Noumi, formerly Freedom Foods, is embroiled in a saga with its auditor after Australian regulators pointed the finger at both parties late last year.

Today, the company released an important update regarding the conclusion of its auditor's appointment, following the auditor's decision to open court proceedings against it.

What did Noumi announce today?

As a quick backdrop, back in December 2021, Noumi was served with two class action proceedings from the Victorian Supreme Court.

The court alleged that both Noumi and its auditor, Deloitte Touche Tomatsu, had breached the Corporations Act 2001.

Today, Noumi advised Deloitte has notified the Australian Securities and Investment Commission (ASIC) that it believes "a conflict of interest situation exists in connection with the class action proceedings brought against it in relation to its role as auditor of the company".

As a result, Deloitte will finish up as Noumi's auditor on 13 April 2022.

Where the conflict of interest arises, Noumi says, is due to the arguments in Deloitte's defence to the class action.

Specifically, Deloitte will allege the company was "a concurrent wrongdoer" in its proportionate liability defence, while lodging a defensive cross-claim against Noumi.

"Noumi intends to vigorously defend all claims made against it in the proceedings," the company stated today.

The company has begun the search to appoint a new auditor and will update the market when doing so, pending shareholder approval.

Noumi's defence is due at the court on 8 April 2022, and thus investors can expect further updates on the saga at that time.

Noumi share price snapshot

The Noumi share price has tracked lower in 2022 and is now down 45% this year to date. It is also down 24% in the past month.

Its shares are down almost 60% over the past year, meaning Noumi must gain 150% before returning to its previous highs.

The post 'Conflict of interest': Why the Noumi (ASX:NOU) share price is falling today appeared first on The Motley Fool Australia.

The leading Australian dairy and plant-based beverages, nutritional products, and ingredients producer's shares ended the day down 12% to 25 cents following the release of its half year results.

Noumi share price falls after COVID weighs on performance

• Net revenue down 7% to $265.3 million
• Adjusted operating EBITDA down 79% to $4.6 million
• Net loss after tax of $65.8 million
• Net loss excluding litigation settlement costs flat at $15.1 million
• Cash at bank of $16.3 million

What happened during the first half?

For the six months ended 31 December, Noumi, formerly known as Freedom Foods, reported a 7% decline in net revenue to $265.3 million.

Management advised that this reflects lower traded milk sales, the removal of an unprofitable product line, lactoferrin sales timing, and the impact of COVID-19 across the business. This was offset partially by growth in out-of-home sales and exports.

One positive was that plant-based Beverage revenue and profit growth continues, with MILKLAB and Australia's Own sales up strongly and with healthy margins.

This couldn't stop the company's margins from being crunched during the six months, though. Noumi's adjusted operating EBITDA fell 79% to $4.6 million due to the impact of COVID-19 on sales volumes, productivity and costs

On the bottom line, the company reported a net loss after tax of $65.8 million. However, this includes litigation settlement costs. If we exclude these costs, Noumi's loss was $15.1 million and in line with the prior corresponding period.

Management commentary

Noumi's Chief Executive Officer, Michael Perich, appeared disappointed with the half but pleased with the performance of some of its key brands.

He said: "The impacts of COVID-19 and the restrictions imposed to combat the pandemic have been felt across the business in this six-month period. While we were hopeful of a return to normal trading conditions, the ongoing disruption caused by COVID-19 here and overseas, as well as the emergence of the Omicron strain late in the year, resulted in a reduction in sales and earnings."

"Despite these impacts, we have continued to deliver strong growth in sales of key brands, particularly MILKLAB in the out-of-home channel, and we are making significant gains in Asian export markets. In addition, and despite delays to key improvement initiatives, we are starting to see the results of our operational turnaround program and expect these to accelerate through the balance of 2022."

Mr Perich spoke positively about the future and expects the company's strategy to start bearing fruit soon.

He commented: "The Company is now firmly in the Transform phase of our Reset, Transform and Grow turnaround strategy. As the impact of COVID-19 restrictions ease, and notwithstanding uncertainty created by rising geopolitical risks worldwide, we expect to see a recovery in financial performance across the business, with positive operating cashflows and increasing economies of scale driving earnings improvement."

"With the sale of Speciality Seafood and the resolution of our US litigation, we are fully focused on our two growth engines and have the certainty we need to pursue our ambitions and deliver long-term sustainable growth," Perich concluded.

The post Noumi (ASX:NOU) share price falls 12% on results but 'growth engines' ready to fire appeared first on The Motley Fool Australia.

After an initial jump of 3% on Friday's closing price, Freedom Foods shares have slid 4.55% to 42 cents at the time of writing.

Let's investigate further.

Freedom Foods share price falls despite strong revenue and earnings growth

• Total revenue from continuing operations of $559.1 million, an 8% year on year growth
• $76.4 million "earnings turnaround" from the year prior
• Adjusted Operating EBITDA from continuing operations of $22.4 million, up 141% on restated loss of $54.0 million in FY20
• Plant-based Beverages revenue up 16% to $152.9 million, with MILKLAB sales up 49% year on year
• Dairy and Nutritional's revenue grew 7% to $394.3 million, with lactoferrin sales up 215%
• Statutory net loss after tax of $38.8m million, a 72% improvement on "restated FY20 loss" of $136.4 million
• No declared dividend for FY21.

What happened in FY21 for Freedom Foods?

In a potential positive for the Freedom Foods share price, the company grew total revenue by 8% to around $560 million in FY21, underscored by strength in its plant-based beverages plus dairy and nutritional's segment.

In fact, plant-based beverages grew revenue by 16% to approximately $153 million, alongside MILKLAB sales which grew about 50% over the year.

Freedom's dairy and nutritional's revenue also expanded by 7% to $394 million. Much of the growth here was underlined by lactoferrin sales which grew a mammoth 215% from the year prior.

The company also outlined growth in "key channels", including a 38% year on year increase in e-commerce sales and a 31% growth in export sales.

Consequently, export sales now "represent 24% of group revenue", a 4 percentage point gain from FY20.

Freedom also recognised an adjusted EBITDA growth of 141% from the year prior of $22.4 million. This represents a "significant, $76.4 million turnaround" from the EBITDA loss of $54 million reported in FY20.

The company explained this turnaround stemmed from "improved operational efficiencies across the business" but does exclude a one-off "restructuring cost" of about $28 million.

Freedom also recognised a statutory net loss after tax of $38 million, which is a "substantial improvement" from the net loss of $136 million a year ago.

Despite these growth patterns, Freedom's specialty seafood revenue decreased by 22% year over year. The decrease came as "COVID-19 disrupted global supply chains, causing stock shortages" which resulted in the "need to cancel promotions".

Finally, the company left FY21 with around $32 million in cash on its balance sheet, with an additional $48 million in working capital from "undrawn facilities".

What did management say?

Speaking on the results, Freedom Foods CEO Michael Perich said:

FY21 was a defining year for Freedom Foods Group, marking the start of our 'Reset, Transform, Grow' transformation into a progressive Australian and regional branded FMCG business, with a much improved operating model and tighter controls that better respond to changes occurring in the local and international environments.

Touching on the earnings turnaround, Perich added:

Actions to transform the Company are well underway, with the Group benefitting from the hard work and commitment of our employees. The continued focus by the team on the customer, quality and innovation has continued to deliver very pleasing results. The significant $76.4 million turnaround in our Adjusted Operating EBITDA performance year-on-year – as well as the sales growth we are seeing in our key brands and markets here and overseas – point to the potential of these actions to continue delivering better returns for the Company and its investors.

What's next for Freedom Foods?

Freedom does not expect to see the "full benefits of the improvements [it is] making to flow through until FY23".

This refers to the Group's "transformation strategy" that aims to "springboard" sales growth by capturing the "ever-increasing consumer demand" for healthy food and lifestyle alternatives.

As a result, management is confident in "continuing the positive momentum" achieved in FY21, as it pursues this transformation strategy.

Freedom also acknowledges the "uncertain impact of the latest COVID-19 lockdowns" to its supply chain, operations and end-markets and, thus, did not provide specific earnings guidance.

The Freedom Foods share price has had a choppy year to date, posting a loss of 85% since January 1. This result has lagged the S&P/ASX 200 Index (ASX: XJO)'s return of around 14% over this same time.

The post Freedom Foods (ASX:FNP) share price slides despite 141% EBITDA growth in FY21 appeared first on The Motley Fool Australia.

He's the billionaire business partner of Warren Buffett, and vice Chairman of the company they run, Berkshire Hathaway Inc. (NYSE: BRK.A) (NYSE: BRK.B) (I own shares, for the record).

Yep, he's kind of a big deal.

Not just because he's rich and well connected, though.

The man is smart.

I'm talking Mensa-smart.

Munger is a true polymath; a man who spends more time reading than almost anyone.

He also has a witty turn of phrase, and doesn't mince words.

Charlie is perhaps the man I'd least like to end up debating in a public forum, on any topic.

He's also eminently quotable. There are dozens of lines that, should you use them as investing guidelines, would almost certainly improve your results.

One of his best known is:

"I know I'll perform better if I rub my nose in my mistakes. This is a wonderful trick to learn."

Why?

Maybe it makes us more humble.

Maybe it forces us to review our investing processes a little more carefully.

Maybe it helps our subconscious identify common traits of our losing stocks.

It's probably all three.

As well as being the Motley Fool's Chief Investment Officer in Australia, I run a couple of our investment services, including Motley Fool Share Advisor.

I'm pleased to say that, at the time of writing, our average return is showing the market a clean pair of heels.

Which is important for context, but not the point I want to make.

See, also at the time of writing, here's the return of some of my recommendations:

iSentia Group Ltd (ASX: ISD): -97.48%

Freedom Foods group Ltd (ASX: FNP): -92.62%

Retail Food Group Limited (ASX: RFG): -70%

Reject Shop Ltd (ASX: TRS): -67.14%

I could go on, but I think that's enough nose-rubbing for now, even for a bloke with a larger-than-average schnoz.

I hate those numbers.

They rankle, both professionally, and because I know our members followed that advice and lost money.

Don't tell my wife, but I feel worse about those losses than losses in our own portfolio.

They just downright suck.

They're examples of bad process, bad luck and just plain bad outcomes.

I make no excuses for them. I don't think all were in our control, but that doesn't pay the bills. The money is still lost.

So why don't I give up and go dig holes?

Because, thankfully, they're rare.

And because they're only a small portion of our overall scorecard result.

And, lastly, because we make sure we're diversified.

None of that is an excuse, by the way — I'm not trying to cover up a screw-up by saying 'look over there'.

But — and this is the unfortunate reality — they're going to happen.

If you want to avoid losers, stay in cash.

But good luck building a retirement nest egg that way.

No, if we want decent investment returns, we need to embrace the reality of risk.

There will be times when we will be wrong.

So how do we proceed?

Here's what we try to do at The Motley Fool.

First, we try to avoid stuff-ups.

Sometimes, I've just been plain wrong. For example, I can't blame anyone else for my Isentia mistake. I was just wrong and I have to learnt to accept that It happens.

Fewer of those, in future, is the aim.

But in other cases, we're playing a game of probabilities.

Every company has both growth potential and inherent risk.

The job of the investor, professional and amateur alike, is to find opportunities where we're being offered an outsized return, for the level of risk we're taking.

Or, as Charlie says:

"We look for a horse with one chance in two of winning and which pays you three to one. You're looking for a mispriced gamble. That's what investing is."

See, not a guaranteed winner (there is no such thing), but a bet where the return on offer is significantly greater than the risk.

If I could, I'd just repeat those last two sentences for the rest of this article.

Because, as an investor, if you can't internalise that, you're on a hiding to nothing.

You can't be right all the time.

And if it was possible, the guaranteed nature of the outcome would mean that your return would be almost zero (government bonds, anyone?).

So, while I hate those losses, I've learned to accept them.

For the record, my four largest winners at Share Advisor are +951%, +645%, +460% and +444%.

See the difference?

Now, of course I'd just take the winners and avoid the losers, if that were possible.

But it's not.

So, here's what I do:

I try to keep learning, refining my process as I go.

I make sure I'm diversified, so that one or two losers don't wreck my portfolio.

I remember that investing is a long game.

And — here's the tough love bit — if you only buy one, two or five of our recommendations, I can't help you.

We don't promise success on that scale. We can't. It's not possible, and such a promise would be illegal or at the very least deeply immoral.

I feel terrible about the people that lost money on Isentia.

But I also hope they made more money on other companies than they lost on that bad recommendation.

Statistically, that's likely — and more likely the longer they've been a member and the more of our recommendations they followed.

I don't blame you for being mad when you lose money. Especially on one of our recommendations.

No-one likes losing money.

But, as I said, it's happened before and it'll happen again.

It probably won't feel any better next time, either.

Hopefully, over time and over a diversified portfolio, the winners will outstrip the losers, in both number and size. That's been the experience at Motley Fool Share Advisor and in the vast bulk of our other services.

We have a gameplan that we think is a winner (and has done well for us so far). But just like in sport, you can't win the game with a single play.

You can be dirty about a missed tackle or a knock-on. A bad bounce or a missed shot. But that's not what determines success.

Nor is it decided in the first minute. Or first 5 minutes. Or first 60.

You've gotta play the whole game – the long game!

Fool on!

The post My biggest losers so far appeared first on The Motley Fool Australia.

Today's pause in trading comes months after news from Freedom Foods that is undergoing what it hopes will be a $265 million recapitalisation to pay off its debts.

The capital raise will consist of subordinated secured convertible notes priced at $1 apiece.

The company hopes the capital raise will include a $200 million leg up from the Perich family, the company's largest shareholder.

To make it up to $265 million, the company will also offer up to $130 million worth of notes to wholesale investors. Priority will be given to the company's existing shareholders.

Let's take a closer look at what the food distributer has been up to lately.

Fresh capital

The question on many investors' lips today is likely to be whether the Perich family will make the offered $200 million investment.

According to the Australian Financial Review, today's trading halt will be followed by news of whether the family's investment vehicle, Arrovest, will fork out the entire sum.

By purchasing $200 million worth of notes, Arrovest could hold an 80% stake in the company by 2024. That's a significant increase from its current 51.5% stake.

Freedom Foods is planning to use between $183 million and $233 million of the raised capital to pay off its debts. The rest will go towards corporate costs and fees from the capital raise.

Freedom Foods returned to trading on the ASX after a 9-month suspension due to significant accounting issues in March 2021.

On their return, Freedom Foods shares fell a whopping 84% to 53 cents each. On the day of its suspension, the Freedom Foods share price was trading at $3.01.

While its share price was in suspension, Freedom Foods faced a number of class actions, which are still ongoing. It also entered into a dispute with one of its suppliers.

Furthermore, the company offloaded its cereal and snacks business to The Arnott's Group for $20 million.

Freedom Foods share price snapshot

Since the Freedom Foods share price resumed trading on the ASX in March, it has plummeted a further 18.87%. It's also down 89.76% over the last 12 months – 9 months of which, it was in suspension.

The company has a market capitalisation of around $116 million, with approximately 277 million shares outstanding.

The post The Freedom Foods (ASX:FNP) share price is frozen. Here's why appeared first on The Motley Fool Australia.

The diversified food company's shares ended the day 4.5% lower at 41 cents.

This leaves the Freedom Foods share price trading a whopping 91% lower than its 52-week high.

Will next week be better for the Freedom Foods share price?

Whether or not the Freedom Foods share price performs better next week will depend upon the reaction to its third quarter update.

This update, that was released after the market close, reveals that the company had a tough quarter.

According to the release, for the three months ended 31 March, Freedom Foods reported total revenue of $141.6 million. This was down $17 million or 10.7% quarter on quarter.

Management advised that this was broadly in line with company expectations and due to seasonal factors.

How did its businesses perform?

The main drag on its performance during the quarter was its key Dairy and Nutritionals business.

For the three months, the company reported Dairy and Nutritionals revenue of $91.5 million. This was down $16.7 million or 15.4% on the prior quarter.

Also underperforming the previous quarter were its smaller Specialty Seafoods and Cereals and Snacks businesses. The latter has now been sold to The Arnott's Group, whereas the former is being reviewed.

This offset a positive performance by its Plant-based Beverages business, which recorded revenue of $37.3 million. This was an increase of $2.4 million or 7% quarter on quarter.

What about cash flow and debt?

Possibly weighing on the Freedom Foods share price next week will be its cash flows.

For the three months, the company recorded an operating cash outflow of $25.6 million. This was partially offset by an $18 million asset disposal, leaving it with a cash balance of $20 million at the end of the quarter.

This cash balance is dwarfed by its debt. The company ended the period with $331.9 million of drawn finance facilities.

The post Will the Freedom Foods (ASX:FNP) share price sink even further after its Q3 update? appeared first on The Motley Fool Australia.

Unfortunately for investors, the Freedom Foods share price opened around 90% below the price it was fetching back in June when shares were originally suspended.

Why did the Freedom Foods share price plummet?

You may have missed it in amongst all the COVID-related news over the last 12 months, but 2020 was not a good year for Freedom Foods. And not just because of the business headwinds created by the pandemic.

In June, Freedom Foods announced it had been forced to write off $60 million worth of inventory. This included obsolete and out-of-date stock dating back as far as 2017. Not only that, but the company was also forced to raise significant doubtful debts provisions, as well as reverse some revenue already recognised in prior periods.

The total impact of these adjustments on FY20 earnings before interest, tax, depreciation and amortisation (EBITDA) was a negative adjustment of $10 million (this was in addition to $4 million worth of doubtful debt provisions that had already been raised earlier in the year).

At the same time, the company announced it was seeking to suspend trading in Freedom Foods shares pending further investigation into its financial position. And then, less than a week later, it was announced that company CEO Rory Macleod – who had been on leave – had resigned.

Now what?

The Freedom Foods share price suspension went on, and on, and on. In the meantime, a number of class actions were launched against the company and it also got itself into a nasty dispute with one of its suppliers, US-based Blue Diamond Growers. It also sold off its cereal and snack assets to the Arnott's Group for $20 million in cash.

For its part, Freedom Foods has ploughed on with an extensive recapitalisation plan and board management shakeup. The company is raising up to $265 million in new capital, comprising $130 million of convertible notes to wholesale investors, and a further $200 million from its majority shareholder, investment company Arrovest.

In addition, senior lenders National Australia Bank Ltd (ASX: NAB) and HSBC will provide further funding through a number of debt facilities, the size of which will depend on the exact amount of proceeds raised through the company's other capital raising initiatives.

Recent financials

In the midst of all this other activity, Freedom Foods released its first-half FY21 results. The company reported a 15% jump in revenues from continuing operations (versus its restated first-half FY20 result) to $291.4 million, while total revenues came in at $317.3 million. Adjusted EBITDA from continuing operations came in at $21.7 million, an increase of $48.2 million over its restated first-half FY20 earnings loss of $26.5 million.

New CEO Michael Perich commented on the result, stating that "while there remains a lot of work to be done to ensure Freedom Foods Group can meet its full potential", the recapitalisation plan will give the company the capital structure that will allow it to "continue to focus on delivering on [its] turnaround strategy and restore the Group to sustainable and long-term profitable growth."

Investors will be hoping that this translates to a recovery in the Freedom Foods share price, which is now down 90% over the last 12 months. At the time of writing, the company's shares are also trading 4.26% lower at 45 cents so far during Monday's session. 

The post What's happened to the Freedom Foods (ASX:FNP) share price? appeared first on The Motley Fool Australia.

Here's the data:

Airtasker Ltd (ASX: ART)

Airtasker shares may have only been listed on the Australian share market for four days last week but they were still far and away the most traded shares on CommSec. Over the period, the jobs marketplace provider's shares accounted for a massive 7.9% of trades on the platform, with buyers accounting for 72% of them. The Airtasker share price finished the week 122% higher than its IPO price of 65 cents.

Zip Co Ltd (ASX: Z1P)

Zip shares were popular with investors again last week and accounted for 2.5% of trades on the platform. And although 53% of these came from buyers, it couldn't stop the Zip share price from sinking 6.5% lower over the five days. This was the fifth week in a row of declines for the buy now pay later provider's shares.

Freedom Foods Group Ltd (ASX: FNP)

This diversified food company's shares accounted for 2.1% of trades last week, with buyers responsible for 68% of them. Those buyers may have been bargain hunters swooping in after the Freedom Foods share price crashed lower after returning from a nine-month suspension. The company's shares fell 83% over the five days.

88 Energy Ltd (ASX: 88E)

88 Energy shares were popular last week. The energy company's shares were responsible for 2% of trades on CommSec. From this, buyers made up 59% of the trading volume. These investors will have been delighted to see the 88 Energy share price jump 82% over the week. This appears to have been driven by optimism over its Merlin-1 project in Alaska.

Brainchip Holdings Ltd (ASX: BRN)

This artificial intelligence technology company's shares returned to the top five after accounting for 1.5% of trades. And although 57% of trades came from sellers, the BrainChip share price fell less than 1%. Earlier this month the company announced the surprise exit of its CEO with immediate effect.

The post Airtasker and Zip were among the most traded ASX shares last week appeared first on The Motley Fool Australia.

A takeover offer and the iron ore sector featured in the headlines.

Here are some of the highlights from the ASX today:

Crown Resorts Ltd (ASX: CWN)

The Crown Resorts share price soared today after confirming that it had received a hefty takeover offer from Blackstone.

The ASX 200 casino operator revealed that yesterday it received an unsolicited, non-binding and indicative proposal from a company on behalf of funds managed and advised by The Blackstone Group and its affiliates to buy the whole of the Crown business at a price of $11.85 cash per share. The purchase price would be reduced by any dividends paid.

This indicative price of $11.85 cash per share represented a premium of 19% to the volume-weighted average price of Crown shares since the release of the FY21 half-year result.

At this stage, the offer is still subject to a number of conditions including due diligence and arranging debt finance.

Blackstone currently has a shareholding of 9.99% in Crown which it acquired from Melco Resorts & Entertainment at $8.15 per share in April 2020.

The Crown board hasn't yet formed a view about this offer, but it will now make an assessment of the proposal with the help of financial adviser UBS and legal adviser Allens.

Freedom Foods Group Ltd (ASX: FNP)

Freedom Foods has crashed 82% after coming back to the market after its long-term suspension. In early trading the share price dropped to just $0.20.

Last week the company announced a recapitalisation plan of up to $265 million to continue its turnaround so that it could substantially repay its bank debt which would provide a flexible capital structure.

The offer comprises an offer of unlisted, subordinated secured convertible notes to eligible wholesale investors of up to $130 million, with priority given to eligible existing shareholders, and a $200 million commitment to subscribe for notes secured from its majority shareholder, Arrovest, the investment vehicle of the Perich family.

Senior lenders National Australia Bank Ltd (ASX: NAB) and HSBC will provide a new 2-year senior secured revolver facility to the company, along with a 2-year term debt facility for up to $50 million, depending on the total note proceeds raises.

All shareholders, excluding Arrovest, will get the chance to apply for ASX-listed options on a pro-rata basis.

Iron ore miner movements

Iron ore resource businesses were in the headlines today.

One of the biggest movers in the ASX 200 was Fortescue Metals Group Ltd (ASX: FMG) which fell 4.3%. The BHP Group Ltd (ASX: BHP) share price fell 1.1% and the Rio Tinto Limited (ASX: RIO) share price fell 1.5%.

Mineral Resources Limited (ASX: MIN) saw a share price fall of around 4%. It told investors today that it had delivered its first iron ore production from the Wonmunna iron ore mine in the Pilbara region, Western Australia. This was achieved less than five months after breaking ground, which was in line with that company's guidance.

Mineral Resources expects the mine to ramp up to the approved 5 million tonnes per annum (mtpa) run rate in the quarter ending 30 June 2021. There is the potential to expand Wonmunna's output to 10mtpa after the successful grant of additional approvals for little additional capital cost.

Chris Ellison, Mineral Resources managing director, said:

Wonmunna's rapid and safe development is testimony to the MRL team's ability to deliver what others thought impossible. It is the innovative design of our NextGen crushing plants and the agility of our people who make this happen.

The post ASX 200 climbs, Crown soars, Mineral Resources drops appeared first on The Motley Fool Australia.

Four ASX shares that have failed to follow the market higher today are listed below. Here's why they are dropping:

Fortescue Metals Group Limited (ASX: FMG)

The Fortescue share price is down 5% to $19.01. This decline has been driven by a pullback in the iron ore price on Friday night. According to CommSec, the iron ore price fell by a further US$5.80 a tonne or 3.5% to US$160.20 a tonne on Friday. This was driven by reports that Chinese regulators will restrict output for some steel mills in Tangshan until the end of 2021.

Freedom Foods Group Ltd (ASX: FNP)

The Freedom Foods share price has crashed 80% lower to 62 cents. This is actually a big improvement on its earlier performance. In morning trade the diversified food company's shares returned from their nine-month suspension by crashing a whopping 94% to 18 cents. Freedom Foods' shares returned to trade after undertaking a major recapitalisation.

QBE Insurance Group Ltd (ASX: QBE)

The QBE share price has fallen 2.5% to $9.52. This decline appears to have been driven by concerns that the terrible floods in New South Wales could result in a huge spike in claims. On a more positive note, this morning the insurance giant advised that it has no credit exposure to Greensill entities.

Singular Health Group Ltd (ASX: SHG)

The Singular Health share price has sunk 7% to 64.5 cents despite announcing an acquisition, investment, and contract win. The medical technology company has acquired Virtual Surgical Planning software and will integrate it into its existing MedVR software. In addition to this, Singular Health plans to invest $300,000 for 25% equity stake in Australian Additive Engineering. Finally, leading medical computer aided design company, Lyka Smith, has agreed to purchase 50 software licenses.

The post Why Fortescue, Freedom Foods, QBE, & Singular Health are sinking appeared first on The Motley Fool Australia.

A company has returned to trading after a near-9 month absence. Yes, Freedom Foods Group Ltd (ASX: FNP) shares have returned to trading this morning, and boy was it not pretty.

At the time of writing, the Freedom Foods share price is down a staggering 81.06% to 57 cents a share after opening at just 20 cents this morning. Freedom last closed at $3.01 a share – but that was back on 24 June 2020.

For some context, back then Victoria was just about to start its extended lockdown and Donald Trump still had 7 months to go as president.

The sorry tale of the Freedom Foods share price

Here at the Fool, we have extensively covered this saga, but here's a refresh in a nutshell. Investors were first alerted that something wasn't quite right at the company when it announced a series of writedowns on its books. These included spoiled food stores, among other things.

Then, The company's CEO and CFO both suddenly resigned, and the share price was suspended shortly afterwards. The company had been bobbing along in uncharted waters since a debate raged over who was ultimately responsible for this series of debacles. But it has returned to trading today after announcing a $265 million recapitalisation arrangement at the end of last week.

So, let's have a look at how much investors might have lost on this sorry story. So anyone who was hoping for a 'turnaround play' and invested in Freedom on its last close, is currently down 81% on their money. That means a $1,000 investment on 24 June would be worth $190 today.

What about Freedom's 52-week high of $5 a share the company saw back in March last year (not too often a company can say that)? Anyone who 'bought the dip' back then would be down a catastrophic 87.6%.

And finally, anyone who bought in back at Freedom's all-time high of $6.94 that was reached in September 2018 is down a heartbreaking 91.79% today. That would have turned a $1,000 investment into $82.

But it's not all bad for everyone involved in Freedom Foods share price today. Freedom shares opened at 20 cents apiece this morning. At the time of writing, they are up to 57 cents a share. That's a 185% recovery in an hour or two of trading. Clearly, some investors are getting their bargain-hunting hats on this morning.

The post How much have investors lost on the Freedom Foods (ASX:FNP) share price? appeared first on The Motley Fool Australia.

This is because I believe it is well worth keeping a close eye on short interest levels as high levels can sometimes be a sign that something isn't quite right with a company.

With that in mind, here are the 10 most shorted shares on the ASX this week according to ASIC:

• Tassal Group Limited (ASX: TGR) has seen its short interest rise to 12.9%. A sharp decline in salmon prices over the last 12 months and concerns over the Australia-China trade war have been weighing on sentiment.
• Webjet Limited (ASX: WEB) has seen its short interest reduce to 10.8%. Short sellers may have been closing positions following the government's announcement of a stimulus package for the tourism industry. In addition, last week Webjet spoke very positively about its longer term outlook at an event.
• Inghams Group Ltd (ASX: ING) has 8% of its shares held short, which is unchanged week on week. Short sellers have been going after the poultry company due to concerns over costs, an unfavourable sales mix, and a potential oversupply of chicken.
• Flight Centre Travel Group Ltd (ASX: FLT) has seen its short interest rise slightly to 7.7%. While the travel agent was recently given a boost by a $1.2 billion government stimulus package for the tourism sector, short sellers aren't giving up on it. They appear to believe it is overvalued after a strong share price recovery.
• Bravura Solutions Ltd (ASX: BVS) has experienced another increase in its short interest to 7.7%. Short sellers appear to be targeting the financial technology company due to the significant Brexit and COVID headwinds impacting its business.
• Resolute Mining Limited (ASX: RSG) has seen its short interest reduce week on week to 7.5%. Industrial disruption at its Syama operation has been weighing heavily on sentiment. Particularly given its guidance for another decline in production in FY 2021.
• Metcash Limited (ASX: MTS) has seen its short interest fall to 6.9%. Last week this wholesale distributor released its growth strategy to the market and received a somewhat mixed response due to its higher capex plans.
• Myer Holdings Ltd (ASX: MYR) has short interest of 6.7%, which is down week on week. Short sellers continue to target the department store operator due to the belief that it is in a structural decline.
• Freedom Foods Group Ltd (ASX: FNP) is back in the top ten with 6.7% of its shares held short. Short sellers will have been celebrating this morning after the Freedom Foods share price crashed 94% lower after returning from its nine-month suspension.
• InvoCare Limited (ASX: IVC) has 6.7% of its shares held short. Concerns over market share losses and allegations of anti-competitive conduct in the funeral sector appear to be weighing on sentiment.

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In early trade, the diversified food company's shares were down a massive 94% to 18 cents.

The Freedom Foods share price has recovered a touch since then but is still down 91% to 28 cents at the time of writing.

Why was the Freedom Foods share price suspended for nine months?

Freedom Foods requested its suspension last year amid a series of significant accounting issues that led to the sudden exit of its CEO and CFO.

These issues ultimately led to the company having to revise and restate previous financial statements, culminating in a loss after tax of $174.5 million for FY 2020.

Freedom Foods share price returns

This morning the Freedom Foods share price is trading again after finalising its recapitalisation plans.

The company is raising up to $265 million via the issuance of unlisted, subordinated secured convertible notes. It has also restructured its existing senior debt facilities with HSBC and National Australia Bank Ltd (ASX: NAB).

The company's capital raising will comprise an invitation to eligible investors to participate in a wholesale investor offer of up to $130 million of notes and a placement of up to $200 million of notes to its largest shareholder Arrovest.

Arrovest will scale back its investment to a minimum of $135 million depending on the level of participation under the wholesale investor offer.

These funds are being raised at $1.00 per note. After which, these notes will convert into shares calculated by dividing the outstanding face value of the notes (including accrued interest) by a notional share price of $0.70.

Subject to shareholder approvals, these notes can convert into shares at any time at a Noteholder's election. However, notes will be mandatorily converted where 75% or more of Noteholders have elected to convert.

What will it do with the proceeds?

The proceeds will be used repay between $183 million to $233 million of the company's existing debt. This is consistent with the requirements of the company's senior lenders.

The funds will also provide a more flexible capital structure that management believes will better facilitate the ongoing financial and operational turnaround of the company.

And finally, the proceeds will provide incremental capital to support the company's turnaround strategy.

The post Freedom Foods (ASX:FNP) share price crashes 94% after 9-month suspension appeared first on The Motley Fool Australia.

The updated list could potentially move the prices of some shares as fund managers seek to readjust their portfolios. In addition, exchange-traded funds (EFT's) will also see changes across the broader indices.

Here is a brief summary of the most well-known shares on the ASX that were added or removed on the S&P/ASX Indices.

Australia's top 100 companies remained stable with no changes to their retrospective benchmark this quarter. However, it was a different story for the remaining indices.

S&P/ASX 200 Index changes

The S&P/ASX 200 Index (ASX: XJO) added a few new companies, mostly within the mining sector, as a result of growing consumer confidence. This saw iron ore developer Champion Iron Ltd (ASX: CIA), along with nickel producer Nickel Mines Ltd (ASX: NIC) and lithium miner Pilbara Minerals Ltd (ASX: PLS) added into the benchmark.

In addition, electronic products company Codan Limited (ASX: CDA) and investment platform provider HUB24 Ltd (ASX: HUB) were also included.

They replaced Bravura Solutions Ltd (ASX: BVS), Smartgroup Corporation Ltd (ASX: SIQ), Service Stream Limited (ASX: SSM) and Tassal Group Limited (ASX: TGR).

S&P/ASX 300 Index changes

There was a number of swaps within the S&P/ASX 300 Index (ASX: XKO), particularly relating to some companies that have taken centre stage recently. The most notable businesses that joined the list were furniture retailer Adairs Ltd (ASX: ADH), artificial intelligence company Brainchip Holdings Ltd (ASX: BRN), and subscription-based meal kit provider Marley Spoon AG (ASX: MMM).

Leaving the ASX 300 index are ELMO Software Ltd (ASX: ELO), Freedom Foods Group Ltd (ASX: FNP), Kathmandu Holdings Ltd (ASX: KMD), Macmahon Holdings Limited (ASX: MAH), and Superloop Ltd (ASX: SLC) among others.

What does this mean?

While the changeover will take place on 22 March 2021, the news could boost or put pressure on the affected shares. Most fund managers are required to adhere to their strict guidelines, which allow them to buy shares only within a certain index. On the other hand, EFTs usually pick up and/or dump the appropriate shares to keep in line with the benchmark.

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Australian blue chip shares recovered a lot of the ground lost on Friday after the selloff.

Here are some of the highlights from today:

Austal Ltd (ASX: ASB)

After taking a bit of a pounding last week, the Austal share price roared higher today by 8.4% after announcing a contract win.

It announced that Austal USA has been awarded a US$235 million contract by the US Navy for the detailed design and construction of the 15^th expeditionary fast transport (EPF) vessel.

Austal USA has delivered twelve EPFs to the US Navy since 2012 on schedule and under budget, from the company's Alabama shipyard.

Austal CEO Paddy Gregg said the new contract was a clear demonstration of confidence by the US Navy in the versatile EPF platform, designed by Austal Australia and manufactured by Austal USA. Mr Gregg said:

The EPF has become a real success story, delivering a fast, flexible and versatile capability to the US Navy. The EPF has made a real difference to military operations and other humanitarian and disaster relief missions over many years now, and this additional vessel contract reflects the continuing confidence in the unique high-speed platform.

This latest EPF will expand the medical facilities on-board, further enhancing the proven operational capabilities of the ship, which has been used for various medical missions in the Pacific, South East Asia and Western Africa.

Austal also announced that Austal Philippines has delivered Hull 419, a 109 metre high-speed catamaran ferry to Fjord Line of Norway.

It was the best performer in the ASX 200.

Fortescue Metals Group Ltd (ASX: FMG)

The Fortescue share price ended the day lower after going ex-dividend to pay its large interim dividend to shareholders.

According to the ASX, it ended the day lower by almost 6%.

Fortescue decided to pay a dividend of $1.47 per share to investors, which wasn't too far off twice the size of last year's interim dividend for investors.

Freedom Foods Group Ltd (ASX: FNP)

Although it's still in a trading halt, Freedom Foods announced its FY21 half-year result today.

It said that continuing operations revenue was up 15% to $291.4 million. Continuing operations adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) jumped 182% to $21.7 million.

Continuing operations net profit after tax (NPAT) grew by 70% to a loss of $15.2 million.

The company also reported that it generated positive cash flow from operations before financing costs and non-recurring adjustments of $4.4 million, which was $30.5 million higher than the prior corresponding period.

The divestment of the cereals and snacks business is on target for completion in March 2021. Progress continues to be made on its recapitalisation plan, with lenders and the majority shareholder so far giving their preliminary support.

Shares will remain in voluntary suspension until release of the full details, which is anticipated to be in the middle of March.

Genworth Mortgage Insurance Australi Ltd (ASX: GMA)

Genworth announced that Genworth Financial has entered into an underwriting agreement (sale agreement) in relation to the sale of all of GFI's shares in the company (around 52% of the issued shares).

After the sale is completed, GFI will no longer own any shares of the company.

The Genworth share price fell 6.2% today. 

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This morning the diversified food company released its half year results for FY 2021.

How is Freedom Foods performing?

For the six months ended 31 December, Freedom Foods reported a 15% increase in revenue from continuing operations to $291.4 million.

This was driven by a 17% increase in Plant-based Beverage revenue to $75.2 million and a 15% lift in Dairy and Nutritionals revenue to $209.8 million. Their positive performances more than offset a 5% decline in Specialty Seafood revenue.

In respect to earnings, the company reported a 21% lift in earnings before interest, tax, depreciation and amortisation (EBITDA) to $15.2 million.

Things weren't quite as positive on the bottom line, though. Freedom Foods posted a loss after tax from continuing operations of $15.2 million. However, this was an improvement from a (restated) loss of $50.2 million a year earlier.

Management commentary

Freedom Foods' Interim Chief Executive Officer, Michael Perich, said: "These results demonstrate the potential of the businesses within Freedom Foods Group, with both our Dairy and Nutritionals and Plant-based Beverages operations delivering solid growth and positive operating earnings in a challenging period."

"Most importantly, the results show the financial and operational turnaround strategy underway across the Company is beginning to gain traction. 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."

"Despite the ongoing impact of COVID-19 and associated lockdowns on our key markets, particularly the out-of-home channel, our flagship brands, including MILKLAB, Australia's Own and PUREnFERRIN lactoferrin continue to deliver strong growth. We will look to continue growing sales, with further penetration of MILKLAB in the out-of-home market, growth of Vital Strength and other nutritionals brands and increasing inroads in Asian export markets."

Outlook

Mr Perich appears optimistic on the future.

He commented: "While there remains a lot of work to be done to ensure Freedom Foods Group can meet its full potential, these results validate our decision to focus on building a world-class business around our market-leading Dairy and Nutritionals and Plant-based Beverages brands."

"Once the recapitalisation is complete, we will have a capital structure that allows us to continue to focus on delivering on our turnaround strategy and restore the Group to sustainable and long-term profitable growth."

The company revealed that progress on recapitalisation continues to be made, with an update to be provided mid-March. Until then, the Freedom Foods share price will remain in voluntary suspension.

The post Here's how Freedom Foods (ASX:FNP) performed in the first half appeared first on The Motley Fool Australia.

This morning the embattled food company released an update on its recapitalisation.

What did Freedom Foods announce?

According to the release, Freedom Foods has reached an in-principle agreement with its majority shareholder, Arrovest, for a recapitalisation of the business. This will involve the issue of secured convertible notes.

Arrovest, which is owned by the Perich family, has stepped in after advanced talks between another new investor collapsed.

In addition to this, the company advised that the in-principle agreement with Arrovest has the non-binding indicative, in-principle support of the company's senior lenders, National Australia Bank Ltd (ASX: NAB) and HSBC.

Management notes that the funding from the recapitalisation will enable the company to materially repay its senior term and revolving secured debt. It will also provide Freedom Foods with sufficient working capital and a stable capital structure to enable it to continue its financial and operational turnaround.

Under the terms of the new in-principle agreement, Arrovest has agreed to invest up to $200 million, with the company having the capacity to raise further capital. Though, it will not be a condition for it to do so for the transaction to complete.

Interim Chief Executive Officer Michael Perich said: "Despite the challenges of the past 10 months, there remains a fundamentally strong business at the heart of Freedom Foods – a market-leading dairy and plantbased beverages and nutritionals business. With the ongoing support of Arrovest, our banks and other shareholders, we have the opportunity to rebuild the business and enable it to meet its full potential."

Tony Perich AM said: "We have been committed supporters of Freedom Foods for 15 years and, despite the difficulties of the past year, we continue to believe in its potential to be one of Australia's great food and beverages companies."

Freedom Foods' shares will remain in voluntary suspension pending further details of the recapitalisation.

The post What's happening with the Freedom Foods (ASX:FNP) share price? appeared first on The Motley Fool Australia.

The Freedom Food share price last closed at $3.01.

What did Freedom Foods announce?

Freedom Foods has today announced the sale of its cereal and snacks operations to The Arnott's Group.

According to Freedom Foods, the divestment follows an ongoing program to create a leaner and simpler business model. The company is seeking to cut its product range in order to improve profitability, while focusing on growth.

The decision follows a previous announcement on 30 November, in which Freedom Foods advised it was reviewing its cereal and snacks segment. Although the company had considered a 'fix and retain' option, it came to the conclusion the best strategic option was to offload the business.

Terms of the sale

Under the agreement, Freedom Foods will sell certain assets and liabilities of the cereal and snacks business for $20 million. The cash payment is expected to provide a net amount of $11 million after transaction costs and equipment leases.

The sale will include manufacturing facilities in Leeton and Darlington Point in New South Wales, and Dandenong in Victoria. The transfer of brands comprises Freedom Foods, Messy Monkeys, Heritage Mill, Arnold's Farm, and Barley Plus.

The transaction is expected to be completed on 1 March 2021 pending customary conditions.

Furthermore, the sale of the Freedom Foods cereals brand will see the company change its corporate name. Management said more information will be provided to shareholders on this subject at a later stage.

What did management say?

Freedom Foods Group interim CEO Mr Michael Perich spoke about the sale. He said:

We believe the Cereal and Snacks business will thrive under an owner such as The Arnott's Group, which is committed to investing in the business and employees to ensure a sustainable and successful future.

This decision is consistent with the new executive team's strategy of simplifying both our business structure and product range to ensure we are maximising growth opportunities in Dairy and Nutritionals and Plant-based Beverages.

Adding to his comments, Arnott's Group CEO Mr George Zoghbi went on to say:

This purchase of manufacturing sites and leading consumer brands from Freedom Foods Group will accelerate our strategy of entering new product categories and unlock innovation to benefit customers and consumers.

This will add three Australian manufacturing sites to our already well-invested domestic supply chain. Once the purchase is finalised, our domestic manufacturing network will extend across eastern Australia from Virginia in Queensland, Huntingwood, Leeton and Darlington Point in NSW to Shepparton and Dandenong in Victoria and Marleston in South Australia.

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Freedom Foods has announced to the market this morning that it is now facing a class action lawsuit from law firm Slater & Gordon Limited (ASX: SGH).

The announcement this morning was a short one:

Freedom  Foods Group Limited advises that a Victorian Supreme Court class action proceeding was commenced against the Company and its auditors, Deloitte Touche Tohmatsu, and served on the Company on 9 December 2020. The proceeding alleges breaches of the Corporations Act 2001 (Cth), Australian Securities and Investments Commission Act and Australian Consumer Law.

The Company has appointed Arnold Bloch Leibler (ABL) to defend the proceeding.

According to reporting in the Australian Financial Review (AFR) today, the class action is on behalf of shareholders who bought or acquired Freedom shares between the dates of 7 December 2014 and 24 June 2020 (when the company was placed in a trading halt, which remains in place to this day).

The AFR reports that the class action's "key allegation" is that Freedom "withheld material information relating to its true asset position since 2014". It alleges that Freedom Foods "engaged in significant breaches of its continuous disclosure obligations and misleading and deceptive conduct". It also alleges Freedom's auditor Deloitte "failed in its duties in signing off on Freedom Foods' accounts each financial year between 2014 and the first half of 2020".

How did Freedom Foods get here?

Freedom Foods has had a year I'm sure it (and its shareholders) would rather forget. It all started back in June, when it was announced the company's former chief executive officer, Rory McLeod, advised he would be going "on leave". A few days later, it was announced that McLeod, as well as Freedom's chief financial officer, would be leaving the company.

This came after revelations there had been some serious irregularities in Freedom's accounting books, which failed to note that large volumes of food stocks had perished in storage. This lead to multiple writedowns amounting to around $60 million in inventories and a further ~$10 million in 'bad debts'.

Following these embarrassing revelations, it was announced the company would go into an ASX trading halt until 30 October. Well, 30 October came and went and Freedom shares still remain in purgatory.

The company finally released its full-year results for the 2020 financial year last Monday (30 November) and told investors it had sustained a loss after tax of $174.5 million in FY2020.

Freedom Foods' Interim Chief Executive Officer, Michael Perich, called these number a "deeply disappointing set of results for Freedom Food Group, its people and its shareholders".

The post Freedom Foods (ASX:FNP) faces class action lawsuit appeared first on The Motley Fool Australia.

Ahead of its potential return, this afternoon the embattled food company released its long-awaited full year results for FY 2020.

What happened in FY 2020?

For the 12 months ended 30 June, Freedom Foods reported total revenue of $580.2 million. This was a 26% year on year increase on its restated FY 2019 revenue of $461.8 million.

This was driven by its Dairy & Nutritionals and Plant-based Beverages businesses. Dairy & Nutritionals grew revenue by 37% to $362.9 million. Management advised that this was the result of growing demand for lactoferrin. Whereas the Plant-based Beverages business reported a 30% lift in revenue to $132.3 million thanks to strong MILKLAB growth.

In respect to earnings, the company reported an earnings before interest, tax, depreciation and amortisation (EBITDA) loss of $86.5 million. This compares to a restated EBITDA loss of $88 million a year earlier. Prior to restating its accounts, Freedom Foods had recorded positive EBITDA of $55.2 million in FY 2019.

On the bottom line, Freedom Foods posted a loss after tax of $174.5 million. This compares to a restated loss after tax of $145.8 million a year earlier, which was previously reported as a profit of $21.9 million.

Restatements.

The company revealed that its FY 2019 accounts were restated to reflect past accounting matters and asset impairments.

Net asset write-downs and restatements of approximately $590 million were made for FY 2020 and prior years.

The company explained: "The FY20 audit by Deloitte and a forensic accounting investigation by PwC identified a range of accounting matters going back a number of years. Most significantly, the reviews determined that most of the costs capitalised during the commissioning phase of the Group's capital investment program should be more appropriately treated as expenses."

"These accounting treatments contributed to decisions on new products and expansions that were based on unrealistic assessments of market opportunities and margin assumptions that were not realised. As a result, too many Group products were sold at prices that did not fully recover their costs. These matters have resulted in a material restatement of the Group's FY19, FY18 and prior period accounts and material write-downs and adjustments," it added.

Management commentary.

Freedom Foods' Interim Chief Executive Officer, Michael Perich, was very disappointed with this results release.

He commented: "This is a deeply disappointing set of results for Freedom Food Group, its people and its shareholders. The results reflect the significant costs of past accounting and operational matters – matters we have identified with the assistance of independent experts and are taking steps to remedy."

"Operationally, we are reviewing the economics of every product line, every site, every sales channel and every market segment to ensure we are focused on those brands with the greatest potential to deliver profitable sales. We will be removing products that are not delivering value and investing in the ones that are."

"Freedom Foods needs to become a simpler business – and that includes identifying parts of our business that may perform better under different ownership," he added.

Recapitalisation plan.

Freedom Foods has been reviewing options to recapitalise the business. This includes through debt, equity, or a combination of both.

The board undertook an extensive process to select the right capital solution, given the uniqueness of its current situation.

The proposed approach it has settled on is an ASX-listed convertible note. It advised that this will protect the incoming capital as secured debt, while providing equity-linked optionality and flexibility.

It is anticipated that the capital raising will total up to $280 million. The company intends to provide existing shareholders with an opportunity to participate.

A further announcement on the recapitalisation will be made before the end of the calendar year.

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