23 Dec, 2021
Financial mismanagement and alleged fraud:
Brief background and Company’s response
The following summary should be read in conjunction with ASX announcements and disclosures made by PET in relation to this matter.
Following their appointments in May 2020, Lachlan McKinnon (Managing Director) and Matthew Parker (Chief Financial Officer) initiated internal reviews and investigations that identified financial management irregularities and fraudulent activity principally centred around the Company’s operations in China.
When these matters became apparent, the Board sought a trading halt on the Australian Stock Exchange (ASX) which came into effect on 21 September 2020. This ensured the Company’s shares were not being traded while investigations continued in an attempt to quantify the impact of the irregularities.
Those investigations have now concluded, and the Company has detailed the outcomes in various disclosures, most recently on 16 November 2021 (LINK to Transcript). Certain legal matters are progressing in an effort to recover misappropriated Company funds and to bring the responsible persons to account.
How has the Company responded?
The Company’s response to these matters has been comprehensive. This has included the restructuring of PET’s organisation in China; a comprehensive and systematic review of all current China contracts and contractual arrangements with third parties; and the implementation of changes which have strengthened PET China’s financial reporting procedures, delegated authority policies and general risk management framework.
More broadly, the Board of Directors has been renewed with the appointment of a new Chairman and other independent non-executive directors and a strengthening of corporate governance across the business. To support the Company’s new growth strategy, experienced executives have been recruited to lead and support global commercial operations, new product development and manufacturing.
The company expects to relist on the ASX early in 2022. This will be subject to meeting the requirements of the ASX, which requires a full audit of the company’s 2021 trading year, along with various disclosures detailing the events outlined above.
A commitment to innovative and effective products and first-class service
While these matters have been a significant distraction and cost to the Company, the current management team, with the support of a new Board, is executing a growth strategy based on further geographic and product diversification, delivering reliable engineering solutions and water treatment products to customers around the world.
The Company is in a strong financial position and is investing in new product development and expanded manufacturing capabilities.
As a global leader in water remediation, PET looks forward to building on its successful track record of more than 300 applications in approximately 20 countries.