Phoslock Environmental Technologies Limited (PET) Earnings Call Transcript & Summary

Okay then, well, let's get a move on. And as I said, welcome, everybody, to Phoslock's half year results briefing. My name is Greg Slade. And I'm an investor relations consultant to Phoslock, been with the company a few months now. Shortly, I will hand over to CEO Lachlan McKinnon and CFO Matthew Parker to take you through the results and the outlook for Phoslock. Thank you to those in the audience who submitted questions as part of the registration process for this webinar. There were several recurring themes in the questions submitted. I have collated the questions, and after the formal presentation concludes, I'll ask Lachie and Matt several questions which should cover off most of the topics that shareholders want discussed. Well, if we don't get to your specific questions that you asked, off-line, either myself or Lachie will get back to you, but we aim to have this wrapped up by about 3:00. So without any further ado, I'll hand over to the CEO of Phoslock, Mr. Lachlan McKinnon.

Thanks, Greg. And welcome, ladies and gentlemen, to the call. Really excited and looking forward to presenting our results to you for the half year of 2021, as Greg talked about. And we also will look forward to answering as many of your questions as we can as we go through. So 2021 first half results. Just skip on a couple of slides. Thanks, [ Denny ]. Thank you. There we go. So the key developments. So the first half at our revenue line was a little slower than we would have liked. As shareholders will know, we are a dominant second half company, so we're not overly surprised with the first half being a little slower, but there were some headwinds which we will talk about that meant at a revenue line particularly our first half was a little lower than we would have liked. It doesn't mean there wasn't a lot of activity, though. And here on this slide you can see some of the things we've been focusing on, and I'll just run through and highlight a few of those now. So obviously continuing the execution of the strategic plan, we've invested a number of, some resources in various geographies, particularly Europe. We've continued the governance program and accounting and management standards upgrades not only in China but all around the world. We've reviewed and progressed many of the key areas that we've talked about previously around our strategy. So manufacturing and supply chain; research and development; and a newer one that we haven't talked about before but certainly people, performance and culture, which is a key driver to enabling us to achieve our strategy. Obviously lots of ongoing work for projects and trials across all the regions, which we'll discuss in more detail; significant efforts going to addressing the issues to facilitate the relisting on the ASX with our new auditors which were appointed in the first half as well. Importantly, we've commenced legal proceedings in China regarding some of the fraud and mismanagement issues we've talked about, and we'll detail a bit more of that as -- a bit later. And we've renewed the Board. So 3 new nonexecutive directors came on in the first half. And as you would remember from the AGM, a new Chairman was appointed at the end of our AGM. So they were some of the major activities during the first half. And I'll hand over to Matt to just talk us through the actual results for the first half of 2021. Thanks, Matt.

Thanks, Lachie. I'll talk to the numbers now. As you can see with the numbers on the slide, the business continues to face headwinds as a result of COVID-related impacts. These impacts involve delays to project approvals as government authorities give priority to health-related matters, delays and interruptions caused by restrictions on access and movement and increasing costs associated with international freight movements. At the half, gross profit was $0.7 million. Whilst this was down on the same period last year, margin percent was higher for the period. This is as a result of lower customer incentives and lower application costs versus pcp. Underlying EBIT for the period was a loss of $3.7 million compared to a loss of $4.3 million in the first half last year. The smaller loss was generated despite lower sales and margin and was largely attributable to lower operating expenses in the period. Whilst these expenses were lower versus 2020, they do remain high. We continue to incur expenditure on interim management and restructuring costs, along with legal expenses as a result of the investigation. The business also made significant investments in growth initiatives in the period, such as our previously announced R&D and manufacturing reviews. Lachie will talk more about that in the coming slides. NPAT or net profit after tax was a small loss of just under $800,000 for the period. This result includes one-off noncash adjustments to leases primarily. The business did manage to successfully negotiate a reduced lease term, smaller footprint and overall small liability in relation to our manufacturing operations in China. This was concluded as part of the ongoing effort to rightsize the business, and that's still ongoing. The result also included a receipt of about $500,000 relating to previous works completed at Xingyun Lake in China. As we mentioned in the past, in previous announcements, whilst receipt of this payment is a good start, we remain circumspect in securing the full payment associated with that project. We have not given up, however, and -- on this matter. And the team is in constant contact with and communications with this customer in an effort to secure a -- the full amount. Of note for the period, following the investigation, the company has launched legal actions to recover payment of outstanding amounts owed by a former substantial customer and related party, BHZQ. BHZQ has responded by making various counterclaims, which are being worked through via arbitration. A final determination is expected to be made on those matters by the end of 2021. Talking to cash flow and balance sheet now. The company reported a cash outflow of $3.8 million for the first 6 months of the year, which was an improvement of $4.5 million over -- of about $4.5 million over last year. The lower cash outflow in this half is because of lower employee payments and lower manufacturing-related activity, in particular the nonrepeat of the safety stock buildup in 2020. In this half, however, we did make tax payments to resolve legacy tax issues identified in the investigation, and that was reported in the 4C for the first quarter. The half closed with current assets of $33.3 million, which was made up of $26.3 million of cash, trade and receivables of about $2 million and inventory of about $4.5 million. Current liabilities were about $4.2 million, which was primarily payables and employee liabilities and some lease assets. The net assets of the group was closed at about $29.4 million, about $29 million, which was relatively unchanged from the 31st of December 2020. And this was explained by the operating outflow that I explained, but it was largely offset by the revised lease adjustments that I've previously explained as well. That's it from me, Lachie. Thank you.

Good, Matt. Thank you very much for that. I'll obviously try and now talk through a little bit more of that detail through the next few slides. And so the next issue -- or the next slide I wanted to talk to was the China issue and reset slide. Now you shareholders will remember and will have seen some of this slide before, but I think it's particularly important to highlight that it illustrates that things are ongoing in China. And a number of the issues that we've been working through in the previous periods are still continuing, and we are addressing those as we go. And so hence, we wanted to leave this slide here. Of particular note, I wanted to talk about the restructure in China and the restructuring of the Chinese operation. And we are continually evolving our business model in China and fine-tuning what that business model needs to look like, and as a consequence, the leadership of the business needs to obviously have the skills and knowledge to manage that China restructure and the business model we want to operate under. So in that light and within that background, we are recruiting for a new leader of the Chinese business that's got a skill set more suited to where we're going and the operating model that we are working with for our China business. Del Liu, the previous GM, submitted his resignation for personal reasons; and that has enabled us in some respects to be able to look at the structure and the personnel we have in the China business. So that is ongoing, along with the consultancy work of FTI in China. The other key point on this slide to mention is the legal proceedings that are underway. That's in the highlighted bottom right-hand corner box. Matt touched on it. We have begun those proceedings around receiving our -- or collection of our receivables, and we are looking to pursue certain individuals over the misappropriation of funds and recovering some of those funds. So some of those actions are underway, and I know shareholders have been keen to understand what we would do. I did want to emphasize here that -- sorry. I'm just seeing questions popping up. I did want to emphasize here that whatever we do in the legal framework will always be governed by the best interests of shareholders in the company. And by that, we need to be careful that we don't spend and put a lot of costs on the company with little chance of reward or little chance of any benefit, so we're always balancing that question whenever we talk about the legal activities that we may or may not wish to pursue. Okay, thanks, [ Denny ]. The next slide talks to some of the project updates for the FY '21 half. And I'll run through these reasonably quickly, but shareholders should be pleased with the activity that happened in the first half even -- and we certainly are in management, even though some of this activity doesn't and hasn't resulted in top line revenue for the half, should result in revenue for the second half. So the securing -- we've, in Australia and New Zealand, secured a project in Auckland. As some would know, we treated the gold -- Lake Hugh Muntz on the Gold Coast in Australia and secured 2 projects in Western Australia. Trial work went on at Lake Wyangan in the Griffith area, which is an exciting opportunity but more work to go. And we are about to appoint a business development agent in New Zealand, as we see opportunities opening up in -- down there. In China, we have currently about 15 projects that are live, as we call it, for this year; and 5 of those were completed in the first half. So 10 -- 15 were worked on, but 5 were actually completed, with the other 10 to go into the second half. Lake Dianchi trial work was completed and we are to discuss the results of that now with the authorities. And again I always stress here with Dianchi that there's no project work associated with Dianchi. It's been trial work. Now we have that discussion with the authorities to see what may or may not eventuate from that trial work. In Europe, permits issued in the Nordic region, as I think we've talked about before. Contract negotiations were ongoing in the first half with -- in the Netherlands for -- with the city of Rotterdam for the Kralingse Plas lake, which was, as you saw this morning, I hope, just announced as a signed contract, so we're really excited and pleased about that. It's a $4 million, roughly, project, which is certainly the biggest in Europe and certainly probably one of the biggest we've done -- or will do. So we're very excited about that. And a lot of activity, as you can imagine, was going on in the first half to get that signed recently. And there are further projects ongoing and were completed in Belgium, the Netherlands and Germany, some to be completed at the end of the year. In South America, Brazil continues to do what Brazil does for us, which is a very secure and steady sales stream and project applications. So they all continued. And we announced previously that we've appointed a distributor in Uruguay, who has a small project to complete for the 2021 year. In North America, in the U.S. remediation work continued at Kitsap Lake and Morrison Lake. We've talked about those before. Work commenced at Lady Bird Lake in Texas and also in Prima Vista waterway, which is in Florida. So they're all exciting new opportunities that are ongoing. And there were some prospects uncovered in Minnesota, California and Indiana, which will be developed over the ensuing periods. In Canada, and I'll talk about this more specifically later, there we continue to address the regulatory issues that we're facing in Canada. Thanks, [ Denny. So a little bit ] of a delay. I now just wanted to update a little on the growth strategy and some of the work we've been doing around that. The shareholders know our strategy is around expanding our market across multiple geographies and multiple products. So in support of that, there's a fair bit of work been going on. We've talked about research and development in the past, and I'll come back to that, and of course, the manufacturing and supply chain projects, but a newer bit of work that we've been doing in the last few months is around people, performance and culture. And we'll move on to that slide now. So that piece of work is reasonably new to you guys. We haven't talked about it before, but clearly, if we're going to meet our customers' demands and satisfy their expectations, we have to have an aligned direction for our people to follow and a focus that they understand and a structure that they can work within. So our customers being at the center of what we're trying to achieve and to deliver on our strategy, we need to have an organization that's focused around these particular areas. And the 3 things that we've identified that customers must have to have that experience of excellence from us is the relationship, firstly. Then they must have the science, and then they must have the application of the product and the monitoring of the product to complement the whole service package. So they're the 3 areas that we're focusing on here particularly. And we're excited to be able to sort of target in on that, get our staff focused on it, structure our business to actually deliver that. And if you think about those diagrams and not to get lost in the marketing of it -- but it's the intersection of those 3 circles, if you like, that is the sweet spot for the customer, so that's what we're trying to achieve and the work been going on there has been really good. So I just wanted to touch on that for you. Thanks, [ Denny ]. Next slide. We've talked about the R&D program before, but I wanted to give you an update. There's been a lot of work that's gone on in the past few months. We've called it the R&D rapid review. We reviewed over -- more than 30 R&D projects. And we've distilled those down into 5 key priority areas, which you can see below. So 2 projects around the core of our business. And that's 1 around enhancing the Phoslock product and, secondly, around the market expansion, so there's 2 particular projects there. And for obvious reasons, we wouldn't go into too much detail about what they are, but that gives you a broad outline. The -- there's a project in what we're calling the adjacent space. So what else can we do in water remediation that may be not directly related to the products that we have today? So that's a mechanical restoration remedy we're looking at, which is again quite exciting. And the other 2 projects where we're going to focus on, transformative projects, which are -- one is ZEEP, which you've heard a lot about. A higher focus on reenergizing that project is ongoing as we speak. And there's another compound that we're looking at which is equally exciting as -- a contaminant barrier in flowing water is the other project that we're looking at, rounds out to 5. Also in this space we're hiring for a new group executive of product solutions. Now what that means, this role is about bringing products to commercialization, hence the name product solutions, not R&D, but clearly the remit of the role will be to focus on R&D. And we've also initiated just recently some new research -- a new research collaboration with a leading university here in Melbourne, which we're very excited about as well. So a lot happened in that space in the past few months, and the fruits of all of that will obviously be in the future. However, we have a very clear plan now about how we're going to not only deliver that but the targets that we're going after. Thank you. And the third sort of piece of work in this review and implementation for strategy delivery is around the manufacturing piece. Again you've seen something similar to this in the past. This was really just to update you. So obviously, as we -- as the work goes on, we're narrowing down our options to -- and focusing -- sorry. [ We showed the same ] -- focusing our options to a few key target areas, which we're doing. The drivers behind what we must have here is lowest total cost supplied to customer and risk and quality. And they're the 3 drivers that we must achieve in any manufacturing strategy. So we're doing -- we're getting towards the end of that review, and that will bring recommendations and suggestions to the Board for consideration at the end of quarter 3 in 2021. As you know, we continue to manufacture in China as well. Thank you. So moving now to a little more of the future and what's happening right now as we speak. So starting in Canada. I said I'd give you more of an update on the regulatory process. So it's a complex process in Canada. It is taking us some time and effort to work our way through it. We are committed to that process. And we are working with the authorities as hard as we can and as fast as we can to get our regulatory licenses for applications in Canada. In the meantime, we're exploring the opportunity to do work under R&D permits. We have a number of projects that are keen to -- or a number of lakes that are keen to treat with Phoslock, but we have to have a permanent system or some other system to do it when we don't currently have that registration, so we're exploring those opportunities. I don't know whether that will work at this point, but that's part of what we're doing on -- in Canada. And of course, we'll continue to discuss other opportunities in other provinces, but I'll obviously keep everyone updated when anything significant happens. But that's the current status of Canada. In the U.S. I mentioned all of these before. I think so. So that's all ongoing work and it's all exciting. And the U.S. market is -- still remains a huge target of -- market for us. And we're discussing the best way to go to market with our distributor, SePRO. And we've got a number of alternatives that we're discussing and considering, and that's a piece of ongoing work as well. In Europe: I mentioned the city of Rotterdam contract. It's hugely significant. We're very excited about it. So that will be part of -- what has to now be done in the next 6 months is get that -- or sorry, the next few months because we're nearly into September. We -- to get that completed in 2021. Several other projects in Netherlands, Belgium and Germany; the permits in the Nordics, I mentioned; and some ongoing projects in Germany and in the Netherlands. South America, I've touched on. I -- we appointed the distribution partner in Uruguay, which is [ Frescos Frutales ]. They have an application planned before the end of the year, not a large one but nevertheless a beginning, and so we're excited about that. I mentioned China and the 10 projects that are underway. These are all scheduled to be completed in 2021 and part of our current forecasting and planning. 5 were completed in the first half -- or up until the end of August. So we've got lots underway in China. The business is performing well in multiple projects, nothing extraordinarily large, but nevertheless, a number of projects and provinces came to use the technology, which is exciting. And in Australia, I've mentioned as well the projects. Of those, only Hugh Muntz has actually been done as we speak. The rest are contracted to be done in -- before the end of the year. Thanks. That sort of leads us into this slide before -- where you've seen this before at the AGM, where we try and give investors and shareholders a bit more of a look of how the forecasts are actually coming together in terms of contracted or heads of agreement or a high probability. So you can see now, as of today, 60% of our forecasted tonnes for 2021 are now under contract. So that's very pleasing; and a significant shift from where they were at the AGM, if you remember. So we're very pleased with that. Clearly the Rotterdam contract getting signed recently has helped that, but nevertheless a number of contracted sales to happen before the end of the year or 60% of our forecast. We have 11% sitting in what we call heads of agreement, which is nearly at a contract stage but not quite. A large component of that is in the U.S., as you can see. And then in high probability, which doesn't necessarily mean that it's worse than heads of agreement -- it's just the status of negotiation in terms of securing them. We have about 29% of our forecast sitting in high probability, largely China and the U.S. as well. So that's the breakup of our forecasts for 2021, split into those categories that we've started to use at the AGM. And hopefully, they are informative for everyone. And we'll continue to try and break the business up for you this way. Thank you. Which leads us to the forecast and the outlook for 2021 and obviously our key priorities for the second half. And we will continue to work with -- work to try and secure additional sales and opportunities across the geographies. That goes without saying. And we've obviously got quite a lot of projects to execute, that will get done in the next few months, so that will be a key priority. And I'll talk a little bit about shipping and other issues in a minute, but that's proving to be quite challenging. Just getting product to where it's needed is more challenging than it's ever been and certainly more expensive. We will continue to address the issues pertaining to resumption of trading on the ASX. I just wanted to pause here for a minute and reinforce what some of those -- what those steps are and what we have to do as a business to try and get that relisting done as soon as we can. We certainly understand that it's a key point for shareholders and a frustration. It's a frustration for us too, but we are working as hard as we can. And I just wanted to reinforce the most and -- single most important part of that relisting process is to have an audited set of accounts that meets the standards of the ASX for relisting and for trading, and that has been and will continue to be our single biggest focus. It's ongoing. It does take some time, as you guys know. And once we have those audited accounts and we submit to the ASX, along with a number of other criteria that we must meet, which is things around our balance sheet, the future of the business, what we've done to address corporate governance so that things can't happen, well, like this again, obviously, Board renewal -- all of that sort of process, all has to be part of our submission to the ASX once those accounts are audited and we apply, if you like, to be relisted. We cannot put a time frame or a time line on this. I know it's frustrating that we can't, but it's just something we have to work as hard, as fast as we can; and we are. We will keep you updated with anything of material nature that affects that timing, but we are working hard and as fast as we can. I know it's a constant question. I get it a lot. Matt gets it, and Greg. We all get the question. We all understand the frustration, so I hope you can see the steps that we have to go through, at least to understand that and maybe understand why we can't put definitive time frames around that other than to say "as soon as we can." So I hope that addresses that a little bit. Further work for the half around the implementing the recommendations around R&D; the manufacturing and supply chain; and of course, the people and culture piece. We're continuing to address the regulatory issues in Canada. That's a high priority for obvious reasons, and we would -- I've just explained some of that. And I also mentioned the building the strength and capability of the team in China and a little bit about how we're looking to restructure some of that, particularly the leadership piece, to better suit the operating model we have in China in the future. So that's what we're focusing on there, the projects. What that's all panning out to look like for the year-end is a little hard to know. There has been some headwinds, as we've talked about, and that gives us a little bit of uncertainty around our forecasting for year-end. There's no doubt some uncertainties have emerged and some have continued, and obviously I talk about COVID continuing. It remains a big challenge even here for projects in New Zealand, for example, where we can't get to where we want to get to; at least just a small example of what some of the challenges and headwinds that have come up in recent times that are making us feel a little uncertain about how many of those projects will get done. We are -- if we do get all of the projects done as forecasted, then we remain committed to what we've said earlier about our financial outcomes, but there are some uncertainties and shareholders should be aware of those. The other uncertainty, of course, and I'm sure you are aware, is the cost implications around freight. And it's extraordinary. In -- freights from China to the U.S. for some of our shipments have tripled, if not quadrupled, in recent times. And of course, just getting shipping space is quite challenging. So they're just a few of the headwinds that are just putting a little bit of uncertainty in our minds about how our forecasts are looking. As I said, if we do all the forecasted sales that we're planning, then that will be the year we've talked about before, but with some of these headwinds, we're just being a little cautious as we speak to you. All right, thanks, [ Denny ]. I think we are towards the -- right. I think this is the last slide. So finishing on in -- with the funding position. Matt mentioned a couple of these already. So cash at the end of June, $26 million, thereabouts. We are -- we do have lower working capital. We are increasing our margins due to some of the inventory write-downs that we've talked about in the past. We are debt free. We'll remain debt free. We have incurred, as you know, some abnormal costs in China, particularly in China, with the investigations and the audits resulting from those investigations. Those costs will decrease -- or the abnormal component of those costs will decrease, but we should be aware that there still are ongoing costs and there still are matters to be addressed and pursued, so we are still incurring some costs that you would consider abnormal to the normal run of business. And Matt also mentioned a lower fixed-cost base following the review of overheads. So I think, Greg, that brings us to the end of the slides. We've obviously got a little bit of time now to handle some questions and if that's [indiscernible].

Thanks, Lachie. Yes, well, we've obviously got -- we've got over 200 people on this call, so it's not really practical to do a live Q&A. And we had a heap of questions submitted prior to the webinar, as part of the registration process, so we'll go through the -- I've collated them into the key topics. We did get some questions about specific projects and how -- the status of specific projects around the globe. We don't intend to go into that on this call because otherwise we could be here all afternoon, but rest assured either myself or Lachie will get back to people who've asked those types of questions with that sort of granularity.

But first of all, and I think you've already touched on this, Lachie, by far, but no prizes for getting what the #1 questions were about, was about the process involved of relisting the shares and the time frames that we're looking at. Now I think you've made some commentary. Is there anything else you would like to add? Because I just want to acknowledge that was, by far, the #1 issue.

No. Thanks, Greg. I'm pretty aware that, that is the #1 issue in shareholders' minds. And it's certainly the question I probably get asked the most, and I understand it and I understand the frustration. So I hope the explanation just before and also what we've said at the AGM, which is all consistent around what we have to do, goes at least some way to -- for people to understand what we're working through. And we're working through that with our auditors. It's a collaborative process with the new auditors, but you can imagine they want to understand the accounts well. And we obviously want them to understand the accounts very well, so it is taking time. We understand that, but we will continue to work as hard and fast as we can. And the steps that we've talked about have to be followed. And I'm confident that we will follow those processes and we'll be as fast as we can. So I don't know, Matt, if there's anything else that you wanted to add that I haven't covered.

No. I just probably wouldn't mind just reiterating what you said as well as give the shareholders comfort that the audit and the audit team is working collaboratively with us. As you can understand, they're asking a lot of questions and we're answering a lot of questions. We did give them some extra time. COVID, as we mentioned in the announcement, has affected a lot of companies. And we're not -- and obviously they've only picked it up in May. So I think they've done a really nice job, so far. And they're progressing really well, but as Lachie said, it does rely on a good set of accounts and support to the auditor to provide an opinion. And if that takes us an extra 20 days or whatever that will take us to get to the best outcome we can get to, we're going to do that. And I've spoken [indiscernible] auditors twice today, the [ audit partner ] twice today. I'll speak to them again. And it's progressing well. Thanks, Lachie.

Right. All right, thanks, Matt.

Okay, moving on to some operational issues. Where is Phoslock focusing marketing resources going forward both in terms of products and geographic regions?

Yes, great. So marketing resources. And by marketing, I'll make the assumption that they mean sales and marketing rather than just the marketing, but it's a similar answer, anyway. So our resources are being spread across the key geographies that we've talked about. So we've talked about North America, South America, China, ANZ and Europe as the key geographies that we're focused on. And that's where our resources will be allocated, and marketing resources. And that is both from a people and a personnel allocation of resources. So as I mentioned at the start, we have a new guy starting in the U.K. as commercial lead for Europe, actually starts tomorrow, funnily enough. So that is an indication of where or how that resource gets spread, yes, and where it will be focused. And there's also in Europe another applications guy that we've recently hired to help with the applications and the projects there. So it will be -- resource will be focused on the areas that we've identified, and similarly with products. So when we talked about the strategy, we talked about geographic expansion. And that's part of that resource base that I just mentioned, but also we talked about product expansion. And I touched on that as well, where we've spent some money and time on the R&D focus, the rapid review, with the sole intent of that of delivering a -- commercial products that can be added to our portfolio to improve our overall position and value with customers who need total remediation sources in their waterways. So that's where some of that is focused, including the recruiting as we're doing now of the product solutions manager who -- which will be a critical role to deliver these -- those outcomes.

Okay. And how secure is Phoslock's intellectual property position around the globe?

Okay, yes, another good question and a question that's a little harder to answer than it is to ask. It's it varies, depending on what geography you're at or talking about. So in some geographies, we have patents granted; here, for example, in New Zealand. In other geographies, we have patents pending, which while not perhaps as strong as a patent granted, is actually still quite strong in terms of intellectual property protection. So in most jurisdictions that we operate, we have either of those 2 status for Phoslock. We also have some IP around the manufacturing process, which is very important. And we've recently, part of the manufacturing review actually, updated all of that IP. So in terms of the manufacturing process, that IP has been strengthened quite recently. That's the technical answer. The practical answer is we continue to work in all of this to try and ensure it's as strong as it can be. We understand the importance of having that protection. Our shareholders will understand that some geographies in the world are harder to get that protection and make that protection stick, if that's the right way to describe it, than other geographies, but that's the general position. Thanks, Greg.

Okay, next question. Does Phoslock need to raise additional capital to fund itself going forward?

Short answer is no. We have a strong capital position, as Matt outlined before, with cash in the bank. And our balance sheet is reasonably strong. If we do the projects in the end of -- not only this year but in the forecasted years ahead, then the business returns to profitability very quickly and we start generating the cash we need as well as the cash reserves that we have, but the short answer is no. It's not part of our current plan.

Okay, changing tack now, questions about China. What progress has been made in recovering any misappropriated funds in China?

Okay, Matt might like to comment on this as well. I'll just give an overarching statement at the start, which is that we touched on this earlier in the presentation. We have begun proceedings to recover the debt of BHZQ, which shareholders will know was involved with the business in the past. And we have also begun -- and we are in -- sorry. We are in constant dialogue with the Xingyun Lake authorities, which is our other large receivable, to receive that. And then in terms of the misappropriation of funds is I also touched on the fact that we've begun some proceedings around that. And it's not appropriate to go into too much detail around that in a public forum, other than to say we have reviewed the cost-benefit analysis of doing those things and that's what we think is the right process and procedures at the moment. So that's what we've started at the moment. Matt, maybe you've got some more on that.