As you know I’ve been transfixed by the goings on at David Koch’s Palamedia, but the latest annual report is a real worry for several reasons.

Firstly,
the company has been on the skids for years but has been supported by
funds from the directors – then they decide to sell all the businesses
and yet it will still not reach profitability, according to the Board.

Secondly,
it would appear that the Tax Office has become a substantial creditor
and is charging interest at 12.6%. The worries are threefold:

1) Why do directors allow a business continue to trade that appears to be insolvent?

2)
Why is the Tax Office allowing them to clock up debt to the tune of
over $1 million (see Note 14)? What have the directors told the Tax
office that they haven’t told their long standing investors? A business
that can’t pay the PAYG and GST taxes is definitely in big trouble.
Isn’t this “compounding with your creditors”?

3) Where is the ASX in all this? Surely they can’t think all this is OK?

The Board is made up of multi-millionaires – why does the taxpayer need to be an investor?

Also
you’ll notice in the accounts Kochie is still getting his $400K a year
– no surprises there. But one A Stabback is also on $357,000, (up from
$222,000 in 2004), so when all else is failing they’re handing out
substantial pay rises?

In the Directors Report, the Review of
Financial Position states that “net assets have decreased by $2,114,772
to $2,764,803 in 2005.” Oops wrong – it’s fallen to MINUS $2,764,803 –
a deficiency in net assets! Or didn’t the Chairman, CEO, Company
Secretary and Accounting Professor, David Champtaloup notice this?

This
should be corrected immediately, but the ASX hasn’t had them correct
anything in the past two years so why start now. I’m angry as not
only have they blown my investment money, but now as a taxpayer, I’m
effectively putting in more money!

Stephen Mayne writes:

Auditor
Moore Stephens has slapped a qualification on the accounts declaring
there is “inherent uncertainty” as to whether Palamedia can continue as
a going concern. But Kochie is hanging in there, with four different
entries in the top 20 shareholders list.

However, the recent
winding up of the television supply contracts suggest Kochie is now
getting paid directly by Seven, rather than through Palamedia, which
looks like a basket case on its last legs. My 100 Palamedia shares are
today worth $2 in total – a loss of $198 on the original modest
investment.

Peter Fray

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