The results are indeed disappointing, with a breakdown in...

The results are indeed disappointing, with a breakdown in corporategovernance, controls and sound business practices. KPMG forensic division notsigning off on the audited accounts, which is holding up relisting, could uponreflection possibly be considered an indictment on their own audit division andillustrates the lack of accounting standards and controls in the business.

The issue of significant bonus shares, with a low threshold and noretention or withholding period is further inappropriate board and executive action.Then, packaging those shares into the disposal by directors and management,together with a significant portion of LF personal holding, againexemplifies the overall weaknesses and the reward process attributed to performance shares, as now reported, based on deception by certain parties, who so easily took advantage of a situation of poor controls and lacks levels of authority. What action is being taken for recovery in this regard? Projecting blame onto some villains without any action for recovery is meaningless to shareholders. The executives and BOD had full oversight of the business at all times. If the systems and risk management were deficient then there should be accountability.

The obvious lapses in business judgement across many levels within PET, time lines and inconsistencies in reporting are inexcusable. Examples are many and is a treatiseon its own.

Then there’s the touting of 'Very Large Projects', by the Chairman, whichapparently lacked substance based on what has now been reported.

The two most recent reports, are short of detail, with any cleardirection and contain many vague statements. What action has been taken againstthe perpetrators of fraud? Shareholders should know, as it’s their money too!

Shareholders should also understand who specifically is driving the turnaround strategyand to whom they can look to for results? The communications, as has been thecase in the past continues to show a disregard for shareholders to be fullyapprised of developments in the business.

The company made this statement last year: ‘PETwill initiate regular investor calls to provide access to the Managing Director’.This has not transpired!

There are numerous unresolved issues and uncertainty, key amongst whichis still after many months an inability to confirm the critical appointment ofa senior manager in China, when this is still a business heavily dependent onChina.

LF was the architect of the business strategy, has been at the helm,since inception, developed a China centric business without what appears to be adequate checks and balances required to run a business in aforeign jurisdiction, and with what has now been reported apparent weakor non-existent controls or monitoring to protect investor’s funds or otherassets.

As a highly experienced successful businessman the manner in which PEThas been run by LF has let shareholders down particularly those who may have dependedon his past history as well as involvement as the head of the PET operations.

Furthermore, there has been no indication to address the issue ofrestitution by way of a recalibration for shareholders who relied on LF’spronouncements, the undertakings made and for those who supported the recentcapital raising, without which the business on information now reported couldhave likely been in dire trouble, possibly even director breaches.

I’m sure that LF, the BOD and senior executives must realize the deepdisappointment in the diminution in value in PET, loss of shareholder’s funds, pastpronouncements, uncertainty and current state of the business in which they wereall involved, have authority in varying degrees and influence over all its proceedings.Surely someone in authority reviewed agreements, signed contracts, appliedKPIs, held a calendar for key dates, checked financial reporting, signed off theaccounts, monitored sales, debtors and cash flow. The list goes on…

The business is not some private fiefdom, however, stakeholders appearto continue to be treated with condescension. The shareholders can only nowhope that the BOD and management have learned a lesson and have had a ‘shake’up call on the need for better application to the governance required and operationalcontrols now needed. Sadly, shareholders became engulfed in the shortfallsand have paid a heavy price as a result of the past modus operandi in therunning of PET.

The article extract below is of consideration. Courtesy and acknowledgment toreferencing its source.
SMH 19, 2011 —12.00am Article by Miriam Steffens (Relating to a previous LF business).

‘……………………..Freedman……………………… He declines tocomment, ‘but is unwilling to accept criticism that he fared better than hisinvestors’. Let's hope this is not the case with PET.

The dismissive and defensive manner in which the CEO replied to a poster,‘peasant’, on this forum is not what stakeholders expect from a leader in thebusiness, so let’s hope that with some humility, a lesson has been learned onthe accountability and approach required to shareholders. The CEO presumably understandsthe great reliance, transparency and trust required of him by stakeholders, aswell as an undertaking he made to report regularly.

The appointment of a new experienced board member is most welcome and given hiscredentials as outlined in the announcement he should certainly have a constructive part toplay. However, the board is controlled by LF and his ex-colleagues, so on theface of it independence may still be lacking. It could also be speculated thatthe plan is for him to take over the chair from LF.

Whilst some on this forum would prefer as they’ve stated to see LFousted that would not IMHO benefit the business or shareholders – sometimes be carefulof what one wishes for!

He would most probably welcome it as he other significant resources, aquick one minute internet search on open platforms shows substantial holdings in AKP, AEI, EOSand others. Therefore, given his position and huge benefits already reaped fromPET he may well prefer to withdraw, as RS has done! Does RS haveaccountability, as most of the issues transpired under his watch too? Interesting that he has not been mentioned in the reports. He ran the business with LF, presumably formulated many past arrangements and he could possibly help by playing a role in the recovery process, as he should have full knowledge of all operations that he and LF, the two key executives, both accountants, were party to, but RF is conspicuous by his absence.

LF has the experience, skills, acumen, connections and resources to improve thePET position immensely and should be more rather than less active inrestoring the business and to meet the many undertakings and obligations thathe made and would in the course of business signed off on. He is still thelargest shareholder and should continue to see through what he started and whathe drew many investors into.

What’s left in PET is a proven product with world class potential, anapplication that meets scientific benefits for waterways and the environment, adequateresources to deliver on a successful strategy, provided one is clearly formulated,but as is always the case, the success of strategy is in the implementation. Thatoperational baton has now been passed to LMK and requires very closeinvolvement by LF and the BOD, as well as greater accountability toshareholders, which shareholders on this forum are screaming out for.

What’s required, ASAP every effort is made to restore credibility,essential for future contract negotiations, compliance and effort to relist, as that point is moot inthe recent announcement, much clearer communication by management and the BOD, apure set of financials with detail on every issue and what has happened toshareholder’s funds, recovery of apparently misappropriated resources and someform of restitution to shareholders, particularly those who followed themost recent rights issue, which as now disclosed by the investigations conducted by the company appears to have proceeded and been promoted with rather questionable numbers and information.

The CEO needs to step up and show his metal as time and circumstances maynot have fully allowed for that since he commenced employment and also had to confront the challenges of Covid. Importantly theBOD should to provide the right high level of governance and oversight together withLF as they are the custodians of shareholder’s funds. All of this together withvery regular updates and no further puffery and an effort to honor the commitmentto reporting timeously will go a long way to restoring the required semblance of order to operate optimally.

As frustrated and upset as shareholders on this forum are, the insults,throwing of bricks, side bets, by some with a possible agenda to drive theprice down, on how much we’re all going to lose are frankly not useful and just feed intoall the negativity with no regard for the real issue - theprospectsfor recoupment!!!

Representation to LF and the board are suggested by a poster to thisforum and could be a part of that process, however, whilst supportive ofshareholder activism, that intention requires a very clearly stated agenda and objectives.

Therefore, in conclusion, with greater diligence from the executives, LF andBOD, a reinvigorated sales marketing and operational drive, significantly improvedfinancial controls, a highly motivated accountable CEO and no further ambiguitythen all stakeholders should be in a position to determine the path ahead forPET, with a potential recovery in the fortunes of the business.

This will enable all concerned to evaluate the business and where shareholdersstand in terms of their personal or collective endeavors.

There is also potential for corporate action, as PET could be a good fitwith a number of other businesses for M&A prospects, a possible shareswap, or outright acquisition at the right price for shareholders!, so despite the resentment and despondency of many on the forum there shouldstill be a positive outcome.
Good luck to all those invested in what was put forward as a promising business and still has potential despite the current malaise.