Freedom Foods Group Limited Annual Report 2017

FY2017 Annual Report · Freedom Foods Group Limited
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2017
ANNUAL 
REPORT

GROWING THROUGH CAPABILITY

CONTENTS

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Chairman’s letter

Managing director’s review of operations

Directors’ report

Auditor’s independence declaration

Corporate governance statement

 Statement of profit and loss and other 
comprehensive income

Statement of financial position

Statement of cash flows

Statement of changes in equity

Notes to the financial statements

Directors’ declaration

 Independent auditor’s report to the  
members of freedom foods group limited

Shareholder information

Corporate directory

Freedom Foods is on a mission  
to make great tasting and high 
quality food and beverages that  
help Australians to eat healthier.

DAIRY

CEREAL

NUTRITIONALS 
& SPECIALTY

S N A C K I N G
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CHAIRMAN’S LETTER

Dear Shareholders

I am very pleased to be able to report a signiﬁcant year in the Company’s development as we 
build a new generation food and beverage company based in Australia, but operating in key 
international markets in China, South East Asia and North America.

The signiﬁcant investments we have made in recent years has enabled our Company to be 
uniquely and strategically well positioned to build scale in our key business platforms of plant 
based beverage, premium dairy and specialty cereal and snacks.

Our investment in recent years has been on creating a unique supply and manufacturing footprint 
in our key categories. We believe the ability to control supply and manufacturing inputs and more 
quickly deliver innovation across a range of product formats for our brands and key customers 
is a key strategic advantage in the medium to long term, particularly in value adding Australia’s 
unique agricultural base. While this has required signiﬁcant capital investment and patience, we 
will continue to invest to achieve this outcome.  

 
 
During the year, a number of initiatives were undertaken across our business activities, with  
the highlights including:

•   Completion of a new world class UHT dairy and plant milk processing facility at Ingleburn  

in Sydney. 

•   Purchase of the remaining 50% interest in the Pactum Dairy Group (PDG) UHT diary operation 

at Shepparton from our former joint venture partner, Australian Consolidated Milk.

•   Acquisition of the Vital Strength assets and business, expanding the Company’s brand and 

offering into the performance and adult nutritionals markets. 

•   Further capital investment across the Group including expansion upgrades at Shepparton for 

upfront processing capacity and at Dandenong for oat cereal capabilities and a major upgrade 
of the Company’s ERP system.

•   Development of a large number of new branded products in key food and beverage categories 

which were only recently launched in August 2017.

The Company also completed a successful capital raising initiative in December 2016 raising $75 
million through an entitlement issue and placement.

The underlying operating EBITDA for the year was $26.2 million, an increase of 22% on the 
previous corresponding period (PCP). Comparable net sales revenue increased by 54% to $262 
million over PCP. The reported net proﬁt after tax increased by $3.8 million to $7.5 million, 
excluding the FY 2016 gain on sale of the investment in the a2 Milk Company and the fair value 
gain on conversion of options in (PDG).

The Board has recommended payment of a ﬁnal fully franked dividend of 2.25 cents per ordinary 
share in December 2017, taking total dividends for FY 2017 to 4.25 cents per share fully franked. 

On behalf of the Board, I would like to thank my fellow directors and all our 430 employees for 
their extraordinary dedication and hard work again this year.

In particular, I would like to recognise the ongoing support of our largest shareholder, the Perich 
Group.  Their dedication and support to our Company is unique and a key contributor to our 
ongoing development. 

As a signal to the sales and proﬁt opportunities arising from our signiﬁcant investments in 
recent years, the Company is experiencing a strong start to the 2018 ﬁnancial year, with net sales 
revenues for the full year estimated to be in the range of $340 to $360 million, as compared to 
$262 million in FY 2017. 

I encourage you to read the Managing Director’s review of operations, which provides further 
details of the years activities and the Company’s future.

Perry Gunner
Chairman

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MANAGING  
DIRECTOR’S
REVIEW OF 
OPERATIONS

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Highlights

A Company strategically well positioned to build 
scale in key food and beverage platforms with 
strong diversiﬁcation in sales, together with earnings 
growth over the long term from key markets and 
channels in Australia/ New Zealand, China, South 
East Asia and North America.

Operating EBDITA of $26.2 million, an increase 
of 22% on the previous corresponding period. 
Comparable Net Sales Revenues increased 54%  
to $262 million.

A credible operating performance in a year of 
signiﬁcant development for the Company, with 
the result impacted by a number of once-off non 
recurring factors. These factors reﬂected principally 
the increased cost of manufacture at Taren Point site 
due to capacity limitations and downtime associated 
with major processing upgrades at Shepparton.

Completion of approximately $130 million of major 
capital expenditure projects across the Group, 
including a new state-of-the-art UHT dairy and plant 
milk processing facility at Ingleburn in South West 
Sydney, which will drive material ongoing earnings 
beneﬁts over the medium term. Examples of expansion 
include upgrades to dairy processing, standardisation 
and ﬁlling capability at the Shepparton UHT dairy 
milk facility, expanded oat cereal capabilities at the 
Dandenong cereal facility and major upgrades to the 
Company’s technology platforms.

»  Ongoing strong growth in Plant beverages, 

including branded and non-branded sales in  
the growing retail Almond milk categories;

»  Strong sales growth in new channels including 
Food Services in Australia with MilkLab and 
Almond Breeze Barista brands;

»  Acceleration of growth in sales of dairy beverages, 
including our Australia’s Own Kid’s Milk in China, 
with the brand now the leading imported Kid’s 
Milk brand in China where it is distributed;

»  Growth in oat based cereals in branded offers in 
Australia and China led by Arnolds Farm; and

»  Ranging of a strong pipeline of differentiated 
product innovation across all key categories 
leading to further sales growth into 2018.

Completion of the acquisition of Australian 
Consolidated Milk’s 50% interest in Pactum 
Dairy Group at Shepparton, providing for a more 
integrated dairy processing platform, with the 
potential for a signiﬁcant increase in sales and 
earnings over time.

Acquisition of the “Vital Strength” Performance 
Nutrition brand to expand the Company’s brand and 
category segment offering in the performance and 
adult nutrition markets, providing a unique vertical 
integration opportunity to the Company’s expanding 
dairy nutritional capabilities.

Planned launches in FY 2017 of new product ranges 
were delayed by retailer timetables with a signiﬁcant 
pipeline of new products introduced from August 2017.

The Company is experiencing a strong start to the 
2018 ﬁnancial year, with net sales revenues estimated 
to be in the range of $340 to $360 million, as 
compared to $262 million in FY 2017.

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Overall a very successful 12 month period investing 
in the Company’s sales and marketing capabilities to 
deliver proﬁtable growth consistent with its medium 
term plan:

»  Continued transformation of a business driving 

growth through its icon brands, including Freedom 
Foods and Australia’s Own;

 
 
 
Financial Summary

The Company achieved an underlying Operating EBDITA of $26.2 million, 22% above the previous 
corresponding period.

A credible operating performance in a year of signiﬁcant development for the Company, with the result 
impacted by a number of once-off non-recurring factors. These factors reﬂected principally the increased cost 
of manufacture at Taren Point site due to capacity limitations and downtime associated with major processing 
upgrades at Shepparton.

The Company reported an operating net proﬁt of $9.9 million, a decrease of 9.0% from the prior 
corresponding period, reﬂecting increased operating EBDITA, offset by higher depreciation and ﬁnance costs 
as compared to the prior year.

The statutory net proﬁt was $7.5 million. Included in the statutory net proﬁt result was costs not representing 
underlying performance including once off acquisition costs of $1.3m, unrealised foreign exchange loss of 
$444k and restructuring costs of $668k, including costs relating to discontinued operations realised in the 
year and workers compensation settlement from a 2015 incident.

In FY 2016, the statutory net proﬁt was $50.6 million, but this included the impact of a pre-tax gain of $25.0 
million arising from the sale of the ﬁnal remaining investment in The a2 Milk Company (a2MC). The income tax 
expense reﬂects an operating tax rate of approximately 19.4%. The change in the effective tax rate from the 
prior year reﬂected an increased research and development claim. The prior year period tax rate includes the 
one off tax adjustment related to the a2 Milk Company share sales transactions.

Each of the business units increased gross margin $, with the exception of Specialty Seafood, which was 
impacted by an unfavorable exchange rate on purchasing in Salmon and Sardines. Notwithstanding, the 
business increased market share in Salmon and is trading ahead of plan. The integration of the Dandenong  
and Shepparton operations for the full year impacted gross margin % as compared to the prior year.

The Cereal and Snacks operations delivered an increased operating earnings reﬂecting growth in sales in 
branded and non-branded activities in both Australia and China.

Plant beverages delivered increased sales, reﬂecting growth in retail and food service brands, with operating 
contribution slightly ahead of the prior year period. The Taren Point facility is at capacity with increased 
cost of maintaining operations and logistics limitations impacting the beneﬁt expected to be incurred from 
increased sales. The new facility at Ingleburn, which will replace Taren Point during FY 2018, will materially 
reduce the cost of ongoing operations.

The Dairy operations at Shepparton achieved sales growth, reﬂecting new retail contracts and increasing 
demand in Australia, China and South East Asia. The operation reported a positive operating earnings 
contribution, reﬂecting increased sales and factory utilisation. During the period, the Company invested  
in additional 1 litre format capacity as well upgrading processing capability and downstream packaging.  
These investments which are critical to long term growth, impacted output during 2nd half of FY 2017,  
with a consequent negative impact on manufacturing recoveries and margin.

Group Services costs increased during the year, reﬂecting investment in sales, marketing and ﬁnance resources 
necessary to manage the growth of the Company.

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Set out below is a reconciliation of statutory EBDITA to underlying Operating EBDITA.

12 MONTHS TO 30 JUNE (A$ MILLION)

Underlying Operating EBDITA(1)

Other costs not representing underlying performance (2)

Employee Share Option Expense (non cash) (3)

Statutory EBDITA (4)

Note:

2017

2016

MOVEMENT

26.2

(2.4)

(0.4)

23.3

21.5

(2.2)

(0.4)

18.8

+4.7

+0.2

-

+4.5

1.   Operating EBDITA (Earnings before depreciation, interest, tax and amortisation) is a non-IFRS measure as contemplated in 
ASIC Regulatory Guide 230 Disclosing non-IFRS ﬁnancial information (RG230). Operating EBDITA is used by management 
and the directors as the primary measures of assessing the ﬁnancial performance of the Group and individual segments.

2.  FY 2017 other costs not representing underlying performance comprise once off acquisition costs of $1.3m, unrealised 

foreign exchange loss of $444k and restructuring costs of $668k including costs relating to discontinued operations realised 
in the year and workers compensation settlement from a 2015 incident.

3.   Non cash employee share option expense of $448k in FY 2017.

4.  During the year, a change to the Company’s trading structure and resulting accounting treatment changed the process for 
transfer and realisation of proﬁt in inventory held for sale between the Pactum and Freedom Foods entities. The impact of 
this change was a reduction in proﬁt in ﬁnished good inventory being recognised at 30 June 2017 of $664k.

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Segment Financials

For the year ended 30 June 2017, the Company has presented the segment reporting consistent with its core 
business categories and management reporting basis effective from 1 July 2016. This has changed from the 
segments reported in FY 2016 and at the half year.

The changes in the composition of the reportable segments include:

»  Freedom Foods entity is now classiﬁed as Cereals and Snacks with the transfer of retail branded plant 

beverage sales from Freedom Foods entity to Pactum entity.

»  Pactum entity is now classiﬁed as Plant Beverages with the transfer of dairy beverage sales from Pactum 

entity to Dairy Beverages entity.

»  Pactum Dairy Group entity is now classiﬁed as Dairy Beverages with the transfer of dairy beverage sales 

from Pactum entity to Dairy Beverages entity.

»  Nutritionals is a new segment reporting, comprising the “Vital Strength” branded business and nutritionals 

products to be manufactured in future years.

»  Specialty Seafood remains unchanged.

12 MONTHS TO 30 JUNE 17 (A$ MILLION)

CEREAL SNACKS

PLANT

DAIRY NUTRITIONALS

SEAFOOD

OTHER

TOTAL

Net Sales Revenue (1)

92.2

82.6

94.1

Trading EBDITA

10.7

12.8

7.4

1.8

0.5

-

-

-

13.8

(21.9)

262.5

1.9

-

33.3

-

-

-

0.2

0.5

0.2

0.5

(7.7)

(7.7)

-

-

-

-

-

-

-

-

-

10.7

12.8

7.4

0.5

1.9

(7.1)

26.2

Net Sales Change (YOY %)

+39.9% +10.5% +131.9%

NA +10.9%

NA 54.0%

Net Sales Change (YOY $ million)

26.3

7.9

53.5

1.8

1.3

NA

92.0

Note:
1.   Net Sales Revenue is after intercompany elimination of sales (Cereals and Snacking of $2.6m, Plant Based beverages of 

$18.4m and Dairy of $891k).

2. Equity Associates is share of NPAT of Australian Fresh Milk Holding (10% equity interest held by Freedom Foods Group).
3. Corporate costs exclude non cash employee share option expenses of $448k.

Other Gains and Losses

Equity Associates (2)

Corporate Costs (3)

Operating EBDITA

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12 MONTHS TO 30 JUNE

Net Sales Revenue

2017 $’000

2016 $’000

% CHANGE

262,481

170,444

+54.0%

EBDITA (Underlying Operating)(1)

26,240

21,526

+21.9%

EBDITA (Statutory)

23,375

18,926

+23.5%

Equity Associates Share of Proﬁt(2)

Pre Tax Proﬁt (Operating)

Pre Tax Proﬁt (Reported)

Income Tax (Operating)

Net Proﬁt (Operating)

Net Proﬁt (Reported)

Interim Ordinary Dividend (cents per share)

Interim CRPS Dividend (cents per share)

EPS (cents per share) (Fully Diluted for CRPS)

EPS Operating (cents per share) (Fully Diluted)

Shareholders Equity (3)

Net Debt /Equity(3)

Net Assets per Share (cents)

Net Tangible Assets per Share (cents)

480

12,213

9,348

2,363

9,850

7,539

2.25

1.35

4.78

6.51

321.4

56.3%

160.0

109.0

372

+29.0%

13,691

-10.8%

57,114

2,873

10,818

-83.6%

-17.7%

-9.0%

50,631

-85.1%

2.25

1.35

-

-

28.54

-83.3%

6.06

287.1

14%

158

119.8

+7.5%

+12.0%

-

1.3%

-9.0%

Notes:
1.   Underlying Operating EBDITA excludes pre-tax abnormal or non-operating charges including an add back of non cash 

employee share option expense of $448k. FY 2017 other costs not representing underlying performance comprising once 
off acquisition costs of $1.3m, unrealised foreign exchange loss of $444k and restructuring costs of $668k including costs 
relating to discontinued operations realised in the year and workers compensation settlement from a 2015 incident.

2. Equity Associates is share of NPAT of Australian Fresh Milk Holdings (10% equity interest held by Freedom Foods Group).
3.  Shareholders equity at year end of $321m, reﬂected a debit to reserves of $54.1m. This related to the acquisition impact of 
acquiring the ACM shareholding in Pactum Dairy Group (PDG) in February for $47m. As PDG was an existing controlled 
entity of the Group, the accounting standards require the goodwill generated on acquisition to be debited against the 
common control reserve, with a consequent negative impact on equity.

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PLANT BASED 
BEVERAGES  
BUSINESS GROUP

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Plant based (non-dairy) volumes and sales increased 
during the period to support the growth of the Australia’s 
Own brand, new branded product launches as well as an 
expansion of private label requirements.

 
 
Branded portfolio

STRONG GROWTH IN AUSTRALIA’S OWN, MILKLAB & BLUE 
DIAMOND BRANDS IN PLANT BASED BEVERAGES 

Plant based branded beverage sales continued the upward trend from the 2016 ﬁnancial year, with volume 
growth compared to the previous corresponding period, reﬂecting strong growth in the Australia’s Own range 
and Blue Diamond Almond Breeze brand in retail and food service channels.

In retail grocery, the Company remains the largest supplier of Almond beverages, including products under the 
Australia’s Own brand, our licensed Blue Diamond Almond Breeze brands and private label offers.

The trend towards plant based food and beverages is increasing in Australia and global markets, driven by a 
desire for healthier and “cleaner” lifestyles, which is motivating consumers to focus on fruits, vegetables, nuts, 
seeds grains and other botanicals.

As part of a focus on building beyond traditional retail segments and channels, the Company launched new 
products in plant milks and continued to invest behind products made for food service channels, with a 
particular focus on coffee milk applications.

The Company launched a range of fresh organic Almond beverages under the Australia’s Own Brand into retail 
grocery. The launch is the Company’s ﬁrst activation into the chilled category and has performed ahead of 
expectations. Additional products were launched recently into the chilled category. The products were sourced 
from a contract manufacturer and will be manufactured at the Company’s Ingleburn facility during 2018.

The increasing growth of food service channels (e.g. cafes and similar) and demand for plant based milks, 
consistent with the retail grocery trend, has seen increasing demand for coffee milk products. The Company’s 
range of Barista blend brands including the premium “MilkLab” range, “Almond Breeze” Almond Barista 
incorporate process technology to deliver a product that “works” with coffee. Further investment during the 
period in marketing and sales resources support resulted in continued strong growth in sales.

The Company sees signiﬁcant growth opportunity in the growing and high margin food service channel and 
is further expanding its food service ﬁeld team to accelerate this business area in 2018. This investment and 
growth aligns with expanded production capabilities at Ingleburn.

During the period, the Company invested in sales and distribution to develop new channels in South East Asia 
and the Middle East, with increasing sales of the Australia’s Own range and MilkLab.

Australia’s Own UHT liquid stocks increased sales and distribution during the period. The business is also a 
signiﬁcant supplier of liquid stocks to retailers and other brands.

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Non-Branded portfolio

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LEADING PRODUCER OF UHT PRIVATE LABEL PRODUCTS 

The Company is a signiﬁcant supplier of plant based beverages and liquid stock products to retailers and 
other brands, reﬂecting a total category approach that leverages our manufacturing platform and provides  
a strong base of earnings to further invest into our brands.

The Company believes its continued investment in product development and leading manufacturing  
capability in plant based beverages provides for signiﬁcant long term growth in supporting retailer and  
other branded products.

 
 
New World Class UHT 
Facility Ingleburn, South West Sydney

LARGEST INVESTOR IN UHT TECHNOLOGY &  
CAPACITY IN AUSTRALIA

The current plant based non-dairy business has been constrained in both production and distribution at the 
Taren Point operation, restricting growth and ﬁnancial returns in the 2017 ﬁnancial year period.

While sales and volumes are growing, the potential additional proﬁt from growing volumes is impacted by 
increasing cost of plant reliability and outsourced distribution arrangements. The plant has been operating at 
7 days for the majority of the current year with signiﬁcant cost associated with transport and logistics across 
more than 5 warehouse locations.

The Company has from August 2017 completed construction of a new state-of-the-art UHT facility at Ingleburn 
in South West Sydney. The transfer of operations to the Ingleburn site from our existing Taren Point operation is 
currently underway with all production expected to be transferred between September and October 2017.

1st stage installed UHT carton capacity will be approximately 80 million litres, from current capacity  
at Taren Point of approximately 50 million litres. Total liquids processing capacity is 180 million  
litres, which is available to be developed as and when required as the infrastructure to support  
this expansion has been included in the building program to date.

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UHT FACILITY INGLEBURN,  
SOUTH WEST SYDNEY

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The Company will also install a number of additional capabilities including yoghurt processing and a  
state-of-the-art PET plastic bottle capability for both long life (UHT) and short shelf life (ESL) formats.

The drinking Yoghurt category is the fastest growing beverage category in China, with further growth 
anticipated including from other markets in South East Asia. The Company has signiﬁcant demand for 
this product from its existing China based customers including opportunities to sell the product under 
the Australia’s Own and So Natural brands in China. The Company will look to utilise these capabilities for 
products in Australia including manufacture of plant based yoghurt products.

The PET bottle capability will facilitate expansion of our branded product range into retail, food service and 
Petrol & Convenience channels. It will also provide the capacity for domestic and export sales into China and 
South East Asia of premium dairy formats utilising dairy milk sourced from our associated company, Australian 
Fresh Milk Holdings (AFMH 1).

Installation of both capabilities will commence in January 2018, with a contribution to sales and earnings 
growth expected from FY 2019.

The facility will also be capable of processing dairy products to allow a two-way redundancy with the 
Shepparton facility, while providing the opportunity to expand the Company’s base in dairy from multiple 
processing sites as required.

Our sales volume capacity in our branded products has been constrained by the capacity of our Taren Point 
operations. The new facility will provide the opportunity for the Company to expand its branded product 
sales, with a material expansion in capacity and efficiency improvements compared to current operations. 
These improvements include more efficient and lower cost production, warehousing and logistics solutions 
compared to current arrangements. This is expected to materially impact sales and earnings during FY 2018 
with the full beneﬁt from FY 2019.

As part of the transition from the Company’s Taren Point facility to Ingleburn, the Company expects to incur 
one off costs of closure including write down of inventory on product formats to be discontinued, plant and 
equipment not utilised in the new facility as well as redundancies for staff not transferring. The costs are yet 
to be determined as the transfer of operations from Taren Point has not been completed. The costs will be 
written off and classiﬁed as a non-operating expense in the FY 2018 full year ﬁnancial reporting.

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1. Freedom has a 10% shareholding in AFMH

 
 
 
 
DAIRY  
BUSINESS GROUP
Branded Portfolio

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Dairy based branded beverage sales continued the upward trend 
from the 2016 ﬁnancial year with sales and proﬁt growth over 
the previous corresponding period, reﬂecting increased sales of 
Australia’s Own Kid’s Milk and the So Natural and Vitalife brands 
in domestic food service and export markets.

 
 
Australia’s Own

LARGEST IMPORTED KID’S MILK BRAND IN CHINA

The Company commenced production of our “Australia’s Own” branded “Kid’s Milk” to support its launch 
in China in February 2015 under a long term brand licensing arrangement to our Chinese partner Shenzhen 
JiaLiLe Food Co. Ltd (JLL).

With signiﬁcant ongoing marketing investment including point of sale promotion, sampling and sponsorship 
of leading children’s TV programmes, the product has continued its strong growth trajectory, with the product 
now the largest imported Kid’s Milk brand in China where it is distributed. The Kid’s Milk product is utilising 
milk sourced from AFMH.

The Company has been producing the Kid’s Milk product from its Taren Point site with production limited by 
capacity of approximately 35 million packs per annum.

With demand now beyond current capacity, the Company has invested in high speed 200ml capacity to be 
available from late 2017, with volume to be in excess of 60 million packs in calendar 2018.

The Company expects the Kid’s Milk product and other new product formats to be a signiﬁcant contributor to 
growth and proﬁtability.

ESTABLISHMENT OF AUSTRALIA’S OWN DAIRY COMPANY CHINA

As announced in July 2017, the Company entered into binding documentation with JLL to establish a new 
company called Australia’s Own Dairy Company China (AO China) to expand our commitment to the growth 
of the Australia’s Own Kid’s Milk brand in China.

The new structure will provide a stronger strategic link between the existing brand operations in China (sales, 
marketing, and distribution) and brand production in Australia (sourcing, processing, manufacturing).

AO China will continue to grow Australia’s Own branded Kid’s Milk products in China, as well as developing 
plans for launch of other dairy products including Ambient Drinking Yogurt in 2018 and Infant Formula 
products under the Australia’s Own brand.

Freedom Foods will subscribe for an initial 10% investment in AO China for a consideration of RMB22 million 
(approximately AUD$4.4 million at current exchange rates). Freedom Foods will have an option to subscribe 
for up to 30% of AO China within 3 years from the date of the initial subscription.

The transaction is subject to regulatory approvals in China and expected to formally complete no later than  
31 December 2017.

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So Natural & Vitalife

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FASTEST GROWING DAIRY BRANDS ON  
ONLINE & OFFLINE CHANNELS IN CHINA

The Company has progressively developed the So Natural and Vitalife brands in the China market, 
commencing in 2014 through offline specialty channel distributors. Sales of “So Natural” and “Vitalife” UHT 
products have continued to grow through cross border ecommerce channels with the major online retailers 
JD.com and Tmall.

As well, the Company invested in additional sales capability to build sales for these brands in general trade 
ecommerce, reﬂecting its position as the primary growth channel for ecommerce in China. An example of 
recent success has been the So Natural brand being utilised in the Costa Coffee chain.

The So Natural brand has also developed a presence in the food services market in Australia, with new contracts 
in high volume food service segments gained in the period, including cruise ship and mining industries.

 
 
Shepparton UHT Operations

LARGEST SUPPLIER OF CONTRACT PACKED MILK BRANDS  
TO CHINA & PRIVATE LABEL MILK IN AUSTRALIA

The Shepparton operations commenced in April 2014, to provide innovative UHT dairy milk capability for our 
own branded requirements, as well as third party customers in domestic and export markets.

Dairy operations at Shepparton achieved sales in FY 2017 of $85.4 million, a 33.8% increase on the comparable 
corresponding period, reﬂecting the contribution from the new contracts entered into in 2016 and increasing 
demand in Australia, China and South East Asia.

In Australia, the Company supplies a number of long term retail customers that provide a strong base of 
underlying volume and earnings support.

In China, the Company has continued key relationships with major dairy manufacturers and brand owners 
including JLL (Guangzhou), Bright Dairy (Shanghai), New Hope Dairy (Chengdu), Weigang Dairy, online 
retailers, Pinlive and a number of regional dairy manufacturers and distributors. Each of these relationships is 
complementary, enabling us to take advantage of the high level of regionalisation and diversiﬁcation in local 
market distribution, product range and capability within this market.

In South East Asia, the Company has also developed other customer relationships in markets such as Hong 
Kong, Singapore, Philippines and Vietnam.

The Company expects further growth in retailer and other brand owner relationships in key markets in the 
coming years, reﬂecting growth in demand and changing competitor supply dynamics in Australia.

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New Capacity

LARGEST INVESTOR IN UHT TECHNOLOGY & CAPACITY  
IN AUSTRALIA

To meet the increased demand for UHT dairy milk and associated value added products, the Company invested 
in additional 1 litre format capacity as well upgrading processing capability and downstream packaging. These 
investments are critical to long term growth. Installation of the additional capacity impacted output during 2nd 
half of FY 2017, with a consequent negative impact on manufacturing recoveries and margin.

The installation, which is now complete, will provide for signiﬁcantly improved output and for the operation to 
facilitate a more efficient 24/6 production cycle from August 2017.

Total installed capacity is approximately 180 million litres or 455 million packs per annum.

During the 2nd half of FY 2017, the Company entered into a long term lease (with purchase options) over the 
land and warehouse facilities adjacent to the UHT operation. The securing of these facilities has enabled us to 
internalise the expanding logistics and supply chain requirements, as well as providing a facility for the group’s 
emerging nutritionals capabilities.

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ACQUISITION OF AUSTRALIAN CONSOLIDATED MILK’S 50% 

INTEREST IN  Pactum Dairy Group

On 1 February 2017, the Company completed the acquisition of Australian Consolidated Milk’s (ACM) 50% 
interest in Pactum Dairy Group (PDG), which is the holding company for the Shepparton operations.

With expanding capabilities in dairy, a full integration of the PDG operations into the Company provides for a 
more integrated dairy processing platform into the future, with the potential for a signiﬁcant increase in sales 
and earnings.

As part of the new ownership arrangements, cream offtake will be managed directly by the Company, 
providing for a market based price to be realised from the commencement of FY 2018.

The Company acquired ACM’s 50% interest in PDG for an equity consideration of A$50.7 million, comprising 
$50.1 million in cash and an issue of 168,538 shares in the Company at an issue price of $4.45 per share. The 
cash consideration was funded from the proceeds of the equity raising completed in December 2016.

ACM will continue to be a key strategic supply partner for the long term, with the Company and ACM having 
entered into a 10 year supply agreement for dairy milk from existing ACM farmer suppliers in Northern Victoria. 
To augment supply of dairy milk from ACM farmers, the Company has entered into supply arrangements with 
other dairy farmers in Northern Victoria and NSW.

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Dairy Supply - AFMH

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AUSTRALIA’S LARGEST SINGLE SITE DAIRY MILKING OPERATION

AFMH operates Moxey Farms, a fully integrated dairy farming operation located in the Lachlan Valley, New 
South Wales, 340 km west of Sydney. Collectively the combined Moxey and Perich Group’s Leppington 
Pastoral dairy milk production is the largest dairy milking operation in Australia.

FNP has a 10% shareholding in AFMH, with the balance held by the Perich Group’s Leppington Pastoral 
Company Pty Limited (LPC), New Hope Dairy Holdings Co Ltd and the Moxey family. The Company equity 
accounted 10% of the net proﬁt of AFMH in the period.

 
 
Farm Expansion  
& New Sites

AUSTRALIA’S TOP DAIRY FARM EXPANDING FROM 75 MILLION 
LITRES OF MILK PA, TO 100 MILLION LITRES PA BY 2018

Since acquisition in 2015, Moxey Farms has expanded from 3,700 milking cows to 6,000 milking cows as 
part of a $40 million expansion including new state-of-the-art rotary processing dairy, cow barns, effluent 
management and expansion of land holdings including water and irrigation capabilities. Total land under 
ownership and use is 2,100 hectares.

AFMH is currently undertaking an expansion to 8,000 milking cows or 100 million litres per annum, as  
part of a 5 year plan to increase production up to 200m litres.

As part of its expansion strategy, the major shareholders in AFMH acquired a property 30km south of Moxey 
farms titled ‘North Logan’, which comprises 1,151 hectares of land and water entitlements. ‘North Logan’ is one 
of the largest aggregations of land available upstream of Moxey Farm on the Lachlan River with the potential 
to develop large scale irrigation.

The acquisition provides further capability to grow feed production capacity for the Moxey Farm expansion 
from 6,000 to 8,000 cows and potential development area for expanded dairy operations as part of the long 
term expansion to up to 200m litres.

During the year, AFMH acquired the Bruem Dairy in the Lachlan Valley, 20km north of the Moxey Farm 
operation. The Bruem Dairy has land of 327 hectares, with 229 hectares under irrigation. The current dairy  
has 500 milking cows.

AFMH will continue to actively acquire additional dairy or farming sites to build more fully integrated dairy 
farming operations, allowing its customers to secure access to additional consistent and long-term supply  
of high quality milk.

The Company intends to utilise a growing proportion of this new output from Moxey Farm for its Australia’s 
Own Kid’s Milk and other dairy product formats.

The Company contributed $1.8 million to AFMH in the form of equity and loans as part of the shareholders 
contribution to the North Logan and Bruem dairy acquisitions.

Our total investment to date in AFMH is $7.6 million.

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NUTRITIONALS  
BUSINESS GROUP

The Company is leveraging its growing dairy capabilities to build a branded high margin product portfolio in 
specialty nutritional products.

Dairy nutritionals are increasingly used in segments such as bakery & confectionery, dairy products, 
convenience foods, infant milk formula, performance & clinical nutrition. The market for dairy ingredients is 
projected to show strong growth in upcoming years due to increasing awareness about the health beneﬁts of 
nutritional food products.

The Company is establishing a nutritionals capability that will provide for protein standardisation and ability 
to separate milk into industrial grade protein components, including Casein, Lactoferrin, Alpha-lactalbumin 
and Whey Protein Isolate. These dairy nutritional ingredients derived from our dairy milk supply base can be 
utilised in current and new product formats either manufactured by the Company for our branded products or 
supplied to our customers for their products.

The 1st stage protein standardisation capability has been installed and will contribute to sales and earnings 
in FY 2018. The platform is being established adjacent to the existing UHT site at Shepparton in Victoria, 
providing synergies with the existing UHT operation.

The 2nd stage protein fractionation and drying capability will be installed over the next 18 months, with a 
potential for a material contribution to sales and earnings during FY 2019.

 
 
ACQUISITION OF PERFORMANCE NUTRITION BRAND

Vital Strength

In May 2017, the Company completed the acquisition of Power Foods International (Power Foods), a major 
Australian manufacturer and brand owner in the sports and adult nutrition category.

Power Foods owns the “Vital Strength” and “UProtein” brands that market a range of performance and adult 
nutrition products. The Vital Strength brand is recognised as a leader in high quality nutrition products, sold 
through retail grocery, pharmacy and ﬁtness retailers in Australia.

Power Foods manufactures all its protein powders at its own blending and packing facility in Marrickville, 
Sydney. The purchase price for Power Foods was a cash consideration of $21 million.

The acquisition of Power Foods will enable Freedom Foods to expand its brand and category segment 
offering into the performance and adult nutrition market in Australia, China and South East Asia, leveraging 
existing retail customer and distribution capabilities. Importantly, it will provide a unique vertical integration  
to the Company’s expanding dairy nutritional capabilities.

Power Foods has strong distribution into retail pharmacy chains which provides an opportunity for Freedom 
Foods to expand distribution of its expanding product range into this growing channel.

The Company has developed a range of snacks and beverages to complement the existing Vital Strength 
range of protein powers and supplements. The new range builds on the Vital Strength brand proposition to 
deliver a higher protein serve per gram as compared to other competitor products, based on cleaner protein 
sources with fewer ingredients. The Company commenced retail distribution of this expanded range across 
key retail stores from August 2017.

The “Vital Strength” range will be sold through the Company’s ecommerce platforms in China from November 2017.

In the medium term, the business will beneﬁt from sourcing internally key dairy protein ingredients from 
the dairy nutritionals platform at Shepparton. This will lead to signiﬁcant cost improvements and further 
efficiencies including additional product claims not available to other competitors.

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ADULT NUTRITION

The Company is developing a range of Adult Nutrition products for launch during FY 2018.

The products will provide a clear functional beneﬁt for the over 50 adult target market, including in powder 
and drinkable formats. The products will be distributed across the Company’s expanding retail and pharmacy 
distribution capability.

 
 
Infant Nutrition

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The Company continued to cautiously build distribution of Australia’s Own “Diamond” Infant Formula for  
Step 1 to 3 in Australia and SE Asia markets.

d to cautiously build distribution f A t

t ib ti

’ O

“Di

li

In June 2017, Australia’s Own “Diamond” Infant Formula was launched with FairPrice retail chain in Singapore. 
Strong support to the launch from FairPrice and the Singapore government has seen good consumer 
response, with repeated orders since launch.

The Company is developing an enhanced version of the Australia’s Own “Diamond” Infant Formula product for 
launch in 2018. The product range will be distributed in Australia, SE Asia and in the medium term into China 
leveraging off Australia’s Own China brand and distribution capabilities.

 
 
Blending & Packing 
Capabilities

Aligned to the Company’s investment in value added protein capabilities, the Company is proposing 
to establish within the Shepparton site a blending and packing facility to package product formats in 
performance, adult and infant nutrition. This would include the relocation of existing performance nutrition 
blending and packing capabilities from Marrickville.

Aligned to these capabilities, the Company is discussing with one of its China based partners, a potential 
partnership in relation to the proposed infant manufacturing capabilities at site, which would seek to obtain 
registration with the China Food and Drug Administration (CFDA) for sale of these products to China.

With these capabilities established, the Company’s site at Shepparton would comprise a unique vertically 
integrated dairy processing facility, with capability to package milk and speciality powder products utilising 
the value chain derived from its core milk supply.

Health Care  
Practitioner Network

To support the expanding nutritional product capabilities, the Company appointed Dr Sonja Kukuljan PhD as 
Group Nutrition Manager with responsibility for building a leading health care practitioner network in Australia, 
China and North America.

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CEREAL & SNACKS 
BUSINESS GROUP
A GLOBAL LEADER IN 
HEALTHY CEREALS  
& SNACKS

S N A C K I N G
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Branded Portfolio 

AUSTRALIA
Number 1 Health Food cereal brand & growing

Freedom Foods branded products delivered sales growth in its Cereal and Snacks segments compared to  
the prior year period.

During the period, the Company launched a brand marketing and promotional campaign with Australian 
icon, Jennifer Hawkins, as brand ambassador to showcase the brand and our mission of making food better. 
Jennifer Hawkins is a respected Australian role model and is assisting in communicating to a wider audience 
the opportunities for eating healthier with Freedom Foods.

Alongside sales, marketing and speciﬁc product launch investments, the Company continued to invest in 
product development capability to drive further growth in retail and other channels such as food service in  
the medium term.

Signiﬁcant additional ranging of an expanded Crafted Blends range launched late in the 1st half of FY 2017, 
as the business delivered more innovation and product differentiation to the Health category. Growth in 
traditional format products following product and format renovation, as well as stronger engagement with 
retailer customers, saw the business grow its share of the Health Cereal category, with a +40% market share.

The Freedom Foods “Arnold’s Farm” brand achieved growth in its oat based cereal products through its 
exclusive distribution in Woolworth’s supermarkets.

Further innovation in value added cereals and snacks including products developed for on the go channels in 
food service were launched in August 2017. These include the Messy Monkeys kids snacking range, Barley + 
cereals and snacks and Crafted Blends snacks.

The Freedom Foods business is the category leader in the Health Food section of retail supermarkets. Our 
expanding innovation, product range and formats through our manufacturing capabilities provides a unique 
opportunity to continue to build the Freedom Foods brand as a leading and trusted brand for healthier tasty 
cereal and snacks options.

Tasty, functional and combination format products, as well as portable and convenience options, will be key 
drivers of growth in the Cereal and Snacks business.

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CHINA & SOUTH EAST ASIA
Fastest growing Australian cereal brand on Alibaba’s Tmall

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In November 2015, Freedom Foods launched an online ﬂagship store to promote the “Freedom Foods” 
branded product portfolio to Chinese consumers in cereal and milk products.

Within the cereal category, since our notable early success, sales have progressed well, with further growth 
achieved and increasing brand recognition in this small but growing category in China.

The Freedom Foods “Arnold’s Farm” brand is one of the top 3 oat cereals on Tmall International. The Company 
and Tmall International have built a joint business plan to accelerate development of a number of key products 
within the cluster cereal and oat porridge category under the Freedom Foods brands, speciﬁcally for the 
Chinese market.

The market for oat based cereal products in China, including cluster and premium muesli porridge formats, 
is expected to grow, driven by demand for better quality oats in existing consumption formats, and also 
changing consumption patterns. The demand for high quality Australian origin oats will also be further 
developed through consumers accessing product through China’s cross border free trade zones and the  
China Australia Free Trade Agreement, which will reduce tariffs on oat based products over the next 5 years.

The Company believes its sourcing and conversion capabilities uniquely position it to build a signiﬁcant 
branded business in high quality imported oat based Cereal and Snacks. As a result, the Company is  
increasing its investment in building distribution of its key brands including “Arnolds Farm” in traditional  
off line distribution channels in key tier 1 and tier 2 cities.

The Company also continues to develop strategic partnerships with Chinese brand owners that build 
diversiﬁcation of supply into the China market including Pinlive, Seamild and VV Group.

 
 
A
NORTH AMERICA
od and beverage capability in the USA
Emerging specialty food and beverage capability in the USA

Freedom Foods has restructured its business operations in North America to provide for an acceleration of its 
sales and earnings base.

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Freedom Foods is establishing a North American entity in partnership with AFT Holdings to grow our North 
American business signiﬁcantly faster than that which we could have achieved independently. AFT Holdings 
is a San Diego based investment group with operations in natural protein products and with strong sales and 
operations execution experience. The new entity will form part of the Specialty Cereal and Snacks Business 
Group. Freedom Foods will have a 75% equity ownership with rights to acquire AFT Holdings’ interest over a  
3 to 5 year period.

The Group is investing in building a stronger local experienced team in sales, operations and ﬁnance. AFT 
Holdings will provide back office administrative resources. Under the new ownership arrangements, Freedom 
Foods is expanding its US based sales, marketing and distribution base to expand the offering of Freedom 
Foods branded products that go beyond the Allergen Free base, leveraging its unique global position in 
healthy cereals and snacks.

As part of this strategy, the Company launched the Barley + cereal range in 1,500 Kroger stores from July 2017.

Additional business has also been secured in both branded and private label supply, with a leading private 
label retailer ranging a number of cereal products later in 2017. The Company also intends to launch its Messy 
Monkey range, as well as its specialised MilkLab “coffee milk” offering in targeted cities in the USA.

Based on developments to date and ongoing strategic initiatives, the Company expects the entity to be 
accretive to earnings in its ﬁrst full year of operation in FY 2018, with additional sales and operational 
efficiencies in the medium term.

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Non-Branded Portfolio

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The Company is a signiﬁcant supplier of cereal, snack and grain based ingredients to retailers and other 
brands, reﬂecting a total category approach that leverages our manufacturing platform and provides a strong 
base of earnings to further invest into our brands.

The Company believes its continued investment in product development and leading manufacturing capability 
in cereal and snacks provides for signiﬁcant long term growth in supporting retailer and other strategic 
branded products in Australia, China and North America.

 
 
Freedom Farmers

BUILDING A FULLY INTEGRATED PADDOCK TO PLATE PROVIDER

As part of ensuring best quality and growth in supply of key grains to our Freedom Foods Group production 
facilities, the business expanded its Freedom Farmers platform, with a number of key farmer groups engaged 
to build the Company’s specialised grains supply platform over the coming years that will guarantee our 
strategy of being a high quality integrated paddock to plate provider. Australian sourcing of all key grain 
based ingredients will be a key source of competitive advantage for the Company.

During the year, the Company managed, for the ﬁrst time, seed and planting processes under contract with 
its Freedom Farmers for all its internal Oat and Barley requirements. Similar processes continued for Popping 
Corn, Maize and Buckwheat requirements.

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Cereal & Snacks 
Manufacturing Base

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The Company intends to maintain, in the medium term, an integrated cereal and snacks operation at Leeton 
and an oats and cluster format cereal processing and packaging operation at Dandenong.

The Company completed a signiﬁcant expansion of its cereal oven and related packaging capabilities at the 
Dandenong facility during the year. This critical expansion of capacity will provide for meeting the growing 
demands of existing customers and our branded portfolio in Australia, China and SE Asia.

S N A C K I N G
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SPECIALTY  
SEAFOODS

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Number 1 Sardine  
brand in Australasia

Brunswick Sardines maintained its No. 1 brand leadership position in Australia and New Zealand.

During the period, supply impacts from prior year were overcome with reactivation of sales promotions 
from August 2016. The Company has established a dual supply base for Atlantic sourced Sardines to reduce 
exposure to a single ﬁshing area.

The Paramount Salmon brand performed well during the period, with strong growth in market share (20% at 
June 17 from 18.4% prior year) across red and pink salmon segments.

Financial performance was impacted by unfavourable exchange rate on purchasing in Salmon and Sardines. 
Tight management of sales promotions and reduced promotional spend negated some of the exchange rate 
impact on gross margin.

The business remains focused on positioning for growth through calendar 2017 through category leadership of 
the Specialty Seafood channel, including a number of new products to be launched under the Brunswick brand.

The business continued to utilise the procurement power of Bumble Bee Foods of North America, with Bumble 
Bee securing 2017 inventory requirements through priority access to salmon and sardine catch volumes.

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INNOVATION 
CAPABILITIES

The Company has invested signiﬁcantly in its innovation capabilities 
across its business groups, including appointment of product 
development personnel. This investment aligned to its signiﬁcant 
capital investment in manufacturing capabilities provides a strong 
base to accelerate new product development pipelines.

A number of new products developed during FY 2017 have only 
recently been launched including 24 new branded sku’s from  
August 2017.

 
 
WE BELIEVE THAT 
FOOD CAN BE 
HEALTHY & DELICIOUS 

...and we are thrilled that our innovation  
has really resonated with the market place.  
This is what we strive for every day.

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CAPITAL  
EXPENDITURE

The Company has substantially completed a capital expenditure program of $250 million over the last 3 
years. This has included construction of 2 greenﬁelds sites at Shepparton and Ingleburn and incremental 
development of 2 other sites at Leeton and Dandenong.

The capital expenditure now provides a strong operational platform to signiﬁcantly increase the Company’s 
sales and operating ﬁnancial returns.

Ongoing operational capital expenditure through FY 2018 and FY 2019 will relate to new capability and or 
product format expansion within our key operating sites at Ingleburn, Shepparton and Leeton. The Company 
will continue to build on these sites as our primary operating platforms for the future, providing operating 
efficiencies through maximising common overhead and expense base.

 
 
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Barley+ in store in Kroger Dallas, Texas USA

CORPORATE &  
GROUP MANAGEMENT
Our people

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As at 30 June 2017, the Company employed 430 employees 
compromising of 378 full time equivalent employees and 52 
casual employees across Australia and North America.

The average length of service is 4.0 years (2016: 3.0 years). 

 
 
FREEDOM FOODS GROUP

Employee in Focus 2017

Each year Freedom Foods recognises the extraordinary contribution of staff members to the success of  
the Company. 

We are fortunate to have people throughout the Company that are committed to our mission and every day 
make an extraordinary contribution. 

This years “Employee in Focus” actually comprises a team of 4 individuals, being the INGLEBURN PROJECT 
TEAM, namely Timothy Moses, Chris Monkton, Gary Saywell and Andrew Johnson.

This team delivered an outstanding new operational capability at Ingleburn. There were contributions from 
many others along the way, including in our recent commissioning, however, this team delivered a very 
material project to the Company without the support of a large construction company and in the face of 
dealing with many challenges, including weather, sub-contractors and changes to plan. Through this process, 
we went from dirt to locked up facility within 12 months and at a cost far less than if we had tendered out 
construction to a large building company.

The Ingleburn facility is truly a unique capability that will deliver substantial sales and operational beneﬁts  
for years to come.

We are extremely proud of this team and our collective efforts to deliver the Ingleburn facility. Importantly,  
we delivered it the “Freedom” way!!

We also recognise the achievements of a number of other employees who have made an extraordinary 
contribution during the year, including Stephanie Graham (Finance), Jelica Topalovic (Operations), Zarko  
Juric (Sales), Kerry Xanthoulis and Rosane Simoes (Product development).

Please join me in congratulating these employees on their recognition.

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Rory J F Macleod
Managing Director and CEO

 
 
 
Diversity & Inclusion

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The Company is committed to actively managing diversity and recognises the value that diversity has in 
enhancing the Company’s performance and attracting and retaining talented people. The Company is dedicated 
to ensuring inclusion of all individuals regardless of gender, age, ethnicity, race, religion and sexual orientation. 

The Company is dedicated to ensuring:

•   that the Company’s corporate culture at all levels supports diversity in the workplace whilst  

maintaining a commitment to a high performance culture;

•   that consideration is given to programs and processes for the development of skills of all employees  

and support for an individual’s domestic responsibility; and

•   that the policy for selection and appointment of new directors is transparent.

The Company’s Diversity Policy is located on the Company website www.ffgl.com.au under Corporate Governance.

As at 30 June 2017, women represent 38% of the Company’s workforce, which is an increase of 3% from  
2016. Women represent 38% of senior management positions across the Company, which is an increase  
of 10% from 2016.

REPRESENTATION OF WOMEN AS AT 30 JUNE 2017

POSITION

Key Management Personnel

Senior Management positions

NUMBER

% WOMEN

0

6

0%

38%

 
 
Quality & Food Safety

Quality and food safety is the foundation for the ongoing success of the Group. The Group strives to achieve 
quality across the business through the products, services and people. Quality and food safety is intrinsic 
to the business philosophy and culture. The quality and safety of the products, as well as meeting the 
requirements of the customers, are of the highest priority to the Group. 

The Group is committed to the ongoing review of the food safety and quality objectives and has a focus on 
continuous improvement by constantly reviewing and challenging the Quality and Food Safety Management 
Systems, as well as utilising improvement methodologies to ensure delivery on the Group’s quality commitment.

Freedom Foods has a range of certiﬁcation and regulatory bodies independently auditing our sites regularly 
to the following standards but not limited to:

•   Regulatory audits: State based Food Authority audits and Export Registered Facilities audit via the 

Department of Agriculture.

•   Global Food Safety Initiative (GFSI) Standards such as Safe Quality Food (SQF) and British Retail 

Consortium (BRC).

•  HACCP Certiﬁcation complying with requirements of Codex Alimentarius Alinorm: 2003/13A.

•  Australian Retailer and Other Customer standards.

•  Product speciﬁc standards: Australian Certiﬁed Organics and Gluten-Free Certiﬁcation program.

•  Registered and Compliant with FDA (Food and drug administration) for sites exporting into North America.

To compliment independent audits an internal audit program is also in place to monitor and continuously 
improve processes.

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Our goal is to have all Freedom Food sites independently certiﬁed to globally recognised Quality Management 
System standards (GFSI). We have recently achieved BRC certiﬁcation for our Darlington Point Mill facility and 
aim to have our new state of art Facility at Ingleburn BRC certiﬁed by January 2018. 

The Ingleburn UHT facility has been designed and constructed with stringent GMP standards and with 
processing technology that is delivering products with improved quality and consistency. 

At Freedom Foods we are passionate about making food better. We have established key Quality metrics to 
help drive a continuous Improvement philosophy and culture. 

We continue to attract top talent into Freedom Foods for key positions around Milk supply, Technical UHT 
skills and nutritionals to support growth and strategic direction. 

Key initiatives the Group has undertaken during the year:

•   Bactoscan purchased to perform rapid testing on raw milk to improve Quality consistency at the  

Shepparton facility.

•  Optical sorter installed at our Darlington point Mill facility to improve Quality of Popping Corn. 

•  NIR (Near Infrared) technology to monitor grain Quality upon receivable into Darlington Point Mill.

•  Trialing and further exploring foreign matter control technologies for our Cereal production facilities.

•  Collaboratively working with key service providers to standardise expectation/deliverables across the Group.

•  Working closer with farmers on improving Quality speciﬁcations for grains and raw milk.

•   We continue to progress with the implementation of our Cloud base Quality Management system “Qumulus” 
with 60% of Phase 1 modules implemented. Remaining phase 1 modules to be completed by the ﬁrst half of 
FY 2018. Some key beneﬁts:

1.    Monitoring and Managing supplier Performance across the group. We will further progress in centralising 

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  2.  Real time data analysis to drive continuous improvement on key quality metrics.

  3.   Efficiencies gained on management of data and reduction of paper based systems, including mobility 

across a number of platforms.

  4.  Commenced integrating Work health safety system into Qumulus and will further develop in FY 2018:

•  Group Quality protocols developed and implemented to standardise best 
practices across the group and will continue to build on through FY 2018.

• Review of processes to optimise quality performance of products.

•  Revised NPD pathway process to ensure all new products developed  

have undergone a comprehensive review before launch.

 
 
 
 
 
 
 
 
 
Talent & Technology

The Company continued to make investments in people and capability to ensure the Company can implement 
and manage growth. During the period, we invested in talent and capability in marketing and innovation 
across beverage, cereal and snacks capability as well as operations, quality, ﬁnancial and compliance.

For our expanding capital projects initiatives, we increased our capability to manage and install our key 
projects that will provide for ongoing capability at our sites, reducing reliance on 3rd party providers. The 
Ingleburn site construction was managed by our own teams, with no external builders or project managers. 
This provided a signiﬁcant time and cost saving to the Company.

We are developing our people and talent identiﬁcation process to align with the Company’s rapidly expanding 
sales and operational platform.

The Company is well progressed on a complete transformation of its IT/ERP systems, with the transition from 
a 1st generation platform to a new cloud based ERP system materially completed by October 2017. Further 
investments in technology will be made to ensure we increase efficiency and productivity.

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Capital Management 

CAPITAL RAISING

The Company completed a capital raising in December 2016 that comprised a pro-rata accelerated non- 
renounceable entitlement offer and institutional placement.

The offer raised a total of $75 million, with the institutional component being signiﬁcantly oversubscribed 
with strong demand from a broad range of high quality institutional investors including existing institutional 
shareholders. The offer price was $4.45 per share, which represented a 5.9% discount to the volume weighted 
average trading price over the preceding 30 day period.

The funds raised from the capital raising were utilised in the funding of the Company’s growth strategy 
including the acquisition of Australian Consolidated Milk’s 50% interest in Pactum Dairy Group, the acquisition 
of Power Foods as well as providing the Company with additional balance sheet ﬂexibility for future growth 
opportunities including the capital expenditure initiatives which are ongoing in relation to product and 
capability expansion at our Shepparton, Ingleburn and Dandenong facilities.

LIQUIDITY & FINANCE FACILITIES

The Company held cash of $4.2 million at 30 June 2017, with total borrowings of $185.2 million, comprising 
term facilities, equipment ﬁnance leases and working capital facilities. Net debt at 30 June 2017 was $181.0 
million, with a net debt to equity ratio of 56.3%.

Cash ﬂow from operations was $10.8 million, a decrease of $3.8 million from prior year period, reﬂecting 
increased working capital requirements.

During the 2nd half FY 2017, the Company funded a signiﬁcant increase in working capital requirements for 
the transition of the Taren Point and Ingleburn sites, including raw materials, packaging, labour and associated 
costs. These transitionary working capital requirements are estimated to be in excess of $10 million and will 
reduce during 2nd quarter of FY 2018 as the Ingleburn site assumes full operation.

During the period, the Company invested $134.7 million in capital expenditure (relating to new facilities being 
constructed at Ingleburn and capital expenditure on plant and equipment at Shepparton, Dandenong, Leeton 
and Darlington Point operations) which was funded by cash and ﬁnance facilities.

With a signiﬁcant proportion of the Company’s capital expenditure plan now complete, the Company is 
establishing with its long term banking partners a more ﬂexible group ﬁnance and liquidity structure that will 
provide for the working capital and capital expenditure needs of the business from continued revenue growth. 
The term of a new secured bilateral and syndicated facility is expected to be 3 years and will be formally 
established prior to 31 December 2017. Reﬂecting the renegotiation timetable with our long term banking 
partners, the Company’s balance sheet as at 30 June 2017 shows a larger proportion of the banking facilities 
as a current liability.

To provide ongoing balance sheet ﬂexibility and to reduce any requirement for equity capital outside of a 
material acquisition initiative, the Company has entered into a sale and leaseback of its Ingleburn land and 
buildings for a net consideration of $75 million. Funds from the sale will provide ﬂexibility to fund growth in 
working capital and capital expenditure over the coming 3 years.

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The sale and leaseback is with a subsidiary of the Perich Group. The Perich Group has a substantial industrial 
and retail property portfolio and a strong track record in being a long term stable property owner, which suits 
the objectives of the Company. The sale and leaseback is for 20 + 10 years and has been negotiated on an 
arm’s length basis. The transaction is expected to be completed on 30 November 2017, subject to shareholder 
approval at the Annual General Meeting.

DIVIDENDS

Consistent with the positive forward outlook for the Group’s performance, the Company will pay a ﬁnal fully 
franked dividend of 2.25 cents per ordinary share in November 2017, in line with the ﬁnal dividend per ordinary 
share paid in November 2016. Allowing for the expanded share capital base following the December 2016 
capital raising, the dividend will amount to $4.5 million, compared to $4.1 million in FY 2016.

The record date for determining entitlements is 2 November 2017 and the payment date is 1 December 2017.

The Company’s Dividend Reinvestment Plan (DRP) remains open.

The Company will pay a fully franked converting preference share dividend in accordance with the terms of 
the converting preference shares. The record date for determining entitlements is 2 November 2017 and the 
payment date is 1 December 2017.

There are 101,627 converting preference shares remaining on issue at 30 June 2017.

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Group Outlook

BUILDING A GLOBAL FOOD & BEVERAGE BUSINESS  
BASED IN AUSTRALIA

The Company is uniquely and strategically well positioned to build scale in its key business platforms of plant 
based beverage, premium dairy and specialty cereal and snacks, with strong sales and earnings growth over 
the long term from Australia and key international markets in China, South East Asia and North America.

Our key brands “Freedom Foods” and “Australia’s Own” will be at the forefront of driving our returns from  
our innovation and manufacturing capabilities in Australia and international markets.

Our commitment to servicing a broader category including retailers and other brand owners will remain, 
driving scale and generating earnings to support our brand strategy.

The Company has created a unique supply and manufacturing footprint in its key categories. We believe 
the ability to control supply and manufacturing inputs and more quickly deliver innovation across a range of 
product formats for our brands and our key customers is a key strategic advantage in the medium to long 
term, particularly in value adding Australia’s unique agricultural base. While this has required signiﬁcant capital 
investment and patience, we will continue to invest to achieve this outcome.

The completion of our new plant and dairy based beverage capabilities at Ingleburn in Sydney is expected to 
result in a material increase in sales and proﬁtability, with further growth opportunities through meeting the 
increasing demands of our brands as well as our private label and other branded customer base.

With a large base of dairy volume established, the focus is on driving the dairy business towards specialty and 
high value added products. The development of a specialised nutritionals platform at Shepparton aligned to 
the dairy UHT operations will provide for protein standardisation and the ability to separate milk into industrial 
grade pure protein components for use in our branded products and for sale to key strategic customers. The 
acquisition of the Vital Strength performance nutrition brand is a key part of this strategy and will materially 
contribute to sales and earnings in the medium term.

The Cereal, Snacks and Milling business is strategically well positioned to build a signiﬁcant growth platform 
in multiple products, channels and distribution across Australia/NZ, China, South East Asia and North 
America. The business will deliver increasing sales and proﬁt through innovation in new products, expansion 
of distribution channels in Australia and international markets, together with increasing manufacturing 
efficiencies from volume and cost efficiencies arising from the capital investment program at Leeton, 
Darlington Point Mill and Dandenong. This, aligned with investment in building awareness of the brand across 
a broader consumer market open to healthier products, is expected to provide a strong base for growth into 
future years.

Our capital raising, the sale and leaseback of Ingleburn and increasing operational cashﬂows in future years, 
along with support from our banking partners, provides a strong balance sheet capability to execute our strategy.

The Company is experiencing a strong start to the 2018 ﬁnancial year, with net sales revenues estimated to be 
in the range of $340 to $360 million, as compared to $262 million in FY 2017.

We expect this and future year’s sales increases to ﬂow through positively to increased operating margins 
reﬂecting the ongoing beneﬁts of the strategy and multi stage capital investment program with acceleration 
of proﬁts and returns in FY 2018 and beyond.

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WE DONT JUST FIND 
OPPORTUNITIES,  
WE CREATE THEM.

Quality 

Nutrition

Taste

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FINANCIAL REPORT

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DIRECTORS’ REPORT

The directors present their report, together with the ﬁnancial statements, on the consolidated entity (referred to hereafter 
as the ‘Group’) consisting of Freedom Foods Group Limited (referred to hereafter as the ‘Company’ or ‘parent entity’) and 
the entities it controlled at the end of, or during, the year ended 30 June 2017.

DIRECTORS

The following persons were directors of Freedom Foods Group Limited during the whole of the ﬁnancial year and up  
to the date of this report, unless otherwise stated:

Perry R. Gunner - Chairman (Non-Executive)

Rory J.F. Macleod - Managing Director and Chief Executive Officer (Executive)

Anthony M. Perich - Deputy Chairman and Director (Non-Executive)

Ronald Perich - Director (Non-Executive)

Trevor J. Allen - Director (Non-Executive)

Michael R. Perich - Alternate Director for Anthony M. Perich and Ronald Perich (Non-Executive)

PRINCIPAL ACTIVITIES

The principal activities of the consolidated entity during the ﬁnancial year were:

•  sourcing, manufacturing, selling, marketing and distribution of specialty cereal and snacks;

•  sourcing, manufacturing, selling, marketing and distribution of plant and dairy based beverages;

•  sourcing, manufacturing, selling, marketing and distribution of nutritional products;

•  selling, marketing and distribution of canned specialty seafood; and

•  investment in large scale dairy farming operations.

The Company operates sales, marketing and distribution activities in Australia, New Zealand, China, South East Asia 
and North America.

There were no signiﬁcant changes in the nature of the principal activities during the ﬁnancial year.

DIVIDENDS

Dividends paid during the ﬁnancial year were as follows:

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Final fully franked dividend for the year ended 30 June 2016 of 2.25 cents  
(2015: 1.50 cents) per ordinary share paid in cash

Dividends reinvested: fully franked at 30% tax rate

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Interim fully franked dividend for the year ended 30 June 2017 of 2.00 cents  
(2016: 1.75 cents) per ordinary share paid in cash

Dividends reinvested: fully franked at 30% tax rate

Final fully franked dividend for the year ended 30 June 2016 of 1.35 cents  
(2015: 1.35 cents) per convertible redeemable preference share

Interim fully franked dividend for the year ended 30 June 2017 of 1.35 cents  
(2016: 1.35 cents) per convertible redeemable preference share

CONSOLIDATED

2017 $'000

2016 $'000

1,048

3,050

1,560

2,439

1

1

515

1,807

688

2,455

1

2

8,099

5,468

On 31 August 2017, the directors declared a fully franked ﬁnal dividend of 2.25 cents per share to the holders of fully 
paid ordinary shares in respect of the ﬁnancial year ending 30 June 2017, which is to be paid to shareholders on  
1 December 2017. The record date for determining the entitlement to the ﬁnal dividend is 2 November 2017. The 
dividend has not been included as a liability in these ﬁnancial statements. The total estimated dividend to be paid  
is $4,519,000. The dividend reinvestment plan will be in operation in respect of this dividend.

On 31 August 2017, the directors declared a fully franked ﬁnal dividend of 1.35 cents per share to the holders of the 
convertible redeemable preference shares in respect of the ﬁnancial year ending 30 June 2017, which is to be paid to 
shareholders on 1 December 2017. The record date for determining the entitlement to the ﬁnal dividend is 2 November 
2017. The dividend has not been included as a liability in these ﬁnancial statements. The total estimated dividend to be 
paid is $1,372.

 
 
REVIEW OF OPERATIONS

The proﬁt for the Group after providing for income tax and non-controlling interest amounted to $7,451,000 (30 June 
2016: $50,492,000 which included one off proﬁts of $24.5 million arising from the sale of the Company’s remaining 
holdings in the A2 Milk Company Limited and $22.4 million arising from the fair value gain on conversion of options in 
Pactum Dairy Group Pty Limited).

Refer to the commentary in the Managing Director’s and CEO’s Review of Operations.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

There were no signiﬁcant changes in the state of affairs of the Group during the ﬁnancial year.

MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR

On 4 July 2017 the Company entered into a joint venture with Shenzhen Jialile Food Co. Limited (JLL) to establish a new 
company called Australia’s Own Dairy Company China. The Company will subscribe for an initial investment of 10% for 
consideration of RMB22 million (approximately AUD$4.4 million), with the option to subscribe up to 30% within 3 years. 
The transaction is subject to regulatory approvals in China and is expected to be formally completed by no later than  
31 December 2017.

On 31 August 2017, the Group entered into an agreement with a subsidiary of the Perich Group for the sale and 
leaseback of its Ingleburn land and buildings for consideration of $75 million. The lease is for a term of 20 years with an 
option for a further 10 years. This transaction is expected to be completed on 30 November 2017 subject to shareholder 
approval at the Annual General Meeting.

Apart from the dividend declared as disclosed in Note 18, the establishment of Australia’s Own Dairy Company China and 
the sale and leaseback agreement, no other matter or circumstance has arisen since 30 June 2017 that has signiﬁcantly 
affected, or may signiﬁcantly affect the Group’s operations, the results of those operations, or the Group’s state of affairs 
in future ﬁnancial years.

LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS

In future years, the consolidated entity expects to continue to grow through organic sales development, leveraging its 
expanding capabilities in supply chain and manufacturing, product development, sales, marketing and distribution in 
its core business activities. Growth beyond Australia and New Zealand will be targeted through key export markets in 
Asia (China and South East Asia) and North America, either through company owned capabilities or through strategic 
alliances and partnerships.

ENVIRONMENTAL REGULATION

The consolidated entity’s operations are subject to environmental regulation under the law of the Commonwealth, 

State and local council regulations.

• There were no breaches of environmental laws, regulations or permits during the year.

• The consolidated entity is currently operating in accordance with local councils consent in regard to hours of operation.

INFORMATION ON DIRECTORS

Name: Mr Perry R. Gunner.

Title: Chairman and Non-Executive Director (Independent).

Qualiﬁcations: B.Ag.Sc, Grad Business Administration.

Experience and expertise: Perry is former Chairman and CEO of Orlando Wyndham Wine Group and was appointed 
Chairman in July 2006.

Other current directorships: Non-Executive Director of Australian Vintage Ltd.

Former directorships (last 3 years): A2 Milk Limited.

Special responsibilities: Chairman of the Remuneration and Nomination Committee and member of the Audit, Risk 
and Compliance Committee.

Interests in shares: 914,094.

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Name: Mr Rory J.F. Macleod.

Title: Managing Director and Chief Executive Officer.

Qualiﬁcations: B.Econ (Hons).

Experience and expertise: Rory has been with the group for the past 14 years with direct responsibility for and 
involvement in the Company’s strategic, operational and ﬁnancial development during this time. He is a former 
Senior Director, corporate ﬁnance for SBC Warburg (now UBS) in Australasia and Europe where he gained extensive 
experience in strategy and commercial development, mergers and acquisitions and corporate analysis. Prior to his 
corporate ﬁnance background, Rory was an Equities Research Analyst with SBC Warburg (now UBS). Rory was 
appointed as an Executive Director in 2008 and appointed Managing Director and CEO in August 2012.

Other current directorships: Non-Executive Chairman, Australian Fresh Milk Holdings Pty Limited (AFMH) and  
its subsidiaries. A director of operating subsidiaries of Freedom Foods Group Limited.

Former directorships (last 3 years): None.

Special responsibilities: None.

Interests in shares: 1,708,795.

Interests in options: Employee Share Options 2,500,000 @ $2.92.

Name: Mr Anthony M. Perich AM.

Title: Deputy Chairman and Non-Executive Director.

Experience and expertise: Anthony is a Member of the Order of Australia. He is joint Managing Director of Arrovest Pty 
Limited, Leppington Pastoral Company, one of Australia’s largest dairy producers, and various other entities associated 
with Perich Enterprises Pty Limited. He is also a property developer, farmer and business entrepreneur. Outside of 
the Perich Group, Anthony holds a number of other directorships which include Greenﬁelds Narellan Holdings, East 
Coast Woodshavings Pty Limited, Breeders Choice Woodshavings Pty Limited, Austral Malaysian Mining Limited and 
Inghams Health Research Institute. Memberships include Narellan Chamber of Commerce, Narellan Rotary Club, Urban 
Development Institute of Australia, Urban Taskforce, Property Council of Australia, past President of Narellan Rotary 
Club and Past President of Dairy Research at Sydney University. He was appointed as a director in July 2006.

Other current directorships: None.

Former directorships (last 3 years): Austral Malaysian Mining Limited, Pulia Mining Sdn Bhd (Malaysia).

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Special responsibilities: Deputy Chairman.

Interests in shares: 111,552,094.

Name: Mr Ronald Perich.

Title: Non-Executive Director.

Experience and expertise: Ronald is joint Managing Director of Arrovest Pty Limited, Leppington Pastoral Company, 
one of Australia’s largest dairy producers, and various other entities associated with Perich Enterprises Pty Limited. 
He is also a property developer, farmer and business entrepreneur. Former Director of United Dairies Limited. He was 
appointed as a director in April 2005.

Other current directorships: None.

Former directorships (last 3 years): None.

Special responsibilities: Member of the Audit, Risk & Compliance Committee and member of the Remuneration  
& Nomination Committee.

Interests in shares: 111,552,094.

 
 
 
 
Name: Mr Trevor J. Allen.

Title: Non-Executive Director (Independent).

Qualiﬁcations: B Comm (Hons), CA, FF, FAICD.

Experience and expertise: Trevor has 39 years experience in the corporate and commercial sectors, primarily as a 
corporate and ﬁnancial adviser to Australian and international public and privately owned companies. Trevor is an 
independent Non-Executive Director of Peet Limited, where he chairs its Audit and Risk Management Committee and 
is a member of its Remuneration Committee. He is an independent Non-Executive Director of Eclipx Group Limited, 
where he also chairs its Audit and Risk Management Committee and is a member of its Remuneration Committee. He 
is the interim Chair of Yowie Group Limited and the Chair of Brighte Capital Pty Limited, a start-up company ﬁnancing 
residential solar and batteries. Trevor is a consultant to PPB Advisory. Prior to Trevor’s Non-Executive roles, he had 
senior executive positions in the investment banking and corporate advisory sector, including Executive Director – 
Corporate Finance at SBC Warburg (now UBS) for over 8 years, Director at Baring Brothers Australia for one year and 
as a Corporate Finance Partner at KPMG for nearly 12 years. At the time of his retirement from KPMG in December 2011, 
he was the lead partner in its National Mergers and Acquisitions group. From 1997 – 2000 he was Director - Business 
Development for Cellarmaster Wines, having responsibility for the integration and performance of a number of 
acquisitions made outside Australia in that period. He was appointed as a director in July 2013.

Other current directorships: Non-Executive Alternate Director, Company Secretary and Public Officer of Australian 
Fresh Milk Holdings Pty Limited and Fresh Dairy One Pty Limited. Non-Executive Director of Peet Funds Management 
Limited, Yowie Hong Kong Holdings Pty Limited, Peet Flagstone Pty Limited and Brighte Capital Pty Limited.

Former directorships (last 3 years): Australian Childcare Projects Limited, Juvenile Diabetes Research Association, 
AON Superannuation Pty Ltd.

Special responsibilities: Chairman of the Audit Risk & Compliance Committee and a member of the  
Remuneration Committee.

Interests in shares: 84,079.

Name: Mr Michael R. Perich.

Title: Alternate Non-Executive Director.

Qualiﬁcations: B AppSci (SysAg).

Experience and expertise: Director of Arrovest Pty Limited, Leppington Pastoral Company, one of Australia’s largest 
dairy producers, and various other entities associated with Perich Enterprises Pty Limited. Former Director of Contract 
Beverages Packers of Australia Pty Limited, a joint venture controlled equally by the Company and Arrovest, Director of 
Australian Dairy Conference and Graduate Member of the Australian Institute of Company Directors post nominals. He 
was appointed as an alternate director in March 2009.

Other current directorships: Non-Executive Director of Australian Fresh Milk Holdings Pty Limited, Milk Holdings Pty 
Limited, Fresh Dairy One Pty Limited, Australian Fresh Milk Pty Limited.

Former directorships (last 3 years): None.

Special responsibilities: None.

Interests in shares: 111,552,094.

‘Other current directorships’ quoted above are current directorships for listed entities only and excludes directorships 
of all other types of entities, unless otherwise stated.

‘Former directorships (last 3 years)’ quoted above are directorships held in the last 3 years for listed entities only and 
excludes directorships of all other types of entities, unless otherwise stated.

COMPANY SECRETARY

Chief Financial Officer, Mr Campbell Nicholas was appointed Company Secretary on 1 September 2016 and has been  
a Certiﬁed Practicing Accountant for 25 years. 

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DIRECTORS’ REPORT

MEETINGS OF DIRECTORS

The number of meetings of the Company’s Board of Directors (‘the Board’) and of each Board committee held during 
the year ended 30 June 2017, and the number of meetings attended by each director were:

Perry R. Gunner 

Rory J.F. Macleod (i)

Anthony M. Perich

Ronald Perich

Trevor J. Allen

Michael R. Perich

FULL BOARD

AUDIT, RISK & COMPLIANCE

REMUNERATION & NOMINATION

ATTENDED

HELD

ATTENDED

HELD

ATTENDED

HELD

10

10

10

6

10

10

10

10

10

10

10

10

4

4

-

2

4

-

4

4

-

4

4

-

1

1

-

1

1

-

1

1

-

1

1

-

Held: represents the number of meetings held during the time the director held office or was a member of the relevant 
committee.

(i)  R.J.F. Macleod attended the Audit, Risk and Compliance Committee meetings at the invitation of the Audit, Risk and 

Compliance Committee. 

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REMUNERATION REPORT (AUDITED)

The remuneration report details the key management personnel remuneration arrangements for the Group, in 
accordance with the requirements of the Corporations Act 2001 and its Regulations.

Key management personnel are those persons having authority and responsibility for planning, directing and 
controlling the activities of the entity, directly or indirectly, including all directors.

The remuneration report is set out under the following main headings:

•  Principles used to determine the nature and amount of remuneration

•  Details of remuneration

•  Service agreements

•  Share-based compensation

•  Group performance, shareholder wealth and directors and key management personnel remuneration

•  Additional disclosures relating to key management personnel

Principles used to determine the nature and amount of remuneration

Remuneration arrangements for key management personnel of the Company and Group (“the Directors and 
Executives”) are set competitively to attract and retain appropriately qualiﬁed and experienced Directors and 
Executives. As part of its agreed mandate, the Remuneration and Nomination Committee obtains independent advice 
when required on the appropriateness of remuneration packages given trends in comparable companies and the 
objectives of the consolidated entity’s remuneration strategy.

During FY2016, the Remuneration and Nomination Committee obtained independent advice from Crichton + Associates 
Pty Limited in relation to current and future remuneration policies and structures for the Company and the Group.

The remuneration structures explained below are designed to attract suitably qualiﬁed candidates. The remuneration 
structures take into account:

•  The capability and experience of the Directors and Executives;

•  The Directors and Executives’ ability to control the relevant operational performance; and

•  The amount of incentives within each Director and Executive’s remuneration.

Managing Director and Executives

Fixed remuneration consists of base remuneration (which is calculated on a total cost basis and includes any FBT charges 
related to employee beneﬁts including motor vehicles), as well as employer contributions to superannuation funds.

The Managing Director and Executives remuneration levels are reviewed annually by the Remuneration and Nomination 
Committee through a process that considers the overall performance of the Group and the individual.

Performance based remuneration

Performance based remuneration is at the discretion of the Remuneration and Nomination Committee. These can take 
the form of share scheme interests or cash bonuses although the Company’s preference is to link performance and 
service to a Long Term Incentive Plan (LTIP). Approval was given at the Annual General Meeting in November 2016 for 
the adoption and establishment of the Freedom Foods Equity Incentive Plan (EIP) to replace the Company’s existing 
Employee Share Option Plan (ESOP) for any new issue of securities under the LTIP. The ESOP will be terminated once 
all unexercised options under the ESOP have either exercised or lapsed.

The EIP allows the Company to grant a range of different share scheme interests to all directors (excluding Mr Ronald 
and Anthony M. Perich) and permanent full time or part time employees, or their respective nominees, of a company 
in the Group (Group Companies), which includes related bodies corporate of the Company and a body corporate in 
which the Company has voting power of 20% or more, whom the Board determines to be eligible to participate. The 
Board believes that share scheme interest grants are appropriate to aligning key executive performance with long term 
performance and growth of the Company. These share scheme interests include options, performance rights, service 
rights, deferred shares, exempt shares, cash rights and stock appreciation rights. No share options have been issued 
under the EIP in FY 2017. 

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Non-Executive Directors

The maximum aggregate amount of fees that can be paid to Non-Executive Directors is subject to approval by 
shareholders at an Annual or Extraordinary General Meeting. Total fees for all Non-Executive Directors, last voted upon 
by shareholders in November 2016, was not to exceed $750,000 in total. Total fees paid to Non-Executive Directors 
for 2017 was $464,055 (2016: $368,720). To align director interests with shareholder interests, the directors are 
encouraged to hold shares in the Company.

 
DIRECTORS’ REPORT

For the year ended 30 June 2017, the Chairman receives approximately 1.2 times the base fee of Non-Executive 
Directors. The Deputy Chairman receives approximately 1.1 times the base fee of Non-Executive Directors. Non-
Executive Directors do not receive performance related remuneration. Directors’ fees cover all main Board activities 
including Committee Fees. Other than contributions towards superannuation funds, there are no termination or 
retirement beneﬁts for Non-Executive Directors.

During the previous ﬁnancial year, the Remuneration and Nomination Committee obtained independent advice  
from Crichton + Associates Pty Limited in relation to current and future remuneration policies and structures for  
the Company and the Group. As a result, the fees for directors in this ﬁnancial year were adjusted to reﬂect market 
practice for comparable listed companies.

DETAILS OF REMUNERATION

Amounts of remuneration

Details of the remuneration of key management personnel of the Group are set out in the following tables.

The key management personnel of the Group consisted of the following Directors of Freedom Foods Group Limited:

•  Perry R. Gunner - Chairman and Non-Executive Director

•  Rory J.F. Macleod - Managing Director and Chief Executive Officer

•  Anthony M. Perich - Deputy Chairman and Non-Executive Director

•  Ronald Perich - Non-Executive Director

•  Trevor J. Allen - Non-Executive Director

•  Michael Perich - Alternate Non-Executive Director for Anthony M. Perich and Ronald Perich

Executive Officers

•  Amine Haddad - CEO, Commercial Operations Australasia

•  Timothy Moses - Group General Manager, Group Operations

•  Campbell Nicholas - Chief Financial Officer and Company Secretary

In making an assessment of the key management personnel, a review of the roles performed by various senior 
management is undertaken each year. This review takes into consideration senior management members’ ability to 
plan, direct and control the principle activities of the Group. As a result of this review in FY 2017 Campbell Nicholas, 
CFO and Company Secretary, has been added to the key management personnel.

The beneﬁts of each director who held office and other key management personnel for the year ended 30 June 2017 
are as follows: 

SHORT-TERM BENEFITS

POST-EMPLOYMENT 
BENEFITS

LONG-TERM  
BENEFITS

SHARE-BASED 
PAYMENTS

SALARY $

DIRECTORS  
FEES $

SUPERANNUATION $

LONG SERVICE 
LEAVE $

OPTIONS $

TOTAL $

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2017

Non-Executive Directors:

Perry R. Gunner

Anthony M. Perich

Ronald Perich

Trevor J. Allen

Michael Perich (alternate)

Executive Directors:

-

-

-

-

-

110,731

101,598

92,466

92,466

26,534

Rory J.F. Macleod

460,384

Other Key Management 
Personnel:

Amine Haddad

Timothy Moses

Campbell Nicholas*

380,384

255,384

253,772

-

-

-

-

1,349,924

423,795

* Campbell Nicholas was appointed on 1 September 2016.

10,519

9,652

8,784

8,784

2,521

19,616

19,616

19,616

17,061

116,169

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

121,250

111,250

101,250

101,250

29,055

279,369

759,369

167,621

567,621

-

-

275,000

270,833 

446,990 2,336,878 

 
 
SHORT-TERM BENEFITS

POST-EMPLOYMENT 
BENEFITS

LONG-TERM  
BENEFITS

SHARE-BASED 
PAYMENTS

SALARY $

DIRECTORS  
FEES $

SUPERANNUATION $

LONG SERVICE 
LEAVE $

OPTIONS $

TOTAL $

2016

Non-Executive Directors:

Perry R. Gunner

Anthony M. Perich

Ronald Perich

Trevor J. Allen

Michael Perich (alternate)

Melvyn Miles*

Executive Directors:

-

-

-

-

-

-

86,758

77,626

68,493

68,493

23,945

11,416

Rory J.F. Macleod

400,692

Other Key Management 
Personnel:

Amine Haddad

Timothy Moses

350,692

233,192

-

-

-

984,576

336,731

8,242

7,374

6,507

6,507

2,275

1,084

19,308

19,308

19,308

89,913

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

95,000

85,000

75,000

75,000

26,220

12,500

280,135

700,135

168,081

538,081

-

252,500

448,216

1,859,436

*  The director fees for Melvyn Miles were paid up until his resignation date, 14 August 2015.

No bonus payments are payable to Executive Directors or other key management personnel with respect to the 
ﬁnancial year ended 30 June 2017. The remuneration is ﬁxed in the above tables.

SERVICE AGREEMENTS

Neither the Managing Director nor any other Executive has a ﬁxed term contract. All senior executive management are 
employed under contract. The agreements outline the components of the remuneration paid to executives, including 
annual review. The agreements do not obligate the business to increase ﬁxed remuneration, pay a short term incentive, 
make termination beneﬁts or offer a long term incentive in any given year. The Company may terminate the contract at 
any time without notice if serious misconduct has occurred. Where termination with cause occurs, the executive is only 
entitled to that portion of remuneration that is ﬁxed, and only up to the date of termination.

The agreements may be terminated by written notice from either party or by the employing entity within the Group 
making a payment in lieu of notice. The notice periods are 9 months for the Managing Director, 6 months for CEO, 
Commercial Operations Australasia and 3 months for Group General Manager, Group Operations and 2 months for the 
CFO and Company Secretary. Other notice periods for other executives are between 1 and 2 months.

SHARE-BASED COMPENSATION

Employee Share Options

GRANT DATE

30 August 2012

1 July 2013

1 July 2015

RECIPIENTS

NUMBER OF SHARES 
UNDER OPTION

EXPIRY  
DATE

EXERCISE  
PRICE

FAIR VALUE PER OPTION  
AT GRANT DATE

350,000

30 August 2017

712,000

1 July 2018

4,000,000

30 June 2020

$0.60

$1.65

$2.92

$0.066

$0.181

$1.195

NUMBER DURING  
THE YEAR 2017

NUMBER DURING  
THE YEAR 2016

FAIR VALUE ($) DURING 
THE YEAR 2017

FAIR VALUE ($) DURING  
THE YEAR 2016

Rory J.F. Macleod - Issued 1 July 2015

Amine Haddad - Issued 1 July 2015

-

-

2,500,000

1,500,000

-

-

2,987,500

1,792,500

There is no performance criteria that need to be met in relation to 30 August 2012 and 1 July 2013 series options granted 
above. The options detailed above vest over a period of 3 years and relate to an employee’s service period only.

The holders of these options do not have the right by virtue of the option, to participate in any share issue or interest 
issue of any other body corporate or registered scheme. 

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DIRECTORS’ REPORT

At the AGM on 30 October 2014, approval was granted for 2,500,000 options under the Employee Share Option  
Plan to be issued to Mr Rory J.F Macleod, Managing Director and CEO on 1 July 2015. Unlike the options on issue at  
30 June 2015, these options will have a 5 year exercise period and will vest based on the achievement of Group 
Company EBDITA performance within the 5 year exercise period per the below:

•  750,000 on achievement of audited Group EBDITA of A$38 million;

•  750,000 on achievement of audited Group EBDITA of A$45 million; and

•  1,000,000 on achievement of audited Group EBDITA of A$57 million.

The above earnings targets include the results of Pactum Dairy Group. The audited Group EBDITA will be adjusted for 
any material acquisition or divestment. Since the grant of the options, the Company acquired Popina Foods, assets 
associated with the Darlington Point Mill (DP Mill) and the assets associated with Power Foods. As a result, the Group 
EBDITA performance targets have been adjusted to the following:

•  750,000 on achievement of audited Group EBDITA of A$44.5 million;

•  750,000 on achievement of audited Group EBDITA of A$51.5 million; and

•  1,000,000 on achievement of audited Group EBDITA of A$63.5 million.

In the ﬁnal year of the 5 year exercise period for the options granted to Mr Rory J.F. Macleod (and other options issued 
under the same conditions to Mr Amine Haddad), any options deemed vested on the basis of a preliminary Group 
EBDITA for 30 June 2020 will be allowed to be exercised based on achievement of an Group EBDITA at 30 June 2020 
up and until the audited Group EBDITA at 30 June 2020 is conﬁrmed no later than 30 September 2020.

The options have been valued using an independent valuation from Ian S. Crichton (BA, FCA, MFTA), Principal, Crichton 
+ Associates Pty Limited. The valuation and annual expense has been reﬂected in the Statement of proﬁt or loss and 
comprehensive income.

GROUP PERFORMANCE, SHAREHOLDER WEALTH AND DIRECTORS AND KEY MANAGEMENT 
PERSONNEL REMUNERATION

The remuneration policy of the Company and Group is at the discretion of the Remuneration and Nomination Committee. 

The earnings of the Group for the ﬁve years to 30 June 2017 are summarised below:

Gross sales revenue*

Net sales revenue

Operating EBDITA**

Operating net proﬁt**

64

Proﬁt after income tax

EPS (Fully Diluted for CRPS)  
on operating net proﬁt

2017 $’000

2016 $’000

2015 $’000

2014 $’000

2013 $’000

313,335

262,481

26,240

8,915

7,539

5%

213,833

170,444

21,526

10,818

50,631

129,502

91,460

16,420

4,970

56,631

122,722

87,856

15,289

12,518

12,132

115,514

88,922

11,600

6,351

13,722

6%

3%

8%

5%

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*   Gross sales revenues in the table above differs from the reported revenue, as the gross sales revenue above includes 

intercompany sales eliminated from the statutory reported revenue from sale of goods ﬁgure. This treatment reﬂects the 
Group’s arm’s length trading policy between Group activities.

**  Operating EBDITA/Operating net proﬁt excludes the non-operating charges and gains with an add back of the non-cash 

employee share option expense of $448 thousand.

Share price at ﬁnancial year end ($)

Total dividends declared (cents per share)

Basic earnings per share (cents per share)

Diluted earnings per share (cents per share)

2017

4.80

4.25

3.89

4.01

2016

4.06

3.25

29.52

28.54

2015

2.96

3.00

37.11

35.99

2014

2.76

2.50

8.65

8.14

2013

1.65

2.00

14.73

11.96

 
 
ADDITIONAL DISCLOSURES RELATING TO KEY MANAGEMENT PERSONNEL 

Key management personnel equity holdings

The number of shares in the Company held during the ﬁnancial year by each director and other members of key 
management personnel of the Group, including their personally related parties, is set out below:

Ordinary shares

Perry R. Gunner

Rory J.F. Macleod

Anthony M. Perich*

Ronald Perich*

Trevor J. Allen

Michael Perich*

Amine Haddad

Timothy Moses

BALANCE AT  
THE START OF 
THE YEAR

RECEIVED 0N 
EXERCISE OF 
OPTIONS

DIVIDEND 
REINVESTMENT 
PLAN 

OTHER CHANGES 
DURING THE YEAR

BALANCE AT  
THE END OF  
THE YEAR

781,569

1,654,487

99,107,422

99,107,422

68,593

99,107,422

1,192,962

100,000

301,119,877

-

-

-

-

-

-

-

75,000

75,000

-

1,068

132,525

53,240

914,094

1,708,795

1,043,627

11,401,045

111,552,094

1,043,627

11,401,045

111,552,094

-

15,486

84,079

1,043,627

11,401,045

111,552,094

8,049

- 

19,101

(8,286)

1,220,112

166,714 

3,139,998

34,415,201

338,750,076

*   Anthony M. Perich, Ronald Perich and Michael Perich (as their alternate) are Joint Managing Directors of Arrovest Pty Limited, 

an entity holding direct interest in the Group.

** Campbell Nicholas, appointed 1 September 2016, held no shares in the Company during the ﬁnancial year.

Directors and key management personnel shareholdings increased during the year as a result of the Company issuing 
new shares under the Placement and Entitlement Offer during December 2016.

EMPLOYEE SHARE OPTIONS IN THE GROUP

The number of options over ordinary shares in the Company held during the ﬁnancial year by each director and other 
members of key management personnel of the Group, including their personally related parties, is set out below:

Options over ordinary shares

Rory J.F. Macleod

Amine Haddad

Timothy Moses

BALANCE AT  
THE START OF 
THE YEAR

2,500,000

1,500,000

75,000

4,075,000

GRANTED

EXERCISED

EXPIRED/
FORFEITED/
LAPSED

BALANCE AT  
THE END OF  
THE YEAR

-

-

-

-

-

-

(75,000)

(75,000)

-

-

- 

-

2,500,000

1,500,000

-

4,000,000

All share options issued to key management personnel were made in accordance with the provisions of the ESOP.

No director or senior management personnel of the Group appointed during the year received a payment as part of his 
consideration for agreeing to hold the position.

INDEMNITY AND INSURANCE OF OFFICERS

The group has not, during or since the ﬁnancial year, in respect of any person who is or has been an officer of the 
Company or a related body corporate:

•  indemnified or made any relevant agreement for indemnifying against liability incurred as an officer, including costs 

and expenses in successfully defending legal proceedings; or

•  paid or agreed to pay, a premium in respect of a contract insuring against a liability incurred as an officer for the 

costs or expenses to defend legal proceedings; with the exception of the following matter.

During the ﬁnancial year the Group paid premiums to insure each of the directors against liabilities for costs and expenses 
incurred by them in defending any legal proceedings arising out of their conduct while acting in the capacity of an officer 
of the Group. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium.

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DIRECTORS’ REPORT

INDEMNITY AND INSURANCE OF AUDITOR

The Company has not, during or since the end of the ﬁnancial year, indemniﬁed or agreed to indemnify the auditor 
of the Company or any related entity against a liability incurred by the auditor.

During the ﬁnancial year, the Company has not paid a premium in respect of a contract to insure the auditor of  
the Company or any related entity.

PROCEEDINGS ON BEHALF OF THE COMPANY

No person has applied to the Court under Section 237 of the Corporations Act 2001 for leave to bring proceedings on 
behalf of the Company, or to intervene in any proceedings to which the Company is a party for the purpose of taking 
responsibility on behalf of the Company for all or part of those proceedings.

NON-AUDIT SERVICES

Details of the amounts paid or payable to the auditor for non-audit services provided during the ﬁnancial year by the 
auditor are outlined in Note 34 to the ﬁnancial statements.

The directors are satisﬁed that the provision of non-audit services during the ﬁnancial year, by the auditor (or by 
another person or ﬁrm on the auditor’s behalf), is compatible with the general standard of independence for auditors 
imposed by the Corporations Act 2001.

The directors are of the opinion that the services as disclosed in Note 34 to the ﬁnancial statements do not 
compromise the external auditor’s independence requirements of the Corporations Act 2001 for the following reasons:

•  all non-audit services were subject to the corporate governance procedures adopted by the Company and have been 

reviewed and approved to ensure that they do not impact the integrity and objectivity of the auditor; and

•  the non-audit services provided do not undermine the general principles relating to auditor independence as set out in 
the Code of Conduct APES 110 Code of Ethics for Professional Accountants issued by The Accounting Professional & 
Ethical Standards Board, including reviewing or auditing the auditor’s own work, acting in a management or decision-
making capacity for the company, acting as advocate for the company or jointly sharing economic risks and rewards.

ROUNDING OF AMOUNTS

The Company is of a kind referred to in Australian Securities and Investments Commission (ASIC) Corporations 
(Rounding in Financial/Directors’ Reports) Instrument 2016/191, dated 24 March 2016, and in accordance with that 
Corporations Instrument amounts in the directors’ report are rounded off to the nearest thousand dollars, unless 
otherwise indicated.

AUDITOR’S INDEPENDENCE DECLARATION

66

A copy of the auditor’s independence declaration as required under Section 307C of the Corporations Act 2001 is  
set out immediately after this directors’ report.

This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations  
Act 2001. 

On behalf of the directors

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___________________________ 

___________________________

Perry R. Gunner 
Chairman 

31 August 2017
Sydney

Rory J.F. Macleod
Managing Director and Chief Executive Officer

 
 
AUDITOR’S INDEPENDENCE DECLARATION

Deloitte Touche Tohmatsu 
ABN 74 490 121 060 

Grosvenor Place 
225 George Street 
Sydney NSW  2000 
PO Box N250 Grosvenor Place 
Sydney NSW 1220 Australia 

DX: 10307SSE 
Tel:  +61 (0) 2 9322 7000 
Fax:  +61 (0) 2 9322 7001 
www.deloitte.com.au  

The Board of Directors 
Freedom Foods Group Limited 
80 Box Road 
Taren Point NSW 2229 

31 August 2017 

Dear Board Members 

(cid:41)(cid:85)(cid:72)(cid:72)(cid:71)(cid:82)(cid:80)(cid:3)(cid:41)(cid:82)(cid:82)(cid:71)(cid:86)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:3)(cid:47)(cid:76)(cid:80)(cid:76)(cid:87)(cid:72)(cid:71)(cid:3)

In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following 
declaration of independence to the directors of Freedom Foods Group Limited. 

As lead audit partner for the audit of the financial statements of Freedom Foods Group Limited for the 
financial year ended 30 June 2017, I declare that to the best of my knowledge and belief, there have 
been no contraventions of: 

(i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit;

and

(ii) any applicable code of professional conduct in relation to the audit.

Yours sincerely 

DELOITTE TOUCHE TOHMATSU 

Andrew J Coleman 
Partner  
Chartered Accountants 

Liability limited by a scheme approved under Professional Standards Legislation. 
A member of Deloitte Touche Tohmatsu Limited. 

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Plant
based 
energy
bar

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made with chia seeds & whole grain oats
to power your moments, your way 

 
 
CORPORATE GOVERNANCE STATEMENT 

CORPORATE GOVERNANCE 

Freedom Foods Group Limited (‘the Company’) continued to follow best practice recommendations as set out by  
the ASX Corporate Governance Council. Where the Company has not followed best practice for any recommendation, 
explanation is given in the Corporate Governance Statement which is available on the Company’s website at  
www.ffgl.com.au.

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STATEMENT OF PROFIT OR LOSS & 
OTHER COMPREHENSIVE INCOME

FOR THE YEAR 
ENDED 30 JUNE 2017

REVENUE

Revenue from sale of goods

Cost of sales

Gross proﬁt

Other income

Other gains and losses

Gain from disposal of a2MC investment

Fair value gain on conversion of options in PDG

EXPENSES

Marketing expenses

Selling and distribution expenses

Administrative expenses

Depreciation and amortisation

Acquisition costs

Other expenses

Net ﬁnance costs

Share of proﬁts of associates accounted for using the equity method

PROFIT BEFORE INCOME TAX EXPENSE

Income tax expense

PROFIT AFTER INCOME TAX EXPENSE FOR THE YEAR

OTHER COMPREHENSIVE INCOME

Items that will not be reclassiﬁed subsequently to proﬁt or loss

Gain on the revaluation of land and buildings, net of tax

Foreign currency translation

Fair value movement in a2MC investment, net of tax

Reclassiﬁcation to proﬁt or loss on disposal of a2MC investment

Other comprehensive income for the year, net of tax

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

Proﬁt for the year is attributable to:

Non-controlling interest

Owners of Freedom Foods Group Limited

Total comprehensive income for the year is attributable to:

Non-controlling interest

Owners of Freedom Foods Group Limited

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Basic earnings per share

Diluted earnings per share

CONSOLIDATED

NOTE

2017 $'000

2016 $'000

5

262,481

170,444

(201,308)

(119,763)

61,173

3,435

(443)

-

-

(3,815)

(27,899)

(8,132)

(11,392)

(1,305)

(119)

(2,635)

480

9,348

(1,809)

7,539

917

(74)

-

-

843

8,382

88

7,451

7,539

88

8,294

8,382

CENTS

3.89

4.01

50,681 

307

658

24,529

22,353

(3,964)

(17,352)

(9,421)

(6,439)

(1,227)

(2,232)

(1,151)

372 

57,114

(6,483)

50,631

-

(279)

16,281

(22,122)

(6,120)

44,511

139

50,492 

50,631 

139

44,372 

44,511

CENTS

29.52

28.54

6

28

35

27

13

19

19

19

19

7

7

The above statement of proﬁt or loss and other comprehensive income should be read in conjunction with the accompanying Notes

 
 
STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2017

ASSETS

CURRENT ASSETS

Cash and cash equivalents

Trade and other receivables

Inventories

Derivative ﬁnancial instruments

Other assets

Prepayments

Total current assets

NON-CURRENT ASSETS

Investments accounted for using the equity method

Property, plant and equipment

Intangibles

Deferred tax

Loans due from associated entities

Total non-current assets

TOTAL ASSETS

LIABILITIES

CURRENT LIABILITIES

Trade and other payables

Borrowings

Derivative ﬁnancial instruments

Income tax

Provisions

Other liabilities

Total current liabilities

NON-CURRENT LIABILITIES

Payables

Borrowings

Provisions

Other liabilities

Total non-current liabilities

TOTAL LIABILITIES

NET ASSETS

EQUITY

Issued capital

Non-controlling interest

Reserves

Retained proﬁts

TOTAL EQUITY

CONSOLIDATED

NOTE

2017 $'000

2016 $'000

20

8

10

9

27

11

12

36

15

22

16

14

23

17

19

4,184

65,920

63,388

382

-

1,717

63,908

45,548

45,834

92

1,053

2,834 

135,591

159,269 

7,634

340,356

102,611

1,835

900

453,336

588,927

65,629

161,763

236

11,642

4,086

39

243,395

52

23,395

649

-

24,096

267,491

321,436

249,954

-

(56,397)

127,879

321,436

6,163

217,057

78,388

3,720

61 

305,389 

464,658 

50,790

32,437

381

11,568

3,148

938 

99,262 

52

71,393

591

6,235 

78,271 

177,533 

287,125

169,106

(8,234)

(2,274)

128,527 

287,125

71

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M
E
N
T

O
F

F
I
N
A
N
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I
A
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P
O
S
I
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I
O
N

The above statement of ﬁnancial position should be read in conjunction with the accompanying Notes

 
 
 
 
 
STATEMENT OF CASH FLOWS

FOR THE YEAR 
ENDED 30 JUNE 2017

CONSOLIDATED

NOTE

2017 $'000

2016 $'000

CASH FLOWS FROM OPERATING ACTIVITIES

Receipts from customers (inclusive of GST)

Payments to suppliers and employees (inclusive of GST)

Cash generated from operations

Payment for business acquisition costs

Claims and redundancies

Interest received

Interest and other ﬁnance costs paid

Income taxes paid

Net cash from operating activities

CASH FLOWS FROM INVESTING ACTIVITIES

Payment for purchase of business, net of cash acquired

Payments for property, plant and equipment

Advances to associates

Repayment of loan by associate

Proceeds from disposal of associate shares

Investment in equity interest

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from issue of equity instruments of the company

Payment of share issue costs

Dividends paid

72

Proceeds/(repayments) of borrowings

Payment of related party balances

Net cash from ﬁnancing activities

21

35

11

27

17

18

Net increase/(decrease) in cash and cash equivalents

Cash and cash equivalents at the beginning of the ﬁnancial year

Cash and cash equivalents at the end of the ﬁnancial year

20

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A

247,782

166,813

(237,002) 

(152,231)

10,780

(1,305)

(119)

746

(3,340)

(1,381)

5,381

14,582

(1,227)

-

1,216

(5,254)

(2,675)

6,642 

(72,671)

(39,423)

(138,506)

(64,052)

(900)

-

-

(953)

(71)

100

90,229

(5,760)

(213,030)

(18,977)

76,991

(2,089)

(2,611)

81,328

(5,694)

147,925

(59,724)

63,908

4,184

66,800

(1,685)

(1,256)

10,362

(307)

73,914 

61,579

2,329 

63,908

The above statement of cash ﬂows should be read in conjunction with the accompanying Notes

 
 
 
STATEMENT OF CHANGES IN EQUITY 

FOR THE YEAR 
ENDED 30 JUNE 2017

Issue of ordinary shares under employee share option plan (Note 17)

1,420

CONSOLIDATED

Balance at 1 July 2015

Proﬁt after income tax expense for the year

Other comprehensive income for the year, net of tax

Total comprehensive income for the year

Non-controlling interest share of proﬁt after tax

Transactions with owners in their capacity as owner:

Issue of ordinary shares in accordance with the dividend 
reinvestment plan (Note 17)

Issue of ordinary shares from an entitlement offer (Note 17)

Share issue costs (Note 17)

Related income tax (Note 17)

Additional non-controlling interests arising on the acquisition  
of Pactum Dairy Group

Share based payments (Note 19)

Dividends (Note 17)

Balance at 30 June 2016

CONSOLIDATED

Balance at 1 July 2016

Proﬁt after income tax expense for the year

Other comprehensive income for the year, net of tax

Total comprehensive income for the year

Non-controlling interest share of proﬁt after tax

Common control reserve arising from acquisition of 50%  
of PDG (Note 35)

Transactions with owners in their capacity as owners:

Issue of ordinary shares in accordance with the dividend 
reinvestment plan (Note 17)

Issue of ordinary shares from an entitlement offer (Note 17)

Share issue costs (Note 17)

Related income tax (Note 17)

Share based payments (Note 19)

Issue of ordinary shares held in Escrow to ACM (Note 17)

Dividends (Note 17)

Balance at 30 June 2017

ISSUED  
CAPITAL  
$’000

RESERVES 
$’000

NON-
CONTROLLING 
INTEREST 
$’000

RETAINED 
PROFITS  
$’000

TOTAL  
EQUITY 
 $’000

99,028

3,398

-

83,503 185,929

-

-

-

-

4,262

65,466

(1,185)

115

-

-

-

-

139

50,492

50,631

(6,120)

(6,120)

-

-

(6,120)

139

50,492

44,511

-

-

-

-

-

-

-

448

-

-

-

-

-

-

-

(8,373)

-

-

-

-

-

-

-

-

-

-

-

1,420

4,262

65,466

(1,185)

115

(8,373)

448

(5,468)

(5,468)

169,106

(2,274)

(8,234)

128,527

287,125

ISSUED  
CAPITAL  
$’000

RESERVES 
$’000

NON-
CONTROLLING 
INTEREST 
$’000

RETAINED 
PROFITS  
$’000

TOTAL  
EQUITY 
 $’000

169,106

(2,274)

(8,234)

128,527

287,125

-

-

-

-

-

-

843

843

-

88

-

88

-

(55,414)

8,146

7,451

7,539

-

843 

73

7,451

8,382

-

-

-

-

-

-

-

-

-

-

(47,268)

1,313

5,489

75,027

(2,091)

461

448

649

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A
T
E
M
E
N
T

O
F

C
H
A
N
G
E
S

I

N

E
Q
U
I
T
Y

(8,099)

(8,099)

127,879 321,436

-

-

-

-

-

-

-

-

-

-

-

-

-

-

448

-

-

5,489

75,027

(2,091)

461

-

649

-

249,954 (56,397)

Issue of ordinary shares under employee share option plan (Note 17)

1,313

The above statement of changes in equity should be read in conjunction with the accompanying Notes

 
 
 
 
NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2017

NOTE 1. GENERAL INFORMATION
The ﬁnancial statements of Freedom Foods Group Limited (“Group” or “Company”) for the year ended 30 June 2017 
was authorised for issue in accordance with resolution of directors on 31 August 2017. The directors have the power  
to amend and reissue the ﬁnancial statements.

Freedom Foods Group Limited is a company incorporated in Australia whose shares are publicly traded on the 
Australian Securities Exchange (ASX). The company is trading under the symbol ‘FNP’.

The nature of the operations and principal activities of the Group are described in Note 3.

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of the ﬁnancial statements are set out either in the respective 
notes or below. These policies have been consistently applied to all the years presented, unless otherwise stated.

GOING CONCERN

The ﬁnancial report has been prepared on a going concern basis which contemplates continuity of normal business 
activities and the realisation of assets and liabilities in the normal course of business. 

During the year, the Group drew down on its facilities with its long term banking partners HSBC and NAB to fund the 
new site being constructed at Ingleburn and the product and capability expansions at Shepparton and Dandenong. 
At 30 June 2017, a number of these facilities are due to mature within the next 12 months (refer to Note 22) and as 
a consequence the Group’s current liabilities exceed current assets by $104.8 million. The Group is in the process of 
restructuring and increasing its existing total facilities of $181.5 million to a three year $225 million secured bilateral  
and syndicated facility, that is expected to be ﬁnalised in November 2017. The Group does not expect to repay the 
$161.8 million included in current liabilities in the next 12 months. 

The banking partners have provided additional facilities for utilisation by the Group since year end. 

To provide ongoing balance sheet ﬂexibility and to reduce any requirement for equity capital outside of a material 
acquisition initiative, the Group has entered into a sale and leaseback of its Ingleburn land and buildings for a net 
consideration of $75 million. Funds from the sale will be utilised to increase capability to fund growth in working capital 
and capital expenditure over the coming 3 years. The restructuring and increase of the Group’s banking facilities is not 
conditional upon the completion of this sale and leaseback. 

After due consideration of the above, the directors believe that the Group will be able to continue as a going concern 
and the ﬁnancial report has been prepared on this basis.

NEW AND AMENDED STANDARDS ADOPTED BY THE GROUP

The Group has adopted all relevant new and amended Accounting Standards and Interpretations issued by the 
Australian Accounting Standards Board (“AASB”) which are effective for annual reporting periods beginning on or after 
1 July 2015. None of the new standards or amendments to standards that are mandatory for the ﬁrst time materially 
affected any of the amounts recognised in the current period or any prior period and they are not likely to signiﬁcantly 
affect future periods.

The AASB has issued a new standard for the recognition of revenue. This will replace AASB 118 which covers revenue 
arising from the sale of goods and the rendering of services and AASB 111 which covers construction contracts. The new 
standard is based on the principle that revenue is recognised when control of a good or service transfers to a customer. 
The standard permits either a full retrospective or a modiﬁed retrospective approach for the adoption. The Company 
has conducted a preliminary review of its customer contracts and does not expect that this revenue recognition 
standard will have a material effect upon the ﬁnancial statements.

The following accounting policies have been adopted in the preparation and presentation of the ﬁnancial statements.

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(A) STATEMENT OF COMPLIANCE

These ﬁnancial statements are general purpose ﬁnancial statements which have been prepared in accordance with 
the Corporations Act 2001, Accounting Standards and Interpretations, and comply with other requirements of the law. 
The ﬁnancial statements comprise the consolidated ﬁnancial statements of the Group. For the purposes of preparing 
the consolidated ﬁnancial statements, the Company is a for-proﬁt entity. Accounting Standards include Australian 
Accounting Standards. Compliance with Australian Accounting Standards ensures that the ﬁnancial statements and 
notes of the Company and the Group comply with International Financial Reporting Standards (“IFRS”).

(B) BASIS OF PREPARATION

The ﬁnancial statements have been prepared on the historical cost basis, except for the revaluation of certain non-current 
assets and ﬁnancial instruments. Cost is based on the fair values of the consideration given in exchange for assets.

 
 
The Company is of the kind referred to in the Australian Securities and Investments Commission Corporations 
(Rounding in Financial/ Directors’ Reports) Instrument, dated 24 March 2016, and in accordance with that Corporations 
Instrument amounts in the ﬁnancial statements are rounded off to the nearest thousand dollars, unless otherwise 
indicated. The ﬁnancial statements are presented in Australian dollars.

(C) BASIS OF CONSOLIDATION

The Consolidated ﬁnancial statements incorporate the ﬁnancial statements of Freedom Foods Group Limited and  
its subsidiaries as at 30 June each year (the “Group”). Control is achieved where the Company:

•  has power over the investee; 

•  is exposed, or has rights, to variable returns from its involvement with the investee; and 

•  has the ability to use its power to affect its returns.

The results of subsidiaries acquired or disposed of during the year are included in the Consolidated Statement of  
proﬁt or loss and comprehensive income from the effective date of acquisition or up to the effective date of disposal, 
as appropriate.

Where necessary, adjustments are made to the ﬁnancial statements of subsidiaries to bring their accounting policies 
into line with those used by other members of the Group.

All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.

The non-controlling interests in the investments of Freedom Foods North America Inc. are entitled to their 
proportionate share of that entity’s net assets, proﬁts and losses and other comprehensive income during the period. 
The amounts attributable to the non-controlling interests are not separately disclosed as the ﬁnancial statements 
are rounded to the nearest thousand dollars under Australian Securities and Investments Commission Corporations 
Instrument 2016/191.

(D) BUSINESS COMBINATIONS

Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The cost of the business 
combination is measured as the aggregate of the fair values (at the date of exchange) of assets given, liabilities 
incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree. Acquisition 
related costs are recognised in proﬁt and loss as incurred. The acquiree’s identiﬁable assets, liabilities and contingent 
liabilities that meet the conditions for recognition under AASB 3 ‘Business Combinations’ are recognised at their fair 
values at the acquisition date, except for non-current assets (or disposal groups) that are classiﬁed as held for sale in 
accordance with AASB 5 ‘Non-current Assets Held for Sale and Discontinued Operations’, which are recognised and 
measured at fair value less costs to sell.

Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost 
of the business combination over the Group’s interest in the net fair value of the identiﬁable assets, liabilities and 
contingent liabilities recognised. If, after reassessment, the Group’s interest in the net fair value of the acquiree’s 
identiﬁable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the excess is 
recognised immediately in proﬁt or loss.

The interest of minority shareholders in the acquiree is initially measured at the minority’s proportion of the net fair 
value of the assets, liabilities and contingent liabilities recognised.

(E) FINANCIAL INSTRUMENTS

Recognition of investments
Investments are initially measured at fair value, net of transaction costs. Subsequent to initial recognition these 
investments are measured as set out below.

Loans and receivables
Loans and receivables have ﬁxed or determinable payments that are not quoted in an active market and are measured 
at amortised cost using the effective interest rate method, less any impairment. Interest income is recognised by 
applying the effective interest rate.

Available for sale ﬁnancial assets
Available for sale ﬁnancial assets include any ﬁnancial assets not included in the above categories. Available for sale 
ﬁnancial assets are reﬂected at fair value. Unrealised gains and losses arising from changes in fair value are taken 
directly to equity.

Financial instruments held for trading
Derivative ﬁnancial instruments such as forward foreign exchange contracts are included under this classiﬁcation.  
The Group does not designate any derivatives as hedges in a hedging relationship.

75

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3
0

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2
0
1
7

 
 
 
 
 
 
 
NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2017

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(F) KEY ESTIMATES AND JUDGEMENT AREAS

In applying the Group’s accounting policies, the directors are required to make estimates, judgements and assumptions 
that affect the amounts reported in the ﬁnancial report. The estimates, judgements and assumptions are based on 
historical experience, adjusted for current conditions and other factors that are believed to be reasonable under the 
circumstances and reviewed on a regular basis. The actual results may differ from these estimates. 

The estimate and judgements which involve a higher degree of complexity or that have a higher likelihood of causing 
adjustment to the carrying amounts of assets and liabilities are included in the following notes: 

•  Note 11: Estimates of useful life’s of assets 

•  Note 12: Determining the recoverable amounts of assets 

•  Note 35: Business combinations and the application of the requirements of control 

Revisions to accounting estimates are recognised in the period in which the estimate is revised.

ISSUED STANDARDS AND INTERPRETATIONS NOT EARLY ADOPTED

The below lists the Standards and amendments to Standards that were available for early adoption and were applicable 
to the Group. The reported results and ﬁnancial position of the Group are not expected to change on adoption of 
any of the amendments to current standards listed below as they do not result in any changes to the Group’s existing 
accounting policies.

AASB 9 (2014) ‘Financial Instruments’, and the relevant amending standards.

This Standard is applicable to annual reporting periods beginning on or after 1 January 2018. The Standard replaces 
all previous versions of AASB 9 and completes the project to replace IAS 39 ‘Financial Instruments: Recognition and 
Measurement’. AASB 9 introduces new classiﬁcation and measurement models for ﬁnancial assets. New simpler hedge 
accounting requirements are intended to more closely align the accounting treatment with the risk management 
activities of the entity. New impairment requirements will use an ‘expected credit loss’ model to recognise an allowance. 
The Group will adopt this standard from 1 July 2018 but the impact of its adoption is yet to be assessed.

AASB 2015-1 ‘Amendments to Australian Accounting Standards – Annual Improvements to Australian Accounting 
Standards 2012-2014 Cycle’; AASB 2014-10 ‘Amendments to Australian Accounting Standards – Sale or Contribution of 
Assets between an Investor and its Associate or Joint Venture’; AASB 2014-9 ‘Amendments to Australian Accounting 
Standards – Equity Method in Separate Financial Statements’; AASB 2014-4 ‘Amendments to Australian Accounting 
Standards – Clariﬁcation of Acceptable Methods of Depreciation and Amortisation’

These Standards are applicable to annual reporting periods beginning on or after 1 January 2016.

AASB 15 ‘Revenue from Contracts with Customers’ and AASB 2014-5 ‘Amendments to Australian Accounting Standards 
arising from AASB 15’

This Standard is applicable to annual reporting periods beginning on or after 1 January 2018. The Standard provides a 
single Standard for revenue recognition. The core principle of the Standard is that an entity will recognise revenue to 
depict the transfer of promised goods or services to customers in an amount that reﬂects the consideration to which 
the entity expects to be entitled in exchange for those goods or services. The Group will adopt this Standard from  
1 July 2018. The Company does not expect that this revenue recognition standard will have a material effect upon the 
ﬁnancial statements.

AASB 16 ‘Leases’

AASB 16 introduces a comprehensive model for the identiﬁcation of lease arrangements and accounting treatments  
for both lessors and lessees.

AASB 16 will supersede the current lease guidance including AASB 117 Leases and the related interpretations when it 
becomes effective. AASB 16 distinguishes leases and service contracts on the basis of whether an identiﬁed asset is 
controlled by a customer. Distinctions of operating leases (off balance sheet) and ﬁnance leases (on balance sheet)  
are removed for lessee accounting, and is replaced by a model where a right of-use asset and a corresponding liability 
have to be recognised for all leases by lessees (i.e. all on balance sheet) except for short-term leases and leases of low 
value assets.

The right-of-use asset is initially measured at cost and subsequently measured at cost (subject to certain exceptions) 
less accumulated depreciation and impairment losses, adjusted for any re-measurement of the lease liability. The lease 
liability is initially measured at the present value of the lease payments that are not paid at that date. Subsequently, the 
lease liability is adjusted for interest and lease payments, as well as the impact of lease modiﬁcations, amongst others. 
Furthermore, the classiﬁcation of cash ﬂows will also be affected as operating lease payments under AASB 117 are 
presented as operating cash ﬂows; whereas under the AASB 16 model, the lease payments will be split into a principal 
and an interest portion which will be presented as ﬁnancing and operating cash ﬂows respectively. In contrast to lessee 
accounting, AASB 16 substantially carries forward the lessor accounting requirements in AASB 117 and continues to 

76

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require a lessor to classify a lease either as an operating lease or a ﬁnance lease. As at 30 June 2017, the Group has 
non-cancellable operating lease commitments of $21.6 million. AASB 117 does not require the recognition of any right-
of-use asset or liability for future payments for these leases; instead, certain information is disclosed as operating lease 
commitments in Note 25. A preliminary assessment indicates that these arrangements will meet the deﬁnition of a 
lease under AASB 16 and hence the Group will recognise a right-of-use asset and a corresponding liability in respect 
of all these leases unless they qualify for low value or short- term leases upon the application of AASB 16. The new 
requirement to recognise a right-of use asset and a related lease liability is expected to have a signiﬁcant impact on 
the amounts recognised in the Group’s consolidated ﬁnancial statements and the directors are currently assessing 
its potential impact. It is not practicable to provide a reasonable estimate of the ﬁnancial effect until the directors 
complete the review.

NOTE 3. OPERATING SEGMENTS
The Group is organised into ﬁve segments which is the basis on which the Group reports and the principal products 
and services of each of these operating segments are as follows:

Cereal and Snacks

 A range of products for consumers including allergen free (ie. Gluten free, wheat free, nut 
free), nutritional oat based, low sugar or salt, highly fortiﬁed or functional. The product 
range covers breakfast cereals, snack bars and other complimentary products. These 
products are manufactured and sold in Australia and overseas.

Plant Based Beverages

 A range of UHT (long life) food and beverage products including liquid stocks, soy, rice and 
almond beverages. These products are manufactured and sold in Australia and overseas.

Dairy Beverages

Specialty Seafoods

Nutritionals

 A range of UHT (long life) dairy milk beverage products. These products are 
manufactured and sold in Australia and overseas.

 A range of canned seafood covering sardines, salmon and specialty seafood. These 
products are manufactured overseas and sold in Australia and overseas.

 A range of performance and adult nutritional products. The product range covers 
powders, bars and drinks. These products are manufactured and sold in Australia.

For the year ended 30 June 2017, the Company has presented the segment reporting consistent with its core business 
categories and management reporting basis effective from 1 July 2016. This has changed from the segments reported 
in FY 2016.

The changes in the composition of the reportable segments include:

•  Freedom Foods entity is now classified as Cereals and Snacks with the transfer of retail branded plant beverage sales 

from Freedom Foods entity to Pactum entity.

•  Pactum entity is now classified as Plant Beverages with the transfer of dairy beverage sales from Pactum entity to 

Dairy Beverages entity.

•  Pactum Dairy Group entity is now classified as Dairy Beverages with the transfer of dairy beverage sales from Pactum 

entity to Dairy Beverages entity.

•  Nutritionals is a new segment report, comprising the “Vital Strength” branded business and nutritionals products to 

be manufactured in future years.

•  Specialty Seafoods remains unchanged.

The FY 2016 operating segments have been reported on the same basis as the prior year as the information under the 
new operating segments is not available. The FY 2016 revenue has however been restated in line with the new FY 2017 
operating segments in an additional table below.

With the ﬁnal integration and set up of the new IT platform, some allocations of key expense categories may change 
and will be reinstated as part of the segment reporting for FY 2018 in comparison to FY 2017.

The ‘Unallocated Shared Services’ group consists of the Group’s other operating segments that are not separately 
reportable as well as various shared service functions.

Operating segments are identiﬁed on the basis of internal reports about components of the Group that are regularly 
reviewed by the Board of Directors in its capacity as the chief operating decision maker of the Group in order to 
allocate resources to the segments and assess their performance.

Intercompany sales are eliminated in the Group’s statutory results, however are included in the segment analysis as  
this is how the Group conducts its business operations.

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NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2017

NOTE 3. OPERATING SEGMENTS (CONTINUED)
The following is an analysis of the Group’s revenue and results by reportable operating segment for the periods under 
review, together with prior year comparatives:

CONSOLIDATED - 2017

Revenue

CEREAL & 
SNACKS  
$’000

PLANT BASED 
BEVERAGES 
$’000

DAIRY  
BEVERAGES 
$’000

SPECIALITY 
SEAFOODS 
$’000

NUTRITIONALS 
$’000

UNALLOCATED 
SHARED 
SERVICES 
$’000

TOTAL  
$’000

Sales to external customers

89,584

64,123

93,229

13,751

1,794

-

262,481

Intercompany sales elimination

2,602 

18,432 

891 

- 

- 

(21,925) 

- 

Depreciation and amortisation

(5,036)

(1,664)

(1,850)

Total revenue

EBDITA

Convertible loan note and 
interest income

Share of associates proﬁts

Other income

Shared services including ESOP

Net ﬁnance costs

Acquisition costs

Other expenditure

Proﬁt/(loss) before income  
tax expense

Income tax expense

Proﬁt after income tax expense

Assets

Unallocated assets:

Shared services

78

Investment in associate

92,186 

82,555 

94,120 

13,751 

1,794 

(21,925) 

262,481 

10,724

12,775

7,406

1,904

503

-

33,312

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

- 

-

-

- 

-

-

-

-

-

-

-

- 

-

-

-

-

1,527

1,527

480

150

480

150

(8,150)

(8,150)

(4)

(2,838)

(11,392)

-

-

- 

(4,162)

(4,162)

(1,305)

(1,305)

(1,112)

(1,112) 

5,688 

11,111 

5,556 

1,904 

499 

(15,410) 

9,348

145,111

198,058

151,283

18,644

21,826

-

534,922 

(1,809)

7,539

46,371

46,371

7,634 

7,634

Total assets

145,111 

198,058 

151,283 

18,644 

21,826 

54,005 

588,927

Acquisition of businesses

- 

- 

- 

- 

(21,432) 

- 

(21,432)

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Segment Assets

Liabilities

Unallocated liabilities:

Shared services

Total liabilities

145,111

198,058

151,283

18,644

51,499

100,071

77,923

2,491

394

622 

54,005

567,495

-

232,606

51,499 

100,071 

77,923 

2,491 

622 

34,885 

267,491

34,885 

34,885

Acquisition of businesses

-

-

-

-

-

-

-

Segment Liabilities*

51,499 

100,071 

77,923 

2,491 

622 

34,885 

267,491

*   The segment liabilities include ﬁnance leases, debtor ﬁnance facilities and multi advance facilities relevant to the appropriate 

operating segment.

 
 
 
CONSOLIDATED - 2016

Revenue

CEREAL & 
SNACKS  
$’000

PLANT BASED 
BEVERAGES 
$’000

DAIRY 
BEVERAGES  
$’000

SPECIALITY 
SEAFOODS 
$’000

NUTRITIONALS 
$’000

UNALLOCATED 
SHARED 
SERVICES 
$’000

TOTAL  
$’000

Sales to external customers

84,250

35,402

36,500

12,404

1,888

-

170,444

Intercompany sales elimination

2,494

20,594

70

-

-

(23,158)

-

Total revenue

EBDITA

86,744

55,996

36,570

12,404

1,888

(23,158)

170,444 

10,632

11,296

2,002

2,025

(857)

-

25,098

Convertible loan note and 
interest income

Share of associates proﬁts

Other income

Shared services including ESOP

-

-

-

-

-

-

-

-

-

-

-

-

Depreciation and amortisation

(2,859)

(1,700)

(911)

-

-

-

-

-

-

-

-

-

-

- 

-

-

-

-

-

-

-

-

-

-

-

157

372

150

157

372

150

(4,339)

(4,339)

(969)

(6,439)

(1,308)

(1,308)

24,529

24,529

(835)

(835)

(392)

(392)

(2,232)

(2,232)

-

22,353

-

-

-

-

-

-

-

-

-

-

- 

22,353 

-

-

-

-

-

- 

7,773

31,949 

1,091

2,025 

(857)

15,133

57,114

(6,483)

50,631

184,852 

141,084 

93,140 

17,461 

1,448 

- 

437,985

184,852 

141,084 

93,140 

17,461 

1,448 

26,673 

464,658

20,510

20,510

6,163

6,163

Net ﬁnance costs

Gain on a2MC investment  
(net costs)

Acquisition costs re  
Popina Foods

Acquisition costs re DP Mill

Other expenditure

Fair value uplift in  
conversion options

Proﬁt/(loss) before income  
tax expense

Income tax expense

Proﬁt after income tax expense

Assets

Unallocated assets:

Shared services

Investment in associate

Total assets

Segment Assets

Liabilities

Unallocated liabilities:

Shared services

Total liabilities

Acquisition of businesses

(56,112)

-

(92,695)

-

-

-

(148,807)

128,740

141,084

445

17,461

1,448

26,673

315,851

35,649

25,965

62,998

274

316

-

125,202

Acquisition of businesses

(12,046)

-

(69,437) 

Segment Liabilities*

23,603

25,965 

(6,439) 

35,649

25,965 

62,998 

274 

-

274

316

-

316 

52,331

52,331

52,331

177,533 

-

(81,483)

52,331

96,050

*   The segment liabilities include ﬁnance leases, debtor ﬁnance facilities and multi advance facilities relevant to the appropriate 

operating segment.

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NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2017

NOTE 3. OPERATING SEGMENTS (CONTINUED)
FY 16 revenue restated into FY 17 operating segments

CONSOLIDATED - 2016

Revenue

CEREAL & 
SNACKS 
 $’000

PLANT BASED 
BEVERAGES 
$’000

DAIRY 
BEVERAGES  
$’000

SPECIALITY 
SEAFOODS 
$’000

NUTRITIONALS 
$’000

UNALLOCATED 
SHARED 
SERVICES 
$’000

TOTAL  
$’000

Sales to external customers

63,411

54,105

40,524

12,404

Intercompany sales elimination

2,494

20,594

70

-

Total revenue

65,905

74,699

40,594

12,404

-

- 

-

-

170,444

(23,158)

-

(23,158)

170,444

All operating segments are conducted in Australia, with the exception of Freedom Foods North America, which 
operates in North America.

Revenue generated by equity accounted associates from external sales is not consolidated, instead under the equity 
method of accounting, the carrying amounts of interest in joint venture entities are increased or decreased to recognise 
the Group’s share of post-acquisition proﬁts or losses and other changes in net assets of the joint venture/minority interest.

81% of total external sales of the Consolidated Group are generated in Australia (2016: 86%) and 57% of total external 
sales (2016: 52%) are through major Australian retailers.

Total proﬁt/(loss) from equity accounted associates for the period totalled $1,898,000 (2016: $(1,384,141)). The Group’s 
share of these proﬁts/(losses) was $480,000 (2016: $372,000).

INFORMATION ABOUT MAJOR CUSTOMERS

Included in revenues arising from external sales of $262.5 million (2016: $170.4 million) (see segment revenue above) 
are revenues of approximately $120.7 million (2016: $114.9 million) which arose from sales to the Group’s two largest 
customers. One other customer contributed 10% or more to the Group’s revenue for 2017 (2016: Nil).

NOTE 4. EXPENSES

Proﬁt before income tax includes the following speciﬁc expenses:

Research and development costs expensed

Superannuation expenses

Share-based payments expense

-

2,217

448

Employee beneﬁts expense excluding superannuation and share-based payment expense

24,009

1,073 

1,914 

448 

14,231 

CONSOLIDATED

2017 $'000

2016 $'000

NOTE 5. REVENUE

Revenue

Revenue from sale of goods

CONSOLIDATED

2017 $'000

2016 $'000

262,481

170,444

SIGNIFICANT ACCOUNTING POLICIES

Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for terms, rebates 
and other similar allowances.

SALE OF GOODS

Revenue from the sale of goods is recognised when all the following conditions are satisﬁed:

•  the significant risks and rewards of ownership of the goods have been transferred;
•  the amount of revenue can be measured reliably;
•  it is probable the revenue will be received; and
•  the costs incurred or to be incurred in respect of the transaction can be measured reliably.

80

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NOTE 6. OTHER GAINS AND LOSSES

Net foreign exchange (losses)/gains

Net gains on ﬁnancial assets held at fair value through proﬁt or loss

Net losses on ﬁnancial liabilities held at fair value through proﬁt or loss

Other losses

NOTE 7. EARNINGS PER SHARE

Proﬁt after income tax

Non-controlling interest

Proﬁt after income tax attributable to the owners of Freedom Foods Group Limited

Share-based payments expense

Proﬁt after income tax attributable to the owners of Freedom Foods Group Limited 
used in calculating diluted earnings per share

CONSOLIDATED

2017 $'000

2016 $'000

(564)

121

-

- 

(443)

660

76

(63)

(15)

658 

CONSOLIDATED

2017 $'000

2016 $'000

7,539

(88)

7,451

448

50,631

(139)

50,492

448 

7,899

50,940

NUMBER

NUMBER

Weighted average number of ordinary shares used in calculating basic earnings per share

191,441,729

171,052,844

Adjustments for calculation of diluted earnings per share:

CRPS

ESOP

114,217

114,217

5,218,016

7,333,740 

Weighted average number of ordinary shares used in calculating diluted earnings per share

196,773,962

178,500,801

Basic earnings per share

Diluted earnings per share

CENTS

3.89

4.01

CENTS

29.52

28.54

At 30 June 2017, there were 200,853,531 ordinary shares (2016: 181,527,335) on issue and 101,627 convertible 
redeemable preference shares (2016: 101,627).

At 30 June 2017, there were nil unlisted ordinary share options (2016: nil). There were 4,643,666 employee share 
options outstanding (2016: 5,662,333), nil exercisable at $0.60 per share (2016: 350,000), 643,666 exercisable at  
$1.65 per share (2016: 1,312,333) and 4,000,000 exercisable at $2.92 per share (2016: 4,000,000).

BASIC EARNINGS PER SHARE

Basic earnings per share is calculated by dividing the proﬁt attributable to the owners of Freedom Foods Group Limited, 
excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares 
outstanding during the ﬁnancial year, adjusted for bonus elements in ordinary shares issued during the ﬁnancial year.

DILUTED EARNINGS PER SHARE

Diluted earnings per share adjusts the ﬁgures used in the determination of basic earnings per share to take into account 
the after income tax effect of interest and other ﬁnancing costs associated with dilutive potential ordinary shares, as 
well as the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive 
potential ordinary shares.

81

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F
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A
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C
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S
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A
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E
M
E
N
T
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3
0

J
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7

 
 
 
 
 
 
 
 
NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2017

NOTE 8. CURRENT ASSETS - TRADE AND OTHER RECEIVABLES

Trade receivables

Less: provision for impairment of receivables

Other receivables

CONSOLIDATED

2017 $'000

2016 $'000

57,660

(48)

57,612

8,308

65,920

39,978

(100)

39,878 

5,670 

45,548

The credit period on sales of goods ranges from 30 to 60 days. No interest is charged on trade receivables. No allowance 
has been made for estimated irrecoverable trade receivable amounts arising from past sale of goods, determined by 
reference to past default experience. During the current ﬁnancial year, the allowance for doubtful debts decreased by 
$52,000 (2016: increased by $69,000) in the Group. The allowance for doubtful debts/impaired trade receivables as at 
30 June 2017 is $48,000 (2016: $100,000). The Group does not hold any collateral over these balances.

Customers with balances past due but without provision for impairment of receivables amount to $25,366,000  
(2016: $10,359,000). These relate to a number of customers for whom there is no recent history of default and other 
indicators of impairment. Management considers that there are no indications as of the reporting date that the debtors 
will not meet their payment obligations.

The Group does not have signiﬁcant risk exposure to any one debtor; however 57% (2016: 52%) of sales and 46%  
(2016: 46%) of year end receivables are concentrated in major supermarkets throughout Australia.

NOTE 9. CURRENT ASSETS - DERIVATIVE FINANCIAL INSTRUMENTS

Forward foreign exchange contracts

Refer to Note 24 for further information on ﬁnancial instruments.

NOTE 10. CURRENT ASSETS - INVENTORIES

Raw materials - at cost

Finished goods - at cost

Less: provision for impairment

CONSOLIDATED

2017 $'000

2016 $'000

382

92

CONSOLIDATED

2017 $'000

2016 $'000

26,659

36,779

(50)

26,597

19,187

50 

63,388

45,834 

All inventories of the Group are expected to be recovered within a 12 month period.

The cost of inventories recognised as an expense during the year in respect of continuing operations was $201,308,376 
(2016: $119,763,486).

SIGNIFICANT ACCOUNTING POLICIES

Inventories are measured at the lower of cost and net realisable value.

Costs incurred in bringing each product to its present location and condition are accounted for as follows:

•  Raw materials: purchase cost on a first in, first out basis.

•  Manufactured finished goods: cost of direct materials, direct labour and an appropriate proportion of manufacturing 

variable and fixed overheads based on normal operating capacity but excluding borrowing costs.

•  Purchased finished goods: purchase cost on a weighted average cost basis.

•  Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of 

completion and the estimated costs necessary to make the sale.

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NOTE 11. NON-CURRENT ASSETS - PROPERTY, PLANT AND EQUIPMENT

Freehold land - at independent valuation

Buildings - at independent valuation

Less: accumulated depreciation

Plant and equipment - at cost

Less: accumulated depreciation

Add: capital work in progress - at cost

Motor vehicles - under lease

Less: accumulated depreciation

CONSOLIDATED

2017 $'000

2016 $'000

5,296

11,907

(1,159) 

10,748

128,686

(39,957)

5,379 

10,840

(891)

9,949 

126,358

(31,746)

235,471

106,952 

324,200

201,564 

468

(356)

112

416

(251)

165 

340,356

217,057

Movements in the carrying amounts of each class of property, plant and equipment between the beginning and the end 
of the current ﬁnancial year:

CONSOLIDATED 

Balance at 1 July 2015

Additions*

Additions through business combinations (Note 35)

Additions through capital work in progress*

Disposals

Depreciation expense

Balance at 30 June 2016

Additions*

Additions through business combinations (Note 35)

Additions through capital work in progress*

Revaluation adjustment

Depreciation write back on revaluation

Disposals

Depreciation expense

Balance at 30 June 2017

FREEHOLD  
LAND $’000

BUILDINGS  
$’000

PLANT & 
EQUIPMENT 
$’000

MOTOR  
VEHICLES  
$’000

TOTAL 
 $’000

254

4,336

789

-

-

-

5,446

5

4,829

-

-

97,661

2,700

50,517

56,764

(17)

69

143

-

-

-

103,430

7,184

56,135

56,764

(17)

(331)

(6,061)

(47)

(6,439)

5,379

9,949

201,564

-

-

-

-

-

(83)

-

-

-

-

1,067

243

-

1,856

472

128,519

-

-

-

165

52

-

-

-

-

-

217,057

1,908

472

128,519

1,067

243

(83)

(511)

(8,211)

(105)

(8,827)

5,296

10,748

324,200

112

340,356

*  Included in additions is $3,025,000 (2016: $949,000) of capitalised interest.

SIGNIFICANT ACCOUNTING POLICIES

The Leeton site is carried at fair value as at 30 June 2017, less any subsequent accumulated depreciation. Fair value 
is determined on the basis of an independent valuation which is carried out regularly by an external valuer, based on 
discounted cash ﬂows or capitalisation of net income, as appropriate.

Plant and equipment, motor vehicles and equipment under ﬁnance lease are stated at cost less accumulated 
depreciation and impairment.

Capital work in progress (CWIP) is stated at cost.

CWIP includes all expenditure directly attributable to bringing the asset to its working condition for its intended use, 
and includes the estimated cost of dismantling and removing the asset and restoring the site (where applicable).

83

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NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2017

NOTE 11. NON-CURRENT ASSETS - PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Cost includes installation costs, delivery costs, consultant’s costs incurred to install the asset, ﬁt out costs and labour 
costs of dedicated project staff associated with these projects. Start-up costs and similar pre-production costs do not 
form part of the cost of an asset unless they are necessary to bring the asset to its working condition. Initial operating 
losses incurred prior to an asset achieving planned performance must be recognised as an expense.

The costs will be initially recognised as a CWIP asset from the time that it satisﬁes the general recognition criteria for 
assets under the accounting standards. The approval (as required by the relevant delegation of authority) to proceed 
with a project is the point in time when the Group is able to satisfy the recognition criteria.

The Group formally assesses whether project costs are to be reclassiﬁed from CWIP. This assessment is done at 
December and June each year taking into consideration when the Commissioning Phase of each asset has been 
completed i.e. when the asset is in the location and condition necessary for it to be capable of operating in the manner 
intended by management. At this point, it is classiﬁed as property, plant and equipment, to be depreciated over the 
useful life of the asset.

Depreciation is calculated on a straight line basis so as to write off the net cost of each asset over its expected useful 
life to its estimated residual value. The estimated useful lives, residual values and depreciation method are reviewed 
at the end of each annual reporting period, with the effect of any changes recognised on a prospective basis. Assets 
held under ﬁnance leases are depreciated over their expected useful lives on the same basis as owned assets or, where 
shorter, the term of the relevant lease.

The gain or loss arising on disposal or retirement of an item of property, plant and equipment is determined as the 
difference between the sales proceeds and the carrying amount of the asset and is recognised in proﬁt or loss.

ACCOUNTING ESTIMATES

The following depreciation rates are used in the calculation of depreciation:

Buildings 

Plant and equipment 

Leased plant and equipment 

Motor vehicles 

Leased motor vehicles 

2 - 6%

4 - 25%

4 - 20%

15 - 33%

15 - 33%

NOTE 12. NON-CURRENT ASSETS - INTANGIBLES

84

Goodwill*

Capitalised development^

Brand names and trademarks#

Software^

7
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CONSOLIDATED

2017 $'000

2016 $'000

59,204

54,854

11,106

31,837

464

102,611

7,131

16,274

129

78,388

*  Goodwill increased by $4,349,896 due to the Power Foods acquisition during the year. Refer to Note 35 for further details.
^   Capitalised development and software for 2016 have been reclassiﬁed from property, plant and equipment.
#  Brand names and trademarks increased by $15,563,000 due to the Power Foods acquisition during the year.

SIGNIFICANT ACCOUNTING POLICIES

Goodwill has been allocated for impairment testing purposes to the following cash generating units:

•  Specialty Seafood

•  Freedom Foods

•  Shepparton (PDG)

•  Nutritionals (Power Foods)

The consolidated entity carries an amount of $31,836,945 of brand names with indeﬁnite useful lives allocated between 
the Specialty Seafood, Freedom Foods and Nutritionals cash generating units. The brand names relate to established 
major brands purchased as part of business combinations and are considered to be market leaders within their market 
segment. The brand names operate in a stable industry with a strong positioning in the consumer functional foods 
market. Refer to Note 35 Business combinations, for the goodwill recognised on consolidation of PDG and Power 
Foods after deducting deemed consideration from fair value of Shepparton (PDG) identiﬁable net liabilities.

 
 
The carrying amount of goodwill is as follows:

Specialty Seafood

Freedom Foods

Dandenong (Popina Foods)

Darlington Point Mill

Shepparton (PDG)

Nutritionals (Power Foods)

CONSOLIDATED

2017 $'000

2016 $'000

1,982

3,232

16,832

1,178

31,630

4,350

1,982

3,232

16,832

1,178

31,630

-

59,204

54,854

Intangible assets with ﬁnite lives that are acquired separately are carried at cost less accumulated amortisation and 
accumulated impairment losses. Amortisation is recognised on a straight-line basis over the their estimated useful lives. 
The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of 
any changes in estimate being accounted for on a prospective basis. Intangible assets with indeﬁnite useful lives that 
are acquired separately are carried at cost less accumulated impairment losses.

Expenditure on research activities is recognised as an expense in the period in which it is incurred.

An internally generated intangible asset arising from development (or from the development phase of an internal 
project) is recognised only if, all of the following have been demonstrated following approval from the Board:

•  the technical feasibility of completing the intangible asset so that it will be available for use or sale;

•  its intention to complete the intangible asset and use or sell it;

•  its ability to use or sell the intangible asset;

•  how the intangible asset will generate probable future economic benefits. Among other things, the entity can 

demonstrate the existence of a market for the output of the intangible asset or the intangible asset itself or, if it is  
to be used internally, the usefulness of the intangible asset;

•  the availability of adequate technical, financial and other resources to complete the development and to use or sell 

the intangible asset;

•  its ability to measure reliably the expenditure attributable to the intangible asset during its development.

The amount initially recognised for internally generated intangible assets is the sum of the expenditure incurred from 
the date when the intangible asset ﬁrst meets the recognition criteria listed above together with the approval from the 
Board. Where no internally generated intangible asset can be recognised, development expenditure is recognised in 
proﬁt and loss in the period in which it is incurred.

Subsequent to initial recognition, internally generated intangible assets are reported at cost less accumulated 
amortisation and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.

ACCOUNTING ESTIMATES

The recoverable amounts of the cash generating units are determined based on a value in use calculation which uses 
cash ﬂow projections based on ﬁnancial budgets approved by management covering a ﬁve year period, a terminal 
value and a discount rate range between 8.72% - 18.72% pa post tax and between 12.46% - 26.74% pa pre-tax (2016: 
8.80% - 15.00% pa post tax and 12.57% - 21.43% pre-tax).

Key assumptions used in the value in use calculations for cash generating units:

•  Budgeted market share - average market share in the period immediately before the budget period plus a growth 
percentage of market share per year. Management believes that the planned market share growth per year for the 
next four years is reasonable.

•  Budgeted gross margin - average gross margins achieved in the period immediately before the budget period is 

consistent with that used by management.

The discount rate is based on the weighted average cost of capital determined by prevailing or benchmarked market 
inputs and includes a risk premium considered appropriate to a newly established business in a development phase.

IMPAIRMENT OF GOODWILL AND OTHER INTANGIBLE ASSETS

Determining whether goodwill or other intangible assets are impaired requires an estimation of the value in use of the 
cash generating units to which the goodwill or other intangible assets have been allocated. The value in use calculation 
requires the directors to estimate the future cash ﬂows expected to arise from the cash generating unit and a suitable 
discount rate in order to calculate the present value.

85

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F
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A
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E
N
T
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3
0

J
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NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2017

NOTE 12. NON-CURRENT ASSETS - INTANGIBLES (CONTINUED)
The value of the goodwill as at the end of the ﬁnancial year was $59,204,000 (2016: $54,854,000), with no impairment 
loss charged against goodwill.

The value of other intangible assets as at the end of the ﬁnancial year was $43,407,000 (2016: $23,534,000), with no 
impairment loss charged against the other intangible assets.

Intangibles with a Finite Life

•  Capitalised development such as new product development, is deferred and amortised on a straight-line basis over 

the period of their expected benefit, being their finite life of 3 years.

•  Significant costs associated with software are deferred and amortised on a straight-line basis over the period of their 

expected benefit, being their finite life of 5 years.

NOTE 13. INCOME TAX EXPENSE

CONSOLIDATED

2017 $'000

2016 $'000

Income tax expense

Current tax

Adjustments recognised in the current year in relation to the current tax of prior years

Deferred tax expense/(income) relating to the origination and reversal of  
temporary differences

Aggregate income tax expense

Numerical reconciliation of income tax expense and tax at the statutory rate

Proﬁt before income tax expense

Tax at the statutory tax rate of 30%

Tax effect amounts which are not deductible/(taxable) in calculating taxable income:

Effect of revenue/expenses that are not deductible in determining taxable proﬁt

Effect of tax concessions (research and development)

Tax impact on investment in a2MC

Fair value gain on conversion of options in PDG

1,492

(1,230)

1,547

1,809

9,348

2,804

(271)

(20)

-

-

Adjustments recognised in the current year in relation to the current tax of prior years

(1,230) 

Franking deﬁcit tax

Income tax expense

1,283

526

1,809

10,170

-

(3,687)

6,483

57,114

17,134

(334)

(50)

(4,264)

(6,706)

-

5,780

703 

6,483

The tax rate used in the above reconciliation is the corporate tax rate of 30% payable by Australian corporate entities 
on taxable proﬁts under Australian tax law. There has been no change in the corporate tax rate when compared with 
the previous reporting period.

Deferred tax balances

Deferred tax assets comprises temporary differences attributable to:

Plant and equipment

Provisions

Other

Tax losses

Tax losses through business combinations

Finance facilities

Total deferred tax assets

CONSOLIDATED

2017 $'000

2016 $'000

2,447

(1,565)

(2,420)

4,970

-

(1,597)

1,835

(2,164)

1,158

793

75

5,470

(2,412)

2,920

86

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SIGNIFICANT ACCOUNTING POLICIES

The Company and its wholly-owned Australian subsidiaries have formed a tax consolidated group and are therefore 
taxed as a single entity. The head entity within the tax consolidated group is Freedom Foods Group Limited. Income tax 
expense/beneﬁt, deferred tax liabilities and deferred tax assets arising from temporary differences of the members of 
the tax consolidated group are recognised in the separate ﬁnancial statements of the members of the tax consolidated 
group using the ‘separate taxpayer within group’ approach by reference to the carrying amounts in the separate 
ﬁnancial statements of each entity and the tax values applying under tax consolidation. Current tax liabilities and assets 
and deferred tax assets arising from unused tax losses and relevant tax credits of the members of the tax consolidated 
group are recognised by the Company (as head entity in the tax consolidated group).

Entities within the tax consolidated group have entered into a tax funding arrangement and a tax sharing agreement 
with the head entity. Under the terms of the tax funding arrangement, Freedom Foods Group Limited and each of the 
entities in the tax consolidated group has agreed to pay a tax equivalent payment to or from the head entity, based on 
the current tax liability or current tax asset of the entity.

The tax sharing agreement entered into between members of the tax consolidated group provides for the determination 
of the allocation of income tax liabilities between the entities should the head entity default on its tax payment obligations 
or if an entity should leave the tax consolidated group. The effect of the tax sharing agreement is that each member’s 
liability for tax payable by the tax consolidated group is limited to the amount payable to the head entity under the tax 
funding arrangement.

CURRENT TAX

Current tax is calculated as the expected amount of income taxes payable or recoverable in respect of the taxable 
proﬁt or loss for the period. It is calculated using tax rates and tax laws that have been enacted or substantively 
enacted by the end of the reporting date.

DEFERRED TAX

Deferred tax is accounted for on the basis of temporary differences between the tax base of an asset or liability and its 
carrying amount in the statement of ﬁnancial position. The tax base of an asset or liability is the amount attributed to 
that asset or liability for tax purposes.

In principle, deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are 
recognised to the extent that it is probable that sufficient taxable amounts will be available against which deductible 
temporary differences or unused tax losses and tax offsets can be utilised. However, deferred tax assets and liabilities 
are not recognised if the temporary differences giving rise to them arise from the initial recognition of assets and 
liabilities (other than as a result of a business combination) which affects neither taxable income nor accounting proﬁt. 
Furthermore, a deferred tax liability is not recognised in relation to taxable temporary differences arising from the initial 
recognition of goodwill.

Deferred tax liabilities are recognised for taxable temporary differences associated with investments in branches and 
associates and interests in joint ventures except where the Group is able to control the reversal of the temporary 
differences and it’s probable that the temporary differences will not reverse in the foreseeable future. Deferred 
tax assets arising from deductible temporary differences associated with these investments and interests are only 
recognised to the extent that it is probable that there will be sufficient taxable proﬁts against which to utilise the 
beneﬁts of the temporary differences and they are expected to reverse in the foreseeable future.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period(s) when the 
asset and liability giving rise to them are realised or settled, based on tax rates (and tax laws) that have been enacted 
or substantively enacted by reporting date. The measurement of deferred tax liabilities and assets reﬂects the tax 
consequences that would follow from the manner in which the Group expects, at the reporting date, to recover or settle 
the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority  
and the Group intends to settle its current tax assets and liabilities on a net basis.

CURRENT AND DEFERRED TAX FOR THE PERIOD

Current and deferred tax is recognised as an expense or income in proﬁt or loss, except when it relates to items 
credited or debited directly to equity, in which case the deferred tax is also recognised directly in equity, or where it 
arises from the initial accounting for a business combination, in which case it is taken into account in the determination 
of goodwill or excess.

87

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T
E
S

T
O

T
H
E

F
I
N
A
N
C
I
A
L

S
T
A
T
E
M
E
N
T
S

3
0

J
U
N
E

2
0
1
7

 
 
 
 
 
 
 
NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2017

NOTE 14. CURRENT LIABILITIES - INCOME TAX

Income tax payable attributable to: entities in the tax consolidated group

11,642

11,568

NOTE 15. CURRENT LIABILITIES - TRADE AND OTHER PAYABLES

CONSOLIDATED

2017 $'000

2016 $'000

Trade payables

Other payables and accruals

Refer to Note 24 for further information on ﬁnancial instruments.

Amounts not expected to be settled within the next 12 months

Payables to related parties - refer Note 31 Related party transactions

CONSOLIDATED

2017 $'000

2016 $'000

43,404

22,225

65,629

36,316

14,474 

50,790

CONSOLIDATED

2017 $'000

2016 $'000

39

938

Trade payables are paid on average within 60 days of invoice date (2016: 60 days). No interest is charged on trade 
payables.

NOTE 16. CURRENT LIABILITIES - DERIVATIVE FINANCIAL INSTRUMENTS

Forward foreign exchange contracts

Refer to Note 24 for further information on ﬁnancial instruments.

NOTE 17. EQUITY - ISSUED CAPITAL

CONSOLIDATED

2017 $'000

2016 $'000

236

381

Ordinary shares - fully paid

200,853,531

181,527,335

249,940

169,090

Convertible redeemable preference shares - fully paid

101,627

101,627

14

16

200,955,158

181,628,962

249,954

169,106

CONSOLIDATED

2017 SHARES

2016 SHARES

2017 $'000

2016 $'000

88

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A
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N
N
A

 
 
MOVEMENTS IN ORDINARY SHARE CAPITAL

DETAILS

Balance

Employee share options exercised

Employee share options exercised

Employee share options exercised

Convertible redeemable preference shares (‘CRPS’)

Conversions

Dividend reinvestment plan (‘DRP’) shares

Dividend reinvestment plan (‘DRP’) shares

Shares issued under the entitlement offer

Transaction costs

Balance

Employee share options exercised

Employee share options exercised

Dividend reinvestment plan (‘DRP’) shares

Dividend reinvestment plan (‘DRP’) shares

Shares issued under the entitlement offer

Shares issued under Escrow

Transaction costs

Balance

DATE

SHARES

ISSUE PRICE

1 July 2015

154,624,900

1,416,667

1,025,002

144,333

35,400

645,194

665,298

22,970,541

-

30 June 2016

181,527,335

350,000

668,667

680,139

598,742

16,860,110

168,538

- 

30 June 2017

200,853,531

$0.40

$0.60

$1.65

$0.30

$2.80

$3.69

$2.85

$0.00

$0.60

$1.65

$4.48

$4.07

$4.45

$3.85

$0.00

MOVEMENTS IN CONVERTIBLE REDEEMABLE PREFERENCE SHARES

$’000

98,995

567

615

238

11

1,807

2,455

65,466

(1,064)

169,090

210

1,103

3,050

2,439

75,027

649

(1,628)

249,940

DETAILS

Balance

Conversion to ordinary shares

Transaction costs

Balance

Transaction costs

Balance

ORDINARY SHARES

DATE

1 July 2015

30 June 2016

SHARES

ISSUE PRICE

$’000

137,027

(35,400)

-

101,627

$0.30

$0.00

-

$0.00

33

(11)

(6)

16

(2)

14

30 June 2017

101,627

Fully paid ordinary shares carry one vote per share and carry the right to dividends. Changes to the then Corporation 
Law abolished the authorised capital and par value concept in relation to share capital from 1 July 1988. Therefore, the 
Company does not have a limited amount of authorised capital and issued shares do not have a par value.

The DRP provides shareholders with the opportunity to receive ordinary shares, in lieu of cash dividends, at a discount 
(set by the directors) from the market price at the time of issue.

CONVERTIBLE REDEEMABLE PREFERENCE SHARES (CRPS)

The CRPS are perpetual with no maturity, but redeemable after 3 years at the option of the Company. The CRPS are 
transferable and are convertible at the option of the CRPS holder. The dividend rate is 9.0% p.a. on the issue price of 
$0.30. It is a preferred, discretionary and non-cumulative dividend and CRPS holders have no claim or entitlement in 
respect of a non-payment.

89

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F
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A
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L

S
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M
E
N
T
S

3
0

J
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E

2
0
1
7

 
 
 
 
 
 
 
NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2017

NOTE 17. EQUITY - ISSUED CAPITAL (CONTINUED)
Dividends are to be payable half-yearly in arrears. CRPS holders who convert their CRPS prior to a dividend payment 
date will not be entitled to any dividend for that part period in respect of that CRPS. However upon conversion 
to ordinary shares a holder who is on the register on the record date for a dividend payable in respect of ordinary 
shares will be entitled to the full ordinary dividend for that period. Dividends on the CRPS will be payable in April and 
November each year until converted or redeemed. CRPS holders are entitled to receive dividends in priority to holders 
of ordinary shares and equally with the holders of other CRPS that may be issued by Company on these terms.

CRPS are convertible into fully paid ordinary shares in the Company on the basis that each CRPS is convertible at the 
election of the CRPS holder into one ordinary share, subject to any restrictions imposed by the Corporations Act and 
ASX Listing Rules. There is no time limit within which CRPS must be converted. No additional consideration is payable 
on conversion.

Notwithstanding the right of holders of CRPS to convert at any time, all CRPS will convert into ordinary shares 
automatically on the occurrence of certain trigger events including certain transactions involving a change in control  
of Company, such as a takeover of Company or a scheme or merger between Company and another body.

The Company may redeem the CRPS, 3 years from the date of issue of the CRPS, being 16 December 2013, at its option 
for the payment per CRPS of the higher of:

•  the issue price of $0.30; and

•  an amount determined by the Board of the Company with reference to the value of a CRPS as determined by an 

independent expert appointed by the Board.

The Company at this time has no plans to redeem the remaining CRPS still on issue due to the expense of the process 
of redemption being signiﬁcantly more than the current value of the CRPS on issue.

SHARE OPTIONS GRANTED UNDER THE EMPLOYEE SHARE OPTION PLAN (ESOP)

For information relating to the Freedom Foods Group Limited ESOP, including details of options issued, exercised and 
lapsed during the ﬁnancial year and the options outstanding at year end, refer to Note 33.

Capital is regarded as total equity, as recognised in the statement of ﬁnancial position, plus net debt. Net debt is 
calculated as total borrowings less cash and cash equivalents.

NOTE 18. EQUITY - DIVIDENDS

DIVIDENDS

Dividends during the ﬁnancial year were as follows:

90

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A
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N
A

Final fully franked dividend for the year ended 30 June 2016 of 2.25 cents  
(2015: 1.50 cents) per ordinary share paid in cash

Dividends reinvested: fully franked at 30% tax rate

Interim fully franked dividend for the year ended 30 June 2017 of 2.00 cents 
(2016: 1.75 cents) per ordinary share paid in cash

Dividends reinvested: fully franked at 30% tax rate

Final fully franked dividend for the year ended 30 June 2016 of 1.35 cents  
(2015: 1.35 cents) per convertible redeemable preference share

Interim fully franked dividend for the year ended 30 June 2017 of 1.35 cents  
(2016: 1.35 cents) per convertible redeemable preference share

CONSOLIDATED

2017 $'000

2016 $'000

1,048

3,050

1,560

2,439

1

1

515

1,807

688

2,455

1

2 

8,099

5,468

On 31 August 2017, the directors declared a fully franked ﬁnal dividend of 2.25 cents per share to the holders of fully 
paid ordinary shares in respect of the ﬁnancial year ending 30 June 2017, which is to be paid to shareholders on 1 
December 2017. The record date for determining the entitlement to the ﬁnal dividend is 2 November 2017. The dividend 
has not been included as a liability in these ﬁnancial statements. The total estimated dividend to be paid is $4,519,000.

On 31 August 2017, the directors declared a fully franked ﬁnal dividend of 1.35 cents per share to the holders of the 
convertible redeemable preference shares in respect of the ﬁnancial year ending 30 June 2017, which is to be paid to 
shareholders on 1 December 2017. The record date for determining the entitlement to the ﬁnal dividend is 2 November 
2017. The dividend has not been included as a liability in these ﬁnancial statements. The total estimated dividend to be 
paid is $1,372.

 
 
FRANKING CREDITS

Franking credits available for subsequent ﬁnancial years based on a tax rate of 30%

-

-

Franking debits that will arise from the payment of dividends declared subsequent 
to the reporting date based on a tax rate of 30%

Net franking credits available based on a tax rate of 30%

(1,356)

(1,225)

(1,356)

(1,225)

CONSOLIDATED

2017 $'000

2016 $'000

NOTE 19. EQUITY - RESERVES

Land and buildings revaluation reserve

Foreign currency translation reserve

Equity-settled employee beneﬁts reserve

Common control reserve

CONSOLIDATED

2017 $'000

2016 $'000

2,416

(542)

2,607

(60,878)

(56,397)

1,499

(468)

2,159

(5,464)

(2,274)

LAND AND BUILDINGS REVALUATION RESERVE

The land and buildings revaluation reserve arises on the revaluation of land and buildings. Where a revalued land or 
building is sold that portion of the asset revaluation reserve which relates to the asset and is effectively realised, is 
transferred directly to retained earnings.

INVESTMENT REVALUATION RESERVE

The investment revaluation reserve is used to recognise increments and decrements in the fair value of the Group’s 
investments in a2MC. This investment was disposed of during the prior year causing the reserve to be nil.

FOREIGN CURRENCY TRANSLATION RESERVE

The foreign currency translation reserve is used to recognise exchange differences arising from the translation of the 
ﬁnancial statements of foreign operations to Australian dollars. It is also used to recognise gains and losses on hedges 
of the net investments in foreign operations.

EQUITY-SETTLED EMPLOYEE BENEFITS RESERVE

The equity-settled employee beneﬁts reserve arises on the grant of share options to executives and senior employees 
under the Employee Share Option Plan. Amounts are transferred out of the reserve and into issued capital when 
the options are exercised. Further information about share based payments to employees is made in Note 33 to the 
ﬁnancial statements.

COMMON CONTROL RESERVE

The common control reserve is used to account for the acquisition of Pactum Australia and Pactum Dairy Group by the 
Group. The difference between the fair value of the consideration paid and the existing book values of the assets and 
liabilities of Pactum Australia has been debited to a common control reserve ($5,464,000). During the current year, 
the reserve was increased due to the additional acquisition of interest in Pactum Dairy Group on 31 January 2017. The 
difference between the fair value of the consideration paid and the non-controlling interest balance on that date has 
been debited to a common control reserve ($55,414,000). Upon disposal of all interests in Pactum Australia or Pactum 
Dairy Group by the Group, the applicable reserve would be transferred to retained earnings.

91

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T
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E

F
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N
A
N
C
I
A
L

S
T
A
T
E
M
E
N
T
S

3
0

J
U
N
E

2
0
1
7

 
 
 
 
 
 
 
NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2017

NOTE 19. EQUITY - RESERVES (CONTINUED)

MOVEMENTS IN RESERVES

Movements in each class of reserve during the current and previous ﬁnancial year are set out below:

CONSOLIDATED

LAND AND 
BUILDINGS 
REVALUATION 
RESERVE $’000

INVESTMENT 
REVALUATION 
RESERVE  
$’000

FOREIGN 
CURRENCY 
TRANSLATION 
RESERVE $’000

EQUITY-SETTLED 
EMPLOYEE 
BENEFITS 
RESERVE $’000

COMMON 
CONTROL 
RESERVE  
$’000

Balance at 1 July 2015

1,499

5,841

Foreign currency translation

Fair value movement in a2MC 
investment, net of tax

Reclassiﬁcation of proﬁt or loss on 
disposal of a2MC investment

Share-based payments

Balance at 30 June 2016

Land and building revaluation

Foreign currency translation

Share-based payments

In relation to 50% acquisition of PDG

-

-

-

-

1,499

917

-

-

-

Balance at 30 June 2017

2,416

-

16,281

(22,122)

-

-

-

-

-

- 

-

(189)

(279)

-

-

-

(468)

-

(74)

-

- 

1,711

(5,464)

TOTAL  
$’000

3,398

(279)

16,281

(22,122)

448 

-

-

-

-

(5,464)

(2,274)

-

-

-

917

(74)

448

-

-

-

448

2,159

-

-

448

-

(55,414)

(55,414)

(542)

2,607

(60,878)

(56,397)

NOTE 20. CURRENT ASSETS - CASH AND CASH EQUIVALENTS

Cash

92

7
1
0
2

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E
R

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A
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N
N
A

CONSOLIDATED

2017 $'000

2016 $'000

4,184

63,908

 
 
NOTE 21. RECONCILIATION OF PROFIT AFTER INCOME TAX TO NET CASH FROM 
OPERATING ACTIVITIES

Proﬁt after income tax expense for the year

Adjustments for:

Depreciation and amortisation

Foreign exchange differences

Fair value gain on conversion of options in PDG

Gain on sale of a2MC disposal

Share based payments

Share of loss/(proﬁt) of associates

Movements in working capital:

Increase in trade and other receivables

Increase in inventories

Decrease in deferred tax assets

Decrease in other operating assets

Increase in trade and other payables

Increase in provision for income tax

Increase for provision in employee entitlements

Increase/(decrease) in other operating liabilities

Net cash from operating activities

CONSOLIDATED

2017 $'000

2016 $'000

7,539

50,631

11,392

423

-

-

448

(480)

6,439

485

(22,353)

(24,529)

448

(372)

(20,336)

(20,925)

(17,554)

(21,738)

1,885

1,053

-

647

20,841

32,209

74

995

(899)

5,381

3,252

1,703

745 

6,642

Details of credit standby arrangements available and unused loan facilities are shown in Note 23 to the ﬁnancial statements.

NON-CASH FINANCING AND INVESTING ACTIVITIES

In accordance with the Company’s DRP, $5,487,552 was reinvested in the year to 30 June 2017 (2016: $4,262,530).

NOTE 22. CURRENT LIABILITIES - BORROWINGS

Loan payable

Finance facilities

Bank bill facilities

Equipment ﬁnancing liabilities

CONSOLIDATED

2017 $'000

2016 $'000

87,959

18,005

48,300

7,499

161,763

18,082

-

9,100

5,255 

32,437

Refer to Note 23 for further information on assets pledged as security and ﬁnancing arrangements. 

Refer to Note 24 for further information on ﬁnancial instruments.

93

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T
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H
E

F
I
N
A
N
C
I
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A
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M
E
N
T
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3
0

J
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2
0
1
7

 
 
 
 
 
 
 
NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2017

NOTE 22. CURRENT LIABILITIES - BORROWINGS (CONTINUED)
The loan due dates and facility renewal dates as at 30 June 2017 are summarised as follows:

DUE DATE

FACILITY RENEWAL DATE

TOTAL $’000 

Loan payable

Equipment ﬁnance(1)

Trade Finance

Total loans payable

Debtor ﬁnance

Bank bill facilities

Bank bill facilities

Bank bill facilities(3)

Total bank bill facilities

Equipment ﬁnancing liabilities

31 March 2018

(2)

n/a

n/a

n/a

31 March 2018

30 November 2017

31 March 2018

30 June 2017

n/a

n/a

n/a

41,808

46,151 

87,959

18,005

18,000

10,000

20,300 

48,300 

7,499

161,763

1.  The bank has agreed to roll this loan over to a 5 year term as part of the facilities restructure (refer Note 2).
2. Revolving trade ﬁnance loans with due dates ranging from 90 to 365 day terms.
3.  These bills are proposed to be rolled into a long term loan as part of the facility restructure and have not been called upon by 

the banks subsequent to 30 June 2017 (refer Note 2).

NOTE 23. NON-CURRENT LIABILITIES – BORROWINGS

Loan payable

Bank bill facilities

Equipment ﬁnancing liabilities

Refer to Note 24 for further information on ﬁnancial instruments.

TOTAL SECURED LIABILITIES

The total secured liabilities (current and non-current) are as follows:

Loan payable

Finance facilities

Bank bill facilities

Equipment ﬁnancing liabilities

94

7
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2

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A
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N
N
A

CONSOLIDATED

2017 $'000

2016 $'000

-

-

23,395

23,395

3,023

37,529

30,841 

71,393

CONSOLIDATED

2017 $'000

2016 $'000

87,959

18,005

48,300

30,894

185,158

21,105

-

46,629

36,096 

103,830

ASSETS PLEDGED AS SECURITY

The Company’s primary bank facilities are arranged with HSBC Bank Australia Limited with general terms and conditions. 
The facilities include debtor ﬁnance, trade ﬁnance and other term facilities. The bank facilities with HSBC are secured by a 
ﬁrst equitable mortgage over the whole of the Group’s assets and undertakings (including uncalled capital), (except items 
speciﬁcally discharged under equipment ﬁnance arrangements for assets held at Leeton, Dandenong and Taren Point 
facilities), and a ﬁrst registered mortgage over the Group’s Leeton and Ingleburn properties.

 
 
 
The equipment ﬁnance facilities relate to:

1.   Speciﬁc equipment operating at the Company’s Leeton, Dandenong and Taren Point facilities, arranged with both 
National Australia Bank and Westpac. These facilities are secured over the assets ﬁnanced under the facility, which 
have been speciﬁcally discharged from the ﬁrst registered mortgage held over the entire Group’s property. The 
leases are over a period of 2 to 6 years and the ﬁnal residual on the current leases will be due in 2020; and

2.  Speciﬁc equipment operating at the Pactum Dairy Group Shepparton facility, arranged with National Australia Bank. 
These facilities are secured over the assets ﬁnanced under the facility, which have been speciﬁcally discharged from 
the ﬁrst registered mortgage held over the entire Group’s property. The leases are over a period of 5 years and the 
ﬁnal residual on the current leases will be due in 2019;

Pactum Dairy Group has term facilities from National Australia Bank relating to trade ﬁnance and working capital 
requirements. These facilities are secured by a ﬁrst equitable mortgage over the whole of Pactum Dairy Groups assets 
and undertakings (including uncalled capital).

FINANCING ARRANGEMENTS

Total facilities

Loan payable

Finance facilities

Bank bill facilities

Equipment ﬁnancing liabilities

Used at the reporting date

Loan payable

Finance facilities

Bank bill facilities

Equipment ﬁnancing liabilities

Unused at the reporting date

Loan payable

Finance facilities

Bank bill facilities

Equipment ﬁnancing liabilities

CONSOLIDATED

2017 $'000

2016 $'000

90,500

24,000

50,400

38,132

35,500

19,000

47,400

41,003 

203,032

142,903 

87,959

18,005

48,300

30,894

185,158

2,541

5,995

2,100

7,238

17,874

21,105

-

46,629

36,096 

103,830 

14,395

19,000

771

4,907 

39,073

UNUSED FINANCING FACILITIES

Fixed ﬁnancing relating to speciﬁc assets such as land and buildings has been maintained. The Company has unused bank 
facilities relating to bank bills, trade ﬁnance, working capital and equipment ﬁnance requirements totalling $17.9 million.

Interest rates are variable and subject to adjustment.

95

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T
O

T
H
E

F
I
N
A
N
C
I
A
L

S
T
A
T
E
M
E
N
T
S

3
0

J
U
N
E

2
0
1
7

 
 
 
 
 
 
 
NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2017

NOTE 24. FINANCIAL INSTRUMENTS

CAPITAL RISK MANAGEMENT

The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while 
maximising the return to stakeholders through the optimisation of debt and equity balances.

The capital structure of the Group consists of debt, which includes the borrowings, cash and cash equivalents and 
equity attributable to equity holders of the parent comprising issued capital, reserves and retained earnings as 
disclosed in their respective notes. The Company is currently in the process of restructuring and increasing its 
borrowings (term facilities, initiatives, equipment ﬁnance leases and working capital facilities) with HSBC and NAB to 
fund further capital expenditure initiates and the working capital needs of the business from continued revenue growth. 
The term of the new secured bilateral and syndicated loans is expected to be 3 years.

Operating cash ﬂows are used to maintain and expand the Group’s manufacturing and distribution assets, as well as to 
make the routine outﬂows of tax, dividends and repayment of maturing debt. The Group’s policy is to borrow centrally; 
using a variety of capital market issues and borrowing facilities, to meet anticipated funding requirements.

MARKET RISK

The Group’s activities expose it primarily to the ﬁnancial risk of changes in foreign currency exchange rates and interest 
rates. The Group enters into forward exchange contracts to manage exposure to foreign currency risk for its imports 
and exports. There has been no change to the Group’s exposure to market risks or the manner in which it manages and 
measures the risk.

Signiﬁcant accounting polices

Details of the signiﬁcant accounting policies and methods adopted, including the criteria for recognition, the basis of 
measurement and the basis on which income and expenses are recognised, in respect of each class of ﬁnancial asset, 
ﬁnancial liability and equity instrument are disclosed in Note 2 to the ﬁnancial statements.

Forward foreign exchange contracts

The Group enters into forward foreign exchange contracts to buy speciﬁed amounts of foreign currencies in the future at 
stipulated exchange rates. The objective of entering into the forward exchange contracts is to protect the Group against 
unfavourable exchange rate movements for the contracted purchases and sales undertaken in foreign currencies.

The Group had entered into contracts (for terms not exceeding 12 months) to purchase ﬁnished goods from suppliers 
in the United States and Canada, equipment from Europe and for sales receipts denominated in United States dollars 
from export customers. The contracts related to highly probable forecasted transactions for the purchase of inventory 
for the Specialty Seafood business (Salmon - USD and Sardines - CAD) and the Freedom Foods business (Spreads 
- USD and Almond paste - USD) with the purchase consideration being settled in the above currencies and on sales 
orders from export customers. The Group’s objective in entering into forward foreign exchange contracts is to provide 
certainty to the income and cash ﬂow implications for the designated foreign currency purchase, relating to purchase 
of inventory or other capital assets. The Group had USD 5,970,928 (Buy), USD 922,350 (Sell), CAD 208,161 (Buy), EUR 
8,655,730 (Buy) and EUR 58,073 (Sell) outstanding foreign exchange contracts as at 30 June 2017.

The Group does not adopt hedge accounting.

The following table details the forward foreign exchange contracts outstanding as at reporting date in Australian dollars:

Buy US dollars

Maturity:

0 - 3 months

3 - 6 months

Buy Canadian Dollars

Maturity:

0 - 3 months

Buy Euros

Maturity:

0 - 3 months

3 - 6 months

6 - 12 months

SELL AUSTRALIAN DOLLARS

AVERAGE EXCHANGE RATES

2017 $'000

2016 $'000

2017

2016

6,088

1,892

5,513

485

0.7500

0.7481

0.7422

0.7294

209

390

0.9963

0.9678

9,518

3,063

-

4,487

1,838

158

0.6774

0.6869

-

0.6389

0.6313

0.6276

96

7
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L
A
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N
N
A

 
 
Buy Australian dollars

Maturity:

0 - 3 months

3 - 6 months

Buy Australian dollars

Maturity:

0 - 3 months

SELL US DOLLARS

AVERAGE EXCHANGE RATES

2017 $'000

2016 $'000

2017

2016

1,212

-

3,422

197

0.7565

-

0.7380

0.7347

SELL EURO

AVERAGE EXCHANGE RATES

2017 $'000

2016 $'000

2017

2016

84

-

0.6925

-

The following table details the forward foreign exchange contracts at fair value as at reporting date in Australian dollars:

Buy US dollars - less than 3 months

Buy CAD dollars - less than 3 months

Buy Euros - less than 3 months

Buy US dollars - 3-6 months

Buy Euros - 3-6 months

Buy Euros - 6-12 months

Sell US dollars - less than 3 months

Sell Euros - less than 3 months

Net fair value

CONSOLIDATED

2017 $'000

2016 $'000

(153)

-

248

(47)

90

-

11

(3)

146

(65)

1

(123)

(20)

(90)

(9)

17

- 

(289)

FOREIGN CURRENCY RISK MANAGEMENT

The carrying amount of the Group’s foreign currency denominated ﬁnancial assets and ﬁnancial liabilities at the 
reporting date were as follows (in the respective foreign currency):

CONSOLIDATED

US dollar

Canadian dollar

Euro

New Zealand dollar

Chinese Yuan

Singapore dollars

ASSETS

LIABILITIES

2017 '000

2016 '000

2017 '000

2016 '000

9,756

284

-

-

13

-

5,136

58

-

-

9

-

3,163

208

2,351

288

355

10

2,319

283

998

94

-

-

There have been no changes to the Group’s exposure to foreign currency risks or the manner in which it manages and 
measures the risks from the previous period.

FOREIGN CURRENCY SENSITIVITY ANALYSIS

The following table details the sensitivity to an increase/decrease in the Australian dollar against the relevant currencies 
in relation to foreign exchange exposures. Sensitivity rates of 4% (USD), 5% (CAD), 5% (NZD), 3% (EUR), 4% (CNY) 
and 5% (SGD) have been used as these represent management’s assessment of a likely maximum change in foreign 
exchange rates.

A positive number indicates an increase in proﬁt where the Australia Dollar strengthens against the respective currency. 
For a weakening of the Australia Dollar against the respective currency there would be an equal and opposite impact 
on the proﬁt and the balances below would be negative.

97

N
O
T
E
S

T
O

T
H
E

F
I
N
A
N
C
I
A
L

S
T
A
T
E
M
E
N
T
S

3
0

J
U
N
E

2
0
1
7

 
 
 
 
 
 
 
NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2017

NOTE 24. FINANCIAL INSTRUMENTS (CONTINUED)

CONSOLIDATED - 2017

% CHANGE

AUD 
STRENGTHENED 
EFFECT ON PROFIT 
BEFORE TAX

EFFECT ON 
EQUITY

% CHANGE

AUD WEAKENED 
EFFECT ON 
PROFIT BEFORE 
TAX

EFFECT ON 
EQUITY

US dollar

Canadian dollar

New Zealand dollar

Euro

Chinese Yuan

4%

5%

5%

3%

4%

(299)

(4)

13

99

2

(189)

299

4

(13)

(99)

(2)

189 

4%

5%

5%

3%

4%

322

4

(14)

(105)

(2)

205

(322)

(4)

14

105

2 

(205)

CONSOLIDATED - 2016

% CHANGE

AUD 
STRENGTHENED 
EFFECT ON PROFIT 
BEFORE TAX

EFFECT ON 
EQUITY

% CHANGE

AUD WEAKENED 
EFFECT ON 
PROFIT BEFORE 
TAX

EFFECT ON 
EQUITY

US dollar

Canadian dollar

New Zealand dollar

Euro

5%

5%

4%

3%

(169)

10

4

52

(103)

169

(10)

(4)

(52)

103

5%

5%

4%

3%

185

(11)

(4)

(55)

115

(185)

11

4

55 

(115)

This is mainly attributable to the exposure outstanding on foreign currency receivables and payables at year end in the 
consolidated entity and the parent.

INTEREST RATE RISK MANAGEMENT

The Group is exposed to interest rate risk as it borrows funds at both ﬁxed and ﬂoating interest rates. The Group 
manages this risk by maintaining an appropriate mix between ﬁxed and ﬂoating rate borrowings.

Exposures to interest rate risk, which is the risk that a ﬁnancial instrument’s value, its borrowing costs and interest 
income will ﬂuctuate as a result of changes in market interest rates and the effective weighted average interest rates  
on those ﬁnancial instruments are set out below:

CONSOLIDATED

Cash and cash equivalents

Loan payable and bank bill facility

Finance facilities

Equipment ﬁnancing facilities

2017

2016

WEIGHTED AVERAGE 
EFFECTIVE 
INTEREST RATE %

BALANCE  
$’000

WEIGHTED AVERAGE 
EFFECTIVE 
INTEREST RATE %

-

4.54%

4.48%

5.49%

4,184

(136,259)

(18,005)

(30,894)

(180,974)

-

4.10%

-

5.45%

BALANCE  
$’000

63,908

(67,734)

-

(36,096)

(39,922)

During the ﬁnancial year there has been no change to the Group’s interest rate risk exposure or the manner in which it 
manages and measures risks.

INTEREST RATE SENSITIVITY ANALYSIS

The sensitivity analysis below has been determined based on the impact of 100 basis point increase in interest rates on 
exposure to interest rates as detailed in the above table.

The impact of a 100 basis point (2016:150) interest rate movement during the year with all other variables being held 
constant would be:

•  an increase/(decrease) on the consolidated entity’s net profit/(loss) of ($621,220) (2016: $642,015). 

This is attributable to the consolidated entity’s exposure to interest rates on its variable borrowings.

A 100 basis point movement represents management’s assessment of the possible change in interest rates.

98

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L
A
U
N
N
A

 
 
CREDIT RISK MANAGEMENT

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in ﬁnancial loss to the 
Group. The Group has adopted the policy of only dealing with creditworthy counterparties as a means of mitigating the 
risk of ﬁnancial loss from defaults. The Group’s exposure and the credit ratings of its counterparties are continuously 
monitored and the aggregate values of transactions concluded are spread amongst approved counterparties.

Credit risk from balances with banks and ﬁnancial institutions is managed in accordance with a Board approved policy. 
Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each 
counterparty. Counterparty credit limits are reviewed by the Board on an annual basis and may be updated throughout 
the year subject to approval of the Board. The limits are set to minimise the concentration of risks and therefore 
mitigate ﬁnancial loss through potential counterparty failure. The credit risk on liquid funds is limited because the 
counterparties are banks with high credit ratings assigned by international credit rating agencies.

The maximum exposure to credit risk, excluding the value of any collateral or other security, at statement of ﬁnancial 
position date, to recognised ﬁnancial assets of the Group which have been recognised on the statement of ﬁnancial 
position is the carrying amount, net of any allowance for doubtful debts.

LIQUIDITY RISK MANAGEMENT

Liquidity risk arises from the possibility that the Group may be unable to settle a transaction on the due date. The 
ultimate responsibility for liquidity risk management rests with the Board of Directors, who has built an appropriate 
liquidity risk management framework for the management of the Group’s short, medium and long-term funding and 
liquidity management requirements. The Group manages risk by maintaining adequate reserves, banking facilities and 
reserve borrowing facilities by continuously monitoring forecasts and actual cash ﬂows and matching the maturity 
proﬁles of ﬁnancial assets and liabilities.

Included in Note 23 is a listing of additional undrawn facilities that the Company and the consolidated entity has at 
their disposal to further reduce liquidity risk.

Unused borrowing facilities at the reporting date:

Loan payable

Finance facilities

Bank bill facilities

Equipment ﬁnancing liabilities

CONSOLIDATED

2017 $'000

2016 $'000

2,541

5,995

2,100

7,238

17,874

14,395

19,000

771

4,907 

39,073 

The following table details the consolidated entity’s remaining contractual maturity for its ﬁnancial liabilities. The table 
has been drawn up based on the undiscounted cash ﬂows of ﬁnancial liabilities based on the earliest date on which the 
consolidated entity can be required to pay. The table includes both interest and principal cash ﬂows.

CONSOLIDATED - 2017

Non-derivatives

Non-interest bearing

Trade payables

Other payables

Interest-bearing - variable

Loan payable

Finance facilities

Interest-bearing - ﬁxed rate

Bank bill facilities

Equipment ﬁnancing liabilities

Total non-derivatives

WEIGHTED AVERAGE 
EFFECTIVE INTEREST 
RATE %

LESS THAN  
1 YEAR $’000

BETWEEN 1 AND 5 
YEARS $’000

REMAINING 
CONTRACTUAL 
MATURITIES $’000

-

-

4.95%

4.48%

3.79%

5.48%

43,404

39

92,317

18,812

50,132

9,055 

213,759

-

52

-

-

-

24,841 

24,893

43,404

91

92,317

18,812

50,132

33,896 

238,652

99

N
O
T
E
S

T
O

T
H
E

F
I
N
A
N
C
I
A
L

S
T
A
T
E
M
E
N
T
S

3
0

J
U
N
E

2
0
1
7

 
 
 
 
 
 
 
NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2017

NOTE 24. FINANCIAL INSTRUMENTS (CONTINUED)

CONSOLIDATED - 2016

Non-derivatives

Non-interest bearing

Trade payables

Other payables

Interest-bearing - variable

Loan payable

Interest-bearing - ﬁxed rate

Bank bill facilities

Equipment ﬁnancing liabilities

Total non-derivatives

WEIGHTED AVERAGE 
EFFECTIVE INTEREST 
RATE %

LESS THAN  
1 YEAR $’000

BETWEEN 1 AND 5 
YEARS $’000

REMAINING 
CONTRACTUAL 
MATURITIES $’000

-

-

41,030

13,261

-

52

41,030

13,313

4.80%

18,950

3,023

21,973

3.83%

5.45%

9,449

6,970

89,660

37,529

34,055

74,659

46,978

41,025 

164,319 

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amount of ﬁnancial assets and ﬁnancial liabilities recorded in the ﬁnancial statements approximates their 
fair values. 

The fair values of ﬁnancial assets and ﬁnancial liabilities are determined as follows:

•  the fair value of financial assets and financial liabilities with standard terms and conditions and traded on active liquid 

markets are determined with reference to quoted market prices; and

•  the fair value of other financial assets and financial liabilities (excluding derivatives instruments) are determined in 

accordance with generally accepted pricing models based on discounted cash flow analysis; and

•  the fair value of derivative instruments are calculated using quoted prices. Where such prices are not available use 
is made of discounted cash flow analysis using applicable yield curve for the duration of the instruments for non-
optional derivatives and option pricing models for optional derivatives.

The Group enters into a variety of derivative ﬁnancial instruments to manage its exposure to foreign exchange rate 
risk, including forward foreign exchange contracts. Derivatives are initially recognised at fair value at the date a 
derivative contract is entered into and are subsequently remeasured to their fair value at each reporting date. The 
resulting gain or loss is recognised in proﬁt or loss immediately unless the derivative is designated and effective as a 
hedging instrument, in which event, the timing of the recognition in proﬁt or loss depends on the nature of the hedge 
relationship. The Group has not adopted hedge accounting during the ﬁnancial year or previous corresponding period.

FINANCIAL RISK MANAGEMENT OBJECTIVES

The Group’s ﬁnancial management team provides services to each of the group businesses, co-ordinates access to 
domestic and international ﬁnancial markets, monitors and manages the ﬁnancial risks relating to the operations of 
the Group through internal risk reports which analyse exposures by degree and magnitude of risks. These risks include 
market risk (including currency risk and price risk), credit risk and liquidity risk.

The Group seeks to minimise the effects of these risks, by using derivative ﬁnancial instruments to hedge these risk 
exposures. The use of ﬁnancial derivatives is governed by the Group’s policies approved by the Board of Directors, 
which provide written principles on foreign exchange risk, credit risk and the investment of excess liquidity. The Group 
does not enter into or trade ﬁnancial instruments, including derivative ﬁnancial instruments, for speculative purposes.

100

7
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0
2

T
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L
A
U
N
N
A

 
 
GEARING RATIO

CONSOLIDATED

Debt(i)

Cash and cash equivalents

Net debt

Equity(ii)

Net debt to equity ratio

2017 $’000

185,158

(4,184)

180,974

321,436

56%

2016 $’000

103,830

(63,908)

39,922

287,125

14%

(i)  Debt is deﬁned as long and short-term borrowings, as detailed in the notes to the ﬁnancial statements.
(ii) Equity includes all capital and reserves.

NOTE 25. CAPITAL AND LEASING COMMITMENTS

Lease commitments - operating

Committed at the reporting date but not recognised as liabilities, payable:

Within one year

One to ﬁve years

Greater than ﬁve years

Lease commitments - ﬁnance

Minimum future lease payments:

Within one year

One to ﬁve years

Total commitment

Less: Future ﬁnance charges

Net commitment recognised as liabilities

Representing:

Equipment ﬁnancing liabilities - current (Note 22)

Equipment ﬁnancing liabilities - non-current (Note 23)

CONSOLIDATED

2017 $'000

2016 $'000

4,139

14,978

2,505

21,622

9,055

24,841

33,896

(3,002)

30,894

7,499

23,395

30,894

803

2,108

-

2,911 

6,970

34,055 

41,025

(4,929)

36,096 

5,255

30,841 

36,096

101

N
O
T
E
S

T
O

T
H
E

F
I
N
A
N
C
I
A
L

S
T
A
T
E
M
E
N
T
S

3
0

J
U
N
E

2
0
1
7

 
 
 
 
 
 
 
 
NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2017

NOTE 26. INTERESTS IN SUBSIDIARIES
The Consolidated Statement of proﬁt or loss and other comprehensive income and Statement of ﬁnancial position 
of the entities party to the deed of cross guarantee is the Consolidated Statement of proﬁt or loss and other 
comprehensive income and Statement of ﬁnancial position included in the 2017 ﬁnancial statements.

NAME

Paramount Seafoods Pty Limited*

Freedom Foods Group Operations Pty Ltd  
(formerly Nutrition Ventures Pty Limited)*

Freedom Foods Group Financing Pty Ltd  
(formerly Nutrition Ventures Financing Pty Limited)*

Freedom Foods Pty Limited*

Pactum Australia Pty Limited*

Pactum Dairy Group Pty Limited**

Freedom Foods Group IP Pty Ltd  
(formerly Australian Natural Foods Holdings Pty Limited)*

Thorpedo Foods Group Pty Limited

Thorpedo Foods Pty Limited 

Thorpedo Seafoods Pty Limited

OWNERSHIP INTEREST

2017 %

2016 %

PRINCIPAL PLACE OF 
BUSINESS/COUNTRY OF 
INCORPORATION

Australia

100.00%

100.00%

Australia

100.00%

100.00%

Australia

100.00%

100.00%

Australia

100.00%

100.00%

Australia

100.00%

100.00%

Australia

100.00%

50.00%

Australia

100.00%

100.00%

Australia

100.00%

100.00%

Australia

Australia

75.00%

75.00%

75.00%

75.00%

Freedom Foods North America Inc

North America

80.00%

80.00%

Popina (Vic) Pty Limited*

Australia

100.00%

100.00%

Freedom Foods Group Ingleburn Pty Ltd  
(formerly Pactum Foods Pty Ltd)*

Freedom Foods Group Nutritionals Pty Ltd***

Freedom Foods Group Trading Pty Ltd***

Australia

100.00%

100.00%

Australia

100.00%

Australia

100.00%

-

-

*  These companies are members of the tax consolidated group.
**   The investment in Pactum Dairy Group Pty Limited by Pactum Australia Pty Limited changed from 50% to 100% on  

102

31 January 2017. Refer to Note 35.

***  Freedom Foods Group Nutritionals Pty Ltd was established during the year to hold assets from the acquisition of Power 

Foods International. Freedom Foods Group Trading Pty Ltd was established during the year as the trading arm for the Groups 
manufacturing facilities. Both entities are members of the tax consolidated group.

7
1
0
2

T
R
O
P
E
R

L
A
U
N
N
A

NOTE 27. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
Interests in associates are accounted for using the equity method of accounting. Information relating to associates that 
are material to the Group are set out below:

NAME

OWNERSHIP INTEREST

2017 %

2016 %

PRINCIPAL PLACE OF 
BUSINESS/COUNTRY OF 
INCORPORATION

Australian Fresh Milk Holdings Pty Limited (AFMH)

Australia

10.00%

10.00%

The consortium comprises Leppington Pastoral Company Pty Limited (LPC), New Hope Dairy Holdings Co Ltd (New 
Hope Dairy) and Freedom Foods Group Limited. The Group acquired its 10% of the consortium for $5.7 million. The 
Group made an additional investment of $896,000 (before transaction costs) during the year and advanced a of loan 
of $900,000.

The completion of the acquisition ensures AFMH has in place a scalable operating platform to invest in additional 
greenﬁeld dairy sites, enabling the consortium to become a signiﬁcant player in the Australian dairy industry.

 
 
SUMMARISED FINANCIAL INFORMATION 

Summarised statement of ﬁnancial position

AFMH

PDG

2017 $'000

2016 $'000

2017 $'000

2016 $'000

Current assets

Non-current assets

Total assets

Current liabilities

Non-current liabilities

Total liabilities

Net assets/(liabilities)

Summarised statement of proﬁt or loss and other 
comprehensive income

Revenue

Expenses

Proﬁt/(loss) before income tax

Income tax expense

Proﬁt/(loss) after income tax

Other comprehensive income

Total comprehensive income

Reconciliation of the Group’s carrying amount

Opening carrying amount

Share of proﬁt/(loss) after income tax

Equity investment

De-recognition of investment and reclassiﬁcation as subsidiary  

Closing carrying amount

43,502

112,837

156,339

19,441

79,073

98,514

57,825

29,494

85,675

115,169

8,395

49,824

58,219

56,950

43,619

37,521

(40,579)

(33,066)

3,040

(1,142)

1,898

-

4,455

(128)

4,327

-

1,898

4,327

6,163

480

951

-

7,594

-

433

5,730

-

6,163

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

16,426

34,496 

50,922 

10,348

61,403 

71,751 

(20,829)

27,763

(30,203)

(2,440)

- 

(2,440)

- 

(2,440)

4,432

(61)

-

(4,371)

-

Equity accounted gain for the year to 30 June 2017 was $480,000 (2016: $372,000).

RELATED PARTY TRANSACTIONS

Current receivables and loans due from associates - refer to Note 31 to the ﬁnancial statements.

AFMH loan receivable

The loan to AFMH attracted interest at 4.5% pa.

CONSOLIDATED

2017 $'000

2016 $'000

900

-

As at 1 January 2016, PDG was no longer deemed to be an associate to the Group, forming part of the consolidated Group.

The Group’s interest in joint ventures represents jointly controlled entities which have been measured by applying the 
equity method of accounting. Under the equity method of accounting the carrying amounts of interests in joint venture 
entities are increased or decreased to recognise the Group’s share of the post-acquisition proﬁts or losses and other 
changes in net assets of the joint ventures.

103

N
O
T
E
S

T
O

T
H
E

F
I
N
A
N
C
I
A
L

S
T
A
T
E
M
E
N
T
S

3
0

J
U
N
E

2
0
1
7

 
 
 
 
 
 
 
 
 
NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2017

NOTE 28. NON-CURRENT ASSETS - INVESTMENT IN A2MC

Reconciliation

Reconciliation of the fair values at the beginning and end of the current and previous 
ﬁnancial year are set out below:

Opening fair value

Revaluation increments

Net proceeds on sale

Closing fair value

CONSOLIDATED

2017 $'000

2016 $'000

-

-

-

-

72,618

17,611

(90,229)

-

The Group sold its remaining shareholding in a2MC in October and November 2015. The shares were sold at a price of 
$AU0.68 and $AU0.85 respectively, realising a gain after transaction costs of $24,529 thousand.

NOTE 29. DEED OF CROSS GUARANTEE
The following have entered into a deed of cross guarantee as a condition to obtaining relief under ASIC Class Order 
98/1418 from the Corporations Act 2001 requirements to prepare and lodge audited ﬁnancial statements and a 
directors’ report.

Freedom Foods Group Limited

Paramount Seafoods Pty Limited

Freedom Foods Group Operations Pty Ltd (formerly Nutrition Ventures Pty Limited)

Freedom Foods Group Financing Pty Ltd (formerly Nutrition Ventures Financing Pty Limited)

Freedom Foods Pty Limited

Pactum Australia Pty Limited

Freedom Foods Group IP Pty Ltd (formerly Australian Natural Foods Holdings Pty Limited)

Thorpedo Foods Group Pty Limited

Popina (Vic) Pty Limited

Pactum Dairy Group Pty Limited

Freedom Foods Group Nutritionals Pty Limited

Freedom Foods Group Trading Pty Limited

104

7
1
0
2

T
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O
P
E
R

L
A
U
N
N
A

Each party to the deed of cross guarantee, guarantees to each creditor in the Group payment in full of any debt upon 
winding up under the provisions of the Corporations Act 2001 or, in any other case, if six months after a resolution or 
order for winding up, any debt of a creditor that has not been paid in full. The consolidated ﬁnancial statements of 
the closed Group would not be materially different from the report of the Group as a whole. The main difference is the 
Freedom Foods North America result.

NOTE 30. PARENT ENTITY INFORMATION
Set out below is the supplementary information about the parent entity.

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Proﬁt after income tax

Other comprehensive income for the year, net of tax

Total comprehensive income

PARENT

2017 $'000

2016 $'000

847

-

847

17,996

-

17,996

 
 
STATEMENT OF FINANCIAL POSITION

Total current assets

Total non-current assets

Total assets

Total current liabilities

Total non-current liabilities

Total liabilities

Net assets

Equity

Issued capital

Reserves

Retained proﬁts

Total equity

PARENT

2017 $'000

2016 $'000

100

288,819

288,919

8,703

(21,578)

(12,875)

301,794

1,355 

247,714 

249,069 

9,934 

(1,860)

8,074 

240,995 

236,149

169,108

3,241

62,404

301,794

3,186

68,701 

240,995

The Company is able to use the Group’s cash to settle its debts when they fall due and therefore continue to operate as 
a going concern.

NOTE 31. RELATED PARTY TRANSACTIONS

SUBSIDIARIES

Interests in subsidiaries are set out in Note 26.

ASSOCIATES

Interests in associates are set out in Note 27.

KEY MANAGEMENT PERSONNEL

Disclosures relating to key management personnel are set out in Note 32 and the remuneration report included in the 
directors’ report.

TRANSACTIONS WITH RELATED PARTIES

Other related parties include:

•  entities with joint control or significant influence over the Group;
•  joint ventures in which the entity was a venturer;
•  subsidiaries; and
•  other related parties.
The following transactions occurred with related parties:

Sale of goods and services:

Sale of goods to subsidiaries

Payment for goods and services:

Purchase of goods from Australian Consolidated Milk Pty Limited*

Purchase of goods and services from Leppington Pastoral Company

Payment for other expenses:

CONSOLIDATED

2017 $

2016 $

21,924,811

23,158,133

39,127,295

39,541,637

3,976,198

1,352,000

Payment for rent and outgoings under a lease commitment with Perich Property Holdings

2,733,120

2,270,000

Loans receivable:

AFMH loan receivable

900,000

-

*   Australian Consolidated Milk Pty Limited ceased to be a related party on 31 January 2017 when the Group acquired the 

remaining 50% of PDG.

These services are provided under normal terms and conditions.

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NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2017

NOTE 32. KEY MANAGEMENT PERSONNEL DISCLOSURES 

COMPENSATION

The aggregate compensation made to directors and other members of key management personnel of the Group is set 
out below:

Short-term employee beneﬁts

Post-employment beneﬁts

Share-based payments

CONSOLIDATED

2017 $

2016 $

1,773,719

1,321,307

116,169

89,913

446,990

448,216 

2,336,878

1,859,436

NOTE 33. SHARE-BASED PAYMENTS
Senior employees are eligible to participate in the share scheme under which executives are issued options to acquire 
shares in the Parent. Each employee share option converts into one ordinary share of the Parent on exercise. No 
amounts are paid or payable by the recipient on receipt of the option. The options carry neither rights to dividends nor 
voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry. There are no 
vesting conditions attached to these options other than continuing employment within the Group with the exception to 
the performance based options detailed in the directors’ report.

The options granted below expire within ﬁve years of their issue, or one year after the resignation of the senior 
employee, whichever is the earlier. In relation to options issued during the ﬁnancial year ended 30 June 2014, the 
options vest in three equal tranches over a period of 3 years.

The following reconciles the outstanding share options granted under the employee share option plan at the beginning 
and end of the ﬁnancial year:

2017

GRANT DATE

EXPIRY DATE

EXERCISE 
PRICE

BALANCE AT 
THE START OF 
THE YEAR

GRANTED

EXERCISED

EXPIRED/ 
FORFEITED/ 
LAPSED

BALANCE AT 
THE END OF  
THE YEAR

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30/08/2012

30/08/2017

$0.60

350,000

01/07/2013

01/07/2018

$1.65

1,312,333

01/07/2015

30/06/2020

$2.92

4,000,000

5,662,333

-

-

-

-

(350,000)

(668,667)

-

(1,018,667)

-

-

-

-

-

643,666

4,000,000 

4,643,666

Weighted average exercise price

$2.48

$0.00

$1.29

$0.00

$2.74

2016

GRANT DATE

EXPIRY DATE

EXERCISE 
PRICE

BALANCE AT 
THE START OF 
THE YEAR

GRANTED

EXERCISED

EXPIRED/ 
FORFEITED/ 
LAPSED

BALANCE AT 
THE END OF  
THE YEAR

01/02/2012

01/02/2017

$0.40

1,416,667

30/08/2012

30/08/2017

$0.60

1,375,002

01/07/2013

01/07/2018

$1.65

1,525,000

-

-

-

(1,416,667)

(1,025,002)

-

-

-

350,000

(144,333)

(68,334)

1,312,333

01/07/2015

30/06/2020

$2.92

-

4,000,000

-

-

4,000,000

Weighted average exercise price

$0.91

$2.92

$0.55

$1.65

$2.48

4,316,669

4,000,000 (2,586,002)

(68,334)

5,662,333

The weighted average exercise price during the ﬁnancial year was $1.29 (2016: $0.55).

The weighted average remaining contractual life of options outstanding at the end of the ﬁnancial year was 2.7 years 
(2016: 3.4 years).

Expected volatility is based on historical share price volatility over the past two years. It is expected that options will be 
exercised only in the event of the market price exceeding the exercise price.

 
 
GRANT DATE

EXPIRY DATE

02/02/2012

02/02/2017

30/08/2012

30/08/2017

01/07/2013

01/07/2018

01/07/2015

30/06/2020

SHARE PRICE AT 
GRANT DATE

EXERCISE  
PRICE

EXPECTED 
VOLATILITY

DIVIDEND  
YIELD

RISK-FREE 
INTEREST RATE

FAIR VALUE  
AT GRANT DATE

$0.46

$0.65

$1.80

$2.94

$0.40

$0.60

$1.65

$2.92

20.00%

5.00%

5.00%

50.00%

2.50%

2.50%

2.50%

0.49%

5.00%

5.00%

5.00%

2.25%

$0.122

$0.066

$0.181

$1.195

Equity-settled share-based payments with employees and others providing similar services are measured at the fair 
value of the equity instrument at the grant date. Fair value is measured by use of a binomial model. The expected life 
used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, 
exercise restrictions, and behavioural considerations.

The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line 
basis over the vesting period, based on the Group’s estimate of shares that will eventually vest.

At each reporting date, the Group revises its estimate of the number of equity instruments expected to vest. The 
impact of the revision of the original estimates, if any, is recognised in proﬁt or loss over the remaining vesting period, 
with corresponding adjustment to the equity-settled employee beneﬁts reserve.

NOTE 34. REMUNERATION OF AUDITORS
During the ﬁnancial year the following fees were paid or payable for services provided by Deloitte Touche Tohmatsu, 
the auditor of the Company:

Audit services - Deloitte Touche Tohmatsu

Audit or review of the ﬁnancial statements 

Other services - Deloitte Touche Tohmatsu

Other assurance services

Stamp duty advice

Research and development advice

Tax compliance services

Tax consulting services

CONSOLIDATED

2017 $

2016 $

404,100

406,550

-

-

54,092

15,000

60,000

23,500

47,363

81,268

-

197,204

69,092

473,192

409,335

815,885

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NOTE 35. BUSINESS COMBINATIONS
Over the course of the year, the Group acquired the remaining 50% of the ordinary shares in Pactum Dairy Group Pty 
Limited (PDG) from its joint venture partner, Australian Consolidated Milk (ACM), and 100% of the business and assets 
of Power Foods International Pty Limited (Power Foods). Details of the business assets acquired as at the date of each 
acquisition were as follows:

On 31 January 2017, the Company acquired the remaining 50% of the ordinary shares in PDG from its joint venture 
partner, ACM, to increase its equity holding to 100% for cash consideration of $47.2 million. In addition, outstanding 
loans and convertible notes of $4.7 million were repaid to ACM. In accordance with AASB 10 Consolidated Financial 
Statements, as the Company has a controlling interest in PDG, the transaction has been treated as a transaction 
between shareholders. As a result, the difference between the consideration paid of $47 million and the non-controlling 
interest ($8,146,000) was recorded in the common control reserve $55 million (Note 19). The Company will continue to 
recognise 100% of the net proﬁt after tax of PDG.

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NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2017

NOTE 35. BUSINESS COMBINATIONS (CONTINUED)
On 1 January 2016, the Group elected to convert its convertible notes held in PDG into ordinary shares which resulted 
in the Group’s interest in PDG increasing to 50%. The increase in equity holding along with additional factors, which 
occurred in January 2016, led to the reassessment of the accounting treatment for the Group’s investment in PDG. 
After taking into consideration the guidance contained in AASB 10 Consolidated Financial Statements (AASB 10), the 
Group concluded that control was deemed to be gained on 1 January 2016. In reaching this conclusion, the Group 
considered its power to direct relevant activities under its Management Services Agreement with PDG along with the 
Group’s provision of specialised knowledge in sales capability and infrastructure management, the Group’s acquisition  
of additional processing equipment in January 2016 for PDG to meet demand, the provision of signiﬁcant funding 
and acting as guarantor for PDG to secure additional ﬁnancing in January 2016. Under AASB 10, from the date that 
control is obtained, the transaction is seen as a stepped acquisition achieved without the transfer of consideration. 
The fair values of the PDG assets and liabilities as at 31 December 2015 were provisionally determined in the 30 June 
2016 ﬁnancial statements. During the current year, the Group recognised the following increases/(decreases) to 
the provisional PDG asset and liability fair values disclosed in the 30 June 2016 ﬁnancial statements as part of the 
ﬁnalisation of this business combination during the measurement period.

Details of the acquisition at control date are as follows:

PROVISIONAL FAIR  
VALUE $’000

ADJUSTMENTS TO PROVISIONAL 
FAIR VALUE $’000

RESTATED FAIR  
VALUE $’000

Cash and cash equivalents

Trade and other receivables

Inventories

Property, plant and equipment

Other assets

Other liabilities

Net liabilities acquired

Non-controlling interests share of net liabilities

Previously held equity

Goodwill

Consideration fair value

670

9,307

5,983

34,554

3,564

(69,437)

(15,359)

7,679

(456)

30,937

22,801

-

(113)

(379)

(34)

(447)

(413)

(1,386)

693

-

693

-

670

9,194

5,604

34,520

3,117

(69,850)

(16,745)

8,372

(456)

31,630 

22,801

As a result of the adjustments to the provisional fair values recognised during the current period, the 30 June 2016 
comparative balance sheet amounts have been restated as follows:

Assets

Trade and other receivables

Inventories

Property, plant and equipment

Liabilities

PROVISIONAL FAIR  
VALUE $’000

ADJUSTMENTS TO PROVISIONAL 
FAIR VALUE $’000

RESTATED FAIR  
VALUE $’000

12,338

11,557

40,371

(560)

(379)

(34)

11,778

11,178

40,337

Trade and other payables

(15,737)

(413)

(16,150)

On 1 May 2017, the Group acquired 100% of the business and assets from Power Foods for a total consideration of 
$21 million. Power Foods is a major Australian manufacturer and brand owner in the performance and adult nutrition 
category. Power Foods brands include “Vital Strength” and UProtein”. The Vital Strength brand is recognised as a 
leader in high quality nutrition products, sold through retail grocery, pharmacy and ﬁtness retailers in Australia.

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Details of the Power Foods acquisition are as follows:

Inventories

Property, plant and equipment

Brand names

Employee beneﬁts

Net assets acquired

Goodwill

Acquisition-date fair value of the total consideration transferred

ACCOUNTING POLICY FOR BUSINESS COMBINATIONS

PROVISIONAL FAIR VALUE $’000

1,152

472

15,563

(105)

17,082

4,350 

21,432 

The acquisition method of accounting is used to account for business combinations regardless of whether equity 
instruments or other assets are acquired.

The consideration transferred is the sum of the acquisition date fair values of the assets transferred, equity instruments 
issued or liabilities incurred by the acquirer to former owners of the acquiree and the amount of any non-controlling 
interest in the acquiree. For each business combination, the non-controlling interest in the acquiree is measured at 
either fair value or at the proportionate share of the acquiree’s identiﬁable net assets. All acquisition costs are expensed 
as incurred to proﬁt or loss.

On the acquisition of a business, the Group assesses the ﬁnancial assets acquired and liabilities assumed for 
appropriate classiﬁcation and designation in accordance with the contractual terms, economic conditions, the Group’s 
operating or accounting policies and other pertinent conditions in existence at the acquisition-date.

Where the business combination is achieved in stages, the Group remeasures its previously held equity interest in the 
acquiree at the acquisition date fair value and the difference between the fair value and the previous carrying amount  
is recognised in proﬁt or loss.

Contingent consideration to be transferred by the acquirer is recognised at the acquisition date fair value. Subsequent 
changes in the fair value of the contingent consideration classiﬁed as an asset or liability is recognised in proﬁt or  
loss. Contingent consideration classiﬁed as equity is not remeasured and its subsequent settlement is accounted for 
within equity.

The difference between the acquisition date fair value of assets acquired, liabilities assumed and any non-controlling 
interest in the acquiree and the fair value of the consideration transferred and the fair value of any pre-existing 
investment in the acquiree is recognised as goodwill. If the consideration transferred and the pre-existing fair value is 
less than the fair value of the identiﬁable net assets acquired, being a bargain purchase to the acquirer, the difference 
is recognised as a gain directly in proﬁt or loss by the acquirer on the acquisition-date, but only after a reassessment of 
the identiﬁcation and measurement of the net assets acquired, the non-controlling interest in the acquiree, if any, the 
consideration transferred and the acquirer’s previously held equity interest in the acquirer.

Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the 
provisional amounts recognised and also recognises additional assets or liabilities during the measurement period, 
based on new information obtained about the facts and circumstances that existed at the acquisition-date. The 
measurement period ends on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the  
acquirer receives all the information possible to determine fair value.

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NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2017

NOTE 36. NON-CURRENT ASSETS - DEFERRED TAX

Deferred tax asset

Movements:

Opening balance

Provisions

Property, plant and equipment

Other

Investments

Tax losses recognised in PDG since 1 January 2016

Deferred tax liabilities acquired

Deferred tax assets related to losses acquired

Closing balance

CONSOLIDATED

2017 $'000

2016 $'000

1,835

3,720 

3,720

(2,723)

4,611

(4,012)

-

(327)

815

(249)

1,835

(2,785)

553

(1,531)

1,633

2,717

75

(2,412)

5,470 

3,720

NOTE 37. EVENTS AFTER THE REPORTING PERIOD
On 4th July 2017 the Company entered into a joint venture with Shenzhen Jialile Food Co. Limited (JLL) to establish a 
new company called Australia’s Own Dairy Company China. The Company will subscribe for an initial investment of 10% 
for consideration of RMB22 million (approximately AUD$4.4 million), with the option to subscribe up to 30% within 3 
years. The transaction is subject to regulatory approvals in China and is expected to be formally completed by no later 
than 31 December 2017.

On 31 August 2017, the Group entered into an agreement with a subsidiary of the Perich Group for the sale and 
leaseback of its Ingleburn land and buildings for consideration of $75 million. The lease is for a term of 20 years with an 
option for a further 10 years. This transaction is expected to be completed on 30 November 2017 subject to shareholder 
approval at the Annual General Meeting.

Apart from the dividend declared as disclosed in Note 18, the establishment of Australia’s Own Dairy Company 
China and the sale and leaseback agreement no other matter or circumstance has arisen since 30 June 2017 that has 
signiﬁcantly affected, or may signiﬁcantly affect the Group’s operations, the results of those operations, or the Group’s 
state of affairs in future ﬁnancial years.

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DIRECTORS’ DECLARATION 30 JUNE 2017

In the directors’ opinion:

•  the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, 

the Corporations Regulations 2001 and other mandatory professional reporting requirements;

•  the attached financial statements and notes comply with International Financial Reporting Standards as issued by  

the International Accounting Standards Board as described in Note 2 to the financial statements;

•  the attached financial statements and notes give a true and fair view of the Group’s financial position as at  

30 June 2017 and of its performance for the financial year ended on that date;

•  there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become  

due and payable; and

•  at the date of this declaration, there are reasonable grounds to believe that the members of the Extended Closed 
Group will be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the 
deed of cross guarantee described in Note 29 to the financial statements.

The directors have been given the declarations required by section 295A of the Corporations Act 2001.

Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001. 

On behalf of the directors

___________________________ 

___________________________

Perry R. Gunner 
Chairman 

31 August 2017
Sydney

Rory J.F. Macleod
Managing Director and Chief Executive Officer

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INDEPENDENT AUDITOR’S REPORT

Deloitte Touche Tohmatsu 
ABN 74 490 121 060 

Grosvenor Place 
225 George Street 
Sydney NSW  2000 
PO Box N250 Grosvenor 
Place 
Sydney NSW 1220 
Australia 

DX: 10307SSE 
Tel:  +61 (0) 2 9322 7000 
Fax:  +61 (0) 2 9322 7001 
www.deloitte.com.au  

Independent Auditor’s Report

to the Members of Freedom Foods Group Limited

Report on the Audit of the Financial Report 

Opinion 

We have audited the financial report of Freedom Foods Group Limited (the Company) and its subsidiaries 
(the Group), which comprises the consolidated statement of financial position as at 30 June 2017, the 
consolidated statement of profit or loss and other comprehensive income, the consolidated statement of 
cash flows and the consolidated statement of changes in equity for the year ended on that date, notes 
comprising  a  summary  of  significant  accounting  policies  and  other  explanatory  information,  and  the 
directors’ declaration. 

In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 
2001, including:  

(i)  

giving a true and fair view of the Groups financial position as at 30 June 2017 and of its financial 
performance for the year then ended; and   

(ii)  

complying with Australian Accounting Standards and the Corporations Regulations 2001. 

Basis for Opinion 

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those 
standards  are  further  described  in  the  Auditor’s  Responsibilities  for  the  Audit  of  the  Financial  Report 
section  of  our  report. We  are  independent  of  the  Group  in  accordance  with  the  auditor  independence 
requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional 
and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are 
relevant  to  our  audit  of  the  financial  report  in  Australia.  We  have  also  fulfilled  our  other  ethical 
responsibilities in accordance with the Code.  

We confirm that the independence declaration required by the Corporations Act 2001, which has been 
given to the directors of the Company, would be in the same terms if given to the directors as at the time 
of this auditor’s report. 

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for 
our opinion. 

Key Audit Matters  

Key audit matters are those matters that, in our professional judgement, were of most significance in our 
audit of the financial report for the current period. These matters were addressed in the context of our 
audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a 
separate opinion on these matters. 

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Liability limited by a scheme approved under Professional Standards Legislation.
A member of Deloitte Touche Tohmatsu Limited.
(cid:3)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Key Audit Matter 

How the scope of our audit responded 
to the Key Audit Matter 

Capitalisation  of  construction 
costs 
Refer to note 11 Property, Plant and 
Equipment  

the  Group  capitalised 
In  2017, 
$128.5  million  of  construction  costs 
as  part  of  the  Capital  Work  In 
Progress (CWIP). The assessment as 
to  whether  it  is  appropriate  to 
capitalise  costs  and  the  point  at 
which  to  transfer  the  asset  from 
CWIP 
to  Property,  Plant  and 
Equipment (PPE) requires judgement 
by  management  and  impacts  the 
carrying value of the assets. 

(cid:3)

Acquisition accounting
Refer to note 35 Business          
Combinations.

On 2 May 2017, the Group acquired 
100%  of  the  business  and  assets 
from  Power  Foods 
total 
consideration  of  $21  million  which 
has been provisionally accounted for 
at 30 June 2017 

for  a 

Accounting  for  these  transactions 
is complex,  requiring  management 
to exercise  judgement  to  determine 
the fair  value  of  acquired  assets 
the 
liabilities  along  with 
and
purchase 
allocation 
and 
consideration 
separately 
intangible 
assets such as  trademarks.

identifiable

goodwill 

the 

to

of

(cid:120)

(cid:120)

Our procedures included amongst others: 
Evaluating 
management’s 
processes  and  controls  in  respect 
of  capitalisation  of  construction 
costs 
Testing  on  a  sample  basis  costs 
capitalised, tracing these to source 
documents and assessing whether 
they  meet  the  criteria  to  be 
capitalised  under  AASB  116 
Property, Plant and Equipment 
Evaluating  on  a  sample  basis, 
whether  projects  included  in  the 
CWIP 
been 
commissioned into production  
Testing  on  a  sample  basis,  the 
transfer  of  completed  projects 
from  CWIP  to  PPE  and  assessing 
whether this has taken place in the 
correct period 
Assessing  the  appropriateness  of 
the relevant disclosures in note 11 
of the financial statements  

register 

have 

(cid:120)

(cid:120)

(cid:120)

With  the  assistance  of  Deloitte  valuation 
experts,  our  procedures  on  the  Power 
Foods  acquisition 
included  amongst 
others: 

(cid:120)

A  review  of  the  business  sale 
the 
agreement 
to  understand 
terms  and  conditions  of 
the 
acquisition 

(cid:1006)

(cid:120)

key 

(cid:120) Obtaining an understanding of the 
process  that  management  had 
undertaken  to  determine  the  fair 
value  of  the  acquired  assets  and 
liabilities 
Assessing  the  forecast  cash  flows 
the  Trademark  valuation 
for 
comparing 
assumptions, 
including  forecast  growth  rates 
and  royalty  rates  used  in  the 
valuation to historical results, and 
comparable transactions  
Evaluating discount rates used by 
the  cost  of  capital 
assessing 
applied 
the  valuation  by 
comparing  it  to  market  data  and 
industry research 
Assessing  the  appropriateness  of 
the relevant disclosures in note 35 
of the financial statements  

to 

(cid:120)

(cid:120)

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INDEPENDENT AUDITOR’S REPORT

Other Information 

The directors are responsible for the other information. The other information comprises the Directors’ 
Report,  which  we  obtained  prior  to  the  date  of  this  auditor’s  report,  and  also  includes  the  following 
information which will be included in the Group’s annual report (but does not include the financial report 
and our auditor’s report thereon): Chairman’s letter and Managing Director’s Report, which is expected 
to be made available to us after that date.  

Our opinion on the financial report does not cover the other information and we do not and will not express 
any form of assurance conclusion thereon. 

In connection with our audit of the financial report, our responsibility is to read the other information 
identified above and, in doing so, consider whether the other information is materially inconsistent with 
the  financial  report  or  our  knowledge  obtained  in  the  audit,  or  otherwise  appears  to  be  materially 
misstated.  

If, based on the work we have performed on the other information that we obtained prior to the date of 
this auditor’s report, we conclude that there is a material misstatement of this other information, we are 
required to report that fact. We have nothing to report in this regard.  

When we read the Chairman’s letter and Managing Director’s Report disclosures, if we conclude that there 
is a material misstatement therein, we are required to communicate the matter to the directors and use 
our professional judgement to determine the appropriate action. 

Directors’ Responsibility for the Financial Report 

The directors of the Company are responsible for the preparation of the financial report that gives a true 
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for 
such internal control as the directors determine is necessary to enable the preparation of the financial 
report that gives a true and fair view and is free from material misstatement, whether due to fraud or 
error.  

In preparing the financial report, the directors are responsible for assessing the ability of the  Group to 
continue as a going concern, disclosing, as applicable, matters related to going concern and using the 
going concern basis of accounting unless the directors either intend to liquidate the  Group or to cease 
operations, or has no realistic alternative but to do so. 

Auditor’s Responsibilities for the Audit of the Financial Report 

Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free 
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes 
our  opinion.  Reasonable  assurance  is  a  high  level  of  assurance,  but  is  not  a  guarantee  that  an  audit 
conducted  in  accordance  with  the  Australian  Auditing  Standards  will  always  detect  a  material 
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, 
individually or in the aggregate, they could reasonably be expected to influence the economic decisions 
of users taken on the basis of this financial report. 

As  part  of  an  audit  in  accordance  with  the  Australian  Auditing  Standards,  we  exercise  professional 
judgement and maintain professional scepticism throughout the audit. We also:   

(cid:120)

Identify  and  assess  the  risks  of  material  misstatement  of  the  financial  report,  whether  due  to 
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit 
evidence  that  is  sufficient  and  appropriate  to  provide  a  basis  for  our  opinion.  The  risk  of  not 
detecting a material misstatement resulting from fraud is higher than for one resulting from error, 
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override 
of internal control.  

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(cid:120) Obtain  an  understanding  of  internal  control  relevant  to  the  audit  in  order  to  design  audit 
procedures that are appropriate in the circumstances, but not for the purpose of expressing an 
opinion on the effectiveness of the Group’s internal control.  

(cid:120)

(cid:120)

(cid:120)

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting 
estimates and related disclosures made by the directors.  

Conclude on the appropriateness of the directors’ use of the going concern basis of accounting 
and, based on the audit evidence obtained, whether a material uncertainty exists related to events 
or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. 
If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s 
report to the related disclosures in the financial report or, if such disclosures are inadequate, to 
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of 
our  auditor’s  report.  However,  future  events  or  conditions  may  cause  the  Group  to  cease  to 
continue as a going concern.  

Evaluate  the  overall  presentation,  structure  and  content  of  the  financial  report,  including  the 
disclosures, and whether the financial report represents the underlying transactions and events 
in a manner that achieves fair presentation.  

(cid:120) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or 
business activities within the consolidated entity to express an opinion on the financial report. We 
are  responsible  for  the direction,  supervision and  performance  of  the  Group audit. We  remain 
solely responsible for our audit opinion. 

We communicate with the directors regarding, among other matters, the planned scope and timing of the 
audit and significant audit findings, including any significant deficiencies in internal control that we identify 
during our audit.  

We also provide the directors with a statement that we have complied with relevant ethical requirements 
regarding  independence, and  to communicate  with  them  all  relationships  and  other  matters  that may 
reasonably be thought to bear on our independence, and where applicable, related safeguards.  

From  the  matters  communicated  with  the  directors,  we  determine  those  matters  that  were  of  most 
significance  in  the  audit  of  the  financial  report  of  the  current  period  and  are  therefore  the  key  audit 
matters.  We  describe  these  matters  in  our  auditor’s  report  unless  law  or  regulation  precludes  public 
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should 
not be communicated in our report because the adverse consequences of doing so would reasonably be 
expected to outweigh the public interest benefits of such communication. 

Report on the Remuneration Report 

Opinion on the Remuneration Report 

We have audited the Remuneration Report included in pages 61 to 65 of the directors’ report for the 
year ended 30 June 2017.

In our opinion, the Remuneration Report of Freedom Foods Group Limited, for the year ended 30 June 
2017, complies with section 300A of the Corporations Act 2001.  

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INDEPENDENT AUDITOR’S REPORT

Responsibilities  

The directors of the Company are responsible for the preparation and presentation of the Remuneration 
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an 
opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing 
Standards. 

DELOITTE TOUCHE TOHMATSU 

Andrew Coleman 
Partner 
Chartered Accountants 
Sydney, 31 August 2017  

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SHAREHOLDER INFORMATION 30 JUNE 2017

1 to 1,000

1,001 to 5,000

5,001 to 10,000

10,001 to 100,000

100,001 and over

Holding less than a marketable parcel

NUMBER OF HOLDERS OF  
ORDINARY SHARES

NUMBER OF HOLDERS OF OPTIONS 
OVER ORDINARY SHARES

1,521

1,606

371

320

58

3,876

262

-

-

-

-

- 

- 

-

20 LARGEST SHAREHOLDERS AS AT 31 JULY 2017

Stock exchanges that have granted quotation to the securities of the Parent quoted in Australia: 

All Member Exchanges.

ORDINARY SHAREHOLDERS

NUMBER  
HELD

% OF TOTAL ORDINARY 
SHARES ISSUED

1. Arrovest Pty Limited

2. HSBC Custody Nominees (Australia) Limited

3. J P Morgan Nominees Australia Limited

4. Citicorp Nominees Pty Limited

5. Netwealth Investments Limited

6. Australian Foundation Investment Company Limited

7. National Nominees Limited

8. Mirrabooka Investments Limited

9. BNP Paribas Nominees Pty Ltd

10. BPC Custody Pty Ltd

11. BNP Paribas Nominees Pty Ltd

12. Mr Michael Andris Bracka

13. Amcil Limited

14. Mr Perry Richard Gunner & Mrs Felicity Jane Gunner

15. Goldacre Investments Pty Limited

16. Maynel Haddad

17. Netwealth Investments Pty Ltd

18. HSBC Custody Nominees (Australia) Limited - Account 2

19. Moorebank Property Management Pty Ltd

20. RBC Investor Services Australia Nominees Pty Limited

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111,552,094

26,456,655

8,043,651

6,749,372

4,773,574

4,506,585

4,039,529

1,795,000

1,605,155

1,596,260

1,200,333

760,802

756,840

687,094

620,055

597,044

577,806

442,055

410,142

389,724

177,559,770

55.54

13.17

4.00

3.36

2.38

2.24

2.01

0.89

0.80

0.79

0.60

0.38

0.38

0.34

0.31

0.30

0.29

0.22

0.20

0.19 

88.39

 
 
 
CONVERTIBLE REDEEMABLE PREFERENCE SHARE (CRPS) SHAREHOLDERS

1. R & M Gugliotta Pty Limited

2. Lewis Little River Pty Limited

3. Mr Hugh Middendorp & Mr Peter Charles

4. Alan Ong Enterprises Pty Limited

5. Est John William Hartigan & Mrs Enid May Hartigan

6. Mr Craig Sargent

7. GWG Investments Pty Limited

8. Lokit Investments Pty Limited

9. Mr Robert William Russell

10. Mr Robert David Napier Nicholls

11. Palatine Holdings Pty Limited

12. Mr Gerald Millman

13. Mr Tjeerd Veenstra & Mrs Susan Lesley Veenstra

14. Mrs Michelle Louise Farrell

15. Mr Andrew Jonathon Achilles

16. Mr Stuart William McDonald

17. Mr Neville Thiele

18. Mrs Dianne Joan Thiele

19. Mr Andrew Macfarlane

20. Mr Kim Wigram Jones

DISTRIBUTION OF CRPS SHAREHOLDERS

1 - 1,000

1,001 - 5,000

5,001 - 10,000

10,001 - 100,000

NUMBER  
HELD

30,000

23,438

16,664

8,000

5,000

3,394

3,125

2,214

1,924

1,736

1,697

1,000

963

640

500

497

273

219

200

133

101,617

% OF TOTAL  
CRPS ISSUED

29.51%

23.07%

16.40%

7.87%

4.92%

3.34%

3.08%

2.18%

1.89%

1.71%

1.67%

0.98%

0.95%

0.63%

0.49%

0.49%

0.27%

0.22%

0.20%

0.13% 

100%

NUMBER OF HOLDERS OF CRPS SHARES

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SUBSTANTIAL SHAREHOLDERS

The number of shares held by substantial shareholders as listed in the Parent’s register as at 31 July 2017 are:

Arrovest Pty Limited

Perpetual Limited

ORDINARY SHARES

NUMBER HELD

% OF TOTAL SHARES ISSUED

111,552,094

19,378,930

55.54

9.65

The Parent’s listed ordinary shares are of one class with equal voting rights and all are quoted on a Member Exchange 
of the Australian Stock Exchange Limited (the home exchange being the Australian Stock Exchange (Sydney) Limited).

 
 
 
CORPORATE 
DIRECTORY 

DIRECTORS 

Perry R. Gunner -  
Chairman and Non-Executive Director

Rory J.F. Macleod -  
Managing Director and Chief Executive Officer

Anthony M. Perich -  
Non-Executive Director, Deputy Chairman

Ronald Perich -  
Non-Executive Director

Trevor J. Allen -  
Non-Executive Director

ALTERNATE DIRECTOR 

Michael R. Perich  
(for Anthony M. Perich and Ronald Perich)

COMPANY SECRETARY 

Campbell Nicholas

NOTICE OF ANNUAL  
GENERAL MEETING

The details of the Annual General Meeting of 
Freedom Foods Group Limited are:

30 November 2017 at 12:00 noon 
Grace Hotel 
77 York Street 
Sydney NSW 2000

REGISTERED OFFICE 

80 Box Road 
Taren Point 
NSW 2229 
Tel: +61 2 9526 2555

PRINCIPAL PLACE OF BUSINESS

80 Box Road 
Taren Point 
NSW 2229 
Tel: +61 2 9526 2555

SHARE REGISTER 

Link Market Services Limited 
Level 12, 680 George Street 
Sydney NSW 2000 
Tel: +61 2 8280 7111 
Fax: +61 2 9287 0303

AUDITOR

Deloitte Touche Tohmatsu 
Grosvenor Place, 225 George Street 
Sydney NSW 2000 
Tel: +61 2 9237 1171

SOLICITORS

PWC Legal 
One International Towers 
Barangaroo 
Sydney NSW 2000

BANKERS

HSBC Australia Limited 
Level 37, 100 Barangaroo Ave 
Sydney NSW 2000

National Australia Bank Limited 
Level 3, 255 George Street 
Sydney NSW 2000 

STOCK EXCHANGE LISTING

Freedom Foods Group Limited shares are 
listed on the Australian Securities Exchange 
(ASX code: FNP)

WEBSITE

www.ffgl.com.au

ABN

41 002 814 235

INSURANCE BROKERS 

GSA Insurance Brokers Pty Ltd 
‘The Old Presbytery’ 137 Harrington St 
Sydney NSW 2000 
Tel: +61 2 8274 8100

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