See below for the article in today's The Australian.
The Perich family-backed Freedom Foods and its Chinese partner supplying nutritional foods to children will consider a future public listing of the joint venture as it prepares to supply infant formula into the Chinese market for the first time.
Freedom and the Guangzhou-based Shenzhen JiaLiLe Food Company last year signed a 50-year agreement that resulted in the launch of Australia’s Own Kid’s Milk aimed specifically at the toddler market in China.
Freedom revealed yesterday that the partners now expected to launch a specialised infant formula product next year, joining the rush of Australian players supplying infant formula products to meet soaring Chinese demand. The product will be initially distributed through specialised channels including online and offline mother and baby shops, using a leading channel distribution partner associated with JLL.
But Freedom chief executive Rory Macleod said infant formula was merely an extension of the Australia’s Own brand and not a “hero product’’ for the JV partners. “For both JLL and ourselves it is a natural extension but I don’t think it is something we see as a hero product in the stable,’’ he said.
“It is not the next big thing for us, it is part of the range.’’
The news came as Freedom reported a 58 per cent drop in statutory net profit to $23.4 million, a result affected by an accounting gain of $53.1m last year due to the reclassification of Freedom’s shareholding in a2 Milk. This year’s statutory result reflected a pre-tax gain of $25m from Freedom’s decision to sell its a2 shareholding during the half.
The company achieved an underlying operating EBIDTA of $7.5m, 32 per cent above the previous corresponding period. But Freedom shares closed 9.5 per cent lower at $3.73. The shares enjoyed big gains in the latter part of last year, surging over the $4 mark.
Freedom will pay an interim fully franked dividend of 1.75c a share in April, an increase of 0.25c per ordinary share on the interim dividend paid in the 2015 financial year.
Over the next five years, Shenzhen JLL, also the biggest producer of herbal teas in China, is expected to spend more than $US100m ($140m) on brand marketing and the distribution of Freedom’s dairy products and potentially cereal and snack products to children in China.
Mr Macleod said the partners were also considering longer-term ownership structures for the brand and business, including the potential for a separately listed company to provide long-term scale and capital. He said any listing, which would be a medium-term prospect, would probably take place in Hong Kong.
