On Tuesday, a class action against the New Zealand company was filed in the Supreme Court of Victoria on behalf of investors who bought shares between 19 August 2020 and 9 May 2021 where it was alleged that a2 Milk engaged in misleading or deceptive conduct.
In a new statement, a2 Milk CEO and managing director David Bortolussi responded to the allegations and confirmed that the company will be defending the class action brought forward by Slater and Gordon Lawyers.
“The company considers that it has at all times complied with its disclosure obligations, denies any liability and will vigorously defend the proceedings,” Mr Bortolussi said.
“The company remains confident in the underlying fundamentals of the business and growth potential.”
On 10 May, it’s alleged that a2 Milk noted a review of its China business and a “blowout” of over $92.9 million in provisions for old stock resulting in a group EBITDA margin of 11-12 per cent, down from 30-31 per cent in August 2020.
Slater and Gordon class actions practice group leader Kaitlin Ferris said the New Zealand company knew or should have been aware that the full year FY21 guidance did not “adequately consider” factors that could have impacted its financial performance, including an alleged attempt to increase sales by pushing English label infant formula tins through the cross-border e-commerce channel “with discounting consequences that would in turn negatively impact sales in the daigou channel”.
“As a result of our investigation following a2’s profit downgrades throughout FY21, we concluded that there was a strong basis to allege that the company provided misleading guidance and was obliged to correct the market’s understanding of its financial position at a much earlier time,” Ms Ferris said.
Neil Griffiths
Neil is the Deputy Editor of the wealth titles, including ifa and InvestorDaily.
Neil is also the host of the ifa show podcast.
