Ann: Half Year Accounts, page-22

Hi Pardner,

This write off of goodwill is very alarming!!!

The half yearly accounts are up until 30 June 2018.....The so called merger (it was technically a purchase of RWL Water by EMC) was only completed on 14 July 2017.

So this goodwill amount which EMC paid to Ronald Lauder for the purchase of RWL has been written off less than one year after the acquisition went through by the issue of 100,500,000 shares to Ronald Lauder who I'd say has managed to offload his loss making company for more than it was actually worth at the time. (I have asked ASIC to look into this in a complaint I have lodged to them earlier this year).

I'd say something really stinks here and my gut say that management have a lot to answer for here.....not just some vague note in the accounts which they have tried to bury amongst all the other stuff in the accounts.

Management have given ABSOLUTELY NO REASON OR ANALYSIS as to why the goodwill is so suddenly and drastically impaired so shortly after the merger......there is NO TRANSPARACY from management surrounding this. I will be referring this to ASIC in addition to a previous complaint I have made to ASIC concerning the the extremely inflated guidance figures that were provided to the market for forecast RWL revenue in the lead up to the merger........the guidance figures provided disappeared from management's vocabulary just as quickly as the the goodwill of $56 million has evaporated after the merger went through....Hmmmm I wonder if it is all related.

The RWL goodwill reported in the accounts up until 31 Decemember 2016 was only US$2.359 million so the goodwill was bumped up significantly before the sale of RWL to EMC.

I'd say Ron Lauder must be thinking he is like a cat that got the cream......not only did he probably get more than his company was worth (meaning he now has significantly more shares in FLC than he might have had), he is now less than a year later able to start buying back the stake he sold for 45 cents less per share than WE (ie the shareholders of EMC at the time) paid to him.

My gut tells me that the true value of RWL is more accurately reflected by the current FLC share price meaning that those shareholder who purchased shares after the merger at around 85 cents (or more in some cases) may have been ripped off. ....I await to hear from ASIC if they think this is the case (I really hope ASIC finds the will and resources to investigate my complaints)

Those who have been purchasing at current levels will probably be OK but with this mob its really anyones guess what is going to happen in the coming months or year.