IMF & SGH circling BAL.

SGH and IMF  circling BAL (Bellamy's) for potential class action, certainly plenty on the go to keep the IMF case pipeline full (and profitable).

https://www.slatergordon.com.au/class-actions/current-class-actions/bellamys


Class action lawyers Slater and Gordon (SGH) and litigation funder IMF Bentham Ltd (IMF) are investigating a claim against Bellamy’s Australia Ltd (Bellamy’s) on behalf of persons that acquired BAL securities between 14 April 2016 and 9 December 2016 inclusive (potential claim period).

SGH considers that eligible shareholders are likely to have claims against Bellamy’s in relation to loss incurred following:

a. the company’s release to the ASX on 2 December 2016, which contained the following information:

1. the company’s revenue for the financial year ending 30 June 2017 (FY17) would be approximately $240 million (a substantial shortfall compared to market expectations and analyst consensus);
2. the company was experiencing “temporary volume dislocation in China due to regulatory changeover”;
3. sales performance on the critical Chinese ‘Singles Day’ was below expectations, and an expected increase in sales in the Chinese market following Singles Day was “softer than anticipated”; and
4. as a consequence of additional investment, its FY17 EBIT margins would be “moderately below 20%”.

  (the 2 December 2016 Business Update)

b. the company’s upcoming release to the ASX, following a 12 December 2016 trading halt and 14 December 2016 trading suspension, regarding “the impact of trading conditions on the Company’s expected financial results”.

(the Upcoming Trading Update)

(together, the FY17 Downgrades).

Background

On 14 April 2016, Bellamy’s made an announcement to the ASX regarding recent regulatory changes announced in China, titled “Bellamy’s well placed to continue growing in China”, noting that the company believed it was “well placed to transition to the new requirements once they are known”.

On 17 May 2016, Bellamy’s released a presentation to the ASX which detailed the company’s responses to potential Chinese regulatory change and noted that it was “well positioned for potential regulatory changes in China”.

On 19 August 2016, Bellamy’s released its results for the financial year ending 30 June 2016 (FY16), noting, inter alia, that:

1. it was “set to benefit from new Chinese regulations"
2. it had “strong foundations to continue [its] growth strategy; and
3. its EBIT margin had more than doubled between FY15 and FY16 to 22%.

On 19 October 2016, at Bellamy’s AGM, the company reiterated the messages of the 19 August 2016 releases.

The market’s reaction to the 2 December 2016 Business Update was severe, with the price of BAL shares falling by approximately 45% over the following trading days.

The market’s reaction to the Upcoming Trading Update, while presently unknown, may result in a further reduction to Bellamy’s trading price, and hence increase the total negative price reaction to the FY17 Downgrades.

Allegations

On the basis of SGH’s investigations to date, we consider that there may be a reasonable basis to allege that:

a.During the period 14 April 2016 and 9 December 2016, Bellamy’s contravened its obligations of continuous disclosure of price sensitive information under section 674 of the Corporations Act 2001 (Cth), by failing to keep the market informed:

1. of the impact of regulatory change in China;
2. that FY17 revenue would fall well short of market expectations and analysts’ consensus;
3. that EBIT margins were in decline; and
4. of the impact of trading conditions on the company’s expected financial results.

b. Statements made by Bellamy’s during the potential claim period regarding benefits arising from regulatory change in China amounted to misleading or deceptive conduct in contravention of section 1041H of the Corporations Act 2001 (Cth).

To register your interest and to receive further information regarding the potential claim and funding arrangements, please visit https://www.imf.com.au/cases/register/bellamys