The Federal Court has ordered food manufacturer Noumi Limited to pay a penalty of $5 million after it admitted to breaching its continuous disclosure obligations by overstating the value of inventory.
The Court found Noumi, when it was trading as Freedom Foods, failed to disclose material information about the value of inventories in its financial reports for the full year ending 30 June 2019 (FY19) and the half year ending 31 December 2019 (HY20). Those accounts were overstated by $31.77 million in FY19 and $36.6 million in HY20 as a result of the inclusion of the unsaleable inventory.
The Court also found Noumi’s HY20 disclosed revenue from sale of goods was overstated by at least $9.8 million and its HY20 disclosed profit was overstated by at least $8.5 million.
ASIC Deputy Chair Sarah Court said, ‘Companies have a fundamental responsibility to ensure compliance with their continuous disclosure obligations. By failing to do so, they not only cause harm to investors by denying them the information they are entitled to, they also erode confidence in Australia’s financial markets.’
Noumi was ordered to pay a contribution to ASIC’s legal costs. The penalty is to be paid by Noumi by way of three separate instalments.
Noumi admitted the contraventions, consented to orders being made and the parties made joint submissions on penalty and costs.
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Background
Noumi is an Australian company listed on the ASX in the business of manufacturing and selling dairy and plant-based beverages and nutritional products. Prior to 2021, Noumi also manufactured and sold cereals and snack food products.
Noumi traded as Freedom Foods until 30 November 2021.
ASIC commenced civil penalty proceedings against Noumi and its former managing director and CEO Rory Macleod and its former CFO and company secretary Campbell Nicholas on 24 February 2023. See 23-042MR.
ASIC’s proceedings against Mr Macleod and Mr Nicholas are ongoing.