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Well stated - The implications of how corporate crime in Australian listed companies can go unchecked for so long are incredibly concerning.
ASIC and current Australian government are not going to be able to ignore this one. Excellent investigative journalism.
Refer to SMH article today Dec 16 2023
The day has come! PET re-listed today and it was ugly. On the plus side holders are at least given the opportunity to buy, hold or sell after being in limbo for two years! Note: I do not hold.
Wow! It seems PET management might actually pull off the incredible and get PET re-listed. The work done in China to restructure, chase compensation, improve governance is great to see. The recent early results from Rotterdam seem positive thus, opening up Europe. The new contracts in NZ, and North America might see long suffering share holders rewarded with a re-listing and a company with a valuable product available again for shareholder investment. Fingers crossed they get across the line and hats off to management if they do. This is a valuable product that can have significant implications on waterways worldwide. It also highlights some of the great stuff that comes out (originally) from the CSIRO. It’s worth for those interested in investing in environmentally positive companies (assuming we will be able to) and/or turn around stories the recent announcement on the ASX from 24th if March.
Could this be another step towards Phoslock re-commencing trading on the ASX?
Phoslock Environmental Technologies Limited (ASX:PET) today announces that it has secured a substantial settlement in relation to all outstanding receivables involving a former customer and related party in China, Beijing BHZQ Environmental Engineering Technology Co. Ltd (“BHZQ”).
Since June 2020, PET has been pursuing the payment of outstanding receivables owed by BHZQ under various contracts for the supply of products and services, including by instituting legal proceedings in arbitration tribunals and courts against BHZQ.
For those that remember, Phoslock went into a seemingly routine trading halt in September of 2020, then things spiralled from there. They later advised to the market that internal investigations requested by the Chairman and MD yielded fraudulent activity in the falsification of invoices and service contracts (wowee).
Phoslock advised the market in November last year that they are on the “pathway to relisting” and expect to be in a position by Feb 2022. Next four weeks will be interesting to see how this plays out.
As a full disclaimer, PET was one of the first companies I bought into; one of those “hot tips” from a mate - as stereotypical as it gets. I was just starting out shortly after the COVID crash and jumped in with a small parcel (fortunately). So yes, unfortunately I still hold. Given how small a size it is, and the value it will most likely become immediately upon reopening (VERY negligible), I’ll hold and see how it goes.
Fortunately, through Strawman, the SM community and thousands of hours of self-education (podcasts and decent books) I've learnt much more than to jump head first into hot-tips from mates and now can offer some more reasoned discussion when they send me messages (and rocket emojis) about mining/exploration compaies with 1 good intercept, or a biotech that has annouced it'll cure death...
Expecting this to be a negative/inverse rocket emoji when they do re-open for trade – maybe they should make a sinkhole emoji (?).
08-Oct-2020: Market Update
Market Update – China accounting irregularities
Phoslock Environmental Technologies (ASX:PET) announced today that KPMG has reported its preliminary findings into suspected accounting irregularities relating to PET’s China operations.
Fraudulent activity has been identified, including false accounting and falsification of invoices and service contracts where PET or its subsidiaries are the recipient, and potential improper tax reporting and misappropriation of funds. Several China-based employees have been either stood down or terminated in relation to these matters.
It has also been confirmed that several previously undisclosed related party transactions have taken place.
Further investigations are required to determine the full extent of these, and possibly further, irregularities and to quantify the impact on the company’s finances and accounts. This work is underway.
In addition to the work being undertaken by KPMG, PET has retained an experienced corporate finance consultant specialising in financial due diligence to be based at PET’s China office and to provide assistance and support to the company. That assistance includes, but is not limited to:
Measures are also being taken to protect the company’s assets, including cash reserves, and intellectual property while the investigations continue. All company operations and assets outside of China are unaffected by these matters, including significant cash reserves on deposit in Australia.
PET will actively investigate and consider its rights in relation to pursuing legal action against individuals and/or entities found to have been involved in any fraudulent activity and to securing the recovery of amounts associated with all irregularities.
The company’s shares will remain suspended from trading until such time as the investigations are complete; the financial and accounting impact has been assessed; and audited accounts for the half year have been released.
While PET addresses these matters in China, the company is continuing its focus on developing its expanding business in other parts of the world and remains confident in its overall growth opportunities.
Further updates will be provided to the market in due course.
--- ends ---
[I do not hold PET shares.]
oh dear, not good..
PET is investigating accounting irregularities in its China operations (see ASX announcement here)
I'll be blunt, this is very bad news and comes after missed guidance and director selling. China accounts for something like 85% of sales.
(remember, with shares suspended you cant sell your Strawman holdings either. Not until trade resumes).
What's more concerning for me, is that PET's deputy Chairman Zhigang Zhang was a strategic investor in Envirosuite (EVS) and has helped establish their operations in China.
14% of the groups revenues were from China, and there could be some concern that there are "irregularities" there too.
Twitter user Nick Fabrio outlined some concerns here:
https://twitter.com/longhorncapital/status/1307891849101635584
I'm not inclined to jump to any conclusions just yet. There's little hard facts out there right now and i'm still digging through things -- maybe it's nothing.
There's often a few 'hairs' on small cap companies that don't amount to anything -- and jumping at every shadow can be very counterproductive.
At the same time, it's hardly encouraging news. I hope EVS have chosen their partners well.