QAF to pay out 2 S-cent special dividend with sale of Australian pork business

BREAD specialist QAF is set to reward shareholders with a special dividend of two Singapore cents per share, upon completing the planned sale of its Australian pork business, which will result in estimated proceeds of A$148.1 million (S$151.8 million).

QAF has agreed to sell the entire issued share capital of its Australian businesses Rivalea Holdings and Oxdale Dairy Enterprise to Industry Park, which is part of Brazilian animal protein giant JBS.

In a Tuesday bourse filing after the market close, QAF disclosed that the indicative purchase price, to be satisfied entirely in cash, is estimated at A$107.9 million. Shareholder loans extended by QAF to the meat business, amounting to about A$40 million, will be fully repaid on completion of the sale.

The gain on disposal for QAF is estimated at about S$10.8 million. The company proposes to set aside a total of S$11.5 million for the special dividend, and will announce the record date subject to the sale completion.

Collectively, the entities to be sold are involved in integrated pork production in Australia with feedmills, pig genetics, pig breeding and grower farms and pork processing plants. This also involves the sale of pork products in both branded and unbranded formats, in supermarkets and to wholesalers.

The bulk of the business is in Australia, with a small portion of the pork products exported to Japan, Singapore and Hong Kong. The entities also sell branded feed to dairy, beef, sheep, pig and poultry producers.

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The entities to be sold collectively recorded a net profit after tax S$15 million for FY2020 ended December.

The sale of the Australian meat business is primarily so that QAF can focus on its bakery and distribution and warehousing segments in the core markets of Singapore, Malaysia and the Philippines.

"The strategic sale of the primary production business is being pursued as such business is in the animal protein segment, which is very different from the bakery and distribution and warehousing businesses; and operates in a different geographical region," QAF said in its filing.

The net proceeds from the sale will allow QAF to double down on investments in its core segments, the company said. It is now in the process of adding a new line at the Gardenia Malaysia plant in Bukit Kemuning. Plans to expand production facilities at North Luzon in the Philippines are also being reviewed.

In addition, another bread line at the Johor plant to supply both Malaysia and Singapore markets, and an upgrade to the bread production lines in Singapore are currently being studied.

Shares of QAF closed flat at S$0.955 on Tuesday.