small listeds and the governance problem

The two non-executive directors that recently resigned, Evans and Fraser, have both previously profited from advisory fees earned raising capital for the company at much higher prices than current market prices.

They resigned prior to the release of a set of half year accounts that are formally qualified by the company's auditor in respect of its ability to pay its debts ie. prior to there being a formal public declaration there is a high risk the company will go bust.

The company wrote off a heap of goodwill at 31 December 2011, $4m of which related to the DCS business; the DCS business was acquired from the current managing director, and one of the previous executive directors who has also now resigned, on their return to the company to save ït from the financial and operating problems it had at the time, back in 2007.

The company's existence is now dependent on selling its two key tangible assets, its land holdings in Shepparton and in Port Melbourne. There is a good risk the land in Port Melbourne may face environmental concern issues at the time of it being marketed for sale, given the nature of manufacturing (and smelly odour issues) at that location.

The company spent a fortune diversifying into consumer products that were sold off by major multinationals. These now face the risk of delisting from supermarket chains and consequential permanent impairment of value, as experienced during the half year ended 31 December 2011.