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

Good morning, everybody. Welcome. It's Thursday, the 18th of January and the time here in Melbourne is 10:30 a.m. This is the Extraordinary General Meeting of Phoslock Environmental Technologies Limited, which I'll sometimes refer to as PET. My name is David Krasnostein and I'm the Chairman of the company. I've been informed by the company's Secretary that a quorum is present, so I declare the meeting open. I want to welcome you all, shareholders, proxies and guests to this hybrid meeting. I'll explain in detail how the meeting is to be conducted, how to vote, how to ask questions, how to reestablish communication should you drop out. It's not the most exciting part of the meeting, but I do have to go through the mechanics. Today's hybrid meeting is both online via the Computershare meeting platform, and also allows in-person attendance here at the meeting venue. For those of you attending the meeting online, you're all watching a live webcast and shareholders and proxies will be able to ask questions and to submit votes. I'll start the meeting firstly, by introducing my fellow directors, potential alternative directors and the Company Secretary. Then I'll run through some housekeeping matters, including procedures for voting and for questions and then run through the order of proceedings. Hopefully, you'll still be awake by the time I finish that. I'll now introduce my fellow directors and the Company Secretary. To my left are Lachie McKinnon, our Managing Director and CEO. Next to him is Brenda Shanahan, Non-Executive Director; and Bob Prosser, Non-Executive Director and Chair of our Audit and Risk Committee. And at the end is our CFO and Company Secretary, Matt Parker. We're also joined today by Frederick Bart. Fred, I'm not sure if Shawn and Graeme are attending in person or not?

No, they are not.

Okay. Shawn Pieter van Boheemen and Graeme Newing, are also standing for election are not in the room, but Fred is, and he represents a potential alternative directors. These individuals will respond to shareholder questions should the need arise. Let's go through the items of business. There are 10 items on the agenda today, which require a shareholder vote. The 10 business items are; 1 and 2, approval of the disposal of the main undertaking, and two, approval of delisting. There is then items 3, 4 and 5, which are the election of Fred Bart as Director, election of Shawn Pieter van Boheemen as Director; and election of Graeme Newing as Director. And then there are 4 resolutions; removal of Lachlan John Foster McKinnon as Director, removal of David Milton Krasnostein as Director, removal of Robert Edward Prosser as Director, removal of Brenda Mary Shanahan as Director, and removal of any director appointed after the date of the requisition notice, which they haven't been any. Shareholders in attendance at the meeting today can vote on each item, either online or hand in their completed blue, yellow and light pink voting cards to Computershare staff when asked to do so. There will be a pause of proceedings for approximately 15-minutes after putting items 1 and 2 being the approval of disposal of the main undertaking and delisting resolutions, put to the meeting for a vote, whereby Computershare will conduct a poll and tally the votes, then provide a poll report to the meeting. If items 1 and 2 pass, the balance of the resolutions will not be considered at this meeting. If items 1 and 2 fail, then shareholders will be asked to vote on Resolutions 3 to 5 inclusive, being the appointment resolutions proposed by the requisitioning shareholders. There will also be a pause of proceedings for approximately 15 minutes after putting resolutions 3, 4 and 5 to the meeting for a vote, whereby Computershare will conduct a poll, tally the votes and then provide a poll report to the meeting. If items 3, 4 and 5 pass, which is the election of those 3 directors, I confirm that all existing directors on the company's Board intend to voluntarily resign from the Board with effect from the close of this meeting. And accordingly, resolution 6 to 10 will not be put to the meeting. If items 1 and 2 do not pass, but if any items 3, 4 or 5 do not pass then Resolution 6 to 10 inclusive will be considered by the meeting. I note that resolutions 3 to 10 are being put to the meeting pursuant to a requisition notice. They are not put to the meeting by the company's Board. The Board recommends you vote against the requisition resolutions, and each director will be voting shares that they hold or control against these resolutions for the reasons outlined in Section 4.3 of the Explanatory Memorandum and any detailed in my upcoming address. Now how to vote. I'll now explain the procedure for voting at the meeting. Because of the hybrid format, voting by necessity differs somewhat from in-person meetings. Voting will be conducted by way of a poll on each of the items of business requiring a vote. If you're in the room today, you would have received blue, yellow and light pink polling cards when you registered along with the instructions on how to vote. The blue cards will be collected after items 1 and 2 are voted on. The yellow cards will be collected after items 3, 4 and 5 are voted on. And if required, the light pink voting cards towards the end of the meeting. For those of you who are attending virtually and have not yet voted, you will need to register into the meeting using your SRN or HIN and post code in order to vote electronically. Of course, if you have already voted by lodging a proxy form, you do not need to vote again unless you change your mind during the meeting. If you are attending virtually and you're eligible to vote, a polling icon should appear on your screen. Selecting this icon will bring up the list of resolutions and present you with voting options. To cast your vote, simply select 1 of the options. There's no need to hit a submit or enter button as the vote is automatically recorded. You do, however, have the ability to change your vote if you wish. Voting is now open and the polling icon will appear on your screen. You can vote on items 1 and 2, and then separately, items 3, 4 and 5, until I give you 5 minutes notice, after those items have been put to the meeting. And for the balance of the items, if they are to be considered by the meeting, you can vote at any time until I give you 5 minutes notice towards the end of the meeting that voting is about to close. Polling cards will also be collected from those who are attending this meeting in person. Voting results for each resolution will be lodged with the ASX after the meeting has concluded and will also be posted on our website. Please note that all undirected proxies held by me as Chairman will be voted in favor of Resolutions 1 and 2 and against Resolutions 3 to 10. There's a slide now, which will show the proxies on the 3 resolutions as of the cutoff time Monday, the 15, 2024. How to ask a question? As I mentioned previously, today's hybrid meeting is being held online by the Computershare meeting platform and in person. This allows shareholders, proxies and guests to attend the meeting in person or virtually. All attendees can watch a live webcast of the meeting. In addition, shareholders and proxies have the ability to ask questions and submit votes. Online attendees can submit questions at any time. To ask a question, select the Q&A icon, type your question into the text box. And once you finish typing, please remember to hit the send button. Please note that while you can submit questions from now, I will not address them until the relevant time in the meeting. Please also note that your questions maybe moderated or if we receive multiple questions on the same topic, they may be amalgamated. To ask a verbal question, please follow the instructions written below the broadcast window. For those of you here in the room, we have 2 roving microphones for you to ask questions. I'll advise when we're taking questions from the floor at various times during the meeting. So sorry for that. It wasn't particularly thrilling. Now to my Chairman's address. Shareholders have been asked to attend today's meeting to consider the future of the company. The resolutions put before shareholders offered 2 choices. Resolutions 1 and 2 provide for selling the company's assets, paying all creditors in full, distributing the balance of the cash to shareholders and winding up the various corporate entities. This option carries a unanimous recommendation of your Board of Directors. Alternatively, Resolutions 3, 4 and 5 have been proposed by some shareholders to continue trading and to do this under a new Board of Directors with new management and a new strategy. Let me review for a moment how the company arrived at this situation. The directors like many shareholders, continue to believe in the potential of Phoslocks' offering. However, despite best efforts, the company has unfortunately not been able to convert this potential into profitable operating performance. Shareholders know that Phoslock is an Australian product invented by the CSIRO, that has been successfully applied in over 320 product -- projects around the world to trap phosphates and improve water quality of nutrient polluted lakes and other water bodies. Sustainable freshwater is one of the planet's biggest challenges and PET has a proven and effective solution to deal with one of its major pollutants. Nutrient enriched water bodies are often the cause of significant algal growth. Algae polluted water bodies also produce methane gas, which is a major contributor to climate change. Phoslock by removing the food source phosphorus for those algae can play a significant role in managing the issue. PET has demonstrated, as you know, that it was internationally competitive on several major projects. Its successes have included cleaning up the Serpentine Lake in Hyde Park, in London, for the Olympics and restoring to health, the largest freshwater lake in Rotterdam in the Netherlands. In 2017, under the previous Board and management team, the company ventured into China. It appointed a Chinese Deputy Chairman, a Chinese non-executive Director and local staff. This has generated significant optimism. Reports from China about rising sales and future opportunities were released to the market. The share price rose to an all-time high of $1.45 in the winter of 2019. At the same time, KPMG, the company's auditors at the time presented through its Australian and Chinese offices, unqualified audit opinions to the year ended December 2019. The China venture ended disastrously. In their new roles as CEO and CFO, and Lachlan McKinnon and Matthew Parker, who joined the company in the first half of 2020, quickly discovered what appeared to be instances of widespread fraud in China, falsified accounting, bribery and corruption, bogus sales, breaches of Chinese and Australian laws, irregular tax compliance and extensive conflicts of interest and self-dealing. Further, after a deep dive into the company's so-called China sales, it was discovered that a significant majority of sales were not the Phoslock product at all. In some instances, non-Phoslock products such as bacterias, zeolites, water blankets and aeration machines were sourced by companies separately controlled, by the appointed Chinese directors who then sold them to PET at a significant market. PET then on-sold those or applied those products to companies such as BHZQ which the same Chinese directors sat on the board of, or had effective control of. The discovery of these legacy issues led to the company's shares being suspended from trading on the ASX, resignation of its auditors, KPMG, they had been the company's auditors in both China and Australia for 3-years. The termination of staff. A restatement of the company's accounts and the self-reporting to the Australian Federal Police, which has resulted in a long and extensive investigation by both the AFP and by ASIC, both of which investigations remain ongoing. After its ill-fated China venture and resulting issues were exposed, the 3 new directors agreed to join the Board because we believe that this Australian company deserved to succeed, and we're committed to addressing the issues and placing appropriate process and governance standards in place. The new board, along with a new CEO and CFO, understood fully the enormous task ahead, but we set about tackling the long list of challenges with determination and persistence. The legacy issues I've spoken about burdened the company and left management with an ongoing drain on its financial resources. Nearly $10 million has been spent to date, dealing with these matters, some of which are still ongoing. Dealing with these legacy issues also presented a challenge for a small management team, who at the same time were developing and implementing a new global sales strategy in a difficult post-COVID environment. Both Lachie, our CEO; and Matt, our CFO, joined the company unaware that serious issues existed. When these issues surfaced, they both stayed the course, and worked with the refreshed Board to address these issues in what turned out to be a stressful and demanding few years. The Board is deeply grateful for their dedication, their enthusiasm and their persistence on behalf of shareholders in the face of daunting challenges. They both acted with the highest degree of professionalism and responsibility. The team oversaw the replacement of KPMG as the company's auditors and replace KPMG with Shine Wing. This resulted in a major project to restore the integrity of the company's accounts led by the CFO, Matt Parker. It took approximately 23-months to complete with significant cost in legal and forensic accounting, further exacerbating the drain on the company's financial resources. We are grateful to Shine Wing for their professional help and thoroughness without which restoration of the company's accounts to the satisfaction of the ASX would simply not have been possible. With the integrity of its accounts restored, Phoslock was then positioned to work with the ASX to allow its shares to trade again. This occurred in September of 2022. Given the serious matters of concern that it is identified under prior management in China and the disclosures the previous Board determined it was obliged to make under Australian law, the company determined to self-report to the Australian Federal Police and enter into an investigation cooperation agreement. This resulted in an extensive and ongoing investigation of past dealings that required the company to expand significant management time and legal fees. With regard to those legacy issues, the company has no control over the length of the investigations and what, if any, course of action, the Australian Federal Police or ASIC may ultimately decide to pursue, subject to any agreed positions to discounts under investigation cooperation agreement, any fines imposed could be significant and remain unknown and unquantifiable contingent liabilities. The potential fines are aimed at each offence are themselves significant and there is a potential for regulators to commence proceedings for multiple offences and even to seek orders under applicable proceeds of crime legislation. In addition, the likely costs relating to responding to any such proceedings would also be significant. The serious legacy issue poses a significant obstacle to raising more capital to support the business. There are also potential liabilities in China for breaches of local laws, which may or may not be progressed at some stage in the future. Our international sales. The international sales strategy was redesigned by the CEO and are refocused on high-value opportunities and diversified for a broader range of applications in mining, septic tank treatments and privately owned water bodies. Recognizing that the company only offered a single product for standing water with Phoslock, he addressed the urgent strategic need for a complementary product to deal with flowing water. He secured Phosflow successfully in the U.S. to add to the company's product offering and marketed this along with its standing water product. There was much interest in Phosflow and trials are underway with customers around the world. But despite positive feedback, this has not yet resulted in any significant sales revenues. Shareholders are, of course, aware that remediating public water bodies has always involved a long sales cycle for the company. Despite hundreds of successful applications, and many supportive scientific studies and papers around the world. It is a time-consuming process to make customers comfortable that the product is an appropriate option for addressing remediation issues in water bodies they manage and the timelines involved in trialing the product, then negotiating application contracts and then relying on our customers often local government authorities to approve funding for and commence the projects. Unfortunately, COVID caused an extended delay in sales efforts as many municipalities and governmental bodies were forced to reprioritize their stretched budgets to deal with the challenges of COVID and its aftermath. COVID also prevented the CEO from traveling overseas to pursue customers and develop projects and local staff were also severely restricted in their travel as well. As part of the legacy issues in China, management inherited $10 million of bad and doubtful debts in China. After lengthy negotiations failed to yield any results. The company took the bold step of initiating legal proceedings in Chinese courts against local Chinese governments by an Australian company and all of those lawsuits were successful. Management then set about trying to collect on those judgments. And through their persistence over a 3-year period, have successfully collected about 80% of the debts owing. Management have worked hard to develop a pipeline of potentially significant projects around the world. The nature of these products presents a difficult challenge in predicting which of those will materialize and when this will occur. To succeed the company needs a sustainable flow of projects sufficient to produce a profitable trajectory of revenues, capable of funding its working capital needs and increased manufacturing capacity that would be required when the production capacity of the China factory has eventually exceeded. Management also took steps to reduce costs. Significant annual cost savings were approved by the Board and implemented in 2023. Most of the Chinese sales team were terminated and our renewed focus was directed at Europe and North America. In addition, more flexible pricing was developed with potential customers to test to what extent pricing might be impeding sales. The Board has fully supported those sales efforts, projections and cost-saving measures, but has eventually come to the difficult conclusion that it was just simply unable to form a reasonable level of confidence in the company achieving a sustainable level of annual sales in the short to medium term, that would be likely to produce profitable growth and financial viability without further capital injections. The various alternatives for funding working capital and capital works in the future will require evidence of a substantial number of recurring and committed sales. Despite all best efforts to achieve this with a new sales team, including flexible pricing offers to customers, the company has not managed to secure this. Shareholders will recall that in the 9 years prior to the China venture, which occurred in about 2017. So BC, Before China, the company's annual revenues averaged around $1.3 million. So I'll repeat that, $1.3 million over that 9-years was the average. Under new management, the company achieved $6.3 million in revenues in 2021, $3 million in revenues in 2022, and still subject to audit verification, $3.1 million in revenues in 2023. However, these much improved sale numbers are still insufficient to achieve a sustainable recurring sales that will be required to achieve profitability for shareholders. As noted previously, the revenues reported during the China years were primarily related to sales of items other than Phoslock and where products and services sourced by and sold to related parties. In addition, the Phoslock sales that were recorded, the vast majority included suspected bribes to win contracts, including Xingyun Lake being a good example. Without a level of reasonable confidence that the company can achieve a sustainable level of significant annual sales, the Board does not believe that it can offer shareholders a reasonable value proposition to invest more capital by way of a capital raise. That option has been tested in direct communications with some of our largest shareholders who were not supportive of another call on capital. Many of the potential projects being pursued in the pipeline by our sales team are admittedly exciting and some are substantial in size. However, there is insufficient evidence that enough of these can be converted into actual sales on an annual basis and that they will commence in the short term, leaving no reasonable basis on which future revenues can be predicted with any level of confidence. The company's financial resources significantly depleted by dealing with its legacy issues will not be sufficient to fund the overheads of the business during the time it will take to see if enough of these opportunities ever come to fruition. It's important to note that the company's sales forecast and cost projections based on a range of assumptions were independently reviewed by our auditors prior to our announcement in September last year, that the 2023 first-half accounts had been prepared on an ongoing concern basis. In the autumn of 2023, the Board engaged Resolute Advisory to explore all available options for raising capital or otherwise strengthening the company's balance sheet. It became clear that the company's serious unquantifiable legacy issues presented a serious obstacle to any fundraising options. The Board had to make a hard decision as to whether shareholders' funds were better spent trading on, in the hope the prospective opportunities would materialize in time and volume, sufficient to achieve a viable company or where the interest of shareholders were better served by having those refunds returned to shareholders. I can assure you this decision was not taken lightly. Your Board came to this decision after much careful analysis and discussion, after considering independent external advice, and after testing the market. After exploring various options for a sale of assets, mergers or joint ventures, the best realistic option was to agree a sale to SePRO Corporation in the U.S.A. on terms agreed in a sales agreement. That sales agreement was made subject to shareholder approval, which is before you today in Resolutions 1 and 2, and carry the unanimous recommendation of your Board. If shareholders approve that sale, the company expects that upon completion consolidated cash reserves will be between $16.6 million and $16.8 million. The company expects that its wind down costs including the payment in full of all current liabilities and creditors will be between $4.3 million and $5.8 million, leaving a net cash amount between $10.8 million and $12.5 million or approximately $0.017 to $0.02 a share. I note that all estimates are approximate figures based on best information currently available and are dependent on a range of factors including whether any contingent liabilities crystallize from legacy issues. Now as a meeting -- notice of meeting for today's meeting sets out, shareholders have also been presented with an alternative option being proposed by certain requisitioning shareholders. That option proposes the company trades on under a new Board of Directors and management and pursues a different strategy. To date, details of that alternative business plan have not been provided to the current Board or to shareholders. This option is not supported by your Board. Those shareholders have stated their case to shareholders in the notice of meeting and it will be for you to decide which course you wish to pursue. This is your company. And as shareholders, it is ultimately you who will decide and what you believe is in the best interest of yourself as shareholders. Your votes cast today will determine the future of the company. Now to the items of business. Just to repeat, there will be time for questions specific to each agenda item before voting and then general questions at the end of the resolutions. So item #1, approval of disposal of main undertaking. This is to consider and if thought fit to pass, the following resolution as an ordinary resolution of the company. That for the purpose of ASX Listing Rule 11.2 and for all other purposes, approval is given for the disposal of all Phoslock group's remaining Phoslock inventory, and certain intangible assets, including registered and unregistered intellectual property to the SePRO Corporation in accordance with the business sale agreement as further described in the Explanatory Memorandum. If there are any questions or comments on this agenda item, I invite you to please put them forward now. I ask the company secretary if there are any questions online?

This question comes from [ Patrick Frayne ]. Previously, the management indicated that final capital return -- is likely to be between -- this one -- good to go. I'll start again. Previously, the management indicated that the final capital return is likely to be between [ $0.012 ] -- so, $0.017 and $0.02 per share. At this point in time, is the management able to provide more clarity as to the expected size of the final capital return? I'm assuming you want me to answer that? Nothing's changed, so, obviously from the assumptions we've put in...

Matt, could you please speak a bit louder, please?

From the assumptions we've put in into the notice of meeting, I believe nothing has changed or been inconsistent that I report now that would change my opinion at the moment.

Any other questions online?

Yes. A question from [ Debra McEwen ]. Do the wind-down costs include payments to staff and the existing Board?

Well, there's no payments to the existing Board. But there are [ statutory ] in terms of staff, and that satisfies all obligations and statutory obligations to staff.

And one more question is just coming, David. Give me one second. Question from [ Patrick Frayne ] again. Would the company be viable as a going concern if the senior management were paid less? I guess that's a question -- that might be a question for Fred?

I think the simple answer to that is no. The fundamental economics of the business model are impacted by a number of significant factors, labour costs are one of them and the marginal cost savings -- even if that were possible, given that senior management have employment contracts that can't be breached, it would not be a material difference in the decision the Board made about the viability of the company. That's it from online?

That's it from online.

Do we have any questions from the floor?

[indiscernible] here. What are the terms of sale to SePRO? You mentioned that sale to SePRO are Phoslock assets...

It's defined in the notice of meeting, but the terms of sales, obviously, they're taking primarily the inventory and the patents.

Shareholders. I'm shareholder as well holding 2 million shares. You see now these people are [indiscernible] the company, completely killing the company, and delisting the company, this is their behavior and they tell lot about their goodness, the polite behavior like [indiscernible], but what is result? Item 1 and 2, yes, they're doing good, driving sustainable growth. This is their slogan. It is a fact, that it is a match with the proposal, your team doing? I think it's completely different way. Those Item 1, Item 2, does it match with the slogan of driving growth of the company...

Okay. Yes?

Is the manufacturing facility in China still operating?

It's able to be operating.

It hasn't produced for some time due to our inventory levels, but it is able to operate once it started again.

Is there any operation ongoing at the moment? Any manufacturing or application of the product anywhere in the world?

Very small applications is ongoing. The manufacturing plant at the moment is mostly concerned with repackaging of product and distributing product from there around to customers.

And what would happen to the manufacturing facility in China in the event of either a wind-up or a continuation under this new management? What are the options for the manufacturing facility?

Well, there's 2 different parts to that question. Under our proposal, the assets would be sold and wound up in China. Under the new -- potential new directors proposal, you'd have to ask them what they're proposing -- what's their direction.

Is there any one representing the potential new Directors at this meeting, maybe speak?

The potential new directors have got certain views, but until they assess all the information that is available to the company that can't give you any definitive views other than to say that there's $40-odd million worth of tax losses in the company. That's one, as the fact. Two, there's $14 million, $13 million, $12 million or $15 million, and the question is, one, can the product be sold in places and why wasn't it? And it's been a number of years. The company spent a lot of money. I'd like to understand why after having -- put the product in over 300, I think you said David, 300 lakes or places all around the world, we're unsuccessful in getting revenue. So maybe it's -- no disrespect, maybe it's the salespeople, maybe it's the attitude, I don't know. But until we get into [indiscernible], we don't know -- until we get to look at the legacy issues, we really can't make a informed decision on what we should do. Nobody's been to china since 2 and a half years, I think since the current board was in. I'm sure there are rational reasons why they haven't been but they haven't been. I think somebody needs to assess what the real prospects are in China and whether there is a business there. But all of those things, we're going to have to have a look at the facts, and then we'll make some decisions.

Thank you, Fred. That was Fred Bart, for anybody who was wondering who Fred was. I have a question in the back?

[indiscernible] I've just got some questions to the current Board. Bearing in mind, they're asking us to strike off the company and liquidate it's assets. From a perspective, well, there was a recent article in one of the national risk -- and my comment or question would be, who gave -- pressed the information. It was clearly proprietary conversations within the Board or Directors, senior management, AFP [indiscernible]. So question I would ask, it's a point of integrity. You were asking us to trust you, but clearly, there was a leak somewhere in the senior management, which are certainly detrimental to the company's -- company's outside view. So I ask that to the Board -- and I think the leak was there. So has anybody bothered to look or tried to decide where it came from? And a supplementary question I'll ask, Brenda Shanahan, who was on the Chair or the Board Committee over 5 years, all this time some of these alleged problems arose. So I suppose my -- there are 2 questions, however, I can [indiscernible] -- the questions really relate to the integrity of the current board and I suggest that any board, future board, may be a better option than what we have here.

I can answer the first question for you in terms of where the journal got the information from, because our simple answer is we don't know. There's clearly no advantage to the company to have leaked any of that information. Over the years, a number of people have been involved in looking at these matters, directly and indirectly, your speculations is as good as ours to where he got his information from, I'm highly confident it didn't -- certainly didn't come from the Board. And I'm highly confident, equally as confident, it didn't come from senior management. And I can't think of any incentive why anyone in the company would benefit from doing so. Hopefully, that answers your first question. Brenda, do you want to comment on the second?

Yes, I do. The -- when I -- I wasn't there for 5 years, -- but I -- when I was appointed, we had a very small accounting firm doing the accounting for the company. And KPMG were actually the accountants in China. And so we switched to KPMG in Australia so that we'd have continuity across the 2 countries. And we received a clean bill of health from KPMG in the years that I was the chair.

Do we have any other questions on the floor?

[indiscernible] that response would not KPMG have some liability or integrity of their report or...

We -- I can say, and I think we've addressed this in previous meetings. We've had a look at the responsibility issues for KPMG as the auditors. As you'd appreciate, there's a number of factors involved in whether you pursue those in law or not and whether it's in the interest of the company or not to do so. We concluded at the time, and I won't go through the legal advice we received, but that the cost of getting into major litigation with one of the top 4 accounting firms, would be a severe drain on the company's cash. And given that ASIC and the Australian Federal Police brought range of legacy issues, and whether those issues could be dealt with on our behalf by those regulatory agencies. Now both those investigations have taken a long period of time. It's in the nature of them generally. They're still ongoing, and we still don't have any insight as to where either or both of those are going to end up and what and who they're going to take an interest in. The company has fully cooperated with them. And it's just a wait and see.

[indiscernible]...

So the value of the assets in China is primarily it's...

Matt, could you speak up.

It is as presented in the accounts of the half. The biggest value is probably what's known as the MVR, which is the filtration system. To answer your question around whether we could get out of China, there probably wouldn't be anything -- the cost associated with that would probably be de minimis. So we'll probably look at trying to sell whatever you can in China. And it certainly wouldn't be anything of a significant amount of money. As presented on the accounts, it's actually been written down. But we sort of -- we do have a view we could probably get some value out of some of the equipment.

[indiscernible].

No.

Any more questions?

[indiscernible].

You're saying if the resolutions for the sale are approved?

How long before the whole thing is...

So I think it's probably 2 parts to answer that question. I guess to transact and to sell and to receive the money will happen quite quickly. To close the businesses and to return the funds to shareholders will take time. There will be repatriation of money throughout all the legal entities. There's many offices sitting in China that need to be repatriated. That will all take time. And as we said in the accounts, we obviously need to work through some of the contingent liabilities should they come in or not, but should that not happen, obviously, all those things take time, and then you will get a return in short to medium term. Yes?

Could you tell us what percentage of the repositioning shareholders represent? It's more than 5%, but what sort of percent are you talking?

What was presented was, I think, 5.6%.

And secondly, you mentioned the termination of staff, who was the staff that was terminated?

In China, are you talking about?