General Shareholder Questions
When will PET recommence trading on the ASX?
The Company must navigate a number of steps prior to trading recommencing. These include the issuing of the half year accounts to 30 June 2021 and the related auditor’s opinion. Our objective is to see PET shares trading as soon as possible and we continue to liaise closely with the relevant regulators on this matter. We will keep shareholders updated on the process and on progress at regular intervals.
Are steps being taken to pursue those responsible for the fraudulent activity relating to the China business?
Various authorities have been made aware of the matters relating to the fraudulent activity. The Company has reserved its rights in relation to pursuing legal action and is taking legal advice in that respect.
Are any of the losses incurred in China able to be recovered?
The Company is working with its legal advisers, its insurers and relevant authorities to determine if any misappropriated Company funds can be recovered.
What is the basis of the Company’s confidence in new management in China?
PET’s China business has been fundamentally restructured and new senior management has been appointed. Appropriate due diligence has been undertaken in respect of those appointments, including with the support of a professional recruitment firm in China. The new leadership team in China is professional, experienced and is implementing new go-to-market strategies and business development plans. Financial reporting procedures, delegated authority policies and risk management processes have been reviewed and improved and material banking transactions now require head office authorisation.
Has any of the Company’s valuable intellectual property been compromised as a result of the China matters?
The Company does not believe that its IP has been compromised. As soon as the mismanagement and accounting irregularities came to light in China, steps were taken to safeguard commercially confidential information. Subsequent investigations into the matters included the forensic review of email communications. The Company continues to closely manage its IP assets and invest in the protection of those assets, with various patent applications continuing to progress in jurisdictions around the world.
Is the Phoslock business in China impacted by current trade tensions between China and Australia?
We do not believe so. PET has an established presence in China and has demonstrated its efficacy with successful treatments in a number of locations. PET engages with regional or local authorities in relation to local projects and has a manufacturing presence in China, with product supplied internally.
What is the status of the Phoslock product registration in Canada?
The Company is working closely with the Canadian regulatory authorities – and with specialist consultants in Canada – in relation to securing the relevant regulatory approvals in Canada. The Canadian market is an important and potentially valuable market for PET and this matter will continue to be given a high priority.
Can you provide clarity around your guidance that the Company expects to return to profitability in 2021?
This guidance assumes that a number of projects scheduled to commence within the balance of the year do, in fact, get underway. Some uncertainty remains around this due to ongoing COVID impacts on the business, but management remain very focused on securing as much work as possible in the current financial year.
What is the status of potential remediation work in the Everglades, Florida?
Testing/trial activity continues in relation to this potential project, but no contracts have yet been secured. The Company remains in regular contact with the responsible local authority.
To what extent is PET pursuing opportunities in Asian markets such as Thailand, Indonesia and Malaysia?
These and other markets in Asia present opportunities for PET as the Company looks to diversify its business and build its presence in geographies around the world. We have signed a distribution agreement in Thailand where we are focusing on opportunities relating to both large lakes and aquaculture. Indonesia also has a significant aquaculture industry, where water quality is a key priority.
Is PET pursuing opportunities relating to the remediation of waters connected to the large Cutzamala Dam project in Mexico?
Yes, we continue to work with the relevant authorities in Mexico, however this project has been significantly delayed by COVID.
Will Australia be given a higher priority for business development as part of your geographic diversification plans?
Yes, the Company sees opportunity to secure additional projects in its home market. Relative to some other parts of the world, however, water quality in Australia is generally good.
Is PET confident in its competitive position?
Phoslock is currently the only product on the market which binds phosphorus and keeps phosphorus bound across the entire pH range found in natural water bodies. Unlike products like aluminium salts, which are commonly used in the U.S., the introduction of Phoslock into an aquatic system will not cause a drop in pH or an increase in conductivity and the product can be used safely without any adverse effects on aquatic life or buffering agents. The Company believes it has a very strong competitive position.
Why is the Company not now providing a quantitative update on its ‘pipeline’?
Given the recent matters in China and other unexpected external impacts such as flooding in China and COVID-related impacts on the market, the Company does not believe there is sufficient certainty to quantify the value of projects expected to be secured within a specific timeframe. Management believes it is in the interests of shareholders to report new projects and contracts when an appropriate degree of certainty exists.
The Xingyun and Catchment project announced in 2020 was forecast to generate $10-15 million in revenues that year. How much revenue was secured and how much was deferred into 2021?
This project was implicated in the accounting irregularities that occurred in China. Given various concerns and uncertainty surrounding its status, the receivable associated with the project was impaired in the 2020 accounts. The Company has recently reported that a relatively small component of that receivable has been paid to the Company. Although this recent part-payment is a positive outcome, it is for initial work, not the bulk of the project application. The Company is yet to receive written confirmation of the receivable from the customer, or acknowledgment that it is past due, despite several requests to that effect.