38,268             -              -             -
     Other deductible items                                          -      (619,843)             -             -
     Amortisation of goodwill                                   74,957        84,952              -             -
     Inventory valuation adjustment                            159,170             -                            -
     Tax effect of timing differences                                -         5,670              -         5,670
     Foreign tax credits utilised                                    -      (233,435)             -             -
     Prior year losses recouped                               (414,890)      (13,593)      (175,808)            -
     Future income tax benefit or losses not brought
     to account                                                (22,174)      166,688        (22,174)      166,688
                                                       -----------------------------------------------------------
     Income tax attributable to operating result             1,551,585             -      1,551,585             -
                                                       ===========================================================
     Income tax expense attributable to operating
     profit is made up of movements in:
         Current income tax provision                        1,571,315             -      1,571,315             -
         Deferred income tax provision                           1,877             -          1,877             -
         Future income tax benefit                             (21,607)            -        (21,607)            -
                                                       -----------------------------------------------------------
                                                             1,551,585             -      1,551,585             -
                                                       ===========================================================
  b) Current tax liability
     Provision for current income tax
        Balance at beginning of year                                 -             -              -             -
        Income tax paid                                        (61,207)            -        (61,207)            -
        Current year income tax expense                      1,571,314             -      1,571,314             -
        Taxes - Other                                           24,354             -         24,354             -
                                                       -----------------------------------------------------------
                                                             1,534,461             -      1,534,461             -
                                                       ===========================================================

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Consolidated               The Company
                                                            2001            2000      2001           2000
                                                              $              $          $              $
  c)   Deferred tax liability
       Provision for deferred income tax comprises
       the estimated expense at 30% (2000 - 34%)               1,877         -           1,877         -
                                                       ===================================================
  d)   Deferred Tax Asset
       Future income tax benefit                              21,607         -          21,607         -
                                                       ===================================================

       Future income tax benefits not
       brought to account
       The potential benefits of which will
       be realised only if the conditions
       occur for deductibility (set out in
       Note 1.12), are as follows:
     - Revenue Tax losses (current year)                           -   166,688               -  166,688
     - Revenue Tax losses (prior years)                            -    32,560               -   32,560
     - Capital losses (current year)                               -         -               -        -
     - Capital losses (prior years)                          304,247   344,813          64,205   72,766

  The prior year losses recouped by the economic entity include losses for a
  subsidiary which were not previously available to the economic entity and
  therefore not previously recognised.

  For details of the franking account, refer to Note 19.

                                                                                    Consolidated
                                                                                2001            2000
  6. EARNINGS PER SHARE                                                        Cents            Cents
     Basic earnings per share (cents per share)                                    6.80             4.52
     Diluted earnings per share (cents per share)                                  5.10             3.27

                                                                                     Consolidated
                                                                                2001            2000
                                                                                  $               $
     Earnings Reconciliation
     Net profit used for basic earnings                                       4,150,770        2,472,159
     After tax effect of dilutive securities                                    338,499          411,246
                                                                        --------------------------------

     Diluted earnings                                                         4,489,269        2,883,405
                                                                        --------------------------------

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6. EARNINGS PER SHARE (Cont)
                                                                                       No.            No.
        Weighted average number of ordinary shares outstanding
        during the year used for calculation of basic earnings per                 61,013,243     54,751,017
        share
        Weighted average number of potential ordinary shares
        outstanding during the year used for calculation of diluted                88,026,526     88,264,874
        earnings per share


Diluted earnings per share is calculated after taking into consideration all
options and convertible notes on issue that remain unconverted at 31 December
2001 as potential ordinary shares.

                                                          Consolidated                    The Company
                                                      2001            2000            2001           2000
                                                        $               $               $              $
     7. CASH ASSETS
        Cash at bank                                   184,558        224,700         153,782        108,376
        Bills of Exchange*                           5,170,796      4,095,197       5,170,795      4,095,197
                                                  -----------------------------------------------------------
                                                     5,355,354      4,319,897       5,324,577      4,203,573
                                                  ===========================================================

       * Paying interest at rate of 4.28% (2000 - 6.26%) maturing within one
         month (2000-one month) following balance date.

       In addition to the above mentioned cash, the Company has Fixed Term
       Deposits of $230,254 (1999 - $135,159), earning interest at 4.27% (2000 -
       6.33%) and maturing within four months. Because these form the security
       for the Company's foreign exchange hedging contracts, they are recorded
       as part of sundry debtors and prepayments in the financial statements
       (refer Note 8).

     8. RECEIVABLES
        CURRENT
        Trade debtors                                1,628,843        288,190       1,628,843        143,710
        Sundry debtors & prepayments                   466,084        290,864         256,275        176,115
                                                  -----------------------------------------------------------
                                                     2,094,927        579,054       1,885,118        319,825
                                                  ===========================================================

       Included in Sundry debtors and prepayments for both the Company and the
       economic entity in 2001 is an amount of $230,254 (1999 - $135,159), being
       funds held on Fixed Term Deposit at the bank as security for the
       Company's foreign exchange hedging contracts (refer to Note 33c).

        NON CURRENT
        Amount receivable from controlled                    -           -         13,799,194     13,198,935
        entities
        Provision for loss on loans                          -           -         (1,604,847)    (1,604,847)
                                                  -----------------------------------------------------------
                                                             -           -         12,194,347     11,594,088
                                                  ===========================================================

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Consolidated                 The Company
                                                  2001          2000         2001          2000
                                                   $             $            $             $
    9.  INVENTORIES
        CURRENT
        Pearls                                 1,082,324      276,215     1,146,475      276,215
                                             ----------------------------------------------------
        NON CURRENT
        Nuclei                                   100,498      327,571             -            -
                                             ----------------------------------------------------
        Total inventory                        1,182,822      603,786     1,146,475      276,215
                                             ====================================================


    10. SELF-GENERATING AND REGENERATING
        ASSETS (SGARAS)
        CURRENT
        Oysters                                2,217,376    1,804,712             -            -
                                             ----------------------------------------------------

        NON CURRENT
        Oysters                                7,489,891    6,479,292             -            -
                                             ----------------------------------------------------
        Total SGARAs                           9,707,267    8,284,004             -            -
                                             ====================================================


    11. INVESTMENTS
        Controlled entity
        -unlisted shares (see Note 29)                 -            -     2,750,004    2,750,004
        Provision for diminution in value              -            -    (2,750,004)  (2,750,004)
                                             -----------------------------------------------------
                                                       -            -             -            -
                                             =====================================================


    12. PROPERTY, PLANT AND EQUIPMENT
        (a)  General
             Plant and equipment
             - at cost                            65,600       58,106        65,600       58,106
             - accumulated depreciation          (57,698)     (47,081)      (57,698)     (47,081)
                                             ----------------------------------------------------
                                                   7,902       11,025         7,902       11,025
                                             ----------------------------------------------------

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Consolidated                     The Company
                                                             2001          2000               2001         2000
  12. PROPERTY, PLANT AND EQUIPMENT (Cont)                    $            $                   $            $
      (b)   Pearling project
            Leasehold land and buildings
            - at cost                                          814,770        764,201             -           -
            - accumulated depreciation                        (199,266)      (125,988)            -           -
                                                        -------------------------------------------------------
                                                               615,504        638,213             -           -
                                                        -------------------------------------------------------
            Plant and equipment, vessels, vehicles
            - at cost                                        5,174,146      4,770,621             -           -
            - accumulated depreciation                      (3,495,116)    (2,811,575)            -           -
                                                        -------------------------------------------------------
                                                             1,679,030      1,959,046             -           -
                                                        -------------------------------------------------------
      Total pearling project                                 2,294,534      2,597,259             -           -
                                                        -------------------------------------------------------
      Total property, plant and equipment                    2,302,436      2,608,284         7,902      11,025
                                                        =======================================================

      Included in Pearling Project leasehold land and buildings is $17,547 (2000
      - $24,790), being construction in progress at cost.

      Reconciliations of the carrying
      amount of each class or property,
      plant and equipment are set out below:

      (a)   General
            Carrying amount at beginning of the year            11,025         23,619        11,025      23,619
            Additions                                            7,494          2,000         7,494       2,000
            Depreciation                                       (10,617)       (14,594)      (10,617)    (14,594)
                                                        -------------------------------------------------------
            Carrying amount at end of the year                   7,902         11,025         7,902      11,025
                                                        -------------------------------------------------------

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Consolidated                         The Company
                                                             2001          2000                 2001           2000
                                                              $              $                   $              $
  12. PROPERTY, PLANT AND EQUIPMENT (Cont)
      (b)   Pearling project
            Leasehold land and buildings
            Carrying amount at beginning of the year           638,213        549,818               -              -
            Additions                                           50,569        166,331               -              -
            Depreciation                                       (73,278)       (77,936)              -              -
                                                        -------------------------------------------------------------
            Carrying amount at end of the year                 615,504        638,213               -              -
                                                        -------------------------------------------------------------
            Plant and equipment, vessels, vehicles
            Carrying amount at beginning of the year         1,959,046      2,247,232               -              -
            Additions                                          403,525        534,093               -              -
            Disposals                                                -         (2,384)              -              -
            Depreciation                                      (683,541)      (819,895)              -              -
                                                        -------------------------------------------------------------
            Carrying amount at end of the year               1,679,030      1,959,046               -              -
                                                        -------------------------------------------------------------

  13. INTANGIBLES

      Goodwill associated with acquisition of 25%            1,249,292      1,249,292               -              -
      investment in P.T. Cendana Indopearls

      Accumulated amortisation                                (749,575)      (499,716)              -              -
                                                        -------------------------------------------------------------
                                                               499,717        749,576               -              -
                                                        =============================================================

  14. PAYABLES

      CURRENT

      Trade creditors                                           55,581        642,637          49,806         65,343
      Other creditors                                        1,098,124        518,710         398,809        306,420
                                                        -------------------------------------------------------------
                                                             1,153,705      1,161,347         448,615        371,763
                                                        =============================================================

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Consolidated               The Company
                                                    2001         2000         2001         2000
                                                      $            $           $             $
15.  BORROWINGS

     CURRENT

     Interest due on convertible notes               4,436      125,554        4,436      125,554
     Convertible notes                             132,160            -      132,160            -
                                                 ------------------------------------------------
                                                   136,596      125,554      136,596      125,554
                                                 ================================================
     NON CURRENT

     Convertible notes                                   -    3,703,201            -    3,703,201
                                                 ================================================

     On 22 March 1999, the Company issued 24,688,009 redeemable notes, each
     having a face value of 15 cents. Interest was paid for the first time on 23
     March 2000 and thereafter every six months at an interest rate of 12.50%
     per annum on the face value of the notes. The notes are convertible at the
     option of the holder, at any time up to 23 March 2002, into ordinary shares
     of the Company on the basis of one share for each note held. Pursuant to
     the issue of convertible notes, there is a fixed and floating charge over
     the assets of Atlas Pacific Limited and Tansim Pty Ltd (and hence P.T.
     Cendana Indopearls) in favour of the trustee representing the convertible
     note holders.

     During the year, 23,806,942 convertible notes were converted to shares.

16.  PROVISIONS

     CURRENT

     Employee entitlements                  160,885     129,305         52,059       60,241
                                        ===================================================
     Number of employees *                       17          16              6            6

     * Employee provision relates to holiday pay accrual for all employees of
     Atlas Pacific Ltd plus all expatriate employees of PT Cendana Indopearls.
     There are no material accruals in relation to the 179 (2000 - 168)
     Indonesian employees of PT Cendana Indopearls.

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Consolidated                    The Company
                                                             2001          2000            2001            2000
                                                              $              $              $                $
17.  CONTRIBUTED EQUITY

     Issued and paid-up capital 78,557,959 ordinary
     shares (2000: 54,751,017 ordinary shares)             16,183,065     12,612,024      16,183,065     12,612,024
                                                        ===========================================================

     Reconciliation of Contributed Equity

     Balance at beginning of year                          12,612,024     12,612,024      12,612,024     12,612,024

     Shares issued

        23,806,942 (2000 - nil) convertible notes           3,571,041              -       3,571,041              -
        with 15 cent face value converted
                                                        -----------------------------------------------------------
     Balance at end of year                                16,183,065     12,612,024      16,183,065     12,612,024
                                                        ===========================================================

     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 and creditors and are fully entitled to
     any proceeds of liquidation. Note 20 gives details of the shares that are
     reserved for issuance under option.

18.  ACCUMULATED PROFITS/(LOSSES)

     Reconciliation of Retained Earnings

     Balance at beginning of year                            (586,830)    (3,058,989)       (468,057)    (2,469,084)
     Net profit attributable to members of the              4,150,770      2,472,159       4,261,809      2,001,027
     parent entity
     Dividends Paid                                        (1,570,399)             -      (1,570,399)             -
                                                        -----------------------------------------------------------
     Balance at end of year                                 1,993,541       (586,830)      2,223,353       (468,057)
                                                        ===========================================================

19.  DIVIDENDS

                                                       Cents per     Total Amount    Date of Payment    Percentage
                                                         Share                                            Franked
     Dividends paid and not provided
     for in previous years by the Company are:

     2001

     Interim Dividend                                      2.0        $1,570,399       5 Nov 2001          nil

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Cents per        Total       Date of     Percentage
                               Share          Amount      Payment       Franked

      2000                      Nil            Nil          N/A            nil

                                                            2001          2000
                                                              $             $

      Dividend Franking Account

      Class C (30%) franking credits available to
      shareholders of the Company for subsequent
      financial years                                      194,488          -

  20. OPTIONS

                                                                             2001          2000
                                                                            Number        Number
      (a)  Exercisable between 14 October 1999 and 14 October
           2002 at 30 cents each
           Outstanding at beginning of year                                8,062,500      8,062,500
           Issued during the year                                                  -              -
           Exercised during the year                                               -              -
                                                                           ------------------------
           Outstanding at end of year                                      8,062,500      8,062,500
                                                                           ------------------------

      (b)  Exercisable between 1 January 2001 and 31 December
           2002 at 30 cents each.
           Outstanding at beginning of year                                  800,000              -
           Issued during the year                                                  -        800,000
           Cancelled/Forfeited during the year                              (275,000)             -
                                                                           ------------------------
           Outstanding at year end                                           525,000        800,000
                                                                           ------------------------

      (c)  Exercisable between 1 January 2001 and 1 January 2003
           at 42 cents each
           Outstanding at beginning of year                                  200,000              -
           Issued during the year                                                  -        200,000
           Cancelled/Forfeited during the year                              (200,000)             -
                                                                           ------------------------
           Outstanding at year end                                                 -        200,000
                                                                           ------------------------

      (d)  Exercisable between 1 January 2001 and 1 January 2003 at
           34.5 cents each
           Outstanding at beginning of year                                        -              -
           Issued during the year                                            170,000              -
           Cancelled/Forfeited during the year                              (170,000)             -
                                                                           ------------------------
           Outstanding at year end                                                 -              -
                                                                           ------------------------
      Total number of options outstanding at year-end.                     8,587,500      9,062,500
                                                                           ========================

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21.  COMMITMENTS

       The Company has entered into leases for office premises. Commitments for
       lease payments contracted for but not provided for are as follows:

                                                        2001           2000
                                                         $              $
       Not longer than one year                        35,000         35,707
       1-2 years                                       26,250         20,829
                                              ------------------------------
                                                       61,250         56,536
                                              ==============================

The amounts do not take into account rental reviews that are provided for in the
lease contract or the renewal of property leases.

22.    CONTINGENT LIABILITIES

       There are no contingent liabilities that the Directors are aware of at
the date of this report.

23.    NOTES TO THE STATEMENT OF CASH FLOWS

       23.1  Reconciliation of Cash

             For the purposes of the statement of cash flows, cash includes cash
             on hand and in banks, and investments in money market instruments,
             net of outstanding bank overdrafts. Cash at the end of the
             financial year as shown in the statement of cash flows is
             reconciled to the related items in the balance sheet as follows:-

                                                      Consolidated                    The Company
                                                  2001           2000            2001           2000
                                                   $              $               $              $

     Cash at bank (Note 7)                        184,558        224,700         153,782        108,376
     Bills of exchange (Note 7)                 5,170,796      4,095,197       5,170,795      4,095,197
                                                -------------------------------------------------------
     Cash per balance sheet                     5,355,354      4,319,897       5,324,577      4,203,573
     Short term deposits (Note 8)                 230,254        135,159         230,254        135,159
                                                -------------------------------------------------------
     Cash and cash equivalents                  5,585,608      4,455,056       5,554,831      4,338,732
                                                =======================================================

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23.2 Reconciliation of net cash from operating activities to operating
          profit/(loss) after income tax

                                                                 Consolidated                    The Company
                                                               2001           2000            2001           2000
                                                                 $              $              $               $
    Operating profit after income tax                        4,172,530      2,472,159       4,283,574      2,001,027
        Inventories                                         (2,002,298)    (2,300,625)       (869,262)      (246,745)
        Increase/(decrease) in interest accrual               (121,118)      (266,326)       (121,118)      (266,326)
        Non cash changes in debtors and creditors           (1,405,097)        52,097      (1,393,344)        14,562
        Purchase of unprocessed pearls                               -              -       3,720,940      5,978,649
        Provision for depreciation                             699,606        912,425          10,617         14,594
        Provision for employee entitlements                      3,848          9,675          (8,182)        22,724
        Amortisation of goodwill                               249,858        249,858               -              -
        Provision for investment in controlled entity                -              -               -     (2,514,866)
        Project administration costs                                 -              -               -       (440,962)
        Loss/(profit) on disposal of fixed assets                    -           (524)              -              -
        Increase/(decrease) in taxes payable                 1,497,378              -       1,492,966              -
        Foreign exchange differences                            63,744          6,435               -          1,324
                                                        -------------------------------------------------------------
    Net cash provided by/(used in) operating
    activities                                               3,158,451      1,135,174       7,116,191      4,563,981
                                                        =============================================================

     23.3 Credit Facilities

          The Company has no overdraft or credit facilities at 31 December 2001.

    24. REMUNERATION OF DIRECTORS

                                                                  Consolidated                    The Company
                                                               2001           2000            2001           2000
                                                                 $              $               $              $
        Amounts received or due and receivable by
        Directors of the Company                               524,108        412,777         274,350       396,881
                                                       ==============================================================
        Number of Directors of Atlas Pacific Limited           2001           2000            2001           2000
        whose remuneration was:
        $10,000 to   $ 19,999                                    3              4               2              3
        $30,000 to   $ 39,999                                    2              1               2              1
        $40,000 to   $ 49,999                                    1              1               1              1
        $50,000 to   $ 59,999                                    -              1               -              1
        $110,000 to  $119,999                                    1              -               1              -
        $200,000 to  $209,999                                    -              1               -              1
        $210,000 to   219,999                                    1              -               -              -

                                      F-57




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##### Table of Contents

25.  RELATED PARTY TRANSACTIONS

     Biron Capital Limited (formerly Biron Corporation Limited), a company in
     which Mr G.R.W. Snow is a substantial shareholder and Director, sub leased
     office space and provided administrative services to the Company on
     commercial terms during the last financial year. In the year ended 31
     December 2001, an amount of $25,650 (9 months) was paid for these services
     (2000 - $41,061).

     Admiral R.P. Poernomo received a fee on normal commercial terms of the
     equivalent of $30,736 (2000 - $21,001) for providing office facilities and
     administration services for the Indonesian subsidiary in Jakarta.

     During the year, WF James & Associates Pty Ltd, a company which is
     associated with Mr. W.F. James, carried out consultancy work for the
     Company to the value of $16,500. These services were provided on commercial
     terms.

     During the year, the Company entered into a lease agreement with Arrow
     Pearling Co Pty Ltd, a company of which Mr. S.J. Arrow is Managing Director
     and major shareholder, to sub-lease office space on commercial terms. This
     agreement commenced on 1 October and during the year, an amount of $8,750
     was paid for this facility.

     The Company entered into a Consultancy Agreement with Arrow Pearling Co Pty
     Ltd on 3 March 1999 under which staff of the economic entity are to be
     trained as pearl operation technicians at the Indonesian pearl farm. During
     the 2001 year, $297,886 (2000 - $187,964) was payable to this company as
     consulting fees. This agreement was entered into prior to Mr. Arrow
     becoming a Director of the Company. It was entered into on commercial
     terms.

     The Company purchases pearls from P.T. Cendana Indopearls. These
     transactions are in the normal course of business.

     During the year, sales of individual pearls of small quantities were made
     to some staff and Directors on normal commercial terms.

     The aggregate number of shares, share options and convertible notes held
     directly, indirectly or beneficially in the Company by Directors or their
     director-related entities at 31st December is:

                                               2001             2000
                                              Number           Number

       Ordinary shares                      18,256,693       14,436,045
       Convertible Notes                             -        4,858,581
       Options - 14 October 2002             3,352,335        3,352,335
       Options - 31 December 2002              200,000          200,000
       Options - 1 January 2003                      -          200,000

     40,000 shares held by Directors were sold between the year ended 31
     December 2002 and the date of this report.

                                      F-58




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##### Table of Contents

Consolidated                The Company
                                                      2001          2000        2001            2000
                                                        $             $           $               $
  26. REMUNERATION OF EXECUTIVES

      Income received or due and
      receivable by Australian based
      executive officers (including
      executive directors) of the economic
      entity, from all entities in the
      economic entity and any related
      entities.                                       353,483     390,425      143,400        206,125
                                               ========================================================

      The number of executive officers
      whose income was within the
      following bands
      $140,000 - $149,999                                   1           -            1              -
      $180,000 - $189,999                                   -           1            -              -
      $200,000 - $209,999                                   -           1            -              1
      $210,000 - 219,999                                    1           -            -              -

  27. REMUNERATION OF AUDITORS                          Consolidated                  The Company
                                                      2001         2000           2001           2000
                                                       $             $             $               $
      Amounts received or due and
      receivable by the auditors for:

      Auditing or reviewing financial
      statements

          Auditors of the Company                      15,750      14,955       15,750        10,455
          Other auditors                               47,041      29,908            -             -
                                               --------------------------------------------------------
                                                       62,791      44,863       15,750        10,455
                                               --------------------------------------------------------
      Other Services
          Auditors of the Company                       7,764      42,708        7,764        16,400
          Other auditors                               55,269      67,310        6,308             -
                                               --------------------------------------------------------
                                                       63,033     110,018       14,072        16,400
                                               --------------------------------------------------------

                                      F-59




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##### Table of Contents

28. SEGMENT REPORTING

      (a)  Industry

           The economic entity operates predominantly in the pearling industry.
           These operations comprise the production and sale of pearls.

      (b)  Geographical

                                                     Indonesia      Australia    Eliminations       Total
                                                         $              $              $              $
      2001
      Revenue outside the economic entity               266,111    11,069,873              -      11,335,984
      Intersegment revenue                            3,720,940             -     (3,720,940)              -
                                                 ------------------------------------------------------------
      Total revenue                                   3,987,051    11,069,873     (3,720,940)     11,335,984
                                                 ------------------------------------------------------------

      Segment operating profit/(loss)                (3,454,563)    7,876,953              -       4,422,390
      Unallocated expenses                                                                          (249,856)
                                                                                              ---------------
      Operating profit after income tax                                                            4,172,534
                                                                                              ---------------

      Segment assets                                 12,406,294     8,757,836                     21,164,130


      2000
      Revenue outside the economic entity               540,840     6,709,338              -       7,250,178
      Intersegment revenue                            5,978,769     1,568,498     (7,547,267)              -
                                                 ------------------------------------------------------------
      Total revenue                                   6,519,609     8,277,836     (7,547,267)      7,250,178
                                                 ------------------------------------------------------------

      Segment operating profit/(loss)                 5,023,968    (2,301,951)             -       2,722,017
      Unallocated expenses                                                                          (249,858)
                                                                                              ---------------
      Operating profit after income tax                                                            2,472,159
                                                                                              ---------------

      Segment assets                                 11,584,387     5,560,214                     17,144,601

                                      F-60




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##### Table of Contents

29. CONTROLLED ENTITIES

                                   Percentage       Percentage         Place of       Book value of Company's
                                     owned            owned         incorporation           investment
                                     2001             2000                              2001          2000
                                                                                         $             $
     Sharcon Pty Ltd                  100%             100%            Australia            -             -
     Tansim Pty Ltd                   100%             100%            Australia            -             -
     P.T. Cendana Indopearls          100%             100%            Indonesia            -             -
                                                                                     -------------------------
                                                                                            -             -
                                                                                     =========================

     The ultimate parent entity, Atlas Pacific Limited, is incorporate in
     Australia.

30. INTEREST IN JOINT VENTURE OPERATIONS

     A controlled entity, P.T. Cendana Indopearls, has a 50% interest in the
     Cemerlang joint venture operations and the Kosuma Mutiara joint venture
     operation. The principal activity of these joint venture operations is the
     production of pearls from oysters supplied by P.T. Cendana Indopearls.

     The economic entity's share of assets employed in these joint ventures is:

                                                 2001           2000
                                                  $              $
                Current
                SGARAs                         170,432        135,255

                NON CURRENT
                SGARAs                          55,290        148,934

                                            --------------------------
                                               225,722        284,189
                                            ==========================


31. POST BALANCE DATE EVENTS

     Subsequent to the year end, an auction was held by Pearlautore
     International in Sydney at which the outstanding stock of pearls at the
     year end, as well as pearls from a harvest which took place in January,
     were offered for sale. As a result of sales from this auction, as well as
     sales prior to and after this auction, nearly 42,700 pearls were sold which
     has realised sales revenue of $7.69 million. There are approximately 740
     pearls remaining on hand.

     Since the year end, a further 731,080 secured convertible notes have been
     converted to shares. The remaining 149,987 notes will be redeemed ($22,498)
     as a result of no election being made to convert them to shares by 23 March
     2002.

     In March 2002, a final dividend of two (2) cents per share, franked to one
     (1) cent, was announced. This dividend is payable in April 2002.

     The results of significant operation activities are made available to
     shareholders and other interested parties through announcements to the
     Australian and NASDAQ Stock Exchanges.

                                      F-61




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##### Table of Contents

32. AMOUNTS PAYABLE/RECEIVABLE IN FOREIGN CURRENCIES

     The Australian dollar equivalents of unhedged amounts payable or receivable
     in foreign currencies, calculated at year end exchange rates, are as
     follows:

                                                       2001           2000
                                                        $              $
      Amount receivable:
      Indonesian Rupiah                                 9,304         17,503
      Japanese Yen                                  1,628,843        198,951
      US Dollars                                       98,642        184,972
                                              -------------------------------
                                                    1,736,789        401,426
                                              ===============================
      Amounts payable:
      Indonesian Rupiah                              (619,221)      (335,609)
      US Dollars                                     (102,513)       (76,131)
                                              -------------------------------
                                                     (721,734)      (411,740)
                                              ===============================

33. ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURE

     (a)  Net fair value of financial assets and liabilities.

          The net fair value of cash, cash equivalents and no-interest bearing
          monetary financial assets and liabilities approximates their carrying
          value.

     (b)  Interest rate risk

          The economic entity's exposure to interest rate risk and the effective
          weighted average interest rate for each class of financial asset and
          financial liability is set out below. Exposures arise predominantly
          from assets and liabilities bearing variable interest rates as the
          economic entity intends to hold fixed rate assets and liabilities to
          maturity.

                               Note       Weighted     Floating
                                          average      interest     Fixed interest rate maturing   Non interest
                                       interest rate     rate                     in                  bearing      Total
                                                                    1 year or less    1-3 years

                                             %             $              $               $             $              $
2001
Financial Assets
   Cash                          7          4.41          175,379         5,170,796            -          9,179       5,355,354
   Receivables                   8          0.48                -           230,254            -      1,864,674       2,094,928
                                                      --------------------------------------------------------------------------
                                                          175,379         5,401,050            -      1,873,853       7,450,282
                                                      --------------------------------------------------------------------------

Financial Liabilities
   Payables                     14          0.00                -                 -            -     (1,153,705)     (1,153,705)
   Convertible notes            15         12.50                -          (136,596)           -              -        (136,596)
                                                      --------------------------------------------------------------------------
                                                                -          (136,596)           -     (1,153,705)     (1,290,301)
                                                      --------------------------------------------------------------------------
Net Financial
Asset/(Liabilities)                                       175,379         5,264,454            -        720,148       6,159,981
                                                      ==========================================================================

                                      F-62




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##### Table of Contents

Note      Weighted
                                         average       Floating
                                         interest      interest    Fixed interest rate      Non interest
                                           rate          rate         maturing in             bearing            Total
                                                                    1 year or     1-3 years
                                                                      less
                                             %             $            $             $               $             $
2000
Financial Assets
   Cash                          7          6.40          211,518     4,095,197             -        13,182      4,319,897
   Receivables                   8          1.55                -       135,159             -       443,895        579,054
                                                      ----------------------------------------------------------------------
                                                          211,518     4,230,356             -       457,077      4,898,951
                                                      ----------------------------------------------------------------------

Financial Liabilities
   Payables                     14          0.00                -             -             -    (1,286,901)    (1,286,901)
   Convertible notes            15         12.50                -             -    (3,703,201)            -     (3,703,201)
                                                      ----------------------------------------------------------------------
                                                                -             -    (3,703,201)   (1,286,901)    (4,990,102)
                                                      ----------------------------------------------------------------------
Net Financial
Asset/(Liabilities)                                       211,518     4,230,356    (3,703,201)     (829,824)       (91,151)
                                                      ======================================================================

    Reconciliation of net financial                                  2001                 2000
    assets to net assets
                                                     Note              $                   $
    Net financial assets/(liabilities) as above                       6,159,981            (91,151)
    Non-financial assets & liabilities
    - Inventories                                      9              1,182,822             603,786
    - SGARAs                                          10              9,707,267           8,284,004
    - Property, plant & equipment                     12              2,302,436           2,608,284
    - Intangibles                                     13                499,717             749,576
    - Tax liability/benefit (net)                      5             (1,492,968)                  -
    - Provisions                                      15               (160,885)           (129,305)
                                                              -------------------- -------------------
    Net assets per balance sheet                                     18,198,370          12,025,194
                                                              ==================== ===================

      (c)  Foreign Exchange Risk

           The consolidated entity has entered into foreign exchange contracts
           to hedge certain anticipated sale commitments denominated in foreign
           currencies, particularly Japanese Yen. The terms of these commitments
           are not more than 12 months.

           The consolidated entity's policy is to enter into forward foreign
           exchange contracts to hedge a proportion of foreign currency sales
           expected within the following 12 months. The amount of anticipated
           future sales is forecast in light of current conditions in foreign
           markets and experience in the pearling industry.

           The following table sets out the gross value to be received under
           foreign currency contracts, the weighted average contracted exchange
           rates and the settlement periods of outstanding contracts for the
           consolidated entity.

                                      F-63




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2001          2000            2001            2000
                                            Weighted average                 AUD              AUD
                                                   rate
          Sell Japanese Yen
          Not later than one year            62.93          62.20        3,343,802        3,336,143

           These forward exchange contracts are hedging anticipated sales that
           are due within 12 months. Any unrealised gains and losses on the
           hedging contracts, together with the costs of the contracts, will be
           recognised in the financial statements at the time the underlying
           transaction occurs. The gross unrecognised gains and losses on hedges
           of anticipated foreign currency sales are as follows:

                                                  2001                              2000
                                          Gains            Losses          Gains            Losses
                                          AU$               AU$             AU$               AU$
          Not later than one year       205,610              -            150,082           78,364

    (d)    Credit risk exposure

           The credit risk on financial assets of the economic entity which have
           been recognised on the balance sheet, other than investments in
           shares, is the carrying amount, net of any provision for doubtful
           debts. The consolidated entity minimises concentration of credit risk
           by undertaking transactions with a large number of customers and
           counterparties in various countries.

           Credit risk on off-balance sheet derivative contracts is minimised as
           counterparties are recognised financial intermediaries with
           acceptable credit ratings determined by a recognised rating agency.

                                      F-64




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##### Table of Contents

34.      SIGNIFICANT DIFFERENCES BETWEEN AUSTRALIAN GAAP AND US GAAP

The above referred to standards and requirements differ in certain respects from
US GAAP. However, the differences which had a significant effect on the
consolidated net income and shareholders equity of Atlas Pacific Ltd. in
previous years no longer exist, due to changes in the accounting conventions
used in the Company's Australian accounts. While this is not a comprehensive
summary of all differences between Australian Accounting Practice and US GAAP,
other differences are not likely to have a significant effect on the
consolidated net income or shareholders equity of the group.

DEVELOPMENT COST

Under Australian GAAP, development costs such as those relating to the
establishment of a pearl farm, can be capitalised and amortised when commercial
production is achieved. For US GAAP purposes, such research and development cost
is written off when incurred. In 1997, the Company wrote off all development
costs incurred to date as an abnormal item, and therefore the Company's
accounting treatment of these costs is now consistent with US GAAP.

STOCK OPTION ISSUES

For US GAAP purposes, stock options issued related to services are valued for
the purpose of assessing a compensation value for services rendered. Such
compensation value has not been accounted for in the Company's Australian
Financial Statements. For US GAAP purposes, the compensation value has been
assessed as being the difference between the market value of the equivalent
listed shares, and the stock option conversion price at the time of issue. Where
conversion price exceeds market value, a nil value has been attributed to the
compensation.

       EARNINGS PER SHARE                                YEARS ENDED 31 DECEMBER
                                                      2001        2000         1999
                                                    (cents)     (cents)     (cents)
Earnings per share under
-   Aust GAAP                                        6.80         4.52         2.04
-   US GAAP                                          6.80         4.52         2.04

Earnings per ADR under US GAAP
-   20 shares equivalent to 1 ADR                  136.00        90.40        40.80

CAPITAL STOCK

Under US tax rules, the Company is classified as a Passive Foreign Investment
Company and accordingly, US Shareholders are taxed on the Company's results of
operations as if the Company was a partnership.

                                      F-65




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##### Table of Contents

34.      SIGNIFICANT DIFFERENCES BETWEEN AUSTRALIAN GAAP AND US GAAP (cont)

VALUATION OF INVENTORY

For US GAAP purposes inventory is valued at the lower cost or fair market value.
Australian GAAP requires inventory to be valued at the lower of cost and net of
realisable value. For the purpose of preparation of the primary financial
statements, no difference exists between the different methods of valuing
inventory.

Under Australian GAAP, special disclosures are required in relation to inventory
which is classified as a Self-Generating or Regenerating Asset (SGARA). This
disclosure is included in the annual report but has no effect on the accounting
treatment of the inventory for the Company or the Group.

                                      F-66




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##### Table of Contents

(Australian Dollars)

34.  SIGNIFICANT DIFFERENCES BETWEEN AUSTRALIAN GAAP AND US GAAP (cont.)

------------------------------------------------------------------------------------------------------------------------------------
SHARE CAPITAL                                                        2001                     2000                     1999
------------------------------------------------------------------------------------------------------------------------------------
                                                            Number of   Number of        A$          A$      Number of        A$
Issued and subscribed ordinary shares                         Shares      Shares                               Shares
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Balance, beginning of year                                  54,751,017  12,612,024   54,751,017  12,612,024  49,376,017   11,563,899
------------------------------------------------------------------------------------------------------------------------------------
..   Issue of 5,375,000 shares as part consideration
    for acquisition of 25% share of Cendana                          -           -            -           -   5,375,000    1,048,125
------------------------------------------------------------------------------------------------------------------------------------
..   Issue of 23,806,942 shares through conversion of
    Secured Convertible Notes (debt) to equity              23,806,942   3,571,041            -           -           -            -
------------------------------------------------------------------------------------------------------------------------------------
Balance at end of year                                      78,557,959  16,183,065   54,751,017  12,612,024  54,751,017   12,612,024
------------------------------------------------------------------------------------------------------------------------------------

Options

In the year ended 31 December 1993, 6,250,000 options exercisable at 25 cents on
or before 30 June 1997, and 3,666,667 options, exercisable at 25 cents, on or
before 30 June 1998 were granted for no consideration. In the year ended
December 31, 1996 200,000 options exercisable at 40 cents on or before June 30,
1999 were granted for no consideration. In the year ended December 31, 1997
300,000 options, exercisable at 30 cents, on or before September 30, 1999 were
granted for no consideration. In the year ended December 31, 1998 825,000
options exercisable at 40 cents between July 1, 2000 and June 30, 2001 were
granted for no consideration. In the year ended December 31, 1999 8,062,000
options exercisable at 30 cents each between October 14, 1999 and October 14,
2002 were granted as part consideration for the acquisition of 25% share of
Cendana held by minority interests. In the year ended December 31, 2000 200,000
options exercisable at 42 cents between January 1, 2001 and January 1, 2003 were
granted to the Managing Director as part of his remuneration. On April 12, 2000
675,000 options exercisable at 40 cents on or before June 30, 2001 were
cancelled. In their place, 800,000 options exercisable at 30 cents between
December 31, 2000 and December 31, 2002 were issued to senior staff and managers
of the Company. Movements in options issues are set out in the financial
statements for the years ended 31 December 1999, 2000 and 2001 and are included
as part of this document. In the year ended December 31, 2001 170,000 options
exercisable at 34.5 cents between January 1, 2002 and December 31, 2003 were
granted to the Managing Director as part of his remuneration. In the year ended
December 31, 2001 200,000 options exercisable at 42 cents between January 1,
2001 and January 1, 2003 and 170,000 options exercisable at 34.5 cents between
January 1, 2002 and December 31, 2003 which had been issued to the Managing
Director as part of his remuneration were cancelled upon his retirement from the
company. A further 275,000 options exercisable at 30 cents between December 31,
2000 and December 31, 2002 which had been issued to managers of the Company were
cancelled upon their resignation from the Company.

                                      F-67




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##### Table of Contents

34.      SIGNIFICANT DIFFERENCES BETWEEN AUSTRALIAN GAAP AND US GAAP (Cont.)

CASH FLOW STATEMENT

The following summary reconciles the Cash Flow statements as prepared in the
Primary Financial Statement, and that which would be reported in accordance with
International Accounting Standard 7.

                                                                         2001              2000             1999
                                                                          A$                A$               A$
Cash Flow from/(to) operating activities:                            3,158,451         1,135,174           946,918
as reported
Add - expenditure on pearling project                                4,321,199         4,155,261         3,731,130
                                                                   ----------------------------------------------------
Cash flow from/(to) operations in accordance with US GAAP
                                                                     7,479,650         5,290,435         4,678,048
                                                                   ----------------------------------------------------

Cash flow from/(to) investing activities:                             (461,588)         (699,568)         (900,701)
as reported
Less - expenditure on pearling project                              (4,321,199)       (4,155,261)       (3,731,130)
                                                                   ----------------------------------------------------
Cash flow from/(to)  investing  activities in accordance  with
US GAAP                                                             (4,782,787)       (4,854,829)       (4,631,831)
                                                                   ----------------------------------------------------

The above adjustments are between categories only, and do not affect the overall
cash flow as reported.

                                      F-68




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##### Table of Contents

CERTIFICATION



I, Simon Charles Bunbury Adams, certify that:



| | 1. |  | I have reviewed this annual report on Form 20-F of Atlas Pacific Limited;
| | -- |  | -------------------------------------------------------------------------



| | 2. |  | Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light
of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3. |  | Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4. |  | The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14
and 15d-14) for the registrant and have;
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (a) |  | designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this annual report is being prepared;
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) |  | evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing of this annual report (the Evaluation
Date); and
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (c) |  | present in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 5. |  | The registrants other certifying officers and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee of the
registrants board of directors (or persons performing the equivalent function):
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (a) |  | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize and report
financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) |  | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



| | 6. |  | The registrants other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors
that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



July 15, 2003



|                                                                      
|----------------------------------------------------------------------
|/s/ Simon Charles Bunbury Adams                                       
|Simon Charles Bunbury  AdamsPrincipal Financial and Accounting Officer



---

##### Table of Contents

CERTIFICATION



I, Joseph James Uel Taylor, certify that:



| | 1. |  | I have reviewed this annual report on Form 20-F of Atlas Pacific Limited;
| | -- |  | -------------------------------------------------------------------------



| | 2. |  | Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light
of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3. |  | Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4. |  | The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14
and 15d-14) for the registrant and have;
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a |  | designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this annual report is being prepared;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b |  | evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing of this annual report (the Evaluation
Date); and
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c |  | present in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 5. |  | The registrants other certifying officers and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee of the
registrants board of directors (or persons performing the equivalent function):
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a |  | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize and report
financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b |  | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



| | 6. |  | The registrants other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors
that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



July 15, 2003



|                                                  
|--------------------------------------------------
|/s/ Joseph James Uel Taylor                       
|Joseph James Uel TaylorPrincipal Executive Officer



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##### Table of Contents

Exhibit Index





|Exhibit No. |  | Exhibit Description                                                                                                                                                                                            
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4  xix.     |  | Joint Production Agreement dated July 2002 between the Company and PT Horiko Abadi for the joint operation of an oyster hatchery and associated sea leases in Banyupoh,
Northern Bali, with English translation
|            | 
|4   xx.     |  | EmploymentAgreement dated November 18, 2002 between the Company and Mr. Jan Jorgensen.                                                                                                                         
|            | 
|12          |  | i.       Section 906 Certification for Chief Executive Officer                                                                                                                                                 
|            | 
|            |  | ii.      Section 906 Certification for Chief Financial Offier