17 August 2023
ASX Market Announcements Office
Australian Securities Exchange
20 Bridge Street
Sydney NSW 2000
Orora Limited (ORA) Appendix 4E and 2023 Annual Report
Orora Limited announces to the market its financial results for the year ended 30 June 2023.
The following documents are attached:
•
•
Appendix 4E – Preliminary Final Report given under Listing Rule 4.3A; and
Orora 2023 Annual Report including its financial statements and Corporate Governance
Statement, for the year ended 30 June 2023.
Yours faithfully
Ann Stubbings
Company Secretary
This announcement has been authorised for release by the Board of Directors of Orora Limited.
Orora Limited ABN 55 004 275 165
109 Burwood Road, Hawthorn VIC 3122, Australia. T +61 3 9811 7111 F +61 3 9811 7171
www.ororagroup.com
Appendix 4E Rule 4.3A
Annual Report
ORORA LIMITED
ABN 55 004 275 165
1. Details of the reporting period and the previous corresponding period
Reporting Period:
Previous Corresponding Period:
Year Ended 30 June 2023
Year Ended 30 June 2022
2. Results for announcement to the market
Key information
Statutory results
2.1 Revenue from ordinary activities
30 June 2023
A$ million
30 June 2022
A$ million
• From Continuing Operations
4,291.3
Up
4.9%
from
4,090.8
• From Discontinued Operations
-
2.2 Net profit/(loss) from ordinary activities after tax but before significant items, attributable to members
• From Continuing Operations
• From Discontinued Operations
203.0
-
Up
8.5%
from
2.3 Net profit/(loss) for the period, after significant items, attributable to members
• From Continuing Operations
• From Discontinued Operations
184.8
-
Down
Down
1.2%
100.0%
from
from
-
187.1
-
187.1
(2.4)
Dividends
Current period
2.4 Final dividend payable 9 October 2023
2.4 Interim dividend
Previous corresponding period
2.4 Final dividend
2.4 Interim dividend
Amount per
security
Franked amount per
security
9.0 cents
8.5 cents
8.5 cents
8.0 cents
unfranked
unfranked
unfranked
unfranked
2.5 Record date for determining entitlements to the dividend
Final dividend – 4 September 2023
2.6 Brief explanation of figures in 2.1 to 2.4:
i) The current period final dividend and interim dividend are unfranked.
ii) 100.0% of the current period final dividend and current period interim dividend were sourced from the Conduit
Foreign Income Account. Dividends to foreign holders are not subject to withholding tax.
iii) Refer to attached Annual Report and the Investor Results Release for further details relating to 2.1 to 2.4.
3. Income Statement and Statement of Comprehensive Income
Refer to the attached Annual Report.
4. Statement of Financial Position
Refer to the attached Annual Report.
5. Statement of Cash Flows
Refer to the attached Annual Report.
6. Statement of Retained Earnings
Refer to the attached Annual Report, Note 2.4.3 Retained Earnings.
7. Details of individual dividends and payment dates
Refer to the attached Annual Report, Note 2.2 Dividends and Note 2.4.3 Retained Earnings.
8. Details of dividend reinvestment plan
The Dividend Reinvestment Plan (DRP) is in operation. No discount is available under the DRP in respect of the FY23 final
dividend. The issue price for the FY23 final dividend will be calculated based on the arithmetic average of the weighted average
market price for the ten ASX trading days from 11 September to 22 September 2023, inclusive. The last date for receipt of
election notices for the DRP is 5 September 2023. Shares allotted under the DRP rank equally with existing fully paid ordinary
shares of Orora Limited.
9. Net tangible assets
Current period
30 June 2022
Net tangible asset backing per ordinary security
$0.41(1)
$0.33
(1) The net tangible asset backing per ordinary share of $0.41 presented above is inclusive of right-of-use assets and lease liabilities. The net tangible
asset backing per ordinary share, as at 30 June 2023 would reduce to $0.20 (2022: $0.13) if right-of-use assets were excluded, and right-of-use
liabilities were included, in the calculation.
10. Control gained or lost over entities during the period having a material effect
Refer to the attached Annual Report, no entities were acquired or disposed of during the period having a material effect.
Refer to Note 6 for details of the Group Structure.
11. Details of associates and joint venture entities
Not applicable.
12. Significant information
Refer to the attached Investor Results Release.
13. For foreign entities, which set of accounting standards is used in compiling the report
International Financial Reporting Standards.
14. Commentary on results for the period
Refer to the attached Annual Report, Note 1.3 Earnings per Share and the attached Investor Results Release.
15 This report is based on accounts which have been audited
Refer to the attached Annual Report.
............................................................
Ann Stubbings
Company Secretary
Dated: 17 August 2023
Orora
Annual
Report
2023
We are a leading
provider of
sustainable,
innovative
packaging
solutions
Investor Centre
To view this report online or to download a copy,
visit Orora’s website: ororagroup.com
Orora AGM
Orora’s Annual General Meeting (AGM)
will be held on Thursday, 19 October 2023.
For more information, visit ororagroup.com/agm
Contents
1
2
4
6
Orora at a glance
FY23 fi nancial overview
A message from the Chair
A message from the
Managing Director and CEO
8 We are One Orora
9 Orora Group strategy update
12 Sustainability at Orora
24
Independent Limited Assurance Report
to the Directors of Orora Limited
26 Group fi nancial review summary
28 Operational review North America
30 Operational review Australasia
32 Corporate Governance Statement
42 Principal risks
44 Board of Directors
46 Executive Leadership Team
48 Directors’ Report
53 Remuneration Report
72
73 Auditor’s independence declaration
74 Financial Report
138 Directors’ declaration (Financial Report)
139 Independent Auditor’s Report to the
Directors’ declaration (Directors’ Report)
members of Orora Limited
144 Statement of shareholdings
146 Five-year historical information
147 Shareholder information
148 Corporate directory
Every day at Orora, we design and
deliver products and services that
enable our customers‘ brands to thrive.
We manufacture and distribute sustainable and innovative packaging
and visual solutions to customers all over the world. Listed on the
ASX and headquartered in Melbourne, Orora operates two businesses across
two key geographic segments — Orora Beverage in Australasia
and Orora Packaging Solutions in North America.
4,600
Team members
41,000
Shareholders
23
Manufacturing
sites
80
Distribution
sites
Read about the progress we
made in FY23 towards our
sustainability goals and learn
more about Our Promise.
pg14
1
ORORA LIMITED ANNUAL REPORT 2023
FY23 financial overview
Our financial year 2023 results have delivered another solid increase in earnings,
reflecting the continued disciplined execution of our strategy as we navigated
market pressures to drive sustainable earnings growth, whilst maintaining a
balanced and disciplined approach to capital management.
Financial overview[1]
• Solid increase in underlying
Group Earnings Before Interest
and Tax (EBIT)[2] and Group Net
Profit After Tax (NPAT)[2], up
12.3% and 8.5% respectively.
• Underlying Earnings Per Share
(EPS] of 24.1 cps, representing
growth of 11.1%.
• North American EBIT up 23.9%
largely driven by continued
optimisation gains and further
margin improvement.
• Resilient earnings performance
in Australasia supported by
strong volume growth in the
Beverage Cans business,
partially offset by softness in
the Beverage Glass business.
• Increased capital expenditure,
with total growth capex of
$145.0 million, to support
future earnings growth.
• Robust cash generation and a
strong balance sheet supports
further investment, with Orora
well positioned for future growth.
• Final ordinary dividend of 9.0 cps
(unfranked), taking the full year
dividend to 17.5 cps, representing
a payout ratio of 72.6%.
NOTE REGARDING NON-IFRS FINANCIAL INFORMATION
Throughout this report, Orora has included certain non-IFRS financial information. This information is presented to assist in making appropriate comparisons with
prior periods and to assess the operating performance of the business. Orora uses these measures to assess the performance of the business and believes that
the information is useful to investors. The following non-IFRS measures have not been audited but have been extracted from Orora’s audited Financial Statements:
Earnings Before significant items, Interest and Tax (EBIT); Earnings Before significant items, Interest, Depreciation, Amortisation and Tax (EBITDA). Performance
measures such as Earnings Per Share (EPS), RoAFE and EBIT margins have been calculated using the non-IFRS measures listed above. All other non-IFRS measures,
unless otherwise stated, have not been extracted from Orora’s audited Financial Statements. References to earnings throughout this report are references to EBIT
before significant items.
(1) Except as expressly defined in this Annual Report, $ refer to Australian dollars.
(2) The financial periods presented above represent underlying earnings excluding the impact of significant items. FY23 excludes a significant item expense after
tax of $18.2 million (pre-tax of $26.0 million) recognised with respect to the decommissioning of the former Petrie mill site. These additional estimated costs to
complete were recognised in FY23 following ongoing project review and reassessment of remediation requirements.
2
ORORA LIMITED ANNUAL REPORT 2023
FY23 fi nancial highlights
Group sales revenue
Underlying Group EBIT
$4,291.3m
$320.5m
4.9%
12.3%
North America (USD million)
North America (USD million)
$2,190.2m
5.1%
Australasia (AUD million)
$1,036.9m
14.1%
$112.6m
15.0%
Australasia (AUD million)
$153.3m
1.8%
RoAFE[3]
Underlying
Group NPAT[2]
EPS
21.8%
$203.0m
24.1 cps
Underlying
operating cash
fl ow
$269.9m
Dividend
per share
17.5 cps
60 bps
8.5%
11.1%
1.0%
6.1%
(3) Return on Average Funds Employed.
ORORA LIMITED ANNUAL REPORT 2023
3
A message from the Chair
I am pleased to report that
Orora has again delivered on its
operating plans and strategy.
We have continued to invest in
our business and drive profi t
growth, while maintaining our
robust balance sheet to support
and enable growth in FY24
and beyond.
“Orora remains well positioned for
growth. With a solid foundation we
continue to assess opportunities
for further deployment of capital.”
The Orora Board was pleased to resume
our regular schedule of meetings and
site visits across Australasia and
North America in FY23.
In the USA we toured OPS locations
in California, Dallas and Houston,
gaining deeper insights into practical
strategy execution, the growth in the
North American packaging market, as
well as safety management progress.
In Australasia, the Board Safety,
Sustainability and Environment
Committee (SSEC) visited Beverage Cans
at Rocklea in Queensland and Dandenong
in Victoria. Our leaders from the Beverage
business showcased the progress of
strategic initiatives and presented on
safety performance and improvement
initiatives.
A ‘One Orora’ commitment to
sustainability and safety emerged as a
clear and consistent theme during our
travels. Pleasingly, sustainable packaging
is also front of mind for our customers.
There was strong focus on embedding
Orora Health & Safety procedures and
the Stay Safe rules in FY23, as well as
a shared belief and excitement about
the investments being made to deliver
additional capacity and innovation
technology like digital printing on cans.
Group fi nancial performance
Consistent performance by Orora drove a
solid increase in FY23 earnings, resulting
in a 12.3% increase in Underlying
Earnings Before Interest and Tax (EBIT)
and an 11.1% increase in Earnings Per
Share (EPS) for the fi nancial year ended
30 June 2023.
Group revenue was up 4.9% on FY22
to $4,291.3 million, (down 0.9% on a
constant currency basis), driven by
a range of variables across Orora’s
segments. Underlying EBIT increased
to $320.5 million, up from $285.5 million
in FY22, an increase of 12.3% (7.7% on
a constant currency basis).
Strong, double-digit earnings growth
in North America was largely driven by
ongoing optimisation gains, embedded
pricing disciplines and an improvement
in segment margin of 90 bps to 5.1%.
Underlying Group EBIT was underpinned
by resilient earnings in Australasia and
continued growth in Cans.
Underlying Net Profi t After Tax (NPAT) was
up 8.5% to $203.0 million this year, while
Statutory NPAT was down $2.3 million to
$184.8 million.
Robust cash generation continued in
FY23, with underlying operating cash
fl ow of $269.9 million.
4
ORORA LIMITED ANNUAL REPORT 2023
Underlying EPS increased to 24.1 cents
per share (cps), up 11.1% driven by higher
EBIT and the impact of prior years’ on-
market share buybacks, partially offset
by higher finance costs.
Striking an appropriate balance between
capital deployment and cash returns
has consistently driven strong Orora
shareholder returns.
The final dividend for FY23 is 9.0 cps, a
0.5 cent or 5.9% increase on FY22. The
full-year dividend of 17.5 cps represents a
6.1% increase from FY22 with a dividend
payout ratio of 72.6%.
Disciplined capital management
continues to generate value
A disciplined approach to capital and
working capital management ensures the
Orora balance sheet remains strong to
pursue organic and inorganic investment.
Australasia continues to be in a capital-
intensive phase, with reinvestment in
manufacturing assets and capex projects
underway to future-proof the Beverage
business, including the Cans expansion
program to support growing end-market
customer demand.
Growth capex was up $94.2 million in
FY23 to $145.0 million. This spend is
comprised of $67.4 million for the new
canning lines at Dandenong and Revesby,
completion of the fully operational can
ends capacity expansion at Ballarat,
and $10.7 million to commence site
preparations for the new oxygen plant
to upgrade the G3 furnace to support
Orora’s greenhouse gas emissions
reduction goals.
Borrowings increased by $150.8 million
and net debt by $145.0 million, the main
drivers being the higher capex noted
above and the investment in working
capital, partially offset by stronger North
American earnings. Higher finance costs
in FY23 reflect the increase in gross debt
and elevated base interest rates.
At 30 June 2023 Orora had committed
undrawn debt facilities of $500.0 million
to support future investment and debt
refinancing requirements.
Delivering on Our Promise
for a low carbon future
Orora redefined our sustainability
framework in FY22, defining clear goals
under the pillars of Circular Economy,
Climate Change and Community.
During FY23, we continued to make
good progress towards these goals.
Transitioning to a low carbon future is
a challenge for all manufacturers and a
driver of our Climate Change strategy.
Since FY19 we have reduced emissions
by 12.98% (Location-based factors
Scope 2) and 4.84% (Market-based
factors Scope 2). FY23 data shows
a marginal decrease in emissions
compared with those recorded for FY22.
We remain on track to achieve our interim
goal of a 40% reduction in greenhouse
gas emissions for Scope 1 and 2 by 2035.
This year we began our examination of
Scope 3 requirements for Orora and we
will continue this during FY24.
During the year, we began site
preparations for the oxygen plant
to upgrade the G3 furnace to
oxyfuel technology at Gawler glass
manufacturing in South Australia. This
upgrade will position the G3 furnace
in the top 10% of energy efficient
furnaces worldwide, delivering a step
change in fossil fuel use and delivering
a ~20% reduction in CO2 emissions.
Construction of the oxygen plant, which
will eventually support all three furnaces
at Gawler, will cost ~$40 million and is
due for completion in FY25. We welcome
government funding of $12.5 million
through the Modern Manufacturing
Initiative to support the planned
construction.
The review and implementation of
findings from the Task Force on Climate-
related Financial Disclosures (TCFD) was
prepared for publication in 2023. No
material risks were identified, with our
strategy determined to be fit-for-purpose
and supportive of Orora’s long-term
sustainable growth.
Board renewal
Over the next 12 months, two of our
valued Independent Non-Executive
Directors reach tenure, after 10 years of
committed service to the Orora Board.
Abi Cleland, current Chair of the
Safety, Sustainability and Environment
Committee (SSEC), and Sam Lewis,
current Chair of the Audit, Risk &
Compliance Committee (ARCC), both
joined the Board in early 2014.
The Board is working on an orderly
transition plan and will ensure we
continue to have an appropriate mix
of skills, experience, knowledge, and
diversity for the Orora Board moving
forward.
Looking ahead and
acknowledgements
Orora remains well positioned for growth
and we continue to assess opportunities
for further deployment of capital in
sustainable packaging.
Whilst global economic conditions remain
uncertain, Group earnings are expected
to be higher in FY24, reflecting the
continued resilience of the business.
Orora continues to provide investors with
a robust and defensive earnings profile
and strong growth prospects, favourably
positioned in sustainable consumer
packaging.
I would like to thank our shareholders
for their ongoing support and express
my sincere appreciation to Brian and the
global teams that have delivered this
year’s very positive result for all of our
stakeholders.
Rob Sindel
Chair
ORORA LIMITED ANNUAL REPORT 2023
5
A message from the
Managing Director and CEO
“The safety and health of our
team is a fundamental and
ongoing commitment at Orora.”
As we marked our tenth year
as an ASX-listed company, the
Orora team delivered another
solid fi nancial result in FY23,
reporting increases in EBIT
and Earnings Per Share (EPS),
against a backdrop of ongoing
challenging market conditions.
We continued to navigate market
pressures including infl ation,
demonstrating the resilience of
our business, and strong discipline
in executing against our strategy
throughout the year.
The Group reported a solid increase
in earnings in FY23, with a 12.3%
increase in underlying Earnings Before
Interest and Tax (EBIT) and an 11.1%
increase in Earnings Per Share (EPS).
Capital expenditure increased as
we continued delivery of planned
investments to support customer
demand and secure future earnings.
Operating highlights
North America
Double digit EBIT growth was delivered
in North America, largely driven by strong
performance in our Distribution business,
where disciplined pricing management
and enhanced account profi tability
continues to drive improvements in
operating effi ciency and cost to serve.
EBIT increased by 15.0% to US$112.6
million (up 23.9% on a reported basis
to $167.2 million) while EBIT margin
increased 90 bps to 5.1%.
The OPS EBIT margin improved to 5.9%
(70bps), attributable to price increases
executed in prior periods, active
management of infl ationary pressures,
continued business optimisation and cost
management; plus, an increase in the
quality of customer earnings as our share
of wallet from more profi table accounts
expanded.
Segment sales revenue was down
5.1% to US$2,190.2 million (up 2.3% to
$3,254.4 million on a reported basis), as
the Manufacturing business experienced
lower volumes due to the decline in
broader industry activity, impacts of
paper price defl ation fl owed through and
less profi table accounts were cycled out.
During the year, Orora Visual operations
were aligned under the OPS business
to support operational and back-offi ce
effi ciencies and to optimise growth
opportunities.
With pricing disciplines fi rmly embedded
and infl ationary pressures stabilising, the
focus for North America is investing in
additional sales resources and capability
to drive long-term volume growth.
Operating highlights
Australasia
The Australasian business has again
proven resilient in FY23, driving double
digit revenue growth supported by higher
can volumes, higher aluminium cost pass-
through and cost infl ation recoveries.
EBIT was in-line with expectations,
up 1.8% to $153.3 million while sales
revenue was up 14.1%, driven by 2.7%
net volume growth. These results
were underpinned by continued strong
growth in Cans volumes (up ~10%) and
improved Cans product mix, supported
by production effi ciencies.
Both earnings and EBIT margin (14.8%)
were partially off set by the impact of a
reduction in Glass bottle volumes driven
by lower Australian commercial wine
bottles sales (export and domestic, and
beer bottles). Margins were also diluted
by higher aluminium costs and other
infl ationary impacts passed through
to customers.
Volumes, revenue and earnings from new
Glass products, including the carbonated
water, spirits and olive oil markets, were
higher than FY22 as we redeployed Glass
capacity to optimise product mix.
Active investment in our multi-year capex
program was ongoing in Australasia. We
continue to see a preference shift to can
formats with ongoing strong demand in
carbonated soft drink (CSD), craft beer,
energy drinks and ready to drink products
(RTDs). Growth in slim, sleek and
multi-size formats refl ects the ongoing
evolution of consumer preferences.
Incremental future earnings are expected
to fl ow from FY24 following the can
ends capacity expansion in Ballarat and
installation of the multi-size can line at
Dandenong in March 2023 and June 2023,
respectively.
6
ORORA LIMITED ANNUAL REPORT 2023
Delivering on our sustainability
goals and commitments
We continued to work towards our
sustainability goals under the pillars of
Circular Economy, Climate Change and
Community throughout FY23.
As a manufacturing leader in the Circular
Economy, we continued driving initiatives
to maximise the recycled content of our
products. This in turn reduces Orora’s
greenhouse gas emissions by minimising
waste and pollution.
This year we continued sourcing
recycled content for manufacturing
our glass containers from Australian
Container Deposit Schemes (CDS). This
recycled cullet is used to feed our glass
beneficiation plant at Gawler in South
Australia, which in its first full financial
year of operation made a strong and
growing contribution to our Circular
Economy goals.
More than 30,000 tonnes of new cullet
sources were developed during FY23,
with our cullet sourcing program now
active in all mainland Australian States.
Overall, we achieved 38% recycled
content (cullet) in glass in FY23, in line
with the prior corresponding period. We
remain on track as we strive towards our
target of reaching 60% recycled content
by 2025.
We continue to prioritise and invest in
initiatives that support our Climate goals.
As an energy intensive manufacturer
our commitment to addressing Climate
Change and reducing emissions must be
unwavering. We are currently on track to
reach our interim goal of 40% emissions
reduction by 2035.
We expanded our efforts to optimise our
energy efficiency and mix in FY23 as we
prepare for the global energy transition
ahead. We ordered our first electric
tractor (truck) in North America and
continued to procure warehouse-based
electric vehicles as part of a multi-year
strategy to electrify our OPS fleet. In
Australasia, we entered into a Solar
Power Purchase Agreement (PPA) as
part of our ongoing renewable energy
initiatives to procure greenhouse gas-
free electricity from FY24.
Protecting Health & Safety
Driving innovation
We prioritise Innovation as one of
Orora’s eight core Principles and continue
to invest in supporting ideas that will
make Orora better through our Think
Orange Fund.
Our Beverage business launched Helio,
a first-to-market decoration and high-
speed digital printing solution, providing
customers with fast turnaround and
smaller quantity print runs. Our OPS
business focused on enhancing their
business model and customer value
proposition through further investment
in digital capabilities.
Looking ahead
With robust cash generation and a strong
balance sheet, we remain well positioned
for future growth.
Whilst global economic conditions
remain uncertain, Orora Group earnings
are expected to be higher in FY24.
In North America, further margin
accretion through account profitability
programs and a continued focus on cost
management, is expected to be largely
offset by ongoing volume softness. In
Australasia, continued strength in Cans
with incremental volume growth from
recent investments is expected to offset
the ongoing softness in Glass from lower
commercial wine volumes.
Orora’s FY23 performance is a testament
to the dedication of all team members;
thank you and well done. I’d also like to
thank our customers for continuing to
partner with Orora, allowing us to design
and deliver products and services that
enable their brands to thrive.
Brian Lowe
Managing Director and CEO
We continued to prioritise action for
our people and communities under our
Community sustainability pillar. The
health and safety of our people remains
a fundamental and ongoing commitment
at Orora.
In FY23, we embedded the final elements
of the GISIP (Global Integrated Safety
Improvement Plan) into our FY23 — FY25
Global Health & Safety Strategy, which is
focused on high-risk activities, improving
effectiveness of critical controls, incident
reporting and governance processes.
Our Stay Safe rules were communicated
across global operations this year,
targeting 10 high-risk activities to
educate and empower team members
to stop work and speak up at any time if
they believe conditions are unsafe.
Lost Time Injury rates remained relatively
stable year-on-year; however, we
experienced a disappointing increase
in largely preventable, low severity
injuries in FY23. One serious injury was
regrettably recorded at our Glass facility.
Extensive risk assessments have been
undertaken and proactive controls
implemented.
We are confident safety performance
will improve through focused
continuous improvement and driving
existing programs. This includes the
implementation of Critical Control
checklists in FY24 to verify critical
controls for our highest-risk activities
are in place and effective.
We are One Orora
It was a pleasure to appoint Kelly Barlow
as President of OPS and a welcome
addition to our Executive Team. Kelly
brings over two decades of experience
in our North American business.
Work continued to align our team and
leverage our strengths across the
Group united by ‘One Orora’ in FY23.
74% of our global team participated in
our ‘Voice of Orora’ engagement survey,
providing vital insights into how we
can build on our strengths and improve.
The engagement score across Orora
was 75%; 7% higher than general and
manufacturing industry standard scores,
based on the survey tool.
ORORA LIMITED ANNUAL REPORT 2023
7
We are One Orora
Throughout FY23 we continued to embed our shared understanding of what
it means to be Orora today across our global team, starting with our leaders.
In FY21, we reviewed all the ways we
have defined Orora since inception.
We consolidated how we express the
essence of Orora, what we do and how
we do it, to take the best of who we are
and our past, into the future. One Orora is
a culmination of the artefacts that make
up our DNA — emerging from our team,
culture and strategy.
Through One Orora, we recognise the
things we have in common, that unite
us across our portfolio — our promise,
purpose and our strategy — guided by
our principles and underpinned by our
values. One Orora builds our ambition into
our purpose, reflecting our desire to lead
and our resolve to be better.
We also celebrate the things that set
us apart and how we leverage our
differences as a source of strength —
our identity and the unique nature of
each Orora business, the diversity of our
operations and the talents of our team.
To be a leading sustainable packaging solutions
provider, designing and delivering products and
services that enable our customers’ brands to thrive
We operate a portfolio of customer-focused
packaging businesses aligned by our common
purpose and unifying principles
Optimise
to grow
Enhance and
expand
Enter new
segments
Customer value-add
Digitally-enabled
Diverse talent
End-to-end capabilities
Innovation
Operating excellence
Staying safe
Sustainability
Every day, across our businesses, we deliver
sustainable and innovative packaging and visual
solutions that lead the industry and bring
our customers’ brands to life.
Together we deliver on the promise of what’s inside.
Leading as One Orora
In March 2023, just under 100 of Orora’s
global leaders convened in Sydney,
Australia, for our One Orora Leading
for the Future conference.
The event reunited our leaders,
connecting and inspiring them, and
provided an important springboard
for taking One Orora to the next level.
Amongst a range of activities, leaders
participated in Innovation workshops,
highlighting a strategic principle central
to our growth. They explored solutions
to anticipated business challenges and
opportunities that can be brought to
fruition over time and planned for the
next phase of Orora’s journey.
8
ORORA LIMITED ANNUAL REPORT 2023
Orora Group strategy update
Orora remains well positioned for our current investment and growth phase, with
disciplined execution of strategy throughout the year delivering a solid increase in
Group earnings.
By maintaining a steadfast focus
on delivering our strategic priorities
throughout FY23, we achieved strong
earnings growth through optimisation
gains in North American Distribution and
continued resilient earnings performance
in Australasia, where we also increased
capital investment to support future
earnings growth.
We maintain a disciplined focus on
creating value for customers and
shareholders, as we continue to leverage
the core capabilities of the Group to
maximise the eff ectiveness of our
businesses. Investment is supported by
increasing innovation and supplemented
by an ongoing focus on optimisation
opportunities and operational effi ciencies.
Orora’s strategic pillars
The three core pillars of Orora’s strategy
continue to form the basis for strategic
planning, drive focused business activity
across our portfolio and enable us to
capitalise on growth opportunities as
they emerge.
1. Optimise to grow
2. Enhance and expand
3. Enter new segments
Our growing and defensive earnings
profi le is underpinned by our leadership
positions in attractive markets, the
diversifi ed and unique nature of Orora’s
operations and our broad customer base.
Cash fl ows are expected to remain
robust and will be deployed via a
prudent combination of distributions to
shareholders (as dividends), strategic
investments and/or acquisitions to
enhance Orora’s off ering and deliver
growth. Further ad hoc returns of
capital, such as on-market buybacks,
may be undertaken as the Board
deems appropriate.
We continue to target market segments
with appealing growth and fi nancial
return characteristics. Our rigorous
approach to capital allocation ensures
any growth opportunities are assessed
thoroughly and only value-add
investments that meet our stringent
return criteria are pursued.
Our strategic principles
Our strategic principles enable the
three pillars of our strategy. They serve
as a lens to help us ensure that Orora’s
business decisions, strategic initiatives
and day-to-day activities are focused
to drive positive momentum towards
delivering our strategy.
Principle in focus
Customer
value-add
Customer value-add is one of eight Orora
strategic principles. We partner closely
with our customers, striving to deliver
over and above their business needs.
Our customers are at the heart of
everything we do — their wins are
our wins and we proactively seek
opportunities to exceed expectations,
solve complex problems and realise
opportunities.
We continually build and expand our
off ering, through enhanced product
and service capabilities.
In Beverage we have a dedicated
Innovation and Design (I&D) team, plus
an in-house Decoration Centre of
Excellence (DCE), which has a bespoke,
world-class pre-press and online digital
proofi ng capability.
In FY23, we supported Campari in their
operations and by delivering new, value-
adding innovations in primary packs.
Using innovative inks and varnishes
for increased appeal and creating
occasions for our customer’s brand to
maximise connection with consumers,
Orora demonstrated how we could
bring these features to life at scale.
These truly unique decoration
capabilities add value for Beverage
customers off ering them a market-
leading competitive advantage.
In North America, OPS corrugated
manufacturing has a key customer in
Korean instant noodle leader, Nongshim.
The partnership began in 2019 with a
lithographic print label order; but as
digital print is a strategic growth driver
for OPS, we took the next opportunity
to present a digital print alternative
to Nongshim.
Nongshim opted for digital print, using
a more sustainable, water-free UV ink
process. Over the next three years we
worked on 15 print runs representing
Nongshim’s various brands, and currently
run four diff erent print styles for the
noodle giant, with our leading capabilities
supporting new products’ speed to
market.
We look forward to continuing to fi nd
new ways to add value for Nongshim
and all our OPS customers.
ORORA LIMITED ANNUAL REPORT 2023
9
Progress against strategic priorities
Each Orora segment has a clear set of strategic priorities aligned to our three strategic pillars. In FY23, we maintained our steadfast
focus on delivering these priorities realising progress across both North America and Australasia to firmly position Orora for growth.
Our strategic priorities
North
America
— OPS
Australasia
— Beverage
Optimise
to grow
Enhance
and expand
Enter new
segments
FY23
progress
• Ongoing account
• Continued
profitability
discipline
investment in
sales force
• Enhance sales force
• Ongoing
effectiveness
• Refine core business
processes
• Continued
integration
of previous
acquisitions and
Orora Visual
digitisation of
business model
• Expand custom
packaging
capabilities
• Continued
assessment of
footprint expansion
opportunities
• Extend product and
service offering
• Assess expansion
opportunities
(including via M&A)
• Continued improvement in financial
performance and operating discipline,
with corresponding lift in EBIT margin
• Critical business model enhancements
introduced, including improved digital
and customer interaction
• Initiated integration of Orora Visual
into OPS
• Continued assessment of M&A
opportunities to expand market
reach and product capabilities
• Increase utilisation/
shifts to enhance
production volumes
• Continue i4.0 and
Integrated Work
System deployment
• Drive supply chain
excellence
• Pursue further
automation
• Drive increased
recycled content
• Build capacity to
meet increased
Cans customer
demand
• Grow share of
wallet in current
markets
• Continue
developments in
light-weighting
• Drive further
development of
digital printing
capabilities
• Ongoing
enhancement
of eCommerce
capability
• Expand current
substrates into
new categories
• Explore potential
ANZ adjacencies
• Continue to assess
opportunities to
expand operating
footprint in attractive
offshore markets
• Construction completed for installation
of new multi-size can line at Dandenong,
Victoria and expansion of can ends
capacity at Ballarat, Victoria
• Construction commenced on a new
multi-size can line at Revesby, New South
Wales, expected to come online in FY25
• New cullet beneficiation plant at Gawler,
South Australia to drive increased
recycled content in glass bottles
fully operational
• Commenced site preparations for
an Australian-first upgrade of our
G3 furnace to oxyfuel technology
at Gawler, South Australia
• Continued assessment of M&A
opportunities in ANZ adjacencies
and offshore expansion
10
ORORA LIMITED ANNUAL REPORT 2023
Shareholder value blueprint
Our three strategic pillars are also fundamental to Orora’s blueprint for shareholder value creation.
Our target, to achieve top quartile Total
Shareholder Return (TSR) performance for
our shareholders, remains unchanged and
we continue to pursue it by executing on
our strategy.
The blueprint shows we will target a
return that represents an appropriate
premium to Orora’s weighted average
cost of capital (WACC) based on the risk
associated with the investment.
Three key components drive Orora’s TSR
performance as outlined in the blueprint.
These include applying a returns-focused,
risk-weighted investment approach (for
capital projects and acquisitions) across
each of our strategic pillars.
This is key to our balanced and disciplined
approach to capital allocation and enables
us to make appropriate investment
decisions across each strategic pillar.
Ongoing financial discipline also
underpins the deployment of capital
for any strategic initiatives.
Orora will continue to invest in base and
growth capex to generate sustainable
dividends to support strong end-market
customer demand, and ultimately
maximise shareholder returns.
R
S
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t
n
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ORGANIC
GROWTH
INVESTMENT
CAPITAL
MANAGEMENT
Optimise to grow
Enhance
and expand
Enter new
segments
Disciplined approach
to capital allocation
Australasia
North
America
Capital
investment
Acquisitions
Sustainable
dividend
• Complementary
adjacencies —
near-term
focus in ANZ
• Payout ratio
of 60%—80%
• Franked to the
extent possible
• GDP sales
growth
• Enhanced
by innovation
and customer
wins
• GDP sales
growth
• Supplemented
by market
share gains
and increased
share of
wallet
• Enhance digital
capabilities,
particularly
in North
America
• Enhance
sustainability,
capacity and
product
capabilities
across portfolio
• Customer-
backed growth
projects
• Beverage
footprint
expansion in
ANZ and
offshore
• Expand
aluminium and
glass product
capability in
ANZ
• Expand product
and service
capabilities in
North America
RETURN TARGETS
Lower
Premium to WACC
Higher
Sensible
leverage
• Target leverage
at 2.0—2.5x
EBITDA
(excluding
AASB 16)
Potential
additional
capital
returns
• Assessed
when
appropriate
• On- or
off-market
buybacks
• Special
dividends/
capital returns
ORORA LIMITED ANNUAL REPORT 2023
11
Sustainability at Orora
Informing our strategy
In FY18, Orora engaged external
consultants to conduct a materiality
assessment that would identify
and validate the material risks and
opportunities important to Orora and
our stakeholders.
The assessment included an analysis of
internal and external sources, extensive
internal and external stakeholder
interviews, review and consolidation, and
workshops to validate materiality aspects
and how they would be prioritised.
Outcomes of this assessment have
since been regularly updated and used
to inform our risk register, to frame
and focus our sustainability reporting,
and to support the development of our
refreshed approach to sustainability,
including directing targets and initiatives
(announced in FY21) under our Circular
Economy, Climate Change and Community
sustainability pillars.
Through our sustainability governance
model, the strength and openness of
our relationships with customers and
investors, and the ongoing feedback we
invite from our people and communities,
we continue to evolve our approach
through collaboration and continuous
improvement.
Our obligations as a signatory to the
UNGC continue to frame our sustainability
approach to ensure compliance with
applicable requirements (including the
ASX Corporate Governance Council’s
Recommendation 7.4) and consider
emerging landscapes and expectations.
Key materiality aspects
Our assessment identifi ed six priority materiality aspects common across internal and external stakeholder inputs. These aspects
are directly linked to our three sustainability pillars and have shaped the priority focus areas within Orora’s sustainability approach.
Priority materiality aspects
Description
Sustainability pillar
INNOVATION &
INNOVATION &
PRODUCT DESIGN
PRODUCT DESIGN
Implementing best practice technologies and processes
to improve product effi ciency, productivity and
sustainability. Promoting innovation in design to meet
evolving customer and consumer expectations and needs.
BUSINESS ETHICS, TRANSPARENCY
BUSINESS ETHICS, TRANSPARENCY
& CULTURE
& CULTURE
RESPONSIBLE
RESPONSIBLE
SOURCING
SOURCING
PRODUCT
PRODUCT
STEWARDSHIP
STEWARDSHIP
RESOURCE
RESOURCE
MANAGEMENT
MANAGEMENT
CLIMATE CHANGE, ENERGY USE
CLIMATE CHANGE, ENERGY USE
AND GHG EMISSIONS
AND GHG EMISSIONS
Ensuring appropriate governance and conducting
business with ethics, integrity and transparency.
Enriching the lives of our team and communities,
prioritising safety and health, and diversity, equity
and inclusion.
Understanding the supply chain and identifying
associated risks to integrity including protection
of human rights.
Use of recycled or reused products, and engaging with
customers and end users on appropriate disposal and
reuse to minimise waste and maximise renewal.
Ensuring sustainable management of resources,
material use management and reducing the lifecycle
impacts of products.
Addressing the risk of climate change by working in
ways that actively manage energy use to minimise
pollution and waste, and reduce greenhouse gas
emissions and climate impact.
Circular
Economy
Community
Community
Circular
Economy
Circular
Economy
Climate
Change
12
ORORA LIMITED ANNUAL REPORT 2023
Sustainability governance
Directing our strategy
The Orora Board oversees and approves
our strategic direction, retains oversight
of material sustainability risks and
opportunities, and the effectiveness of
our corporate governance, and operates
through the Safety, Sustainability and
Environment Committee (SSEC).
Our Global Management Team (the CEO
and Executive Leadership Team) oversees
our corporate sustainability strategy,
targets and material sustainability
activities. The Continuous Disclosure
Committee (CDC) approves market
release of sustainability performance
data.
Our Governance model
Each Orora segment has sustainability as
a standing agenda item for all leadership
team meetings to govern business
sustainability strategy and activities,
in line with our corporate sustainability
strategy. Working groups are established
as required to drive initiatives and
projects that contribute to our targets
and meet the expectations of our
stakeholders.
Reporting our performance
We report on our sustainability activity
annually through the Communication on
Progress (CoP) to the UNGC, outlining the
actions we’ve taken to further implement
the UNGC’s Principles on human rights,
labour, environment, and anti-corruption.
We also continue to support the CDP[1],
voluntarily disclosing information under
the Climate, Water and Forest Risk
sections. As part of our commitment to
sustainable operations, we achieved a
FY22[2] score of C for Climate, B- for Water
and C for Forest Risk in FY23.
Orora also submitted an annual report
to the Australian Packaging Covenant
(APC) in FY23[3] and was assessed
as being in the highest ‘Beyond Best
Practice’ category.
To further improve Orora’s sustainability
disclosures, KPMG were engaged to
provide Limited Assurance over some
of the FY23 metrics reported in the
Sustainability at Orora section of this
Annual Report. A copy of the KPMG
Limited Assurance Report is on page 24.
y
g
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&
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O
BOARD SAFETY, SUSTAINABILITY
& ENVIRONMENT COMMITTEE (SSEC)
GMT SUSTAINABILITY COMMITTEE
Global Management Team (GMT) &
Continuous Disclosure Committee (CDC)
Beverage Leadership Team
Sustainability Governance Australasia
OPS Leadership Team
Sustainability Governance North America
Sustainability Working Groups and Projects
Our People
Our
Customers
Our
Investors
Our
Communities
[1] CDP, formerly known as the Carbon Disclosure Project.
[2] FY22 CDP scores are included in Orora’s FY23 reporting, as CDP releases scores for the prior year each March.
[3] APCO 2022 Annual Report and Action Plan for Orora Packaging Pty Ltd: https://ororagroup.com/Orora_APCO_Annual_Report_2022
ORORA LIMITED ANNUAL REPORT 2023
13
Our Promise
to the Future
At Orora, we care about making a diff erence. Our approach to sustainability
is embedded across our business and central to our strategy and our journey.
It’s Our Promise to the Future.
Circular
Economy
We’re a proven leader
in the circular economy
Climate Change
We’re committed to
addressing climate change
Community
We’re working to enrich
our communities
FOCUS AREAS
OUR PROMISE
Recycled content
Recyclable
packaging
Recyclable
substrates
Certifi cation
60% recycled content* for
Orora glass beverage containers
by 2025
This target exceeds the 2025 50%
recycled content target for glass
packaging supported by the Australian
Packaging Covenant (APC) organisation.
*pre and post-consumer
GHG reduction
Energy effi ciency
Renewable energy
Climate risk
analysis
Net zero emissions by 2050. 40%
reduction in emissions by 2035
We are committed to achieving net zero
greenhouse gas emissions by 2050 for
Scope 1 and 2 and achieving a 40% reduction
in greenhouse gas emissions by 2035 for
Scope 1 and 2 from FY19.
Our pathway between 2035 and 2050
will be confi rmed over time and will require
advances in technology.
Safety & health
Diversity, equity
& inclusion
Human rights and
supply chain
Responsible
sourcing
Prioritising action for our people
and our communities
We’re focused on initiatives that benefi t
our teams and our communities through:
• Protecting safety, health and
human rights
• Championing diversity, equity
and inclusion.
14
ORORA LIMITED ANNUAL REPORT 2023
Our sustainable approach
In FY22, we reviewed our material
sustainability risks and opportunities to
refresh our sustainability strategy and
set new goals; redefining the pillars of
our program to Circular Economy, Climate
Change and Community, informed by
insights from our materiality assessment.
Orora’s sustainability program is
ambitious, aligned to the Orora values
and to the expectations of our people,
customers, investors, regulators, and the
communities in which we operate.
Our diverse portfolio sees us take a broad
approach to managing sustainability risks
and maximising opportunities.
We work across a wide range of focus
areas, with some being business or
location specific. Many of the activities
underpinning our pillars are ongoing and
have been part of how we operate for
many years.
OUR FY23 PROGRESS
Achieved 38% recycled content
Expanded our can ends capacity at
(cullet) in glass, in line with the prior
reporting period.
We averaged 57% recycled content
in our corrugated board manufactured
by OPS, an increase of 3% from FY22.
Completed construction for the
installation of a new multi-size can
line at Dandenong, Victoria.
Ballarat, Victoria.
Commenced construction on a
new multi-size can line at Revesby
in New South Wales.
LOOKING AHEAD TO FY24
• Increase levels of recycled cullet in our
glass containers as we strive towards
our target of 60% recycled content
by 2025.
• Expand cullet sourcing as the new
Container Deposit Scheme comes
online in Victoria, Australia.
• Explore new ways to utilise and
maximise recycled content or
products in OPS.
• Continue to convert North American
customers to fibre-based solutions.
Commenced site preparations for
the Australian-first upgrade of our
G3 furnace to oxyfuel technology
at our Gawler glass manufacturing
plant. Design of our oxy-fired plant
infrastructure is well progressed.
Total Scope 1 and 2 greenhouse gas
emissions decreased by 4.84%
(utlising Market-based factors for
Scope 2) and 12.98% (utilising
Location-based factors for Scope 2)
from the FY19 baseline year.
Expanded efforts to increase
Commenced examination of Scope 3
electrification in Beverage signing a
new foundational PPA with Epic Energy
for 100% offtake from their Mannum
Solar Farm in South Australia.
greenhouse gas emissions.
Ordered our first electric tractor
(truck) in a multi-year strategy to
electrify our OPS fleet.
• Continue examination of Scope 3
requirements.
• Commence building the oxygen plant
at Gawler, as one of our integral carbon
reduction initiatives.
• Continue our work with industry
partners to assess the potential
use of low carbon fuels to support
reduced emissions.
• Continue making smart use of energy
sources, increasing energy efficiency
and expanding electrification.
74% of Orora’s 4,600+ team members
Developed new Critical Control
responded to ‘The Voice of Orora’
engagement survey in March 2023.
Results revealed a Group engagement
score of 75% — 7% higher than general
industry and manufacturing industry
standard scores.
Implementation of our FY23 — FY25
Global Health & Safety Strategy began.
Orora Stay Safe rules were
implemented across all operations.
checklists to enhance safety controls.
Continued Unconscious Bias training
in OPS for the direct reports of our
senior leaders.
222 leaders and team members
across Orora have attended culture
shaping workshops to date. The
culture program continues to be
rolled out.
• Deliver next stage of Stay Safe rules to
drive SIF prevention and launch Critical
Control checklists.
• Deploy further culture shaping
workshops across Orora.
• Provide Harassment and Discrimination
Prevention training at OPS.
• Launch our DE&I Council in Australasia.
Continue DE&I activities in North
America.
• Execute action plans arising from the
FY23 employee engagement survey.
ORORA LIMITED ANNUAL REPORT 2023
15
Circular Economy
Our Promise:
60% recycled content[1] for Orora glass beverage containers by 2025
Our role in the circular
economy is to examine and
implement ways to maximise
the recycled content of
our products to ensure
they can be continually
recycled, minimising waste
and pollution and reducing
greenhouse gas emissions.
Maximising the life of resources
by recycling them
We continue to work towards maximising
the recycled content in our manufactured
packaging products and visual solutions.
We are focused on innovating to increase
the waste glass (cullet) used in our
bottles, enhancing the level of recycled
content in our cans and producing
corrugated board and visual solutions
from recycled materials.
Sourcing recycled glass cullet
Orora continued our recycled cullet
sourcing eff orts in FY23, having
developed supply chains to access
cullet derived from all Australian
State Government Container Deposit
Schemes (CDS).
We continue to strive towards our target
of reaching 60% recycled content in
the glass containers we manufacture
by 2025. There was an average of 38%
recycled content[1] in Orora’s glass
containers sourced from CDS in FY23.
We use approximately 80% of the
recycled cullet derived from South
Australia’s CDS and the majority from
Western Australia’s ‘Containers for
Change’. Orora proudly partnered with
Containers for Change to sponsor the
2023 Change Maker Awards, celebrating
local individual and organisational eff orts
to save containers from landfi ll.
We continue to collaborate with CDS
coordinators and operators to maximise
the use of cullet and we look forward
to participating in Victoria’s CDS when
it commences in FY24. More than
30,000 tonnes of new cullet sources
were developed during FY23, with our
cullet sourcing program now active in all
mainland Australian States.
Achieving advances through
glass benefi ciation
Glass can be recycled endlessly by
crushing, blending, and melting it together
with sand and other starting materials.
Our glass benefi ciation plant at Gawler
in South Australia was commissioned in
July 2022 to propel the use of recycled
glass cullet and divert more cullet from
landfi ll, reducing the need for virgin
materials to be used in production.
Orora’s signifi cant ~$25.0 million
investment in the benefi ciation plant was
supported by an $8.0 million grant from
the Commonwealth and South Australian
governments through the Recycling
Modernisation Fund. Throughout FY23
the facility made a strong and growing
contribution to our Circular Economy goals.
Recycled content (cullet %) progress
in manufactured glass products
Recycled content (cullet %) progress
Target: 60% recycled content
in manufactured glass products
Target: 60% recycled content
38%
38%
31%
25%
FY20
FY21
FY22
FY23
[1] This is the proportion of pre and post consumer recycled cullet of total manufactured glass products produced in tonnes.
16
ORORA LIMITED ANNUAL REPORT 2023
Our Promise to the Future
Driving increased use of recycled
content across our businesses
We continue to work with suppliers to
increase recycled content in Orora’s
aluminium cans, seeking better ways
of creating a closed loop environment
for recycling.
We diversified our approach to procuring
aluminium coils and flat sheets in FY23,
securing some supply from South Korea
where product is typically comprised of
up to 80% recycled content.
We achieved an average of 57% recycled
content in the aluminium flat sheets and
coils used to make our cans in FY23, in
line with FY22.
In North America, we averaged 57%
recycled content in the manufacture of
OPS’ corrugated board, an increase of
3% from FY22, and continue to explore
new ways to utilise and maximise
recycled content.
The production of visual solutions created
using Orora’s eco-friendly, printable
fabric comprising 100% recycled content
converted from PET bottles continues
to increase, as customers seek more
sustainable ways to promote their
products and services.
All Orora primary manufactured
substrates are recyclable and we
continue to work on increasing
the sustainability of our packaging
substrates, with a focus on fit-for-
purpose applications and reducing
waste of end products.
This revolutionary process reduces waste
to landfill, removes used plastic from our
ecosystem and minimises the use of new
raw materials.
Recyclability starts with design
We emphasise building resource recovery
into package and solution design. Many
of our products are made from infinitely
recyclable substrates with high material
circularity. This means they can be
transformed and recreated, time and
time again.
The aluminium we use to create Orora
cans is infinitely recyclable and we
return scrap aluminium to manufacturers
for recycling. Beverage cans that are
disposed of in recycling bins can return
as a new can within 180 days.
At OPS we have been working closely
with our customers to convert foam and
plastic-based solutions to fibre-based
solutions, including corrugated, folding
carton and paper pulp.
OPS signed an exclusive contract with
Flexi-Hex Ltd in FY23 for the distribution
of FSC-certified, fibre-based recyclable
sleeves in North America, which provide
a sustainable alternative to bubble wrap
and foam commonly used for packing.
Teams across our segments again
celebrated Orora’s commitment to our
Circular Economy pillar and to recycling
by participating in national sustainability
events including America Recycles Day
and Australia’s National Recycling Week.
Drive for sustainable packaging
boosts demand for cans
Cans are an infinitely recyclable sustainable
packaging option, convenient for many purposes
and importantly, are produced from aluminium
which contains recycled content.
The sustainable nature of cans is boosting demand
for can manufacturing, as beverage makers and
consumers actively seek out more sustainable
packaging.
Growing our Cans business also generates wider
sustainability benefits. Having facilities located
near high population areas reduces the number of
domestic truck transfers required for deliveries
and contributes to a reduction in CO2 emissions. At
Dandenong, almost a third of our wastewater will be
recycled and reused via our onsite water treatment
plant, significantly reducing use of fresh water to
run our new can line.
Our significant investment in Cans enables Orora
to meet the escalation of demand in the craft beer,
seltzer and non-alcoholic drinks segments, and
demonstrates our commitment to supporting our
Beverage customers’ growth into the future.
Our onsite water treatment plant at Dandenong.
ORORA LIMITED ANNUAL REPORT 2023
17
Climate Change
Our Promise:
Net zero emissions by 2050. 40% reduction in emissions by 2035
We are addressing climate
change by understanding
the risks and opportunities
it poses, reducing gross
greenhouse gas emissions
across our business
and making smart and
renewable energy choices
to minimise waste.
Addressing climate change risk
Since the materiality assessment which
shaped our sustainability approach,
we are constantly examining the
sustainability landscape and engaging
with stakeholders to identify current and
emerging physical and transition risks
and opportunities.
This informs how we best approach
material risks and opportunities as
part of our Climate Change pillar.
In FY22, we completed our review and
implementation of recommendations
from the Financial Stability Board’s
Task Force on Climate-related Financial
Disclosures (TCFD) with the support of
independent external consultants.
The TCFD analysis explored the impact of
climate change on Orora under diff erent
climate scenarios and did not identify
any material risks to Orora. It confi rmed
that Orora’s current climate change
strategy is appropriate, positions us
well should any risks become material,
and contributes to our long-term
sustainable growth. Outcomes of this
analysis and actions we have taken to
address or capitalise on climate risks and
opportunities are available on Orora’s
website (ororagroup.com).
Our ongoing work and eff orts to
reduce gross/absolute greenhouse
gas emissions and further understand
potential impacts of climate change
on our operations and investments
recognises our obligations under
Principle 7 of the UNGC, which requires
businesses to support a precautionary
approach to environmental challenges.
It also refl ects our ongoing commitment
to assessing and measuring our exposure
to material risks in accordance with the
ASX Corporate Governance Council’s
Recommendation 7.4 and other regulatory
expectations.
Investment and innovation
to reduce our climate impact
We are targeting net zero Scope 1 and
2 emissions by 2050 and are focused
on achieving a 40% reduction in these
emissions by 2035 from a FY19 baseline.
Our work to reduce our gross/absolute
greenhouse gas emissions across
the Group has been central to our
sustainability approach for the past
eight years.
We will achieve continued reductions
through focused investment, the
application of new technology, utilising
increased recycled content in our
manufactured products and deploying
renewable electricity sources.
Ongoing innovation to increase the
recycled content in our beverage
containers contributes to the circular
economy, generates less waste and
reduces our greenhouse gas emissions.
We have developed a Life Cycle
Assessment (LCA) tool in OPS to assist
customers to analyse and compare the
carbon footprint of diff erent packaging
solutions and support more informed
and sustainable decision making.
In FY23, we commenced site preparations
for the Australian-fi rst upgrade of our
G3 furnace to oxyfuel technology at our
Gawler glass manufacturing plant in
South Australia. Design of our oxy-fi red
plant infrastructure is well progressed.
18
ORORA LIMITED ANNUAL REPORT 2023
Our Promise to the Future
Orora’s ~$40 million investment,
announced in FY22, is supported by a
Federal Government grant of $12.5 million
under the Modern Manufacturing Initiative
— Manufacturing Translation Stream of
the Recycling and Clean Energy program.
Following this upgrade, the G3 furnace will
move into the top 10% of energy efficient
furnaces worldwide. It will not only deliver
a step-change reduction in fossil fuel
use, but also reductions in nitrogen oxide
and carbon dioxide emissions, providing
customers with a more sustainable
option.
Orora’s FY23 emissions performance
Since FY19 we have reduced emissions by
12.98% (Location-based factors Scope 2)
and 4.84% (Market-based factors Scope
2), as demonstrated in the graphs. This is a
marginal decrease in emissions compared
to emissions recorded for FY22.
Addressing Scope 3
This year we began our examination of
Scope 3 requirements for Orora and we
will continue this during FY24.
Energy efficiency and smart
use of energy sources
Our drive for energy efficiency continued
in FY23, as we identified opportunities
for continuous improvement as part of
operations optimisation.
In North America, we ordered our first
electric tractor (truck) in a multi-year
strategy to electrify our OPS fleet.
Expected in the first half of FY24, the
tractor will be used to make deliveries
in Southern California, as we continue
to procure warehouse-based electric
vehicles as leases arise for renewal in
OPS, with over 70% of these fleet vehicles
now electric.
We are focused on efficiency in gas
and electricity use to further reduce
our greenhouse gas emissions. Orora
has been a very early adopter of using
renewables in manufacturing, finding
alternative ways to purchase, produce
and use electricity to help ensure we can
make smart use of available renewable
electricity sources.
80% of the electricity used by Orora
Beverage in Australia in FY23 came
from renewable sources. Our long-term
Power Purchase Agreements (PPAs) with
renewables providers continue to supply
wind generated electricity to Beverage
operations on Australia’s east coast.
In FY23, we signed a new foundational
PPA with Epic Energy for 100% offtake
from the Mannum Solar Farm, which will
provide our South Australian facilities
with access to 35MW of solar generated
electricity from FY24.
We continue to explore opportunities to
expand our use of solar electricity, with
systems in place at sites in New Jersey,
USA and Gawler, Dudley Park, Ballarat and
Rocklea in Australia. OPS sites in Illinois
are powered by solar via an established
supply agreement. We are also working
with landlords on plans to install rooftop
solar at two sites in Buena Park, California
to enable Orora to access and purchase
solar supply, rather than electricity from
the grid.
As we prepare for the energy transition
that lies ahead, we will take a balanced
and economically prudent approach to
our energy resource mix.
Our progress on greenhouse gas emissions reduction [1] [2]
GHG reduction progress*: Location-based factors
GHG reduction progress*: Market-based factors
393
359
369
359
117
104
109
102
12.98%
342
87
e
₂
O
C
s
e
n
n
o
t
K
276
255
260
257
255
455
421
434
434
433
4.84%
180
166
174
177
178
276
255
260
257
255
e
₂
O
C
s
e
n
n
o
t
K
FY19
FY20
FY21
FY22
FY23
FY19
FY20
FY21
FY22
FY23
Scope 1
Scope 2 Location
GHG Total
Scope 1
Scope 2 Market
GHG Total
* From FY19 baseline to FY23.
* From FY19 baseline to FY23.
[1] Covers 1 July 2022 to 30 June 2023 and includes all Orora Group entities. All actual kilotonnes have been rounded to the nearest hundred. Scope 1 and
2 greenhouse gas emissions are measured in tonnes of carbon dioxide equivalents. Scope 1 emissions include natural gas, raw material combustion in
furnace for glass, transport and LPG. Scope 2 emissions include indirect emissions from consumption of purchased electricity utilising Market-based
and Location-based factors as stated. Both Market and Location-based emissions factors for the consumption of purchased electricity from the grid are
updated annually to reflect changes in energy mix. Scope 1 and 2 emissions are reported for Australian operations utilising the NGER Act and under the
GHG Protocol Standard for operations outside of Australia.
[2] Greenhouse gas emissions have been restated from those disclosed in the 2022 Annual Report due to reporting errors in energy at OPS Manufacturing
locations (as follows). FY19: an increase of 10kt (4%) S1 CO2e. FY20: an increase of 10kt (4%) S1 CO2e. FY21: an increase of 7kt (3%) S1 CO2e. FY22: an
increase of 8kt (3%) S1 CO2e. Further, an increase of 0.46kt (0.5%) S2 CO2e Location-based and a decrease of 0.37kt (-0.2%) S2 Market-based, due to OPS
end-of-year invoice adjustments.
ORORA LIMITED ANNUAL REPORT 2023
19
Working with global partners and local
industry groups that share our goals, we
continue to examine opportunities for
Orora to transition to lower emissions
technologies. This ranges from trialling
diff erent lower emissions emitting
furnace technologies with International
Partners in Glass Research (IPGR), to
exploring the use of hydrogen as an
alternative fuel with South Australia’s
hub-to-hub Hydrogen Technology Cluster
in the Barossa Valley.
Eco Targets drive focused
improvements[1][2]
Orora’s Eco Targets, the second set since
Orora commenced operation in 2013,
aim to reduce our CO2 emissions, waste
to landfi ll and water use over fi ve years
from a baseline of FY20, through to
30 June 2024.
We have demonstrated solid progress
towards our FY24 goals in our
Distribution business during the third
year in this Eco Target program, but
Eco Target performance declined this
year in the Production business.
CO₂e intensity: Production
0.438
0.411
0.410
CO₂e intensity: Production
0.438
332.4
343.6
0.411
336.3
0.410
0.453
0.453
321.6
FY20
332.4
CO₂e absolute (kt)
FY21
343.6
FY22
336.3
CO₂e intensity
FY23
321.6
FY20
FY21
FY22
FY23
CO₂e absolute (kt)
CO₂e intensity: Distribution
CO₂e intensity
CO₂ emissions
Target: 5% reduction
in emissions ratio intensity
CO₂e intensity: Production
0.438
0.411
0.410
CO₂e intensity: Production
0.438
332.4
343.6
0.411
336.3
0.410
3.4%
0.453
0.453
321.6
FY20
332.4
CO₂e absolute (kt)
FY21
343.6
FY22
336.3
CO₂e intensity
FY23
321.6
FY20
FY21
FY22
FY23
CO₂e absolute (kt)
CO₂e intensity: Distribution
CO₂e intensity
0.0757
0.0746
CO₂e intensity: Distribution
0.0757
25.9
0.0746
25.5
0.0665
22.7
0.0665
21.4%
0.0595
20.2
0.0595
FY20
25.9
CO₂e absolute (kt)
FY21
25.5
FY22
22.7
CO₂e intensity
FY23
20.2
FY20
FY21
FY22
FY23
CO₂e absolute (kt)
CO₂e intensity
Waste to landfill intensity: Production
0.0034
0.0033
0.0027
Waste to landfill intensity: Production
0.0042
0.0042
CO₂e absolute (kt)
Waste to landfill intensity: Production
CO₂e intensity
0.0034
0.0033
0.0027
Waste to landfill intensity: Production
2,582
0.0034
2,289
2,676
0.0033
0.0042
0.0042
2,969
0.0027
FY21
2,289
FY20
2,582
Waste to landfill absolute (t)
FY20
FY21
FY22
2,676
FY23
2,969
Waste to landfill
intensity
FY22
FY23
Waste to landfill intensity: Distribution
Waste to landfill absolute (t)
Waste to landfill
intensity
0.0245
0.0209
0.0228
Waste to landfill intensity: Distribution
7,180
0.0245
6,333
0.0209
0.0228
6,351
FY20
FY21
FY22
21.6%
0.0192
5,753
0.0192
FY23
7,180
Waste to landfill absolute (t)
6,333
6,351
5,753
Waste to landfill
intensity
FY20
FY21
FY22
FY23
Waste to landfill absolute (t)
Waste to landfill
intensity
Water intensity: Production
0.939
0.763
0.749
0.772
0.453
0.453
321.6
CO₂e intensity: Production
0.438
0.411
0.410
CO₂e intensity: Production
0.438
332.4
0.411
343.6
0.410
336.3
FY20
332.4
This was primarily due to production
volume declines, increased non-
FY21
343.6
recyclable waste generation, water use
CO₂e intensity
due to facility upgrades, and increased
FY22
FY23
water use in some facilities.
CO₂e absolute (kt)
FY20
FY22
336.3
FY23
321.6
FY21
CO₂e absolute (kt)
CO₂e intensity
0.0757
0.0746
0.0665
0.0665
22.7
FY21
25.5
0.0746
25.5
0.0757
25.9
CO₂e intensity: Distribution
CO₂e intensity: Distribution
Orora will in part address increased water
consumption for the Production business
through the full operationalisation of a
0.0595
revolutionary water and chemistry-free
20.2
plate-making process at all four OPS
0.0595
Orora Visual locations in North America
FY23
FY20
20.2
25.9
during FY24.
CO₂e absolute (kt)
FY20
FY22
22.7
CO₂e intensity
FY22
FY23
This project was sponsored by Orora’s
Think Orange Innovation Fund and is
expected to deliver estimated water
0.0042
savings of more than 2 million litres per
year and eliminate the use of 9,000 litres
of chemicals.
0.0034
2,582
0.0027
Waste to landfill intensity: Production
Waste to landfill intensity: Production
CO₂e absolute (kt)
CO₂e intensity
0.0033
2,676
0.0034
0.0042
0.0033
2,969
FY21
2,289
0.0027
FY20
2,582
FY21
2,289
FY22
2,676
FY23
2,969
Waste to landfill absolute (t)
FY20
FY21
Waste to landfill
intensity
FY23
FY22
Waste to landfill absolute (t)
Waste to landfill intensity: Distribution
Waste to landfill
intensity
0.0245
0.0209
Waste to landfill intensity: Distribution
0.0228
0.0192
5,753
0.0192
0.0228
0.0209
6,351
6,333
Water use
FY21
FY22
6,351
6,333
FY20
7,180
Waste to landfill absolute (t)
FY20
Target: 5% reduction
in water use ratio intensity
Waste to landfill
intensity
FY23
5,753
FY23
FY22
FY21
Water intensity: Production
0.763
Water intensity: Production
0.749
0.772
0.939
0.939
578,919
0.763
626,286
0.749
0.772
632,874
667,193
FY20
578,919
FY21
626,286
FY22
632,874
FY23
667,193
Water absolute (kL)
FY20
FY21
Water intensity
FY22
FY23
Water absolute (kL)
Water intensity
Water intensity: Distribution
0.435
0.367
0.384
Water intensity: Distribution
0.435
89,117
0.367
74,889
FY21
74,889
FY20
89,117
Water absolute (kL)
FY20
FY21
0.384
80,491
FY22
80,491
40.0%
0.261
51,841
0.261
FY23
51,841
Water intensity
FY22
FY23
Water absolute (kL)
Water intensity
0.0757
0.0746
0.0665
CO₂e intensity: Distribution
Waste to landfi ll
0.0757
25.9
0.0746
25.5
22.7
0.0665
20.2
Target: 5% reduction
0.0595
in waste to landfi ll ratio intensity
FY20
FY23
20.2
25.9
CO₂e absolute (kt)
22.7
CO₂e intensity
FY22
FY21
25.5
0.0595
0.0245
7,180
FY20
FY21
FY22
23.5%
FY23
Waste to landfill absolute (t)
Waste to landfill
23.1%
intensity
2,289
0.0027
0.0034
2,582
2,676
0.0033
2,969
FY21
2,289
[1] All data relates to the period 1 July 2022 to 30 June 2023. Eco Target CO2 emissions are calculated as per footnote 1 on page 19, but utilising Location-based
factors for Scope 2 emissions. Waste to landfi ll includes solid waste to landfi ll that is not solid material diverted from landfi ll e.g., reused, recycled, repurposed,
FY20
composted or converted to energy. Water use is measured in kilolitres ('000 L). Waste to landfi ll and Water scope is for all activities under operational control of
2,582
Orora Group.
Waste to landfill absolute (t)
[2] Production facilities include Beverage facilities in Australia and New Zealand and for OPS CorruKraft and MPP facilities in North America. Distribution facilities
FY20
include all other sites including Landsberg, Pollock and Orora Visual in North America. Eco Targets are measured as ratios against metrics that refl ect the
primary business activities of Orora and are divided into metrics for production of packaging (measured against tonnes produced) and distribution of packaging
Waste to landfill absolute (t)
(measured against fl oor space square metres).
FY23
2,969
Waste to landfill
intensity
Waste to landfill intensity: Distribution
Water absolute (kL)
626,286
0.749
Water intensity: Production
578,919
0.763
Water intensity
632,874
0.772
FY22
2,676
632,874
626,286
578,919
667,193
667,193
0.939
FY20
FY22
FY23
FY20
FY22
FY23
FY23
FY22
FY21
FY21
FY21
Waste to landfill
intensity
0.0228
0.0245
20
0.0209
Waste to landfill intensity: Distribution
0.0245
7,180
6,333
0.0209
FY20
7,180
FY20
FY21
6,333
FY21
0.0228
6,351
FY22
6,351
ORORA LIMITED ANNUAL REPORT 2023
Water absolute (kL)
Water intensity: Distribution
Water intensity
Water intensity: Distribution
0.435
0.435
89,117
FY20
0.367
0.384
0.367
74,889
FY21
0.384
80,491
FY22
0.261
51,841
0.261
FY23
89,117
Water absolute (kL)
74,889
80,491
Water intensity
51,841
FY20
FY21
FY22
FY23
0.0192
5,753
0.0192
FY23
5,753
0.939
0.939
0.261
51,841
0.261
FY23
51,841
FY23
Water intensity: Production
Water absolute (kL)
Water intensity
Waste to landfill absolute (t)
Waste to landfill
intensity
FY22
FY23
Waste to landfill absolute (t)
Waste to landfill
intensity
0.763
0.749
Water intensity: Production
0.772
578,919
0.763
FY20
578,919
626,286
0.749
FY21
626,286
632,874
0.772
667,193
FY22
632,874
FY23
667,193
Water absolute (kL)
Water intensity
FY20
FY21
FY22
FY23
Water absolute (kL)
Water intensity
Water intensity: Distribution
0.367
0.384
Water intensity: Distribution
0.435
0.435
89,117
FY20
89,117
FY20
0.367
74,889
FY21
74,889
FY21
0.384
80,491
FY22
80,491
FY22
Water absolute (kL)
Water intensity
Water absolute (kL)
Water intensity
Our Promise to the Future
Community
Our Promise:
Prioritising action for our people and our communities
We are enriching the lives of
our teams and communities
by protecting safety,
health and human rights,
and championing diversity,
equity and inclusion, guided
by the Orora Values.
The safety of our people is
a fundamental and ongoing
commitment at Orora — no injury
or illness is ever acceptable, and
we believe all are preventable.
In FY23, we embedded the fi nal
elements of our Global Integrated Safety
Improvement Plan (GISIP) into our FY23
— FY25 Global Health & Safety Strategy
(Strategy) and began implementation.
Our Strategy was developed in
consultation with key stakeholders across
Orora. It builds on work completed as part
of GISIP and sets out actions for the next
three years to further improve the safety,
health and wellbeing of our team. It details
how we will continue to build awareness,
capability, and accountability to achieve
our objectives, and provide the safest
possible workplaces.
The Strategy builds on our Health &
Safety Framework, which aligns with
international safety standards[1] and
enables our One Orora approach to
improve consistency and effi ciency. It
is supported by a full implementation
plan and progress is measured against
key performance indicators.
Health & Safety governance
Over the past three years, we have
embedded Health & Safety governance
through the Board Safety, Sustainability
and Environment Committee (SSEC),
the Global Management Team (GMT),
GISIP SteerCo and the Health & Safety
Leadership Team (HSLT).
Safety performance[2]
Orora Group safety performance
8.1
7.1
6.8
7.2
9.5
2.3
1.7
2.0
2.5
2.6
FY19
FY20
FY21
FY22
FY23
Lost Time Injury[3] Frequency Rate (LTIFR)
Recordable Case Frequency Rate (RCFR)
This structure sets a strong foundation
for our One Orora approach to safety,
executed through our Strategy, and
includes quarterly and annual reporting.
Health & Safety Management System
In FY23, we developed and implemented
our high-risk safety procedures including
Contractor Management, Hazard
Identifi cation and Risk Management, to
manage risks consistently and eff ectively.
Across the Group, we continue to complete
action plans arising from the internal
assurance audit in FY22. Safety assurance
surveillance audits will be conducted
in FY24, supported by in-person safety
coaching and remote desktop audits.
[1] ISO 45001:2018.
[2] Orora’s injury rates are measured using two key metrics, Recordable Case Frequency Rate (RCFR) and the Lost Time Injury Frequency Rate (LTIFR). LTIFR is
determined by dividing the total number of Lost Time Injuries in a 12-month period by the total number of hours worked in the same 12-month period, then
multiplying by 1,000,000. RCFR is determined by dividing the total number of Recordable Case Injuries (Lost Time Injury, Restricted Work Case & Medical
Treatment Injury) in a 12-month period by the total number of hours worked in the same 12-month period, then multiplying by 1,000,000.
[3] Lost Time Injury (LTI) is defi ned as a work-related injury or illness resulting in a worker being unable to work for a full scheduled shift (other than the shift in
which the injury occurred). A full scheduled shift is regardless of shift length or duration (e.g., two hours or 12 hours). The LTI must be certifi ed by a medical
professional.
ORORA LIMITED ANNUAL REPORT 2023
21
Our FY23 performance
While Lost Time Injury Frequency Rates
(LTIFR) remained stable year-on-year, our
Recordable Case Frequency Rate (RCFR)
increased by 2.3. We experienced an
increase in largely preventable, low severity
injuries in FY23. This primarily related
to musculoskeletal injuries (sprains and
strains), cuts and lacerations associated
with manual handling tasks, slips and trips
or operation of plant and equipment. While
the level of incident reporting has improved
transparency through increased rigour
in processes and greater awareness of
requirements, this result is disappointing.
We are confident safety performance
will improve through focused continuous
improvement and driving existing programs,
which aim to identify and manage hazards
before they lead to injury.
Serious Injury or Fatality (SIF) Prevention
Ongoing improvements in reporting as
part of our SIF Prevention Program led to
a moderately higher number of potential
SIFs reported in FY23 (38 compared to
32 in FY22). One actual serious injury was
regrettably recorded at our Glass facility in
Gawler, South Australia. The circumstances
of this incident have undergone extensive
risk assessment and proactive controls
were implemented to prevent any
recurrence.
In FY22, we identified and communicated
10 high-risk activities that have the
potential to cause SIFs and how to manage
them through the Stay Safe rules. These
empower team members to STOP WORK
if they feel unsafe and to TAKE 5 before
starting work. The Stay Safe rules were
implemented across all operations in
FY23, through focused communication,
emphasising the requirements for each rule.
In FY23, we collaborated with key
stakeholders to develop Critical Control
checklists; to verify that critical controls
for our highest risk activities are in place
and effective.
Driving health and safety culture
Our FY23 employee engagement survey
revealed that our people know health
and safety is a priority at Orora. 95%
of respondents said they had a good
understanding of Orora’s health and
safety rules and procedures, while 88%
reported that Orora provides a safe
work environment and always works
in safe ways.
[1] Based on the Korn Ferry survey tool.
22
We intensified our focus on driving
our health and safety culture through
leaders’ communication, and relaunched
Safety Leadership Tours (SLTs) in FY23
as informal, one-on-one interactions
between senior leaders and team members
to emphasise that workplace safety is
everyone’s responsibility. Orora Beverage
continued behavioural awareness
programs to address adverse behaviours
that may put people at risk, while OPS
focused on raising awareness, embedding
health and safety into meeting agendas
and day-to-day engagement.
Caring for team member wellbeing
Orora’s holistic approach to the individual
wellbeing of team members encompasses
emotional, physical, social and financial
aspects. In FY23, our commitment to
wellbeing was delivered through a range
of initiatives including:
• Mental health remained a wellbeing
priority for our North American
Diversity, Equity & Inclusion (DE&I)
Council, promoting internal awareness
and education campaigns on this and
other priorities such as mens’ health
and breast cancer.
• Beverage Cans team members were
trained to co-facilitate and rollout
the iBelong ‘Call it out’ program
across the Cans business; designed
to support a psychologically safe
workplace, free from bullying,
harassment, discrimination and
negative behaviours.
The Voice of Orora
Orora has 4,600+ team members, with
more than 3,500 in North America and
just over 1,100 in Australasia. In March
2023, we conducted our ‘Voice of Orora’
employee engagement survey, with a
pleasing response rate of 74%.
Our engagement score across Orora
was 75%; 7% higher than general industry
and manufacturing industry standard
scores[1].
Leaders communicated survey results
to their teams towards the end of FY23
and action planning for improvements
has commenced.
Our Orora culture program
The global Our Orora culture program is
moving our culture from ’good’ to ’great’
and creating an innovative, high performing
and inclusive work environment where our
team members thrive.
To date, 222 Orora leaders and team
members have attended culture shaping
workshops, supported by specialised
external consultants. This year we focused
on upskilling Orora leaders to become
program facilitators. Nine leaders are now
trained to facilitate the program and we will
develop this cohort as we continue to rollout
the culture shaping program. The program
is being successfully reinforced by ’culture
champions’ and regular communications.
Diversity, Equity & Inclusion (DE&I)
We are creating vibrant Orora workplaces
that reflect the richness of the communities
in which we operate.
We see diversity as a powerful source
of competitive advantage, driving better
decision making, innovation and growth. Our
focus on equity and inclusion enables team
members with different backgrounds, varied
abilities and ways of thinking to bring their
best selves to work.
We continued our DE&I activities this year
in accordance with our DE&I Policy and
in pursuit of the measurable objectives
approved by the Board.
We again celebrated the diversity of the
LGBTIQ+ community across the globe
during Pride Month through Orora Proud,
to raise awareness and educate our
wider workforce.
In FY23, females represented 30% of all
external new hires meeting our 30% target,
representing a decrease of 7% from FY22.
At OPS, 50% of our Leadership team is
currently female.
We continued Unconscious Bias training
with the direct reports of senior leaders
in North America, integrating elements
of the training into an OPS Leadership
Development Solutions program.
The North American DE&I Council launched a
new intranet site to engage team members
on a range of Council activities, DE&I topics
and offer mental health support resources.
Our Corporate Governance Statement
contains further information on our
measurable objectives for achieving
gender diversity.
ORORA LIMITED ANNUAL REPORT 2023
Our Promise to the Future
Clear boundaries and visual cues
keep people safe from site traffic
A range of opportunities to better manage
site traffic were identified, resulting in:
To identify risks that might contribute
to safety incidents Orora Visual in New
Jersey, USA conducted a gap assessment
to review traffic management processes
related to forklifts (or Powered Industrial
Trucks — PITs) and pedestrian safety.
Site managers, supervisors and floor
leads developed action plans, which were
reviewed and then monitored by site
leaders and Health & Safety. Orora’s Health
& Safety Management System enabled
them to review common findings and
opportunities from across Orora locations,
and review best practices which could be
used to address gaps.
• Installing 500m of physical separation
barriers to keep people out of areas
where PITs operate,
• Displaying site maps to show traffic
flow and posting warning signage in
English and Spanish stating when
forklifts are in use and reminding our
people of traffic hazards,
• Defining and enforcing pedestrian
and forklift exclusion zones, and
• Installing devices on all fleet PITs to
limit speed to no more than 5mph.
These enhancements protect our team and
demonstrate our commitment to creating
and maintaining a safe workplace to ensure
everyone returns home safely every day.
Recognising Orora Heroes
In December 2022, we again recognised
individuals and teams that have excelled
across Orora with our HERO Awards.
The annual global program celebrates
heroic achievements and contributions
to Orora across seven categories: Our
People, Customer Focus, Safety, Financial
Discipline, Innovation, Sustainability
and Operational Excellence.
130 nominations were received in FY23,
reflecting the breadth and diversity of
our teams.
Women in Leadership at Orora (WILO)
In FY23, 25 talented Orora women from
across the Group joined the Women in
Leadership at Orora (WILO) program, now
in its seventh year.
Participants attend expert-led sessions
as part of this specialised development
program and have dedicated coaches who
are previous graduates. Graduates become
part of a powerful global network, building
on Orora’s culture of Diversity, Equity and
Inclusion.
With 154 WILO participants to date, we
are cultivating a thriving global pipeline
of female leadership talent at Orora.
Protecting human rights
and supply chain integrity
We oppose all forms of slavery in our
operations and the operations of our
suppliers and are committed to protecting
and respecting human rights.
We published our most recent Board
approved Modern Slavery Statement in
FY23, which described relevant Modern
Slavery and human rights risks associated
with our businesses, actions taken
to address those risks and upcoming
continuous improvement activities.
Orora’s Modern Slavery Statements are
available on our website.
Each business implements actions under
our Community pillar to address human
rights and Modern Slavery risks. Orora
Beverage implemented a new supplier
onboarding process in FY23 to assess
Modern Slavery risks. The process requires
suppliers to qualify as an appropriate
provider to Orora with an aligned ethical
position and approach to Modern Slavery
risks at registration. OPS undertook a
review of the potential for these risks with
suppliers based in Mexico and China. Orora
also began the introduction of a Modern
Slavery and human rights all-employee
training program.
Supplier Conduct and Assurance
Orora continued to apply our Supplier Code
of Conduct and Ethics Policy, which sets
minimum standards for our suppliers’
conduct and supply chains in line with
our values, our commitment to the Ten
Principles of the UNGC and other legislative
requirements.
This Policy complements our Code of
Conduct and Ethics Policy and is supported
by our Supplier Assurance Framework (SAF).
The SAF helps us identify and mitigate
potential human rights and environmental
issues with suppliers.
We use a risk assessment tool to identify
any high risks, which in some cases may be
further assessed through Sedex (Supplier
Ethical Data Exchange) or EcoVardis.
Suppliers must successfully mitigate any
risks via an agreed plan and may be unable
to partner with Orora if unsuccessful.
Responsible fibre sourcing
We remain committed to the use of fibre
from traceable, transparent, socially and
environmentally responsible sources in
North America.
Forest Chain of Custody certification
ensures our raw materials and finished
fibre-based products meet this standard.
We hold Forest Stewardship Council®
(FSC) Chain of Custody certification status
across a number of our OPS recycled
corrugated sheet and carton board
manufacturing operations[1].
Our responsible fibre sourcing approach is
supported by a due diligence framework
giving preference to suppliers with credible,
independent chain of custody certification
based on international standards and
transparent and traceable supply chains.
[1]
FSC Chain of Custody Certification Standard Ref: FSC-Std-40-004V3c. FSC COC Certification of Multiple Sites Standard Ref: FSC-Std-40-003V2.1.
FSC Certification Code: VS013968/12.
ORORA LIMITED ANNUAL REPORT 2023
23
Independent Limited Assurance Report
to the Directors of Orora Limited
Independent Limited Assurance Report to the Directors of Orora Limited
Conclusion
Based on the evidence we obtained from the procedures performed, we are
not aware of any material misstatements in the Selected Sustainability
Information, which has been prepared by Orora Limited, in accordance with
the criteria for the year ended 30 June 2023.
Selected Sustainability Information
The Selected Sustainability Information comprises the following material sustainability metrics in the
Orora Limited (Orora) Annual Report for the year ended 30 June 2023.
Selected Sustainability Information
Recycled content (cullet %) in manufactured glass products (Australia)
Scope 1 GHG emission
Scope 2 GHG emissions (location based)
Scope 2 GHG emissions (market based)
Percentage of renewable electricity (Australia)
CO₂e intensity: Production
CO₂e intensity: Distribution
Waste to landfill intensity: Production
Waste to landfill intensity: Distribution
Water intensity: Production
Water intensity: Distribution
Recordable Case Frequency Rate (RCFR)
Diversity: Percentage of female external new hires
Unit
%
Ktonnes CO₂e
Ktonnes CO₂e
Ktonnes CO₂e
%
ratio
ratio
ratio
ratio
ratio
ratio
ratio
%
FY23
38
255
87
178
80
0.453
0.0595
0.0042
0.0192
0.939
0.261
9.5
30
The Selected Sustainability Information covers Orora’s Group operations in Australia, United States, New
Zealand, Canada and Mexico, unless otherwise noted.
Criteria
The criteria used are from Orora management’s measurement methodologies, which are aligned to the
National Greenhouse and Energy Reporting Act 2007. A summary is provided in the data footnotes in the
Annual Report (“the criteria”).
Basis for Conclusion
We conducted our work in accordance with Australian Standard on Assurance Engagements ASAE 3000
(Standard). In accordance with the Standard we have:
• used our professional judgement to plan and perform the engagement to obtain limited assurance that
we are not aware of any material misstatements in the Selected Sustainability Information, whether due
to fraud or error;
• considered relevant internal controls when designing our assurance procedures, however we do not
express a conclusion on their effectiveness; and
• ensured that the engagement team possess the appropriate knowledge, skills and professional
competencies.
24
ORORA LIMITED ANNUAL REPORT 2023
Summary of Procedures Performed
Our limited assurance conclusion is based on the evidence obtained from performing the following
procedures:
Interviews with senior management and relevant employees;
•
• Understanding the key systems, processes and controls for collecting, managing and reporting of
Selected Sustainability Information;
• Reviews of relevant documentation including Orora’s policies and procedures;
• Walkthroughs of key data sets and detailed analytical procedures;
• Desk-top reviews of Australia, US, Canada, Mexico and NZ data, and interviews with site managers;
• Recalculating datasets for percentage recycled content, emissions and waste metrics;
• Agreeing selected Sustainability Reporting Data to underlying sources;
• Assessing the suitability of the criteria, including key assumptions; and
• Reviewed the Orora Annual Report 2023 in its entirety to ensure it is consistent with our overall
knowledge of the assurance engagement.
How the Standard Defines Limited Assurance and Material Misstatement
The procedures performed in a limited assurance engagement vary in nature and timing from and are less
in extent than for a reasonable assurance engagement. Consequently, the level of assurance obtained in a
limited assurance engagement is substantially lower than the assurance that would have been obtained had
a reasonable assurance engagement been performed.
Misstatements, including omissions, are considered material if, individually or in the aggregate, they could
reasonably be expected to influence relevant decisions of the Directors of Orora.
Use of this Assurance Report
This report has been prepared for the Directors of Orora for the purpose of providing an assurance
conclusion on the Selected Sustainability Information and may not be suitable for another purpose. We
disclaim any assumption of responsibility for any reliance on this report, to any person other than the
Directors of Orora, or for any other purpose than that for which it was prepared.
Management’s responsibility
Management are responsible for:
• determining that the criteria are appropriate to
meet their needs;
• preparing
and
the Selected
presenting
Sustainability Information in accordance with the
criteria; and
• establishing internal controls that enable the
preparation and presentation of the Selected
Sustainability Information that is free from
material misstatement, whether due to fraud or
error.
Our Responsibility
Our responsibility is to perform a limited assurance
engagement
the Selected
Sustainability Information for the year ended 30
June 2023 and to issue an assurance report that
includes our conclusion.
relation
to
in
Our Independence and Quality Management
We have complied with our independence and
other relevant ethical requirements of the Code of
Ethics for Professional Accountants (including
Independence Standards) issued by the Australian
Professional and Ethical Standards Board, and
complied with the applicable requirements of
Australian Standard on Quality Management 1 to
design, implement and operate a system of quality
management
KPMG
Sarah Newman
Director
Melbourne
17 August 2023
ORORA LIMITED ANNUAL REPORT 2023
25
Group financial
review summary
Income statement[1]
AUD million
Sales revenue
Earnings before significant items, interest, depreciation,
amortisation and related tax
Depreciation and amortisation
Earnings before significant items, interest and related
income tax expense
Significant items
Earnings before interest and related tax expense
Net financing costs
Income tax expense
Profit for the financial period from continuing operations
Balance sheet[2]
AUD million
Cash
Other current assets
Property, plant and equipment
Right-of-use lease assets
Goodwill and intangible assets
Other non-current assets
Total assets
Borrowings
Lease liabilities
Payables and provisions
Total equity
Total liabilities and equity
Cash flow[3]
AUD million
Earnings before significant items, interest, depreciation,
amortisation and related tax
Right-of-use asset lease payments
Non-cash items
Movement in total working capital
Net base capital expenditure
Underlying operating cash flow
Cash significant items
Operating free cash flow
2023
2022
4,291.3
4,090.8
443.5
403.4
(123.0)
320.5
(26.0)
294.5
(47.5)
(62.2)
184.8
(117.9)
285.5
-
285.5
(26.7)
(71.7)
187.1
2023
58.4
2022
52.6
1,199.3
1,255.1
806.5
180.7
440.1
116.8
685.2
173.7
433.2
109.0
2,801.8
2,708.8
832.4
227.6
941.6
800.2
2,801.8
681.6
224.5
1,071.0
731.7
2,708.8
2023
443.5
(65.6)
25.0
(84.8)
(48.2)
269.9
(34.4)
235.5
2022
403.4
(59.1)
26.8
(62.6)
(35.9)
272.6
(27.0)
245.6
Revenue
Sales revenue for the year was $4,291.3
million, up 4.9% on FY22. On a constant
currency basis, sales revenue was down
0.9%, reflecting the impact on the reported
result of the lower Australian dollar against
the US dollar.
In North America revenue was up 2.3% to
$3,254.4 million. In local currency terms,
revenue was down 5.1% to US$2,190.2
million, largely reflecting a decline in broader
manufacturing industry activity and the flow-
through impacts of price deflation.
In Australasia, revenue increased 14.1% to
$1,036.9 million. This was driven by strength
in can volumes and higher aluminium costs
passed on to customers, partially offset by
lower volumes in wine and beer glass.
Earnings before
interest and tax
Underlying EBIT was $320.5 million, up 12.3%
on the prior year (up 7.7% on a constant
currency basis).
North America delivered another strong
financial performance, with reported EBIT
increasing 23.9% on the prior year to
$167.2 million (up 15.0% on a constant
currency basis). This was largely driven by
the Distribution business, reflecting
disciplined pricing management and ongoing
benefits from the account profitability
program. The EBIT margin for North America
increased 90bps to 5.1%, with the OPS EBIT
margin improving by 70bps to 5.9%.
Earnings in Australasia were resilient and in-
line with expectations, with EBIT up 1.8% to
$153.3 million. Continued strong growth in
Cans volumes, up ~10%, and improved Cans
product mix was partially offset by lower
Glass volumes from a slowdown in domestic
and export consumer demand for Australian
commercial wine, and lower beer bottle sales.
US dollar earnings were translated at
AUD/USD ~67.3 cents in FY23, compared
to ~72.6 cents in the prior year.
[1] Represents continuing operations only, as reported in the segment note contained within the financial
statements (refer note 1) with the exception of net unallocated financing costs and income tax
expense, which is not included in the segment note.
IFRS compliant information extracted from the audited financial statements.
[2]
[3] Operating free cash flow includes principal lease and interest payments associated with
Right-of-Use (ROU) assets as reported per the segment note in the financial statements (refer note 1).
26
ORORA LIMITED ANNUAL REPORT 2023
Significant item expense
During the period Orora recorded a
significant item of $18.2 million after tax
($26.0 million pre-tax) relating to
decommissioning activities for the former
Petrie mill site. These additional estimated
costs to complete were recognised
following ongoing project review and
reassessment of remediation
requirements.
Balance sheet
Total assets increased by $93.0 million
or 3.4% in FY23.
The Group’s centralised approach to cash
management ensured cash balances
remain tightly managed, with a 30 June
2023 cash balance of $58.4 million.
Other current assets declined by $55.8
million as a result of a decline in trade and
other receivables and a reduction in
inventory. Trade and other receivables
reduced by $44.4 million, reflecting lower
North American revenue and the timing of
aluminium pass-through recoveries in
Australasia. Inventory decreased by $11.7
million as North America normalised
inventory levels. This was partially offset
by higher inventory in Australasia, largely a
result of higher Glass inventory to support
the G3 furnace rebuild in FY25.
Net Property, Plant and Equipment (PP&E)
increased by $121.3 million as the Group
enters a period of capital investment to
support future earnings growth and
sustainability initiatives. Capital
expenditure for FY23 was $193.8 million
and included spend on the new multi-size
canning lines at Dandenong and Revesby,
ends capacity expansion at Ballarat, the
oxygen plant and the G3 furnace rebuild at
Gawler, and leasehold improvements in
North America. Depreciation for the period
was $62.9 million (excluding ROU assets).
The increase in intangible assets of $6.9
million was largely driven by foreign
currency impacts ($13.5 million) and IT
related additions of $5.1 million, with
amortisation of $10.1 million for the period.
The higher capital expenditure along with
an investment in working capital increased
borrowings and net debt by $150.8 million
and $145.0 million, respectively. The
foreign currency translation impact on USD
denominated debt was $12.4 million.
The $129.4 million decrease in payables
and provisions was driven primarily by a
decrease in trade and other payables of
$173.0 million, partially offset by an
increase in provisions. The decrease in
trade and other payables was a result of
lower inventory purchases in North
America, reflecting a decline in broader
manufacturing industry activity, and lower
commodity prices (aluminium) in
Australasia.
The net of Right-of-Use (RoU) liability
position decreased by $3.9 million. ROU
leases relate predominantly to the North
American businesses, with very few leases
in Australasia.
Cash flow
Orora’s underlying operating cash flow of
$269.9 million was broadly in line with
FY22. The Group’s continued strong cash
generation reflects an 8.6% increase in
cash EBITDA (sum of EBITDA and non-cash
items), offset by an increase in the
movement in total working capital and
higher base capital expenditure.
The movement in total working capital for
FY23 increased by $22.2 million from the
prior year to $84.8 million. This was
primarily due to higher inventory in Glass to
support the G3 furnace rebuild, partially
offset by a depletion of finished goods in
Cans and lower working capital in North
America.
Base capex of $48.2 million was higher
than the prior year, reflecting the impact of
$13.0 million of preliminary capital
expenditure relating to the G3 furnace
rebuild scheduled to be completed in FY25.
Cash conversion remained strong at 70.2%
(excludes base capital expenditure relating
to the G3 furnace rebuild).
Corporate
Corporate costs have been allocated
directly to the business segments.
As at 30 June 2023, Orora has $500.0
million of committed undrawn debt
facilities to support future investments and
repayment of US$100.0 million of USPP
notes, which matured in July 2023.
During the year, the Group increased the
global syndicated multi-currency facility,
maturing November 2024, by $110.0
million to $460.0 million. The USD
syndicated facility was amended and
extended for USD $100.0 million to June
2027 and the $35.0 million bilateral facility
was extended to April 2025. Commercial
terms and composition of these amended
and extended facilities were not materially
changed. Orora also established two new
bilateral facilities, comprising a $75.0
million bilateral revolving facility, maturing
January 2026, and a USD $100.0 million
term debt facility, maturing January 2028,
to facilitate repayment of the USD $100.0
million USPP notes maturing July 2023.
We remain well within all debt covenant
requirements with leverage of 2.0x at 30
June 2023.
Petrie decommissioning
The decommissioning of the former Petrie
mill site is progressing, but continues to be
a significant and complex exercise
involving multiple government agencies. A
further $34.4 million was spent on
decommissioning the site during the year
($26.5 million in the prior year).
Unprecedented rainfall levels in
Queensland in FY23 and unforeseen
complexities related to the remediation of
the remaining and most technically
complex areas of the site have resulted in
delays, with a further $26.0 million ($18.2
million after tax) recognised in respect of
estimated costs to complete. A specialist
environmental consulting firm continues to
be engaged to manage the completion of
the remaining remediation works. The
Petrie related provision at 30 June 2023
represents management's best estimate in
respect of the anticipated costs to
complete the remediation, using all
currently available information and
considering applicable legislative and
environmental regulations.
ORORA LIMITED ANNUAL REPORT 2023
27
Operational review
North America
Our Orora Packaging Solutions business in North America delivered strong earnings
growth and further margin improvement, reflecting continued optimisation gains
including operating efficiencies and cost to serve, whilst ensuring strong pricing
disciplines.
Key points
• Sales revenue, in local currency
terms, was US$2,190.2 million,
5.1% below prior year, reflecting
a decline in broader
manufacturing industry activity,
the flow-through impacts of
paper price deflation and cycling
out of less profitable customers.
• Strong earnings growth, with
EBIT up 15.0% in local currency
terms, driven by Distribution, and
the ongoing benefits of the
customer account profitability
program and cost to serve.
• North America’s EBIT margin
the back of further earnings
growth and disciplined working
capital management, with cash
conversion remaining strong at
89.2%.
improved by 90bps to 5.1%, with
OPS EBIT margin improving
70bps to 5.9%.
• RoAFE increased by 140bps to
21.7%, reflecting the higher
earnings.
• Operating cash flow increased by
33.0% to US$112.5 million on
Earnings[1]
AUD million
Sales revenue
EBIT
EBIT margin %
RoAFE[2]
USD million
Sales revenue
EBIT
Segment cash flow
USD million
EBITDA[3]
Lease repayments
Non-cash items
Cash EBITDA
Movement in total working capital
Base capex
Sale proceeds
Underlying operating cash flow
Cash significant items
Operating free cash flow
Cash conversion
FY23
FY22
Change
3,254.4
3,181.7
167.2
5.1%
21.7%
134.9
4.2%
20.3%
2.3%
23.9%
FY23
FY22
Change
2,190.2
2,308.3
112.6
97.9
(5.1%)
15.0%
FY23
164.2
(41.1)
3.1
126.2
2.8
(16.9)
0.4
112.5
-
112.5
89.2%
FY22
150.8
(40.2)
3.5
114.1
(14.2)
(15.4)
0.1
84.6
(0.3)
84.3
74.1%
Change
8.9%
10.6%
33.0%
33.5%
As reported in the segment note contained within the financial statements, refer note 1.
[1]
[2] Return on Average Funds Employed (RoAFE) is calculated as EBIT divided by average funds employed.
[3]
Earnings Before significant items, Interest, Depreciation, Amortisation and Tax.
28
ORORA LIMITED ANNUAL REPORT 2023
Orora Visual
Orora Visual was aligned under the OPS
business during the first half of FY23 to
support operational and back office
efficiencies and to optimise growth
opportunities.
The effective execution of Orora Visual’s
business improvement programs to drive
further earnings growth continues to yield
improvements in operational and financial
performance.
The operational improvements delivered
both earnings growth and margin
expansion in FY23, largely attributable to
price. Revenue declined slightly due to
lower volumes, partially offset by price,
reflecting softness across most sectors
other than retail.
Operations in Mexico and the eastern
United States continued to perform
strongly, delivering both revenue and EBIT
growth, as economic headwinds impacted
other regions.
Embedded pricing disciplines and a focus
on cost management ensured the
Distribution business actively managed
inflationary pressures and operational
demand.
Manufacturing
Manufacturing revenue was lower than the
prior year as the business cycled 12
months of lower volumes, which are down
in line with the broader industry. The flow-
through impacts of paper price deflation
also unfavourably impacted revenue during
FY23.
Manufacturing earnings declined on the
back of lower volumes, with the continued
focus on operating efficiency, strong active
cost management and operational
excellence, partially offsetting the earnings
decline.
Orora Packaging Solutions
OPS delivered another strong earnings
result with EBIT up 15.0% in local currency
terms (up 23.9% on a reported basis). The
decline in broader manufacturing industry
activity resulted in softer volumes,
primarily in Manufacturing, contributing to
a decline in revenue, down 5.1% in local
currency terms.
The ongoing disciplined execution of the
customer account profitability program,
along with the sustained and disciplined
approach to operating efficiency, more than
offset volume softness and continues to
deliver earnings growth and margin
expansion.
With pricing disciplines firmly embedded,
the business is investing to drive long-term
volume growth and is well advanced with
the planned recruitment of new sales
resources.
Distribution
Distribution delivered strong earnings and
EBIT margin growth in FY23. The double-
digit earnings growth was driven by price
from continued improvements in account
profitability and cost to serve, as well as
further operating efficiencies.
Revenue declined marginally, reflecting
softer volumes in the second half of the
year, which was partially offset by price.
OPS has secured an
exclusive contract with
Flexi-Hex Ltd for the
distribution of FSC-certified,
fibre-based recyclable sleeves
in North America, providing a
sustainable alternative to
bubble wrap and foam
commonly used for packing.
ORORA LIMITED ANNUAL REPORT 2023
29
Operational review
Australasia
Our Beverage business in Australasia delivered a resilient earnings performance,
with strong consumer demand for cans offsetting softness in glass, as the
business invests to drive future earnings growth.
Key points
• Sales revenue was up by 14.1%
to $1,036.9 million in
Australasia.
• EBIT of $153.3 million was in line
with the prior year, up 1.8%,
underscoring the resilience of
the Beverage business.
• Australasia's earnings
performance reflects net volume
growth of 2.7%, with strong
volume growth in Cans and
improved product mix, offsetting
lower wine and beer glass
volumes.
• EBIT margin declined to 14.8%,
primarily reflecting the impact of
higher aluminium costs, which
are directly passed through to
customers.
• Our Beverage operations are
part-way through a multi-year
growth capital expenditure
program underpinned by long-
term customer contracts and a
commitment to sustainability.
• Return on Average Funds
Employed (RoAFE) was down
280bps to 21.8%, driven by
higher average working capital
and capital expenditure.
• Cash conversion of 53.7% is
largely attributable to the
inventory build in Glass to
support the G3 furnace rebuild.
Earnings[1]
AUD million
Sales revenue
EBIT
EBIT margin %
RoAFE[2]
Segment cash flow
AUD million
EBITDA[3]
Lease repayments
Non-cash items
Cash EBITDA
Movement in total working capital
Base capex
Sale proceeds
Operating cash flow
Cash significant items
Operating free cash flow
Cash conversion
FY23
1,036.9
153.3
14.8%
21.8%
FY23
199.5
(4.4)
20.3
215.4
(89.1)
(23.6)
-
102.7
(34.4)
68.3
53.7%
FY22
909.1
150.6
16.6%
24.6%
FY22
195.6
(3.7)
21.9
213.8
(43.0)
(15.2)
0.4
156.0
(26.6)
129.4
72.9%
Change
14.1%
1.8%
Change
2.0%
0.7%
(34.2%)
(47.2%)
As reported in the segment note contained within the financial statements, refer note 1.
[1]
[2] Return on Average Funds Employed (RoAFE) is calculated as EBIT divided by average funds employed.
[3]
Earnings Before significant items, Interest, Depreciation, Amortisation and Tax.
30
ORORA LIMITED ANNUAL REPORT 2023
Beverage
The Beverage business delivered a resilient
earnings performance as the business
navigated market pressures, with EBIT in
line with expectations, up 1.8% on the prior
year.
Strong revenue growth in Cans, driven by
growth in volumes, was partially offset by
softness in Glass and Closures from a
slowdown in Australian commercial wine
and inflationary pressures.
The business is part-way through a multi-
year capital investment program as we
actively invest for future earnings growth
and to deliver on our sustainability
commitments.
Cans
Revenue was significantly higher than the
prior year driven by strong sales volume
growth, improved product mix and higher
aluminium costs passed through to
customers. This sales result translated to
strong earnings growth, supported by
inflation cost recoveries through contract
price pass-through mechanisms and
operating efficiencies.
Despite capacity constraints, growth in
volumes was achieved across all can
formats and was up ~10% on the prior year,
principally through production efficiencies,
benefits from a post-COVID environment
and the ongoing asset refresh program.
Volume growth was also underpinned by
ongoing strong demand in carbonated soft
drink (CSD), craft beer, energy drinks
and ready-to-drink (RTDs) categories, which
benefited from a continuation of the
preference shift to can formats.
The capital investment in Cans capacity
and capability reached a milestone during
FY23 with commissioning in March of the
~$30 million can ends capacity increase in
Ballarat and installation in June of the new
~$80 million multi-size canning line at
Dandenong. Construction of a second ~$85
million multi-size canning line at Revesby
has commenced and is scheduled for
completion in the second half of FY25.
These investments are expected to
contribute ~$30 million of growth-related
earnings once they are fully utilised by
FY28.
Glass
Revenue and earnings were below the prior
year, largely attributable to a reduction in
demand for glass bottles, reflecting lower
sales of Australian commercial wine
bottles and lower beer bottle volumes. The
business was also impacted by higher
supply chain costs due to higher inventory
and commodity prices. These cost impacts
were partially offset through contracted
and out-of-cycle price increases.
The decline in wine bottle volumes was
driven by the slowdown in domestic and
export consumer demand for Australian
commercial wine. Beer continues to see a
packaging preference shift, which has
contributed to lower beer bottle sales
volumes during FY23. The successful
expansion into new glass products saw
further growth in volumes across the
carbonated water, spirits and olive oil
markets, as we continue to diversify our
Glass portfolio mix.
Pleasingly, second half revenue and
earnings improved year-on-year against the
backdrop of challenging market conditions.
The cullet beneficiation plant was
commissioned in early FY23 and site
preparation has commenced for the oxygen
plant to upgrade the G3 glass furnace to
oxyfuel technology as part of Orora’s
commitment to sustainability. The oxygen
plant and G3 furnace rebuild are scheduled
to be completed in FY25.
Closures
Earnings performance was below the prior
year, reflecting lower commercial wine
bottle volumes, inflationary pressures and
continued supply chain challenges related
to aluminium supply in the first half of
FY23.
Revenue increased on the prior year driven
by price and product mix, which offset the
impact of volume softness.
The business has addressed supply chain
challenges by insourcing the coating and
decorating of flat sheet aluminium.
Construction for the
~$110 million installation of a
new multi-size can line at
Dandenong and the expansion
of can ends capacity at Ballarat
in Victoria is complete, with
the projects to provide an
incremental capacity uplift of
10% and 40% respectively.
ORORA LIMITED ANNUAL REPORT 2023
31
Corporate Governance
Statement
The Board is committed to achieving and demonstrating
standards of corporate governance appropriate to the operations
and size of the Company, and continuing to refine and improve
Orora’s governance framework and practices to ensure they meet
the interests of shareholders and other stakeholders.
The Board of Directors of Orora Limited and
its subsidiaries (Orora or the Company)
believe good corporate governance:
•
is an integral part of the culture and
business practices of the Company;
and
• will add to Orora’s performance to
create shareholder value, while having
regard to other stakeholders and an
appropriate risk and return framework.
The Board is committed to achieving and
demonstrating standards of corporate
governance appropriate to the operations
and size of the Company, and continuing to
refine and improve Orora’s governance
framework and practices to ensure they
meet the interests of shareholders,
regulators and other stakeholders.
The Board has adopted Charters and key
corporate governance documents which
articulate the policies and procedures
followed by Orora. These documents,
together with Orora’s 2023 Annual Report
referred to in this Corporate Governance
Statement, are available on Orora’s website
at www.ororagroup.com under the
‘Investors’ section.
This Corporate Governance Statement
summarises Orora’s main corporate
governance practices for the reporting
period, being the year that ended 30 June
2023, which comply with the Australian
Securities Exchange (ASX) Corporate
Governance Council’s Corporate
Governance Principles and
Recommendations 4th Edition
(ASX Principles).
This Statement is current as at 17 August
2023 and has been approved by the Board.
The Board of Directors
The Board
The Directors of the Company as at the
date of this Statement are set out below,
all of whom (except Orora’s Managing
Director and Chief Executive Officer (CEO),
Brian Lowe), are independent Non-
Executive Directors. Details of each
Director’s tenure, experience, expertise and
qualifications are set out in the Board of
Directors section of the 2023 Annual
Report and on Orora’s website.
• A R H (Rob) Sindel (Chair)
• B P (Brian) Lowe (CEO)
• A P (Abi) Cleland
• M A (Michael) Fraser
• T J (Tom) Gorman
• S L (Sam) Lewis
Jeremy Sutcliffe retired from the Board on
31 August 2022.
Abi Cleland and Sam Lewis will reach their
10-year tenure with the Board in March and
February 2024, respectively. The Board
periodically reviews its composition, and
tenure and succession of the Directors,
upon input and recommendation from the
Nomination Committee.
Role of the Board
The Board is responsible for the
governance of the Company and is
accountable to shareholders for guiding
and monitoring the effective management
and performance of the Company.
The Board Charter, available on Orora’s
website, sets out how the Board’s role,
powers and responsibilities are exercised,
having regard to principles of good
corporate governance, market practice and
applicable laws.
The Board operates in accordance with the
principles set out in its Board Charter, the
Company’s Constitution, relevant laws and
ASX listing rules.
Responsibilities of the Board
The Board’s responsibilities, as
summarised in the Board Charter, include:
• defining the Company’s purpose and
approving and monitoring
management’s development and
implementation of the Group’s strategy,
plans and core values of the Group;
• setting the risk appetite within which
the Board expects management to
operate;
reviewing, approving and monitoring
the Company’s risk policy and risk
management systems (for both
financial and non-financial risks),
including internal compliance and
control mechanisms;
•
• overseeing the Company’s accounting
and corporate reporting systems and
disclosures;
• approving the overall remuneration
policy and remuneration of Non-
Executive Directors, the CEO and senior
management, including any incentive
and/or equity plans;
• overseeing, with recommendations
•
from the Human Resources Committee,
that the remuneration policy is aligned
with the Company’s purpose, values,
strategic objectives and risk appetite;
receiving information regarding
material breaches of the Company’s
Code of Conduct and Ethics, Anti-
Bribery and Anti-Corruption Policy and
reports of material incidents under the
Whistleblower Policy;
• determining the size, composition and
structure of the Board, and the process
for evaluating its performance;
• approving and removing the CEO and
Company Secretary, and approving and
reviewing succession plans for the
Non-Executive Directors, CEO and
senior management;
• satisfying itself that the Board
reporting framework is appropriate and,
where required, providing constructive
feedback to challenge the CEO and
senior management;
• ensuring provision of adequate,
accurate and timely information to the
market of all material information and
developments relating to the Company;
• adopting appropriate procedures to
ensure compliance with all laws,
government regulations and
accounting standards; and
reviewing and, to the extent necessary,
amending the Board and Committee
Charters.
•
Board composition and succession
The Board is committed to ensuring that it
is comprised of individuals who collectively
have the appropriate skills and experience
to develop and support the Board’s
responsibilities and Company objectives.
As Abi Cleland and Sam Lewis approach
their 10-year tenure with the Board, the
Company is committed to an orderly
transition which will be taken with the
appointment of new Directors. The Board’s
composition is determined based on
criteria set out in the Company’s
Constitution and the Board Charter,
including:
• a majority of Independent
Non-Executive Directors and a
Non-Executive Director as Chair;
the Board having an appropriate mix of
skills, knowledge, experience,
independence and diversity necessary
to review and approve the strategic
directions of the Company, and to guide
and monitor management; and
re-election of Directors at least every
three years (except for the CEO).
•
•
32
ORORA LIMITED ANNUAL REPORT 2023
Board skills and experience
Board skills matrix
The Board recognises the importance of
having Directors with a broad range of
skills, backgrounds, expertise, diversity
and experience in order to facilitate
constructive decision making and
facilitate good governance processes
and procedures.
The Company has established a Board
skills matrix relevant to the Company. A
summary of the main skills and experience
of the Board as applicable to its strategic
objectives is set out in the skills matrix
below. A regular assessment of the
optimum mix of these skills and experience
is conducted which takes into account the
strategic positioning of the Company.
The skills attributed to each Director
recognise their experience acquired
through previous executive or non-
executive director roles.
The Board has unfettered access to the
Company’s senior management team and
external consultants for required expertise.
The Board considers that there are
currently no significant gaps in the skill set
that it seeks to have represented on the
Board, and that the skills and experience of
the Directors are relevant and appropriate
to Orora. The Directors of the Company as
at the date of this Statement have the
following skills:
Skill/Experience
Strategic thinking
Experience in developing and implementing enterprise-wide successful
strategies, and an effective capital management framework, including
appropriately questioning and challenging management on the delivery of
agreed strategic planning objectives.
Workplace safety and health
Directors with Skill/Experience
! ! ! ! ! ! 6/6
Senior executive or substantial board experience in key workplace safety and
health risk, including management, performance and governance of workplace
safety and health.
! ! ! ! ! ! 6/6
Financial acumen
Experience in financial accounting and reporting, corporate finance and/or
restructuring, corporate transactions, including the ability to evaluate the
adequacies of financial and risk controls and understand key financial drivers
of the business.
Technology and innovation
Experience in oversight, adoption and implementation of technology and
innovation to support growth and drive competitive advantage, the ability to
understand key factors relevant to Orora including digital disruption,
opportunities and risks and cyber risk management.
People, culture and remuneration
Senior executive or substantial board experience leading people, oversight of
culture and organisational design, remuneration frameworks that attract and
retain a high calibre workforce and a culture that promotes diversity, equity
and inclusion.
Sustainability and environment
Senior executive or substantial board experience in management,
performance and governance of sustainability, environmental and social
responsibility initiatives, risks and opportunities including in relation to
sustainability and climate change.
Corporate governance
Experience with a major organisation that is subject to rigorous governance
standards, a proven track record of leadership and governance skills,
demonstrated behaviours consistent with Orora’s values and an awareness of
global practices and trends.
Relevant industry experience
Senior executive or substantial board experience in a number of relevant
industries, including packaging, manufacturing, FMCG, food and beverage,
recycling, industrials and logistics, product or customer strategy.
Risk management
Senior executive or substantial board experience in, or understanding of,
identifying and monitoring key existing and emerging risks to an organisation
and implementing appropriate risk management frameworks, procedures and
controls.
! ! ! ! ! ! 6/6
! ! ! ! ! ! 6/6
! ! ! ! ! ! 5/6
! ! ! ! ! ! 6/6
! ! ! ! ! ! 6/6
! ! ! ! ! ! 5/6
! ! ! ! ! ! 6/6
ORORA LIMITED ANNUAL REPORT 2023
33
Corporate Governance
Statement
Board experience
Relevant industry experience
83%
Relevant
industry
experience
17%
No relevant
industry
experience
Board gender diversity
33%
Female
67%
Male
Board age
50%
<55yo
50%
>55yo
Board tenure
67%
0–5
years
33%
5–10
years
The Company aims to have a diverse skill
set and an appropriate mix of gender,
thought, age and cultural background
represented on the Board. Further details of
the Company’s diversity objectives and
Diversity, Equity and Inclusion Policy are
set out in the Sustainability section of the
2023 Annual Report. The relevant industry
experience, gender diversity, age and
tenure of the Board are shown in the charts
on this page.
Directors’ independence
The Board has adopted specific principles
in relation to Non-Executive Directors’
independence as set out in the Board
Charter.
The Board Charter states that:
•
•
•
the Board shall consist of a majority of
Non-Executive Directors who are
considered by the Board to be
independent;
Directors must immediately disclose to
the Company Secretary and the Chair
any information, facts or
circumstances of which they become
aware, which may affect their
independence; and
in the absence of special
circumstances, the tenure for Non-
Executive Directors should be limited
to a maximum of 10 years, to ensure
Directors remain demonstrably
independent, with a view to best
represent the interests of
shareholders.
The Board undertakes an annual review of
the extent to which each Non-Executive
Director is independent, having regard to
the relationships affecting the independent
status of a Director as described in the ASX
Principles and any other matters the Board
considers relevant. Where the Board
determines a Director is no longer
independent, an announcement will be
made to the market.
As at the date of this statement, with the
exception of the CEO, the Board considers
that each Non-Executive Director is
independent.
Conflicts of interest
Directors must keep the Board advised, on
an ongoing basis, of any interest that could
potentially conflict with their duties to the
Company. The Board has developed
procedures to assist Directors to disclose
potential conflicts of interest and, each
year, all Non-Executive Directors complete
independence declarations. Where the
Board believes that a significant conflict
exists for a Director on a Board matter, the
Director concerned does not receive the
relevant Board papers and is not present at
the meeting whilst the item is considered.
The Chair
The Board Charter provides that the Chair
should be an Independent Director and
should not be the CEO. The Chair, Rob
Sindel, is considered by the Board to be
independent and his role is separate to
that of the CEO.
The Chair’s role and responsibilities are
outlined in the Board Charter and include:
•
leadership of the Board and assisting
the Board to work effectively and
discharge its responsibilities, and
encouraging and facilitating a culture of
openness and debate between
Directors to foster a high-performing
and collegiate team;
•
• maintaining effective communication
and promoting constructive and
respectful relationships between the
Board and management;
chairing general meetings of the
Company;
setting the agenda for each Board
meeting in consultation with the CEO
and Company Secretary; and
representing the Board in
communications with shareholders and
other key stakeholders.
•
•
The Chair has acknowledged that the role
will require a significant time commitment
and has confirmed that other positions will
not hinder the effective performance of the
role of Chair.
34
ORORA LIMITED ANNUAL REPORT 2023
The Company Secretary
The Board has appointed Ann Stubbings
as Company Secretary. Details of the
Company Secretary’s skills, experience
and expertise are set out on Orora’s
website. The role of the Company
Secretary is set out in the Board Charter.
The Company Secretary is accountable to
the Board, through the Chair, on all matters
to do with the proper functioning of the
Board and its Committees. The
appointment or removal of the Company
Secretary is a matter for the Board as a
whole. Each Director is entitled to access
the advice and services of the Company
Secretary.
Checks and information on Directors
Before appointing or proposing a person
for election as a Director, Orora conducts
all appropriate background checks,
including reference checks and criminal
and bankruptcy record checks.
Prior to a Director’s election or re-election
by shareholders, the Board provides
shareholders with all material information
known to Orora which is relevant to the
decision of shareholders to elect or re-elect
the Director, in order to assist their
decision-making process. This information
is contained in the notice of meeting of the
Annual General Meeting at which the
Director’s appointment will be considered
by shareholders.
A candidate for election or re-election as
a Non-Executive Director will be required
to provide the Board or Nomination
Committee with all material information
and an acknowledgement that he or she
will have sufficient time to fulfil his or her
responsibilities as a Director.
Agreements with Directors
Non-Executive Directors are appointed
pursuant to a formal letter and a deed of
appointment, which set out the key terms
relevant to the appointment, including the
term of appointment, the responsibilities
and expectations of Directors in relation to
attendance and preparation for all Board
meetings, appointments to other boards,
the procedures for dealing with conflicts of
interest, and the availability of independent
professional advice. Non-Executive
Directors are expected to spend a
reasonable amount of time each year
preparing for and attending Board and
Committee meetings and associated
activities. Other commitments of Non-
Executive Directors are considered by the
Nomination Committee prior to
appointment to the Board and are reviewed
each year as part of the annual Board
performance assessment.
Director induction and development
Orora has in place a formal process to
educate new Directors about the operation
of the Board and its Committees, the
Company’s purpose, values, strategy, any
financial, strategic, operational and risk
management issues, and the expectations
of performance of Directors. This induction
program includes providing new Directors
with access to previous Board and
Committee meeting minutes, Orora’s
policies and the strategic plan, and
facilitating meetings with senior
executives.
Directors visit Orora sites on an ongoing
basis, and meet with management to gain a
better understanding of business
operations, safety and culture across
Orora. These visits are conducted either as
a full Board, or Board Committee, or with
individual Directors. Directors are also
given access to continuing education
opportunities to update and enhance their
skills and knowledge.
Performance evaluation
The Board undertakes a performance
evaluation to review its performance and
that of its Committees (including the
performance of the Chair and Committee
Chairs), last conducted in 2022, with the
intention to continue in 2023 and 2024.
The Chair reports to the Board regarding
the performance evaluation process,
having regard to the ASX Principles and the
findings of these reviews.
The evaluation may involve surveys by the
Directors and the Board, the assistance of
external facilitators and consideration of
the degree to which each Non-Executive
Director has demonstrated the skills
relevant to the position of Non-Executive
Director or Chair, as applicable.
The 2022 evaluation concluded that the
composition of the Company’s Non-
Executive Directors is appropriate having
regard to the skill set, expertise and
experience required for a company of
Orora’s size and geographic spread. The
evaluation further concluded that the
Company’s Committee structure is
effective and is well-led by appropriately
experienced and skilled Directors.
Independent professional advice
and access to information
Each Director has the right to access
all relevant Company information and
senior executives and, subject to prior
consultation with and approval from the
Chair, may seek independent professional
advice from an advisor suitably qualified in
the relevant field at the Company’s
expense.
A copy of advice received by the
Director will be made available for all
other Directors.
ORORA LIMITED ANNUAL REPORT 2023
35
Corporate Governance
Statement
Senior management
Delegations to management
Day-to-day management of Orora is
formally delegated to the CEO, supported
by senior management, in accordance with
the Board Charter and the Company’s
Delegated Authority Policy, a summary of
which is available on Orora’s website.
These delegations are reviewed on a
regular basis to ensure that the division of
functions remains appropriate to the needs
of the Company.
Senior executive appointments
and agreements
The Company conducts all appropriate
background checks on prospective senior
executives, including reference checks and
criminal and bankruptcy record checks.
The Company also has a written agreement
in place with the CEO and each senior
executive, setting out the terms and
conditions of their employment and the
obligations they are required to fulfil in their
role. Each candidate is required to accept
all terms and obligations as a condition of
their employment. The key terms of the
CEO’s and Chief Financial Officer’s (CFO)
employment contracts are set out in the
Remuneration Report in the 2023 Annual
Report.
Senior executive induction
and performance evaluation
The Company has an established process
for the induction of new senior executives,
which enables them to gain an
understanding of the Company’s purpose,
values, strategy, financial position,
operations and risk management policies.
The performance of senior executives is
reviewed on an ongoing basis, and a formal
performance evaluation takes place every
six months in accordance with the
Company’s established evaluation process.
Senior executives and the CEO are
assessed against measurable short and
long-term objectives which are aligned with
the Company’s business strategy and
operating plan, as well as how they have
demonstrated behaviours that are
consistent with Orora’s values. The CEO
performs the evaluations of the other
senior executives. An evaluation of senior
executives was last undertaken in
July/August 2023. The outcomes of these
assessments are reported to the Board.
The Board is responsible for approving
the objectives of the CEO and conducting
a formal annual evaluation of the
performance of the CEO, including an
assessment against these objectives and
the demonstration of behaviour consistent
with Orora’s values.
The outcome of the performance evaluation
of the senior executives and the CEO then
contribute to the determination of the
senior executives’ and CEO’s remuneration.
The Company’s Senior Executive Reward
and Evaluation Policy is published on
Orora’s website.
Further information relating to the
performance evaluation of applicable
senior executives can also be found in
the Remuneration Report in the 2023
Annual Report.
Board Committees
To increase its effectiveness, the Board has
established the following standing Board
Committees:
• Audit, Risk & Compliance
• Executive
• Human Resources
• Nomination
• Safety, Sustainability & Environment.
The members of these Committees as at
the date of this Statement are set out in
the table below. Profiles of each
member/Director, including their tenure,
relevant experience and qualifications, are
set out in the Board of Directors section of
the 2023 Annual Report and on the
Company’s website. The Company
Secretary is the Secretary of each
Committee.
Each Committee has a Charter which
includes a more detailed description of its
role, responsibilities and specific
composition requirements. The Charters
are available on Orora’s website. The Board
may establish other Committees from time
to time to deal with matters of special
importance.
All Directors are welcome to attend
Committee meetings even though they
may not be a member.
The Committees have access to senior
executives and management, and
independent advisors. Committee agendas
and papers are available to all Directors
before the meetings. Copies of the minutes
of each Committee meeting are made
available to the full Board, and the Chair
of each Committee provides an update on
the outcomes at the Board meeting that
immediately follows the Committee
meeting.
Board Committees
Directors
Rob Sindel
Brian Lowe
Abi Cleland
Tom Gorman
Sam Lewis
Michael Fraser
Board
l
l
l
l
l
l
Audit, Risk &
Compliance Committee
l
l
l
Executive
Committee
l
l
l
Human Resources
Committee
Nomination
Committee*
l
Safety, Sustainability &
Environment Committee
l
l
l
l
l
l
l
l
l Chair l Member
* All Nomination Committee matters were dealt with by the full Board during the financial year.
36
ORORA LIMITED ANNUAL REPORT 2023
Audit, Risk & Compliance Committee
The Audit, Risk & Compliance Committee
Charter provides that all members of the
Committee must be Non-Executive
Directors, the majority of whom are
independent, and the Chair cannot be the
Chair of the Board. At least one member of
the Committee must be a qualified
accountant or other finance professional
with relevant experience of financial and
accounting matters. Current members,
including the Chair of the Committee, are
shown in this Statement and in the Board
of Directors section of the 2023 Annual
Report.
The Committee assists the Board in
fulfilling its responsibility for oversight of
the quality and integrity of the accounting,
auditing and financial reporting of the
Company, the Company’s compliance with
legal and regulatory requirements and
operations, effectiveness of the enterprise
risk framework, including monitoring risk
parameters of the Company, the
Company’s systems of internal control and
its risk management framework (for
financial and non-financial risks), including
elevated, new or emerging risks, and such
other duties as directed by the Board. The
Committee Charter provides that the
Committee has the authority and resources
necessary to discharge its duties and
responsibilities, including meeting with the
internal and/or external auditors without
management present.
The Committee approves the appointment,
or dismissal, of the head of the Company’s
internal audit function. The head of the
internal audit function provides regular
reports directly to the Committee.
The Committee is responsible for the
appointment, compensation, retention and
oversight of the external auditor, including
its independence, and review of any non-
audit services provided by the external
auditor. The Committee’s policy is to
review the performance of the external
auditor regularly regarding quality, costs
and independence. In discharging its role,
the Committee is empowered to
investigate any matter brought to its
attention. The Company’s current external
auditor is KPMG.
The internal and external auditors, the CEO
and the CFO are invited to the Committee
meetings at the discretion of the
Committee Chair.
The Committee is required under its
Charter to meet at least quarterly and
otherwise as necessary.
Executive Committee
The Executive Committee deals with
matters referred to it by the Board or with
urgent matters that may not be deferred
until the next meeting of the Board. A
majority of the Committee members must
be independent. Current members,
including Chair, of the Committee are
shown in this Statement and in the Board
of Directors section of the 2023 Annual
Report.
Human Resources Committee
The Human Resources Committee assists
the Board in fulfilling its responsibilities to
shareholders and regulators in relation to
the Company’s people and culture policies
and practices, including overseeing CEO
and senior executive remuneration and
performance.
All members of the Committee are required
to be Non-Executive and Independent
Directors. The Committee reviews the
remuneration of the CEO and other senior
executives, taking advice from external
advisors where appropriate. No individual is
directly involved in deciding their own
remuneration.
Current members of the Committee,
including the Chair, are shown in this
Statement and in the Board of Directors
section of the 2023 Annual Report. The
CEO is not a member of this Committee,
but attends meetings by invitation, other
than for matters relating to his own
remuneration.
The Committee meets at least quarterly
and as otherwise required.
Nomination Committee
The Nomination Committee oversees the
nomination and succession planning
processes for Directors, and reviewing or
making recommendations to the Board on
matters which the Committee considers
necessary, or are requested by the Board.
When a vacancy in the position of Non-
Executive Director exists or there is a need
for particular skills, the Committee, in
consultation with the Board, determines
the selection criteria based on the skills
deemed necessary, having regard to the
skills and experience of the Board as
referred to in the Board skills matrix. The
Committee identifies potential candidates,
with advice from an external third party
where appropriate. The Board then
appoints the most suitable candidate.
Board appointees must stand for election
at the next Annual General Meeting of
shareholders following their appointment.
The Committee also makes
recommendations to the Board and
oversees implementation of the procedure
for evaluating the performance of the
Board, the Board Committees and each
Non-Executive Director, and also oversees
and makes recommendations to the Board
in respect of any ongoing training
requirements for Directors. The Committee
comprises three Independent Non-
Executive Directors, and the Chair of the
Board is the Chair of the Committee.
Current members of the Committee are
shown in this Statement and in the Board
of Directors section of the 2023 Annual
Report.
Committee members are not involved in
making recommendations to the Board in
respect of themselves. All Committee
matters were dealt with by the full Board
during the reporting period and
consequently there was no separate
meeting of the Committee.
Safety, Sustainability &
Environment Committee
The Safety, Sustainability and Environment
Committee provides advice and assistance
to the Board in reviewing and
recommending to the Board for the
approval of appropriate safety and
sustainability goals and objectives, and
monitoring the decisions and actions of
management. This includes upholding the
Company’s commitment as a signatory to
the United Nations Global Compact (UNGC).
All members of the Committee are required
to be Non-Executive and Independent
Directors. Current members of the
Committee, including the Chair, are shown
in this Statement and in the Board of
Directors section of the 2023 Annual
Report.
The Committee meets at least quarterly
and as otherwise required.
Attendance at Board and Committee
meetings during the reporting period
Details of Director attendance at Board
and Committee meetings held during the
financial year are provided in the Directors’
Report.
ORORA LIMITED ANNUAL REPORT 2023
37
Corporate Governance
Statement
Sustainability
Orora’s sustainability approach is framed
by its obligations as a signatory to the
UNGC, matters of utmost importance to
key stakeholders and legal requirements.
The pillars that form Orora’s redefined
sustainability program are Circular
Economy, Climate Change and Community.
The Sustainability section of the 2023
Annual Report explains Orora’s
sustainability governance and reporting,
how business-wide processes support
Orora’s sustainability objectives, how the
most important sustainability issues are
managed, and the progress made during
FY23. The Principal Risks section of the
2023 Annual Report lists Orora’s current
strategic risks, including exposure to social
and environmental risks, and outlines
strategies to respond to identified
exposures.
Acting ethically and
responsibly
Code of Conduct and Ethics
Orora recognises the importance of
honesty, integrity and fairness in
conducting its business, and is committed
to increasing shareholder value in
conjunction with fulfilling its
responsibilities as a good corporate citizen.
All Directors, managers and team members
are expected to act lawfully and with the
utmost integrity and objectivity, striving at
all times to enhance the reputation and
performance of the Company.
Orora continually assesses and upgrades
its policies and procedures to ensure
compliance with corporate governance
requirements.
Code of Conduct and Ethics,
Anti-Bribery and Anti-Corruption
and Whistleblower policies and
procedures
Orora’s Code of Conduct and Ethics Policy
(Code) and values set the standards we
expect of our people. Further information
on Orora’s values can be found in the 2023
Annual Report and represent Orora’s
commitment to act ethically, lawfully and
responsibly.
The Code emphasises a strong culture of
integrity and ethical conduct in association
with independent Anti-Bribery and Anti-
Corruption and Whistleblower policies.
Trading of securities during a blackout
period can only occur in exceptional
circumstances and with the approval of the
Company Secretary or, in some
circumstances, the Chair.
The Directors and executive team are
required to certify their compliance with
the policy at the end of each financial year.
The policy prohibits Directors, team
members and certain associates from
engaging in hedging arrangements over
unvested securities issued pursuant to any
employee option or share plans and certain
vested securities that are subject to the
Minimum Shareholding Policy. The Share
Trading Policy meets the requirements of
the ASX Listing Rules on trading policies
and is available on Orora’s website.
Other policies
The Company has a number of other
governance policies which outline
expected standards of behaviour of
Directors and team members which are
available on Orora’s website.
Human rights due diligence
Orora is committed to our people, and the
protection of human rights. All forms of
slavery in our operations and the
operations of our suppliers are opposed.
Orora’s human rights commitments, due
diligence and initiatives can be found in the
Sustainability section of the 2023 Annual
Report, in our Modern Slavery Statement
and on Orora’s website under the
‘Sustainability’ section.
Compliance training
Orora has a compliance training program in
place which is completed by team
members. This program supports the
principles set out in the Code and other
applicable policies. Orora also has a
comprehensive competition/anti-trust
compliance training program.
There are also numerous activities and
compliance programs across the Company
designed to promote and encourage the
responsibility and accountability of
individuals for reporting inappropriate or
unethical practices.
These policies cover expectations on a
broad range of issues, including
environmental management, health and
safety, human rights, community
engagement, political donations and
participation, use of information and its
security, market disclosure, fraud, bribery,
corruption and the avoidance of conflicts of
interest.
Team members and other third parties
(including suppliers) can report reasonably
suspected misconduct or an improper
state of affairs or circumstances within the
Company, including unethical/illegal
behaviour, coercion, harassment or
discrimination, fraud or corrupt practices,
or workplace safety or environmental
hazards through eligible recipients noted in
the Company’s Whistleblower Policy,
including anonymously through an
independent third-party integrity reporting
service. The Whistleblower Policy
emphasises that Orora will not tolerate
anyone being discouraged from speaking
up or being adversely affected because
they have reported misconduct in
accordance with the policy. These policies
are available on Orora’s website.
Material breaches of the Code and the Anti-
Bribery and Anti-Corruption Policy, and
reports of incidents under the
Whistleblower Policy, are reported to the
Board through the Audit, Risk &
Compliance, or the Human Resources
Committee, and the program is periodically
reviewed for its effectiveness and
promoted to team members across Orora.
The Company’s Supplier Code of Conduct
and Ethics Policy (Supplier Code) sets out
the expectations of Orora’s suppliers and
applies to all suppliers, including all
organisations and sub-contractors
providing goods and services to Orora,
globally. The Supplier Code is available on
Orora’s website.
Trading in Company securities
Orora has a Share Trading Policy that
outlines insider trading laws and prohibits
Directors, team members and certain
associates from trading in Orora’s
securities during specified ‘blackout
periods’.
The blackout periods are the period from
the close of trading on 31 December each
year until after the announcement to the
ASX of the Company’s half-year results, the
period from the close of trading on 30 June
each year until after the announcement of
the Company’s full-year results and any
other period that the Board specifies from
time to time.
38
ORORA LIMITED ANNUAL REPORT 2023
Diversity, Equity
& Inclusion
Orora’s major centres of operation,
in Australia, New Zealand and North
America, are in some of the most
demographically diverse countries.
Orora is committed to developing an
inclusive and respectful work
environment to optimise diversity
of thought and background. Bringing
together people with different
backgrounds and ways of thinking is
a powerful source of competitive
advantage in driving better decision
making, innovation and growth.
Orora’s Diversity, Equity and Inclusion
Policy, available on Orora’s website,
recognises the positive differences
each team member brings to the
business and how Orora team
members can connect and work
together to capture the benefits of
these differences.
Each year Orora reports Gender
Equality Indicators in accordance with
the Workplace Gender Equality Act
2012 (Cth). Our 2022 submission can
be viewed at the website of the
Workplace Gender Equality Agency.
During the reporting period, the
proportion of Orora’s workforce
currently represented by women in
senior leadership roles is set out in the
chart on this page.
Further information relating to Orora’s
Diversity, Equity and Inclusion focus
and initiatives is included in the
Sustainability section of the 2023
Annual Report.
Measurable objectives
and progress
Each year the Board approves
measurable objectives for diversity,
equity and inclusion in the composition
of the Board, senior executives and
workforce generally, and monitors
progress towards achieving them. The
measurable objectives for FY23 remain
unchanged. The FY23 progress
towards achieving these objectives is
outlined on this page.
Orora will also progressively add more
diversity, equity and inclusion goals as
part of its redefined sustainability
program.
Female representation in senior leadership roles at each executive level
on 30 June 2023
%
45
40
35
30
25
20
15
10
5
0
40
39
38
39
37
37
33
29
32
17
Board*
CEO 1
CEO 2
CEO 3
Total
FY23
FY22
*In April 2022 the number of Directors increased from six to seven as a temporary measure to facilitate Board
transition.
FY23 measurable objectives approved by the Board
FY23 measurable objective
Progress (as at 30 June 2023)
Maintaining not less than 30%
of each gender in the
composition of Orora’s Board
Ensuring that Orora continues
to employ greater than 30%
female of all external new hires
Ensuring that Orora identifies
and attracts female talent for
Board and senior management
vacancies
Supported by:
33% female and 67% male Directors.
30% (195 new females have been recruited across all of Orora in
the past 12 months).
Orora continues to ensure that female talent candidates are
included in Board and senior management succession planning
and vacancies – progress is always within the context of hiring
the best talent available. There has been an increase in female
representation in the executive team (direct reports to the MD &
CEO) to 40% with the newly appointed female President of OPS
North America.
The development of women
into leadership roles, including
through the Women in
Leadership at Orora (WILO)
program
Orora continues to support development of women into
leadership roles and invest in female talent with the WILO
program running for the seventh consecutive year in 2023.
Ongoing talent reviews for the WILO graduates have been
introduced to support continuous development.
Using an objective process in
valuing roles and setting
comparative male and female
remuneration for salaried
positions
A role-based remuneration structure has been established
globally to reduce unconscious bias during remuneration
decision making.
Gender pay equity reviews have been introduced at various
stages of the remuneration cycle, including during annual
remuneration review and incentive outcome assessments.
Promoting holistic working
practices, including, but not
limited to, continuing to
support flexible working
arrangements, where
practicable and provide training
on unconscious bias and
inclusion.
Orora continues to prioritise team member health and wellbeing.
An ongoing flexible working approach has been introduced at
Orora where office-based team members are able to choose
between a full five days in the office or alternatively, adopt a
hybrid working model between the office and remote working
subject to business, team and individual needs.
Orora continues to educate team members and leaders on
unconscious bias and creating an inclusive culture in the
organisation.
ORORA LIMITED ANNUAL REPORT 2023
39
Corporate Governance
Statement
Remuneration
Details of Orora’s remuneration policies,
practices and performance reviews and
outcomes, and the remuneration paid to
Directors (Executive and Non-Executive)
and key management personnel are set out
in the Remuneration Report section of the
2023 Annual Report. Non-Executive
Directors receive no incentive payments
and there are no retirement benefit
schemes in place.
Shareholders will be invited to consider and
adopt the Remuneration Report at the
2023 Annual General Meeting.
Risk management
and assurance
The Company understands and recognises
that rigorous risk and opportunity
management is essential for corporate
stability and for sustaining its competitive
market position and long-term
performance.
Risk management
The Board is responsible for overseeing the
risk management framework, internal
controls and systems for monitoring legal
and ethical compliance. The Board sets the
risk appetite and considers Orora’s risk
profile on a regular basis to ensure it
supports the achievement of Orora’s
strategic and business goals.
The Principal Risks section of the 2023
Annual Report lists the current strategic
risks, including Orora’s exposure to social
and environmental risks, and outlines our
strategies to respond to identified
exposures.
Orora’s approach to managing the
sustainability aspects of strategic and
operational risks is set out in further detail
in the Sustainability section of the 2023
Annual Report.
The Company has implemented an
enterprise risk management (ERM)
framework that incorporates the principles
of effective risk management, as set out in
the Global Risk Management Standard ISO
31000. The ERM seeks to apply risk
management across the entire
organisation so that all material risks (both
financial and non-financial) can be
identified, assessed and managed.
The Audit, Risk & Compliance Committee
reviews the Company’s risk management
framework on a regular basis to ensure that
it continues to be sound. The framework is
in the process of being reviewed. It remains
fit for purpose and will be reviewed on an
ongoing basis for continuous improvement
opportunities.
Several layers assist the Board in ensuring
the appropriate focus is placed on the risk
management framework:
• Audit, Risk & Compliance Committee —
provides assistance and advice to the
Board in fulfilling its responsibility
relating to the Company’s financial
reporting, internal control structure,
risk management systems, including
the risk management framework, and
the internal and external audit
functions.
• Safety, Sustainability & Environment
Committee — provides assistance and
advice to the Board on the
management of the Company’s safety,
sustainability and environment goals,
objectives, legal responsibilities and
monitoring the decisions and actions of
management in upholding the
Company’s commitment as a signatory
to the UNGC and achieving the
Company’s goal to be a sustainable
organisation.
• Human Resources Committee —
provides assistance and advice to the
Board on the Company’s people, culture
and remuneration policies and
practices as well as the Company’s
involvement in the communities in
which it operates.
• Executive Team — senior executives
have responsibility for driving and
supporting risk management across
the Orora Group. Each business group
within the Company then has
responsibility for implementing this
approach and adapting it, as
appropriate, to its own circumstances.
Orora’s Continuous Disclosure Committee
has responsibility for assessing any
potential material risk to Orora and any
consequent need for market disclosure.
Assurance
The Board is responsible for oversight of
the effectiveness of the Company’s internal
control environment, with input and
recommendation from the Audit, Risk &
Compliance Committee.
The Board’s policies on internal control
governance are comprehensive, as noted
earlier in this Statement, and include
clearly drawn lines of accountability and
delegation of authority, as well as
adherence to the Code.
In order to effectively discharge these
responsibilities, the Company has a
number of assurance activities (including
internal and external audit) to
independently review the control
environment and provide regular reports to
the Board, the Audit, Risk & Compliance
Committee and management committees.
These reports and associated
recommendations are considered and
acted upon to maintain or strengthen the
control environment.
Financial reporting
The Audit, Risk & Compliance Committee
assists the Board in fulfilling its
responsibilities in overseeing Orora’s
processes which ensure the quality and
integrity of financial statements and
reporting, compliance with legal and
regulatory requirements, and reviewing
material changes in accounting or reporting
requirements and assessing subsequent
effects on Orora’s policies and practices.
Before approving the financial statements
for each half year and full year, the Board
receives a declaration from the CEO and
CFO stating that:
•
•
in their opinion, the Company’s
financial records have been properly
maintained and that they comply with
the relevant accounting standards and
give a true and fair view in all material
respects of the Company’s financial
position and performance; and
the opinion has been formed based on
a sound system of risk management
and internal control which is operating
effectively.
40
ORORA LIMITED ANNUAL REPORT 2023
Verification of corporate reports
The Company completes a documented
internal verification process of corporate
reports that the Company releases to the
market, including those that are not
audited or reviewed by the external auditor.
The Company’s annual and half-year
financial statements are underpinned by a
Group-wide certification process where
each executive and chief financial officer
for each business responds to set
questionnaires and signs a certification.
This process provides verification and
approval for the CEO and CFO to then
provide a signed representation letter to
the external auditor and a signed
declaration to the Board that supports that
the accounts provide a true and fair view,
that there is integrity in the statements,
and that the financial statements comply
with the Corporations Act 2001 (Cth)
(Corporations Act) and relevant accounting
standards. The CEO and CFO are both
present for Board discussions relating to
financial statements, and the Audit, Risk &
Compliance Committee has private
sessions with the external auditor to
discuss any issues or concerns without
management before recommending the
Board approves the release of financial
statements to the market. The certification
process is reviewed annually having regard
to any changes in the Corporations Act,
accounting standards or governance.
For other types of unaudited periodic
corporate reports (including the annual
Modern Slavery Statement and this
Statement), the Company conducts an
internal review and verification process to
ensure that such reports are materially
accurate, balanced and provide investors
with appropriate information before
approval by the Board and release to the
market. External advice is obtained as
required.
Engagement with
shareholders and
other stakeholders
Orora has a number of stakeholders
including shareholders, employees,
customers, suppliers and local
communities. The Board identifies and
prioritises Orora’s key stakeholders,
develops a strategy for engagement with
stakeholders and supports management to
engage with key stakeholders to
understand, consider and respond to
issues.
Orora is committed to keeping the market
informed in a timely manner and complying
with its continuous disclosure obligations.
Continuous disclosure and
communications
Orora’s Market Disclosure and
Communications Policy is available on
Orora’s website and details the Company’s
procedures to ensure compliance with
applicable legal and regulatory
requirements under the Corporations Act
and the ASX Listing Rules. The Policy is
approved by the Board and is reviewed
regularly to ensure compliance with the
ASX Listing Rules and guidance on
continuous disclosure. It applies to all
Directors and Orora team members. Its
purpose is to ensure:
• Compliance with legal obligations to
identify and keep the market fully
informed of material information.
• That access to this material
information is protected and controlled
until such material information is
announced to the market.
• Orora meets its disclosure obligations.
• That investors are provided with equal
and timely access to material
information.
Orora’s Continuous Disclosure Committee
meets as required, and often on very short
notice, to ensure compliance with
disclosure requirements. The CEO approves
all disclosures before they are released.
The Board approves all disclosures that
are significant and Directors receive a copy
of all ASX disclosures promptly following
release. The Company Secretary is
responsible for communications with
the ASX.
Shareholder engagement
Orora is committed to providing
shareholders and other financial market
participants with consistent and
transparent corporate reporting, as well as
timely and accurate disclosures.
Shareholders and other stakeholders are
informed of all material matters affecting
the Company through ASX announcements,
periodic communications and a range of
forums and publications, available on the
Company’s website.
Other shareholder engagement activities
include:
• Encouraging shareholders to
participate in general meetings
including the AGM, by attending,
exercising voting rights and asking
questions of the Board. Orora conducts
all voting at general meetings by a poll,
ensuring that voting outcomes reflect
the proportionate holdings of all
shareholders who vote (whether in
person or by proxy or other
representative). The Company’s
external auditor will attend the AGM
and will be available to answer
questions from shareholders on the
conduct of the audit.
• Participating in Orora’s investor
relations program, which includes
investor roadshows and ad-hoc
investor meetings and conference calls
with institutional investors, private
investors and sell-side analysts.
• Engagement with proxy advisors,
investor representative organisations
and the Australian Shareholders
Association.
• Providing through the Company’s
website up-to-date information about
the Company and its operations, the
Corporate Governance Framework, the
Board and management, ASX
announcements, the share price,
dividend distributions and other
relevant information. Information about
Orora is also communicated through a
range of other channels, such as
LinkedIn.
• Giving shareholders the option to
receive communications from, and
send communications to, Orora and its
share registry electronically.
• New and substantive investor and
analyst presentations are released on
the ASX Market Announcements
Platform ahead of the presentation.
ORORA LIMITED ANNUAL REPORT 2023
41
Principal
risks
Orora actively manages a range of principal risks and uncertainties with the potential to have a material impact on the Orora Group and
its ability to achieve its strategic and business objectives. Orora continuously monitors and re-assesses our principal risks to ensure they
remain relevant following any changes in our internal and external environment.
Orora’s principal risks are outlined below in no particular order.
Area of Materiality
Risk
Mitigation and Monitoring Strategies
Workplace safety
and health
Workplace safety and health events may have the
potential to adversely affect Orora’s team members and
operations.
Orora’s commitment to keeping people safe and healthy is paramount and
is a core value. Orora’s senior leadership team and Board are focused on
enhancing Orora's safety culture and performance, and regularly review
safety performance and improvement strategies and activities across the
business, including training.
Business interruption
and disruption
(including cyber risk)
Orora operates numerous sites across several
countries. Circumstances such as natural disaster,
pandemic, cyber breaches, operational failure or
industrial disruption may occur, which may preclude key
sites from operating. In these circumstances,
operational and financial performance may be
negatively impacted.
Economic conditions
Orora is susceptible to major changes in macro-
economic conditions globally or in a single country,
region or market. Sudden and/or prolonged deterioration
in the economy may impact the value chain or
industries on which Orora is dependent and could have
a material negative impact on operational and financial
performance.
Business continuity disaster planning and cyber controls are periodically
assessed and tested. Key programs of work are also in place to be able to
monitor and enhance the effectiveness of security capabilities as the
threat landscape continues to evolve.
Orora also engages in continuous identification, review and mitigation of
property risks, as well as independent loss prevention audits, and has a
suitable insurance program in place.
Regular reporting on these key risks and control metrics is provided to the
Board, Executive and Management.
Orora seeks to mitigate the severity of impact that deterioration in
macro-economic conditions may have by:
•
•
•
•
•
operating businesses that have a broad spread of geographic locations,
raw material inputs and customers servicing several end-markets
deploying an operating model that focuses on continually improving
the value proposition to customers
creating and maintaining a high-performance culture
remaining disciplined in cash and cost management
continuing to invest in manufacturing capabilities and innovation to
improve cost positions.
Competition
Supply chain
Talent
Orora operates in highly competitive markets with
varying barriers to entry, industry structures and
competitor motivational patterns. The actions of
established, new or potential competitors may have a
negative impact on financial performance.
Orora is well placed to leverage both its regional experience and insight,
and its international footprint and scale, to deliver new ideas and value
propositions to customers to gain competitive advantage. Orora also
continuously focuses on quality and innovation as a source of competitive
advantage.
Disruption to Orora’s supply chain caused by an
interruption to the availability of key components, raw
materials, energy supply, or cost-effective
transportation may adversely impact delivery timelines
for capex projects, sales and/or customer relations,
resulting in unexpected delays or increased costs.
Orora’s businesses are sensitive to input price risks,
specifically energy and other commodities, in various
forms and with varying degrees of impact. Although
Orora seeks to mitigate these risks through various
input pricing strategies and pass-through mechanisms,
there is no guarantee that Orora will be able to manage
all future energy and commodity price movements.
Failure to do so may adversely affect Orora’s operations
and financial performance.
Orora’s operating and financial performance is largely
dependent on its ability to attract and retain talent and,
in particular, key personnel. Any loss of key personnel
could adversely affect operating and financial
performance.
Orora’s approach to supply chain risk management is multi-faceted and
includes:
•
•
•
•
•
implementing a multi-sourcing strategy for the supply of raw materials
customer contracts that provide for regular and timely pass-through of
movements in raw material input costs
input pricing strategies including active monitoring of input prices
supplier due diligence and risk management including a supplier
assurance framework and code of conduct
a focus on innovation in sustainable energy sourcing and pricing
including entering long-term renewable energy power purchase
agreements.
Orora’s strategic Human Resources (HR) priorities aim to create an
inclusive culture that optimises diversity of background and thought, by
attracting and retaining the best talent in the market. Orora continues to
invest in a high performance culture, is encouraged by setting challenging
objectives and rewarding high performers, while succession planning is
undertaken to develop leadership talent. Orora believes this strategic
approach to HR management provides a tangible source of competitive
advantage.
Remuneration is competitive in the relevant employment markets to
attract, motivate and retain talent, and is aligned with business outcomes
that deliver value to shareholders.
42
ORORA LIMITED ANNUAL REPORT 2023
Area of Materiality
Risk
Mitigation and Monitoring Strategies
Sustainability,
including climate
change
Customers
and consumer
preferences
Capital
investments
Mergers &
Acquisitions (M&A)
Country and
regulatory risk
Litigation
Financial and
treasury
The physical and non-physical impacts of
environmental, social and governance (ESG) risks,
including climate change, may affect Orora’s licence to
operate, assets and productivity. Climate change may
present risks arising from extreme weather events
affecting business operations and certain customer
segments, which could impact the future profitability
and viability of Orora.
Climate change may also present transition risks which
may include but are not limited to changes in the
market, regulatory environment, technology, and
customer preferences, which could also impact the
future profitability and viability of Orora.
Orora has strong relationships with key customers for
the supply of packaging and Point of Purchase products
and related services. These relationships are critical to
Orora’s success. The loss of a key customer, or a
significant quality issue, could have a negative impact
on financial performance.
Changes in consumer preferences may result in some
of Orora’s existing product range becoming obsolete or
new products not meeting sales and margin
expectations.
Consumer preferences may be influenced by regulation
change and environmental risk, including climate risk
(both of these risks are separately listed in this Principal
Risks section).
Orora is increasing expenditure on capital works in
response to increasing customer demands for our
products, and an ongoing commitment to invest in the
upgrade of our plant and equipment. There is a risk that
the returns on these investments may vary if customer
requirements materially change or there is substantial
delay, to the delivery of plant or equipment, increased
costs or project execution challenges.
Orora is committed to achieving its ESG goals under three pillars that form
its sustainability program – Orora’s ‘Promise to the Future’ Circular
Economy, Climate Change and Community. The Sustainability section of
this Annual Report summarises the Company’s ESG goals, initiatives and
progress including Orora’s greenhouse gas emission reduction
commitments and investments that have been informed by Orora’s initial
Taskforce on Climate Related Financial Disclosure (TCFD) analysis outlining
the risks and opportunities posed by climate change for Orora. The TCFD
disclosure along with sustainability activities and disclosures are available
on Orora’s website under the ‘Sustainability’ section. ESG risks and
opportunities are continually assessed, and overseen by the Board, the
Safety, Sustainability & Environment Committee, and the Executive
Leadership Team. Orora continuously reviews expenditure plans to
mitigate ESG and customer risk, and operating businesses that have a
broad geographic spread and customers serving a number of end markets.
The key to mitigating customer risk is Orora’s commitment to being the
industry-leading customer-focused sustainable packaging solutions
company. This is embedded in Orora’s promise to its customers.
In addition, no single customer generates revenue greater than 10% of
total revenue for the Orora Group.
Orora’s commitment to responsible capital investment linked to
contracted customer demand, innovation, and its strong relationships with
its customers, seeks to address evolving consumer preferences.
Orora continuously reviews operating and capital expenditure plans to
mitigate customer risk or changing consumer preferences.
Orora seek to mitigate these risks through a variety of measures including:
linking capital investments to contracted demand
due diligence throughout procurement and tender processes
project oversight through steering and governance committees
an ongoing focus on supply chain issues
•
•
•
•
• management of project risk in accordance with our Enterprise Risk
Management Framework.
Orora’s growth opportunities are dependent, in part, on
disciplined selection and successful integration of
acquisition targets that are consistent with the Group’s
strategy. Failure to be disciplined in selection, effective
at integration or focused on capturing value could
impact operations and have adverse consequences for
the achievement of expected financial benefits.
The Group has an established M&A framework that imposes rigour in target
selection, approval, due diligence, integration planning and post-
acquisition value capture. In addition, Orora’s management team possess
experience in undertaking M&A activity and executing the integration
process. Where deemed necessary, the Group will utilise the services of
external advisors to supplement internal resourcing to successfully
execute and integrate acquisitions.
Orora predominantly operates in Australia, New Zealand
and the United States under a broad range of legal,
accounting, tax, regulatory (including environmental)
and political systems. The profitability of Orora’s
operations may be adversely impacted by changes in
fiscal or regulatory regimes including tax policies,
difficulties in interpreting or complying with the local
laws of the countries in which Orora operates and
reversal of current political, judicial or administrative
policies, including as a result of geopolitical tensions.
Orora’s customers, many of which operate across a
broad range of countries, are subject to regulatory risk
in various jurisdictions, which may have an impact on
their operations and consequently Orora’s operations.
Orora continually monitors changes or proposed changes in regulatory
regimes that may have an impact on Orora and, where appropriate,
engages consultants and advisors to address specific issues. Where
possible, Orora appoints local management teams that bring a strong
understanding of the local operating environment and strong customer
relationships. Orora also has a global compliance training program and its
business leaders regularly review country and regulatory risk.
Orora’s tax affairs are governed by a tax risk framework that is approved,
reviewed and reported against by the Audit, Risk & Compliance Committee
of the Board. Tax risks are actively monitored and managed.
As is the case with all organisations, Orora is exposed to
potential legal and other claims or disputes in the
ordinary course of business, including contractual
disputes and other claims.
Orora takes legal advice in respect of such claims and, where relevant,
makes provisions and disclosure regarding such claims in its financial
statements. There are no current undisclosed claims or disputes of a
material nature.
Orora faces a variety of risks arising from the
unpredictability of financial markets, including the cost
and availability of funds to meet its business needs and
movements in market risks, such as interest rates,
foreign exchange rates and commodity prices.
Orora’s Treasury function adopts a financial risk management policy
approved by the Board. Appropriate commercial terms are negotiated and
derivative financial instruments are used, such as foreign exchange
contracts, commodity contracts and interest rate swaps, to hedge these
risk exposures. In addition, where possible, debt is proportionally drawn
down in currencies that align with the proportion of assets in those same
currencies to create a natural hedge for foreign exchange risk.
ORORA LIMITED ANNUAL REPORT 2023
43
Board of Directors
Rob Sindel
(BEng, MBA, GAICD, FIEAust, CPEng)
Brian Lowe
(MBA)
Independent Non-Executive Director
and Chair
Managing Director and
Chief Executive Offi cer
Rob Sindel brings international
experience obtained from executive
management and leadership positions,
principally from his 30-year career in
the construction and manufacturing
industries both in Australia and the
United Kingdom. Rob has particular
insights in sales and marketing, in B2B
environments, process improvement,
strategic management and operating in
high-risk industries.
Prior to Orora, Brian Lowe spent eight
years with Delphi Technologies where
he was Managing Director of the Asia
Pacifi c Powertrain business, including
fi ve years based in Shanghai. This
followed a 10-year career at General
Electric (GE), where he held various
leadership roles in sales and marketing,
and supply chain. He was Managing
Director of GE Plastics, Australia from
2001 to 2003.
Rob was formerly the Managing Director
and Chief Executive Offi cer of CSR
Limited from 2011 until 2019. Rob has
been a Director of Orora Limited since
March 2019 and was appointed Chair
of the Board in February 2020.
In his 12 years at Orora, Brian has been
the Group General Manager of the
Beverage (2011 — 2015) and Fibre (2016
— 2019) businesses. He was appointed
Managing Director and Chief Executive
Offi cer of Orora Limited in October 2019.
Board Committee membership
Directorships of listed entities and
other directorships and offi ces
Current:
• Director, Boral Limited
(since September 2020)
• Director, Mirvac Group
(since August 2020)
• Member, Yalari NSW Advisory
Committee (since August 2017)
Board Committee membership
KEY — Committee Member
(Chair of each Committee
indicated by black circle outline)
Executive Committee
Nomination Committee
Safety, Sustainability & Environment Committee
Human Resources Committee
Audit, Risk & Compliance Committee
Abi Cleland
(BA, BCom, MBA, GAICD)
Independent Non-Executive Director
Abi Cleland has extensive global
experience in strategy, M&A, digital
and running businesses. This has been
gained from senior executive roles in the
industrial, retail, agriculture and fi nancial
services sectors, including with ANZ,
Amcor, Incitec Pivot and as Managing
Director of 333 Management, after
starting her career at BHP in Australia
and Asia.
From 2012 to 2017, Abi established and
operated an advisory and management
business, Absolute Partners, focusing
on strategy and building businesses
leveraging disruptive change for
large corporates and entrepreneurial
businesses. Abi has been a Director of
Orora Limited since February 2014.
Directorships of listed entities and
other directorships and offi ces
Current:
• Director, Coles Group Ltd
(since November 2018)
• Director, Computershare Limited
(since February 2018)
• Director, Methodist Ladies College
Victoria (since January 2021)
• Director, ProbeCX
(since September 2022)
Recent (last three years):
• Chair, Planwise Australia
(June 2016 to March 2020) and Director
(January 2016 to March 2020)
• Director, Swimming Australia (Audit
Chair) (July 2015 to June 2021)
• Director, Sydney Airport Limited
(April 2018 to March 2022)
Board Committee membership
44
ORORA LIMITED ANNUAL REPORT 2023
Michael Fraser
(BCom, FCPA, MAICD)
Tom Gorman
(BA, MA, MBA)
Sam Lewis
(BA (Hons), CA, ACA, GAICD)
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Michael Fraser has a wealth of
experience, following a 30-year career
at AGL Energy where he held various
senior management positions in sales
and marketing, distribution, corporate
services and regulatory management.
Michael was formerly the Managing
Director and Chief Executive Offi cer of
AGL Energy Limited. Michael is currently
Independent Chairman of APA Group
and was until recently, a Non-Executive
Director of Aurizon Holdings Ltd. Michael
has been a Director of Orora Limited since
April 2022.
Directorships of listed entities and
other directorships and offi ces
Current:
• Independent Chair, APA Group (since
October 2017; and Independent Director
since September 2015)
Recent (last three years):
• Director, Aurizon Holdings Ltd
(February 2016 to February 2022)
Board Committee membership
Thomas (Tom) Gorman brings a wealth of
experience to Orora, following a 30-year
career in executive positions at Ford
Motor Company and Brambles Limited, of
which he was Chief Executive Offi cer. Tom
has worked in multiple functions including
fi nance, operations, logistics, marketing
and business development in England,
France, Australia and the United States
(where he is a resident).
Tom graduated cum laude from Tufts
University with BA degrees in Economics
and International Relations, obtained an
MA from the Fletcher School of Law and
Diplomacy, and an MBA with distinction
from the Harvard Business School. Tom
has been a Director of Orora Limited since
September 2019.
Directorships of listed entities and
other directorships and offi ces
Current:
• Director, Alcoa Corporation
(since May 2021)
• Director, Sims Limited
(since June 2020)
• Director, Worley Limited
(since December 2017)
Recent (last three years):
• Director, High Resolves
(May 2017 to June 2022)
Board Committee membership
Samantha (Sam) Lewis is a chartered
accountant with extensive experience
in accounting, fi nance, auditing, risk
management, corporate governance,
capital markets and due diligence. Sam
has been a Non-Executive Director since
2014. Prior to becoming a Non-Executive
Director, she spent 24 years with Deloitte,
including 14 years as a Partner. In that
role, she led the audit of a number of
major Australian listed companies in the
retail, FMCG, manufacturing and industrial
sectors. In addition, Sam provided
accounting and transactional advisory
services including due diligence, IPOs and
debt/equity raisings.
Sam holds a Bachelor of Arts, Economics
from the University of Liverpool in the
UK, and is a member of the Institute of
Chartered Accountants in Australia and
the Institute of Chartered Accountants
in England and Wales. Sam has been
a Director of Orora Limited since
March 2014.
Directorships of listed entities and other
directorships and offi ces
Current:
• Director, Australia Pacifi c Airports
Corporation Limited
(since October 2022)
• Director, Aurizon Holdings Limited
(since February 2015)
• Director, Nine Entertainment Co.
Holdings Limited (since March 2017)
Recent (last three years):
• Chair, APRA Audit & Risk Committee
(June 2016 to December 2022)
Board Committee membership
ORORA LIMITED ANNUAL REPORT 2023
45
Executive Leadership Team
Brian Lowe
(MBA)
Managing Director and
Chief Executive Offi cer
Prior to Orora, Brian Lowe spent eight
years with Delphi Technologies where he
was Managing Director of the Asia Pacifi c
Powertrain business, including fi ve
years based in Shanghai. This followed a
10-year career at General Electric (GE),
where he held various leadership roles in
sales and marketing, and supply chain.
He was Managing Director of GE Plastics,
Australia from 2001 to 2003.
In his 12 years at Orora, Brian has been
the Group General Manager of the
Beverage (2011 — 2015) and Fibre (2016
— 2019) businesses. He was appointed
Managing Director and Chief Executive
Offi cer of Orora Limited in October 2019.
Kelly Barlow
(BS Mgt, MBA)
Simon Bromell
(BSc, GDip Agribus, GAICD)
President, Orora Packaging Solutions
President Beverage
Kelly Barlow was appointed President of
Orora Packaging Solutions in February
2023. Kelly has 21 years of experience at
Orora and served as Senior Vice President
of the Landsberg Distribution business
immediately prior to her appointment
as President. Kelly has also held senior
leadership roles in sales, marketing,
customer experience, business
development and operations.
Some of her former key roles are: Senior
Vice President, Customer Experience;
Region Vice President of the Southwest;
Director Marketing; Division Manager, Los
Angeles; and Division Manager, Portland.
Kelly began her Orora career as a sales
representative.
Simon Bromell joined Orora in 2014,
and has over 30 years of experience in
leadership roles across the national food
and beverage supply chain in consumer
goods, agribusiness and packaging. Prior
to Orora, Simon was General Manager
of Gold Coin Asia and also spent four
years as Managing Director of Fonterra’s
Australian Ingredients business.
Before this, he held senior management
roles across a range of businesses and
functions at Mars from 1996 to 2009.
46
ORORA LIMITED ANNUAL REPORT 2023
Shaun Hughes
(BComm, BA, GAICD, CA ANZ)
Chief Financial Offi cer
Shaun Hughes was appointed CFO
at Orora in October 2020, having
spent more than 20 years leading the
fi nance, procurement and IT teams for
a range of ASX-listed and multinational
companies operating across diverse
industries. Shaun has extensive fi nancial
management experience in building and
growing organisations having held global
leadership roles with Telstra, Elders,
IBM and EBOS. Shaun is a member of the
Institute of Chartered Accountants of
Australia and New Zealand.
Ann Stubbings
(BA/LLB, GAICD)
Chief People, Sustainability and
Governance Offi cer, Company Secretary
and Group General Counsel
Ann Stubbings leads the Human
Resources, Sustainability, Corporate
Safety, Legal, Company Secretariat
and Corporate Aff airs/Communications
teams. Ann was appointed to the Orora
Executive Leadership Team upon Orora’s
listing on the ASX in December 2013.
Prior to joining Orora, Ann held various
senior in-house legal roles in corporate
and commercial law, dispute resolution,
governance and company secretariat
across manufacturing and fi nancial
services, and commenced her career in
private legal practice at Hall and Wilcox.
Matthew Wilson
(LLB, BCom (Hons))
Chief Strategy and Corporate
Development Offi cer
Matthew Wilson joined Orora in
January 2020, bringing over 20 years
of experience in corporate fi nance
and strategy. Prior to Orora, Matthew
was Managing Director at independent
corporate advisory fi rm, Flagstaff
Partners and previously spent 15 years at
J.P. Morgan in both Melbourne and Sydney
where he led the Australian investment
banking division’s coverage of healthcare,
telecommunications, technology and
private equity clients. Matthew began
his professional career in the investment
banking division of Macquarie Bank.
ORORA LIMITED ANNUAL REPORT 2023
47
Directors’
Report
The Directors of Orora Limited (Orora or
the Company) present their report,
together with the financial statements
of the Company and its controlled entities
(collectively referred to as the
consolidated entity or the Orora Group),
for the financial year ended 30 June 2023.
In this section
Directors’ Report
Statutory matters
Board of Directors
Company Secretary
Directors’ meetings
Operating and financial review
State of affairs
Principal activities
Events subsequent to the
end of the financial year
Likely developments
Dividends
Environmental performance
and reporting
48
49
49
49
49
50
50
50
50
50
50
50
Directors’ interests
Unissued shares under option
Shares issued on exercise of options
On-market share purchases to satisfy
employee share plans
Indemnification and insurance
of officers
Indemnification of auditors
Proceedings on behalf of the Company
Non-audit services
External audit services
Rounding off
Corporate Governance Statement
51
51
51
51
51
52
52
52
52
52
52
Remuneration Report
Directors’ declaration
Auditor’s independence declaration
53
72
73
48
ORORA LIMITED ANNUAL REPORT 2023
DIRECTORS’ REPORT
Statutory
matters
Board of Directors
The Directors of the Company in office as at the date of this report are:
A R H (Rob) Sindel
B P (Brian) Lowe
A P (Abi) Cleland
M A (Michael) Fraser
T J (Tom) Gorman
S L (Sam) Lewis
All Directors, served on the Board for the period from 1 July 2022 to 30 June 2023. Jeremy Sutcliffe retired as Director on 31 August
2022.
The qualifications, experience and special responsibilities of the current Directors, and other directorships held by them during the
previous three years, are set out on pages 44 to 45 of this Annual Report.
Company Secretary
A L (Ann) Stubbings is the Company Secretary of the Company, having commenced the position on listing of the Company on the ASX in
December 2013. Ms Stubbings’ qualifications and experience are set out on page 47 of this Annual Report.
Directors’ meetings
The following table sets out the number of Directors’ meetings (including meetings of Board Committees) held during the period from
1 July 2022 to 30 June 2023, and the number of meetings attended by each Director.
Board
10
2
A
12
11
12
12
12
12
1
B
12
12
12
12
12
12
1
Audit, Risk &
Compliance
Committee
4
-
A
3*
4
4
4
4*
4*
-
B
-
4
4
4
-
-
-
Executive
Committee
Human Resources
Committee
Nomination
Committee**
2
-
4
-
-
-
A
-
-
-
2
2
2
-
B
-
-
-
2
2
2
-
A
4
4
4
4*
4*
4*
1
B
4
4
4
-
-
-
1
A
-
-
-
-
-
-
-
B
-
-
-
-
-
-
-
Safety,
Sustainability
& Environment
Committee
4
-
A
4
4*
2*
4
4*
4
-
B
4
-
-
4
-
4
-
Scheduled Meetings
Unscheduled Meetings
A P Cleland
M A Fraser
T J Gorman
S L Lewis
B P Lowe
A R H Sindel
J L Sutcliffe [1]
[1] Mr Sutcliffe retired 31 August 2022 as Director.
A
B
Number of meetings attended.
Number of meetings held during the time the Director held office (in the case of Board meetings) or as a member of the Committee during the year (in the case
of Committee meetings).
Indicates that although the Director is not a member of a specific Committee, the Director attended the meeting. All Directors are welcome to attend Committee
meetings even though they may not be a member.
All Nomination Committee matters were dealt with by the full Board during the financial year.
*
**
ORORA LIMITED ANNUAL REPORT 2023
49
DIRECTORS’ REPORT
Statutory
matters
Operating and financial review
An operating and financial review of the consolidated entity during the financial year and the results of these operations begins at
page 26 of this Annual Report.
State of affairs
There have been no significant changes in the state of affairs of the consolidated entity during the financial year ended 30 June 2023
other than as disclosed in this Annual Report.
Principal activities
The principal activities of the consolidated entity at the date of this report are set out in the ‘Orora at a glance’ section on page 1 of this
Annual Report. There were no significant changes in the nature of the principal activities of the consolidated entity during the financial
year ended 30 June 2023.
Events subsequent to the end of the financial year
The Group’s US Private Placement (USPP) notes of US$100.0 million matured in July 2023. The maturing USPP notes were repaid with
funds from the Group’s US$100.0 million committed bilateral facility with a maturity date of January 2028.
Likely developments
The Operating and Financial Review section from pages 26 to 31 of this Annual Report contains information on the consolidated entity’s
business strategies and prospects for future financial years, and refers to likely developments in the consolidated entity’s operations and
the expected results of these operations in future financial years. Information on likely developments in the consolidated entity’s
business strategies, prospects and operations for future financial years and the expected results of those operations has not been
included in this report where the Directors believe it would likely result in unreasonable prejudice to the consolidated entity. Details that
could give rise to material detriment to the consolidated entity, for example, information that is commercially sensitive, confidential or
could give a third party a commercial advantage, have also not been included.
Dividends
Dividends paid or declared by the Company to members during the financial year ended 30 June 2023 are set out in note 2.2 to the
Financial Statements.
No waiver was sought from the Trustees of the Orora Employee Share Trusts in respect of the entitlement of Treasury Shares held in the
Trusts to be paid from the 2023 interim or final dividends, in compliance with Australian Tax Office Tax Determination (TD 2019/13). The
Trusts received dividends on unallocated shares and the Employee Share Trusts were subject to tax at the applicable rate on dividends
received in respect of the unallocated shares.
Environmental performance and reporting
The Orora Group is committed to continuous improvement of its environmental performance by finding better ways to manufacture and
distribute its products. This is guided by the Orora Group’s Environmental Policy, a copy of which is available on Orora’s website.
(a) Carbon emissions
The National Greenhouse and Energy Reporting (Safeguard Mechanism) Rule 2015 (Rule) made under the National Greenhouse and Energy
Reporting Act 2007 (Cth) (NGER Act) applies to facilities with direct CO2 emissions (Scope 1) of greater than 100,000 tonnes per year.
These facilities are required to maintain their direct emissions below their historical peak level. Facilities that exceed their historical peak
CO2 emissions will be required to purchase CO2 credits to offset their increase in emissions.
The only Orora Group facility that exceeds the 100,000 tonnes per year CO2 threshold is the glass facility in Gawler, South Australia.
The Glass facility at Orora moved from a calculated baseline to a production adjusted baseline in FY21. To date, the site has never
exceeded the Safeguard Mechanism baseline. This facility complies with its obligations under the Rule.
(b) Greenhouse gas requirements
In Australia, the Orora Group is subject to reporting obligations under the NGER Act.
The NGER Act requires the Company to report on its annual Australian greenhouse gas emissions and energy use. The Orora Group has
data gathering and management systems in place that comply with the NGER Act and the Clean Energy Regulator’s audit processes. To
comply with this obligation, Orora provides a report to the Clean Energy Regulator each year.
50
ORORA LIMITED ANNUAL REPORT 2023
DIRECTORS’ REPORT
Statutory
matters
(c) Manufacturing
All of Orora Group’s manufacturing sites are subject to significant environmental regulation, including, where applicable, specific
environmental licences. These licences require discharges to air, land and water to be below specified levels of contamination.
Compliance with these regulations and Group’s overall environmental performance is monitored by Orora’s internal Sustainability Team,
which liaises directly with divisional and site-based health, safety and environment professionals. Orora Group’s environmental
performance and material regulatory compliance is also discussed regularly at Executive Leadership Team meetings.
The Directors are not aware of any material breaches of environmental regulations or site-specific licences during or since the financial
year ended 30 June 2023.
Directors’ interests
The relevant interests of each Director in the share capital of the Company as at 30 June 2023 are as follows:
Name
Directors of Orora Limited
A P Cleland
M A Fraser
T J Gorman
S L Lewis
B P Lowe
A R H Sindel
J L Sutcliffe
Number
of shares
135,425
55,000
56,000
98,798
605,932(1)
140,000
131,355[2]
Details of rights and options over shares in the Company held by B P Lowe are set out in section 7.4 of the Remuneration Report.
(1)
(2) Mr Sutcliffe retired 31 August 2022. The shareholding presented above represents shares held by Mr Sutcliffe at the date of his retirement.
Unissued shares under option
Unissued ordinary shares or interests of the Company under option as at the date of this report are as follows:
Options granted
30 Oct 2015
22 Oct 2018
Expiry date
Issue price
30 Sep 2024
31 Aug 2027
2.08
3.58
Number
under option
226,567
1,000,518
These options do not allow the holder to participate in any share or rights issue of the Company. Refer to the Remuneration Report for
further information.
Shares issued on exercise of options
There were no ordinary shares of the Company issued during or since the financial year ended 30 June 2023 on the exercise of options
granted over unissued shares or interests.
On-market share purchases to satisfy employee share plans
During the financial year ended 30 June 2023, 1,368,481 ordinary shares of the Company were purchased on-market and held on trust to
satisfy obligations under the Company’s employee incentive plans. The average price per security at which these shares were purchased
was $3.33.
Indemnification and insurance of officers
In accordance with the Company’s Constitution, the Company has entered into agreements with each person who is, or has been, an
officer of the Company. This includes the Directors in office at the date of this report, all former Directors and other executive officers of
the Company, indemnifying them against any liability to any person other than the Company, or a related body corporate, that may arise
from their acting as officers of the Company, notwithstanding that they may have ceased to hold office. There is an exception where the
liability arises out of conduct involving a lack of good faith, or is otherwise prohibited by law.
ORORA LIMITED ANNUAL REPORT 2023
51
DIRECTORS’ REPORT
Statutory
matters
During and since the end of the financial year ended 30 June 2023, the Company has paid or agreed to pay the premiums for an insurance
policy to insure current and previous Directors and other executive officers of the Company against certain liabilities incurred in that
capacity.
Due to the confidentiality obligations and undertakings set out in these agreements, no further details in respect of the premiums paid,
or the terms of the agreements, can be disclosed.
No indemnity payment has been made under any of the documents referred to above, during or since the financial year ended
30 June 2023.
Indemnification of auditors
The Company’s auditor is KPMG. During and since the financial year ended 30 June 2023:
• no premium has been paid by the Company in respect of any insurance for KPMG
• no indemnity has been paid by the Company in respect of KPMG’s appointment as auditor
• no officers of the Company were partners or directors of KPMG, while KPMG undertook an audit of the Company.
Proceedings on behalf of the Company
No proceedings have been brought or intervened in on behalf of the Company with leave of the Court, nor has any application for leave
been made in respect of the Company, under section 237 of the Corporations Act 2001.
Non-audit services
During the year, KPMG, the Company’s auditor, performed certain other services in addition to their statutory duties. The Board has
considered the non-audit services provided during the financial year ended 30 June 2023 by the auditor and, in accordance with written
advice provided by resolution of the Audit, Risk & Compliance Committee, is satisfied that the provision of those non-audit services
during the financial year by the auditors is compatible with the general standard of independence for auditors, and did not compromise
the auditor 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 by the
Audit, Risk & Compliance Committee to ensure they do not impact the impartiality and objectivity of the auditor. In particular, all non-
audit services are approved in accordance with the non-audit services delegations and approvals framework and reported to the
Audit, Risk & Compliance Committee at each meeting.
• The non-audit services provided do not undermine the general principles relating to auditor independence as set out in APES 110
Code of Ethics for Professional Accountants, as they did not involve reviewing or auditing the auditor’s own work, acting in a
management or decision-making capacity for the Company, acting as an advocate for the Company or jointly sharing risks and
rewards. A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 can be found
on page 73 of this Annual Report.
• Details of the amounts paid to KPMG and its related practices for audit and non-audit services provided during the financial year are
set out in note 7.2 to the Financial Statements. In each case, the engagement of KPMG was made on its merits (based on service
level, expertise, cost, as well as geographical spread).
External audit services
The Company appointed KPMG as the Company’s external auditor for the financial year ended 30 June 2023.
Rounding off
The Company is of a kind referred to in the ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191. In
accordance with the ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, and except where otherwise
stated, amounts in the Financial Statements and Directors’ Report have been rounded off to the nearest $100,000 or to zero where the
amount is $50,000 or less.
Corporate Governance Statement
The key features of the Company’s corporate governance framework are set out in the Corporate Governance Statement, which is
available on pages 32 to 41 of this Annual Report.
52
ORORA LIMITED ANNUAL REPORT 2023
DIRECTORS’ REPORT
Remuneration
Report
“Incentive plan outcomes for FY23
reflect the alignment between
financial performance, executive
performance and execution of the
Company’s challenging strategic
business objectives.”
Dear Fellow Shareholder,
On behalf of Orora’s Board of Directors, I am pleased to present Orora’s Remuneration Report for the financial year ended 30 June 2023.
As the Chair of the Human Resources Committee, I continued to work closely with my Committee colleagues and my colleagues on the
Board throughout FY23 to ensure the Company’s Human Resources policies and remuneration frameworks are structured to attract,
retain and motivate a diverse and talented team, and that Orora’s reporting and communication is consistently clear and transparent.
Financial year 2023 performance and remuneration outcomes
The Orora team drove a solid increase in earnings through consistent execution of business strategy for FY23 (achieving a 12.3%
increase in Underlying Earnings Before Interest and Tax (EBIT) to $320.5 million). Orora continued to navigate challenging economic
conditions to deliver on the promise for customers. Orora invested in innovation and focused growth programs that will support
customers’ needs. Additionally, Orora continued investment in sustainability initiatives to address Climate Change, the Circular Economy
and the Community. The Orora team continued their relentless drive for safety improvement. Unfortunately, one team member was
seriously injured during the period, but has returned to full duties. Lost Time Injury rates remained relatively stable. As a result of these
below expectation outcomes, a negative safety modifier was applied to STI outcomes where appropriate.
Executives at Orora are rewarded for annual performance against business plans and for delivering longer-term returns for shareholders.
Incentive plan outcomes for FY23 reflect the alignment between financial performance, executive performance and execution of the
Company’s challenging strategic business objectives.
The Short-Term Incentive (STI) assessment includes financial and non-financial metrics, including safety. STI payments for the current
Executive KMP will be paid between 59% and 63% of maximum STI opportunity.
In FY19 we made changes to Orora’s Long-Term Incentive (LTI) plans to better align them with market practice. The LTI has a three-year
performance period and a one-year employment holding lock. As disclosed in the FY22 Remuneration Report, the FY20 grant vested at
100% in August 2023, at the conclusion of the one-year employment holding lock. The FY21 LTI grant was tested at the end of the recent
performance period (30 June 2023). With positive results achieved over the performance period, the FY21 grant will vest at 85% in
August 2024, at the conclusion of the one-year employment holding lock.
ORORA LIMITED ANNUAL REPORT 2023
53
DIRECTORS’ REPORT
Remuneration
Report
Remuneration changes during the financial year
The Human Resources Committee periodically reviews Orora’s Executive Remuneration Framework to ensure it effectively supports
Orora’s objectives of attracting and retaining strong executive and diverse talent, and aligning executive remuneration outcomes to long-
term shareholder returns. The review process undertaken this year included engagement with Orora team members to understand their
perspectives, analysis of market practice in similar companies and discussions with Orora’s largest shareholders and their proxy advisors
on strategy, performance and remuneration.
For FY24, the Board has decided to increase the fixed remuneration of Executive KMP by 2.5%, in line with the market. Additionally,
modest adjustments will be made to the Executive Remuneration Framework to enhance alignment with shareholders and market
practice. The changes are summarised below and are further discussed in Section 2 of this Report.
•
Introduction of cash-settled Dividend Equivalent Payments (DEP) at the end of the deferral period on the deferred equity component
of STI, which will apply to the global executive team including Executive KMP. This change is intended to better align executive
remuneration outcomes with shareholder returns.
• Removal of the Absolute Total Shareholder Return (ATSR) gateway on the LTI plan to align the plan with current market practice.
The Board believes that these changes to the Executive Remuneration Framework will enable Orora to appropriately reward executives
and further strengthen the alignment between shareholders and executives.
Final thoughts
I send my sincere congratulations and thanks to all Orora team members for another year of consistent delivery and solid results.
Thank you to all Orora’s shareholders for your support this year. As always, I welcome your feedback and queries regarding the FY23
Remuneration Report provided in the following pages.
Warm regards,
Tom Gorman
Chair, Human Resources Committee
54
ORORA LIMITED ANNUAL REPORT 2023
DIRECTORS’ REPORT
Remuneration
Report
Introduction
The Remuneration Report provides a summary of Orora’s remuneration policy and practice for Key Management Personnel (KMP) for the
financial year ended 30 June 2023. This report has been prepared as required by the Corporations Act 2001 (Cth) for the Company and its
controlled entities (collectively, the Group or Orora) and has been audited by Orora’s external auditor. This Remuneration Report forms
part of the Directors’ Report.
Structure of this report
Orora’s 2023 Remuneration Report is divided into the following sections:
Section
Message from Tom Gorman, Chair Human Resources Committee
u Key Management Personnel
v Changes to the Remuneration framework in FY24
w Overview of FY23 remuneration
x FY23 Remuneration framework
y Relationship between performance and remuneration outcomes
z Non-Executive Director remuneration
{ Additional required disclosures
Page No.
53
55
56
56
59
61
67
67
Key Management Personnel (KMP)
1.
For the purposes of this Remuneration Report, KMP include Executive and Non-Executive Directors and nominated senior executives who
have authority and responsibility for planning, directing and controlling the activities of the Group, either directly or indirectly. For the year
ended 30 June 2023, the KMP were:
Name
Non-Executive Directors (NED)
A R H (Rob) Sindel
A P (Abi) Cleland
T J (Tom) Gorman
S L (Sam) Lewis
M A (Michael) Fraser
J L (Jeremy) Sutcliffe [1]
Executive Director
B P (Brian) Lowe
Executive
Position
Chair
Director
Director
Director
Director
Director
Term as KMP
Full year
Full year
Full year
Full year
Full year
Partial year
Managing Director and Chief Executive Officer (CEO)
Full year
S C (Shaun) Hughes
Chief Financial Officer (CFO)
Full year
(1)
J L Sutcliffe retired as a Director on 31 August 2022.
ORORA LIMITED ANNUAL REPORT 2023
55
DIRECTORS’ REPORT
Remuneration
Report
2. Changes to the remuneration framework in FY24
Orora is well-positioned for further growth through ongoing enhancements in the core business, increasing the focus on sustainability
and innovation across the Company’s portfolio, and continuing to invest in initiatives that generate additional opportunity and value for
customers and shareholders. At the heart of Orora’s success is its ability to attract and retain top executive talent who can deliver long-
term organic growth and strong returns. It is within this context that the Board reviewed the executive remuneration framework against
similar sized ASX listed and US companies and introduced the following changes for FY24:
Change
Description
Introducing cash-
settled Dividend
Equivalent Payments
(DEP) on the deferred
component of Short-
Term Incentive (STI)
• Orora’s STI plan rewards the achievement of Group and individual goals over a 12-month period.
• Currently, 2/3 of executive STI is delivered in cash and 1/3 in Deferred Share Rights (DSR). A portion of STI is
deferred to align reward outcomes with long-term value creation for shareholders.
The DSR granted to executives do not have rights to dividend payments under the current framework.
•
• Majority of companies of a similar size as Orora (ASX 50 to 150) that defer STI into equity, either defer it in the
form of shares (which have dividend entitlements) or pay Dividend Equivalent Payments.
• Orora seeks to provide shareholders with a steady income stream through an indicated dividend pay-out ratio of
Removing Absolute
Total Shareholder
Return (ATSR) gateway
from the Long-Term
Incentive (LTI) plan
60-80% of net profit after tax.
• By introducing DEP, executives will share in the same share price movements and dividends as shareholders
•
•
•
•
over the deferral period which further enhances alignment of shareholder and executive outcomes.
Introducing DEP also aligns Orora’s STI plan design with market practice in ASX 50 to 150 listed organisations.
The DEP will be calculated using an accumulating model i.e. Gross dividends reinvested in shares on the date of
dividend payment as this mirrors total shareholder returns for a typical Orora shareholder.
The DEP will be paid to executives at the end of the deferral period (2 years) only if they continue to be employed
on the vesting date.
The Board retains the discretion to lapse unvested equity and claw back vested equity including the entitlement
to dividend equivalent payments.
• Orora’s executive LTI plan currently has an Earnings per Share (EPS) growth hurdle with a Return on Average
Funds Employed (RoAFE) gateway (50% weighting) and a Relative Total Shareholder Return (RTSR) with an
Absolute Total Shareholder Return (ATSR) gateway (50% weighting).
• Majority of the ASX 50 to 150 listed organisations use one or more financial performance hurdles for their LTI
•
plan. The most common hurdle is RTSR followed by EPS. These are typically used in conjunction.
The complexity of Orora’s plan, with two hurdles and two gateways, creates uncertainty around long-term
earning potential for executives which is a barrier to attract and retain good talent.
• Since the sale of the Fibre business, Orora has consistently exceeded the gateway of having a non-negative
ATSR.
• Considering feedback from our team members and market practice, the Board has decided to simplify the LTI
•
plan by removing the ATSR gateway from the LTI plan.
The plan will continue to have financial performance (EPS growth, RoAFE) and RTSR performance metrics which
align with Orora’s goal to provide superior returns to shareholders compared to peers.
3. Overview of FY23 remuneration
3.1. Summary of remuneration framework
Orora’s executive remuneration framework applies to the CEO and all of his direct reports of which the Executive KMP form a subset. This
framework was introduced in FY20. Refer to Section 4.1 for a detailed explanation of the current remuneration components. Refer to
Section 7.3 for an explanation of performance hurdles used and the vesting schedule.
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OUR PURPOSE
To be a leading sustainable packaging solutions provider, designing and delivering
products and services that enable our customers’ brands to thrive
Our Purpose is supported by our remuneration principles and
performance framework, overseen by the Board
REMUNERATION PRINCIPLES
Attract, motivate and
retain talent
Drive a high-
performance culture
Create long-term
shareholder value
REMUNERATION COMPONENTS[1]
Fixed remuneration (FR)
Short-Term Incentive (STI)
Long-Term Incentive (LTI)
• A market-based reward for
• Rewards the achievement of Group and individual
• Reinforces focus on creating long-term
role.
• Delivered as cash salary and
contribution to retirement
benefits.
goals over a 12-month period.
• CEO has a target STI of 70% of FR and a maximum
opportunity of 100% of FR. The other Executives
have a target of 50% and a maximum opportunity
of 75% of FR.
• 2/3 delivered in cash and 1/3 in Deferred Share
Rights (DSR) deferred for two years.
value for shareholders.
• 50% to 100% of FR delivered as an
upfront grant of Performance Rights
(PR) with a three-year performance
period and an additional one-year
employment holding lock before
vesting.
• Any increases in salary will
consider the market median
remuneration for similar roles
and individual performance.
LINK TO PERFORMANCE
• A scorecard of performance measures at a Group
level is used to determine STI award payable. The
scorecard represents the key priority areas for the
current year and typically includes strategic
initiatives and has a strong weighting towards
financial growth and returns. A safety and
performance overlay also applies.
• Deferral of payment in equity aligns reward
outcomes with long-term value creation for
shareholders.
The following performance hurdles apply
to LTI aligning executive and shareholder
interests:
• Earnings per Share (EPS) growth with a
Return on Average Funds Employed
(RoAFE) gateway.
• Relative Total Shareholder Return
(RTSR) with an Absolute Total
Shareholder Return (ATSR) gateway.
Supports alignment of Executive and Shareholder interests
Large proportion of remuneration
is at risk and delivered as equity.
Clawback and malus provisions
apply to all equity.
Use of EPS, RoAFE, RTSR and
ATSR performance hurdles for PR.
Minimum shareholding
requirements.
(1)
An award of shares or cash deferred up to five years is occasionally used at the time of recruitment to replace existing entitlements from previous employers or
as a specific retention award for existing executives.
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3.2. Snapshot of FY23 performance and remuneration outcomes
The Executive KMP remuneration outcomes for the financial year ended 30 June 2023 are summarised below. For more detailed
information on remuneration outcomes and link to performance, please refer to Section 5.
Remuneration
component
Fixed remuneration
Short-Term
Incentive (STI)
Description
•
•
The Board periodically benchmarks the remuneration of Executive KMP against comparable roles in other
ASX-listed companies of similar size and industry dynamics as Orora.
For FY24, reflecting the overall performance of the Company, the Board has decided that Executive KMP will
receive a fixed remuneration increase of 2.5%, in line with market increases.
FY23 award
• Orora’s STI assessment includes several financial and non-financial metrics (at Group and individual level).
•
The Earnings before Interest and Tax (EBIT) performance was between the threshold and target and EBIT as a %
of sales exceeded the target set by the Board for the financial year ended 30 June 2023.
• As a result, STI payments for current Executive KMP will be paid out between 59% and 63% of maximum
STI opportunity.
Awards due to vest in FY23 and FY24
• DSR awarded as part of the STI payment for the financial year ended 30 June 2020 vested in September 2022.
The Board did not identify any performance or conduct factors that would warrant lapsing of unvested equity.
Accordingly, the Board approved full vesting of the FY20 DSR.
• DSR awarded as part of the STI payment for the financial year ended 30 June 2021 are due to vest in September
2023. The Board did not identify any performance or conduct factors that would warrant lapsing of unvested
equity. Accordingly, the Board approved full vesting of the FY21 DSR. For this equity to vest, the executive must
remain employed until the vesting date (September 2023).
Long-Term
Incentive (LTI)
FY23 award
•
The CEO and other Executive KMP were awarded 100% and 70% of their FR as Performance Rights respectively
with a three-year performance period (1 July 2022 to 30 June 2025) and an additional one-year employment
holding lock before vesting. The grant to the CEO was awarded post shareholder approval at the 2022 AGM.
Award tested in FY22 and vesting in FY24
• As previously disclosed, the performance period for the LTI plans from FY20 was reduced from four years to
three years to facilitate robust goal setting, with an additional one-year employment holding lock for vesting to
occur.
• Accordingly, the FY20 LTI grant had a three-year performance period which ended on 30 June 2022. This grant
had a one-year employment holding lock before vesting (August 2023).
• As disclosed in last year’s report, the grant exceeded the performance hurdles set for the plan. The Board did not
identify any performance or conduct factors that would warrant lapsing of unvested equity. Accordingly, 100%
of the grant vested in August 2023.
Award tested in FY23 and vesting in FY25
•
The FY21 LTI grant had a three-year performance period which ended on 30 June 2023. The grant has a one-year
employment holding lock before vesting (August 2024).
• 50% of the award had an EPS performance hurdle with a RoAFE gateway and 50% had a RTSR performance
•
hurdle with an ATSR gateway.
The RoAFE and ATSR gateways were met for this grant. Orora’s EPS growth performance of 22.2% exceeded the
target of 8% and RTSR performance of 60th percentile was between the target (50th percentile of RTSR) and
maximum (75th percentile of RTSR) vesting range for this grant.
• Accordingly, 85% of the grant is scheduled to vest in August 2024 post the one-year employment holding lock.
For this equity to vest, the executive must remain employed until the vesting date (August 2024).
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FY23 remuneration framework
4.
4.1. Remuneration components
Remuneration
component
Fixed
Remuneration (FR)
Short-Term
Incentive (STI)
Description
•
•
Includes cash salary and contribution to retirement benefits.
The Board sets the fixed remuneration for KMP based on market median remuneration for similar roles in
ASX-listed companies of similar size, industry and geographical footprint. The annual review of fixed
remuneration takes into consideration market relativity, skills, experience, past performance and impact on total
remuneration.
• Rewards the achievement of Group and individual financial and non-financial goals over a 12-month period.
• 2/3 of the award is delivered annually in cash following the release of the end of year financial results.
•
1/3 of the award is delivered in DSR[1] deferred over two years subject to malus conditions. Vesting after two
years is subject to continued service.
The number of units is calculated as 1/3 of the STI award divided by the volume-weighted average share price
(VWAP) of Orora shares for the five trading days up to and including the end of the financial year (30 June).
The CEO has a target STI of 70% of FR and a maximum opportunity of 100% of FR. Other executives have a
target of 50% and a maximum opportunity of 75% of FR.
•
•
Long-Term
Incentive (LTI)
• Aligns executive and shareholder interests by reinforcing executive focus on long-term sustainable shareholder
returns.
• 50% to 100% of FR delivered as PR[1] subject to a three-year performance period and an additional one-year
employment holding lock with the following performance hurdles:
— Growth in EPS hurdle with a RoAFE gateway – 50% weight
— RTSR hurdle with an ATSR gateway – 50% weight
The combination of EPS and RoAFE represents a strong measure of overall business performance.
The use of RTSR hurdle with an ATSR gateway focuses on growth of the Group and creating above average value
for shareholders. Refer to Section 7.3 for a more detailed explanation of the hurdles used.
•
•
• After considering internal and external benchmarks, the Board set the following performance hurdles for the
FY23 LTI grant:
— PR subject to EPS hurdle: RoAFE gateway of 15% must be met for the performance period for vesting to
occur. If the RoAFE gateway is met, EPS Compound Annual Growth Rate (CAGR) growth of 4% over the
performance period will be required for 50% vesting, with 100% vesting requiring an EPS growth of 8%.
•
•
— PR subject to RTSR hurdle: Orora’s ATSR over the performance period must not be negative for vesting to
occur. If the ATSR gateway is met, RTSR over the performance period must be at the 50th percentile of the
comparator group for 50% vesting, with 100% vesting requiring RTSR to be at the 75th percentile.
The number of units granted is calculated as value of the grant (50% to 100% of FR) divided by the VWAP of
Orora shares for the five trading days up to and including the end of the financial year (30 June).
For LTI grants from FY22, the share price used to calculate the ATSR of the Group and each of the comparator
companies for the performance period will use the 20 trading days VWAP for both the starting share price and
the closing share price. The previous approach used five trading days VWAP for the starting share price and
20 trading days VWAP for the closing share price. This change has been made to reduce the impact of share
price volatility and to improve consistency.
(1)
A Right (either DSR or PR) is the right to receive one Orora share (or cash of equivalent value) upon vesting, subject to adjustment for certain capital actions.
Rights do not carry any dividend entitlements or voting rights prior to vesting. Shares allocated upon vesting carry the same rights as any other Orora share. For
DSR and PR, forfeiture and clawback provisions apply for behaviour contrary to Orora’s values or any actions that bring the Group or any company within the
Group into disrepute. If employment ceases due to resignation or dismissal, any unvested DSR or PR will lapse. If employment ceases due to other reasons, the
Board has discretion with respect to unvested Rights, including to lapse any unvested DSR or PR fully or partially.
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4.2. Target remuneration mix and delivery
Orora’s executive remuneration framework provides an appropriate mix of short, medium and long-term incentives to attract, motivate
and retain talent and to drive high performance. Delivering a significant portion of remuneration in equity (1/3 of STI delivered as DSR
deferred over two years and LTI delivered as PR subject to a three-year performance period and an additional one-year employment
holding lock) aligns the interests of executives and shareholders.
MD & CEO
Other Executive KMP
LTI
37%
FR
37%
STI
26%
FR
45%
LTI
32%
STI
23%
Delivering a significant portion of remuneration as equity over a four-year period reinforces executive focus on achieving long-term
objectives and creating sustainable value for shareholders.
(1)
The grants to the CEO are awarded post shareholder approval at the 2022 AGM (for LTI) and 2023 AGM (for STI). The LTI award is due to vest in August 2026.
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5. Relationship between performance and remuneration outcomes
5.1. Performance framework
Orora’s executives are rewarded for annual performance against challenging business plans as well as longer-term returns for
shareholders. Financial and non-financial performance measures that align with the key priority areas for the Group are carefully selected
by the Board at the start of the financial year. The performance measures selected for FY23 are summarised below:
Performance
overlay:
Impacts individual
STI by 20%
Considers ’how’ the
performance was
achieved
Safety
overlay:
If not met, may reduce
STI award by 10%
Performance
against key safety
metrics
Overall
outcome
Total performance
Group
earnings
(60% weight)
Earnings before
interest and tax
(EBIT)
Group margin
improvement
(10% weight)
EBIT as a % of sales
Individual strategic
measures
(30% weight)
Individual strategic
measures
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5.2. Performance outcome
Achievement against the performance measures both at a Group and individual level is assessed every six months by the Human
Resources Committee (HRC), which provides recommendations to the Board. At the end of the financial year, the Board determines
the STI outcome for executives based on their performance against the agreed measures.
The STI assessment includes a number of financial and non-financial metrics (at a Group and individual level).
Significant items (both positive and negative) are assessed each year by the Board to determine whether any significant items should be
included in the STI assessment, and in the past have been generally excluded for the purpose of measuring performance for STIs as they
are not part of ordinary trading results. The Board has determined that the impact of costs related to ongoing strategic growth evaluation
and the significant item expenses related to the decommissioning of the Petrie Mill site will be excluded when determining STI outcomes
for FY23.
At the end of the financial year, the HRC reviews Group performance against the LTI performance hurdles to confirm the vesting outcome
of any PR that have completed their performance period. The HRC also assesses if there are any significant Group or individual
performance factors that require the Board to apply discretion to claw back previously granted equity or reduce the quantum of LTI to be
granted.
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5.2. Performance outcome (continued)
An overview of the performance measures for FY23 and achievement against these measures is summarised below.
KPI
Group earnings
Earnings Before Interest and Tax (EBIT)
Group margin improvement
EBIT as a % of sales
Individual strategic measures
Performance commentary
Outcome
EBIT earnings growth up 12.3% (7.7% on a
constant currency basis) with continued strong
earnings growth in North America largely driven
by the Distribution business and the
Australasian business performing in line with
expectations.
Group EBIT as a % of sales increasing from 7.0%
to 7.5% as a result of the continued focus
across the Group on account profitability,
improving operating efficiencies and
maintaining strong pricing discipline to manage
cost pressures.
Between threshold and target
Exceeded target
Performance measures vary for each role and support
Orora’s strategy of expanding and optimising Group
outcomes while delivering our sustainability goals
(‘Our Promise to the Future’)
Performance outcomes varied for executives
with assessments ranging from partially
achieved to fully achieved.
Fully achieved for executive KMP,
Varied for other executives
Safety overlay
Performance and leadership against a selection of
key safety metrics
Performance overlay
The Board also considers:
•
•
if performance was aligned to Orora’s values.
if the Executive was proactive in overcoming
challenges in the delivery of the final outcome.
• what their individual contribution was to the
Group performance.
Safety results for the financial year ended 30
June 2023 were disappointing and an overlay
was applied where appropriate.
A number of initiatives were launched across
the business to address safety performance.
The Board considered how the executives
achieved performance and was satisfied that
the STI outcomes were appropriate, and no
further performance overlay was necessary.
5% reduction in outcome for
executive KMP; varied for
other executives
No overlay applied
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5.3. Group financial performance (total operations)
The table below summarises the key indicators of Orora’s performance and relevant shareholder returns for the five years to 30 June
2023. The table below shows total operations of the Group including the Australasian Fibre business which was divested during the FY20
financial year, and which is presented in the Financial Report as a discontinued operation.
Financial summary for year ended 30 June
EBIT ($m)
Dividends per ordinary share (cents)
Closing share price (as at 30 June)
EPS growth (%)
NPAT ($m)
TSR (%)[C]
Operating cash flow ($m) [D]
RoAFE (%)[E]
2023(A)
320.5
17.5
$3.29
11.1%
203.0
(6.0%)
269.9
21.8%
2022(B)
285.5
16.5
$3.65
28.2%
187.1
18.4%
272.6
22.4%
2021(B)
249.1
14.0
$3.33
(2.3%)
156.7
32.6%
246.0
19.9%
2020(B)
288.2
12.0
$2.54
(22.9%)
167.3
(13.4%)
57.9
12.0%
2019(B)
335.2
13.0
$3.24
3.7%
217.0
(5.6%)
268.9
13.0%
(A)
(B)
(C)
EBIT, NPAT, EPS growth and RoAFE exclude the impact of the after-tax significant item expense amount of $18.2 million recognised relating to additional
expected costs associated with the decommissioning of the former Petrie Mill site. Refer to note 1.2 of the financial statements for further detail.
EBIT, NPAT, EPS growth and RoAFE exclude the impact of the significant item income and expense items. Details of the significant items excluded from these
measures, for each year in the table above, can be found in the relevant 2019-2022 Annual Reports.
TSR is calculated as the change in share price for the financial year, plus dividends paid during the financial year, divided by the opening share price for the
financial year.
(D) Operating cash flow excludes cash significant items that are considered to be outside the ordinary course of operations and non-recurring in nature but includes
non-growth net capital expenditure.
RoAFE is calculated as Earnings Before Income and Tax (EBIT) excluding significant items divided by average funds employed.
(E)
5.4. Fixed Remuneration changes
Reflecting the overall performance of the Company, along with total compensation outcomes, the Board awarded the CEO a fixed
remuneration increase of 3.5% and the CFO a 7.5% increase in FY23. A minor adjustment was made in July 2023 for Executive KMP to
align their superannuation with the increased Superannuation Guarantee rate effective 1 July 2023.
In determining remuneration for executives, Orora considers market relativity, skills, experience and past performance. Remuneration is
reviewed annually and approved by the Board. For Australia based executives, Orora uses ASX-listed companies of a similar size
(assessed by market capitalisation) and industry for comparison. For US based executives, Orora uses both ASX-listed companies and
NYSE/NASDAQ-listed companies of a similar size and industry for comparison. For FY24, on reviewing market data and considering the
overall performance of the Company, the Board has decided that the Executive KMP will receive a fixed remuneration increase of 2.5%,
in line with market increases.
Refer to Section 2 for details of changes to short-term and long-term incentive plans for executives in FY24.
5.5. Short-term incentive outcomes
FY23 STI award
An overview of Orora’s performance measures for FY23 and achievement against these measures can be found in Section 5.2. Orora’s
Earnings were between the threshold and target and margin improvement exceeded the target set by the Board. The FY23 STI outcomes
reflect Orora’s resilience and financial discipline despite ongoing challenging conditions. After considering individual and business
performance against the financial and non-financial targets set by the Board, STI payments were paid as per the table below.
Executive KMP
B P Lowe
S C Hughes
$
834,582
335,267
STI awarded[1]
% of maximum
STI opportunity
Cash STI ($)
DSR ($)
# of DSR
% of maximum
STI opportunity
forfeited
62.8%
59.8%
556,389
223,513
278,193
111,754
85,598
34,386
37.2%
40.2%
(1)
The cash and DSR will be granted in September 2023. DSR allocations are determined based on the volume-weighted average price of the Company’s shares for
the five trading days prior to 30 June 2023 ($3.25 per share).
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STI award due to vest in FY23 and FY24
DSR awarded as part of the STI payment for the financial year ending 30 June 2020 vested in September 2022. The Board did not identify
any performance or conduct factors that would warrant lapsing of unvested equity. Accordingly, the Board approved full vesting of the
FY20 DSR.
DSR awarded as part of the STI payment for the financial year ended 30 June 2021 are due to vest in September 2023. The Board did not
identify any performance or conduct factors that would warrant lapsing of unvested equity. Accordingly, the Board approved full vesting
of the FY21 DSR. For this equity to vest, the executive must remain employed until the vesting date (September 2023).
5.6. Long-term incentive outcomes
FY23 LTI award
Details of the Executive KMP LTI opportunity and the actual award for FY23 are provided below:
Executive KMP
LTI as % of FR # of units granted
Face value of grant[1]
Performance hurdles associated with the grant
B P Lowe
70%
361,413
1,109,538
S C Hughes
70%
142,282
442,497
50% CAGR EPS with minimum RoAFE gateway of 15.0%.
50% Relative Total Shareholder Return (TSR) with an absolute TSR
gateway.
A one-year employment holding lock applies before vesting until
31 August 2026.
Refer to Section 4.1 for further details.
(1)
Face value of grant reflects the share price at the date the award was granted. The award for Mr Lowe was granted on 20 October 2022 ($3.07 per share), for Mr
Hughes the award was granted on 5 October 2022 ($3.11 per share).
LTI tested in FY23 and vesting in FY25
The FY21 grant was delivered as PR with a three-year performance period and an additional one-year employment holding lock for vesting.
50% of the PR are subject to the EPS hurdle with RoAFE gateway and 50% are subject to the RTSR hurdle with ATSR gateway. Refer to
Section 7.3 for a more detailed explanation of the hurdles used and the vesting schedule. The performance period for the grant
commenced on 1 July 2020 and concluded on 30 June 2023 and this grant is due to vest in August 2024 at the conclusion of the one-
year holding lock. The results are outlined below:
Performance hurdles and gateways
Result over the performance period (1 July
2020 to 30 June 2023)
Proportion eligible to vest at
the end of the employment
holding lock
Proportion lapsed
RoAFE gateway
EPS hurdle
ATSR gateway
RTSR hurdle
Achieved
Achieved (22.2%)
Achieved
Partially Achieved (60th percentile)
N/A
100%
N/A
70%
0%
30%
As the performance hurdles were partially met, 85% of the FY21 LTI grant is eligible to vest in August 2024 at the end of the one-year
employment holding lock.
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5.7. Total remuneration realised by Executive KMP during FY23
The table below summarises the remuneration realised by Executive KMP during the performance periods ended 30 June 2022 and 30
June 2023. This table has been included to increase transparency and provide shareholders greater clarity around remuneration
outcomes. This table differs from the statutory remuneration table in Section 7.2, which presents remuneration in accordance with
accounting standards.
Remuneration realised by Executive KMP for FY22 and FY23 is explained below.
Remuneration component
Description
Fixed
Remuneration (FR)
Cash Short-Term
Incentive (STI)
Deferred Share Rights
(DSR)
Performance Rights
(PR)
• Comprises cash salary and contribution to retirement benefits for the relevant year.
• Comprises the cash component of the STI earned in the relevant year which is paid after the issuance of the
relevant financial year’s annual report.
• Represents the value of DSR that were awarded as part of STI in previous years and vested in the relevant
year. For 2023, this comprises the value of DSR awarded as part of the STI payment for the financial year
ended 30 June 2020 that vested in September 2022. For 2022, this comprises the value of DSR awarded as
part of the STI payment for the financial year ended 30 June 2019 that vested in September 2021.
• Represents the value of equity tested at the end of the performance period to 30 June and vesting is
approved by the Board. For this equity to vest, the executive must remain employed until the vesting date
(and to the end of any applicable employment holding lock periods). For 2023, this comprises the value of
FY20 LTI that vested. For 2022, this comprises the value of FY19 LTI that partially vested.
Executive KMP
Year
Fixed Remuneration
Cash STI
DSR[1]
PR[2]
SO[3]
Total remuneration
B P Lowe
S C Hughes
2023
2022
2023
2022
1,344,016
1,275,347
734,737
689,566
556,389
798,453
223,513
329,553
236,497
10,275
906,750
322,500
-
-
-
-
-
19,951
-
-
3,043,652
2,426,526
958,250
1,019,119
Incentives realised
(1)
(2)
(3)
The value of DSR was calculated using the VWAP on the ASX for the five trading days up to and including the vesting date. The VWAP for the DSR award that
vested during the period was $3.35 per share (2022: $3.40 per share).
The value of PR was calculated using the VWAP on the ASX for the five trading days up to and including the end of the performance period. The VWAP for
30 June 2023 was $3.25 per share (2022: $3.68 per share).
The value of the SO was calculated using the VWAP on the ASX for the five trading days up to and including the end of the performance period less the exercise
price of $3.58. The VWAP for 30 June 2022 was $3.68 per share.
66
ORORA LIMITED ANNUAL REPORT 2023
DIRECTORS’ REPORT
Remuneration
Report
6. Non-Executive Director remuneration
The NED fee policy enables the Company to attract and retain high-quality Directors with relevant experience. The fee policy is reviewed
annually by the HRC. In setting and reviewing NED fees, the HRC considers fees paid by comparable companies and the qualifications and
experience necessary for the role, and provides recommendations to the Board.
NED receive a base fee ($213,000) for being a Director of the Board, and additional annual fees as listed below:
for chairing the Audit, Risk & Compliance Committee (ARCC): $25,000.
for chairing the HRC or Safety, Sustainability & Environment Committee (SSEC): $20,000.
•
•
• where a NED is not a Chair of a Committee, but is a member of two Committees, being membership of the ARCC, HRC and/or SSEC:
$20,000.
No additional fees are payable to the Chair of the Board for membership of Committees or other NEDs if they are already remunerated for
Chairing the ARCC, HRC or SSEC. No additional fees are paid for Chairing or membership of the Executive or Nomination Committees.
The current NED aggregate fee limit is $1,900,000 as approved by shareholders at the 2015 Annual General Meeting. No increase was
made to fixed-base fees or Committee fees, during the financial year ended 30 June 2023.
A minor adjustment (0.5%) was made in July 2023 to superannuation for all NEDs to align with the increased Superannuation Guarantee
rate effective 1 July 2023.
NEDs do not receive performance-based remuneration and are not granted equity instruments by Orora as part of their remuneration.
7. Additional required disclosures
7.1. Remuneration governance
The Board maintains overall accountability for the oversight of Orora’s remuneration approach for all Orora executives and NEDs, having
regard to the recommendations made by the HRC. The HRC reviews and makes recommendations to the Board on NED and executive
remuneration and at-risk remuneration policies for all Orora executives taking into account business strategy, corporate governance
principles, market practice and stakeholder interests. More information on the Board’s role and Orora’s corporate governance policies for
KMP (including minimum shareholding, share trading, and the prohibition of hedging or margin lending in respect of Orora securities) can
be found on Orora’s website at: https://www.ororagroup.com/investors/policies-and-standards.
During the reporting period, the HRC did not receive any remuneration recommendations (as defined by the Corporations Act 2001) from
external consultants.
ORORA LIMITED ANNUAL REPORT 2023
67
DIRECTORS’ REPORT
Remuneration
Report
7.2. Statutory remuneration disclosures
Executive KMP remuneration
Details of the Executive KMP remuneration prepared in accordance with statutory requirements and accounting standards during the
reporting period are given in the table below.
Short-term benefits
Executive KMP
Year
Base salary(1)
Other
benefits[2]
B P Lowe
S C Hughes
2023
2022
2023
2022
1,277,380
29,555
1,239,710
691,017
701,180
-
-
-
Cash STI Superannuation
556,389
798,453
223,513
329,553
25,292
23,568
25,149
23,568
Long service
leave
Share-based
payments
(DSR/PR/SO)[3]
Total
remuneration
Performance
related
remuneration
39,812
49,340
18,261
16,547
919,657
830,513
349,483
243,355
2,848,085
2,941,584
1,307,423
1,314,203
51.8%
55.4%
43.8%
43.6%
(1)
The amount disclosed includes base salary and the movement in the short-term employee annual leave benefit.
(2) Other benefits include costs associated with other short term employment benefits, inclusive of any fringe benefits tax.
(3)
The value of the share-based payments represents the accounting fair value of restricted shares, options, rights and performance rights granted, collectively
referred to as the ‘grants’. In accordance with the Accounting Standards the accounting fair value of the grants is recognised proportionally over the grant’s
performance period. The amounts above represent management’s best estimate, at the date of this report, of the likelihood that the performance conditions of
the grants being met and will therefore vest, at which point the Executive KMP will be entitled to receive the share-based payment. If the performance
conditions are not met, the Executive KMP will not be entitled to the share-based payment.
NED remuneration
Details of the NED remuneration during the reporting period are given in the table below.
NED
A R H Sindel
A P Cleland
M A Fraser[1]
T J Gorman[2]
S L Lewis
J L Sutcliffe[3]
Year
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
Base and Committee fees
Superannuation benefits
Total remuneration
396,606
396,606
210,868
210,868
209,909
52,477
232,928
232,307
215,434
215,434
35,145
210,868
25,292
23,568
22,141
21,087
22,040
5,248
-
-
22,621
21,543
3,690
21,087
421,898
420,174
233,009
231,955
231,949
57,725
232,928
232,307
238,055
236,977
38,835
231,955
(1) M A Fraser was appointed as a Director on 1 April 2022. The remuneration for the comparative period represents the period from 1 April 2022 to 30 June 2022.
T J Gorman remuneration for the comparative period has been restated to reflect an adjustment to his director fees for services provided in the 2022 financial
(2)
year.
J L Sutcliffe retired as a Director on 31 August 2022. The remuneration for the current period represents the period from 1 July 2022 to 31 August 2022.
(3)
68
ORORA LIMITED ANNUAL REPORT 2023
DIRECTORS’ REPORT
Remuneration
Report
7.3. Terms of equity grants
Performance Rights granted from FY20
The awards from FY20 were granted consistent with the terms described in Section 4.1.
PR subject to an EPS hurdle must first meet a minimum RoAFE gateway to vest. RoAFE is calculated as EBIT excluding significant items
divided by the average funds employed in each financial year at the 30 June testing date. EPS measures the earnings generated by the
Group attributable to each Orora share. EPS is calculated based on the net profit after tax (NPAT) excluding significant items calculated
on a constant currency basis for the relevant financial year divided by the weighted average number of Orora shares on issue.
The growth in the Group’s EPS over the relevant performance period will be calculated as the increase in EPS over the base EPS (the
normalised EPS outcome for the previous financial year). The compound growth in EPS will be expressed as a cumulative percentage.
If the RoAFE gateway is not met in the relevant performance period, all PR subject to the EPS hurdle will lapse. If the RoAFE gateway is
met, the PR subject to the EPS hurdle will vest in accordance with the vesting schedule below.
RTSR measures the growth in the Group’s share price together with the value of dividends declared and paid or any other returns of
capital during the performance period against companies ranked 50 to 150 on the S&P/ASX index as at the start of the performance
period.
The share price used to calculate the TSR of the Group and each of the comparator companies for the performance period will be
measured as follows:
•
•
the opening share price is the VWAP on the ASX for the final 20 trading days of the previous financial year for PR granted from FY22.
For the FY20 and FY21 grants, the opening share price is the VWAP on the ASX for the final five trading days of the previous financial
year.
the closing share price is the VWAP on the ASX for the final 20 trading days of the performance period.
PR subject to the RTSR hurdle must first meet a minimum ATSR gateway to vest. The ATSR gateway is a condition that Orora’s TSR over
the performance period must not be negative. If the ATSR gateway is not met in the relevant performance period, all PR subject to the
RTSR hurdle will lapse. If the ATSR gateway is met, the PR subject to the RTSR hurdle will vest in accordance with the vesting schedule
below.
% CAGR in EPS over
performance period
% of PR subject to EPS
hurdle that will vest
Below 4%
4%
Between 4% and 8%
0%
50%
RTSR over
performance period
Below 50th percentile
50th percentile
% of PR subject to RTSR hurdle that
will vest
0%
50%
Pro-rata straight line vesting will
occur between 50% and 100%
Between 50th and 75th percentile
Pro-rata straight line vesting will
occur between 50% and 100%
8% or higher
100%
75th percentile or higher
100%
Orora engages the services of an independent external provider to calculate TSR performance. The Board has the discretion to change or
modify the gateways and hurdles associated with the plan at the time of grant.
ORORA LIMITED ANNUAL REPORT 2023
69
DIRECTORS’ REPORT
Remuneration
Report
7.4. Options and Rights over equity instruments
The table below shows the DSR, PR and SO held by Executive KMP during the reporting period. Any rights that vest will automatically be
exercised at no cost on or around the time that Orora notifies the participant of vesting. During the period no share options vested nor
were any exercised by the Executive KMP.
Type of
equity
Grant
date
Number
granted
First date
exercisable
Expiry
date
Number
%
Number
%
Number
Fair value
at grant
Exercise
price
Vested
Lapsed
Unvested
B P Lowe[1]
DSR
DSR
DSR
PR
PR
PR
PR
PR
SO
06/10/2022
108,485 01/09/2024 01/09/2024
27/08/2021
127,032 01/09/2023 01/09/2023
-
-
-
-
15/09/2020
70,640 01/09/2022 01/09/2022
70,640
100%
20/10/2022
361,413 31/08/2026 01/09/2026
05/11/2021
273,847 31/08/2025 31/08/2025
28/10/2020
339,147 30/08/2024 01/09/2024
22/11/2019
270,900 31/08/2023 01/09/2023
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
108,485
127,032
-
- 361,413
- 273,847
- 339,147
- 270,900
22/10/2018
100,500 31/08/2022 31/08/2022
87,636
22/10/2018
244,500 30/8/2022 30/08/2027
199,512
87%
82%
12,864
44,988
13%
18%
-
-
S C Hughes
06/10/2022
44,776 01/09/2024 01/09/2024
27/08/2021
36,466 01/09/2023 01/09/2023
05/10/2022
142,282 30/06/2026 01/09/2026
30/09/2021
148,066 30/06/2025 01/09/2025
06/11/2020
183,000 30/06/2024 01/09/2024
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
44,776
36,466
142,282
148,066
183,000
$3.02
$3.13
$2.14
$1.76
$2.27
$1.81
$2.23
$1.91
$0.38
$3.02
$3.13
$1.88
$1.99
$1.78
-
-
-
-
-
-
-
-
$3.58
-
-
-
-
-
B P Lowe was appointed Managing Director and Chief Executive Officer effective 1 October 2019 and was designated a KMP from this date. Grants prior to this
date relate to his previous roles.
DSR
DSR
PR
PR
PR
(1)
70
ORORA LIMITED ANNUAL REPORT 2023
DIRECTORS’ REPORT
Remuneration
Report
7.5. Shareholdings
To strengthen alignment of the interests of Orora’s executives and NEDs with shareholders, there is a minimum shareholding requirement
(MSR).
Executive KMP shareholdings
The CEO and other executives are required to build and maintain a shareholding equivalent to 100% and 50% of FR respectively within six
years of their appointment. Once the relevant MSR has been attained, executives must not dispose of Orora equity granted as incentive
on or after 1 January 2014, where it will result in them holding less than the MSR.
Executive
B P Lowe
S C Hughes
Balance on
1 July 2022
Received on
exercise of grant
Shares acquired during
reporting period
Shares disposed of
during reporting period
Closing balance on
30 June 2023
Value of total holdings
as a % of FR
542,656
105,000
158,276
-
-
-
(95,000)
-
605,932
105,000
148.2%
45.7%
Non-Executive Director shareholdings
The Board resolved in August 2020 to adopt an updated Board Charter that, amongst other things, specifies that Non-Executive Directors
will be expected to purchase Orora shares (at times when they are permitted to trade) to achieve a shareholding equivalent in value to
one year’s base fee remuneration within five years of joining the Board and maintain at least that level of shareholding throughout their
tenure. Existing NED are expected to achieve this shareholding going forward and maintain it throughout their tenure.
NED
A R H Sindel
A P Cleland
M A Fraser
T J Gorman
S L Lewis
J L Sutcliffe[1]
Balance on
1 July 2022
Shares acquired during
reporting period
Shares disposed of
during reporting period
Closing balance on
30 June 2023
Value of total holdings
as a % of base fees
140,000
130,632
55,000
56,000
93,835
131,355
-
4,793
-
-
4,963
-
-
-
-
-
-
-
140,000
135,425
55,000
56,000
98,798
131,355
115.0%
209.2%
85.4%
78.3%
149.4%
229.4%
(1)
J L Sutcliffe retired as a Director on 31 August 2022. The shareholding presented above represents shares held by Mr Sutcliffe at the date of his retirement.
7.6. Executive KMP service agreements
The details of the contract terms for the Executive KMP are disclosed:
Type of contract
Permanent ongoing
Notice period
six months
Termination payment
Greater of amount payable required by law
and payments in lieu of notice (total termination
payment must not exceed 12 months’ FR)
7.7. Transactions with KMP
No other transactions occurred between KMP and the Group during the reporting period.
7.8. Loans to KMP or related parties
No loans to KMP or related parties were provided during the reporting period.
ORORA LIMITED ANNUAL REPORT 2023
71
DIRECTORS’ REPORT
Directors’
declaration
This Directors’ report is made in accordance with a resolution of the Directors.
A R Sindel
Chair
17 August 2023
72
ORORA LIMITED ANNUAL REPORT 2023
Auditor’s independence
declaration
ORORA LIMITED ANNUAL REPORT 2023
73
Financial
Report
This is the financial report of Orora Limited
(the Company) and its subsidiaries
(collectively referred to as the Group).
The financial report has been prepared in a
style that attempts to make the report less
complex and more relevant to
shareholders. The note disclosures have
been grouped into a number of sections
with each section also including details of
the accounting policies applied in
producing the relevant note, along with
details of any key judgements and
estimates used.
Notes to the financial statements provide
information required by statute,
accounting standards or Listing Rules to
explain a particular feature of the
financial statements. The notes which
follow also provide explanation and
additional disclosures to assist readers in
their understanding and the
interpretation of the Annual Report and
the financial statements.
In this section
Financial statements
Income statement
Statement of comprehensive income
Statement of financial position
Statement of changes in equity
Cash flow statement
74
75
76
77
78
79
Notes to the financial statements
Results for the year
1.1
Segment results
1.2 Significant items
1.3
1.4
Earnings Per Share (EPS)
Income
1.5 Operating costs
Capital structure and financing
2.1 Capital management
2.2 Dividends
2.3 Net debt
2.4 Equity
Assets and liabilities
3.1
Trade and other receivables
3.2 Inventories
3.3 Trade and other payables
3.4 Other assets
3.5 Property, plant and equipment
3.6 Leases
3.7
Intangible assets
3.8 Impairment of
non-financial assets
3.9 Provisions
Income tax
4.1
Income tax expense
4.2 Deferred tax balances
80
83
83
86
87
88
89
90
90
91
92
95
98
98
99
100
100
101
102
106
107
109
112
112
112
Financial risk management
5.1
Derivative financial instruments
5.2 Market risks
5.3 Credit risks
5.4 Liquidity and funding risk
Group structure
6.1
Principal subsidiary
undertakings and
investments
6.2 Orora Employee Share Trust
Other notes to the
financial statements
7.1
Share-based compensation
7.2 Auditors’ remuneration
7.3 Commitments and contingent
liabilities
7.4 Orora Limited
7.5 Deed of Cross Guarantee
7.6
7.7
Related party transactions
Key Management Personnel
7.8 New and amended
accounting standards
and interpretations
115
115
120
124
125
127
127
127
128
128
131
131
132
134
136
136
137
74
ORORA LIMITED ANNUAL REPORT 2023
Income
statement
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
$ million
Continuing Operations
Sales revenue
Cost of sales
Gross profit
Other income
Sales and marketing expenses
General and administration expenses
Profit from operations
Finance income
Finance expenses
Net finance costs
Profit before related income tax expense (1)
Income tax expense
Profit from continuing operations
Discontinued Operations(2)
Loss from discontinued operations, net of tax
Note
2023
2022
1.1
1.4
1.4
1.5
4.1
4,291.3
(3,491.5)
4,090.8
(3,318.0)
799.8
772.8
6.9
(247.2)
(265.0)
3.9
(233.1)
(258.1)
294.5
285.5
1.4
(48.9)
(47.5)
247.0
(62.2)
184.8
0.6
(27.3)
(26.7)
258.8
(71.7)
187.1
1.2
-
(2.4)
Profit for the financial period attributable to the owners of Orora Limited
184.8
184.7
Earnings per share for profit from continuing operations attributable to the ordinary equity holders
of Orora Limited
Basic earnings per share
Diluted earnings per share
Earnings per share for profit attributable to the ordinary equity holders of Orora Limited (2)
Basic earnings per share
Diluted earnings per share
Cents
Cents
1.3
1.3
1.3
1.3
21.9
21.7
21.9
21.7
21.7
21.5
21.4
21.2
(1) Profit from operations in the current period includes a significant item of expense of $26.0 million (after tax $18.2 million) relating to additional expected costs
associated with the decommissioning of the Petrie site. Refer to note 1.2 for further details of the significant item.
(2) On 30 April 2020, the Group completed the sale of its Australasian Fibre business; accordingly, the financial results of this business are presented separately as a
discontinued operation within this income statement. The comparative period earnings per share includes the after-tax net loss on sale of $2.4 million recognised
in respect of the sale of the Australasian Fibre business, refer note 1.2. Further details regarding the sale of the Australasian Fibre business can be found in the
2021 and 2020 Annual Reports.
The above Income statement should be read in conjunction with the accompanying notes.
ORORA LIMITED ANNUAL REPORT 2023
75
Statement of
comprehensive income
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
$ million
Note
2023
2022
Profit for the financial period
Other comprehensive income/(expense)
Items that may be reclassified to profit or loss:
Cash flow hedge reserve
Unrealised gain on cash flow hedges
Realised gain transferred to profit or loss
Income tax relating to these items
Exchange fluctuation reserve
Exchange differences on translation of foreign operations
Net investment hedge of foreign operations
Other comprehensive income for the financial period, net of tax
Total comprehensive income for the financial period attributable to the owners of Orora Limited
Total comprehensive income for the financial period attributable to the owners of Orora Limited arises
from:
Continuing operations
Discontinued operations
Total comprehensive income for the financial period attributable to the owners of Orora Limited
2.4.2
2.4.2
184.8
184.7
19.4
(12.5)
(2.1)
21.1
-
25.9
210.7
9.9
(2.5)
(2.3)
31.2
(3.9)
32.4
217.1
210.7
-
210.7
219.5
(2.4)
217.1
The above Statement of comprehensive income should be read in conjunction with the accompanying notes.
76
ORORA LIMITED ANNUAL REPORT 2023
Statement of
financial position
AS AT 30 JUNE 2023
$ million
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Derivatives
Other current assets
Total current assets
Non-current assets
Property, plant and equipment
Right-of-use assets
Deferred tax assets
Goodwill and intangible assets
Derivatives
Other non-current assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Borrowings
Lease liabilities
Derivatives
Current tax liabilities
Provisions
Total current liabilities
Non-current liabilities
Other payables
Borrowings
Lease liabilities
Derivatives
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
NET ASSETS
Equity
Note
2023
2022
2.3
3.1
3.2
5.4
3.4
3.5
3.6
4.2
3.7
5.4
3.4
3.3
2.3
2.3, 3.6
5.4
3.9
3.3
2.3
2.3, 3.6
5.4
4.2
3.9
58.4
517.4
639.1
9.3
33.5
52.6
561.8
650.8
15.8
26.7
1,257.7
1,307.7
806.5
180.7
12.1
440.1
9.2
95.5
685.2
173.7
16.1
433.2
1.1
91.8
1,544.1
1,401.1
2,801.8
2,708.8
758.2
150.0
54.2
2.2
17.9
102.4
931.2
35.0
49.7
1.9
17.6
86.9
1,084.9
1,122.3
12.8
682.4
173.4
1.6
33.1
13.4
5.0
646.6
174.8
-
13.7
14.7
916.7
854.8
2,001.6
1,977.1
800.2
731.7
Contributed equity and treasury shares
Reserves
Retained earnings
TOTAL EQUITY
2.4.1
2.4.2
2.4.3
(38.8)
167.5
671.5
800.2
(37.3)
138.9
630.1
731.7
The above Statement of financial position should be read in conjunction with the accompanying notes.
ORORA LIMITED ANNUAL REPORT 2023
77
Statement of
changes in equity
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
$ million
Balance at 1 July 2021
Net profit for the financial period
Other comprehensive income/(expense):
Unrealised gain on cash flow hedges
Realised gains transferred to profit or loss
Exchange differences on translation of
foreign operations
Deferred tax
Total other comprehensive income
Note
2.4.3
2.4.2
2.4.2
Realised gains transferred to non-financial
assets, net of tax
2.4.2
Transactions with owners in their capacity as owners:
Share buyback
2.4.1
2.4.1
Purchase of treasury shares
2.4.1
Settlement of options and performance rights
Share-based payment expense
7.1
2.2
Dividends paid
Balance at 30 June 2022
Net profit for the financial period
Other comprehensive income/(expense):
Unrealised gain on cash flow hedges
Realised gains transferred to profit or loss
Exchange differences on translation of foreign
operations
Deferred tax
Total other comprehensive income
2.4.3
2.4.2
2.4.2
Realised gains transferred to non-financial
assets, net of tax
2.4.2
Transactions with owners in their capacity as owners:
Purchase of treasury shares
2.4.1
2.4.1
Settlement of options and performance rights
Share-based payment expense
7.1
Dividends paid
2.2
Contributed
equity and
treasury
shares
80.8
-
-
-
-
-
-
-
(109.0)
(12.8)
3.7
-
-
(37.3)
-
-
-
-
-
-
-
(4.5)
3.0
-
-
1.8
-
9.9
(2.5)
-
(2.3)
5.1
(3.1)
-
-
-
-
-
3.8
-
19.4
(12.5)
-
(2.1)
4.8
0.3
-
-
-
-
Balance at 30 June 2023
(38.8)
8.9
Attributable to owners of Orora Limited
Cash flow
hedge
reserve
Share-based
payment
reserve
Demerger
reserve
Exchange
fluctuation
reserve
Retained
earnings
Total
equity
8.7
132.9
(35.8)
580.2
768.6
-
-
-
-
-
-
-
-
-
(3.7)
5.7
-
10.7
-
-
-
-
-
-
-
-
(3.0)
5.4
-
13.1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
27.3
-
27.3
-
-
-
-
-
-
132.9
(8.5)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
21.1
-
21.1
-
-
-
-
-
184.7
184.7
-
-
-
-
-
-
-
-
-
-
(134.8)
630.1
184.8
-
-
-
-
-
-
-
-
(143.4)
9.9
(2.5)
27.3
(2.3)
32.4
(3.1)
(109.0)
(12.8)
-
5.7
(134.8)
731.7
184.8
19.4
(12.5)
21.1
(2.1)
25.9
0.3
(4.5)
-
5.4
(143.4)
132.9
12.6
671.5
800.2
The above Statement of changes in equity should be read in conjunction with the accompanying notes.
78
ORORA LIMITED ANNUAL REPORT 2023
Cash flow
statement
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
$ million
Note
2023
2022
Cash flows from/(used in) operating activities
Profit for the financial period from continuing operations
Depreciation and amortisation of property, plant and equipment
Amortisation of right-of-use assets
Amortisation of intangible assets
Net finance costs
Net loss on disposal of non-current assets
Net gain on disposal of leases
Fair value gain on financial instruments at fair value through income statement
Share-based payment expense
Other asset amortisation, net impairment losses and other sundry items
Restructuring and decommissioning expense
Income tax expense
Operating cash inflow before changes in working capital and provisions
- (Increase)/decrease in trade and other receivables
- (Increase)/decrease in inventories
- (Increase)/decrease in prepayments and other operating assets
- Increase/(decrease) in trade and other payables
- Increase/(decrease) in provisions
Interest received
Interest and finance costs paid
Income tax paid
Net cash inflow from continuing operating activities
Net cash flows from discontinued operating activities
Net cash inflow from operating activities
Cash flows from/(used in) investing activities
Granting of amounts to associated companies and other persons
Government grant received
Payments for property, plant and equipment and intangible assets
Proceeds on disposal of non-current assets
Net cash flows used in continuing investing activities
Net cash flows used in discontinued investing activities (1)
Net cash flows used in investing activities
Cash flows from/(used in) financing activities
Share buyback
Payments for treasury shares
Proceeds from borrowings (2)
Principal lease repayments
Dividends paid and other equity distributions
Net cash flows used in continuing financing activities
Net cash flows from discontinued financing activities
Net cash flows used in financing activities
Net increase in cash held
Cash and cash equivalents at the beginning of the financial period
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at the end of the financial period (3)
1.5
1.5
1.5
7.1
1.2
2.4.1
2.4.1
2.2
2.3
184.8
62.9
50.0
10.1
47.5
0.1
-
(0.1)
5.4
27.9
26.0
62.2
476.8
58.4
8.1
(19.2)
(173.5)
(13.1)
337.5
1.4
(48.3)
(40.3)
250.3
-
187.1
64.4
44.6
8.9
26.7
1.3
(2.5)
(0.4)
5.7
22.8
-
71.7
430.3
(52.7)
(239.2)
(5.5)
220.6
(12.9)
340.6
0.1
(27.7)
(55.4)
257.6
-
250.3
257.6
(0.2)
8.0
(189.7)
0.6
(181.3)
(2.6)
(183.9)
-
(4.5)
137.9
(55.6)
(143.4)
(65.6)
-
(3.9)
5.0
(92.2)
0.5
(90.6)
(9.3)
(99.9)
(109.0)
(12.8)
150.1
(49.3)
(134.8)
(155.8)
-
(65.6)
(155.8)
0.8
52.6
5.0
58.4
1.9
50.6
0.1
52.6
(1) Net cash flows used in discontinued investing activities represents payments for the settlement of amounts already provided for relating to the sale of the
Australasian Fibre business. Further details regarding the sale of the Australasian Fibre business can be found in the 2021 and 2020 Annual Reports.
(2) Short-term draw downs and repayments of facilities are presented net within the financing activities of the cash flow statement.
(3) For the purpose of the cash flow statement, cash and cash equivalents includes cash on hand and at bank and short-term money market investments, net of
outstanding bank overdrafts. Refer to note 2.3 for details of the financing arrangements of the Group.
The above cash flow statement should be read in conjunction with the accompanying notes.
ORORA LIMITED ANNUAL REPORT 2023
79
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
About this report
Orora Limited (the Company) is a for-profit entity for the
purposes of preparing this financial report and is domiciled in
Australia. The Company and its subsidiaries (collectively referred
to as the Group) are primarily involved in the manufacture and
supply of packaging products and solutions to grocery, fast
moving consumer goods and industrial markets.
This financial report is a general purpose financial report which:
• has been prepared in accordance with Australian Accounting
Standards (AASBs), including Australian Accounting
Interpretations adopted by the AASB, and the Corporations
Act 2001. The financial report of the Group also complies
with International Financial Reporting Standards (IFRSs) and
Interpretations as issued by the International Accounting
Standards Board (IASB);
• has been prepared under the historical cost basis except for
financial instruments which have been measured at fair
value. Non–derivative financial instruments are measured at
fair value through the income statement;
is presented in Australian dollars with values rounded to the
nearest $100,000 unless otherwise stated, in accordance
with the ASIC Corporations (Rounding in Financial/Directors’
Reports) Instrument 2016/191;
•
• presents reclassified comparative information where
required for consistency with the current period
presentation;
• adopts all new and amended Accounting Standards and
Interpretations issued by the AASB that are relevant to the
operations of the Group and effective for reporting periods
beginning on or after 1 July 2022 (refer note 7.8);
• does not early adopt any Accounting Standards and
Interpretations that have been issued or amended, but are
not yet effective; and
• has applied Group accounting policies consistently to all
periods presented.
This general purpose financial report for the Group for the year
ended 30 June 2023 was authorised for issue in accordance
with a resolution of the Directors on 17 August 2023. The
Directors have the power to amend and reissue the financial
report.
Basis of consolidation
The consolidated financial statements comprise the financial
statements of the Company and its controlled entities. Details of
the controlled entities (subsidiaries) of the Company are
contained in note 6.1.
The financial statements of subsidiaries are included in the
consolidated financial statements from the date that the Group
obtains control until the date that control ceases. The subsidiary
financial statements are prepared for the same reporting period
as the parent company, using consistent accounting policies and
all balances and transactions between entities included within
the Group are eliminated.
The acquisition of subsidiaries is accounted for using the
acquisition method of accounting when control is obtained by
the Group.
Foreign currency
Items included in the financial statements of each of the entities
included within the Group are measured using the currency of
the economic environment in which the entity primarily
generates and expends cash (the ‘functional currency’). These
financial statements are presented in Australian dollars, which is
the functional and reporting currency of the Company, Orora
Limited.
Transactions in foreign currencies are initially recorded in the
functional currency of the entity using the exchange rate
prevailing at the date of the transaction. Monetary assets and
liabilities denominated in foreign currencies are translated at the
rate of exchange ruling at the balance sheet date. Foreign
exchange gains and losses arising from the translation of the
monetary assets and liabilities, or from the settlement of foreign
currency transactions, are recognised in the income statement,
except when deferred in equity as qualifying cash flow hedges or
net investment hedges. The amounts deferred in equity in
respect of cash flow hedges are recognised in the income
statement when the hedged item affects profit or loss and for
net investment hedges when the investment is disposed of.
As at the reporting date, the assets and liabilities of entities
within the Group that have a functional currency different from
the presentation currency, are translated into Australian dollars
at the rate of exchange at the balance sheet date and the
income statements are translated at the average exchange rate
for the year. The exchange differences arising on the balance
sheet translation are taken directly to a separate component of
equity in the Exchange Fluctuation Reserve.
Judgements and estimates
The preparation of the financial statements requires
management to exercise judgement in applying the Group’s
accounting policies. It also requires the use of estimates and
assumptions that affect the reported amounts of assets,
liabilities, income and expenses.
The areas involving a higher degree of judgement or complexity
are set out below and in more detail in the related notes:
Note
Note 3.6
Leases
Note 3.8
Impairment of non-financial assets
Note 3.9
Provisions
Section 4
Income tax
Note 5.1
Derivative financial instruments
Note 7.3
Commitments and contingent liabilities
80
ORORA LIMITED ANNUAL REPORT 2023
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
Climate change
The Group's current strategy to manage climate related-risks and
opportunities is underpinned by Orora's Circular Economy and
Climate Change pillars of the Group’s Sustainability strategy, Our
Promise to the Future. This strategy focuses on reducing gross
greenhouse gas emissions across the Group and investing in low
emissions technologies and renewable energy sources, as well
as maximising the recycled content of our products to ensure
they can be continually recycled to minimise waste and pollution
and to reduce greenhouse gas emissions.
The Group has committed to achieve net zero greenhouse gas
emissions by 2050 for Scope 1 and 2 emissions and a 40%
reduction by 2035, both from a FY19 baseline. Under the Circular
Economy pillar, the Group has set a target of 60% recycled
content for Orora glass beverage containers (pre and post-
consumer) by 2025.
During the period the Group completed the construction of the
cullet beneficiation plant at Gawler in South Australia which will
significantly increase the recycled content in the Group's glass
beverage packaging in support of Orora’s Circular Economy and
greenhouse gas emissions reduction goal.
The Group has also expanded efforts to procure greenhouse gas-
free electricity as part of the businesses ongoing renewable
energy initiatives by entering into long-term power purchase
agreements, refer note 5.2.3.
During the period the upgrade of the G3 glass furnace in
Australia to utilise oxyfuel technology commenced. This
technology will move this furnace into the top 10% of energy
efficient furnaces worldwide and will deliver a step change
reduction in the Group's fossil fuel use, nitrogen oxide and carbon
dioxide emissions.
The known estimates and approved cash flows required to
execute these activities and other initiatives identified by the
Group in managing climate related risk and opportunities have
been incorporated into the forecast cash flows when assessing
the carrying value of the Group's assets. Orora will continue to
develop reporting plans and quantitative analysis around the
Group’s climate change strategy, the financial implications of
which will be considered and built into future cash flow
assumptions. Any change to the Group's strategy around climate
change and the circular economy could impact these forecasts
and assumptions.
Future changes in the Group's climate change strategy, global
regulatory requirements and expectations of customers,
investors and the communities the Group operates within may
impact the Group's significant judgements and estimates and
may result in changes to the financial results and the carrying
values of certain assets and liabilities in future reporting periods.
Other accounting policies
Significant and other accounting policies that summarise the
measurement basis used, and which are relevant to an
understanding of the financial statements, are provided
throughout the notes to the financial statements.
Current period events
Dividend
During the financial year the Group paid an unfranked FY22 final
dividend of $71.5 million at 8.5 cents per ordinary share and an
unfranked FY23 interim dividend of $71.9 million at 8.5 cents per
ordinary share.
Since 30 June 2023 the Directors have determined a final
dividend for FY23 of $75.8 million, unfranked, of 9.0 cents per
ordinary share. Refer note 2.2 for further details.
Refinancing
During the year ended 30 June 2023, the following refinancing
activities were undertaken by the Group:
•
the $35.0 million committed bilateral facility that was due to
mature in April 2023 was extended to April 2025.
the $350.0 million committed multicurrency revolving
syndicated facility maturing November 2024 was upsized by
$110.0 million to $460.0 million.
•
• a new $75.0 million committed bilateral facility was
established with a maturity date of January 2026.
the USD150.0 million committed revolving syndicated facility
that was due to mature in April 2024 was amended to
USD100.0 million and extended to June 2027.
•
• a new USD100.0 million committed bilateral facility was
established with a maturity date of January 2028.
Decommissioning costs
The Group has recognised a significant item expense of $26.0
million (after tax $18.2 million) relating to anticipated additional
costs associated with the decommissioning of the former Petrie
Mill site. The significant item expense is presented in the income
statement within ‘general and administration’ expense. The
decommissioning of the Petrie site is progressing but continues
to be a significant and complex exercise involving multiple
government agencies. Recent significant developments
associated with the unprecedented and continuing rainfall levels
in Queensland and unforeseen complexities related to the
remediation of the remaining and most technically complex
areas of the site, have resulted in delays and caused the
estimated costs to complete the remaining decommissioning to
be higher than previously contemplated.
The Group continues to engage a specialist environmental
consulting firm to manage the completion of the remaining
remediation works. The provision at 30 June 2023 (refer note
3.9), represents management’s best estimate in respect of the
anticipated costs to complete the remediation, using all
currently available information and considering applicable
legislative and environmental regulations.
Subsequent event
The Group’s US Private Placement (USPP) notes of
USD100.0 million matured in July 2023. The maturing USPP
notes were repaid with funds from the Group’s USD100.0 million
committed bilateral facility with a maturity date of January 2028.
ORORA LIMITED ANNUAL REPORT 2023
81
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
The notes to the financial statements
The following notes include information which is material and
relevant to the operations, financial position and performance of
the Group. Information is considered material and relevant due to
its size or nature of the information:
•
is important for understanding the Group’s current period
results;
• provides an explanation of significant changes in the Group’s
•
business – for example, business acquisitions; or
it relates to an aspect of the Group’s operations that is
important to its future performance.
The notes are organised into the following sections:
• Results for the year – provides details on the results and
performance of the Group for the year;
• Capital structure and financing – outlines how the Group
manages its capital structure and related financing
activities;
• Assets and liabilities – provides details of the assets used to
generate the Group’s trading performance and the liabilities
incurred as a result;
Income tax – provides information on the Group’s tax position
and the current and deferred tax charges or credits in the
year;
•
• Financial risk management – provides information on how the
Group manages financial risk exposures associated with
holding financial instruments;
• Group structure – explains the characteristics of and
changes within the Group structure during the year;
• Other notes to the financial statements – provides additional
financial information required by accounting standards and
the Corporations Act 2001, including details of the Group’s
employee reward and recognition programs and
unrecognised items.
82
ORORA LIMITED ANNUAL REPORT 2023
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
Section 1: Results for the year
In this section
This section focuses on the results and performance of the Group. On the following pages you will find disclosures explaining the Group’s
results for the year, segment information, significant items and earnings per share.
This section also analyses the Group’s profit before tax by reference to the activities performed by the Group and an analysis of key
operating and finance costs. Earnings before significant items, interest and related income tax expense (EBIT) is a key profit indicator for
the Group. This measure excludes discontinued operations and the effects of individual significant gains or losses arising from events that
are not considered part of the core operations of the business that may have an impact on the quality of earnings and reflects the way the
business is managed and how the Directors assess the performance of the Group.
1.1. Segment results
The Group’s operating segments are organised and managed according to their geographical location. Each segment represents a
strategic business that offers different products and operates in different industries and markets. The Corporate Executive Team, the
chief operating decision-makers (CODM), monitor the operating results of the business separately for the purpose of making decisions
about resource allocation and performance assessment.
The results of the reportable segments for the year ended 30 June 2023 and 30 June 2022 are set out below. The following segment
information has been presented for continuing operations only.
$ million
Australasia
2022
`
2023
North America
2022
2023
Total Reported
2022
2023
Reportable segment revenue(1)
1,036.9
909.1
3,254.4
3,181.7
4,291.3
4,090.8
Reportable segment earnings
Earnings before significant items, interest, tax,
depreciation and amortisation
Depreciation and amortisation
Earnings before significant items, interest and tax
Allocated finance expense - lease liabilities interest
Earnings before significant items, unallocated interest and tax
199.5
195.6
244.0
207.8
443.5
403.4
(46.2)
153.3
(0.5)
152.8
(45.0)
150.6
(0.6)
150.0
(76.8)
167.2
(9.5)
157.7
(72.9)
134.9
(9.2)
125.7
(123.0)
320.5
(10.0)
310.5
(117.9)
285.5
(9.8)
275.7
Capital spend on the acquisition of property, plant and
equipment and intangibles and other growth spend
163.2
65.0
30.6
22.2
193.8
87.2
Receivables
Inventory
Payables
139.4
383.5
155.3
342.5
391.8
255.6
422.4
308.3
531.2
639.1
577.7
650.8
(327.1)
(387.5)
(415.1)
(522.7)
(742.2)
(910.2)
Total reportable segment working capital
195.8
110.3
232.3
208.0
428.1
318.3
Average funds employed(2)
Operating free cash flow(3)
701.9
610.8
770.0
664.8
1,471.9
1,275.6
68.3
129.4
167.2
116.2
235.5
245.6
(1) Represents total revenue from external customers. Across all segments, in accordance with AASB 15 Revenue from Contracts with Customers, the timing of
revenue recognition materially occurs at a point in time, refer note 1.4.
(2) Average funds employed excludes intersegment balances and represents net assets less net debt and assets under construction, at the beginning and end of the
reporting period.
(3) Operating free cash flow represents the cash flow generated from the Group’s operating activities and non-growth capital expenditure activities, including lease
payments but before interest, tax and dividends. In the current period the operating free cash flow of the Australasia segment includes an outflow of $34.4 million
(2022: $26.5 million) representing expenditure on the decommissioning of the Petrie site, refer notes 1.2 and 3.9.
ORORA LIMITED ANNUAL REPORT 2023
83
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
Section 1: Results for the year (continued)
1.1. Segment results (continued)
The following summary describes the operations of each reportable segment.
Orora Australasia
This segment focuses on the manufacture of beverage packaging products within Australia and New Zealand. The products
manufactured by this segment include glass bottles, beverage cans and wine closures.
Orora North America
This segment, predominately located in North America, purchases, warehouses, sells and delivers a wide range of packaging and other
related materials. The business also includes integrated corrugated sheet and box manufacturing and equipment sales capabilities, point
of purchase retail display solutions and other visual communication services.
Accounting policies
Segment performance is evaluated based on earnings before significant items, interest and related income tax expense (EBIT). This
measure excludes the effects of significant items which are typically gains or losses arising from events that are not considered part of
the core operations of the business whilst including items directly attributable to the segment as well as those that can be allocated on a
reasonable basis.
Interest income and expenditure and other finance costs, other than interest on lease liabilities, are not allocated to the segments, as
this type of activity is managed at the Group level. Transfer prices between segments are priced on an ‘arms-length’ basis, in a manner
similar to transactions with third parties, and are eliminated on consolidation.
Geographical segments
In presenting information on the basis of geographical location both segment revenue and non-current assets are based on the location
of the Orora business.
Revenue
$m
Non-current assets(1)
$m
¢ 2023
¢ 2022
Revenue by product
$ million
Corrugate and paper-based packaging
Beverage packaging
Traded packaging products
Total sales revenue
[1]
Non-current assets exclude deferred tax assets and non-current financial
instruments.
2023
2022
1,620.8
1,036.9
1,633.6
1,583.5
909.1
1,598.2
4,291.3
4,090.8
No single customer, within an operating segment, generates revenue greater than 10% of the Group’s total revenues.
84
ORORA LIMITED ANNUAL REPORT 2023
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
Reconciliation of segmental measures
The following segmental measurements reconcile to the financial statements as follows:
Profit before related income tax expense
$ million
Reported segment earnings
Significant items before related income tax (refer note 1.2)
Unallocated net finance costs
Profit before related income tax expense
Capital spend on the acquisition of property, plant and equipment and intangibles
$ million
Reported segment capital and growth spend
Movement in capital creditors
Government grant received included in segment capital spend
Movement in prepaid capital items
Other adjustments
Acquisition of property, plant and equipment and intangibles for total operations (1)
(1)
Refer notes 3.5 and 3.7.
Operating free cash flow
$ million
Reported segment operating free cash flow
Add back capital expenditure and other growth activities included in segment operating
free cash flow
Add back principal lease repayments included in segment operating free cash flow
Less operating activities excluded from operating free cash flow:
Interest received
Interest and borrowing costs paid
Income tax paid
Net cash flows from operating activities
2023
2022
310.5
(26.0)
(37.5)
247.0
275.7
-
(16.9)
258.8
2023
193.8
(2.3)
8.0
0.2
(12.0)
187.7
2022
87.2
10.0
5.0
(0.6)
18.3
119.9
2023
2022
235.5
245.6
36.4
55.6
1.4
(38.3)
(40.3)
250.3
35.9
49.3
0.1
(17.9)
(55.4)
257.6
ORORA LIMITED ANNUAL REPORT 2023
85
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
Section 1: Results for the year (continued)
1.1. Segment results (continued)
Working capital
$ million
Reported segment working capital
Add/(less) amounts included in working capital for management reporting purposes:
Derivatives
Add/(less) amounts excluded from working capital for management reporting purposes:
Net capital receivables and payables
Loan receivables and other assets
Other payables
Reconciles to the financial statements as follows:
Trade and other receivables (note 3.1)
Inventories (note 3.2)
Trade and other payables (note 3.3)
Current prepayments and other assets (note 3.4)
1.2. Significant items
2023
2022
428.1
318.3
(7.1)
(13.9)
9.9
2.2
(8.3)
424.8
517.4
639.1
(758.2)
26.5
424.8
7.3
0.3
(10.8)
301.2
561.8
650.8
(931.2)
19.8
301.2
Significant items are typically gains or losses arising from events that are not considered part of the core operations of the business.
$ million
Continuing operations
Decomissioning costs
Discontinuing operations
Net loss on sale of Australasian Fibre businesses
2023
Tax
(expense)/
benefit
Before tax
Net of tax
Before tax
2022
Tax
(expense)/
benefit
Net of tax
(26.0)
(26.0)
-
-
7.8
7.8
-
-
(18.2)
(18.2)
-
-
-
-
-
-
-
-
-
(2.4)
(2.4)
(2.4)
-
-
(2.4)
(2.4)
(2.4)
Total significant item expense
(26.0)
7.8
(18.2)
Decommissioning costs
Following ongoing project review and reassessment of remediation requirements, additional costs associated with the decommissioning
of the former Petrie Mill site of $26.0 million ($18.2 million after tax) have been recognised in respect of estimated costs to complete.
This expense has been recognised as a significant item and is presented in the income statement within ‘general and administration’
expense. The decommissioning of the Petrie site is progressing but continues to be a significant exercise involving multiple government
agencies. Recent significant developments associated with the unprecedented and continuing rainfall levels in Queensland and
unforeseen complexities related to the remediation of the remaining and most technically complex areas of the site have resulted in
delays and caused estimated costs to complete the remaining decommissioning to be higher than previously contemplated. The Group
continues to engage a specialist environmental consulting firm to manage the completion of the remaining remediation works. The
provision at 30 June 2023 (refer note 3.9) represents management’s best estimate in respect of the anticipated costs to complete the
remediation, using all currently available information and considering applicable legislative and environmental regulations.
Net loss on sale of Australasian Fibre business
During the comparative period a tax expense of $2.4 million was recognised upon finalisation of the tax position of the Australasian Fibre
business and the filing of associated tax returns with tax authorities. Further details regarding the sale of the Australasian Fibre business
can be found in the 2021 and 2020 Annual Reports.
86
ORORA LIMITED ANNUAL REPORT 2023
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
1.3. Earnings Per Share (EPS)
Earnings Per Share (EPS) is the amount of post-tax profit attributable to each share.
Basic EPS is calculated on the Group profit for the year attributable to ordinary shareholders of the Company of $184.8 million
(2022: $184.7 million) divided by the weighted average number of shares on issue during the reporting period, excluding ordinary shares
purchased by the Company and held as Treasury Shares, being 843.2 million (2022: 864.0 million).
Diluted EPS reflects any commitments made by the Group to issue shares in the future and so it includes the effect of the potential
conversion of share options and rights granted to employees. To calculate the impact, it is assumed that all share options and rights are
exercised and new shares are issued.
Basic and Diluted EPS, before significant items, is presented below in order to show the business performance of the Group in a consistent
manner and reflect how the business is managed and measured on a day-to-day basis. It is also a measure that is considered by the Board in
determination of dividend payments.
Calculation of EPS
Calculation of basic and diluted EPS has been based on the following profit attributable to ordinary shareholders and weighted average
number of ordinary shares outstanding.
EPS attributable to the ordinary equity holders of Orora Limited
million
Continuing operations
Profit for the financial period from continuing operations before significant items
Significant item expense (refer note 1.2)
Discontinued operations
Significant item expense (refer note 1.2)
Profit for the financial period
Weighted average number of ordinary shares for basic earnings per share
Dilution due to share options and rights
Weighted average number of ordinary shares for diluted earnings per share
Earnings per share for continuing operations
Basic earnings per share
Diluted earnings per share
Basic earnings per share, before significant items
Diluted earnings per share, before significant items
Earnings per share
Basic earnings per share(1)
Diluted earnings per share(1)
Basic earnings per share, before significant items
Diluted earnings per share, before significant items
2023
2022
$203.0
($18.2)
$184.8
-
$184.8
843.2
7.0
850.2
21.9c
21.7c
24.1c
23.9c
21.9c
21.7c
24.1c
23.9c
$187.1
-
$187.1
($2.4)
$184.7
864.0
6.2
870.2
21.7c
21.5c
21.7c
21.5c
21.4c
21.2c
21.7c
21.5c
(1) Earnings per share in the current period includes an after-tax significant item expense of $18.2 million relating to additional expected costs associated with the
decommissioning of the former Petrie Mill site. Refer note 1.2 for further details. Earnings per share in the comparative period includes the after-tax net loss on
sale of $2.4 million recognised in respect of the sale of the Australasian Fibre business. Further details regarding the sale of the Australasian Fibre business can
be found in the 2021 and 2020 Annual Reports.
ORORA LIMITED ANNUAL REPORT 2023
87
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
Section 1: Results for the year (continued)
1.4.
Income
$ million
Revenue from sale of goods
Sub-lease income
Other
Total other income
External interest income
Total finance income
Accounting policies
2023
2022
4,291.3
4,090.8
0.9
6.0
6.9
1.4
1.4
1.3
2.6
3.9
0.6
0.6
The Group generates revenue primarily from the sale of packaging materials and products providing customers with an extensive range of
tailored packaging and visual communication solutions.
The Group provides standard packaging materials to its customers as well as customer specific (made-to-order) packaging products. The
Group also sources and provides packaging equipment/solutions to customers who enter into long-term agreements under bundled
contract arrangements. Revenue is recognised when control of the goods or services are transferred to the customer and the Group’s
right to payment arises. Revenue is measured on the consideration to which the Group expects to be entitled to in a contract with a
customer.
For certain customers the Group provides retrospective rebates once the quantity of product purchased during the period exceeds a
threshold specified in the contract. For contracts that include rebates the amount of revenue recognised is adjusted to the anticipated
rebates payable, which is based on the purchase history of the customer.
Standard packaging products
Customers obtain control of standard packaging products when the goods are delivered to the customer. Invoices are generated at that
point in time with payment terms varying depending on the customer, ranging from 30 to 90 days. Some contracts allow for volume
discounts/rebates.
Made-to-order packaging products
Made-to-order packaging products are usually long-term contracts which contain several elements. In the vast majority of cases these
elements represent only one performance obligation to the customer. In some cases, the Group produces these products in advance of
delivery. Typically control over these goods remains with the Group until shipment, or when the customer takes physical possession of
the goods. The right to payment arises only at the point in time when control over the goods is transferred to the customer.
The Group has determined that for made-to-order products the customer obtains control of the products when the goods are delivered to
the customer. This represents the point in time when invoices are generated as the right to payment arises. Payment terms vary
depending on the customer, ranging from 30 to 90 days. Some contracts allow for volume discounts/rebates.
Bundled packaging solutions
The Group sources and provides packaging equipment/solutions to customers who enter into long-term product supply arrangements.
The customer obtains control of the equipment and product when the goods are delivered to the customer. Invoices are generated at that
point in time with payment terms varying depending on the customer, ranging from 30 days to 60 days.
88
ORORA LIMITED ANNUAL REPORT 2023
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
1.5. Operating costs
Employee benefit expense
$ million
Wages and salaries
Workers compensation and other on-costs
Superannuation costs on accumulation funds
Other employment benefits expense
Share-based payments expense
- Options
- Performance rights and other plans
Total employee benefits expense
2023
659.2
39.5
8.8
0.1
-
5.4
2022
630.8
35.8
7.1
-
0.1
5.6
713.0
679.4
The Group’s accounting policy for liabilities associated with employee benefits is contained in note 3.9, whilst the policy for share-based
payments is set out in note 7.1.
Depreciation and amortisation
$ million
Depreciation
Amortisation of finance leased assets
Amortisation of right-of-use assets
Amortisation of intangibles
Total depreciation and amortisation
Finance expenses
$ million
Interest paid/payable:
- Finance charges on leased assets
- Unwinding of discount
- External interest expense
Amount capitalised(1)
Total interest paid/payable
Borrowing costs
Total finance expenses
2023
2022
62.9
-
50.0
10.1
123.0
64.3
0.1
44.6
8.9
117.9
2023
2022
10.0
-
44.0
(5.7)
48.3
0.6
48.9
9.8
0.1
15.6
-
25.5
1.8
27.3
(1) The capitalisation rate used to determine the amount of borrowing costs capitalised is the weighted average interest rate applicable to the Group’s general
borrowings during the year, in this case 5.1%. No borrowing costs were capitalised in the comparative period.
Refer to note 3.6 for the Group’s accounting policy and details on right-of-use assets and note 2.3 regarding the Group’s external
borrowings.
ORORA LIMITED ANNUAL REPORT 2023
89
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
Section 2: Capital structure and financing
In this section
This section outlines how the Group manages its capital structure and related financing, including its balance sheet liquidity and access to
capital markets.
The Directors determine the appropriate capital structure of the Group, specifically, how much is raised from shareholders (equity) and how
much is borrowed from financial institutions (debt) in order to finance the Group’s activities both now and in the future. Maintaining capital
discipline and balance sheet efficiency remains important to the Group, as seen through the refinancing activities undertaken during the
year. Any potential courses of action in respect of the Group’s structure take into account the Group’s liquidity needs, flexibility to invest in
the business and impact on credit ratings.
In order to optimise the capital structure, the Group may:
adjust the amount of ordinary dividends paid to shareholders;
•
• maintain a dividend investment plan;
•
•
raise or return capital to shareholders; and
repay or raise debt for working capital and capital expenditure requirements, or to facilitate acquisitions in line with the strategic
objectives and operating plans of the Group.
The Directors consider the Group’s capital structure and dividend policy at least twice a year ahead of announcing results and do so in the
context of its ability to continue as a going concern, to execute the strategy and to invest in opportunities to grow the business and
enhance shareholder value.
2.1. Capital management
Capital is defined as the combination of shareholders’ equity, reserves and net debt. The key objective of the Group when managing its
capital is to safeguard its ability to continue as a going concern, so that the Group can continue to provide returns for shareholders and
benefits for other stakeholders and maintain an optimal capital and funding structure.
The aim of the Group’s capital management framework is to maintain an investment grade credit profile, and the requisite financial metrics,
to secure access to alternate funding sources with a spread of maturity dates and sufficient undrawn committed facility capacity. The
Group’s capital management framework also aims to optimise, over the long term and to the extent practicable, the weighted average cost
of capital to reduce the cost of capital to the Group while maintaining financial flexibility.
The Group uses a range of financial metrics to monitor the efficiency of its capital structure, including on-balance sheet gearing and leverage
ratios, and to ensure that its capital structure provides sufficient financial strength to allow it to secure access to debt finance at
reasonable cost. At 30 June 2023, the Group’s gearing and leverage ratios, excluding lease liabilities, were 49.2% (2022: 46.2%) and
2.0 times (2022: 1.8 times), respectively.
Comparative period - On-market share buyback
On 21 October 2021, the Group announced an on-market share buyback of issued share capital of up to $150.0 million. The buyback
commenced in November 2021. The Dividend Reinvestment Plan was suspended whilst the on-market buyback was undertaken.
The share buyback ceased on 30 June 2022. During the period ordinary shares totalling 30,673,993 were purchased on-market through the
share buyback for a total value of $109.0 million, representing 3.5% of the share capital at the date the share buyback was announced.
$ million
Financial borrowings
Total borrowings
Less: Cash and cash equivalents
Net debt
Lease liabilities
Net debt including lease liabilities
Equity and reserves
Contributed equity and treasury shares
Reserves
Retained earnings
Note
2023
2022
2.3
2.3
2.3
2.4.1
2.4.2
2.4.3
832.4
(58.4)
774.0
227.6
1,001.6
(38.8)
167.5
671.5
800.2
681.6
(52.6)
629.0
224.5
853.5
(37.3)
138.9
630.1
731.7
Net Capital
1,801.8
1,585.2
90
ORORA LIMITED ANNUAL REPORT 2023
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
2.2. Dividends
Final external dividend
Final dividend for 2022 of 8.5 cents per share, unfranked, paid 10 October 2022
(2022: Final dividend for 2021 of 7.5 cents per share, unfranked, paid 11 October 2021)
Interim external dividend
Interim dividend for 2023 of 8.5 cents per share, unfranked, paid 12 April 2023
(2022: Interim dividend for 2022 of 8.0 cents per share, unfranked, paid 30 March 2022)
Proposed and unrecognised at period end(1)
Final dividend for 2023 of 9.0 cents per share, unfranked, payable 9 October 2023
(2022: Final dividend for 2022 of 8.5 cents per share, unfranked, payable 10 October 2022)
(1)
Estimated final dividend payable, subject to variations in the number of shares up to record date.
Shareholder distributions – cents per share (excludes special dividends)
2023
2022
71.5
65.9
71.9
68.9
143.4
134.8
75.8
71.6
Dividend reinvestment plan
The Group operates a dividend reinvestment plan which allows eligible shareholders to elect to invest dividends in ordinary shares. All
holders of Orora Limited ordinary shares with Australian or New Zealand addresses registered with the share registry are eligible to
participate in the plan. The allocation price for shares is based on the average of the daily volume weighted average share price of Orora
Limited ordinary shares sold on the Australian Securities Exchange, calculated with reference to a period of not less than 10 consecutive
trading days as determined by the Directors. In the comparative period, the Dividend Reinvestment Plan was suspended whilst the
on-market buyback was undertaken.
Franking account
Franking credits for shareholders of the Company apply at a corporate tax rate of 30% (2022: 30%). The interim dividend for 2023 was
unfranked (2022 Interim: unfranked) and the proposed final dividend for 2023 is unfranked (2022 Final: unfranked). The balance of
franking credits available as at 30 June 2023 is nil (2022: nil).
Conduit Foreign Income (CFI) account
For Australian tax purposes, non-resident shareholder dividends will not be subject to Australian withholding tax to the extent that they
are franked or sourced from the Company’s CFI account. For the 2023 dividends, 100% of the interim dividend and 100% of the final
dividend is to be sourced from the CFI account (2022: 100% of the interim and final dividend were sourced from the Company’s CFI
account). As a result, none of the 2023 dividends paid to a non-resident will be subject to Australian withholding tax. The balance of the
conduit foreign income account as at 30 June 2023 is $73.7 million (2022: $69.2 million). The estimated final dividend to be paid on
9 October 2023 of $76.1 million (2022: $71.9 million) will be paid from this balance and the advance receipt of FY24 foreign dividends.
ORORA LIMITED ANNUAL REPORT 2023
91
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
Section 2: Capital structure and financing (continued)
2.3. Net debt
In addition to the US Private Placement of notes of USD243.0 million, of which USD100.0 million matures in July 2023 and USD143.0 million
in July 2025, the Group has access to the following committed facilities as at 30 June 2023:
•
•
•
a $460.0 million revolving multicurrency facility through a syndicate of domestic and international financial institutions, maturing in
November 2024;
a USD100.0 million four-year USD revolving facility, through a syndicate of domestic and international financial institutions, maturing in
June 2027; and
four bilateral agreements with domestic institutions: a $35.0 million revolving facility maturing in April 2025, a $75.0 million revolving
facility maturing in January 2026, a $100.0 million revolving facility maturing in July 2027, and a USD100.0 million term facility maturing
in January 2028.
These facilities are unsecured. During both the current and comparative reporting period Orora Limited has complied with the financial
covenants of its borrowing facilities.
During the year ended 30 June 2023, the following refinancing activities were undertaken by the Group:
•
•
the $35.0 million committed bilateral revolving facility that was due to mature in April 2023 was extended to April 2025;
the $350.0 million committed multicurrency revolving syndicated facility maturing November 2024 was upsized by $110.0 million to
$460.0 million;
a new $75.0 million committed bilateral revolving facility was established with a maturity date of January 2026;
a new USD100.0 million committed bilateral term facility was established with a maturity date of January 2028; and
the USD150.0 million committed revolving syndicated facility that was due to mature in April 2024 was amended to USD100.0 million
and extended to June 2027.
•
•
•
$ million
Cash on hand and at bank
Deposits at call
Total cash and cash equivalents
Lease liabilities
Due within one year
Due after one year
Total lease liability
Borrowings
Bank loans due within one year
US Private Placement due within one year
Current borrowings
Bank loans due after one year
US Private Placement due after one year
Non-current borrowings
Total borrowings
Total debt
Net debt
Accounting policies
2023
2022
58.4
-
58.4
54.2
173.4
227.6
-
150.0
150.0
468.1
214.3
682.4
832.4
52.5
0.1
52.6
49.7
174.8
224.5
35.0
-
35.0
295.0
351.6
646.6
681.6
1,060.0
906.1
1,001.6
853.5
Cash and cash equivalents
Cash and cash equivalents include cash at bank and on hand and short-term money market investments with an original maturity of
three months or less and are classified as financial assets held at amortised cost. Cash at bank earns interest at floating rates based on
daily bank deposits. Short-term deposits are made for varying periods, depending on the immediate cash requirements of the Group, and
earn interest at the respective short-term deposit rates.
The carrying value of cash and cash equivalents is considered to approximate fair value due to the assets’ liquid nature.
92
ORORA LIMITED ANNUAL REPORT 2023
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
Bank loans
All loans and borrowings are initially recognised at the fair value of the consideration received, less directly attributable transaction
costs. Subsequent to initial recognition, interest-bearing liabilities are measured at amortised cost using the effective interest rate
method.
Interest-bearing liabilities are derecognised when the obligation specified in the contract is discharged, cancelled or expires. The
difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the
consideration paid is recognised in profit or loss.
Interest-bearing liabilities are classified as current liabilities, except for those liabilities where the Group has an unconditional right to
defer settlement for at least 12 months after the reporting period, which are classified as non-current liabilities.
The US Private Placement notes have a carrying value of $364.5 million (excluding borrowing costs) while the fair value of the notes is
$356.7 million. For all other borrowings, the fair values are not materially different to their carrying amount since the interest payable on
those borrowings is either close to current market rates or the borrowings are of a short-term nature.
2.3.1. Net debt reconciliation
The following table illustrates the cash and non-cash movements of net debt:
$ million
Net debt at 1 July 2021
Cash flows
Change in lease arrangements
Unwinding of discounting
Other non-cash movements
Effect of movements in foreign exchange rates
Net debt at 30 June 2022
Cash flows including borrowing costs
Change in lease arrangements
Unwinding of discounting
Other non-cash movements
Effect of movements in foreign exchange rates
Assets
Liabilities from financing activities
Cash and
cash
equivalents
Lease
liabilities
Bank loans
US Private
Placement
50.6
1.9
-
-
-
0.1
52.6
0.8
-
-
-
5.0
(252.9)
60.0
(4.0)
(9.8)
-
(17.8)
(224.5)
65.6
(50.9)
(10.0)
-
(7.8)
(180.0)
(150.1)
-
-
-
0.1
(330.0)
(137.9)
-
-
(0.2)
-
(468.1)
(323.4)
-
-
-
(0.2)
(28.0)
(351.6)
-
-
-
(0.3)
(12.4)
Total
(705.7)
(88.2)
(4.0)
(9.8)
(0.2)
(45.6)
(853.5)
(71.5)
(50.9)
(10.0)
(0.5)
(15.2)
Net debt at 30 June 2023
58.4
(227.6)
(364.3)
(1,001.6)
ORORA LIMITED ANNUAL REPORT 2023
93
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
Section 2: Capital structure and financing (continued)
2.3. Net debt (continued)
2.3.2. Borrowings
The maturity profile of the Group’s external borrowings drawn down, excluding the impact of capitalised borrowing costs, as at 30 June
2023 is illustrated in the following chart:
Maturity profile of drawn debt by facility
$m
The terms and conditions of loans (expressed in Australian dollars) are as follows:
$ million
Currency
Matures
Drawn
US Private Placement(1)
Global Syndicated Multicurrency Revolving Facility(2)
Committed Bilateral Revolving Facility(3)
US Private Placement
Committed Bilateral Revolving Facility
USD Syndicated Revolving Facility(4)
Committed Bilateral Revolving Facility
Committed Bilateral Term Facility
USD
AUD
AUD
USD
AUD
USD
AUD
USD
July 2023
November 2024
April 2025
July 2025
January 2026
June 2027
July 2027
January 2028
150.0
385.0
35.0
214.5
40.0
-
10.0
-
834.5
2023
Facility
size
150.0
460.0
35.0
214.5
75.0
150.0
100.0
150.0
1,334.5
2022
Facility
size
144.9
350.0
35.0
207.2
-
217.4
100.0
-
1,054.5
Drawn
144.9
245.0
35.0
207.2
-
-
50.0
-
682.1
In November 2022 this facility was increased to $460.0 million from $350.0 million.
(1) The USD100.0 million US Private Placement notes were repaid in July 2023.
(2)
(3) During the period the $35.0 million facility that was due to mature in April 2023 was extended to April 2025.
(4) During the period this facility was amended to USD100.0 million from USD150.0 million and the maturity extended to June 2027.
All bank debt drawings as at 30 June 2023 that were denominated in Australian dollars bore interest at BBSY plus an applicable credit
margin. Any bank debt drawings in US or New Zealand dollars would bear interest at Term SOFR or BKBM plus an applicable margin. The
Group’s US Private Placement notes bore an interest rate based on an applicable fixed rate coupon.
94
ORORA LIMITED ANNUAL REPORT 2023
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
2.4. Equity
This section explains material movements in shareholders’ equity that are not explained elsewhere in the financial statements. The
movements in equity and the balance at 30 June 2023 are presented in the Statement of changes in equity.
2.4.1. Contributed equity and treasury shares
$ million
Ordinary shares issued and fully paid
Share buyback reserve
Treasury shares
Total contributed equity and treasury shares
2023
-
(27.9)
(10.9)
(38.8)
2022
-
(26.4)
(10.9)
(37.3)
Contributed equity
The following table illustrates the movements in the Group’s contributed equity and treasury shares.
At 1 July 2021
Share buyback
Acquisition of shares by the Orora Employee Share Trust
Acquisition of shares under share buyback program (1)
Treasury shares used to satisfy issue of RSU Grant
Restriction lifted on shares issued under the RSU Grant
Exercise of vested grants under Employee Share Plans
Treasury shares used to satisfy exercise of vested grants under Employee
Share Plans
Contributed equity
Treasury shares
No. '000
$ million
No. '000
$ million
890,240
(30,674)
-
(14,214)
-
-
357
(357)
127.4
(109.0)
-
(46.1)
(1.5)
0.2
3.5
(0.9)
(14,440)
-
(3,587)
14,214
433
-
-
357
(46.6)
-
(12.8)
46.1
1.5
-
-
0.9
At 30 June 2022
845,352
(26.4)
(3,023)
(10.9)
Acquisition of shares by the Orora Employee Share Trust
Cancellation of RSU Grant
Treasury shares used to satisfy issue of RSU Grant
Restriction lifted on shares issued under the RSU Grant
Exercise of vested grants under Employee Share Plans
Treasury shares used to satisfy exercise of vested grants under Employee
Share Plans
-
-
-
-
1,318
(1,318)
-
0.3
(0.1)
0.1
2.9
(4.7)
(1,369)
(84)
7
-
-
1,318
(4.5)
(0.3)
0.1
-
-
4.7
At 30 June 2023
845,352
(27.9)
(3,151)
(10.9)
(1) As at 30 June 2021, 14,214,228 ordinary shares purchased on-market under the share buyback program announced by the Group had not been cancelled, these
shares have been presented as Treasury Shares. Subsequent to the end of the 2021 financial year the shares were cancelled.
Refer to note 7.1 for movements in the Group’s Employee Share Plans, including the Restricted Share Unit (RSU) grants. Refer to note 6.2
for details of the Orora Employee Share Trust.
Ordinary shares
Ordinary shares are classified as equity. The Company does not have authorised capital or par value in respect of its issued shares. All
issued shares are fully paid, all shares rank equally with regards to the Company’s residual assets. Ordinary shares entitle the holder to
participate in dividends, as declared from time to time, and are entitled to one vote per share at meetings of the Company. Incremental
costs directly attributable to the issue of new shares or the exercise of options are recognised as a deduction from equity, net of any
related income tax benefit effects. Where the Group reacquires its own shares, for example as the result of a share buyback, those
shares are cancelled. The consideration paid to acquire those shares, including any directly attributable transaction costs net of income
taxes, is recognised directly as a reduction in equity.
Share buyback reserve
Due to share buybacks being undertaken at higher prices than the original subscription price, the balance for ordinary share contributed
equity has been reduced to nil, and a reserve created to reflect the excess value of shares bought over the original amount of the
subscribed equity.
ORORA LIMITED ANNUAL REPORT 2023
95
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
Section 2: Capital structure and financing (continued)
2.4. Equity (continued)
2.4.1. Contributed equity and treasury shares (continued)
Treasury shares
Where the Orora Employee Share Trust purchases equity instruments in the Company that have been identified as treasury shares, the
consideration paid, including any directly attributable costs, is deducted from equity, net of any related income tax effects. When the
treasury shares are subsequently sold or reissued, any consideration received, net of any directly attributable costs and the related
income tax effects, is recognised as an increase in equity, and the resulting surplus or deficit on the transaction is presented in retained
earnings. Refer to note 6.2.
2.4.2. Reserves
$ million
Cash flow hedge reserve
Share-based payment reserve
Demerger reserve
Exchange fluctuation reserve
Total reserves
2023
8.9
13.1
132.9
12.6
167.5
2022
3.8
10.7
132.9
(8.5)
138.9
Details of movements in each of the reserves is presented in the statement of changes in equity.
Accounting policies
Cash flow hedge reserve
The cash flow hedge reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging
instruments related to hedged transactions that have not yet been realised.
During the 12 months to 30 June 2023 the following movements were recognised in the cash flow hedge reserve:
$ million
Unrealised gains/(losses) on cash flow hedges
Forward exchange contract gains
Forward commodity contract losses
Interest rate swap contracts gains
Power purchase contract gains
Realised (gains)/losses transferred to profit or loss
Forward exchange contract gain
Realised (gains)/losses transferred to non-financial assets, net of tax
Forward exchange contract gain
Commodity contract loss/(gain)
Refer to note 5.4 for further information on these derivative instruments.
2023
2022
12.3
(1.2)
3.2
5.1
19.4
10.5
(0.6)
-
-
9.9
(12.5)
(2.5)
(0.8)
1.1
0.3
(2.7)
(0.4)
(3.1)
Share-based payment reserve
The share-based payment reserve is used to recognise the fair value of options and rights recognised as an expense. The Company
provides benefits to employees of the Group in the form of share-based payments, whereby employees render services in exchange for
options or rights over shares. Refer to note 7.1 for further details of the Group’s share-based payment plans.
The fair value of options and rights granted is recognised as an employee benefit expense in the income statement with a corresponding
increase in the share-based payments reserve in equity and is spread over the vesting period during which the employees become
unconditionally entitled to the option or right. Upon exercise of the options or rights, the balance of the share-based payments reserve,
relating to the option or right, is transferred to share capital.
96
ORORA LIMITED ANNUAL REPORT 2023
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
Demerger reserve
The demerger reserve represents the difference between the consideration paid by Orora under an internal corporate restructure and the
assets and liabilities acquired, which were recognised at their carrying value under a common control transaction.
Exchange fluctuation reserve
For controlled entities with a functional currency that is not Australian dollars, their assets and liabilities are translated at the closing
exchange rate at reporting date, while income and expenses are translated at year-to-date average exchange rates.
On consolidation all exchange differences arising from translation are recognised in other comprehensive income and accumulated in the
exchange fluctuation reserve.
In addition, foreign exchange gains or losses are deferred in equity if they relate to qualifying cash flow hedges, qualifying net investment
hedges or are attributable to part of the net investment in a foreign operation. When a foreign operation is disposed of, the cumulative
amount recognised within the reserve relating to that foreign operation is transferred to the income statement as an adjustment to the
profit or loss on disposal.
2.4.3. Retained earnings
Retained earnings comprises profit for the year attributable to owners of the Company and other items recognised directly in equity as
presented on the statement of changes in equity.
$ million
Retained earnings at the beginning of the period
Net profit attributable to the owners of Orora Limited
Ordinary dividends:
Final paid (refer note 2.2)
Interim paid (refer note 2.2)
Retained earnings at the end of the period
2023
630.1
184.8
814.9
(71.5)
(71.9)
2022
580.2
184.7
764.9
(65.9)
(68.9)
(143.4)
(134.8)
671.5
630.1
ORORA LIMITED ANNUAL REPORT 2023
97
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
Section 3: Assets and liabilities
In this section
This section details the assets used to generate the Group’s trading performance and the liabilities incurred as a result. On the following
pages there are notes covering working capital, other assets, non-current assets and provisions.
Liabilities relating to the Group’s financing activities are set out in Section 2, whilst the assets and liabilities recognised in respect of
derivative instruments, used to hedge financial risks, are contained in Section 5. Information pertaining to deferred tax assets and liabilities
is provided in Section 4.
3.1. Trade and other receivables
$ million
Trade receivables
Less loss allowance provision
Other receivables
Total current trade and other receivables
Accounting policies
2023
457.6
(7.5)
450.1
67.3
517.4
2022
512.0
(6.5)
505.5
56.3
561.8
Trade receivables and other receivables are all classified as financial assets held at amortised cost.
Trade receivables
Trade receivables are initially recognised at fair value and subsequently at amortised cost using the effective interest rate method, less a
loss allowance provision. The Group, from time to time, may enter into trade financing instruments in respect of trade receivables and as
a result the receivable is derecognised as substantially all of the risks and rewards of ownership have been transferred.
The carrying value of trade and other receivables, less impairment provisions, is considered to approximate fair value, due to the short-
term nature of the receivables.
Impairment of trade receivables
The collectability of trade and other receivables is reviewed on an ongoing basis. Individual debts which are known to be uncollectable are
written off when identified. The Group recognises an impairment provision based upon anticipated lifetime losses of trade receivables.
The anticipated losses are determined with reference to historical loss experience and are regularly reviewed and updated.
The amount of the impairment loss is recognised in the income statement within ‘general and administration’ expense.
Credit risks related to receivables
In assessing an appropriate provision for impairments and anticipated expected credit loss of receivables consideration is given to
historical experience of bad debts, the ageing of receivables, knowledge of debtor insolvency or other credit risk and individual account
assessment.
Customer credit risk is managed by each business group in accordance with the procedures and controls set out in the Group’s credit
risk management policy. Credit limits are established for all customers based on external and internal credit rating criteria and letters of
credit or other forms of credit insurance cover are obtained where appropriate. In monitoring customer credit risk, customers are grouped
according to their credit characteristics, including whether they are an individual or a legal entity, whether they are a wholesale, retail or
end-user customer, their geographic location, industry and existence of previous financial difficulties.
For some trade receivables the Group may also obtain security in the form of guarantees, deeds of undertaking or letters of credit which
can be called upon if the counterparty is in default under the terms of the agreement. The Group does not otherwise require collateral in
respect of trade and other receivables.
98
ORORA LIMITED ANNUAL REPORT 2023
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
The following table sets out the ageing of trade receivables, according to their due date:
$ million
Not past due
Past due 0-30 days
Past due 31-120 days
More than 121 days past due
Loss allowance provision
2023
2022
-
0.8
1.0
5.7
7.5
-
-
3.6
2.9
6.5
Gross carrying
amount
2023
408.6
33.8
9.4
5.8
457.6
2022
442.5
50.7
15.9
2.9
512.0
The Group has recognised a net loss of $2.5 million (2022: $4.4 million) in respect of the trade receivables written off in the financial
year. The loss has been included in ‘general and administration’ expense in the income statement.
3.2.
Inventories
$ million
Raw materials and stores
Work in progress
Finished goods
Total inventory
Accounting policies
2023
281.0
8.8
349.3
639.1
2022
262.2
8.2
380.4
650.8
Inventories are valued at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary
course of business, less the estimated costs of completion and selling expenses.
Costs incurred in bringing each product to its existing location and condition are accounted for as follows:
• Raw materials – purchase cost on a weighted average cost formula;
• Manufactured finished goods and work in progress – cost of direct material and labour and an appropriate proportion of production
and variable overheads incurred in the normal course of business.
Cost may also include transfers from equity of any gain or loss on qualifying cash flow hedges of foreign currency purchases of inventory.
During the period the Group recognised a net write-down of $6.8 million (2022: $7.6 million) with regard to the net realisable value of
inventories which has been recognised in ‘cost of sales’ expense in the income statement.
ORORA LIMITED ANNUAL REPORT 2023
99
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
Section 3: Assets and liabilities (continued)
3.3. Trade and other payables
$ million
Current
Trade creditors
Deferred grant income
Other creditors and accruals
Total current trade and other payables
Non-current
Deferred grant income
Other creditors
Total non-current other payables
Accounting policies
2023
2022
447.0
1.0
310.2
758.2
11.7
1.1
12.8
560.9
0.3
370.0
931.2
4.7
0.3
5.0
Trade and other payables
Trade and other payables are all classified as financial liabilities held at amortised cost. Trade and other payables represent liabilities for
goods and services provided to the Group prior to the end of the financial year which were unpaid at the end of the financial year and
these amounts are unsecured.
The Group has supply chain financing arrangements in place which act as an alternative source of financing for suppliers who have the
option to trade their invoices with funding providers in order to receive cash earlier than the invoice due dates. The Group also has supply
agreements in place for certain raw material purchases, where there is considerable time lag between the purchase order date and
receipt of the raw material, that include supply chain financing characteristics that provide the Group with extended payment terms
compared to the related invoice payment due date. Under these arrangements, the funding provider agrees to pay amounts to the
participating suppliers in respect of these invoices and receives settlement from the Group at a later date.
At 30 June 2023, the carrying amount of liabilities included in trade creditors party to these arrangements is $186.0 million
(2022: $285.1 million). The cash flows on payment to the funding provider have been recognised in operating cash flow as they represent
payments for the purchase of goods and services and continue to be part of the normal operating cycle of the Group.
The carrying value of trade and other payables is considered to approximate fair value due to the short-term nature of the payables. Trade
and other payables are included in current liabilities, except for those liabilities where payment is not due within 12 months from
reporting date, which are classified as non-current liabilities.
Deferred grant income
Grants from governments are recognised at their fair value when there is a reasonable assurance that the grant will be received, and the
Group will comply with all attached conditions. The grants received are in relation to the purchase and construction of items of property,
plant and equipment. The grants are recognised as deferred income and are credited to the income statement on a straight-line basis
over the expected useful life of the related asset.
3.4. Other assets
$ million
Current
Contract incentive payments (1)
Prepayments and other current assets
Total other current assets
Non-current
Contract incentive payments (1)
Other non-current assets
Total other non-current assets
2023
2022
7.0
26.5
33.5
27.5
68.0
95.5
6.9
19.8
26.7
23.8
68.0
91.8
(1) Contract incentives are provided to customers to secure long-term sale agreements and are amortised over the period of the contractual arrangement.
100
ORORA LIMITED ANNUAL REPORT 2023
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
3.5. Property, plant and equipment
The following note details the physical assets used by the Group to operate the business to generate revenues and profits.
The cost of these assets is the amount initially paid for them with a depreciation charge recognised in the income statement to reflect the
wear and tear of the assets as they are used which reduces the value of the assets over time.
Land
improvements
Buildings
Plant and
equipment
Finance
leased assets
Assets under
construction
$ million
Cost
At 1 July 2021
Additions for the period
Disposals during the period
Other transfers
Effect of movements in foreign
exchange rates
At 30 June 2022
Additions for the period
Disposals during the period
Other transfers
Effect of movements in foreign
exchange rates
Land
13.3
21.1
-
-
-
34.4
-
-
-
-
8.2
-
-
-
0.1
8.3
-
-
1.3
-
238.3
3.9
(4.2)
4.5
1,224.6
45.0
(11.3)
2.3
3.9
26.2
246.4
1,286.8
12.3
(0.8)
4.7
2.2
63.6
(21.4)
29.6
14.1
At 30 June 2023
34.4
9.6
264.8
1,372.7
Accumulated depreciation and impairment
At 1 July 2021
Depreciation charge
Disposals during the period
Impairment loss
Effect of movements in foreign
exchange rates
At 30 June 2022
Depreciation charge
Disposals during the period
Impairment loss
Other transfers
Effect of movements in foreign
exchange rates
At 30 June 2023
Net book value
At 30 June 2022
At 30 June 2023
-
-
-
-
-
-
-
-
-
-
-
-
(2.8)
(0.2)
-
-
(80.7)
(8.8)
3.2
-
(781.9)
(55.3)
10.7
(1.5)
-
(3.0)
(16.4)
(3.0)
(0.2)
-
-
-
-
(89.3)
(844.4)
(7.5)
0.5
-
(0.6)
(1.5)
(55.2)
21.0
(3.3)
0.6
(9.2)
(3.2)
(98.4)
(890.5)
34.4
34.4
5.3
6.4
157.1
166.4
442.4
482.2
3.6
-
-
-
0.3
3.9
-
-
-
0.1
4.0
(3.5)
(0.1)
-
-
(0.3)
(3.9)
-
-
-
-
(0.1)
(4.0)
-
-
Total
1,496.4
114.4
(15.5)
-
8.4
44.4
-
(6.8)
-
30.5
46.0
106.7
-
(35.6)
-
1,625.8
182.6
(22.2)
-
16.4
117.1
1,802.6
-
-
-
-
-
-
-
-
-
-
-
-
(868.9)
(64.4)
13.9
(1.5)
(19.7)
(940.6)
(62.9)
21.5
(3.3)
-
(10.8)
(996.1)
46.0
117.1
685.2
806.5
At 30 June 2023, no property, plant and equipment was provided as security for any interest-bearing borrowings (2022: nil).
ORORA LIMITED ANNUAL REPORT 2023
101
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
Section 3: Assets and liabilities (continued)
3.5. Property, plant and equipment (continued)
Accounting policies
Property, plant and equipment is stated at cost less accumulated depreciation and impairment losses. Cost includes expenditure that is
directly attributable to the acquisition of the item including borrowing costs that are related to the acquisition, construction or
production of an asset. Cost may also include transfers from equity of any gain or loss on qualifying cash flow hedges of foreign currency
purchases of property, plant and equipment.
Subsequent costs are included in the asset’s carrying amount, or recognised as a separate asset, only when it is probable that future
economic benefits associated with the item will flow to the Group.
All other repairs and maintenance are charged to the income statement during the financial year in which they are incurred.
Depreciation
Property, plant and equipment, excluding freehold land, is depreciated at rates based upon the expected useful lives, or in the case of
leasehold improvements and certain leased plant and equipment the lease term, using the straight-line method. Land is not depreciated.
Depreciation rates used for each class of asset for the current and comparative periods are as follows:
• Buildings 2%
Land improvements 3%-5%
•
• Plant and equipment 5%-20%
Depreciation is calculated by estimating the number of years the Group expects an asset to be used over. At each reporting date
depreciation methods, residual values and useful lives are reassessed and adjusted if necessary. In addition, assets subject to
depreciation are reviewed for impairment whenever events or changes in circumstances indicate that an asset’s carrying amount may
not be recoverable. If an asset’s value falls below its depreciated value an additional one-off impairment charge is made against profit.
Refer note 3.8 for further details.
3.6. Leases
The following note details leased right-of-use assets utilised used by the Group as a lessee to operate the business to generate revenues
and profits. This includes the lease of warehouse, office and factory facilities, vehicles and other items of plant and equipment.
The cost of these assets represents the net present value of the future lease payments with an amortisation charge recognised in the
income statement to reflect the utilisation of the right-of-use asset over the term of the lease arrangement.
Other than minor sub-lease arrangements, the Group is not a lessor of assets.
Leases for premises typically run for a period of 10 years with an option to renew the lease after that date. Lease payments for premises
are adjusted annually either through a fixed rental increase, typically 3.0% per annum, or are linked to changes in the consumer price
index or as a result of a market rent review process.
The leases for items of plant and equipment, which includes vehicles, typically run for periods of three to five years. In the majority of
instances when these lease contracts expire, they are replaced by new leases for similar underlying assets.
102
ORORA LIMITED ANNUAL REPORT 2023
Property
Plant and
Equipment
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
Right-of-use assets
$ million
Cost
At 1 July 2021
Lease additions and modifications
Derecognition of right-of-use assets
Effect of movements in foreign exchange rates
At 30 June 2022
Lease additions and modifications
Derecognition of right-of-use assets
Effect of movements in foreign exchange rates
At 30 June 2023
Accumulated amortisation and impairment
At 1 July 2021
Amortisation charge for the period
Derecognition of right-of-use assets
Reversal of impairment loss
Effect of movements in foreign exchange rates
At 30 June 2022
Amortisation charge for the period
Derecognition of right-of-use assets
Effect of movements in foreign exchange rates
At 30 June 2023
Net book value
At 30 June 2022
At 30 June 2023
Amounts recognised in the income statement
The following amounts, for continuing operations, were recognised in the income statement:
$ million
Amortisation of right-of-use assets
Expenses relating to short-term leases
Expenses relating to low-value assets
Income from sub-leasing right-of-use assets
Interest on lease liabilities
257.2
19.6
(37.6)
19.5
258.7
46.0
(6.6)
9.5
307.6
(79.1)
(37.2)
15.7
3.0
(7.1)
(104.7)
(43.2)
5.8
(4.2)
(146.3)
154.0
161.3
Total
292.1
21.7
(38.5)
22.3
297.6
53.4
(9.1)
10.7
352.6
(91.6)
(44.6)
16.6
3.0
(7.3)
(123.9)
(50.0)
6.9
(4.9)
34.9
2.1
(0.9)
2.8
38.9
7.4
(2.5)
1.2
45.0
(12.5)
(7.4)
0.9
-
(0.2)
(19.2)
(6.8)
1.1
(0.7)
(25.6)
(171.9)
19.7
19.4
173.7
180.7
2023
50.0
18.5
1.0
(0.6)
10.0
2022
44.6
15.7
0.7
(0.8)
9.8
ORORA LIMITED ANNUAL REPORT 2023
103
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
Section 3: Assets and liabilities (continued)
3.6. Leases (continued)
Lease liabilities
$ million
Current lease liabilities
Non-current lease liabilities
The following table sets out the undiscounted maturity analysis of future lease payments.
$ million
Within one year
Between one and five years
More than five years
Less sub-lease rental income
2023
2022
54.2
173.4
227.6
49.7
174.8
224.5
2023
2022
64.2
169.0
25.9
259.1
(5.9)
253.2
55.9
154.8
28.8
239.5
(6.9)
232.6
Accounting policies
Assets and liabilities arising from a lease are initially measured on a present value basis.
Lease liability
Lease liabilities include the net present value of the following lease payments:
fixed payments (including in-substance fixed payments), less any lease incentive receivable
•
• variable lease payments that are based on an index or a rate, initially measured using the index or rate as at the commencement date
• amounts expected to be payable by the Group under residual value guarantees
the exercise price of a purchase option if the Group is reasonably certain to exercise that option; and
•
• payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option.
Payments associated with short-term leases of equipment and vehicles and all low-value assets are recognised on a straight-line basis
as an expense in the income statement. Short-term leases are leases with a lease term of 12 months or less.
Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is
generally the case for leases in the Group, the Group’s incremental borrowing rate is used, being the rate that the Group would have to
pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with
similar terms, security and conditions.
The Group is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the
lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is
reassessed and adjusted against the right-of-use asset.
Lease payments are allocated between principal and finance cost. The finance cost is charged to the income statement over the lease
period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
Right-of-use assets
Right-of-use assets are measured at cost comprising the following:
the amount of the initial measurement of lease liability
•
• any lease payments made at or before the commencement date less any lease incentives received
• any initial direct costs; and
•
restoration costs.
Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis. If the
Group is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset’s useful life.
104
ORORA LIMITED ANNUAL REPORT 2023
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
Lease term
Extension and termination options are included in a number of property leases across the Group. These are used to maximise operational
flexibility in terms of managing the assets used in the Group’s operations. The majority of extension and termination options held are
exercisable only by the Group and not the respective lessor.
Deferred tax
A lease transaction is considered a single transaction in which the recognition of the right-of-use asset and the lease liability are
integrally linked. As a result, differences that arise between the settlement of the lease liability and the amortisation of the leased asset
result in a net temporary difference on which deferred tax is recognised in accordance with the Group’s deferred tax accounting policy.
Judgements and estimates
In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an
extension option, or not exercise a termination option. Extension options (or periods after termination options) are only included in the lease
term if the lease is reasonably certain to be extended (or not terminated).
For leases of properties and equipment, the following factors are normally the most relevant:
•
•
•
if there are significant penalties to terminate (or not extend), the Group is typically reasonably certain to extend (or not terminate)
if any leasehold improvements are expected to have a significant remaining value, the Group is typically reasonably certain to extend (or
not terminate)
otherwise, the Group considers other factors including historical lease durations and the costs and business disruption required to
replace the leased asset.
The lease term is reassessed if an option is actually exercised (or not exercised) or the Group becomes obliged to exercise (or not exercise)
it. The assessment of reasonable certainty is only revised if a significant event or a significant change in circumstances occurs, which
affects this assessment, and that is within the control of the Group.
ORORA LIMITED ANNUAL REPORT 2023
105
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
Section 3: Assets and liabilities (continued)
3.7.
Intangible assets
The following note details the non-physical assets used by the Group to generate revenue and profits.
These assets include computer software and licences, customer relationships and goodwill. The cost of these assets is the amount that the
Group has paid or, where there has been a business combination, the fair value of the specific intangible assets identified. In the case of
goodwill, its cost is the amount the Group has paid for acquiring a business over and above the fair value of the individual assets and
liabilities acquired. The value of goodwill is ‘intangible’ value that comes from, for example, synergies available with the integration of the
acquired business into the Group, a skilled and knowledgeable assembled workforce, proprietary technologies and processes and uniquely
strong market positions.
$ million
Cost
At 1 July 2021
Additions for the period
Disposals during the period
Effect of movements in foreign exchange rates
At 30 June 2022
Additions for the period
Disposals during the period
Effect of movements in foreign exchange rates
At 30 June 2023
Accumulated amortisation and impairment
At 1 July 2021
Amortisation charge
Disposals during the period
Effect of movements in foreign exchange rates
At 30 June 2022
Amortisation charge
Disposals during the period
Effect of movements in foreign exchange rates
At 30 June 2023
Net book value
At 30 June 2022
At 30 June 2023
Accounting policies
Other intangible assets
Computer
software
Other
Goodwill
Total
128.2
5.5
(4.9)
8.0
136.8
5.1
(2.3)
3.4
143.0
(77.3)
(8.2)
1.1
(5.8)
(90.2)
(9.4)
0.7
(2.3)
26.6
-
-
2.2
28.8
-
(0.7)
1.0
29.1
(21.0)
(0.7)
-
(1.9)
(23.6)
(0.7)
0.7
(0.8)
435.0
-
-
33.7
468.7
-
-
15.2
589.8
5.5
(4.9)
43.9
634.3
5.1
(3.0)
19.6
483.9
656.0
(80.3)
-
-
(7.0)
(87.3)
-
-
(3.0)
(178.6)
(8.9)
1.1
(14.7)
(201.1)
(10.1)
1.4
(6.1)
(101.2)
(24.4)
(90.3)
(215.9)
46.6
41.8
5.2
4.7
381.4
393.6
433.2
440.1
Other intangible assets
Other intangible assets include computer software, customer relationships and software licences. The cost of these assets is the
amount that the Group has paid or, where there has been a business combination, their fair value at the date of acquisition.
Internal spend on computer software is only capitalised within the development phase, when the asset is separate, and it is probable that
future economic benefits attributable to the asset will flow to the Group. Costs incurred in the customisation and configuration in the
implementation of Software-as-a-Service arrangements are only capitalised when a unique customised software product controlled by
the Group is identified.
Following initial recognition, other intangible assets are carried at cost less amortisation and any impairment losses.
Other intangible assets are amortised on a straight-line basis over their useful life, and tested for impairment whenever there is an
indication that they may be impaired. Refer to note 3.8 for further details on impairment.
Computer software and licences are amortised over a period of between three to 10 years whilst customer relationships are amortised
over a period of up to 10 years. The amortisation period and method is reviewed each financial year.
106
ORORA LIMITED ANNUAL REPORT 2023
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
Goodwill
The goodwill recognised by the Group has arisen as a result of business combinations and represents the future economic benefits that
arise from assets that are not capable of being individually identified and separately recognised.
Goodwill is initially measured as the amount the Group has paid in acquiring a business over and above the fair value of the individual
assets and liabilities acquired.
Goodwill is not amortised but is instead tested annually for impairment, or more frequently if events or changes in circumstances
indicate that it might be impaired and is carried at cost less any accumulated impairment losses.
Where there has been a change in the Group’s circumstances, such as technological changes or a decline in business performance, a
review of the value of the intangible assets, including goodwill, is undertaken to ensure the assets’ value has not fallen below its carrying
value. Should an asset’s value fall below its amortised value an additional impairment charge is made against profit and the carrying
value of the asset. Refer note 3.8.
Impairment of non-financial assets
3.8.
Testing for impairment
The Group tests property, plant and equipment, intangibles and goodwill for impairment:
• where there is an indication that an asset may be impaired (assessed at a minimum at each reporting date);
• where there is an indication that previously recognised impairments (on assets other than goodwill) have changed; and
• at least annually for goodwill.
In testing for impairment, the recoverable amount is estimated for an individual asset or, if it is not possible to estimate the recoverable
amount for the individual asset, the recoverable amount of the cash generating unit (CGU) to which the asset belongs. CGUs are the
smallest identifiable group of assets that generate cash inflows that are largely independent from the cash flows of other assets or
groups of assets. Each CGU is no larger than an operating segment.
Assets are impaired if their carrying value exceeds their recoverable amount. The recoverable amount of an asset or CGU is determined
as the higher of its fair value less costs of disposal or value in use.
An impairment loss is recognised in the income statement if the carrying amount of an asset or a CGU exceeds its recoverable amount.
Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the CGU
(group of CGUs) and then to reduce the carrying amount of the other assets in the CGU (group of CGUs).
Impairment calculations
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that
reflects the risks specific to the asset or CGU and the market’s current assessment of the time value of money.
Value in use is assessed using cash flow projections for five years using data from the Group’s latest internal forecasts and is
management’s best estimate of income, expenses, capital expenditure and cash flows for each CGU. Changes in selling prices and direct
costs are based on past experience and management’s expectation of future changes in the markets in which the Group operates.
The Group’s current strategy to manage climate-related risks and opportunities is focused on reducing gross greenhouse gas emissions
across the Group and investing in low emission technologies and renewable energy sources (refer note 5.2.3), as well as maximising the
recycled content of our products to ensure they can be continually recycled to minimise waste and pollution and to reduce greenhouse
gas emissions. The cash flow projections included in the value in use computations include known estimates of approved cash flows
required to meet the Group’s identified initiatives to manage climate-related risks and opportunities. This includes consideration of
compliance with local climate regulations such as the National Greenhouse and Energy Reporting (Safeguard Mechanism) Rule 2015.
Orora will continue to develop reporting plans and quantitative analysis around the Group’s climate change strategy, the financial
implications of which will continue to be considered and built into future cash flow assumptions used within impairment modelling.
Cash flows beyond the five-year period are extrapolated using estimated growth rates which are determined with regards to the long-
term performance of each CGU in their respective markets and are not expected to exceed the long-term average growth rates for the
industry in which each CGU operates.
The discount rate used in performing the value in use calculations reflects the Group’s weighted average cost of capital, as adjusted for
specific risks relating to each geographical region in which the CGUs operate.
Reversal of impairment
Where there is an indication that previously recognised impairment losses may no longer exist or may have decreased, the asset is
tested for impairment. The impairment loss is reversed if there has been a change in the estimates used to determine the recoverable
amount of the asset and is reversed only to the extent that the carrying amount of the asset does not exceed the carrying amount that
would have been determined, net of depreciation or amortisation, had no impairment loss been recognised. Impairments recognised for
goodwill are not reversed.
ORORA LIMITED ANNUAL REPORT 2023
107
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
Section 3: Assets and liabilities (continued)
3.8.
Goodwill impairment tests
Impairment of non-financial assets (continued)
For the purpose of impairment testing, goodwill is allocated to CGUs or groups of CGUs according to the level at which management
monitors goodwill. Goodwill is tested annually or more regularly if there are indicators of impairment.
The recoverable amounts of the CGUs were based on the present value of the future cash flows expected to be derived from the CGU
(value in use calculation). Value in use is calculated from cash flow projections for five years using data from the Group’s latest internal
forecasts. The key assumptions for the value in use calculations are those regarding the expected changes in earnings during the initial
five-year period, discount rates and growth rates applied to the extrapolated periods of the value in use calculation.
The following table presents a summary of the goodwill allocation and the key assumptions used in determining the recoverable amount
of each CGU:
Goodwill Allocation
($ million)
Pre-tax Discount
Rate (%)
Terminal Growth
Rate (%)
2023
Australasia CGU
North America CGU
2022
Australasia CGU
Orora Packaging Solutions CGU
Orora Visual CGU
32.4
361.2
32.2
282.3
66.9
11.1
11.3
10.7
9.7
9.8
1.3
1.0
2.0
2.0
2.0
North America CGU
During the period a significant restructuring of Orora’s North America operations took place with the merger of the Orora Packaging
Solutions (OPS) and Orora Visual (OV) businesses. The merger of these two operations triggered a reassessment and ultimately a change
in the composition of the Group’s CGUs with the OPS CGU and OV CGU combining into the North America CGU.
Immediately prior to the merger of the operations and identification of the new North America CGU, impairment tests were undertaken to
separately assess the carrying value of the OPS and OV CGU’s. The impairment assessments were performed in accordance with the
Group’s recoverable amount assessment policy using a value in use calculation; no impairment was identified for either CGU.
Whilst the outlook for the Group remains subject to the future potential impacts of rapidly changing market conditions and inflationary
pressures, based on current economic conditions and performance of each of the Group’s CGUs, no reasonable possible change in any of
the key assumptions would be expected to result in a material impairment to the Group using the value-in-use methodology.
Judgements and estimates
The determination of impairment involves the use of judgements and estimates that include, but are not limited to, the cause, timing and
measurement of the impairment. Management is required to make significant judgements concerning the identification of impairment
indicators, such as changes in competitive positions, expectations of growth, increased cost of capital, and other factors that may indicate
impairment, such as a business restructuring.
Management is also required to make significant estimates regarding future cash flows and the determination of fair values when assessing
the recoverable amount of assets (or groups of assets). Inputs into these valuations require assumptions and estimates to be made about
forecast earnings and related future cash flows including the impact of climate related risks, growth rates, applicable discount rates, useful
lives and residual values.
The judgements, estimates and assumptions used in assessing impairment are management’s best estimates based on current and
forecast market conditions. Changes in economic and operating conditions impacting these assumptions could result in changes in the
recognition of impairment charges in future periods.
108
ORORA LIMITED ANNUAL REPORT 2023
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
3.9. Provisions
$ million
2023
Opening balance
Provisions made during the period(1)
Payments made during the period
Released during the period
Effect of movement in foreign exchange rate
Closing balance
Current
Non-current
2022
Opening balance
Provisions made during the period
Payments made during the period
Released during the period
Effect of movement in foreign exchange rate
Closing balance
Current
Non-current
Employee
entitlements
Asset restoration,
restructuring and
decommissioning
Other claims
and provisions
30.1
17.0
(14.5)
(0.8)
0.3
32.1
30.1
2.0
25.8
16.9
(12.8)
(0.5)
0.7
30.1
28.0
2.1
60.2
33.6
(32.6)
(1.8)
0.6
60.0
48.6
11.4
78.4
11.3
(30.5)
(0.2)
1.2
60.2
48.5
11.7
11.3
14.7
(2.5)
-
0.2
23.7
23.7
-
16.5
1.7
(4.3)
(3.2)
0.6
11.3
10.4
0.9
Total
101.6
65.3
(49.6)
(2.6)
1.1
115.8
102.4
13.4
120.7
29.9
(47.6)
(3.9)
2.5
101.6
86.9
14.7
(1) During the period a significant item expense of $26.0 million was recognised in respect of additional expected costs associated with the decommissioning of the
Petrie Mill site. Refer to note 1.2 for further details of the significant item.
Accounting policies
A provision is recognised when: the Group has a present legal or constructive obligation arising from past events; it is probable that cash
will be paid to settle it; and a reliable estimate can be made of the amount of the obligation.
Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects the current market assessments
of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as a finance cost in the
income statement.
Employee entitlements
The provision for employee entitlements represents the obligation for annual leave, long service leave entitlements and incentives
accrued by employees.
Liabilities for employee benefits such as wages, salaries and other current employee entitlements represent present obligations arising
from employees’ services provided to the reporting date and are calculated at undiscounted amounts based on remuneration wage and
salary rates, including related on-costs, such as workers compensation insurance and payroll tax, and are presented in other payables.
The liability for annual leave and long service leave is measured as the present value of estimated future cash outflows to be made in
respect of services provided by the employee up to the reporting date. Consideration is given to expected future wage and salary levels,
experience of employee departures and period of service. Expected future payments that are not expected to be settled within 12
months are discounted using market yields at the reporting date of high-quality corporate bonds. The rates used reflect the terms to
maturity and currency that match, as closely as possible, the estimated future cash outflows.
ORORA LIMITED ANNUAL REPORT 2023
109
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
Section 3: Assets and liabilities (continued)
3.9. Provisions (continued)
Other claims and provisions
Other claims provisions include amounts relating to potential losses or damages arising from legal actions or other obligations that arise
from an incident or events that have occurred prior to reporting date. The amounts recognised represent the value of the total estimated
outflows of cash that may be required to settle the obligation.
Asset restoration, restructuring and decommissioning
Asset restoration and decommissioning
Where the Group has a legal or constructive obligation to restore a site on which an asset is located, either through make-good provisions
included in lease agreements or decommissioning of environmental risks, the present value of the estimated costs of dismantling and
removing the asset and restoring the site is recognised as a provision with a corresponding increase in the related item of property, plant
and equipment.
At each reporting date, the liability is remeasured in line with changes in discount rates, estimated cash flows and the timing of those
cash flows. Any changes in the liability are added to or deducted from the related asset, other than the unwinding of the discount, which
is recognised as a financing cost in the income statement. If there is no related asset in respect of the restoration or decommissioning
activity, changes in the liability are recognised in the income statement.
The asset restoration provision includes amounts that have been recognised in respect of certain environmental contamination
indemnities provided under the Australian Fibre sale and purchase agreement. The indemnity relates to certain pre-existing
contamination that may exist at the Australasian Fibre sites as at 30 April 2020, where after this date the contamination is either a)
required to be remediated by a regulatory agency, or b) the site is subject to regulatory enforcement action that is directly related to pre-
existing contamination.
Restructuring
A provision for restructuring is recognised when the Group has a detailed formal restructuring plan and the restructuring has either
commenced or has been publicly announced, including discussions with affected personnel. Future operating costs in relation to the
restructuring are not provided for. Payments falling due greater than 12 months after reporting date are discounted to present value.
110
ORORA LIMITED ANNUAL REPORT 2023
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
Judgements and estimates
A provision is recognised by the Group where an obligation exists relating to a past event, it is probable that a cash payment will be required
to settle it, and the Group is not certain how much cash will be required to settle the liability. The value of that provision is based upon
estimates and assumptions with regards to the amount and timing of cash flows required to settle the obligation, which are dependent on
future events. The key assumptions applicable to the determination of the provisions are as follows:
Employee entitlements
The provision for employee entitlements is based on a number of management estimates, which include:
•
•
•
future increase in salaries, wages and on-cost rates
future probability of employee departures
future probability of years of service (long service leave provision).
Asset restoration and decommissioning
Asset restoration and decommissioning provisions require assessments to be made of lease make-good conditions and decommissioning
and environmental risks. The provisions require estimates to be made of costs to dismantle and remove equipment and to restore the site to
the condition required under the terms of the lease or contract and as required by environmental laws and regulations.
The recognition and measurement of asset restoration and decommissioning provisions is a complex area and requires significant
judgement and estimates. The measurement of the provision can vary as a result of many factors, including, but not limited to:
•
•
•
•
changes in the relevant legal or local/national government requirements and any other commitments made to stakeholders;
review of remediation and restoration options
identification of additional remediation requirements identified during the restorative process
the emergence of new restoration techniques.
In determining an appropriate provision management gives consideration to the results of the most recently completed surveying data in
respect of the remediation process, current cost estimates and appropriate inclusion of contingency in cost estimates to allow for both
known and unknown residual risks.
Estimates can be impacted by the emergence of new restoration techniques and experience at other operations. This is compounded by the
fact that there has been limited restoration activity and historical precedent within the Group against which to benchmark estimates of the
costs to remediate.
The decommissioning of the Petrie site is a significant and complex exercise involving multiple government agencies. The Group continues
to use a specialist environmental consulting firm to manage the completion of the remaining remediation works. At the date of this Report,
decommissioning work continues on site with the estimated costs to complete the decommissioning contingent on final remediation
requirements which require significant judgement in respect of determining a reliable estimate.
Management has measured the Petrie decommissioning provision as at 30 June 2023 using all currently available information and
considering applicable legislative and environmental regulations. However, given the complexity and multiple stakeholders involved in the
decommissioning of the Petrie site, there remains a risk of further currently unidentified costs in the future.
All the uncertainties discussed above may result in future actual expenditure differing from the amounts currently provided for in the
balance sheet.
Restructuring
Restructuring provisions require assessments to be made regarding the timing of recognition, specifically are plans sufficiently detailed,
approved and communicated to support recognition at a point in time. The provisions also require estimates to be made of the cost of
restructuring and the timing of these cash outflows.
The judgements, estimates and assumptions used in the recognition of all provisions are evaluated on an ongoing basis and are based on
historical experience and other factors, including expectation of future events that are believed to be reasonable under the circumstances
and are management’s best estimates based on currently available information, legislation and environmental laws and regulations. The
actual result may differ from these accounting estimates. Revisions to accounting estimates are recognised in the period in which the
estimate is revised and in any future periods affected.
ORORA LIMITED ANNUAL REPORT 2023
111
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
Section 4: Income tax
In this section
This section sets out the Group’s tax accounting policies, the current and deferred tax charges or credits in the year (which together make
up the total tax charge or credit in the income statement), a reconciliation of profit before tax to the tax charge for the period and the
movements in the deferred tax assets and liabilities.
Income tax expense
4.1.
The total taxation charge in the income statement for continuing operations is analysed as follows:
$ million
Current tax expense
Current period
Adjustments relating to prior periods
Total current tax expense
Deferred tax expense
Origination and reversal of temporary differences
Total income tax expense
Deferred income tax expense included in income tax expense comprises:
Increase/(decrease) in deferred tax assets
Increase in deferred tax liabilities
Deferred income tax expense included in total income tax expense
2023
2022
(40.8)
0.5
(40.3)
(21.9)
(62.2)
20.9
(42.8)
(21.9)
(56.8)
(0.2)
(57.0)
(14.7)
(71.7)
(2.6)
(12.1)
(14.7)
The following table provides a numerical reconciliation of income tax expense for continuing operations to prima facie tax payable:
$ million
Profit before related income tax (expense)/benefit
Tax at the Australian tax rate of 30% (2022: 30%)
Tax effect of amounts which are not deductible/(taxable) in calculating taxable income:
Net tax effect of amounts which are non-deductible/non-assessable for tax
Net tax credits and tax loss utilisation
Over provision in prior period
Foreign tax rate differential
Total income tax expense
4.2. Deferred tax balances
Deferred income tax in the income statement from continuing operations relates to the following:
$ million
Property, plant and equipment
Net right-of-use lease accounting
Trade receivable loss allowance provision
Intangible assets
Valuation of inventories
Employee benefits
Provisions
Financial instruments at fair value
Tax losses carried forward
Accruals and other items
Deferred tax expense
2023
247.0
(74.1)
3.6
0.6
1.6
6.1
(62.2)
2023
37.5
1.0
(0.2)
5.8
(3.3)
0.1
1.9
(0.2)
(20.0)
(0.7)
21.9
2022
258.8
(77.6)
(0.1)
0.7
1.3
4.0
(71.7)
2022
3.4
2.1
(1.1)
4.3
(3.1)
(1.2)
10.2
0.6
-
(0.5)
14.7
112
ORORA LIMITED ANNUAL REPORT 2023
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
Deferred income tax in the balance sheet relates to the following:
$ million
Deferred tax assets
Net right-of-use lease accounting
Trade receivable loss allowance provision
Valuation of inventories
Employee benefits
Provisions
Tax losses carried forward
Tax set-off
Deferred tax asset
Deferred tax liabilities
Property, plant and equipment
Intangible assets
Financial instruments at fair value
Accruals and other items
Tax set-off
Deferred tax liability
Accounting policies
2023
2022
13.6
1.9
23.8
38.7
13.2
20.2
111.4
(99.3)
12.1
105.8
20.1
3.7
2.8
132.4
(99.3)
33.1
14.6
1.6
20.2
36.3
15.0
-
87.7
(71.6)
16.1
66.0
13.7
1.7
3.9
85.3
(71.6)
13.7
Income tax expense comprises current and deferred tax. Income tax expense is recognised in profit or loss except to the extent that it
relates to items recognised directly in equity or in other comprehensive income, in which case it is recognised directly in equity or in
other comprehensive income respectively.
Current tax
Current tax is the expected tax payable on taxable income for the period, using tax rates enacted or substantively enacted at the
reporting date, and any adjustment to tax payable in respect of previous periods. Current tax is also adjusted by changes in deferred tax
assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in
the financial statements, and by the availability of unused tax losses.
Current tax assets and liabilities are offset where the Group has a legally enforceable right to offset and intends either to settle on a net
basis, or to realise the asset and settle the liability simultaneously.
Deferred tax
Deferred tax is recognised using the balance sheet method in which temporary differences are calculated based on the carrying amounts
of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for:
•
•
taxable temporary differences arising on the initial recognition of goodwill;
taxable differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that
affects neither accounting nor taxable profit; and
temporary differences relating to investments in subsidiaries to the extent that the Group is able to control the timing of the reversal
of the temporary difference and it is probable that they will not reverse in the foreseeable future.
•
Deferred tax is measured at the tax rates that are expected to be applied when the temporary difference reverses, that is, when the asset
is realised or the liability is settled, based on the laws that have been enacted or substantively enacted at the reporting date.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only to the extent that it is probable that
future taxable profits will be available against which the assets can be utilised. Deferred tax assets are reviewed at each reporting date
and are reduced to the extent that it is no longer probable that the related tax benefit will be realised. Deferred tax assets that have been
recognised in respect of tax losses can be carried forward indefinitely and have no expiry date.
Offsetting deferred tax balances
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset and when the deferred tax balances relate
to taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but the Group intends to settle current
tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.
ORORA LIMITED ANNUAL REPORT 2023
113
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
Section 4: Income tax (continued)
Accounting policies (continued)
Unrecognised deferred tax assets and liabilities
Deferred tax liabilities have not been recognised in respect of temporary differences arising as a result of the translation of the financial
statements of the Group investments in subsidiaries. The deferred tax liability will only arise in the event of disposal of the subsidiary,
and no such disposal is expected in the foreseeable future.
Unremitted earnings of the Group’s international operations are considered to be reinvested indefinitely and relate to the ongoing
operations. Upon distribution of any earnings in the form of dividends or otherwise, the Group may be subject to withholding taxes
payable to various foreign countries; however, such amounts are not considered to be significant. As the Group controls when the
deferred tax liability will be incurred and is satisfied that it will not be incurred in the foreseeable future, the deferred tax liability has not
been recognised. There are no unrecognised deferred tax assets.
Pillar Two top-up tax
In October 2021, over 135 jurisdictions agreed to update the international tax system based on the Organisation for Economic Co-
operation and Development (OECD) Global Anti-Base Erosion (GloBE) tax rules. Under the OECD Pillar Two rules, multinational groups with
consolidated revenue over €750.0 million are subject to a minimum Effective Tax Rate (ETR) of 15% on income arising in low-tax
jurisdictions.
Orora operates across a number of jurisdictions where the OECD Pillar Two rules are in varying stages of development and enactment:
ranging from no announcement regarding enactment through to draft or proposed laws. The Australian Government announced as part of
the 2023-2024 Federal Budget that it will adopt legislation to implement Pillar Two rules in Australia, effective for income years
commencing on or after 1 January 2024.
The Group operates in seven key countries, and all these countries have statutory corporate tax rates more than 15%. The Group is in the
process of undertaking a preliminary assessment in preparation for complying with the Pillar Two model rules. At the date of this report
this assessment is not yet complete however the analysis prepared does indicate that the Group is unlikely to have any potential
exposure to Pillar Two top-up taxes.
Judgements and estimates
The Group is subject to income taxes in Australia and foreign jurisdictions and as a result the calculation of the Group’s tax charge involves a
degree of estimation and judgement in respect of certain items, including assumptions made in respect of the application of tax legislation.
Uncertainty and changes to tax regimes can materialise in any country in which we operate. There are many transactions and calculations
relating to the ordinary course of business for which the ultimate tax determination is uncertain.
The Group recognises liabilities for uncertain tax positions based on management’s best estimate of whether additional taxes will be due.
Where the final outcome of these matters is different from the amounts that were initially recorded, these differences impact the current
and deferred tax provisions in the period in which such determinations are made.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable
profits are available to utilise those temporary differences and losses, and the tax losses continue to be available having regard to the
nature and timing of their origination and compliance with the relevant tax legislation associated with their recoupment. The assumptions
regarding the future realisation, and therefore the recognition of deferred tax assets, may change due to future operating performance and
other factors.
The assumptions made in respect of the recognised tax balances are subject to risk and uncertainty and there is a possibility that changes
in circumstances or differences in opinion will alter outcomes which may impact the amount of deferred tax assets and deferred tax
liabilities recognised and the amount of tax losses and timing differences not yet recognised.
114
ORORA LIMITED ANNUAL REPORT 2023
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
Section 5: Financial risk management
In this section
The following section outlines how the Group manages the financial risks it is exposed to associated with holding financial instruments that
arise from the Group’s need to access financing (bank loans and overdrafts and unsecured notes), from the Group’s operational activities
(cash, trade receivables and payables) and instruments held as part of the Group’s risk management activities (derivative financial
instruments).
5.1. Derivative financial instruments
Hedging activities and the use of derivatives
What is a derivative?
A derivative is a type of financial instrument typically used to manage risk. A derivative’s value changes over time in response to underlying
variables, such as exchange rates or interest rates, and is entered into for a fixed period of time. A hedge is where a derivative is used to
manage exposure in an underlying variable.
The Group is exposed to certain market risks which include foreign exchange risk, interest rate risk and commodity price risk. In accordance
with Board approved policies the Group manages these risks by using derivative financial instruments to hedge the underlying exposures.
Why do we need them?
The key market risks facing the Group:
•
Foreign currency transaction risk is the risk that currency fluctuations will have a negative effect on the value of the Group's future cash
flows due to changes in foreign currency between the date a commercial transaction is entered into and the date at which the
transaction is settled.
Interest rate risk arises from fluctuations in variable market interest rates impacting the fair value or future cash flows on long-term
borrowings.
•
• Commodity price risk arises from significant changes in the price of electricity and key raw material inputs, in particular the purchase of
aluminium.
How do we use them?
The Group employs the following derivative financial instruments when managing its foreign currency, interest rate and commodity price
risk:
•
•
Forward exchange contracts and options are derivative instruments used to hedge transaction risk. They enable the sale or purchase of
foreign currency at a known fixed rate on an agreed future date. The Group holds forward exchange contracts and options denominated
in US Dollars, Euros, British Pounds and NZ Dollars to hedge highly probable forecast sale and purchase transactions (cash flow hedges).
Interest rate swaps are derivative instruments used to manage interest rate risk. They enable the exchange of a fixed rate of interest for
a floating rate, or vice versa, or one type of floating rate for another. These derivatives are entered into to manage the Group's exposure
to fixed and floating interest rates arising from borrowings. These hedges may incorporate cash flow hedges, which fix future interest
payments, and fair value hedges, which reduce the Group's exposure to changes in the value of its assets and liabilities arising from
interest rate movements.
• Power Purchase Arrangements (PPA’s) are derivative instruments that are used to hedge transaction risk associated with the variability
of wholesale electricity prices in Australia. These forward commodity contracts exchange a variable wholesale price of electricity for a
fixed electricity price.
To manage commodity price risk associated with aluminium purchases the Group uses forward commodity contracts and fixed price
swaps to hedge price risk and enable the purchase of aluminium raw materials at a known fixed rate on an agreed future date (cash flow
hedge). Where contracted, the Group passes on the price risk of commodities contractually through to customers, including any benefits
and costs relating to swaps upon their maturity (fair value hedge).
•
With the exception of the PPA’s, all derivative financial instruments utilised by the Group are hedges of highly probable forecast transactions
with a hedge ratio of 1:1, therefore the change in the hedging instrument is equal to the change in the value of the underlying hedged item.
Derivative financial instruments are only undertaken if they relate to underlying exposures; the Group does not use derivatives to speculate.
Analysis of the derivatives used by the Group to hedge its exposure and the various methods used to calculate their respective fair values
are detailed in this section.
Accounting policies
Derivative financial instruments are recognised initially at fair value on the date the instrument is entered into and are subsequently
remeasured at fair value or ‘marked to market’ at each reporting date. The gain or loss on remeasurement is recognised immediately in
the income statement unless the derivative is designated as a cash flow hedging instrument in which case the remeasurement is
recognised in equity.
ORORA LIMITED ANNUAL REPORT 2023
115
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
Section 5: Financial risk management (continued)
5.1. Derivative financial instruments (continued)
Hedge accounting
At the inception of the hedge relationship, the Group formally designates the relationship between hedging instruments and hedged
items, as well as its risk management objective for undertaking various hedge transactions. The Group also documents its assessment,
both at hedge inception and on an ongoing basis, as to whether the derivatives that are used in hedging transactions have been and will
continue to be highly effective in offsetting changes in fair values or cash flows of hedged items. Where option contracts are used to
hedge forecast transactions, only the intrinsic value of the option contract is designated as the hedging instrument.
Rebalancing
If the hedging ratio for risk management purposes is no longer optimal but the risk management objective remains unchanged and the
hedge continues to qualify for hedge accounting, the hedge relationship will be rebalanced by adjusting either the volume of the hedging
instrument or the volume of the hedged item so that the hedge ratio aligns with the ratio used for risk management purposes. Any hedge
ineffectiveness is calculated and accounted for in profit or loss at the time of the hedge relationship rebalancing.
For the purposes of hedge accounting, hedges are classified as fair value hedges, cash flow hedges or net investment hedges and are
accounted for as set out in the table below.
Fair value hedge
Cash flow hedge
Net investment hedge
A derivative or financial instrument
designated as hedging the change
in fair value of a recognised asset or
liability or firm commitment.
A derivative or financial instrument hedging
the exposure to variability in cash flow
attributable to a particular risk associated
with an asset, liability or forecasted
transaction.
Financial instruments hedging changes
in foreign currency when the net assets
of a foreign operation are translated from
their functional currency into Australian
dollars.
What is it?
Movement in
fair value
Changes in the fair value of the
derivative are recognised in the
income statement, together with
the changes in fair value of the
hedged asset or liability attributable
to the hedged risk.
The effective part of any gain or loss on the
derivative financial instrument is recognised in
other comprehensive income and
accumulated in equity in the hedging reserve.
The change in the fair value that is identified
as ineffective is recognised immediately in the
income statement within ‘other income’ or
‘general and administration expenses’.
Amounts accumulated in equity are
transferred to the income statement in the
periods when the hedged item affects profit or
loss (for instance, when the forecast sale that
is hedged takes place). However, when the
forecast transaction that is hedged results in
the recognition of a non-financial asset (for
example, inventory), the gains and losses
previously deferred in equity are transferred
from equity and included in the measurement
of the initial cost or carrying amount of the
asset.
Where options are used, changes in the fair
value of the option are recognised in other
comprehensive income depending on whether
it is designated as the hedging instrument in
its entirety, or its intrinsic value only. If only
the intrinsic value is designated, the option’s
time value that matches the terms of the
hedged item is be recognised in equity and
released to profit or loss over the term of the
hedged item.
When a hedging instrument expires or is sold,
terminated or exercised, or when a hedge no
longer meets the criteria for hedge
accounting, any cumulative gain or loss
existing in equity at that time remains in
equity and is recognised when the forecast
transaction is ultimately recognised in the
income statement. When a forecast
transaction is no longer expected to occur, the
cumulative gain or loss that was reported in
equity is immediately transferred to the
income statement.
On consolidation, foreign currency
differences arising on the translation of
financial assets and liabilities
designated as net investment hedges of
a foreign operation are recognised in
other comprehensive income and
accumulated in the foreign exchange
reserve, to the extent that the hedge is
effective. Any ineffective portion is
recognised in the income statement.
Upon disposal of the foreign operation,
which is subject to the net investment
hedge, the cumulative amount that has
been recognised in equity in relation to
the hedged net investment is transferred
to the income statement and recognised
as part of the gain or loss on disposal.
Discontinuation
of hedge
accounting
If the hedge no longer meets the
criteria for hedge accounting, the
adjustment to the carrying amount
of a hedged item, for which the
effective interest method is used, is
amortised to the income statement
over the period to maturity using a
recalculated effective interest rate.
116
ORORA LIMITED ANNUAL REPORT 2023
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
Fair value measurement
The following table sets out the fair value of derivative financial instruments utilised by the Group, analysed by type of contract.
$ million
Asset
Liabilit y
Asset
Liabilit y
Asset
Liabilit y
Level 2
Level 3
Tot al
30 June 2023
Cash flow hedges
Int erest rat e swap cont ract s
Foreign exchange derivat ives
Commodit y derivat ives
Elect ricit y derivat ives
Fair value hedge
Foreign exchange derivat ives
Commodit y derivat ives
Tot al derivat ives in an asset / (liabilit y) posit ion
Current asset / (liabilit y)
Non-current asset / (liabilit y)
30 June 2022
Cash flow hedges
Foreign exchange derivat ives
Elect ricit y derivat ives
Fair value hedge
Foreign exchange derivat ives
Commodit y derivat ives
Tot al derivat ives in an asset / (liabilit y) posit ion
Current asset / (liabilit y)
Non-current asset / (liabilit y)
3.2
5.5
-
-
3.3
0.1
12.1
8.5
3.6
7.8
-
8.9
-
16.7
15.8
0.9
-
(0.9)
(0.2)
-
(0.1)
(1.1)
(2.3)
(2.2)
(0.1)
(0.6)
-
-
(0.6)
(1.2)
(1.9)
0.7
-
-
-
6.4
-
-
6.4
0.8
5.6
-
0.2
-
-
0.2
-
0.2
-
-
-
(1.5)
-
-
(1.5)
-
(1.5)
-
(0.7)
-
-
(0.7)
-
(0.7)
3.2
5.5
-
6.4
3.3
0.1
18.5
9.3
9.2
7.8
0.2
8.9
-
16.9
15.8
1.1
-
(0.9)
(0.2)
(1.5)
(0.1)
(1.1)
(3.8)
(2.2)
(1.6)
(0.6)
(0.7)
-
(0.6)
(1.9)
(1.9)
-
The Group does not hold any Level 1 financial instruments. There were no transfers between Level 1 and 2 for recurring fair value
measurements during the year.
Fair value measurement
The following table provides a reconciliation of the fair value movements in Level 3 financial instruments.
$ million
Opening balance
Tot al gains or losses:
Recognised in ot her comprehensive income
Recognised in income st at ement
Set t lement of derivat ive
Closing balance
2023
(0.5)
5.1
(0.4)
0.7
4.9
2022
0.1
-
(0.6)
-
(0.5)
ORORA LIMITED ANNUAL REPORT 2023
117
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
Section 5: Financial risk management (continued)
5.1. Derivative financial instruments (continued)
Judgements and estimates
The Orora Group Treasury team performs the financial instrument valuations and reports directly to the Chief Financial Officer (CFO)
and the Audit, Risk & Compliance Committee. Discussions of valuation processes and results are held with the CFO and Orora Group
Treasury at least once every six months, in line with the Group’s half-yearly reporting requirements. Significant valuation issues are
reported to the Audit, Risk & Compliance Committee.
When measuring the fair value of an asset or liability, the Group uses market observable data as far as possible. Fair values are
categorised into three levels as prescribed under accounting standards, with each of these levels indicating the reliability of the
inputs used in determining fair value. The levels in the fair value hierarchy are:
Level 1: Financial instruments traded in an active market (such as publicly traded derivatives, and trading and available-for-sale
securities). Fair value is from a quoted price, for an identical asset or liability at the end of the reporting period, traded in an active
market. The quoted market price used for assets is the last bid price.
Level 2: Financial instruments that are not traded in an active market (for example over-the-counter derivatives). Fair value is
determined using valuation techniques that maximise the use of observable market data and rely as little as possible on entity-
specific estimates. All significant inputs used in the valuation method are observable.
Level 3: Financial instruments for which no market exists in which the instrument can be traded. Where one or more of the
significant inputs in determining fair value for the asset or liability is not based on observable market data (unobservable input), the
instrument is included in Level 3.
Determining fair value
The specific valuation techniques used to value derivative financial instruments at balance sheet date are as follows:
•
•
•
•
•
the fair value of interest rate swaps is calculated as the present value of the estimated future cash flows – i.e. the amounts that
the Group would receive or pay to terminate the swap at reporting date, based on observable yield curves;
the fair value of forward foreign exchange contracts and currency options is determined using the difference between the
contract exchange rate and the quoted exchange rate;
the fair value of the aluminium commodity forward contracts is determined using the difference between the contract
commodity price and the quoted market price;
the fair value of commodity forward contracts is calculated as the present value of the estimated future cash flows using
market observable quoted prices; and
the fair value of energy derivatives is calculated as the present value of the future contracted cash flows using market
observable quoted prices and risk adjusted forecast prices including credit adjustments.
118
ORORA LIMITED ANNUAL REPORT 2023
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
Financial risk management is carried out by Orora Group Treasury under the Treasury Risk Management Policy that has been approved by the
Board for managing each of the below risks including principles and procedures with respect to risk tolerance, delegated levels of authority
on the type and use of derivative financial instruments and the reporting of these exposures. The Treasury function reports regularly to the
Board and treasury procedures are subject to periodic reviews.
In accordance with Board approved policies the Group typically uses derivative financial instruments to hedge underlying exposures arising
from the Group’s operational activities relating to changes in foreign exchange rates on foreign currency commercial transactions
(transaction risk), exposure to changes in commodity prices, changes in interest rates on net borrowings and changes in the Company’s
share price.
The Group’s overall financial risk management program focuses on the unpredictability of financial markets and seeks to minimise
potential adverse effects on the Group’s financial performance as set out in the table below:
Risk
Exposure
Management
Market risks
•
Interest rate
risk
•
Foreign
exchange risk
• Commodity
price risk
• Employee
share plan risk
Credit risk
The Group is exposed to interest rate risk in respect
of short and long-term borrowings where interest is
charged at variable rates.
The Group is exposed to foreign exchange risk
because of its international operations and the need
to undertake certain transactions denominated in
foreign currencies. These risks relate to future
commercial transactions (mainly relating to export
sales, the purchase of inventory and capital
expenditure), financial assets and liabilities not
denominated in A$ and net investments in foreign
operations.
The Group is exposed to changes in commodity
prices in respect of the purchase of aluminium raw
materials and the price of electricity.
The Group’s employee share plans require the
delivery of shares to employees in the future when
rights vest or options are exercised. The Group
currently acquires shares on-market to deliver
these shares exposing the Group to cash flow risk –
i.e. as the share price increases it costs more to
acquire the shares on-market.
The Group is exposed to credit risk from financial
instrument contracts and trade and other
receivables. The maximum exposure to credit risk at
reporting date is the carrying amount, net of any
provision for impairment, of each financial asset in
the balance sheet.
Liquidity and
funding risk
The Group is exposed to liquidity and funding risk from
operations and from external borrowings, where the
risk is that the Group may not be able to refinance debt
obligations or meet other cash outflow obligations
when required.
The Group mitigates interest rate risk primarily by maintaining an
appropriate mix of fixed and floating rate borrowing
arrangements. Where necessary the Group hedges interest rate
risk using derivative instruments – e.g. interest rate swaps. Refer
notes 5.2.1 and 5.1.
Loans are drawn in foreign currency by foreign entities to create a
natural hedge of foreign currency assets and liabilities. Where a
natural hedge does not exist the Group’s policy is to hedge
contractual commitments denominated in a foreign currency by
entering into forward exchange contracts. Refer notes 5.2.2 and
5.1.
Where possible, the Group mitigates raw material commodity
price risk by contractually passing rise and fall adjustments
through to customers. To mitigate the variability of wholesale
electricity prices in Australia, the Group utilises Power Purchase
Arrangements (PPAs). Refer notes 5.2.3 and 5.1.
The Group has established the Orora Employee Share Trust which
manages and administers the Group’s responsibilities under the
employee share plans through acquiring, holding and transferring
shares or rights to shares in the Company to participating
employees. Refer notes 5.2.4, 6.2 and 7.1.
The Group manages credit risk through a robust system of
counterparty approval, granting and renewal of credit limits,
regular monitoring of exposures against such credit limits and
assessing the overall financial stability and competitive strength
of the counterparty on an ongoing basis.
The Group only enters into financial instrument contracts with
high credit quality financial institutions with a minimum long-
term credit rating of BBB+ or better by Standard & Poor’s.
Refer to notes 5.3 and 3.1 for credit risk exposures relating to
trade and other receivables.
The Group mitigates funding and liquidity risks (refer note 5.4) by
ensuring that:
• a sufficient range of funds are available to meet working
capital and investment objectives;
• adequate flexibility within the funding structure is
maintained through the use of bank overdrafts, bank loans
and unsecured notes;
through regular monitoring of rolling forecast of cash
inflows and outflows, the cost of funding is minimised
and that the return on any surplus funds is maximised
through efficient cash management; and
there is a focus on improving operational cash flow and
maintaining a strong balance sheet.
•
•
ORORA LIMITED ANNUAL REPORT 2023
119
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
Section 5: Financial risk management (continued)
5.2. Market risks
5.2.1. Interest rate risk
The Group’s main interest rate risk arises from long-term borrowings with variable rates, which expose the Group to cash flow interest
rate risk. The Group’s Treasury Risk Management Policy is to maintain an appropriate mix between fixed and floating rate borrowings,
monitoring global interest rates, and where appropriate, hedging floating interest rate exposures or borrowings at fixed interest rates
through the use of interest rate swaps and forward interest rate contracts.
The Group regularly analyses its interest rate exposure, by taking into consideration forecast debt positions, refinancing, renewals of
existing positions, alternative financing, hedging positions and a mix of fixed and floating interest rates. The Group’s objective is to hold a
percentage of fixed rate debt within the appropriate range for its tenor as defined in the Treasury Risk Management Policy. At 30 June
2023, approximately 56% (2022: 52%] of the Group’s debt is fixed rate. The movement in fixed rate debt was a result of interest rate
swaps put in place during the year.
The Group had the following borrowings exposed to floating interest rate risk:
2023
Bank loans
Int erest rat e swaps (not ional principal amount )
Net exposure t o cash flow int erest rat e risk
2022
Bank loans
Int erest rat e swaps (not ional principal amount )
Net exposure t o cash flow int erest rat e risk
Weight ed average
int erest rat e
Balance
$ million
5.6%
3.7%
2.5%
-
468.1
100.0
368.1
330.0
-
330.0
Interest rate derivatives used for hedging
The Group’s interest rate swaps are classified as cash flow hedges so any movement in the fair value is recognised directly in equity. The
amounts accumulated in equity are transferred to the income statement in the period in which the hedged item affects profit or loss.
The table below details the carrying values representing the fair value of the instruments used to hedge interest rate risk together with
the notional principal amounts of the interest rate swaps outstanding at the end of the reporting period:
2023
Cash flow hedge(1)
Tot al derivat ives in an asset posit ion
Not ional it em
Balance
$ million
AUD150.0m float ing t o fixed
3.2
3.2
(1) The cash flow hedge notional amount in the above table includes $50.0 million of forward starting swaps which are hedging the underlying interest rate
exposures and therefore not included in the net exposure to cash flow interest rate risk table above.
The Group did not hold any derivative instruments as at 30 June 2022 in respect of hedging interest rate risk.
During the year a gain of $3.2 million (2022: nil) was recognised in other comprehensive income. No amounts relating to cash flow
hedges were transferred from equity to operating profit (2022: nil). No amounts were recognised in the income statement in respect of
hedge ineffectiveness on interest rate swaps (2022: nil).
At 30 June 2023, if Australian and US interest rates had increased by 1.0% (100 bps), post-tax profit for the year would have been $3.3
million lower (2022: $2.3 million lower), net of derivatives and equity would have been $3.5 million higher (2022: nil). If interest rates on
Australian and US dollar denominated borrowings had decreased by 1.0% (100 bps), post-tax profit for the year would have been $3.3
million higher (2022: $2.3 million higher), net of derivatives and equity would have been $3.5 million lower (2022: nil).
120
ORORA LIMITED ANNUAL REPORT 2023
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
5.2.2. Foreign exchange risk
The Group operates internationally and is therefore exposed to currency risk arising from movements in foreign currency rates, primarily
with respect to the US Dollar and NZ Dollar. The foreign exchange risk arises from:
•
recognised monetary assets and liabilities held in a non-functional currency and net investments in foreign operations (translation
risk); and
• differences in the dates foreign currency commercial transactions are entered into and the dates they are settled (transaction risk).
Translation risk
To limit translation risk exposure the Group’s borrowings are generally denominated in currencies that match the cash flows generated
by the underlying operations of the Group, which are primarily Australian and US dollars. Interest payable on those borrowings is
denominated in the currency of the borrowing. In respect of the US operations this provides a natural economic hedge without requiring
derivatives to be entered into.
The summary quantitative data about the Group’s exposure to translation currency risk (expressed in Australian dollars), as reported to
the management of the Group, is as follows:
$ million
Funds employed
Net Debt
Net exposure t o t ranslat ion risk
Transaction risk
2023
USD
745.8
(343.4)
402.4
NZD
54.0
33.7
87.7
2022
USD
729.9
(336.8)
393.1
NZD
65.3
19.1
84.4
To manage foreign currency transaction risk, where a natural hedge does not exist, the Group’s policy is to hedge material foreign
currency denominated expenditure at the time of commitment and to hedge a proportion of foreign currency denominated forecasted
exposures on a rolling 18-month basis (mainly relating to export sales, the purchase of inventory and capital expenditure and the
resulting payables) through the use of forward foreign exchange contracts or foreign currency options taken out for up to two years from
the forecast date.
The Group’s exposure to foreign currency risk at the end of the reporting period in respect of foreign denominated monetary items was as
follows:
$ million
2023
Trade receivables
Trade payables
Foreign currency forwards
Cash flow hedges
Buy foreign currency
Sell foreign currency
Fair value t hrough p&l
Buy foreign currency
Sell foreign currency
2022
Trade receivables
Trade payables
Foreign currency forwards
Cash flow hedges
Buy foreign currency
Sell foreign currency
Fair value t hrough p&l
Buy foreign currency
Sell foreign currency
USD
NZD
EUR
GBP
28.9
(128.4)
100.2
(0.7)
90.0
-
19.9
(142.8)
116.7
-
121.0
-
2.1
(7.0)
-
(3.4)
-
-
0.7
-
-
(2.5)
-
(0.4)
-
(3.0)
26.9
-
0.5
-
-
(1.2)
7.4
-
2.0
-
-
(0.4)
0.2
-
-
-
-
(0.3)
3.9
-
-
-
ORORA LIMITED ANNUAL REPORT 2023
121
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
Section 5: Financial risk management (continued)
5.2. Market risks (continued)
5.2.2. Foreign exchange risk (continued)
Forward exchange derivatives used for hedging
The below carrying values represent the fair value of instruments used to hedge foreign exchange risk together with the associated
nominal volume and foreign exchange swap rate:
2023
Cash flow hedges
AUD/ USD
AUD/ EUR
AUD/ GBP
NZD/ USD
NZD/ AUD
Fair value hedges
AUD/ USD
NZD/ USD
AUD/ EUR
Tot al derivat ives in an asset / (liabilit y) posit ion
2022
Cash flow hedges
AUD/ USD
AUD/ EUR
AUD/ GBP
NZD/ USD
NZD/ AUD
Fair value hedges
AUD/ USD
AUD/ NZD
Tot al derivat ives in an asset / (liabilit y) posit ion
Not ional It em
million
Weight ed
Average
$ million
Asset
Liabilit y
USD 90.4
EUR 26.9
GBP 0.2
USD 9.1
NZD 3.4
USD 73.1
USD 16.9
EUR 0.5
0.6840
0.6378
0.5585
0.6069
0.9152
0.6843
0.6269
0.6289
USD109.3
EUR9.4
GBP3.9
USD16.1
NZD2.9
0.7226
0.6442
0.5417
0.6391
0.9296
USD95.2
USD17.1
0.7277
0.6766
3.2
2.1
-
0.2
-
2.6
0.7
-
8.8
7.0
0.1
-
0.6
0.1
7.0
1.9
16.7
(0.6)
-
-
(0.3)
-
-
(0.1)
-
(1.0)
-
(0.3)
(0.3)
-
-
-
-
(0.6)
Within other income in the income statement the Group recognised a net foreign exchange gain of $4.2 million (2022: $0.7 million gain)
and, in respect of foreign currency derivatives designated at fair value through profit or loss, a gain of $0.1 million (2022: $0.4 million
gain).
In addition, a gain of $12.3 million (2022: $10.5 million gain) relating to cash flow hedges and a $21.1 million gain (2022: $27.3 million
gain) on the translation of foreign operations was recognised in other comprehensive income. Gains of $12.5 million (2022: $2.5 million
gain) relating to cash flow hedges were transferred from equity to operating profit, whilst gains of $1.1 million were transferred from
equity to non-financial assets (2022: $4.0 million gain). No amounts were recognised in the income statement in respect of hedge
ineffectiveness (2022: nil).
The following sensitivity illustrates how a reasonably possible change in the US dollar, NZ dollar and Euro would impact the financial
results and position of the Group as at 30 June:
•
•
•
if the Australian dollar had weakened by 10% against the US dollar with all other variables held constant, post-tax profit would have
been $7.3 million higher, net of derivatives, and equity would have been $11.5 million higher (2022: post-tax profit $9.1 million higher
and equity $20.9 million higher).
if the Australian dollar had weakened by 10% against the NZ dollar with all other variables held constant, post-tax profit would have
been $0.4 million lower, net of derivatives, and equity there would have been $0.2 million lower (2022: no material impact upon post-
tax profit and equity would have been $0.4 million lower).
if the Australian dollar had weakened by 10% against the Euro with all other variables held constant, the post-tax profit would have
been $0.2 million lower, net of derivatives, and equity would have been $5.0 million higher (2022: no material impact upon post-tax
profit or equity).
122
ORORA LIMITED ANNUAL REPORT 2023
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
5.2.3. Commodity price risk
The Group is exposed to commodity price risk arising from the purchase of aluminium and the price of electricity.
Electricity prices
To manage the risk associated with the variability of wholesale electricity prices in Australia the Group utilises Power Purchase
Agreements (PPAs). These contracts are entered into in order to economically hedge exposure to fluctuations in electricity prices by
purchasing electricity at predetermined prices.
These derivative instruments meet the requirements for hedge accounting. Settlement of the contracts requires exchange of cash for
the difference between the contracted and spot market price. The contracts are measured at fair value and the resultant gains or losses
that effectively hedge designated risk exposures are deferred within the cash flow hedge reserve.
The following table details the fair value of the energy derivatives outstanding at the end of the reporting period:
$ million
Energy derivat ive financial asset s
Current
Non-current
Energy derivat ive financial liabilit y
Current
Non-Current
2023
2022
0.8
5.6
6.4
-
(1.5)
(1.5)
0.2
-
0.2
(0.7)
-
(0.7)
During the year a gain of $5.1 million (2022: nil) was recognised in other comprehensive income, whilst $0.2 million loss was recognised
in the income statement in respect of hedge ineffectiveness (2022: nil). No amounts relating to cash flow hedges were transferred from
equity to operating profit.
The following sensitivity illustrates how a reasonably possible change in electricity forward prices would impact the financial results and
position of the Group as at 30 June:
•
•
if at the end of the period the forward price had been 10% higher with all other variables held constant, post-tax profit would have
been $0.1 million lower and equity would have been $3.9 million higher (2022: nil).
if at the end of the period the forward price had been 10% lower with all other variables held constant, post-tax profit would have
been $0.1 million higher and equity would have been $4.2 million lower (2022: nil).
Aluminium purchases
Commodity derivatives used for hedging
The below carrying values represent the fair value of instruments used to hedge commodity price risk together with the associated
nominal volume:
2023
Cash flow hedges
Commodit y LME price (USD / mt )
Fair value hedges
Commodit y LME price (USD / mt )
Tot al derivat ives in an asset / (liabilit y) posit ion
2022
Fair value hedges
Commodit y LME price (USD / mt )
Tot al derivat ives in an asset / (liabilit y) posit ion
Not ional It em
million
Average
Price
$ million
Asset
Liabilit y
USD3.9
2,312.5
USD8.9
2,399.6
USD6.9
2,778.2
-
0.1
0.1
-
-
(0.2)
(1.1)
(1.3)
(0.6)
(0.6)
In managing commodity price risk associated with aluminium purchases in the majority of instances the Group is able to pass on the
price risk contractually to customers through rise and fall adjustments. Under these circumstances some hedging of aluminium prices is
undertaken using fixed price swaps on behalf of certain customers. Hedging undertaken is upon customer instruction and all related
benefits and costs are passed through to the customer on maturity of the transaction.
ORORA LIMITED ANNUAL REPORT 2023
123
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
Section 5: Financial risk management (continued)
5.2. Market risks (continued)
5.2.3. Commodity price risk (continued)
Aluminium purchases
The movements in aluminium commodity hedges are recognised in equity and the cumulative amount of the hedge is recognised in the
income statement when the forecast transaction is realised. Where commodity hedges are undertaken on behalf of certain customers,
there is no impact on profit as a result of movements in commodity prices as the Group passes the price risk contractually through to
customers.
During the period, the Group recognised a loss of $1.2 million (2022: $0.6 million loss) relating to commodity hedges in other
comprehensive income, whilst a loss of $1.6 million (2022: $0.6 million gain) relating to commodity hedges was transferred from equity
to non-financial assets. No amounts relating to cash flow hedges held for Group purposes were transferred from equity to operating
profit.
At 30 June 2023, if the price of aluminium had been 10% higher with all other variables held constant, there would have been no material
impact upon post-tax profit, whilst equity would have been $0.6 million higher (2022: no material impact upon post-tax profit or equity).
5.2.4. Employee Share Plan risk
The Group is exposed to movements in the value of ordinary shares of the Company in respect of the obligations under the Group’s
Employee Share Plans (refer note 7.1). To mitigate this risk the Group has established the Orora Employee Share Trust (the Trust) to
manage and administer the Group’s responsibilities under the Employee Share Plans through the acquiring, holding and transferring of
shares, or rights to shares, in the Company to participating employees.
As at 30 June 2023, the Trust holds 3,492,519 treasury shares in the Company (2022: 3,485,020) of which 341,076 are allocated shares
in respect of the Restricted Share Unit (RSU) grants (2022: 461,347). Refer to note 6.2 for further details.
5.3. Credit risks
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual
obligations. It arises principally from the Group’s receivables from customers, cash and cash equivalents and in-the-money derivatives.
There is also credit risk relating to the Group’s own credit rating as this impacts the availability and cost of future finance.
The Group manages credit risk through the maintenance of procedures such as the utilisation of systems of approval, granting and
renewal of credit limits, regular monitoring of exposures against such credit limits and assessing the overall financial stability and
competitive strength of the counterparty on an ongoing basis.
Trade and other receivables
Credit risk exposures related to trade and other receivables are discussed in note 3.1.
Cash and cash equivalents and derivatives
Credit risk related to balances with banks and financial institutions is managed by Orora Group Treasury in accordance with the Group’s
Treasury Risk Management Policy. The policy only allows financial derivative instruments to be entered into with high credit quality
financial institutions with a minimum long-term credit rating of BBB+ or better by Standard & Poor’s. In addition, the Board has approved
the use of these financial institutions, and specific internal guidelines have been established with regards to limits, dealing and
settlement procedures.
The maximum exposure to credit risk by class of recognised financial assets at the end of the reporting period, excluding the value of any
security held, is equivalent to the carrying amount and classification of the financial assets (net of any provisions) as presented in the
Statement of financial position.
Guarantees
The Group’s policy is to provide financial guarantees only to certain parties securing the liabilities of subsidiaries. These are only provided
in exceptional circumstances (refer note 7.3).
124
ORORA LIMITED ANNUAL REPORT 2023
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
5.4. Liquidity and funding risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s financing policy is to
fund itself for the long term by using debt instruments with a range of maturities and to ensure access to appropriate short-term
facilities. Orora Group Treasury aims to maintain flexibility within the funding structure through the use of bank overdrafts and bank
loans.
Management manages liquidity risk through maintaining minimum undrawn committed liquidity of at least $150.0 million that can be
drawn upon at short notice and regularly monitoring rolling forecasts of cash inflows and outflows in relation to the Group’s activities.
This monitoring includes financial ratios to assess possible future credit ratings and headroom and takes into account the accessibility of
cash and cash equivalents.
Financing arrangements
In addition to a range of short-term uncommitted credit lines, as at 30 June 2023 the Group had access to the following committed facilities:
• $460.0 million through a revolving multicurrency facility, provided by a syndicate of domestic and international financial institutions
maturing in November 2024.
• USD243.0 million via a US Private Placement of notes of which USD100.0 million matures in July 2023 and USD143.0 million matures in
July 2025.
• USD100.0 million through a USD revolving facility, provided by a syndicate of domestic and international financial institutions, maturing
in June 2027.
• $35.0 million, $75.0 million and $100.0 million through bilateral revolving facility agreements which mature in April 2025, January 2026,
and July 2027 respectively.
• USD100.0 million through a bilateral term facility agreement maturing in January 2028.
These facilities are unsecured.
The committed and uncommitted standby arrangements and unused facilities of the Group are set out below:
$ million
Financing facilit ies available:
Bank overdraft s
US Privat e placement
Loan facilit ies and t erm debt
Facilit ies ut ilised:
Bank overdraft s
US Privat e placement
Loan facilit ies and t erm debt
Facilit ies not ut ilised:
Bank overdraft s
US Privat e placement
Loan facilit ies and t erm debt
Commit t ed
2023
Uncommit t ed
Tot al
Commit t ed
2022
Uncommit t ed
Tot al
-
364.5
970.0
1,334.5
-
364.5
470.0
834.5
-
-
500.0
500.0
6.2
-
80.0
86.2
-
-
-
-
6.2
-
80.0
86.2
6.2
364.5
1,050.0
1,420.7
-
364.5
470.0
834.5
6.2
-
580.0
586.2
-
352.1
702.4
1,054.5
-
352.1
330.0
682.1
-
-
372.4
372.4
6.2
-
73.0
79.2
-
-
-
-
6.2
-
73.0
79.2
6.2
352.1
775.4
1,133.7
-
352.1
330.0
682.1
6.2
-
445.4
451.6
The Group also has access to facilities for working capital purposes, refer note 3.1 and 3.3. The supplier facilities allow the Group to
provide certain suppliers with access to supply chain financing, which allows these suppliers to benefit from the Group’s credit profile.
The size of these facilities at 30 June 2023 was $197.5 million (2022: $186.6 million).
The Group also has supply agreements in place for certain raw material purchases, where there is considerable time lag between the
purchase order date and receipt of the raw material, that include supply chain financing characteristics that provide the Group with
extended payment terms compared to the related invoice payment due date. Under these arrangements, the funding provider agrees to
pay amounts to the participating suppliers in respect of these invoices and receives settlement from the Group at a later date. The size of
the facility at 30 June 2023 was $120.0 million (2022: $137.7 million).
The level of utilisation under these arrangements is dependent upon the Group’s raw material purchases and the individual requirements
of the Group’s suppliers which varies over time.
ORORA LIMITED ANNUAL REPORT 2023
125
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
Section 5: Financial risk management (continued)
5.4. Liquidity and funding risk (continued)
Maturity of financial liabilities
The table below allocates the Group’s financial liabilities, including derivatives, into relevant maturity groupings based on the period
remaining until the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows (including
interest), so will not always reconcile with the amounts disclosed in the statement of financial position:
1-2 years
2-5 years
More t han
5 years
Tot al
cont ract ual
cash flows
Carrying amount
(asset s)/ liabilit ies
$ million
2023
Non-derivat ive financial inst rument s
Trade and ot her payables
Lease liabilit ies
Borrowings
Tot al non-derivat ives
Derivat ives
Net set t led:
Commodit y cont ract s
Int erest rat e swaps
Elect ricit y price commodit y swaps
Gross set t led forward exchange cont ract s
Inflow
Out flow
Tot al gross set t led forward exchange cont ract s
Tot al derivat ives
2022
Non-derivat ive financial inst rument s
Trade and ot her payables
Lease liabilit ies
Borrowings
Tot al non-derivat ives
Derivat ives
Net set t led:
Commodit y cont ract s
Elect ricit y price commodit y swaps
Gross set t led forward exchange cont ract s
Inflow
Out flow
Tot al gross set t led forward exchange cont ract s
Tot al derivat ives
1 year
or less
758.2
64.2
188.8
1,011.2
(1.1)
-
0.2
317.0
(309.6)
7.4
6.5
2.3
55.8
445.3
503.4
(0.1)
-
0.4
17.3
(16.9)
0.4
0.7
5.6
113.2
273.4
392.2
-
3.2
(0.3)
-
-
-
4.9
25.9
-
30.8
-
-
4.6
-
-
-
2.9
4.6
771.0
259.1
907.5
1,937.6
(1.2)
3.2
4.9
334.3
(326.5)
7.8
14.7
931.2
55.9
56.0
0.5
48.6
160.7
1,043.1
209.8
1.4
106.2
467.5
575.1
3.1
28.8
50.0
81.9
936.2
239.5
734.2
1,909.9
(0.6)
(0.5)
344.9
(329.9)
15.0
13.9
-
-
26.6
(25.5)
1.1
1.1
-
-
-
-
-
-
-
-
-
-
-
-
(0.6)
(0.5)
371.5
(355.4)
16.1
15.0
771.0
227.6
832.4
1,831.0
(1.2)
3.2
4.9
7.8
14.7
936.2
224.5
681.6
1,842.3
(0.6)
(0.5)
16.1
15.0
126
ORORA LIMITED ANNUAL REPORT 2023
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
Section 6: Group structure
In this section
This section provides information on those subsidiaries whose results principally affect the financial results of the Group, including details
of the divestments and acquisitions that occurred during the period.
Details of the Orora Employee Share Trust are also discussed below.
6.1. Principal subsidiary undertakings and investments
The ultimate parent of the Group is Orora Limited, a company incorporated in Australia. The companies listed below are those whose
results, in addition to the parent Company, principally affect the figures shown within the Annual Report:
Cont rolled ent it ies
Orora Packaging Aust ralia Pt y Lt d
Orora Packaging New Zealand Lt d
Orora Packaging Solut ions
Landsberg Orora
Orora Packaging Texas LP
Pollock Invest ment s Incorporat ed
Kent H. Landsberg Co of Illinois LLC
Orora Visual LLC
Count ry of
incorporat ion
Aust ralia
New Zealand
Unit ed St at es
Unit ed St at es
Unit ed St at es
Unit ed St at es
Unit ed St at es
Unit ed St at es
Ownership int erest
2023
2022
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
6.2. Orora Employee Share Trust
The Group holds shares in itself as a result of shares purchased by the Orora Employee Share Trust (the Trust). The Trust was established
to manage and administer the Company’s responsibilities under the Group’s Employee Share Plans (refer note 7.1) through the acquiring,
holding and transferring of shares, or rights to shares, in the Company to participating employees. In respect of these transactions, at
any point in time the Trust may hold ‘allocated’ and ‘unallocated’ shares.
As at 30 June 2023, the Trust held 3,492,519 treasury shares in the Company (2022: 3,485,020) of which 341,076 are allocated shares
in respect of the Restricted Share Unit (RSU) grants (2022: 461,347).
Allocated shares
Allocated shares represent those shares purchased and awarded to employees under Orora’s Employee Restricted Share Unit (RSU) Plan
(refer note 7.1).
Shares granted to an employee under the RSU Grant are restricted in that the employee is unable to dispose of the shares for a period of
up to five years (or as otherwise determined by the Board). The Trust holds these shares on behalf of the employee until the restriction
period is lifted at which time the Trust releases the shares to the employee. Allocated shares are not identified or accounted for as
treasury shares.
Where the Orora Employee Share Trust purchases equity instruments in the Company, as a result of managing the Company’s
responsibilities under the Group’s RSU Grant Employee Share Plan award, the consideration paid, including any directly attributable costs
is deducted from equity, net of any related income tax effects.
Unallocated shares
Unallocated shares represent those shares that have been purchased by the Trustee on-market to satisfy the potential future vesting of
awards granted under the Group’s Employee Share Plans, other than the RSU Grant. As the shares are unallocated, they are identified and
accounted for as Treasury Shares, refer note 2.4.1.
Accounting policies
Transactions with the Group-sponsored Trust are included in these financial statements. In particular, the Trust’s purchases of shares in
Orora Limited are debited directly to equity. The shares are held in the Trust until such time as they may be transferred to participants of
the various Group share schemes.
In accordance with the Trust Deed, the Trustees have the power to exercise all voting rights in relation to any investment (including
shares) held within the Trust.
ORORA LIMITED ANNUAL REPORT 2023
127
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
Section 7: Other notes to the financial statements
In this section
This section includes additional financial information that is required by the accounting standards and the Corporations Act 2001, including
details about the Group’s employee reward and recognition programs.
7.1. Share-based compensation
The Group provides benefits to employees (including senior executives) of the Group in the form of share-based incentives. The Orora
employee incentive plans have been established to ensure employees are motivated and incentivised to develop and successfully execute
against both short and long-term strategies that grow the business and generate shareholder returns. The plans provide an appropriate level
and mix of short and long-term incentives to appropriately recognise and reward employees creating a high-performance culture and Orora’s
ability to attract and retain talent. Orora’s remuneration strategy is competitive in the relevant markets to support the attraction and
retention of talent.
The following information provides details of Orora’s employee incentive plans. During the period the Group recognised a share-based
payment expense of $5.4 million (2022: $5.7 million). Employee expenses and employee provisions are shown in notes 1.5 and 3.9
respectively.
This note should be read in conjunction with the Remuneration Report, as set out in the Directors’ Report, which contains detailed
information regarding the setting of remuneration for Key Management Personnel.
The following table details the total movement in Restricted Share Units (RSU), Share Options, Performance Rights or Performance Shares
issued by the Group:
Long-Term Incent ive Plans
Short -Term Incent ive Plan
RSU Grant
Share Opt ions
Performance Right s and
Performance Shares
Deferred Equit y(1)
No.
$(2)
No.
$(2)
No.
$(2)
No.
$(2)
2023
Out st anding at beginning of period
Grant ed during t he period
Exercised during t he period
Forfeit ed during t he period
Out st anding at end of period
461,347
7,352
(58,854)
(68,769)
341,076
3.55
3.11
2.40
3.66
3.57
1,452,692
-
-
(225,607)
1,227,085
Exercisable at end of period
-
-
1,227,085
0.39
-
-
0.38
0.39
0.39
5,024,900
1,971,616
(937,479)
(1,030,547)
1.93
1.96
2.01
1.85
1,375,180
1,039,440
(380,076)
(180,099)
5,028,490
1.94
1,854,445
-
-
-
2022
Out st anding at beginning of period
Grant ed during t he period
Exercised during t he period
Forfeit ed during t he period
80,000
463,075
(65,000)
(16,728)
3.22
3.57
3.26
3.62
4,635,817
-
-
(3,183,125)
0.55
-
-
0.63
4,793,172
1,688,568
(162,000)
(1,294,840)
Out st anding at end of period
461,347
3.55
1,452,692
0.39 5,024,900
Exercisable at end of period
-
-
226,567
0.43
-
2.00
2.05
2.98
2.20
1.93
-
610,707
1,006,900
(194,817)
(47,610)
1,375,180
-
2.85
3.02
2.14
3.04
3.07
-
2.31
3.13
2.65
2.57
2.85
-
(1) The equity outcomes for the 2023 financial year short-term incentive will be determined and allocated in September 2023 and are therefore not included in the
above table.
(2) The above weighted average fair value is determined in accordance with AASB 2 Share-based Payment in respect of recognising the share-based payment
expense of the award granted.
128
ORORA LIMITED ANNUAL REPORT 2023
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
The exercise price of the RSU Grant, Performance Rights and Performance Shares and Deferred Equity Awards are nil. The exercise price
of Share Options outstanding at the end of the year are set out below:
Grant dat e
Vest ing Dat e
Expiry dat e
Exercise
price
30 Oct 2015
22 Oct 2018
30 Sept 2019
31 Aug 2022
30 Sept 2024
31 Aug 2027
2.08
3.58
Share opt ions out st anding at end of period
Weight ed average cont ract ual life of opt ions out st anding at end of period
Number
2023
2022
226,567
1,000,518
226,567
1,226,125
1,227,085
1,452,692
3.7 years
4.7 years
The Group has ceased offering share options under the long-term incentive plan. The last share option grant was issued in FY19, with a
performance period end date of 30 June 2022.
Accounting policies
The cost of the share-based compensation provided to employees is measured using the fair value at the date at which the rights are
granted and is recognised as an employee benefit expense in the income statement with a corresponding increase in the share-based
payment reserve in equity. The expense is spread over the vesting period during which the employees become unconditionally entitled to
the rights granted. Upon exercise of the right, the balance of the share-based payment reserve, relating to the right, is transferred to
share capital.
At each reporting period the Group revises the estimate of the number of rights that are expected to vest based on the non-market
vesting conditions. Any impact to the revision of an original estimate is recognised in the income statement with a corresponding
adjustment to the share-based payment reserve. The employee expense, recognised each period, reflects the most recent estimate. The
fair value of rights is measured at grant date taking into account market performance conditions but excludes the impact of any non-
market conditions (e.g. profitability and earnings growth targets). Non-market vesting conditions are included in the assumptions about
the number of rights that are expected to be exercisable.
The fair value of rights is measured at grant date using a Monte-Carlo valuation model which simulates the date of vesting, the
percentage vesting, the share price and total shareholder return. Once the simulated date of vesting is determined a Black-Scholes
methodology is utilised to determine the fair value of the rights granted.
The following weighted average assumptions were used in determining the fair value of rights granted during the period:
Expect ed dividend yield (%)
Expect ed price volat ilit y of t he Company's shares (%)
Share price at grant dat e ($)
Risk-free int erest rat e - right s (%)
Expect ed life of right s (years)
2023
2022
4.71
29.74
3.20
3.44
3.46
4.70
31.00
3.16
0.31
4.00
The dividend yield reflects the assumption that the current dividend pay-out will continue with no anticipated changes. The expected
price volatility of the Company’s shares reflects the assumption that the historical volatility is indicative of future trends, which may not
necessarily be the actual outcome.
ORORA LIMITED ANNUAL REPORT 2023
129
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
Section 7: Other notes to the financial statements (continued)
7.1. Share-based compensation (continued)
A description of the equity plans in place during the year ended 30 June 2023 is described below:
Retention/Share Payment plan
Long-term incentives
Short-term incentive
RSU Grant
Performance Rights and Performance Shares
Deferred Equity
Overview
The Board endorses certain
employees as eligible to receive
ordinary shares in part satisfaction
of their remuneration for the
relevant financial year. The number
of shares issued is at the discretion
of the Board.
The restrictions on these shares do
not allow the employee to dispose
of the shares within the
vesting/restriction period.
The shares subject to the RSU Grant
carry full dividend entitlements and
voting rights.
Under the long-term incentive plan performance
rights over ordinary shares in the Company, or
performance shares, may be issued to
employees. The exact terms and conditions of
each award are determined by the Directors of
the Company at the time of grant.
Give the employee the right to receive a share at
a future point in time upon meeting specified
vesting conditions, as described below, no
exercise price is payable.
The rights are granted at no consideration and
carry no dividend entitlement or voting rights
until they vest and convert to ordinary shares on
a one-for-one basis.
Vesting
conditions
Subject to alignment of
performance with Orora’s Values as
assessed by the Board and the
employee remaining in employment
of the Group at the vesting date.
Of the grants provided, 50% are subject to
meeting a relative Total Shareholder Return
(TSR) and the satisfaction of an absolute TSR
gateway test, and 50% are subject to meeting
an EPS hurdle and the satisfaction of a RoAFE
gateway test.
Vesting of the rights is subject to the employee
remaining in employment of the Group at vesting
date.
Provides an additional short-term
incentive opportunity to selected
employees, in the form of rights to
ordinary shares. The number of rights
that are allocated to each eligible
employee is based on:
• 33.3% of the value of the cash
bonus payable under the Short-
Term Incentive Plan, following the
end of the performance period;
the volume weighted average price
of Orora Limited ordinary shares for
the five trading days up to and
including 30 June, being the end of
the performance period; and
•
• where cash bonuses are determined
in currencies other than Australian
dollars, the average foreign
exchange rate for the same five-day
period.
Remain in employment of the Group at
vesting date.
Vesting
period
Vested
awards
Unvested
awards
Up to 5 years
4 years
2 years
Restriction lifted upon vesting.
Shares are issued upon vesting.
Shares issued upon vesting.
Unvested awards are forfeited if the employee voluntarily ceases employment or is dismissed for cause or poor performance.
130
ORORA LIMITED ANNUAL REPORT 2023
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
7.2. Auditors’ remuneration
$ t housand
Audit ors of t he Group
Audit and ot her assurance services
Audit and review of financial report s
Ot her regulat ory audit services
Ot her assurance services
Ot her services
Taxat ion services and ot her advice
Relat ed net work firms of t he audit or of t he Group
Audit and ot her assurance services
Audit and review of financial report s
Ot her services
Taxat ion services and ot her advice
Tot al audit ors' remunerat ion
2023(1)
2022(2)
950.0
16.0
75.5
992.1
-
-
161.1
254.5
1,202.6
1,246.6
-
-
-
14.0
52.3
66.3
1,202.6
1,312.9
(1)
(2)
In 2023, all amounts were paid to member firms of KPMG.
In 2022, all amounts were paid to member firms of PwC, being the Group’s auditors for that financial year.
7.3. Commitments and contingent liabilities
7.3.1. Commitments
At 30 June 2023, the Group has capital commitments contracted but not provided for in respect of the acquisition of property, plant and
equipment of $108.8 million (2022: $61.8 million). In addition, other contracted commitments for the acquisition of Large-scale
Generation Certificates under the Group’s PPA’s (refer note 5.2.3) not provided for amount to $10.6 million (2022: nil).
7.3.2. Contingent liabilities
A contingent liability is a liability that is not sufficiently certain to quality for recognition as a provision where uncertainty may exist
regarding the outcome of future events.
Guarantees
The Group has issued a number of bank guarantees to third parties for various operational and legal purposes. In addition, Orora Limited
has guaranteed senior notes issued by Landsberg Orora in the US private placement market, the notes have maturities between 2023
and 2025 (see note 2.3). It is not expected that these guarantees will be called on.
Other
Certain entities in the Group are party to various legal actions and exposures that have arisen in the ordinary course of business. The
actions are being defended and the Directors are of the opinion that provisions are not required as no material losses are expected to
arise.
Judgements and estimates
Legal proceedings
The outcome of currently pending and future legal, judicial, regulatory and other proceedings of a litigious nature cannot be predicted with
certainty. Legal proceedings can raise difficult and complex issues and are subject to many uncertainties and complexities including, but
not limited to, the facts and circumstances of each particular case, issues regarding the jurisdiction in which each proceeding is brought
and differences in applicable law.
An adverse decision in a legal proceeding could result in additional costs that are not covered, either wholly or partially, under insurance
policies, which could significantly impact the business and the results of operations of the Group.
Each legal proceeding is evaluated on a case-by-case basis considering all available information, including that from legal counsel, to assess
potential outcomes. Where it is considered probable that a future obligation will result in an outflow of resources, a provision is recognised
in the amount of the present value of the expected cash outflows, if these are deemed to be reliably measurable.
ORORA LIMITED ANNUAL REPORT 2023
131
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
Section 7: Other notes to the financial statements (continued)
7.4. Orora Limited
Orora Limited financial information
The financial information for the parent entity Orora Limited has been prepared on the same basis as the consolidated financial
statements, except as set out below.
Investments in subsidiaries
In the Company’s financial statements, investments in subsidiaries are carried at cost less, where applicable, accumulated impairment
losses.
Nature of tax sharing agreement
Upon tax consolidation, the entities within the tax-consolidated group entered into a tax sharing agreement. The terms of this agreement
specify the methods of allocating any tax liability in the event of default by the Company on its group payment obligations and the
treatment where a subsidiary member exits the group. The tax liability otherwise remains with the Company for tax purposes.
Orora Limited and its wholly owned Australian resident entities have formed a tax-consolidated group and are therefore taxed as a single
entity. The head entity within the tax-consolidated group is Orora Limited.
The Company, and the members of the tax-consolidated group, recognise their own current tax expense/income and deferred tax assets
and liabilities arising from temporary differences using the ‘stand-alone taxpayer’ approach by reference to the carrying amounts of
assets and liabilities in the separate financial statements of each entity and the tax values applying under tax consolidation.
In addition to its current and deferred tax balances, the Company also recognises the current tax liabilities (or assets), and the deferred
tax assets arising from unused tax losses and unused tax credits assumed from members of the tax-consolidated group, as part of the
tax-consolidation arrangement. Assets or liabilities arising as part of the tax consolidation arrangement are recognised as current
amounts receivable or payable from the other entities within the tax-consolidated group.
Summarised income statement and comprehensive income
$ million
Cont inuing Operat ions
Profit before relat ed income t ax expense
Income t ax expense
Profit from cont inuing operat ions
Discont inued Operat ions
Loss from discont inued operat ions, net of t ax(1)
Profit for t he financial period
Tot al comprehensive income/ (expense) for t he financial period at t ribut ed t o:
Cont inuing operat ions
Discont inued operat ions
Tot al comprehensive income for t he financial period
Orora Limit ed
2023
2022
191.3
(15.1)
176.2
199.9
(29.2)
170.7
-
(2.4)
176.2
168.3
181.1
-
181.1
175.9
(2.4)
173.5
(1) On 30 April 2020, the Group completed the sale of its Australasian Fibre business. Accordingly, the financial results of this business are presented separately as a
discontinued operation in both the current and comparative period. Further details regarding the sale of the Australasian Fibre business can be found in the 2021
and 2020 Annual Reports.
132
ORORA LIMITED ANNUAL REPORT 2023
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
Summarised balance sheet
$ million
Tot al current asset s
Tot al non-current asset s
Tot al asset s
Tot al current liabilit ies
Tot al non-current liabilit ies
Tot al liabilit ies
Net asset s
Equit y
Cont ribut ed equit y and t reasury shares
Reserves:
Share-based payment reserve
Cash flow hedge reserve
Ret ained profit s
Tot al equit y
Contingent liabilities of Orora Limited
Orora Limit ed
2023
2022
479.0
1,260.1
536.2
1,284.7
1,739.1
1,820.9
471.5
529.6
752.6
368.9
1,001.1
1,121.5
738.0
699.4
(38.8)
(37.3)
13.1
8.9
754.8
738.0
10.7
3.8
722.2
699.4
Deed of Cross Guarantee
Pursuant to the terms of the ASIC Corporations (Wholly Owned Companies) Instrument 2016/785, which relieves certain wholly owned
subsidiaries from specific accounting and financial reporting requirements, Orora Limited and all of the Company’s Australian wholly
owned subsidiaries entered into an approved deed for the cross guarantee of liabilities. No liabilities subject to the Deed of Cross
Guarantee at 30 June 2023 are expected to arise to Orora Limited and subsidiaries, as all such subsidiaries were financially sound and
solvent at that date.
Details of the deed and the consolidated financial position of the Company and the subsidiaries party to the Deed are set out in note 7.5.
Other guarantees
Orora Limited has guaranteed senior notes issued by Landsberg Orora in the US private placement market, the notes have maturities
between 2023 and 2025 (see note 2.3). It is not expected that these guarantees will be called on.
ORORA LIMITED ANNUAL REPORT 2023
133
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
Section 7: Other notes to the financial statements (continued)
7.5. Deed of Cross Guarantee
The Company, Orora Limited, and the subsidiaries listed below are subject to a Deed of Cross Guarantee (Deed) under which each
company guarantees the debts of the others:
• Orora Packaging Australia Pty Ltd
• Pak Pacific Corporation Pty Ltd
• Fibre Containers (Queensland) Pty Ltd
•
Lynyork Pty Ltd
• Chapview Pty Ltd
• AGAL Holdings Pty Ltd
• Rota Die Pty Ltd
• ACN 089523919 CCC Pty Ltd
• Orora Closure Systems Pty Ltd
• Envirocrates Pty Ltd
• ACN 002693843 Box Pty Ltd
Under the terms of ASIC Corporations (Wholly Owned Companies) Instrument 2016/785, those wholly owned subsidiaries that have
entered into the Deed are granted relief from the Corporations Act 2001 requirement to prepare and lodge audited Financial Reports and
Directors’ Reports.
Financial statements for the Orora Limited Deed of Cross Guarantee
The consolidated income statement, statement of comprehensive income and statement of financial position of the entities party to the
Deed for the year ended and as at 30 June, are set out below.
Consolidated income statement, statement of comprehensive income and retained earnings
$ million
Cont inuing Operat ions
Sales revenue
Profit from operat ions
Finance income
Finance expenses
Net finance cost s
Profit before relat ed income t ax expense(1)
Income t ax expense
Profit from cont inuing operat ions
Discont inued Operat ions
Loss from discont inued operat ions, net of t ax(2)
Profit for t he financial period
Ot her comprehensive income/ (expense)
It ems t hat may be reclassified t o profit or loss:
Cash flow hedge reserve
Unrealised gains on cash flow hedges, net of t ax
Realised gains t ransferred t o profit or loss, net of t ax
Ot her comprehensive income, net of t ax
Tot al comprehensive income for t he financial period
Tot al comprehensive income/ (expense) for t he financial period at t ribut able t o:
Cont inuing operat ions
Discont inued operat ions
Tot al comprehensive income for t he financial period
Ret ained profit s at beginning of financial period
Profit for t he financial period
Dividends recognised during t he financial period
Ret ained profit s at end of t he financial period
2023
2022
875.2
226.0
0.7
(23.5)
(22.8)
203.2
(15.4)
187.8
-
187.8
13.6
(12.5)
1.1
188.9
188.9
-
188.9
812.2
187.8
(143.7)
856.3
777.9
215.6
0.2
(7.4)
(7.2)
208.4
(30.8)
177.6
(2.4)
175.2
7.0
(1.8)
5.2
180.4
182.8
(2.4)
180.4
771.8
175.2
(134.8)
812.2
(1) Profit from operations in the current period includes a significant item of expense of $26.0 million (after tax $18.2 million) relating to additional expected costs
associated with the decommissioning of the Petrie site. Refer to note 1.2 for further details of the significant item.
(2) On 30 April 2020, the Group completed the sale of its Australasian Fibre business. Accordingly, the financial results of this business are presented separately as a
discontinued operation in both the current and comparative period. Further details regarding the sale of the Australasian Fibre business can be found in the 2021
and 2020 Annual Reports.
134
ORORA LIMITED ANNUAL REPORT 2023
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
Consolidated balance sheet
$ million
Current asset s
Cash and cash equivalent s
Trade and ot her receivables
Invent ories
Derivat ives
Ot her current asset s
Tot al current asset s
Non-current asset s
Invest ment s in cont rolled ent it ies
Propert y, plant and equipment
Right -of-use asset s
Goodwill and int angible asset s
Derivat ives
Ot her non-current asset s
Tot al non-current asset s
Tot al asset s
Current liabilit ies
Trade and ot her payables
Borrowings
Lease liabilit ies
Derivat ives
Current t ax liabilit ies
Provisions
Tot al current liabilit ies
Non-current liabilit ies
Ot her payables
Borrowings
Lease liabilit ies
Derivat ives
Deferred t ax liabilit ies
Provisions
Tot al non-current liabilit ies
Tot al liabilit ies
NET ASSETS
Equit y
Cont ribut ed equit y and t reasury shares
Reserves
Ret ained earnings
TOTAL EQUITY
2023
2022
0
4.9
124.6
351.7
9.3
10.4
500.9
567.7
625.5
12.1
19.5
9.2
24.0
18.7
129.0
303.4
15.8
10.2
477.1
567.7
509.9
12.0
22.1
1.1
19.7
1,258.0
1,132.5
1,758.9
1,609.6
294.3
-
4.3
2.2
-
48.0
348.8
12.7
469.5
11.0
1.6
25.7
10.5
531.0
879.8
357.9
35.0
3.2
1.9
1.2
54.3
453.5
4.9
295.0
12.4
-
5.2
9.5
327.0
780.5
879.1
829.1
(38.8)
61.6
856.3
879.1
(37.3)
54.2
812.2
829.1
ORORA LIMITED ANNUAL REPORT 2023
135
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
Section 7: Other notes to the financial statements (continued)
7.6. Related party transactions
The related parties identified by the Directors include investments and Key Management Personnel.
Details of investment in subsidiaries are disclosed in note 6.1 and details of the Orora Employee Share Trust are provided in note 6.2. The
Group does not hold any interests in associates or joint ventures.
7.6.1. Parent entity
The ultimate parent entity within the Orora Group is Orora Limited, which is domiciled and incorporated in Australia. Transactions with
entities in the wholly-owned Orora Group are made on normal commercial terms and conditions and during the year included:
• purchases and sales of goods and services;
• advancement and repayment of loans;
interest expense paid by Orora Limited for money borrowed;
•
transfer of tax related balances for tax consolidation purposes;
•
• provision of transactional banking facilities on behalf of subsidiaries;
• payment and receipt of intercompany dividends; and
• provision of payroll, superannuation, share-based remuneration and managerial assistance.
7.6.2. Other related parties
Contributions to superannuation funds on behalf of employees are disclosed in note 1.5.
7.7. Key Management Personnel
Key Management Personnel (KMP) consists of Orora Limited Executive and Non-Executive Directors and the Chief Financial Officer. Key
Management Personnel compensation is as follows:
$ t housand
Short -t erm employee benefit s
Long-t erm employee benefit s
Post employment benefit s
Share-based payment expense
2023
4,079
58
146
1,269
5,552
2022
4,386
66
140
1,074
5,666
Detailed remuneration disclosures are provided in the Remuneration Report section of the Directors’ Report. Apart from the information
disclosed in this note, no Director has entered into a material contract with the Group this financial year and there were no material
contracts involving Directors’ interests existing at year end (2022: nil).
At 30 June 2023, no individual KMP or related party holds a loan with the Group (2022: nil).
136
ORORA LIMITED ANNUAL REPORT 2023
Notes to the
financial statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023
7.8. New and amended accounting standards and interpretations
7.8.1. Adopted from 1 July 2022
All new and amended Australian Accounting Standards and Interpretations mandatory from 1 July 2022 to the Group have been adopted,
including:
• AASB 2020-1 and AASB 2020-6 Amendments to Australian Accounting Standards – Classification of Liabilities as Current or Non-
Current
• AASB 2020-3 Amendments to Australian Accounting Standards – Annual Improvements 2018-2020 and Other Amendments
The Group has no transactions that are affected by the newly effective standards and interpretations, or the Group’s accounting policies
are already consistent with the new requirements. As such the adoption of the amending standards has not resulted in a change to the
financial results or position of the Group.
7.8.2. Issued but not yet effective
AASB 2023-1 Amendments to Australian Accounting Standards – Supplier Finance Arrangements
AASB 2023-1 introduces additional disclosures in respect of supplier finance arrangements that are aimed to enable users of the
financial statements to assess how supplier finance arrangements affect an entity’s liabilities, cash flows and exposures to liquidity risk.
The amendments will require the following additional information to be provided:
•
•
•
•
the terms and conditions of the arrangements,
the carrying amount of the liabilities that are part of the arrangements,
the carrying amounts of those liabilities for which the suppliers have already received payment from the finance providers,
the range of payment due dates and the effect of non-cash changes.
The amendments are applicable from 1 January 2024, with early adoption permitted. At the date of adoption, the Group will be required to
provide the additional information required by the amendments.
AASB 2023-2 Amendments to Australian Accounting Standards – International Tax Reform – Pillar Two Model Rules
AASB 2023-2 introduces a mandatory temporary exception to accounting for deferred taxes arising from the implementation of the Pillar
Two model rules published by the Organisation for Economic Co-operation and Development (OECD). The amendments also introduce
targeted disclosure requirements in respect of an entity’s exposure to incomes taxes arising from the reform particularly during periods
where legislation implementing the rules is yet to come into effect across impacted jurisdictions.
The mandatory exception to the deferred tax accounting and the additional disclosures regarding the potential exposure to top-up taxes
under the Pillar Two model rules are applicable to annual reporting periods beginning on or after 1 January 2023 that end on or after 30
June 2023, early adoption is permitted.
The Group operates in seven key countries, and all these countries have statutory corporate tax rates more than 15%. The Group is in the
process of undertaking a preliminary assessment in preparation for complying with the Pillar Two model rules. At the date of this report
this assessment is not yet complete however the analysis prepared does indicate that the Group is unlikely to have any potential
exposure to Pillar Two top-up taxes.
In addition, the following new and amending accounting standard issued by the AASB that are not yet effective and may impact the
Group in the period of initial application. They are available for early adoption but have not been applied in preparing this financial report.
The following amending standards are not expected to have a significant impact upon the Groups’ consolidated financial statements:
• AASB 2021-2 Amendments to Australian Accounting Standards – Disclosure of Accounting Policies and Definition of Accounting
Estimates
• AASB 2021-5 Amendments to Australian Accounting Standards – Deferred Tax related to Assets and Liabilities arising from a Single
Transaction
• AASB 2022-1 Amendments to Australian Accounting Standards – Initial Application of AASB 17 and AASB 9 – Comparative
Information
• AASB 2022-5 Amendments to Australian Accounting Standards - Lease Liability in a Sale and Leaseback
• AASB 2022-6 Amendments to Australian Accounting Standards - Non-current Liabilities with Covenants
ORORA LIMITED ANNUAL REPORT 2023
137
Directors’
declaration
1.
In the opinion of the Directors of Orora Limited (the Company):
(a)
the financial statements and notes, and the Remuneration Report within the Directors’ Report, are in accordance with the
Corporations Act 2001 including:
i.
ii.
complying with Australian Accounting Standards, the Corporations Regulations 2001 and other mandatory
professional reporting requirements; and
giving a true and fair view of the Orora Group’s financial position as at 30 June 2023 and its performance for the year
ended on that date; and
(b)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and
payable.
2. Within the notes to the financial statements it is confirmed that the financial statements also comply with International Financial
Reporting Standards as issued by the International Accounting Standards Board.
3. At the date of this declaration, there are reasonable grounds to believe that the Company and the consolidated entities identified in
note 7.5 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 between the Company and those consolidated entities pursuant to ASIC Corporations (Wholly-Owned Companies)
Instrument 2016/785.
4. The Directors have been given the declarations required by section 295A of the Corporations Act 2001 by the Managing Director and
Chief Executive Officer and Chief Financial Officer for the financial year ended 30 June 2023.
Signed in accordance with a resolution of the Directors.
A R Sindel
Chair
17 August 2023
138
ORORA LIMITED ANNUAL REPORT 2023
Independent Auditor’s Report
to the members of Orora Limited
ORORA LIMITED ANNUAL REPORT 2023
139
Independent Auditor’s Report
to the members of Orora Limited
140
ORORA LIMITED ANNUAL REPORT 2023
Independent Auditor’s Report
to the members of Orora Limited
ORORA LIMITED ANNUAL REPORT 2023
141
Independent Auditor’s Report
to the members of Orora Limited
142
ORORA LIMITED ANNUAL REPORT 2023
Independent Auditor’s Report
to the members of Orora Limited
ORORA LIMITED ANNUAL REPORT 2023
143
Statement
of shareholdings
Statement pursuant to Australian Securities Exchange official list requirements.
Top 20 shareholders as at 28 July 2023
Rank
Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Total
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
CITICORP NOMINEES PTY LIMITED
NATIONAL NOMINEES LIMITED
BNP PARIBAS NOMS PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CITICORP NOMINEES PTY LIMITED
BNP PARIBAS NOMINEES PTY LTD
PACIFIC CUSTODIANS PTY LIMITED
PACIFIC CUSTODIANS PTY LIMITED
BKI INVESTMENT COMPANY LIMITED
NETWEALTH INVESTMENTS LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
NAVIGATOR AUSTRALIA LTD
BNP PARIBAS NOMINEES PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
BNP PARIBAS NOMS PTY LTD
THE MANLY HOTELS PTY LTD
NEWECONOMY COM AU NOMINEES PTY LIMITED
BNP PARIBAS NOMS (NZ) LTD
Substantial shareholders as at 28 July 2023
Holder
Conner, Clark & Lunn
The Vanguard Group, Inc.
Shares held % of issued capital
289,402,303
136,751,268
130,590,139
54,265,022
15,221,685
9,149,987
7,644,009
6,136,919
3,888,738
3,492,519
2,473,000
2,386,510
2,185,014
2,168,715
1,878,000
1,643,323
1,333,423
1,258,507
1,149,391
1,069,948
34.23
16.18
15.45
6.42
1.80
1.08
0.90
0.73
0.46
0.41
0.29
0.28
0.26
0.26
0.22
0.19
0.16
0.15
0.14
0.13
674,088,420
79.74
Last Notice of
Substantial
Shareholding
No. of Shares
9 February 2023
42,901,137
18 December 2018
48,284,772(1)
(1)
Calculated based on number of shareholdings reported in the latest notice to ASX, on a basis of each five shares to be consolidated to four shares, fractions
rounded up to the next whole number.
144
ORORA LIMITED ANNUAL REPORT 2023
Statement
of shareholdings
Distribution of shareholdings
Fully paid ordinary shares as at 28 July 2023
Range
100,001 and over
10,001 to 100,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
Unmarketable parcels
No. of holders.
No. of shares % of issued capital
112
3,295
4,611
17,105
14,758
39,881
1,763
695,137,132
68,969,424
32,794,333
41,232,718
7,218,183
845,351,790
82,171
82.23
8.16
3.88
4.88
0.85
100.00
0.01
Voting rights
Votes of shareholders are governed by Rules 17 and 18 of the Company’s Constitution. In broad summary, but without prejudice to the
provisions of these rules, on a show of hands every shareholder present shall have one vote and upon a poll every shareholder present, or
by proxy or attorney, shall have one vote for every fully paid share held.
Unquoted equity securities — Issued pursuant to various
Orora Limited Employee Incentive Plans as at 28 July 2023
Unquoted equity securities
Options over ordinary shares – exercise price $2.08
Options over ordinary shares – exercise price $3.58
Rights
No. participating
No. of securities
1
6
41
226,567
1,000,518
5,034,740
ORORA LIMITED ANNUAL REPORT 2023
145
Five-year historical
information
Results shown for all operations before significant items except where indicated[1]
$ million (except where indicated)
For the years ended 30 June
Orora Consolidated Results
Sales revenue
Operating profit before interest and tax pre significant items
Operating profit before tax pre significant items
Net operating profit pre significant items
Net operating profit after significant items
Basic earnings per share (cents) pre significant items
Basic earnings per share (cents) after significant items
Dividend and distribution
Dividend per ordinary share (cents)
Dividend franking (% p.a.)
Dividend cover (times)
Financial Ratios
Net tangible asset backing per share ($)
Net EBITDA interest cover pre significant items (times)
Gearing (net debt/net debt and shareholders' equity) (%)
Return on average funds employed (%)[9]
Financial Statistics
Income from dividends and interest
Depreciation and amortisation provided during the year
Net finance costs
Cash flow from operations
Capital expenditure and acquisitions
Balance Sheet Data as at 30 June
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Shareholders' equity
Contributed equity and treasury shares
Reserves
Retained profits
Total shareholders' equity
Other data as at 30 June:
Fully paid shares (000's)
Orora share price
- year's high ($)
- year's low ($)
- close ($)
Market capitalisation
Employee numbers
Number of shareholders
2023
2022
2021
2020
2019
4,291.3
4,090.8
3,538.0
4,659.1
4,761.5
320.5
273.0
203.0
184.8
24.1
21.9
143.4
17.5
-
10.6
0.41(5)
9.3
49%
21.8%
1.4
123.0
47.5
250.3
189.7
1,257.7
1,544.1
2,801.8
1,084.9
916.7
2,001.6
800.2
(38.8)
167.5
671.5
800.2
285.5
258.8
187.1
184.7
21.7
21.4
134.8
16.5
-
11.2
0.33[6]
15.1
46%
22.4%
0.6
117.9
26.7
257.6
92.2
1,307.7
1,401.1
2,708.8
1,122.3
854.8
1,977.1
731.7
(37.3)
138.9
630.1
731.7
249.1
216.3
156.7
135.8
16.9
14.6
113.0
14.0
-
9.7
0.37[7]
11.2
37%
19.9%
0.2
120.2
32.8
270.6
59.0
980.8
1,343.8
2,324.6
806.3
749.7
1,556.0
768.6
80.8
107.6
580.2
768.6
288.2
230.4
167.3
238.9
17.4
24.8
606.6[2]
49.3[2]
30%/50%[3]
4.8
0.60[8]
7.6
22%
11.9%
0.6
149.2
57.8
17.7
174.3
1,055.4
1,442.8
2,498.2
817.1
650.9
1,468.0
1,030.2
333.6
139.2
557.4
335.2
295.8
217.0
161.2
18.0
13.4
156.7
13.0
30%[4]
12.4
0.85
11.9
29%
13.0%
0.4
132.9
39.4
297.9
334.3
1,446.2
2,471.2
3,917.4
1,160.6
1,113.1
2,273.7
1,643.7
484.1
164.7
994.9
1,030.2
1,643.7
845,352
845,352
890,240
965,363
1,206,685
3.70
2.84
3.29
2,781.2
4,657
39,966
4.00
3.06
3.65
3,085.5
4,820
40,646
3.33
2.23
3.33
2,964.5
3,768
44,653
3.45
2.54
2.54
2,452.0
3,776
52,694
3.69
2.89
3.24
3,909.7
7,221
55,087
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
The financial information in the above table is presented on a total operations basis and therefore the period FY19-FY20 includes the financial results of the
Australasian Fibre business that was divested in April 2020.
A special dividend of 37.3 cents, 50% franked, was paid on 29 June 2020.
The FY20 final dividend was unfranked, FY20 special dividend was 50% franked, FY20 interim dividend was 30% franked.
The FY19 final dividend was 30% franked, FY19 interim dividend was 50% franked.
The net tangible asset backing per ordinary share is inclusive of right-of-use assets and liabilities. This measure would reduce to $0.20 if right-of-use assets
were excluded and right-of-use liabilities were included in the calculation.
The net tangible asset backing per ordinary share is inclusive of right-of-use assets and liabilities. This measure would reduce to $0.13 if right-of-use assets
were excluded and right-of-use liabilities were included in the calculation.
The net tangible asset backing per ordinary share is inclusive of right-of-use assets and liabilities. This measure would reduce to $0.15 if right-of-use assets
were excluded and right-of-use liabilities were included in the calculation.
The net tangible asset backing per ordinary share is inclusive of right-of-use assets and liabilities. This measure would reduce to $0.38 if right-of-use assets
were excluded and right-of-use liabilities were included in the calculation.
Return on average funds employed (RoAFE) is calculated as EBIT divided by average funds employed.
146
ORORA LIMITED ANNUAL REPORT 2023
Shareholder
information
Shareholder enquiries
Shareholders seeking information about
their shareholding or dividends should
contact Orora’s Share Registry, Link
Market Services Limited (Link). Contact
details can be found on the inside back
cover of this report. For security and
privacy reasons, before contacting the
Share Registry, shareholders should
have their Securityholder Reference
Number (SRN) or Holder Identification
Number (HIN) available.
Shareholders can also access a wide
variety of holding information via Link’s
website:
www.linkmarketservices.com.au and
make changes either online or by
downloading a form.
These changes include:
• choosing the preferred method of
receiving the Annual Report, Notice
of Meeting and payment
statements
• checking holding balances
• updating address details
• providing an email address
• updating or providing bank details
• electing to participate in the DRP.
Stock Exchange listing
Orora Limited shares are listed on the
Australian Securities Exchange (ASX)
and are traded under the code ORA.
Annual General Meeting
The Annual General Meeting of Orora
Limited will be held at 10.30am
(Melbourne time: AEST) on
19 October 2023.
Formal notice of the Meeting is sent
to each shareholder.
Orora publications and
communications
The Annual Report is mailed in
mid-September only to those
shareholders who have previously
requested to receive hard copies of the
document.
If you have previously requested a
printed copy of the Annual Report, but
no longer require it in printed form,
please update your preference online
with Link Market Services or advise Link
in writing. To view this report online, or
to download a copy, visit Orora’s
website: www.ororagroup.com.
Orora’s website, www.ororagroup.com
offers shareholders details of the latest
share price, announcements made to
the ASX, including half-year and full-
year results, investor and analyst
presentations and many other
publications that may be of interest.
Dividend Reinvestment Plan
(DRP)
The DRP provides shareholders in
Australia and New Zealand with the
opportunity to reinvest their dividends
to acquire additional Orora shares.
Shares acquired under the DRP rank
equally with existing fully paid ordinary
shares.
Full details of the DRP and a DRP
election form are available from Orora’s
Share Registry or from Orora’s website.
Dividends
Orora normally pays dividends around
April and October each year.
Shareholders should retain all
remittance advice relating to dividend
payments for tax purposes.
1. Direct deposit to a bank,
building society or credit
union account
Shareholders can receive their
dividends directly into a nominated
bank, building society or credit union
account held in Australia, the United
States of America or New Zealand.
The currency selected must match the
location of the financial institution. For
example, NZD can only be paid into an
account held with a financial institution
located in New Zealand.
Shareholders can provide or update
banking details online at Orora’s
Share Registry at:
www.linkmarketservices.com.au.
2. Cheque payable to
international shareholders
(other than New Zealand)
International shareholders (other than
shareholders domiciled in New Zealand)
who do not have an account with an
Australian or United States financial
institution will receive their dividends
by Australian dollar cheque.
Lost or stolen cheques should be
reported immediately in writing to
Orora’s Share Registry to enable a
‘stop payment’ and replacement.
In addition, eligible shareholders can
choose to have their dividend earnings
reinvested in Orora shares.
ORORA LIMITED ANNUAL REPORT 2023
147
Corporate
directory
Orora Limited
Registered office and principal
administrative office:
109–133 Burwood Road
Hawthorn Victoria 3122
Australia
Telephone: +61 3 9116 1711
Website: www.ororagroup.com
ABN: 55 004 275 165
Chair
Mr A R Sindel
Managing Director and
Chief Executive Officer
Mr B P Lowe
Chief Financial Officer
Mr S C Hughes
Company Secretary
Ms A L Stubbings
Auditors
KPMG
Tower Two
Collins Sqaure
727 Collins Street
Melbourne Victoria 3008
Australia
Postal Address:
GPO Box 2291U
Melbourne Victoria 3001
Australia
Telephone: +61 3 9288 5555
Facsimile: +61 3 9288 6666
DX: 30824 Melbourne
Website: www.kpmg.com.au
ABN: 51 194 660 183
Orora share registry
Link Market Services Limited
Street address:
Tower 4, Collins Square
727 Collins Street
Melbourne Victoria 3008
Australia
Postal address:
Locked Bag A14
Sydney South NSW 1235
Australia
Telephone: +61 1300 554 474
(toll free within Australia)
Facsimile: +61 2 9287 0303
Email:
orora@linkmarketservices.com.au
Website:
www.linkmarketservices.com.au
Financial calendar 2023-2024
Financial year 2023 (FY23) ends
Announcement of full-year results for FY23
Ex-dividend date for final dividend FY23
Record date for final dividend FY23
Dividend payment date for FY23 final dividend
Annual General Meeting
Financial half-year 2024 ends
Announcement of interim results
for financial year 2024 (FY24)
Ex-dividend date for interim dividend FY24
Record date for interim dividend FY24
Dividend payment date for FY24 interim dividend
Financial year 2024 (FY24) ends
30 June 2023
17 August 2023
1 September 2023
4 September 2023
9 October 2023
19 October 2023
31 December 2023
February 2024
March 2024
March 2024
April 2024
30 June 2024
148
ORORA LIMITED ANNUAL REPORT 2023
If any amendments to
this Annual Report
are required, they
will be disclosed to
the ASX and posted on
Orora’s website under
the Investor section at
ororagroup.com/investors
ororagroup.com