- Shares in Phoslock Environmental Technologies’ (PET) have been suspended, after an independent investigation revealed accounting irregularities in its China-based operations
- The news follows an already troubling year-to-date for the water treatment company, with recent regional flooding and the ongoing COVID-19 pandemic delaying its Chinese operations
- Despite downgrading its guidance earlier this year, the company reported just $1.2 million in revenue for the first six months of 2020, compared to $9.8 million in the previous corresponding period
- Now, after prompting from PET’s management, an ongoing independent investigation led by KPMG’s forensic accounting division has discovered irregularities in half-year figures
- While the exact nature of the irregularities currently remains unclear, PET intends to update the market further in due course
- Phoslock Environmental Technologies closed in the grey for 24.5 cents per share
Phoslock Environmental Technologies’ (PET) shares have been suspended, after an independent investigation revealed irregularities in its China-based operations.
The news follows an already troubling year-to-date for the water treatment company, after regional flooding and the onset of COVID-19 continued to delay its projects in China, blowing out capital expenses in process.
Despite already downgrading its expected guidance, the company’s recent revenue report was worse than expected, prompting its management team to initiate the investigation.
In the six months leading up to June 30, the company reported just $1.2 million in revenue, compared to $9.8 million in the previous corresponding period.
Commenting on the troubling figures in the half-year report, Managing Director and CEO, Lachlan McKinnon, initially blamed the shortfall on its recent difficult operating environment.
“The challenges faced in our first half reporting period were outside of the control of the company and underline the impact of timing issues on our revenues, earnings and cash flow. This impact will be lessened as we continue to grow and diversify the business,” he said.
At the time of release, accounting organisation KPMG was unable to complete its audit of the half year report. However, after prompting from Lachlan himself, auditors have now discovered irregularities in the recent financials, and shares have been suspended until the investigation concludes.
Turning to its market performance, year’s challenges have dragged PET shares from a high of $1.47 in mid-2019 to a 52-week low of just 19 cents by August this year.
While the exact nature of the irregularities currently remains unclear, PET intends to update the market further in due course.
Phoslock Environmental Technologies closed in the grey for 24.5 cents per share.