Troubled infant milk maker Bellamy’s Australia has paid a penalty of $66,000 for allegations it failed to warn the Australian stock exchange when it knew it would drastically downgrade revenue.
By: Sarina Locke
Source: ABC Rural
The Tasmanian-based company told the ASX on December 2, 2016 its forecast revenue for the first half of the 2017 financial year was likely to be $120 million and similar for the second half, when brokers were expecting $368 million earnings for the year.
The downgrade came after worse-than-expected sales during the special day of online trading in China on November 11.
When Bellamy’s reported the news to the ASX in December more than $500 million was wiped from Bellamy’s shares during the day.
The Australian Securities and Investment Commission (ASIC) alleged that brokers told the Bellamy’s board their forecast for full-year earnings was $368 million in October 2016, and the board took two months to inform the ASX that it could not meet those expectations.
ASIC said that meant Bellamy’s was “in breach of its continuous disclosure obligations between 18 October 2016 and 2 December 2016”.
“Investor confidence in our markets depends on the timely disclosure of market-sensitive information,” ASIC commissioner Cathie Armour said.
“Listed companies must promptly disclose changes to performance forecasts previously made to the market.”
Bellamy’s pays fine, does not admit liability
Bellamy’s has agreed to pay the fine without admitting liability, to get the matter out of the way and avoid further costs.
In a statement to the ASX today, Bellamy’s said it had not known the impact of the Bellamy’s Singles Day event in China.
It said it complied with continuous disclosure obligations leading up to the trading update on December 2.
It has been a difficult period for Bellamy’s, with China first suspending then renewing the next month the export licence of Bellamy’s new subsidiary infant milk canning facility.
Shares in the company rose 12 per cent today to close at $9.78, with the market evidently deciding this ASIC fine was a slap on the wrist.
There remains legal action against the company by shareholders arguing they were misled.