Few interesting things in these accounts to understand further:...

Few interesting things in these accounts to understand further:

- Investment in associate is loss making but no impairment in the investment would indicate assumptions are being made about its recoverability. How much risk does this pose in the future if other tenants can't be found to make the associate profitable, what does that mean for the value of those properties?
- No disclosure about restrictions on cash related to sovereign risk. Would think there would be some disclosure as to whether there is any restriction on transferring cash out of China. Nothing in there, so does that mean there is no restriction or there has been a failure to disclose key information? This is fairly fundamental to the value of equity in an Australian based company.
- Others have had comments about the share issue and store refurbishment amounts are very similar. Are there any related party relationships between the contractors and the company or its key management personnel. The notes say independent contractors, so hope the auditors have checked those relationships.
- Parent entity has a large retained loss and this got larger in the current year. Franking likely never to be available (assuming the company can get cash out of China). Current liabilities has grown in parent as well, if those continue to grow does that mean a capital injection will be required if funds can't be remitted from China?
- Machinery and Equipment and Buildings historical cost values have reduced. That would indicate they have got rid of items. In a growing business wouldn't you invest in capital not get rid of it? There is $250k of CWIP and some capital commitments ($1.6m), but that still looks a little odd.
- sales up inventories down. Seems an odd relationship, especially when payables are up.
- Why would you borrow short term if you have plenty of cash in the bank? Very expensive rates given they have cash.
- Assume the statutory reserve in China has met the cap and thus why no further amounts put in it? No mention of that.
- there are a fair few spelling mistakes/typos in the financials which always make me worried they haven't been read and proof read properly. If you can't get spelling right how confident are parties on the other content?
- Audit Report - given the overseas nature of the operations and some of the scepticism I've seen on this site about the company and what the share price tells us, it would have been nice to have seen a couple of key audit matters related to physical existence verification of all assets and distributor networks. This might have given the market a bit of confidence.

The main thing that is a challenge to this company is the tightly held register and lack of desire to implement capital management programs that provide comfort to and reward for Australian investors.

All just in my own opinion, DYOR