Before the meeting was held, trading in the company’s shares was halted, and Rob Woolley resigned as a director and chairman of the board.
Michael Wadley was named interim chairman of the board, only to be removed from the board following voting on the resolutions for election and removal of directors.
At the meeting, existing director Launa Inman resigned, and existing directors Wadley and Charles Stich were removed from the board.
The resolution to remove Patria Mann was not carried.
The election of Jan Cameron to director was not carried, however, Chan Wai-Chan and Rodd Peters were both elected to the board of directors.
CFDA registration
The company also commented on Bega Cheese’s announcement regarding the sale of one of its spray dryers at Tatura and its infant formula finishing plant at Derrimut to Mead Johnson Nutrition (Australia) Pty Ltd.
It said despite the announcement, its manufacturing contract with Bega remains in place and the two companies are continuing to work closely together on their day-to-day operations.
Bellamy’s also said from 1 January 2018, China will require the company’s infant formula products to be registered with the China Food and Drug Administration (CFDA) as a requirement for export for sale in China.
As a result of Bega’s sale to Mead Johnson Nutrition, Bellamy’s said it may need to enter CFDA registration discussions with other manufacturers, as well as Bega.
It said it ‘remains confident it can achieve registration of its infant formula product series with CFDA in a timely manner to preserve continuity of supply for PRC products beyond the implementation date of January 1, 2018.’
Financial results
Bellamy’s last week issued its financial results for the half year ending December 31, 2016, which show revenue rose by 12.5%, but EBIT dropped by 47%.
The company said that it expects to meet its full year revenue guidance of A$220m-240m (US$169m-184m), and that significant cost reduction measures are under way.
Other figures show diluted earnings per share dropped from 13.9 cents in 1H16 to 7.2 cents. The company said a build up of Australian label inventory by China/Hong Kong resellers in 2H16 and 1H17 led to an oversupply, causing widespread discounting on Chinese e-commerce platforms.
Debt grew from A$0.1m (US$77,000) June 30, 2016 to A$14.6m (US$11.2m) December 31, 2016, while net cash dropped from A$32.2m (US$24.7m) to A$1m (US$767,000) over the same period. Inventory also grew to more than A$100m (US$76.7m).
Turnaround takes 18 months
Bellamy’s said returning the business to sustainable growth will take 18 months. For 2H17, The company said it expects net profit after tax for 2H17 and FY17 to range between 4% and 6% of revenue.
Acting CEO Andrew Cohen said the company was reviewing its supply chain to reduce ingredient costs, and plans to increase the number of stores selling its products in China.
Proceedings launched
Bellamy’s Australia Limited also acknowledged it has been served with a representative proceeding filed against Bellamy’s in the Federal Court of Australia in Victoria.
The statement of claim includes allegations of contraventions of the Corporations Act 2001 (Cth) in relation to misleading or deceptive conduct and continuous disclosure obligations.
Bellamy’s said it will vigorously defend the proceedings.
Bellamy’s share prices again took a tumble following the announcement of the financial results, dropping to A$4.30 (US$3.30), however, following the extraordinary board meeting, prices recovered to A$4.45 (US$3.41) when trading resumed.