Noumi Limited (NOU) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to Freedom Foods' Annual General Meeting for the 2020 financial year. My name is Perry Gunner, the Chair of the Board. And I would like to thank you all for attending our first-ever online AGM this morning. However, I need to notify you that we are adjourning for 15 minutes of the meeting to allow our notice we have lodged with the ASX to be released. We thank you for your patience in regard to this matter, and we'll be recommencing the meeting at 11:15 a.m. Sydney time. [Break]

Good morning, again, ladies and gentlemen, and thank you for your patience due to the adjournment we made just prior to commencing our meeting to allow an ASX notice to be released. And that will be referred to later in our presentations today. So continuing on, this year, we are holding the AGM in a virtual environment due to the difficulties imposed upon us by COVID-19 of gathering in large groups and crossing state borders. Unfortunately, in my case, as I live in Adelaide, this means that I am unable to join the other directors who will appear on video in Sydney. However, a virtual meeting allows us to be able to provide all of our shareholders, wherever located, with the opportunity to participate in our AGM in a way that is safe and responsible during these challenging times. We are now past the nominated time for the meeting, as you're aware. And I have been advised by the Company Secretary that a quorum is present. So I can now declare the meeting open. Before we begin, I would like to acknowledge the traditional owners of the country on which we meet today and pay our respects to their elders past, present and emerging. Joining me today are Nonexecutive Director and our Deputy Chair, Tony Perich AM; Nonexecutive Director, Ron Perich; Nonexecutive Independent Directors Trevor Allen, Jane McKellar and Genevieve Gregor; Alternate Director, Tim Bryan; Interim Group CEO, Michael Perich; Acting CFO-in-waiting, Josée Lemoine; and General Counsel and Company Secretary, Justin Coss, who will act as our moderator later in the meeting. Representing our auditors is David White of Deloitte, who will be available in the normal course to answer questions from shareholders. We will conduct today's AGM in 3 main parts after this brief introduction, through which I'll share information on the voting procedure. Following that will be the Chair's address. I will then hand over to Michael who will provide a business update, followed by Genevieve who will provide an update on the proposed capital raise. And then we'll turn to the formal business of the meeting. Today's meeting is being held online via the Link Market Services virtual meeting platform. This platform allows shareholders, proxies and guests to attend the meeting virtually. All attendees can watch a live webcast of the meeting. And in addition, shareholders and proxies have the ability to ask questions online via the platform and to submit votes. If you do lose connection to the meeting at any time, you can log back into the AGM online platform by returning to the Link log-in page and following the prompts. You will then receive an automated e-mail with a recovery link for you to click on. Click on this link to reconnect to the AGM. Alternatively, please call our share registry provider, Link Market Services, on 1 (800) 990-363 for assistance. [Operator Instructions] Questions can be submitted now or at any time before the meeting considers the item of business to which your question relates, and questions will be dealt with at the appropriate time. Please note that while you can submit questions from now on, we will not address them until the relevant time in the meeting. Please also note that our questions may be moderated and we -- and if we receive multiple questions on one topic, amalgamated together. [Operator Instructions] All questions will go through to the moderator for the meeting. The moderator will identify each person who asks a question, read out the question and will then pass the question to me as Chair of the meeting. I will either answer the question or pass it to the most appropriate person to answer. We reserve the right to rule out questions that do not relate to the business of the meeting. We will also not answer questions that are the same or substantially similar to questions that have already been answered or may combine questions dealing with similar content. Otherwise, we will endeavor to answer as many of the questions as we can. All resolutions to be considered at this meeting will be determined by poll. If you are eligible to vote at this meeting, a new polling icon will appear. Selecting this icon will bring up a list of resolutions and present you with voting options. To cast your vote, simply select one of the options. There is no need to hit a submit or enter button as the vote is automatically recorded. You do, though, have the ability to change your vote up until the time I declare the voting closed. I now declare voting open on all items of business. The polling icon will be apparent on the platform by means of which you can submit your votes at any time. I will give you a warning before I move to close the voting. After Michael's and Genevieve's presentations, I will formally strip through the voting resolutions. At this stage, are there any questions relating to the procedures of the meeting?

There aren't any questions, Chair, about the procedures for the meeting.

Thank you. I now report that the minutes of the previous Annual General Meeting held on the 15th of November 2019 have been approved by the Board and signed by myself as Chair. A copy of those minutes is available to any member wishing to inspect them on the company's website in the Investors & Media tab under Results & Presentations. I will now turn to the Chairman's address. It is no understatement to say that this has been a difficult year for your company. The full year accounts we released at the end of last year were confronting for all of us, not the least of you, our shareholders. They were the result of a number of factors going back several years, not all of them within our control, including the unpredictable impact of COVID-19. In short, it has become clear that the growth the company has delivered in recent years has, in many parts of the business, not been profitable growth. In addition, there have been aspects of our culture that have not delivered the best outcomes for the company and its shareholders. Once identified, the Board and management have been determined to isolate and address these matters across governance, culture, personnel and crucially our operational performance. Let me assure you that this process is well underway. Significant changes have already taken place, and every identified matter is in progress of being remedied. The turnaround of this business is a work in progress, but we are well advanced. The end result will be a company that is better governed, better managed and delivers better sustainable performance for all shareholders. Now let me run through some of the changes the Board has implemented in the past year. Our first challenge was to stabilize the business, identify the matters that needed to be addressed and put it on a sound financial footing. With the ongoing support of our majority shareholder, the Perich family company Arrovest, we were able to negotiate a standstill agreement with our banks. This gave us the breathing space to determine the best options to recapitalize the business. And it gave our suppliers, customers and employees the confidence that we would be able to work through these challenges without substantial disruption to the business. As you know, for several months, we have been working on a specific recapitalization plan with a potential new investor involving a convertible note. Unfortunately, the potential investor, the company and our banks were not able to agree acceptable terms. Following detailed and in-depth negotiations over several months, this was both unexpected and disappointing. However, as you can see from our announcement this morning, I'm pleased to say that we've now reached an indicative in-principle agreement with Arrovest, which has the indicative and in-principle support of our banks, for a recapitalization based on a similar structure to the original convertible note proposal. In effect, the Perich family's related entity, Arrovest, has stepped up as the cornerstone investor in an issue of secured convertible notes. This funding will provide Freedom Foods with sufficient working capital and a stable capital structure to enable us to continue our financial and operational turnaround. Importantly, the structure will provide an opportunity for shareholders who meet the wholesale investor requirements under the Corporations Act to participate in the recapitalization. Genevieve will shortly provide an update on the recapitalization process and what it means to shareholders. In terms of governance and culture, we have started at the top. We have completely refreshed our executive team, led by Michael Perich and our new CFO-elect, Josée Lemoine. And the Board renewal process we commenced early last year with the appointments of independent nonexecutive directors, Genevieve Gregor and Jane McKellar, before these matters were identified has continued. Both Genevieve and Jane bring enormous experience and energy to the Board. During the challenges of the past few months, their presence and contribution has been invaluable. You'll hear the -- have the opportunity to hear a little more about both directors later when you are considering their elections. As foreshadowed at the end of last year, if elected today, Genevieve will replace me as Nonexecutive Chairman at the conclusion of the meeting. In addition to these appointments, Tim Bryan, a current alternate director to the company, has been nominated by the directors for election. Tony Perich will also retire by rotation at the end of the meeting and is standing for reelection at today's meeting. You again have the opportunity to hear a little more about Tim and Tony when considering their election and reelection, respectively. At the conclusion of the AGM, Ron Perich will retire from the Board. [ On behalf ] of the Board, I would like to thank Ron for more than 17 years of invaluable service and support for Freedom Foods. Also, at the conclusion of the AGM, Trevor Allen will retire from the Board. On behalf of the Board, I would like to thank Trevor for more than 7 years of invaluable service. As signaled earlier, at the conclusion of the AGM, I will also be retiring from the Board after 14 years as your Nonexecutive Chairman. The Board will continue to focus on ensuring that the company has the appropriate mix of skills, experience and diversity to guide your company through the challenges of the present and the opportunities of the future. In particular, a search for an independent director as permanent Chair of the Finance and Audit Committee is well underway, a role qualified chartered accountant Tim Bryan will fill in the interim. Aside from rebuilding the senior team, the Board has been focused on reinforcing internal systems and controls particularly around risk and addressing our culture through a redesign of employee remuneration and associated governance frameworks. As you will have seen in the Notice of Meeting, the Board's People and Culture Committee, led by Jane, has led a substantial revision of our cultural framework, talent refreshment and remuneration policies and structure to ensure they are aligned with the best principles of incentive and accountability. While this is still work in progress, especially as it relates to specific KPIs which will be dependent on the capital raising structure, much of the work has been completed. The Board Risk and Compliance Committee, led by Genevieve, has led a substantial enhancement to the company's risk management framework, policies and procedures, involving external consulting advice and strong input from our team. Across the business, we continue to improve and strengthen financial reporting and cash flow monitoring and processes. We have reviewed and updated costing standards and accounting policies and practices. We have appointed a new General Manager, Internal Audit as well as a new General Counsel and Company Secretary, Justin Coss, who is in attendance today. And we have worked with Michael and his team to improve internal management processes and business intelligence, such as inventory controls and delegations of authority, while providing a clearer focus on operational KPIs and reporting. Turning to our operational performance of the business. Michael and his executive team, aided by external consultants, have led a root and branch review of the business. Across the business, we have reviewed the economics of every product line, every site, every sales channel and every market segment to ensure we are focused on those with the greatest potential. We are removing or repositioning products that are not delivering value and investing in the ones that are. We must deliver profitable growth. One of the outcomes of this review is the decision to sell the Cereals & Snacks business to The Arnott's Group, which we announced in mid-December and which we expect to complete in March. We believe cereal and snacks will thrive under the Arnott's umbrella given their commitment to invest in the business and its employees. We are also reviewing the future of our Specialty Seafood division with the possibility of a divestment of that business as well. That will leave us focused on our Dairy and Nutritionals and Plant-Based Beverages operations where we see enormous scope for improvement and growth here and as well overseas. These are also categories that are tapping into long-term consumer trends. As you will see in our full year results, those businesses delivered revenue growth of 26% in the recent financial year, with particularly strong demand for our MILKLAB brand and lactoferrin products. Michael will provide more detail about our operational turnaround and some early encouraging signs of progress in his address shortly. I'd like to give special thanks to all the employees of Freedom Foods for their hard work and dedication through a period of significant disruption and uncertainty. They have managed the challenges of COVID-19 with dedication and ensured we have never lost sight of delivering the best service and support to our customers and suppliers. On behalf of the Board, our warmest thanks to you. As mentioned, this will be my last AGM as your Chairman, and I'll be handing over to Genevieve Gregor. Notwithstanding the deep disappointment of the past year, it has been a privilege to have worked with the Freedom team and fellow Board members. I am confident that I'll be leaving Freedom in the very capable and committed hands of a new Board, a new Chair and a new executive team. I wish the company all the best for what I know will be a brighter future. I will now ask Michael to [ address the meeting ]. Thank you, Michael.

Thank you, Perry, for the introduction, and thank you all for joining today's virtual AGM. As Perry has mentioned, there has been a huge amount of work going on at Freedom Foods since the Board was first made aware of the matters that for some time have been masking the true performance of the business. This work has been forensic. It has covered nearly every aspect of our structure, our finances, our personnel, our operations, our systems, our governance and our culture. Some of these results have been visible to shareholders through our ASX announcements, including the new management team, the divestment of the Cereals & Snacks business, the recapitalization and the painful restatement of the past financial results. However, much of the work has been happening behind the scenes. I'd like to take this opportunity to update you on the work that it's -- and the positive changes we are making at Freedom Foods, some of the early signs of success and how we will deliver long-term sustainable growth to our shareholders. Despite all of the challenges of the past 10 months, what has become clear is that there remains a fundamentally strong business at the heart of Freedom Foods: a market-leading Dairy business and Plant-Based Beverages and Nutritional, with the best days ahead of it. Our mission is to strip back all the unnecessary complexity in the business, in its structure, its product mix and its operations to ensure these core businesses and brands can be supported to deliver profitable growth. The most obvious change to address this complexity has been the decision to sell Cereals & Snacks, which Perry touched on earlier. Our Specialty Seafood division is also under review, and a decision on whether to retain or divest this business is expected to be made at the appropriate time. The simplification of the Freedom Foods business is happening in numerous other ways, too. As Perry said, we have been reviewing every product line, every site, every sales channel, every market segment to ensure we are focused on those with the greatest potential. We are removing or repositioning products that are not delivering value and investing in others that are. As a result, you will see a greater investment in brands, particularly MILKLAB, our PUREnFERRIN lactoferrin product, Australia's Own and Vital Strength. You will see strategic new product development [ rather ] than some of the ad hoc launches of the past. You'll see us target large and growing addressable markets for plant-based and dairy beverages here and overseas. You will see a continued commitment to reducing wastage, inefficiencies and risks across the business, simultaneously improving productivity and margins. At our sites, especially Shepparton, we are constantly measuring and recording wastage that occurs through all the processing steps. This is a critical KPI of the operations team. Some of the simple but highly effective measures we have already implemented include significant improvement in planning production runs at our key facilities. One of the drawbacks of having too many product lines or SKUs is the need to constantly stop and start production lines, involving significant lost time and costs for marginal returns. In the past, we supported our customers by providing products with varying formulations, which introduced complexity and reduced returns because every single change in the formulation requires a full wash-down of the facility before the next product line. Fewer product lines, better planning, allowing longer runs between product changeovers and ensures our world-class facilities at Shepparton and Ingleburn are operating efficiently. We measure time utilization across our sites with the aim of achieving best-in-class performance. We are also addressing our product formulations and ingredients, particularly to ensure that product specifications match their price point and can deliver quality brands for our consumers. Naturally, we would never compromise quality of our products, but selling a higher-protein product at a lower price bracket is simply giving away margin. Some of this occurs through the way the sites are configured as we are not able to separate the highest-specification product. We are looking at all cost-effective opportunities to reconfigure the sites to ensure the right quality and specification for every product. Apart from the operational improvements, I have worked with the Board to instill and embed a culture within Freedom Foods where policies and procedures are applied uniformly, all employees are treated with respect, and our workforce is united behind one clear, coherent and consistent vision built around our commitment to safety and quality. Specifically, we have implemented clear reporting lines that are designed around business outcomes; senior leadership initiatives focused on building the culture within the team; an improved governance, compliance and risk framework to ensure that the risks are identified and escalated and that accountability flows through the business; and a new internal audit function. Despite the challenges of the past year, the feedback from our team to these changes has been positive. All of this work is taking place against the backdrop of the continued uncertainty in the consumer economy largely caused by the COVID-19 pandemic. The various lockdowns around the country around the holiday period have affected our out-of-home sales, and the prices of some products, such as bulk cream, remain below historical levels. However, we continue to see strong year-on-year growth on our MILKLAB range with new customers coming on board here and overseas. Our world-class lactoferrin facility in Shepparton is now fully commissioned. As you have seen, we have recently announced the partnership with the University of Newcastle to examine the effects of PUREnFERRIN lactoferrin against rhinovirus or common cold, influenza and coronavirus. At the full year results in November, I indicated that year-to-date, the business had returned a small profit of an unaudited adjusted EBITDA basis before restructuring and one-off costs. I'm pleased to say that positive trend has continued. We will provide a more comprehensive update on our performance at the time of our first half results in late February. I'd like to thank our farmers, our suppliers, our customers, who are all critical components of our supply chain for their continued support. Like Perry, I would also like to extend a special thanks to the entire Freedom Foods team for their commitment and dedication during what has been a challenging year. Finally, to our shareholders, thank you again for joining us virtually today. Thank you for your patience through the past 10 months as we have worked hard to turn around the business. There's a long way to go, but with the right people, culture, capital structure, I'm very confident that we are on the right path. I will now ask Genevieve Gregor to give you an update on the recapitalization process.

Thank you, Michael. The Board felt that I was the most appropriate person to provide an update on the recapitalization process as I have been the most heavily involved from the Board. I clearly did not expect to be working through a situation such as this when I joined the Board in March last year. But it turns out my career in banking and finance, particularly debt restructuring and turnarounds, has provided me with an ideal experience and expertise for the circumstances we find ourselves in. Early in this process, it was clear to the Board and its advisers that the company would require a substantial reset of its capital base to enable it to undertake the necessary actions to stabilize the business and turn around its performance. We are enormously fortunate to have been able to call on the continued financial support of Arrovest and the Perich family. This support has allowed the company to put in place a standstill agreement with our banks, and the Perich family guaranteed the interim liquidity needs of the business, which has given us time to work through the audit and the best options to recapitalize the business. Working with our advisers, we sought from the market the best funding opportunities available at the time for the company. Throughout this process, the Board's overriding concern has been to act in the best interests of the company, its stakeholders and all of its shareholders. In particular, we have prioritized options that have provided significant senior deleveraging, the least dilutive effect on existing shareholders and capital that provides the company with the best opportunity to resolve the current legal disputes it faces. One of the challenges with a traditional equity raising was the prospect, now the reality, of a shareholder class action and its impact on the appetite to underwrite an equity offer. This meant that a secured convertible note instrument, as previously flagged, was considered a better option for the company. A convertible note gives new investors an increased level of downside protection and provides existing shareholders with the potential to share in any equity upside. Since late last year, we have been exclusively negotiating with a potential new investor along with our banks. Negotiations with that potential new investor have now ceased. As Perry mentioned, unfortunately and disappointingly, given the time invested, the investor, the company and our banks were not able to reach acceptable terms. As you can see from our announcement this morning, we have now reached a conditional in-principle agreement with Arrovest, the Perich family entity, for recapitalization of the business based on a similar structure to the original convertible note proposal. That in-principle agreement has the indicative nonbinding in-principle support of our banks. In effect, the Perich family's Arrovest has stepped up as the cornerstone investor in the issue of unlisted secured convertible notes. Arrovest will invest a minimum of $100 million of the issue size and a maximum of $200 million depending on the take-up by other Freedom Foods shareholders or other investors. This funding will allow Freedom Foods to partially repay its senior term and revolving secured debt and to provide it with sufficient working capital and a stable capital structure to enable the company to continue its financial and operational turnaround. Importantly, the structure provides an opportunity for all eligible Freedom Foods shareholders to participate in the recapitalization by opting to subscribe for a convertible note on the same terms as Arrovest. Further details will be provided on the recapitalization as soon as we can -- have concluded documentation with the banks and Arrovest. Of all the options available to the company, the Board believes this one is in the best interests of the company and all of its shareholders. To be clear, you are not being asked to make a decision on the recapitalization today. It is not on the agenda for this meeting. You will have plenty of time to read all the documents, ask any questions and make your own decisions based on your own circumstances. I'll now hand back to Perry.

Thank you, Genevieve. We now come to the more formal matters of the meeting today. The Notice of Meeting dated 21 December 2020 was circulated to members, and I will take that Notice of Meeting as being read. I would also like to advise that I as Chair intend to vote all undirected proxies in favor of all resolutions. The procedures will be as follows. At each proposed resolution, I will introduce the resolution. There will be an opportunity for proxyholders and shareholders to ask questions on the resolution through our online platform in line with the process that I previously described. A slide will show the proxies received prior to the meeting for each resolution. Those persons entitled to vote on the resolution may cast a vote on the resolution at any time before the close of the poll. And the results of the poll will be released on the ASX company announcements platform and made available on the company's website as soon as possible after the close of the meeting. I will now move to the business of the meeting. The first item of formal business is to receive and consider the financial report, the directors' report and the independent auditor's report of the company for the financial year ended 30 June 2020. This item of business does not require shareholders to vote on the resolution or to formally adopt the reports. Shareholders or their proxies may comment or ask questions about the reports or about the management of the company. Shareholders or their proxyholders may also ask a question of the company's auditor in relation to the conduct of the audit, preparation and content of the audit report, accounting policies adopted by the company and the independence of the auditor in carrying out the audit. I will take the reports as having been read. I would now like to open the floor to questions. I also note that there will be an opportunity to ask questions about specific resolutions or resolutions further on in the meeting when we move through the formal part of the meeting. I hope you will appreciate there are many questions we cannot answer or cannot answer as comprehensively as we would like due to the legal claims against the company, which are now before the courts and the ongoing regulatory investigations. So I'll ask the moderator, are there any questions at this point in time?

Yes, Chair, there are a number of questions. The first question is from Mr. [ John Davies ]. And it is, what's the best case and worst case in regard to the Blue Diamond litigation? What does Freedom Foods hope to gain from the litigation?

Thank you, [ John ], for your question. I'll actually ask our Legal Counsel to respond to that question. Justin?

Certainly, Perry. Firstly, I'd say that it's inappropriate to comment on matters that are before the courts. But certainly, we're vigorously defending the matter, and we certainly intend to update the market at the appropriate time.

Thank you, Justin. Any further questions?

Yes, Chair. We have another question from [ John Davies ]. What is the time line in providing information to shareholders on the recapitalization plan? Will we receive forecasts and information about the solvency of the business?

Thank you, [ John ], again, for your question. I believe Genevieve would be the most appropriate person to answer that question because as she has indicated, she has [ head carriage ] of this matter on behalf of the Board. Genevieve?

Thank you for the question. So the time line -- more -- further information will come out, but the time line is linked to the information on the half year results in late February. We're targeting to issue those results in late February. And then following that, a prospectus and an independent expert's report will be prepared as part of the convertible note issue. And in the prospectus will be the terms of the convertible note. So please watch the company website for further information on the time line. Thank you.

Thank you. Mr. moderator, any further questions?

Yes, Chair. The next question is again from [ John Davies ]. And it is, what was Deloitte's materiality in completing the audit? Why didn't they discover the errors? What accountability do they have?

Thanks, [ John ], for your question. In planning the audit for FY '20, we took into account a number of qualitative and quantitative factors in setting our materiality that was appropriate for our audit of the financial statements. As you may be aware, I rotated on to the auditors as the signing partner for FY '20. So I'm not in a position to provide any comments in respect of prior year materialities or audit procedures performed for prior periods.

Thank you, David. Any further questions?

Yes, Chair. There's another question from [ Frank Ramsey ], and it is as follows. Page 106, related party transactions, Note 35, Dairy Four milk purchases, $12.3 million. How is integrity of that amount tested by our audit in relation to market rates?

Thank you, [ Frank ], for the question. David, I think, may wish to address that question.

So firstly, thank you for the question. Our audit is conducted to provide an opinion on the financial statements as a whole, not individual transactions or balances. In respect of the milk purchases and purchases more generally, we -- they were subject to specific tailored audit testing to address a number of assertions, including [ complete list ], accuracy and measurement.

Thank you, David. Any further questions?

Yes, Chair. There's another question relating to the audit from [ John Davies ]. Has ASIC reviewed Deloitte's audit files in 2019 or 2020? What were their findings?

Thanks for the question. I'm not in a position to make any comments in respect of matters relating to the regulator.

Thank you, David. Any further questions?

Yes, Chair. We have a question from [ Laura Hubert ]. And it is, will legal action be sought against the ex-CEO, CFO and Deloitte regarding fraud and gross misconduct?

Thank you, [ Laura ], for your question, which I will answer. These matters are subject of ongoing investigations by the regulators and court proceedings. And therefore, whilst we are cooperating with the regulators, we cannot make any further comments today. Any further questions?

Yes, Chair. This question comes from [ Peter Corr ]. Will cash flow from operating activities turn positive in first half 2021? And how large is the impact of the strong Australian dollar on export earnings?

Michael, would you like to answer that question on behalf of the Board?

Thank you for your question. At this point in time, we're not providing any forecast on current results. We will be presenting half 1 results of 2021 at the end of February. The business also has a hedging policy to manage current FX movements.

Any further questions?

Yes, Chair. The next question comes from [ Frank Ramsey ]. Would divesting the dairy farm business assist the simplification policy?

Again, [ Frank ], thank you for your question. And again, I'll ask Michael to answer it.

The dairy business is a world-class facility. And the Board will review all parts of the business in due course. With the strategic review of the business, we have identified initiative to simplify the dairy business.

Thank you, Mike. Well, any further questions?

Yes, Chair. The next question comes from [ Neil Gilmore ]. Has any consideration been given to selling the Freedom Foods holding in AFMH? This investment doesn't show much in the way of return especially when considering the fact that the funds for its original purchase came from the sale of a2 Milk shares back in 2015. As a2 Milk remains a key customer of AFMH, it leaves a pretty sour taste for FNP shareholders.

Thank you for your question. AFMH is a strategic investment on behalf of our business. It provides part of our milk supply. It is also important in our marketing of our milk brands. Like all investments, it is always reviewed, and AFMH remains one of those investments that we continue to review. Are there any further questions?

There are, Chair. This question comes again from [ Laura Hubert ]. Can you give an update on your legal issues? And how are you currently placed with each of them?

Again, Justin, as Legal Counsel, I'll ask you to respond to that question from [ Laura ]. And thank you, [ Laura ], for your question.

Thanks, Perry. I've already commented, of course, on the Blue Diamond matter, so I won't repeat my comments there. In relation to the ASIC investigation that we have disclosed, of course, the investigation's ongoing, and the company is cooperating fully with the regulator. It wouldn't be appropriate to comment in any greater detail. But of course, we will update the market at the appropriate time. In relation to the class action, we have announced to the ASX late last year that we received service of a class action brought by Slater and Gordon. We have appointed lawyers, Arnold Bloch Leibler, to defend the matter, and we will be doing so vigorously. Again, it wouldn't be appropriate to comment on -- in detail on the merits or otherwise of the class action. But again, we will also update the market at the appropriate time.

Are there any further questions?

Yes, Chair. We have another question from [ Lance Trudell ]. And that is on the last 3 occasions the Board have fronted shareholders, there has been a material announcement within a couple of hours before the meeting, allowing shareholders very little time to digest the contents and ask appropriate questions. Why would I invest in recapitalization when the Board treats its communication with shareholders with such disdain? We are not mushrooms to be kept in the dark and fed manure.

We certainly understand that frustration, and thank you for your question. We have, on those occasions, not been in a position to release the matters earlier. And had we been so, we would have. But certainly, we understand the frustration and apologize for it. Thank you. Any further questions?

Yes, Chair. We have a question from Elton Ivers. Who in the key management personnel have a dairy industry or consumer staples industry experience prior to their work with Freedom Foods?

Again, I'll ask Michael. Thank you for the question. Again, I'll ask Michael to address it.

Thanks, Elton, for your question. So regarding dairy, myself has extensive role before taking this position as interim CEO of Freedom Foods, and the CFO-elect on consumer-based products. And we will be supplementing the KMP prior -- post the recap.

Thank you, Michael. Are there any further questions?

There is one further question, Chair, and I'm just pulling it out of the system. The question is, Page 19, risks for the AFMH business, should animal health be listed?

Michael, you could address the -- thank you for the question. Michael, could you address the issue of animal health? I mean it's a very important issue as far as the company is concerned.

Actually, Perry, it's Genevieve. I might take that as Chair of the Risk Committee. I agree, it is absolutely a risk we should be focused on and making sure that, that is a focus. I'll take it on notice to, in the future, include that in the ESG reporting. But certainly, one thing I would say is that AFMH is widely regarded in the industry as being a leader in animal husbandry. So I think we can take that on notice for the future. Thank you.

Yes, yes. And I would endorse Genevieve's statements about AFMH. They are certainly highly regarded in that respect. Are there any further questions?

There are no further questions, Chair.

Okay. With that, clearly, further questions can be asked with the resolutions as we go through them. So the first resolution relates to the remuneration report. And that is the…

One more question coming on. I apologize, we have had one more question come in, Chair, if I may. Question from [ John Davies ]. Deloitte's audit report states that, "Due to significant control deficiencies, they have adopted a substantive audit approach." At any point in time, has Deloitte raised concern about significant control issues? If not, why not? If they did, what did management and the Board do about these deficiencies?

Thank you for your question, [ John ]. David, would you like to address that in the first instance? I might make some further comment.

Sure. Thanks, Perry. In the conduct of our audit, we consider both the controls and a substantive audit approach. Where controls can't be relied upon, we have to do a fully substantive audit. This was the case in respect of the FY '20 audit that we have just completed. During that audit, where I identified control deficiencies, they have been reported through to the management team and also the Board.

Thank you, David. And with respect to where the company's position is, again, we can only say that we are cooperating with the regulators and cannot make any further comment. So Justin, that would conclude the questions at this stage?

At this stage, Chair, there are no further questions.

Yes. Any question relating specifically to the resolutions can be made at that point. So I am now moving to resolution 1, which is a nonbinding resolution to adopt the remuneration report. And this is, as indicated in the Notice of Meeting, that the remuneration report as set out in the annual report for the year ended 30 June 2020 be adopted. Please note that the vote on this resolution is advisory only and does not bind the directors or the company. Shareholders are encouraged to read the explanatory memorandum for further details on the consequences of voting on this resolution. I would also like to advise shareholders that the company will disregard any votes as stated in the voting exclusion statement related to resolution 1 as set out in the Notice of Meeting. In the interest of governance, the Board does not make a recommendation to shareholders in relation to this resolution. So are there any questions in relation to this resolution?

No, chair. There are no questions on this resolution.

Therefore, at this stage, I'll have the proxies displayed for this resolution. So if there's no further discussion, I now put to the meeting resolution 1. So please now select either for, against or abstain for resolution 1, remembering, of course, that the ability to vote continues on right through the meeting and for a 5-minute period after the meeting closes. [Voting]

So I now turn to the 4 resolutions, which are the reelection of Tony Perich AM as a director and the election of 3 directors: Genevieve Gregor, Jane McKellar and Tim Bryan. Tony, Genevieve, Jane and Tim will each address the meeting to outline why they are seeking your approval to continue or to be appointed as a director. And then afterwards, we will come back to consider the reelection of each of them individually. So Resolution 2 is the reelection of Anthony (Tony) Perich AM, who retires in accordance with clause 74(3) of the company's constitution and, having offered himself for reelection and being eligible, be reelected as a director of the company. So Tony, would you like to say a few words to the meeting?

Yes. Thank you, Perry. A little bit on myself. I became a director of Freedom Foods in 2006 when our family first invested in the so-called So Natural Foods. At the time, we saw enormous potential to create a major Australian food and beverage business. And despite the painful challenge of the last 10 months, we still do. Through our family company Arrovest, we have provided and will continue to provide substantial finance support to the Freedom Foods Group. We look forward to working with all investors, existing and new, to complete the turnaround of this company, which is well underway, ensuring it remains an industrial lead in dairy and nutritional and plant beverages. We have -- in the past have been supported by you, the shareholder. Please do join the Perich family to continue to do that. As a director, I fully support the Board's renewal process and have brought new skills and experience on to the Board. I believe I bring to the Board a lifetime experience in agribusiness, the foods -- business development, the food sector and invaluable level of continuity while the Board and management continue their transformation of the business. Thank you.

Thank you, Tony. And again, further details about the resolution are also contained in the explanatory memorandum that accompanied the Notice of Meeting. The directors, with Tony Perich abstaining, unanimously recommend shareholders vote in favor of this resolution. The resolution is now set out on the screen. Are there any questions?

There are no questions on this resolution, Chair.

So if there are no questions and further discussion, I'll now put to the meeting resolution 2, and here are the proxies that have been received with respect to this resolution. So now could you please select either for, against or abstain for Resolution 2? [Voting]

We now move to resolution 3, the election of Genevieve Gregor as a director. And I will now move to -- this resolution that Genevieve Gregor, having been appointed as a director of the company since the last Annual General Meeting and who retires from the office of director in accordance with clause 74(3) of the company's constitution and ASX Listing Rule 14.4 and having offered herself for election and being eligible, be reelected as a director of the company. Genevieve, would you like to say a few words to the meeting?

Thank you, Perry. I joined the Board of Freedom Foods Group in March last year. And I was attracted to Freedom Foods for its simple promise of making food better and its potential to build on its success in becoming a major Australian food and beverage business. As I mentioned earlier, when I joined the Board, I was not expecting the significant challenges of the past year. But I have found myself in not -- unfamiliar situation where I hope my skill set has been valuable. My 25-year-plus career has been spent in and around banking and finance. Before my latest role as a Founding Partner at Colinton Capital, a mid-market private equity growth invested in Australian companies, I was the Co-Head and Managing Director of the Asian Special Situations Group for Goldman Sachs in Australia. In this role, I led investments in fast-growing Australian companies and provided capital to help turn around companies that find themselves in difficult situations. Some of the companies that I helped were listed. Freedom Foods qualifies on both those counts. Throughout the past 10 months, I have thrown myself into the restructuring and turnaround of the company and in particular the recapitalization process. I believe my understanding of the world of finance and investments will contribute to delivering the best outcome for shareholders and ensuring your company has this long and sustainable future. As the Chair of the Risk and Compliance Committee, I have also overseen the implementation of a robust risk framework and an uplift in the focus on compliance across the business, which will help avoid a repeat of the challenges we have faced in the past year. Just as I did when I joined the Board last March, I believe Freedom Food has great potential to be one of Australia's premier dairy and plant beverage businesses. I believe my skill set is exactly what Freedom Foods needs at this time. With your support, I look forward to continuing to serve on the Board and, if elected today, to lead the Board as Chair in the future. Thank you, Perry.

Thank you, Genevieve. Again, further details about the resolution are also contained in the explanatory memorandum that accompanied the Notice of Meeting. The directors, with Genevieve abstaining, unanimously recommend shareholders vote in favor of this resolution. The resolution is now set out on the screen. Are there any questions?

Chair, there are no questions on this resolution.

If there are no questions or further discussion, I now put to the meeting resolution 3, and we'll now display the proxies in relation to this resolution. Again, please now select either for, against or abstain on your voting button. [Voting]

I'll now move to the fourth resolution, which is to consider and, if thought fit, pass the following resolution as an ordinary resolution, that Jane McKellar, having been appointed as a director of the company since the last Annual General Meeting and who retires from the office of director in accordance with clause 74(3) of the company's constitution and the ASX Listing Rule 14.4 and having offered herself for reelection and being eligible, be reelected as a director of the company. Jane, would you like to say a few words on your behalf?

Thank you, Perry. Like Genevieve, I joined the company last year in May, and like Genevieve, I wasn't really expecting to find myself in this situation. However, the strength of the brands and the opportunities for growth in dairy, plant-based beverages and nutritionals remain compelling. And I believe my particular skill set has been valuable in helping the business navigate through the challenges of the past year, and they position it for a strong growth into the future. I bring to the Board a career spent in senior consumer-facing, digital brand and marketing roles, including at Unilever and Microsoft. As a former Chief Marketing Officer and then as a CEO for 15 years, both here in Australia and internationally, I've led teams to transform businesses in difficulty back to profitability and growth. It's this experience that I will continue to draw on to assist Freedom Foods. As Chair of the Board's People and Culture Committee, formerly the Remuneration Committee, I'm overseeing a comprehensive overhaul of the executive remuneration framework and the strengthening of cultural initiatives. I've also overseen the appointment of key senior management personnel. I also bring to the Board valuable governance experience as a nonexecutive director of other ASX-listed companies, the GWA Group and McPherson's Limited as well as being a nonexecutive director of the NRMA. With your support, I look forward to continuing to serve on this Board. Thank you, Perry.

And thank you, Jane. Again, further details about the resolution are also contained in the explanatory memorandum that accompanied the Notice of Meeting. The directors, with Jane abstaining, unanimously recommend shareholders vote in favor of this resolution. The resolution is now set out on the screen. Are there any questions?

There are no questions on this resolution, Chair.

So if there are no questions and no further discussion, I now put to the meeting resolution 4. And here are the proxies in relation to this resolution. I'd ask you now to please select either for, against or abstain for resolution 4. [Voting]

I'll now move to the fifth resolution, which is to consider and, if thought fit, to pass the following resolution as an ordinary resolution, that Timothy Bryan, having been appointed as an alternate director of the company and who has been nominated by the directors for election at the Annual General Meeting in accordance with clause 74(4) of the company's constitution and ASX Listing Rule 14.3 and having offered himself for election and being eligible, be elected as a director of the company. Tim, would you like to say a few words on your behalf?

I would. Thank you, Perry. As CEO of the Perich group of private companies, I was appointed as an alternate director for Tony Perich in December 2019 and then an alternate director for Ron Perich later in August 2020. My background is in accounting. And before joining the Perich Group in 2016, I was Managing Partner of Kelly & Partners South West Sydney. My role with the Perich Group and before that with Kelly & Partners has provided me with extensive experience in the agribusiness and food industries, which I bring to Freedom Foods' Board. As a chartered accountant, I've been asked to serve as the interim Chair of the Audit Committee, while the Board conducts a search for an independent director to serve as Chair of that committee moving forward. With your support, I look forward to serving on the Board as a director.

Thank you, Tim. And again, further details about the resolution are contained in the explanatory memorandum that accompanied the Notice of Meeting. The directors, with Tim abstaining, unanimously recommend shareholders vote in favor of this resolution. That resolution is now displayed on the screen. Are there any questions?

There are no questions, Chair.

If there are no questions and no further discussion, I now put to the meeting resolution 5. Again, please now select your voting button either for, against or abstain. [Voting]

I'll now move to the sixth and final resolution for us to consider today. And that is to consider and, if thought fit, to pass the following resolution as an ordinary resolution, that for the purposes of ASX Listing Rule 7.2, exception 13, and all other purposes, the Freedom Foods' equity incentive plan, EIP, as described in the explanatory memorandum accompanying the Notice of Meeting, be approved for the issue of securities under the Freedom Foods' EIP. Again, further details are in the explanatory memorandum. I would also like to advise shareholders that the company will disregard any votes as stated in the voting exclusion statement related to resolution 6 as set out in the Notice of Meeting. And in the interest of governance, the Board does not make a recommendation to shareholders in relation to this resolution. I will now display the resolution on the screen. Are there any questions or discussions about the resolution?

There's no questions about this resolution, Chair.

Okay. We'll now display the proxies in relation to this resolution. And again, could you please now select either for, against or abstain resolution 6 on your voting buttons? [Voting]

Ladies and gentlemen, that concludes the formal items of…

Come in -- yes, we have had a late question come in, which I think the Board may wish to answer. The question is from Kathleen O'Shea. When is the suspension of share trading likely to end?

That's not actually a question about that particular resolution. But Genevieve, are you prepared to answer that question?

Happy to, Chair. The company's shares will remain in voluntary suspension pending further details on the recap. But we anticipate that the shares will release after the execution of documentation for the recap and/or after the release of the first half results at the end of February. That way, the market will be fully informed for retrading. Thank you.

Yes. Thank you, Genevieve. And that's a very relevant question, and thank you for -- I didn't mean to indicate that we weren't prepared to answer it. So as I said, ladies and gentlemen, that concludes the formal items of business for our Annual General meeting today. As indicated previously, the voting system will remain open for 5 minutes after the close of the meeting to allow all votes to be properly cast. Please ensure that you have cast your vote on all resolutions. Again, as mentioned, results of these votes will be released on the ASX company announcements platform and will be available on the company's website as soon as possible after the close of the meeting. That concludes the AGM of Freedom Foods Group Limited. And I thank you for joining us today and having the patience in relation to the slight delay we had at the beginning. So thank you again.