- Phoslock Environmental Technologies (PET) has updated the market on progress towards the reset of its China operations during the March quarter
- The water treatment company uncovered fraudulent financial activity at its China-based business in October following an independent audit
- Notably, the company has appointed Dei Lui as general manager for China
- PET renegotiated the lease of its factory warehouse in Changxing and reviewed production scheduling to ensure efficient working capital management
- Phoslock’s cash outflows for quarter one came in at $3.7 million, slightly higher than $3.5 million in the prior period, which it mostly attributes to operating activities
- PET ended March with $26.7 million in cash and equivalents
- Phoslock shares last traded at 24.5 cents each
Phoslock Environmental Technologies (PET) has updated the market on progress towards the reset of its China operations during the March quarter.
The water treatment company uncovered fraudulent financial activity at its China-based business in October last year following an independent audit.
After announcing an overhaul of the operations in November, PET has taken several steps in quarter one.
Notably, the company appointed Dei Lui as the China business’ general manager, which it considers a key move in the ongoing restructure.
Further, Phoslock has successfully renegotiated the lease of its factory warehouse in Changxing and reviewed its production scheduling to ensure working capital is managed efficiently.
Other business
The March quarter was otherwise quiet for PET, which the company considers typical for the period given the seasonality of its business.
Phoslock reported quarterly sales of roughly $700,000, mostly related to ongoing projects in Brazil, Europe and China, as well as smaller retail sales in Australia and New Zealand.
The company penned an agreement with the City of Rotterdam for a treatment scheduled to commence later this year.
Contracts for upcoming treatments in Denmark and Brazil were also finalised.
In the United States, PET appointed Harry Knight as regional manager of a new U.S. subsidiary.
Finances
Phoslock’s cash outflows for quarter one came in at $3.7 million, which it mostly attributed to operating activities.
The figure is slightly higher than the prior period, in which it reported $3.5 million, primarily due to lower collections, higher staff costs due to off-set separations and higher tax payments made to resolve PET’s legacy tax issues.
Phoslock also attributed outflows in the quarter to the ongoing investigation of its board and audit fees.
PET ended March with $26.7 million in cash and equivalents.
Phoslock shares last traded at 24.5 cents each on April 29.