EMC Acquisition

A quick review of the recently released financials reveals some genuine concerns and brings about a lot of questions.

[Page 3]

"The results of segments that are significant to an understanding of the business as a whole:

The standalone (i.e. prior to consolidation eliminations and corporate overheads) losses after tax for the year was $5,737,625 for the CETO wave energy technology segment and $7,349,101 for the solar and battery engineering, procurement and construction (“EPC”) segment. The solar and battery EPC segment’s loss was impacted by the integration of the Energy Made Clean Group during the year."

[Page 3]

While EMC was only 100% owned for the last 7 months of the 2017 Financial Year, the standalone business had a turnover for the full 2017 financial year of approximately $12m. The Company also looks forward to seeing first revenues flow from the EMC/Lendlease Joint Venture during the 2018 Financial Year


[Page 12]

1. The amount of revenue and loss of the Group, for the year to 30 June 2017, had the acquisition occurred on 1 July 2016 would have been:
   
   
   • Consolidated revenue $8,515,059
     
     
   • Consolidated loss $18,028,457
     

Does this strike anyone as completely dumbfounding?

I can't help but feel that someone has dreadfully over cooked the valuation of this business.

Between cash paid to the vendor (1.6m) and shares issued, (11m) what does CCE get? A bloody great big hole!

Now I'm not an accountant, but a couple of things are abundantly clear to me when scratching my head through these numbers...

1. EMC was about to go under in my opinion. The business was sinking and CCE threw them a lifeline. I suspect because they did not want to loose their 35%.

2. Why did CCE agree to this value of EMC based on their understanding of the financials? All they have acquired by the looks of things reading between the lines is a dreadful legacy of debt and projects that were supposed to be delivered and haven't been (MRO still not commissioned)

3. If EMC turned over 12m for the full year (16-17) and had a loss after tax of 7.3m from Dec, it begs the question what the full loss would have been.

4. Why have shares been issued for a business that has delivered nothing but a great big hole? Surely the board of CCE weren't stupid enough to base the vendor payment on revenue without considering profit?

So let me understand this properly. We have parked wave (I know everyone with object but until such time as I see it, I don't buy in to the bullshit anymore) and we are left with a business that clearly has no idea what it is doing in delivering projects.

It beggars belief how any CCE shareholder can possibly be happy with this right now. Honestly, heads should be rolling.

I'm holding for the next few months to see what happens on the back of Vic and Albany... but seeing what I have now seen, it's clear to me this group has some serious structural problems and I genuinely think so real issues.

We best pray people, I wish you all well.