March 4, 2015 Sophie Langley

Freedom Foods has reported a Net profit of $55.2 million for the first half of the 2015 financial year. However, the Net Profit figure was boosted by the inclusion of a post-tax fair value gain of $52.2 million from the gain on reclassification of the A2 Milk Company investment.

The Company achieved an Operating EBDITA of $6.3 million (including interest from Associates), a marginal decrease of 1.4 per cent on the previous corresponding period.

Freedom Foods is the largest single shareholder in the A2 Milk Company, which owns and commercialises unique and comprehensive intellectual property rights relating to A2 brand milk and related dairy products in a range of international markets including Australia. Freedom Foods has now reclassified its shares in the A2 Milk Company as Available for Sale. Commentators have suggested that Freedom Foods might be hoping to sell off some or all of its shares in the A2 Milk Company to offset profit losses.

The Company said its profit loss result reflected the impact of commissioning of the new nutritional snack equipment reducing manufacturing recoveries and gross margin during the half, although there were increased sales in all business units.

UHT operations and Specialty Seafood performed ahead of the prior year. The Company said it considered the operating EBDITA result satisfactory considering the significant investment and commissioning of plant being undertaken and adjustments required to the operating structure of the business in this phase.

Reclassification of investment in A2 Milk Company

Freedom Foods acquired additional shares in the A2 Milk Company in the first half, for a total net consideration of $538,000.

During the first half of the 2015 financial year, Freedom Foods reclassified how it accounts for investment in the A2 Milk Company to an Available for Sale investment.

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Freedom Foods carries substantial trading decline and puts price on A2