Freedom Foods losses in half-year 2021 accounts, white knight deal not yet concluded

Freedom Foods continues to bleed. See the extent of the losses in the half-year accounts.

Freedom Foods’ former managing director Rory Macleod left the company after irregularities were discovered in the business’ accounts.

TROUBLED dairy and plant-based foods producer Freedom Foods Group has continued to post hefty losses.

Releasing its half-yearly report for the six months to December 31, Freedom Foods has posted a $23.9 million after-tax loss for the period.

While the loss was less than the restated $63.5 million loss for the previous corresponding period — which was initially stated as a $9.1 million operating net profit after tax this time last year — the disclosure indicates the company has some way to go before emerging from its financial distress.

Revenue from the key dairy and nutritionals business rose 15 per cent to $209.9 million and plant-based beverages income increased by 17 per cent to $75.2 million.

Overall, revenue rose 10 per cent for $317.3 million.

Interim chief executive officer Michael Perich said the revenue results demonstrated the potential of businesses within the Freedom Foods Group, with the dairy and nutritionals and plant-based beverages divisions providing “solid growth and positive operating earnings in a challenging period”.

“Most importantly, the results show the financial and operational turnaround strategy under way across the company is beginning to gain traction,” Mr Perich said.

“By working hard to remove complexity across the business — as well as improving our culture, governance and accountability — we are able to focus our attention on the brands and products with the greatest potential.”

The company said sale of the cereal and snacks division to The Arnott’s Group was on target for completion this month and the specialty seafoods division was still under review.

The company said divestment of the seafoods division was an option.

Freedom Foods disclosed late last year it had suffered losses of $591 million amid accounting irregularities going back a number of years.

Its managing director Rory Macleod and chief financial officer Campbell Nicholas both left the company soon after the irregularities were discovered.

Freedom Foods said in its half-yearly reports the Australian Securities and Investments Commission had issued a notice requiring the company’s books to be handed over in relation to an investigation the corporate regular was conducting.

“ASIC’s inquiries are continuing but, to the best of the company’s knowledge, have not at the date of these accounts, been concluded,” it said.

“If, following completion of ASIC’s inquiries, ASIC determines breaches under the Corporations Act may have occurred, it may commence enforcement action or issue an infringement notice.

“Any action that ASIC may take could have a material adverse impact on the company’s financial performance, including, for example, fines and/or penalties (which may be significant), compliance orders, enforceable undertakings, litigation or public statements.”

Freedom Foods has already been hit with two shareholder class actions over the misreporting of financial results.

Meanwhile, Freedom Foods’ negotiations on the recapitalisation with its major shareholder Arrovest Pty Ltd — a Perich family company — was still continuing.

Freedom Foods said an update on the recapitalisation was expected in two weeks time.

Share trading on the Australian Securities Exchange, which have been suspended since last June when anomalies were discovered in the company’s accounts, will remain in voluntary suspension until then.

MORE

PERICH FAMILY’S ARROVEST TO BAIL OUT FREEDOM FOODS

CFO DEPARTS, CEO ON LEAVE AS BLACK HOLE EMERGES

FREEDOM FOODS SHARE HALT CONTINUES AMID INVESTIGATION