More annual reports from Pact Group Holdings Ltd:
2023 ReportPeers and competitors of Pact Group Holdings Ltd:
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Leading the
Circular Economy
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Contents
Overview
Pact Group at a Glance
Our Capabilities
Financial and Operational Highlights
A View from the Chairman
A Message from the CEO
Sustainability
Our Awards
Review of Operations and Financial Performance
Overview of Business Strategy
Operational and Financial Summary
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Governance
Corporate Governance Overview
Financial Reports
Directors' Report
— Remuneration Report
Auditor's Independence Declaration
Financial Statements
Directors' Declaration
Independent Auditor's Report
Shareholder Information
FY22 Shareholder Calendar
Corporate Directory
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Pact's Vision is to lead the Circular Economy through Packaging, Reuse and Recycling solutionsPerformanceGovernanceFinancial ReportsShareholder Information
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Pact Group
At a Glance
Operating across the whole Circular Economy,
we deliver a diversity of smarter scaled solutions
to a huge range of trusted brands.
Our capabilities
Packaging
Reuse
Recycling
Contract Manufacturing
>100
operating sites
15
countries
7,000+
customers
8 years recognised as
one of Australasia’s Most
Innovative Companies1
6,000
employees,
casuals and
contractors
1 Australian Financial Review Most Innovative Companies List 2013, 2014, 2015, 2016, 2017, 2018, 2019, 2020.
Our Capabilities
A leader in the Circular Economy
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• A leader in sustainable packaging, differentiated through manufacturing,
technical and innovation capability and access to recycled materials
• A scaled Asian platform, well positioned for growth
• A leader in plastics recycling in Australia and New Zealand, building a
network of recycling infrastructure
• An integral service provider to major supermarkets and retailers,
supplying sustainable and efficient supply chain solutions through
best-in-class reuse platforms and technology
PerformanceGovernanceFinancial ReportsShareholder Information
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Financial and
Operational
Highlights
Underlying EBIT
up 10% to $183M
Underlying NPAT
up 28% to $94M
EBIT Margins up
1.2% to 10.4%
Net debt reduced
and gearing
improved to 2.4x
(prior year 2.6x)
ROIC improved to
11.8% (prior year
10.6%)
Execution of
strategy to lead the
Circular Economy
gaining momentum
Total dividends
11.0 cents per
share (65%
franked) — up from
3.0 cents per share
in the prior year
Solid financial and operating performance
• Strict management of COVID-19 risks, with no material disruption to operations
• Organic growth emerging in packaging, with strong volumes in closures
• Improved margins, with disciplined management of raw material input costs
• Strong organic growth in reuse platform, with USA reuse services performing above
expectation
• Balance sheet strengthened
• Dividend payout increased
5 Year Financial
History
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7
4
1
,
4
7
6
1
,
4
3
8
1
,
9
0
8
1
,
FY17
FY18
FY19
FY20
3%
Revenue $m
2
6
7
1
,
FY21
3
3
2
7
3
2
1
3
2
4
3
2
2
0
3
5
1
3
FY17
FY18
FY19
FY20 Exc
AASB16
FY20 Inc
AASB16
FY21
9
6
1
5
6
1
8
4
1
1
5
1
6
6
1
3
8
1
FY17
FY18
FY19
FY20 Exc
AASB16
FY20 Inc
AASB16
FY21
0
0
1
5
9
7
7
1
8
3
7
4
9
FY17
FY18
FY19
FY20 Exc
AASB16
FY20 Inc
AASB16
FY21
4%
Underlying
EBITDA $m
10%
Underlying
EBIT $m
28%
Underlying
NPAT $m
PerformanceGovernanceFinancial ReportsShareholder Information
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A View from
the Chairman
Dear Fellow Shareholders
Sustainability
On behalf of the Board of Directors of Pact Group, it is
my pleasure to present to you our Annual Report for the
year ended 30 June 2021.
FY21 Overview
I am pleased to report another successful year for your
Company. I am delighted with the progress we have
made in FY21. The Group delivered strong earnings
growth, improved margins, a robust cash performance
and lower net debt. We made great progress in our
strategy and we continued to manage the challenges
arising from COVID-19 to Pact, our suppliers, and our
customers. Our performance in the year demonstrates
the capability and commitment of our people to
maintaining the safe and efficient operation of our
facilities and diligently supporting the needs of our
customers.
Our Values
Strong values are the foundation of all successful
organisations and at Pact we have recently launched
our new Pact Group Values, focusing on providing a safe,
inclusive, and inspiring workplace for everyone and a
high-performance culture.
Our values are:
• Safety — at Pact we will make safety our priority and
take pride in our workplace
• Customer — we will win when our customer wins, and
we will deliver when and what we say
• Integrity — we will strive for results with honesty and
integrity
• Innovation — being innovative is in Pact’s DNA and will
drive the Circular Economy
• Respect— we will create a better workplace through
respect and collaboration
As an organisation we are committed to living by our
Pact values to ensure we maintain our responsibilities to
our customers, our people, and our planet.
Our Vision
At Pact, our vision is to Lead the Circular Economy
through sustainable Packaging, Reuse and Recycling
solutions. We are targeting top quartile Total Shareholder
Returns and the inclusion of 30% recycled content
across our portfolio by 2025. A Circular Economy is a
systemic approach to economic development designed
to benefit businesses, society, and the environment. It
is regenerative and aims to gradually decouple growth
from the consumption of finite resources, keeping
products and services in use for longer and reducing the
environmental impact.
Consumers are increasingly demanding sustainable
packaging and locally sourced recycled content.
Our strategy has clear initiatives that underpin the
development of infrastructure, manufacturing and
technical capability that will enable our customers to
transition to recycled content and other sustainable
packaging alternatives.
Sustainability underpins our vision and our strategy and
is a major consideration in all of our business decisions.
Through our End of Waste Promise we are committed to
Reduce, Reuse and Recycle, and we have continued to
make good progress in relation to these commitments.
• Reduce — Eliminate all non-recyclable packaging that
we use
Since 2018 we have reduced our use of non-recyclable
resins by 34% or more than 3,000 tonnes.
• Reuse — Have solutions to reduce, reuse and recycle
all secondary packaging in supermarkets.
Since 2018 we have grown use of returnable produce
crates by 12%, reducing the use of single use corrugate
secondary packaging by 2,700 tonnes. Our retail
accessories business is also now reusing 1.2 million
garment hangers each day through global retailers.
• Recycle — offer 30% recycled content across our
packaging portfolio.
Pact is currently recycling 33,400 tonnes per annum —
59% of our 2025 target. In addition, our products in total
are now averaging 8% recycled content and we are on
track to increase this in the next 12 months.
A national network of plastics recycling infrastructure
is essential to the Circular Economy and to meeting
our sustainability targets. I am delighted to report that
Pact is leading the way in this area, with our industry
and government partners. In addition to our new plant
in Albury, we have announced plans with our partners
to construct two further state-of-the-art recycling
facilities in Australia which will significantly increase
the local processing capability for recycled plastics
collected from kerbside and Container Deposit Schemes,
creating food grade recycled resins for use in packaging.
The development
of this industry is strongly aligned to our growth strategy
and will also create thousands of jobs and help to
support the national manufacturing industry.
Pact is a signatory to the Australian Packaging
Covenant Organisation (APCO). APCO is a
co-regulatory, not-for-profit organisation
partnering with government and industry
to reduce the environmental impact of
packaging in Australian communities.
APCO is tasked with bringing government,
industry, and community groups together
to fund projects that assess packaging
sustainability issues. APCO 2025
targets will require up to 30% recycled
content in plastic packaging and our
strategy is aligned with that target.
Pact has also joined the ANZPAC
Plastics Pact and the UK Plastics
Pact, both part of the Ellen
MacArthur Foundation’s global
Plastics Pact network. These
are collaborative agreements
that bring together industry
stakeholders with shared knowledge, investment and
industry led innovation. ANZPAC is the first in the
Oceania region and second regional Plastics Pact
to become part of the network and will target the
implementation of solutions tailored to Australia, New
Zealand, and the Pacific Islands region to take action in
creating a Circular Economy for plastics.
Pact is committed to continually working to improve the
sustainability of our packaging through collaboration,
improved design, and the use of more environmentally
friendly materials. Most of our customers have also
set ambitious objectives for 2025 for increased use
of recycled content in plastic packaging. Through our
investment in recycling infrastructure and technical
and innovation capability, Pact is well positioned to be
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a partner of choice in this area. We will work with like-
minded partners to cut waste, promote sustainability,
and share knowledge to change the planet for the better.
Board Changes
I would like to take this opportunity to highlight a change
to the Board of Directors this year. Following our 2020
AGM, Mr Ray Horsburgh retired as a Director of the
Company. The Board and I would like to thank Ray for
his invaluable contribution since joining the Board in
October 2015 and wish him all the best for the future.
Dividend
As part of the Group’s capital allocation model, the
Board has a medium-term target to pay dividends
greater than 40% of Underlying Net Profit After Tax.
In line with this policy and recognising the strong
operating and cash performance in FY21, I am delighted
to confirm that the Board has determined to pay an
increased final dividend of six cents per share, franked
to 65%, in respect of the year ended 30 June 2021. This
will take total dividends for the year to 11 cents per share
compared to three cents per share in the prior year.
Thank You
On behalf of the Board of Directors and myself, I would
like to say thank you to shareholders and to all our
customers, suppliers and other stakeholders for your
continued investment and support of Pact. Thank you
as well to our dedicated management team and most
importantly to all our people around the Group for
their passion and commitment in driving our strategy
forward and delivering a strong operational and financial
performance.
Pact is well positioned to continue to manage challenges
in the year ahead and deliver on our promises. I am
confident that Pact’s strategy positions the Company
well to deliver long-term value for all stakeholders.
Thank you
Raphael Geminder
Non-Executive Chairman
At Pact, our vision is to lead
the Circular Economy through
innovative Packaging, Reuse
and Recycling solutions.
PerformanceGovernanceFinancial ReportsShareholder Information
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A Message
from the
CEO
Dear Shareholder
We delivered a very pleasing performance in FY21,
with solid growth in underlying earnings and margins
despite continued market uncertainty and disruption.
These results reflect the great progress we are
making in transforming Pact as we drive toward our
strategic vision to lead the Circular Economy. Through
our strategy we have redefined Pact. Today we are
a sustainable packaging solutions provider, firmly
recognised by industry, our customers and government
as leaders in this space. We have strong experience
and capability in packaging, recycling, and reuse
solutions and as plastics sustainability transforms our
industry, our unique and integrated capability provides a
significant value creation opportunity.
We have disciplined financial management and
ambitious targets for shareholder value creation, and
I believe that our results are illustrating the great work
our people are doing.
Group Performance & Business Overview
In FY21 I am pleased to report that we delivered solid
improvements across all key metrics. Underlying EBIT
of $182.9 million was 10% ahead of the prior year and
underlying NPAT of $93.5 million was up 28%. Volumes
in our key segments were ahead and the business
delivered higher margins and benefits from improved
operational efficiency. The resilience of our portfolio
was demonstrated once again in the face of significant
challenges from the ongoing COVID-19 pandemic,
volatility in raw material prices and disruption to
international freight. Free cash flow generated by the
business was significantly improved and we were able
to further reduce net debt and improve our gearing and
return on invested capital (ROIC) metrics. Gearing at
2.4x (excluding the impact of lease accounting) was well
within our targeted range of less than 3.0x and ROIC
at 11.8% was 1.2% up on the prior year as we progress
towards our target of 13.5%. Pleasingly, we increased
dividends to our shareholders.
Our Packaging and Sustainability business delivered
strong organic volume growth in closures, supported by
the consolidation of our platform in Asia and despite
the challenges of the COVID-19 pandemic in the
region. The business also benefitted from
improved demand in the agricultural
and industrial sectors in Australia
and New Zealand and contract
wins supported by our Circular
Economy and sustainability
credentials. Margins were well
managed despite increased
input costs in the second half.
The Materials Handling and
Pooling business achieved
strong organic growth in
hanger reuse services along
with continued robust
pooling volumes as we
continued to increase
penetration in the fresh
produce sector.
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Our strategy is clear and its
delivery is on track. Improvements
in the Group’s performance have
been underpinned by the delivery
of strategy and I am pleased
with the significant progress
we are making.
In our Contract Manufacturing segment demand for
nutraceutical products in the health and wellness
sector improved, and we benefited from continued
improvement in platform efficiency. However earnings
were lower as volumes in the hygiene category
normalised, cycling out elevated COVID-19 related
demand in the prior period.
Safety & People
Our values are led by safety. It is extremely important
to me that we are providing a workplace that is safe
both physically and mentally, and we remain committed
to targeting zero harm. Our Lost Time Injury Frequency
Rate was 4.2 in FY21, slightly higher than FY20 but
with a reduction in the severity of incidents. The Group
continues to focus on safety, culture and new processes
to drive improvement in our safety performance.
COVID-19 has continued to present significant
challenges across our operations in FY21, particularly
in Asia. Strict health and safety protocols have been
maintained at all facilities to protect employees and the
community, with all known and potential cases managed
within strict guidelines. It is a testament to our people,
teamwork, and risk management processes that we have
protected our sites and employees and experienced no
material impact to our operations in FY21. Vaccination is
also a key priority and we have provided funding support
for vaccine programs in Asia and incentives in Australia
and New Zealand through our ProudToBeVaxxed program.
The success of our business is clearly linked to the
accomplishments of our people. We have a strong and
diverse leadership and continually seek to promote a
high-performance culture in our business, empowering
our people and providing the framework to attract,
engage and retain talented people. I am extremely proud
of all our people and particularly for the way they have
responded to the ongoing challenges presented by the
COVID-19 pandemic and also for embracing our values
and driving our strategy forward. I would like to take this
opportunity to thank all our people around the Group
for their hard work and dedication in a challenging but
successful year.
Strategy
Our strategy is clear and its delivery is on track.
Improvements in the Group’s performance have been
underpinned by the delivery of strategy and I am
pleased with the significant progress we are making.
Our near-term priorities are clear:
• Deliver margin growth in Australian packaging –
returning our margins to global industry standard.
• Lead plastics recycling in ANZ — building scaled
industry solutions for high-quality food-grade
recycled resins.
• Deliver value from recycling — building organisational
capability to support transition to recycled content.
• Grow our Asian packaging platform — a regional
leader in caps and closures.
• Continue to grow our pooling and reuse platforms –
including increased penetration in fresh produce crate
pooling and diversification into new categories.
We have made good progress on these initiatives in
FY21, stabilising operations and increasing margins in
our Australian packaging business, announcing plans
to construct two new recycling facilities, which will
complement our new Albury plant and lift recycling
capability in Australia by a further 40,000 tonnes,
and completing the acquisition of Flight Plastics in
New Zealand. This acquisition provides access to local,
high-quality food-grade recycled PET for use in food
packaging. In addition, our recycling capability has
enabled us to win contracts in the dairy and beverage
sector and supply noisewalls with 70% recycled content
to a major Victorian infrastructure project. Our closures
business has also delivered strong organic growth in
FY21 and we saw continued momentum in the growth
and diversification of our pooling and reuse solutions.
The sale process for our Contract Manufacturing
business remains ongoing but has been impacted by
recent COVID-19 related restrictions in New South
Wales. We have a value hurdle for the business that
must be met, and if divestment cannot realise this
expectation, we will retain the business in our portfolio.
We will keep you informed of our progress.
Outlook
In respect of our outlook, we expect further progress in
the delivery of strategy and earnings resilience in FY22.
In our first quarter, demand is expected to be generally in
line with recent trends, though margins will be impacted
by higher raw material and international freight costs.
COVID-19 continues to create market uncertainty.
An update on trading will be provided at the AGM.
The Group has delivered a solid financial performance
in FY21 and a strengthened balance sheet, both
underpinned by the delivery of our strategy. Our strategy
has provided us clarity in Vision and a pathway to deliver
significant long-term value for all stakeholders. This was
my ambition when we undertook our strategy review in
2020 and I am excited at the progress we are making.
The Circular Economy transition is accelerating, with
growing consumer demand for sustainable packaging,
strong government support and legislative changes. I am
proud of the industry leading position Pact is taking in
this exciting period of change.
Thank You
Finally, I would like to take this opportunity to thank
shareholders for your continued support and confidence
in the Company and to thank the Chairman and Board
of Directors for their support and guidance as we have
transformed Pact and driven our strategic vision. I also
reiterate my gratitude to our management team and the
wonderful people across the entire Group who continue
to perform so well in such challenging circumstances.
I am excited for the future of Pact and look forward to
updating you all on further progress in FY22.
Thank you
Sanjay Dayal
Managing Director & Group CEO
PerformanceGovernanceFinancial ReportsShareholder Information
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Sustainability
Sustainability underpins and shapes our core
philosophy and our day-to-day business decisions.
At Pact, we recognise that our business activities have
a direct impact on a wide range of stakeholders and the
communities in which we operate. For us, sustainability
is an ongoing process of considering our material issues
and seeking to improve our sustainability performance.
Our areas of focus are People, Planet and Principles.
Each one comes with its own unique set of goals and
commitments.
People
Pact Group
Sustainability
Principles
Planet
People
Providing a safe and respectful workplace
with highly motivated and engaged talent.
Planet
Reducing our environmental impact.
Principles
Conducting our business responsibly
and investing in programs that positively
impact the communities in which we
operate.
Pact’s annual Sustainability Report represents our
commitment to greater transparency, improved
accountability, and performance. It outlines and reflects
the impact on the Group’s operations and supply
chain, focussing on environmental and social impacts,
alongside our governance and leadership.
This Report is prepared in accordance with the Global
Reporting Initiative (GRI) standards. As a signatory
to the UN Global Compact, this report describes how
we continue to deliver against the United Nations
Sustainable Development Goals (SDGs) relevant to us.
Pact’s Sustainability Report is available on the
Company’s website: www.pactgroup.com/sustainability/
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Our Awards
We are very proud to have received multiple awards
in recognition of our unwavering commitment to
sustainable Packaging, Reuse and Recycling solutions.
In FY21, Pact was named as one of
Australasia’s Most Innovative Companies
for the eighth consecutive year.
SUSTAINABLE PACKAGING
DESIGN OF THE YEAR - RECYCLED CONTENT
Annual Report 2021PerformanceGovernanceFinancial ReportsShareholder Information 13
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Bottle made from
100% recycled
plastic
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Review of
Operations
and
Financial
Performance
OverviewGovernanceFinancial ReportsShareholder Information
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Overview of
Business Strategy
Our vision
Our target
Pact’s vision
is to lead the
Circular Economy
through Reuse,
Recycling and
Packaging solutions
Our target is
top quartile
shareholder returns
and 30% recycled
content across the
portfolio by 2025
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Manufacturing
scale, technical
know-how and
innovation
capability to
use recycled
raw materials in
value-add
products for
customers
Scale and industry leading
capability across the
plastics value chain
Recycling capability
to transform waste
into valuable raw
materials
Recycle
Packaging
Reuse
Reuse solutions
to meet the growing
need for alternatives
to single-use packaging
Our Priorities
Leadership and Capability
Lead plastics recycling in Australia and New Zealand
Scale-up reuse solutions
The Group will seek to deliver long-term value focussing
on three core areas, with six key priorities:
Strong leadership and capability will underpin the
delivery of our strategy.
• Strengthen our core
• A customer-centric operating model has been
— Focus the portfolio and strengthen the balance
implemented, and key leadership positions are in place.
sheet.
— Turnaround and defend our core Australia and
New Zealand consumer packaging businesses.
• Expand reuse and recycling capability
— Lead plastics recycling in Australia and
New Zealand.
— Scale up reuse solutions.
— Differentiate industrial and infrastructure
businesses.
• Leverage regional scale
— Grow our Asian packaging platform.
Key Enablers
The Group has identified the following key enablers to
help achieve our vision:
• A safe, diverse and motivated workforce
• Competitive Manufacturing
• A segment skilled sales capability
• Differentiated solutions through technical expertise
and innovation
• Circular Economy credentials and communication
• Disciplined capital management
• Data-driven decision making
• Capability has been enhanced through:
— Supply chain excellence, driving efficiencies.
— The transformation of functional teams, driving
standardisation, improved data analytics and
operational excellence.
— Leadership development programs.
— External appointments to leadership positions,
challenging the status quo.
— Strong employee alignment, supported by incentive
and share ownership programs.
Execution of Our Strategy
The Group has continued to make solid progress in the
delivery of the strategy in FY21.
Turnaround and defend core Australia and New Zealand
consumer packaging businesses
Operations in our Australian packaging business have
stabilised, and margins are improving. Our new operating
model, strong leadership, and investment in platform
capability, are delivering improvements in operational
performance, safety, quality, and delivery. We have
developed detailed segment strategies which are guiding
our investment decisions and will continue to drive
growth in margins. We are targeting to return margins
in our Australian packaging business to global industry
standard by 2025.
Pact is leading the industry through investment in
scaled solutions and a network of plastic recycling
infrastructure. The Group has announced plans to
construct two new recycling facilities which together
will lift Australia’s recycling capability by 40,000 tonnes.
These facilities will complement our new Albury plant
which will be operational by the end of 2021, and several
other projects are under evaluation. Strong support has
been received from both state and federal governments
with $12.5 million of grants announced in FY21.
There has also been strong demand for offtake
from our new facilities. Customers are increasingly
recognising the need to develop strategic partnerships
to access local recycled content that will be necessary
to deliver ambitious 2025 sustainability targets. To
support our customers in their transition to recycled
content solutions, Pact is also investing in end-to-end
organisational capability. The Group has established
a Demand Team, and is expanding its manufacturing,
technical and innovation capability. The Group’s recycling
credentials are enabling it to differentiate and win in
the market and has already underpinned several new
contracts in the packaging and infrastructure sectors.
Pact completed the acquisition of Flight Plastics NZ
during FY21, and this has provided access to quality,
locally processed food-grade recycled PET for use in
food packaging. Supply of recycled content solutions
through Flight has been a key enabler to contract wins in
the fresh food segment in Australia and New Zealand.
Pact’s market leading reuse platform delivered strong
growth in FY21, driven by the compelling sustainability
and efficiency benefits of reuse. The new USA contract
has performed well, and the business has delivered
new contract wins in Europe. Expansion of facilities
in Bangladesh will help enable future growth in this
business.
In addition, the Group has achieved increased crate
pooling penetration in the fresh produce sector and
diversification into new produce categories. Pooling
opportunities in protein categories are also being
evaluated.
Momentum in the growth of reuse solutions is expected
to continue as customers increasingly seek sustainable
alternatives to single-use packaging.
Grow Asian packaging platform
The closures business delivered strong organic
growth in FY21, supported by the consolidation of our
regional platform. The Group’s focus is now turning
to accelerating growth in Asia and further leveraging
capability in the region.
Annual Report 2021OverviewGovernanceFinancial ReportsShareholder Information 16
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Case Study
Building scaled
industry solutions
for high-quality
food grade
recycled resins
Pact Group is accelerating the plastics Circular
Economy by investing in world class recycling
facilities that unlock the value of plastic waste.
Our consumers are demanding locally sourced and
verified recycled materials. Brand owners have
committed to this as signatories to APCO’s 2025
Targets. To deliver locally processed recycled materials
at scale, Pact has formed cross-industry joint ventures
(JVs) that combine the complementary expertise of
each participant to produce the highest quality, locally
sourced recycled resins. These JVs have received strong
government support.
For Pact, entering into cross industry collaborative
projects de-risks our investment by ensuring the Group
has offtake partners. Contracted offtake from the Albury
and Laverton JVs is already 80%.
Pact’s new projects will complement the Group’s existing
40,000 tonne plastics recycling capability, including the
recently acquired Flight Plastics in New Zealand. Building
scaled solutions gives our customers privileged access
to locally processed recycled resins, and closes the
loop on plastics. This is the foundation of a successful
plastics Circular Economy.
Working collaboratively with
like-minded partners across
the whole value chain is
the only way to build scaled
solutions and achieve a true
Circular Economy
Sanjay Dayal
Managing Director and Group CEO
Pact Group
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A National Network of Plastics
Recycling Infrastructure
New South Wales
(Albury)
(Pact share 33%)1
• 20,000 tonne food grade recycled
PET capacity
• Operational late 2021
• Construction cost ~ $45 million
• $5 million government funding
Victoria
(Laverton)
(Pact share 50%)
• 15,000 tonne recycled HDPE and
5,000 tonne PP (food grade and
non-food grade)
• Operational by 2023
• Construction cost ~ $38 million
• $3 million government funding
rPET Plant2
(Location TBD)
(Pact share 33%)
• 20,000 tonne food grade recycled
PET
• Operational by 2023
• Construction cost ~ $50 million
Western Australia
Under review
• Mixed plastics facility
• $9.5 million government funding
Queensland
Under review
• Working closely with government
for a waste recycling plant proposal
1. Ownership % subject to finalisation of legal documentation in respect of the joint venture between
Pact, Cleanaway, Asahi Beverages and Coca-Cola Europacific Partners.
2 Subject to finalisation of legal documentation in respect of the joint venture between Pact,
Cleanaway, Asahi Beverages and Coca-Cola Europacific Partners.
OverviewGovernanceFinancial ReportsShareholder Information
18
Operational and
Financial Summary
The Group has reported revenue of $1,761.6 million for the year ended 30 June 2021, down 3%
compared to the prior corresponding period (pcp). The statutory net profit after tax (NPAT) for the year
was $87.5 million, compared to $88.8 million in the pcp. Underlying NPAT3 for the year was $93.5 million,
up 28% compared to $73.2 million in the pcp.
Overview
• Revenue down 2.6% to $1,761.6 million
(pcp: $1,809.2 million)
• Underlying EBITDA1 up 4.3% to $314.9 million
(pcp: $301.8 million)
• Underlying EBIT2 up 10.0% to $182.9 million
(pcp: $166.3 million)
• Underlying NPAT3 up 27.7% to $93.5 million
(pcp: $73.2 million)
• Strict management of COVID-19 risks,
with no material disruption to operations.
• Higher earnings and improved margins
— Strong organic growth in closures and reuse services.
— Stronger demand in agricultural and industrial
sectors in Australia and New Zealand.
— Effective management of raw material input costs.
— Crate pooling volumes remain robust.
— Lower volumes in the Contract Manufacturing
hygiene category as COVID-19 related demand
reduced in 2H 2021.
— EBIT margins up 1.2% to 10.4%.
• Net debt6 reduced and leverage improved
— Reduction in net debt6 of $29 million through
continued focus on financial discipline.
— Continued strategic investments in the Circular
Economy and the resumption of dividend payments.
— Gearing4 at 2.4x improved on the pcp (2.6x) and well
within the Group’s targeted range.
Key financial highlights — $ millions
Revenue
Underlying EBITDA1
Segment Underlying EBIT2
Packaging & Sustainability
Materials Handling & Pooling
Contract Manufacturing Services
Underlying EBIT2
Underlying NPAT3
Reported Net Profit After Tax
Total Dividends – cents per share
• ROIC7 improved to 11.8% (pcp 10.6%)
• Execution of strategy to Lead the Circular Economy
gaining momentum.
— Operations in Australian packaging have stabilised
and growth initiatives are underway.
— Recycling capability further enhanced
– Acquisition of Flight Plastics Ltd in New Zealand
completed in January and fully integrated into
Pact’s packaging operations.
— Albury PET recycling facility on track for
commissioning in 1H 2022.
— Commitment to two additional recycling projects.
— New plastic recycling facility being evaluated in
WA, supported by government funding.
— Contract wins in packaging and infrastructure
sectors, enabled by access to recycled raw materials.
— Increased pooling penetration in the fresh produce
sector, and diversification into new categories.
— Strong growth in reuse volumes with new USA
contract performing well and new contract wins
in Europe.
— Consolidation of the closures business into Asia
driving organic growth.
– Sale process in respect of Contract Manufacturing
businesses is ongoing.
• Final ordinary dividend of 6.0 cents per share
(65% franked to be paid in October 2021), taking
total dividends for the year to 11.0 cents per share
(pcp: 3.0 cents per share)
2021
1,761.6
314.9
104.6
54.4
23.8
182.9
93.5
87.5
11.0
2020
1,809.2
301.8
90.8
44.2
31.3
166.3
73.2
88.8
3.0
Change %
(2.6%)
4.3%
15.2%
23.2%
(23.8%)
10.0%
27.7%
(1.5%)
266.7%
Note: Underlying EBITDA, Underlying EBIT and Underlying NPAT are non-IFRS financial measures and have not been subject
to audit by the Company’s external auditor. Refer to page 27 for definitions.
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2020
Change %
2021
1,761,572
20,625
1,809,158
17,276
(1,467,309)
(1,524,627)
314,888
17.9%
(132,013)
182,875
10.4%
(8,414)
174,461
(51,171)
(38,156)
2,400
87,534
301,807
16.7%
(135,544)
166,263
9.2%
6,537
172,800
(62,754)
(30,264)
9,065
88,847
(2.6%)
4.3%
10.0%
1.0%
(1.5%)
Group Results
$’000
Revenue
Other income (excluding interest revenue)
Expenses
Underlying EBITDA1
EBITDA margin
Depreciation and amortisation
Underlying EBIT2
EBIT margin
Underlying adjustments (before tax)
Reported EBIT
Net finance costs expense
Income tax expense
Tax on underlying adjustments
Net profit after tax
Revenue
Underlying EBIT1
Group revenue for the year of $1,761.6 million was
2.6% lower than the pcp of $1,809.2 million. The full
year included an $8.1 million contribution from the
acquisition of Flight Plastics in New Zealand. Excluding
this impact, revenue was 3.1% lower than the pcp, due
to lower Contract Manufacturing volumes, the pass
through of generally lower raw material input cost during
the majority of the year and adverse foreign exchange
translation movements.
Packaging and Sustainability benefitted from strong
growth in closures and higher demand in the health and
wellness, agricultural and industrial sectors. The Materials
Handling and Pooling segment delivered strong volume
growth in hanger reuse services and robust crate pooling
volumes. In Contract Manufacturing, volumes into the
health and wellness sector were stronger, though these
benefits were more than offset by lower hygiene volumes,
following unprecedented COVID-19 related demand in
the prior year.
The Group has delivered a solid improvement in earnings,
with EBIT (before underlying adjustments) for the year
up $16.6 million, or 10.0%, to $182.9 million. Results
benefitted from favourable revenue mix and costs
were well managed, with effective management of
raw material input cost movements and the delivery of
efficiency programs. Depreciation and amortisation were
also lower. EBIT margins increased 1.2% to 10.4%.
Further detail on revenue and earnings in each of the
Group’s operating segments is contained in the Review of
Operations below.
Annual Report 2021OverviewGovernanceFinancial ReportsShareholder Information 20
Underlying Adjustments
Income Tax Expense and Significant Tax Items
The income tax expense for the year (excluding tax on
underlying adjustments) was $38.2 million, representing
an average tax rate of 29.0% of underlying net profit
before tax, consistent with the statutory tax rates
payable by the Group across its main operating
geographies, and essentially in line with the prior year.
Tax on underlying adjustments was a benefit of
$2.4 million for the half year, compared to a benefit
of $9.1 million in the pcp.
Net Profit after Tax
The reported net profit after tax for the year was $87.5
million compared to $88.8 million for the prior year.
Excluding underlying adjustments, NPAT was $93.5
million, an increase of $20.3 million or 27.7% compared
to $73.2 million in the pcp.
Covid-19 Financial Assistance
During the year the Group received $0.3 million in relation
to the JobKeeper program in Australia.
Pre-tax underlying adjustments for the year were an
expense of $8.4 million. This includes transaction costs of
$1.7 million, business restructuring costs of $6.2 million,
clean-up costs and other expenses arising from a factory
fire at a Contract Manufacturing site of $4.0 million,
and an expense of $2.7 million for the write off of fixed
assets and inventory as a result of the fire at that site. In
addition, pre-tax underlying adjustments contain income
of $1.8 million from settlement of an insurance claim
from events in prior periods and a profit of $4.4 million
from the sale of two properties in China.
Pre-tax underlying adjustments in the prior year delivered
net income of $6.5 million. This included $4.5 million of
benefits relating to a net gain on lease modification
(following the adoption of AASB 16), and $30.0 million
from the reversal of an earn-out provision (recognised
on the acquisition of TIC). These items were partly offset
by transaction costs of $4.0 million, expenses relating to
the recognition of acquisition provisions of $7.2 million, an
impairment expense of $11.8 million (relating to customer
contract intangible assets in the contract manufacturing
business), and $5.0 million of costs associated with
business restructuring.
Net Finance Expense
Net financing costs for the year were $51.2 million, a
substantial reduction of $11.6 million compared to the
pcp. The reduction primarily relates to lower interest on
bank loans and borrowings driven by lower net debt levels
during the year and benefits from lower market interest
rates.
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Balance Sheet
$’000
Cash
Other current assets
Property plant & equipment
Intangible assets
Other assets
Total assets
Lease liabilities
Bank borrowings
Other Liabilities payables & provisions
Total liabilities
Net assets
Net debt including lease liabilities6
Net debt6
Net debt of $585.0 million was $28.5 million lower
than 30 June 2020. The improvement was driven by
increased earnings, continued disciplined working
capital management delivering a strong operating cash
flow performance, and proceeds received for property
disposals in China. This partly offset cash outflows
following the resumption of dividend payments in
FY21 and payments for investments in joint ventures,
acquisitions and deferred acquisition consideration in
the period. Net debt including lease liabilities at 30 June
2021 was $1,055.0 million, a decrease of $13.4 million
from 30 June 2020.
The Group has significant undrawn debt capacity, with
$317.2 million committed undrawn facilities. Pact’s solid
financial performance is providing an opportunity to
improve liquidity, with planning underway to extend
maturity of commitments and widen the lender base.
The movement in other current assets includes a
decrease in trade and other receivables of $20.4 million
and an increase in inventories of $19.0 million. The
reduction in receivables is due to the timing of cash
collections. The increase in inventories relates primarily
to higher raw materials due to increased resin and steel
prices in the last quarter of FY21 and a need to hold more
raw material stock in response to significant disruptions
in global freight and supply chains due to the COVID-19
pandemic.
The increase in property plant and equipment (including
right of use assets) of $18.2 million primarily reflects
additions of $95.0 million, acquisition of subsidiaries
and businesses of $41.1 million and lease modifications
of $22.7 million, partly offset by depreciation of $130.5
million, disposals of $2.8 million and a reduction due to
foreign exchange translation of $6.6 million. The net book
2021
62,152
402,862
1,014,199
459,369
69,161
2,007,743
469,944
647,163
458,766
1,575,873
431,870
1,054,955
585,011
2020
76,004
400,495
996,002
456,068
67,066
1,995,635
454,859
689,530
478,597
1,622,986
372,649
1,068,385
613,526
Change %
(18.2%)
0.6%
1.8%
0.7%
3.1%
0.6%
3.3%
(6.1%)
(4.1%)
(2.9%)
15.9%
(1.3%)
(4.6%)
value of right of use assets included within property,
plant and equipment at 30 June 2021 was $372.5 million
compared to $364.1 million at 30 June 2020.
There were no material movements in intangible assets or
other assets from 30 June 2020 to 30 June 2021.
The decrease in other liabilities, payables and provisions
of $19.8 million mainly relates to $26.9 million in lower
trade and other payables partly offset by $7.7 million in
additional provisions.
Financing metrics
2021
2020
Change
Gearing4
Gearing (including
leasing)4
Interest Cover5
Interest Cover
(including leasing)5
2.4x
3.4x
9.6x
6.2x
2.6x
3.5x
6.4x
4.8x
(0.2)
(0.1)
3.2
1.4
At 30 June 2021 gearing was 2.4x, a reduction of 0.2x
compared to the pcp as a result of increased earnings,
the strong cash flow performance in the period and
continued disciplined balance sheet management.
Including the impact of lease accounting, gearing was
3.4x (compared to 3.5x in the pcp). Interest cover at 9.6x
also improved substantially from 6.4x in the prior year on
increased earnings and lower net finance costs. Including
the impact of lease accounting, interest cover was 6.2x
(compared to 4.8x in the pcp).
Gearing and interest cover remain well within targeted
levels.
Annual Report 2021OverviewGovernanceFinancial ReportsShareholder Information 22
23
Cash Flow
Key Items — $’000
Net cash flows provided by operating activities
Payments for property, plant and equipment
Payments for investments in associates and joint ventures
Purchase of businesses and subsidiaries, net of cash acquired
Payments for deferred acquisition consideration
Repayment of lease liability principal
Payment of dividends
Statutory operating cash flow including proceeds from
securitisation was $221.0 million for the year, up $28.9
million or 15.0% on the pcp. The inflow from securitisation
of trade debtors was $3.2 million for the year compared
to an outflow of $6.8 million in the pcp. Excluding
securitisation inflows, statutory operating cash flow
was $18.9 million higher than the pcp. Net receipts and
payments were $34.9 million higher than the pcp and net
finance cost and interest cash flows $10.7 million lower.
These improvements were partly offset by $26.8 million in
higher tax cash payments (with a tax refund received in
the first half of the prior year).
Payments for property, plant and equipment were $78.3
million for the year, broadly in line with $76.5 million in the
pcp as the Group continued to maintain a disciplined
approach to capital expenditure and balance sheet
management, whilst continuing to support initiatives
aligned to the business strategy to lead the Circular
Economy. During FY21 the Group invested in projects
supporting the use of recycled content in New Zealand
packaging, automation and efficiency programs in
Australian packaging, capacity initiatives in the Asian
platform, the consolidation of the Group’s closures
footprint, the systems integration of the hanger reuse
business and the expansion and enhancement of crate
pooling services.
Payments for investments in associates and joint
ventures of $9.0 million relate to the purchase of shares
in Circular Plastics Australia Pty Ltd, the Company that
will develop and operate a post-consumer recycling
plastics plant in Australia through a joint venture
between Pact, Cleanaway and Asahi. The payment of
$3.6 million in the pcp related to the purchase of a 50.8%
share in Australian Recycled Plastics Pty Ltd (ARP), a
kerbside collected plastics recycling business located in
New South Wales.
2021
221,034
(78,283)
(9,009)
(23,836)
(23,307)
(47,413)
(27,520)
2020
Change %
192,131
(76,475)
(3,558)
-
-
(44,480)
-
15.0%
2.4%
153.2%
n/a
n/a
6.6%
n/a
Payments for the purchase of businesses and
subsidiaries, net of cash acquired, of $23.8 million
represent the acquisition of 100% of the net assets
of Flight Plastics, a New Zealand based packaging
manufacturer with integrated PET recycling capability
operating in the fresh food segment. The acquisition
of Flight Plastics complements the Group's strategy to
lead the Circular Economy through reuse, recycling and
packaging solutions.
Payments for deferred acquisition consideration of
$23.3 million represents deferred consideration and
post-completion adjustments in respect of the
acquisition of TIC (acquired in the first half of FY2019).
Repayments of lease liability principal (net of incentive
received) represents the payment of liabilities recognised
after the adoption of AASB16 in FY2020. The increase
of $2.9million compared to the pcp reflect lease asset
additions.
The dividend payment of $27.5 million reflects the three
cents per share final dividend from FY2020 (paid in
October 2020), following the resumption of dividend
payments, and the five cents per share interim dividend
in respect of FY21 (paid in April 2021).
Review of operations
The Group’s operating segments are:
• Packaging and Sustainability
• Materials Handling and Pooling
• Contract Manufacturing Services
Inter-segment revenue eliminations of $35.4 million (pcp:
$44.5 million) are not included in the segment financial
information below.
Packaging and
Sustainability
The Packaging and Sustainability segment is a market leader
in rigid plastic packaging in Australia and New Zealand with a
growing presence in Asia. The business is also a leader in select
rigid metals packaging sectors in Australia and New Zealand and
a leading supplier of sustainability, environmental, reconditioning
and recycling services in Australia and New Zealand. Packaging &
Sustainability contributed 64% of the Group’s revenue in FY21.
2021
2020
Change %
1,131,088
1,143,852
190,734
16.9%
104,616
9.2%
181,272
15.8%
90,806
7.9%
(1.1%)
5.2%
1.1%
15.2%
1.3%
Underlying EBIT for the year of $104.6 million was $13.8
million or 15.2% up on the pcp. Earnings benefitted from
disciplined margin management, favourable product mix
and lower depreciation. These benefits more than offset
the impact of adverse foreign exchange translation.
EBIT margins for the year were strongly improved at
9.2%, up 1.3% compared to the pcp.
$’000
Revenue
Underlying EBITDA1
EBITDA margin %
Underlying EBIT2
EBIT margin %
Revenue for the Packaging and Sustainability segment
of $1,131.1 million for the year was $12.8 million or 1.1%
lower than the pcp. FY21 included a contribution of $8.1
million from the acquisition of Flight Plastics. Excluding
this impact, segment revenue was $20.9 million or 1.8%
lower due to the pass through of generally lower raw
material input cost during the majority of the year and
adverse foreign exchange translation movements.
The closures businesses delivered strong organic volume
growth with strict management of COVID-19 risks in
Asia and minimal disruption to operations. Performance
was assisted by the benefits of the regional consolidation
program and growth in the health and wellness segment.
Demand in the agricultural and industrial sectors in
Australia and New Zealand was also generally improved
on the pcp.
Annual Report 2021OverviewPerformanceGovernanceFinancial ReportsShareholder Information 24
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Materials Handling
and Pooling
The Materials Handling and Pooling segment is a leading
Australian supplier of polymer materials handling products
and a leading supplier of custom moulded products for use
in infrastructure and other projects. The business is also
the largest supplier of returnable produce crate pooling
services in Australia and New Zealand and includes TIC, a
closed loop plastic garment hanger and accessories re-use
business operating across several countries in Asia as well
as in Australia, the USA and the UK. Materials Handling and
Pooling contributed 20% of the Group’s revenue in FY21.
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Contract Manufacturing
Services
The Contract Manufacturing Services segment is a leading
supplier of contract manufacturing services for the home,
personal care and health and wellness categories in
Australia. The business includes manufacturing capability
for liquid, powder, aerosol and nutraceutical products.
Contract Manufacturing Services contributed 18% of
the Group’s revenue in FY21. A sale process in respect of
Contract Manufacturing businesses is ongoing.
2021
344,008
85,579
24.9%
54,446
15.8%
2020
315,999
73,012
23.1%
44,200
14.0%
Change %
9.0%
17.2%
1.8%
23.2%
1.8%
Underlying EBIT for the segment was strongly improved
at $54.4 million, up $10.2 million or 23.2% compared
to the pcp. Earnings growth was driven by higher
volumes, favourable product mix and disciplined margin
management. This was partly offset by adverse foreign
exchange translation.
EBIT margins were up 1.8% to 15.8%.
$’000
Revenue
Underlying EBITDA1
EBITDA margin %
Underlying EBIT2
EBIT margin %
Revenue for the Materials Handling and Pooling segment
of $344.0 million for the year was $28.4 million (9.0%)
higher than the pcp despite the adverse impact of
foreign exchange movements. The increase was driven
by strong organic volume growth in the TIC hanger
and clothing accessory reuse business, supported by
a recovery in clothing retail demand, strong demand
for reuse services in the USA and the start-up of a
new contract in Europe. Pooling volumes remained
solid, with increased market penetration through the
delivery of crate conversion opportunities and product
diversification, though the cessation of the crate wash
contract with Coles pulled pooling revenues lower.
Infrastructure volumes were lower, with fewer available
projects and the impact of the wind down of the NBN
rollout.
$’000
Revenue
Underlying EBITDA1
EBITDA margin %
Underlying EBIT2
EBIT margin %
2021
321,915
38,575
12.0%
23,813
7.4%
2020
394,188
47,523
12.1%
31,257
7.9%
Change %
(18.3%)
(18.8%)
(0.1%)
(23.8%)
(0.5%)
Revenue for the Contract Manufacturing Services
segment of $321.9 million for the year was $72.3 million
(18.3%) lower than the pcp.
Underlying EBIT for the year of $23.8 million was $7.4
million (23.8%) lower than the pcp driven primarily by
lower volumes.
Overall volumes were down, due to lower volumes of
hand sanitiser and other hygiene products following
robust demand driven by the COVID-19 pandemic in
the prior year. Demand in the health and wellness sector
for nutraceutical products was significantly improved
and the business continued to see benefits from the
ongoing diversification of its customer portfolio in that
category. Personal care volumes were also improved,
but demand was lower in the retail household sector.
The business was also impacted by softer demand for
pest and insecticide products, due to cooler and wetter
summer conditions in Australia, and lower automotive
sales following a factory fire.
Depreciation and amortisation expenses were $1.5 million
lower with reduced amortisation resulting from the write
off of customer contract intangibles in FY2020 partly
offset by increased depreciation on capital investment in
efficiency and automation projects.
EBIT margins were 0.5% lower at 7.4%.
Financial ReportsShareholder InformationOverviewGovernance
26
Outlook
We expect further progress in the delivery of strategy
and earnings resilience in FY22. In our first quarter,
demand is expected to be generally in line with recent
trends, though margins will be impacted by higher raw
material and international freight costs.
COVID-19 continues to create market uncertainty.
An update on trading will be provided at the AGM.
Other events of significance
Joint Venture with Cleanaway and Asahi Holdings
On 3 August 2020 the Group entered into an agreement
to acquire shares in Circular Plastics Australia Pty Ltd,
a joint venture will recycle PET bottles to produce new
bottles, food and beverage packaging in Australia.
Acquisition of Flight Plastics Ltd
On 31 January 2021, the Group paid a net $23.8 million
consideration to the vendor to acquire 100% of the net
assets of Flight Plastics. Flight Plastics is a New Zealand
based packaging manufacturer with integrated PET
recycling capability operating in the fresh food segment.
The acquisition of Flight Plastics complements the
Group's strategy to lead the Circular Economy through
Reuse, Recycling and Packaging solutions.
Plastics Recycling Joint Ventures
On 26 July 2021 Pact and Cleanaway announced the
intention to build a new plastics recycling facility at
Laverton, Victoria. Construction of the plant will start
towards the end of the year, and it is expected to be fully
operational by December 2022.
On 16 August 2021 Pact, Cleanaway, Asahi Beverages
and Coca-Cola Europacific Partners (CCEP) announced
they have signed a Memorandum of Understanding to
form a joint venture to build a new PET recycling facility.
A decision on the plant’s location is anticipated in the
coming months and construction is expected to be
complete by 2023.
Business risks
There are various internal and external risks that may
have a material impact on the Group’s future financial
performance and economic sustainability. The Group
makes every effort to identify material risks and to
manage these effectively. Material risks that could
adversely impact the Group’s financial prospects are
listed below. These risks are not to be interpreted as
an exhaustive list of the risks Pact is exposed to, nor
are they in order of significance. Details of the Group’s
environmental and social sustainability risks are reported
in the Group’s Sustainability Report.
27
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Covid-19 risks
Consumer demand
BCP and incident management
To date Pact has been deemed to be an essential
service allowing manufacturing plants to continue
operating with strict hygiene protocols, management of
onsite attendance and contract tracing requirements.
Limitations have been imposed on the movement of
personnel and restriction of visitors to sites. Supply
chains have had disruptions, shipping costs have
increased, and difficulties have been experienced in
obtaining personnel offshore for the installation of new
capital projects. Pact has utilised virtual technology to
assist with the maintenance and capital installation
projects.
People risks
Future financial and operational performance of the
Group is significantly dependant on the performance
and retention of key personnel, in particular Senior
Management. The unplanned or unexpected loss of
key personnel, or the inability to attract and retain high
performing individuals to the business may adversely
impact the Group’s future financial performance.
Pact has introduced and developed a number of
initiatives to attract, develop and retain key people,
including talent management and succession planning,
recognition programs, implementation of a performance
management system and equity acquisition plans.
In line with the manufacturing industry, Pact has an
exposure to health and safety management incidents
in the manufacturing operations. Failure to comply with
health and safety legislation and industry good practice
may result in harm to a person or persons, which may
lead to negative operational, reputational and financial
impacts. Pact has adopted a comprehensive list of
controls including a Zero Harm Framework, integrated
WHSE management system and audit program, WHS
Risk Register, systematic review of all incidents, real-time
reporting of incidents and injuries and scheduled training.
A significant focus has been on the identification and
close out of WHS risks.
Pact also recognises the importance of diversity in the
workplace and has developed a framework that goes
beyond the necessitated regulatory reporting, including
an enhanced Diversity Policy and adherence to best
practice according to the ASX Corporate Governance
Council Principles and Recommendations on diversity.
Cyber risks
Data security is fundamental to protect privacy of
information and to protect critical intellectual property.
Advances in technology have resulted in an increased
volume of data being stored electronically. There is an
increasing risk of and sophistication to cyber-attacks
and crime, which may lead to systems and data
breaches, interruption to operations and an adverse
effect on the Group’s future financial performance.
To manage this risk, Pact has adopted cyber security
incident response policies, plans and procedures, mock
data breach assessments, cyber security training and
penetration testing.
Changes in demand for Pact’s products or adverse
activities in key industry sectors which Pact and its
customers service may be influenced by various factors.
These industry sectors include consumer goods (e.g.
food, dairy, beverages, personal care and other household
consumables) and industrial (eg. surface coatings,
petrochemical, agriculture and chemicals) industry
sectors. Factors which may influence these sectors
include climate change, seasonality of foods and edible
oils production, an increased focus in Australian and
New Zealand supermarket chains on private brands
and different substrates, and reputation of products,
substrates (eg. plastics, recycled and recyclable
materials) or technology in the wider industry sector.
Demand for Pact's products may materially be affected
by any of these factors which could have an adverse
effect on the Group's future financial performance. Pact
closely monitors supply and demand which is especially
important during COVID-19 times and has introduced a
centralised procurement system for significant product
to help manage this risk.
Volatility of commodity prices, foreign exchange and
economic environment
Pact’s financial reports are prepared in Australian dollars.
However, a substantial proportion of Pact’s revenue,
expenditures and cash flows are generated in, and assets
and liabilities denominated in, New Zealand dollars. Pact
is also exposed to a range of other currencies including
the US dollar, Chinese yuan, the Philippines peso, the
Indonesian rupiah, the Thai baht, the South Korean won,
the Indian rupee, the Nepalese rupee, the Hong Kong
dollar, the UK pound and the Bangladesh Taka in relation
to Pact’s business operations. Any appreciation of the
Australian dollar or adverse movement in exchange rates
would have an adverse effect on the Group's future
financial performance. Pact utilises forward foreign
currency contracts, maintains a detailed understanding
of its sales contracts, foreign exchange adjustments and
market intelligence on commodity markets and forecast
reports to help manage this risk.
Global supply chain disruptions
The ability for the supply chain to meet the Group’s
requirements, including the sourcing of raw materials, is
reliant on key relationships with suppliers. The price and
availability of raw materials, input costs, including energy,
and future consolidation in industry sectors could result
in a decrease in the number of suppliers or alternative
supply sources available to Pact. Additionally, Pact may
not always be able to pass on changes in input prices to
its customers. Any of these factors may have an adverse
effect on the Group's future financial performance.
Management of this risk includes close collaboration
with Pact’s key suppliers, regular scheduled forecasting,
maintenance of contracts with preferred shipping lines,
dual sourcing of major supplies and focussed
co-ordination and communication with customers.
Pact operates across a diverse geographical footprint
and situations may arise in which sites are not able to
operate. Factors include emergency situations such
as natural disasters, failure of information technology
systems or security, or industrial disputes. Any of these
factors may lead to disruptions in production or increase
in costs and may have an adverse effect on the Group’s
financial performance. Pact recognises the importance
and benefits of the implementation of an international
business continuity program.
Compliance risks
Pact is required to comply with a range of laws and
regulations, and those of particular significance to
Pact are in the areas of employment including modern
slavery, work health and safety; property; environmental;
competition; fraud; anti-bribery and corruption; customs
and international trade; taxation; and corporations.
Changes in government policy may also have an adverse
effect on the Group’s financial performance. Pact has
been working to improve its current risk management
framework to better manage controls identified in order
to reduce its external and internal risks.
This report includes certain non-IFRS financial information
which has not been subject to audit by the Group’s external
auditor. This information is used by Pact, the investment
community and Pact’s Australian peers with similar business
portfolios. Pact uses this information for its internal
management reporting as it better reflects what Pact considers
to be its underlying performance.
(1) Underlying EBITDA is a non-IFRS financial measure which
is calculated as earnings before underlying adjustments,
finance costs (net of interest revenue), tax, depreciation and
amortisation.
(2) Underlying EBIT is a non-IFRS financial measure which
is calculated as earnings before underlying adjustments,
finance costs (net of interest revenue) and tax.
(3) Underlying NPAT is a non-IFRS financial measure which
is calculated as net profit after tax before underlying
adjustments.
(4) Gearing is a non-IFRS financial measure which is calculated
as net debt divided by rolling 12 months EBITDA. Gearing
has been presented both excluding and including the impact
of lease accounting since the adoption of AASB16.
(5) Interest cover is a non-IFRS financial measure which is
calculated as rolling 12 months EBITDA divided by rolling
12 months net finance costs and losses on de-recognition
of financial assets. Interest cover has been presented both
excluding and including the impact of lease accounting
since the adoption of AASB16.
(6) Net debt is a non-IFRS financial measure and is calculated
as interest-bearing liabilities (presented both including and
excluding lease liabilities) less cash and cash equivalents.
(7) ROIC is a non-IFRS financial measure which represents
return on invested capital and is defined as rolling 12 months
underlying EBIT divided by rolling 12 months average total
assets (excluding cash, cash equivalents and deferred tax)
less current liabilities (excluding interest-bearing liabilities
and tax liabilities).
Annual Report 2021OverviewGovernanceFinancial ReportsShareholder Information 28
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OverviewPerformanceFinancial ReportsShareholder Information
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Corporate
Governance
The Board recognises the importance of good corporate
governance and its role in ensuring the accountability of
the Board and management to shareholders.
The Board’s role is to ensure that the Group is properly
managed to protect and enhance shareholder interests
and that the Group, including the Company, Directors,
officers, and employees, operate in an appropriate
environment of control and corporate governance. The
corporate governance framework adopted comprises of
principles and policies that are consistent with the ASX
Corporate Governance Council’s Corporate Governance
Principles and Recommendations (fourth edition).
The annual Corporate Governance Statement outlines
the key aspects of the Group’s corporate governance
framework and practices. The Board considers that
the Company’s corporate governance framework and
practices have complied with the ASX recommendations
for the financial year, except as otherwise detailed in the
Corporate Governance Statement. The 2021 Corporate
Governance Statement is available on the website:
www.pactgroup.com/investors/investor-
communications/#corporate-governance-.
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Pact Group is
committed to
providing all
stakeholders
with accessible,
accurate and timely
information on
our activities and
performance.
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Financial
Report
Consolidated Financial Report
For the year ended 30 June 2021
Introduction
This is the Consolidated Financial Report of Pact
Group Holdings Ltd (“Pact” or the “Company”) and its
subsidiaries (together referred to as the “Group”) and
including the Group’s joint ventures at the end of, or
during the year ended 30 June 2021. This Consolidated
Financial Report was issued in accordance with a
resolution of the Directors on 18 August 2021.
Information is only included in the Consolidated
Financial Report to the extent the Directors consider
it material and relevant to the understanding of the
financial statements. A disclosure is considered material
and relevant if, for example:
• the dollar amount is significant in size and/or by
nature;
• the Group’s results cannot be understood without the
specific disclosure;
• it is critical to allow a user to understand the impact of
significant changes in the Group’s business during the
year; and
• it relates to an aspect of the Group’s operations that
is important to its future performance.
Preparing this Financial Report requires management
to make a number of judgements, estimates and
assumptions to apply the Group’s accounting policies.
Actual results may differ from these judgements and
estimates under different assumptions and conditions
and may materially affect financial results or the
financial position reported in future periods. Key
judgements and estimates, which are material to this
report, are highlighted in the following notes:
• Note 1.3 Taxation
• Note 2.2 Estimation of useful lives of assets
• Note 2.2 Recoverability of property, plant and
equipment
• Note 2.2 Impairment of goodwill and other intangibles
• Note 2.4 Business restructuring
• Note 2.5 Incremental borrowing rate
• Note 2.5 Determining the lease term of contracts with
renewal and termination options
• Note 3.2 Control and significant influence
• Note 5.1 Actuarial assessments
To assist in identifying key accounting estimates and
judgements, they have been highlighted as follows:
Contents
Directors’ Report
Auditor’s Independence Declaration
35
58
Consolidated Statement of Comprehensive Income
59
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Section 1: Our Performance
1.1 Group results
1.2 Revenue from contracts with customers
1.3 Taxation
1.4 Dividends
Section 2: Our Operating Assets
2.1 Working capital
2.2 Non-current assets
2.3 Capital expenditure commitments and
contingencies
2.4 Other provisions
2.5 Leases
Section 3: Our Operational Footprint
3.1 Businesses acquired
3.2 Controlled entities
3.3 Associates and joint ventures
Section 4: Our Capital Structure
4.1 Net debt
4.2 Contributed equity and reserves
4.3 Managing our financial risks
4.4 Financial instruments
Section 5: Remunerating Our People
5.1 Defined benefit plans
5.2 Employee benefits expenses and provisions
5.3 Share based payments
5.4 Key management personnel
Section 6: Other Disclosures
6.1 Basis of preparation
6.2 Other (losses)/gains
6.3 Pact Group Holdings Ltd — Parent entity
financial statements summary
6.4 Deed of Cross Guarantee
6.5 Auditors remuneration
6.6 Segment assets and segment liabilities
6.7 Geographic revenue
6.8 Subsequent events
Directors’ Declaration
Independent Auditor’s Report
60
61
62
63
65
67
70
71
74
79
79
81
84
85
87
90
94
95
100
104
110
111
112
113
114
115
116
117
118
119
119
120
121
Directors'
Report
The Directors present their report on the consolidated entity consisting of Pact Group Holdings Ltd
("Pact" or the "Company") and the entities it controlled (collectively the "Group") at the end of, or during,
the year ended 30 June 2021.
Directors
The following persons were Directors of the Company from their date of appointment up to the date of this
report:
Non-Executive
Raphael Geminder
Non-Executive Chairman
Member of the Board since 19 October 2010
Member of the Nomination and Remuneration Committee
Raphael founded Pact in 2002. Prior to this, Raphael was the co-founder and Chairman of Visy Recycling,
growing it into the largest recycling company in Australia. Raphael was appointed Victoria’s first Honorary
Consul to the Republic of South Africa in July 2006. He also holds a number of other advisory and Board
positions.
Raphael holds a Master of Business Administration in Finance from Syracuse University, New York.
Other current directorships
Director of several private companies.
Lyndsey Cattermole AM
Independent Non-Executive Director
Member of the Board since 26 November 2013
Member of the Audit, Business Risk and Compliance Committee (from 15 August 2019 to 1 September 2020)
Chair of the Nomination and Remuneration Committee (from 15 August 2019 to 1 September 2020)
Member of the Nomination and Remuneration Committee (from 1 September 2020)
Lyndsey founded Aspect Computing Pty Limited and remained as Managing Director from 1974 to 2001, before
selling the business to KAZ Group Limited, where she served as a Director from 2001 to 2004. Lyndsey has
held many board and membership positions including with the Committee for Melbourne, the Prime Minister's
Science and Engineering Council, the Australian Information Industries Association, the Victorian Premier’s
Round Table and the Women’s and Children’s Health Care Network.
Lyndsey holds a Bachelor of Science from the University of Melbourne and is a Fellow of the Australian
Computer Society.
Other current directorships
Non-Executive Director of Melbourne Rebels Rugby Union Ltd, and the Florey Institute of Neuroscience and
Mental Health and several private companies.
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Directors' Report
Directors' Report
Directors (continued)
Directors (continued)
Jonathan Ling
Independent Non-Executive Director
Member of the Board since 28 April 2014
Chair of the Nomination and Remuneration Committee (from 1 September 2020)
Chair of the Audit, Business Risk and Compliance Committee (from 15 August 2019 to 12 August 2020)
Member of the Audit, Business Risk and Compliance Committee (from 1 September 2020)
Jonathan has extensive experience in complex manufacturing businesses. He was the Chief Executive
Officer and Managing Director of GUD Holdings Limited from 2013 to 2018, and Chief Executive
Officer and Managing Director of Fletcher Building Limited during the period 2006 to 2012. He also held
leadership roles with Nylex, Visy and Pacifica.
Jonathan has a Bachelor of Engineering (Mechanical) from the University of Melbourne and a Master of
Business Administration from the Royal Melbourne Institute of Technology.
Other current directorships
Independent Non-Executive Director and Chairman of Pro Pac Packaging Ltd, and Non-Executive Director
and Chairman of Planet Innovation Ltd. Jonathan is also a Director of several private companies.
Carmen Chua
Independent Non-Executive Director
Member of the Board since 1 September 2018
Member of the Audit, Business Risk and Compliance Committee (from 1 September 2020)
Carmen is based in Hong Kong and has broad base management experience in the packaging and
material science industry. Carmen was most recently the Chief Marketing Officer of the Resins and
Functional Material business for Royal DSM. Previously she held the positions of President for Laird PLC
and VP/GM of Materials Group at Avery Dennison Corporation. Carmen has also held leadership positions
across sales, marketing and business development with organisations such as Worldmark, Dell and
Adampak.
Carmen has a Bachelor of Arts (Hons) from University Science Malaysia, a Master of Business
Administration from the University of Portsmouth, UK and Advanced Management Program from Wharton
School of Business.
Michael Wachtel
Independent Non-Executive Director
Member of the Board since 21 April 2020
Member of the Audit, Business Risk and Compliance Committee (from 21 April 2020)
Chair of the Audit, Business Risk and Compliance Committee (from 18 August 2020)
Michael brings a strong professional background and extensive global experience in governance, risk
management, finance and complex international transactions to the role. Through his Future Fund Board role
he has a deep involvement in global markets and monetary policy trends. Michael has previously held a number
of leadership roles in professional services organisations, including as Chair (Asia Pacific and Oceania) of EY.
Michael has Bachelors of Commerce and Law from the University of Cape Town and a Master of Laws from the
London School of Economics. Michael completed the Harvard Business School Executive Program in 2011 and
is a Fellow of the Australian Institute of Company Directors.
Other current directorships
Michael is currently a Board member of Future Fund, Seek Limited and St Vincent’s Medical Research Institute.
Executive
Sanjay Dayal
Managing Director and Group Chief Executive Officer
Member of the Board since 3 April 2019
Sanjay joined Pact Group from BlueScope Steel where he held the position of Chief Executive, Building
Products, Corporate Strategy and Innovation. This followed several other senior positions in Asia and Australia
over a nine-year period with the company. Prior to BlueScope, Sanjay had a very successful career with Orica
and ICI, including Regional General Manager for Manufacturing and Supply Chain and General Manager for the
DynoNobel Integration, based out of London.
Sanjay holds a Bachelor of Technology (Chemical Engineering) from Indian Institute of Technology — Delhi.
Company Secretary
Jonathon West
Company Secretary
Jonathon West was appointed to the positions of General Counsel and Company Secretary as well as Head of
Corporate Development of Pact on 1 June 2016.
Prior to this appointment, Jonathon was most recently at Goodman Fielder Limited where he held a variety
of roles over a 10-year period, including Group Strategy and Corporate Development Officer, Group General
Counsel and Company Secretary and Group Commercial Director. Prior to that Jonathon worked in both
private practice and industry in Australia and the UK, including with Burns Philp Limited, Sportal.com, AOL
Europe, Linklaters and Herbert Smith Freehills.
Jonathon holds Bachelor of Laws (Honours) and Bachelor of Science degrees from the University of Melbourne.
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Directors' Report
Directors' Report
Directors’ shareholding
As at the date of this report, the relevant interests of the Directors in the shares of the Company or a
related body corporate were as follows
Operating and financial review
A review of the operations of the Group during the year and of the results of those operations is contained in
the ASX announcement on 18 August 2021.
Raphael Geminder
Lyndsey Cattermole
Jonathan Ling
Carmen Chua
Michael Wachtel
Sanjay Dayal
Relevant Interest
in Ordinary Shares
152,252,175
541,433
48,786
150,000
41,925
40,000
Directors’ meetings
The table below shows the number of Directors’ meetings (including meetings of Board committees), and
the number of meetings attended by each Director in their capacity as a member during the year:
Directors’ Meetings
Meetings
held
Meetings
attended
Audit, Business Risk and
Compliance Committee
Meetings
Meetings
attended
held
Nomination and
Remuneration Committee
Meetings
Meetings
attended
held
Raphael Geminder
Lyndsey Cattermole
Jonathan Ling
Carmen Chua
Michael Wachtel
Sanjay Dayal
Former Director
Ray Horsburgh(1)
9
9
9
9
9
9
6
9
9
9
9
9
9
6
NM
NM
2
6
4
4
2
6
4
4
NM
NM
5
5
5
NM
NM
NM
5
5
5
NM
NM
NM
2
2
NM
NM
NM — Not a member of the relevant committee
(1) Ray Horsburgh resigned as a Non-Executive Director on 18 November 2020
Principal activities
Pact is a leading provider of specialty packaging solutions, servicing both consumer and industrial sectors.
Pact specialises in the manufacture and supply of rigid plastic and metal packaging, materials handling
solutions, contract manufacturing services and recycling and sustainability services.
Dividends
The directors have determined to pay a final dividend of 6 cents after the end of the financial year
(2020: 3 cents).
The table below shows dividends paid (or payable) during the year ended 30 June 2021 and the comparative
year.
Amount per
security
Franked
amount per
security
Unfranked amount
per security
sourced from the
conduit foreign
income account
Date payable
Dividends
Current year to 30 June 2021
Final Dividend (per ordinary share)
6.00 cents
3.90 cents
2.10 cents
7 October 2021
Interim Dividend (per ordinary share)
5.00 cents
3.25 cents
1.75 cents
7 April 2021
Prior year to 30 June 2020
Final Dividend (per ordinary share)
3.00 cents
1.95 cents
1.05 cents
7 October 2020
Interim Dividend (per ordinary share)
-
-
-
-
Other events of significance
Please refer to the Review of Operations and Financial Performance in the ASX announcement on 18 August
2021.
Significant events after balance date
Plastics Recycling Joint Ventures
On 26 July 2021 Pact and Cleanaway announced the intention to build a new plastics recycling facility at
Laverton, Victoria. Construction of the plant will start towards the end of the year and it is expected to be fully
operational by December 2022.
On 16 August 2021 Pact, Cleanaway, Asahi Beverages and Coca-Cola Europacific Partners (CCEP) announced
they have signed a Memorandum of Understanding to form a joint venture to build a new PET recycling facility.
A decision on the plant’s location is anticipated in the coming months and construction is expected to be
complete by 2023.
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Directors' Report
Workplace health, safety and environmental regulation
The Group operates under an integrated Workplace Health, Safety and Environment (WHSE) Management
System, with a goal of Towards Zero Harm to both people and the planet. The system is aligned with ISO
14001 and operates under our Environmental Policy and our Workplace Health and Safety Policy. The
system is fundamental to achieving compliance with WHSE regulations in all jurisdictions in which we
operate and is implemented at all our sites.
Where applicable, licences and consents are in place in respect of each site within the Group. An
interactive database is used to ensure compliance and completion of all required actions.
On occasion, the Group receives notices from relevant authorities pursuant to local WHSE legislation and
in relation to the Group’s WHSE licences and consents. The Group takes all notices seriously, conducting a
thorough investigation into the underlying causes and ensure we take every opportunity to continuously
improve our systems. Pact works with the appropriate authorities to address any requirements and to
proactively manage any obligations.
The Group is also subject to the reporting and compliance requirements of the Australian National
Greenhouse and Energy Reporting Act 2007 (Cwth). The National Greenhouse and Energy Reporting
Act 2007 requires that Pact reports its annual greenhouse gas emissions and energy use. Pact has
submitted all annual reports and is due to submit its next report in September. As part of this process
The Group engages a third party to provide limited assurance to our WHSE metrics as published in our
sustainability report.
Share options and rights
The total number of share rights on issue at the date of this report is 2,555,825. Refer to the Remuneration
Report (Section 3) for further details of share rights on issue.
Indemnification and insurance of officers
The Company’s Constitution requires the Company to indemnify current and former Directors, alternate
Directors, executive officers and such other officers of the Company as the Board determines on a full
indemnity basis and to the full extent permitted by law against all liabilities incurred as an officer of
the Group. Further, the Company’s Constitution permits the Company to maintain and pay insurance
premiums for Director and Officer liability insurance, to the extent permitted by law.
Consistent with (and in addition to) the provisions in the Company’s Constitution outlined above, the
Company has also entered into deeds of access, indemnity and insurance with all Directors of the
Company and the Company Secretary which provide indemnities against losses incurred in their role as
Directors or Company Secretary, subject to certain exclusions, including to the extent that such indemnity
is prohibited by the Corporations Act 2001 (the Act) or any other applicable law.
During the financial year the Company paid insurance premiums for a Directors and Officers liability
insurance policy that provides cover for the current and former Directors, alternate Directors, secretaries,
executive officers and officers of the Group. The Directors have not included details of the nature of the
liabilities covered in this contract or the amount of the premium paid, as disclosure is prohibited under the
terms of the contract.
Indemnification of auditors
Pursuant to the terms of the Company’s standard engagement letter with Ernst & Young (EY), it
indemnifies EY against all claims by third parties and resulting liabilities, losses, damages, costs and
expenses (including reasonable legal costs) arising out of, or relating to, the services provided by EY
or a breach of the engagement letter. The indemnity does not apply in respect of any matters finally
determined to have resulted from EY’s negligent, wrongful or wilful acts or omissions nor to the extent
prohibited by applicable law including the Act.
Directors' Report
Proceedings on behalf of the company
No person has applied to the court under section 237 of the Act for leave to bring proceedings on behalf of
the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking
responsibility on behalf of the Company for all or part of those proceedings.
No proceedings have been brought or intervened in on behalf of the Company with the leave of the court under
section 237 of the Act.
Non-audit services
During the year, EY, the Company’s auditor, performed other assignments in addition to their statutory audit
responsibilities.
Details of the amounts paid or payable to EY for non-audit services provided in respect of the Group during the
year are as follows:
$
Tax services
Consulting services
Other assurance related services
Total
2021
2020
192,000
252,000
824,000
-
289,000
87,000
1,305,000
339,000
The Board has considered the position and, in accordance with the advice received from the Audit, Business
Risk and Compliance Committee, is satisfied that the provision of non-audit services is compatible with the
general standard of independence for auditors imposed by the Act.
The Directors are satisfied that the provision of non-audit services by EY, given the amounts paid and the type
of work undertaken, did not compromise the auditor independence requirements of the Act for the following
reasons:
• All non-audit services have been reviewed by the Audit, Business Risk and Compliance Committee to ensure
they do not impact the impartiality and objectivity of the auditor.
• None of the services undermine the general principles relating to auditor independence as set out in APES
110: Code of Ethics for Professional Accountants, including reviewing or auditing the auditors own work,
acting in a management or decision-making capacity for the Group, acting as advocate for the Group or
jointly sharing economic risk and rewards.
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Directors' Report –
Remuneration Report
2. Governance
Nomination and Remuneration Committee
The Nomination and Remuneration Committee (the Committee) has been delegated responsibility by the
Board for managing appropriate remuneration policy and governance procedures including to:
• review and recommend to the Board appropriate remuneration policies and arrangements including incentive
plans for the CEO and CFO;
• review and approve short-term incentive plans, long-term incentive plans, performance targets and bonus
payments for the CEO and CFO;
• review the performance of the CEO;
• review the Senior Executives’ performance assessment processes to ensure they are structured and operate
to realise business strategy; and
• review and recommend to the Board, remuneration arrangements for the Chairman and NEDs.
The Committee comprises three Non-Executive Directors and meet as often as the Committee members deem
necessary to fulfil the Committee’s obligations. It is intended they meet no less than three times a year. A copy
of the Committee’s charter is available at www.pactgroup.com.
Use of remuneration consultants
The Nomination and Remuneration Committee may seek advice from independent remuneration advisors with
respect to information and recommendations relevant to remuneration decisions.
Decisions to engage remuneration consultants are made by the Committee or the Board. Contractual
engagements and briefing of the consultants are undertaken by the Chairman of the Committee and the
remuneration recommendations of the consultants are to be provided directly to the Chairman of the
Committee.
During the financial year ended 30 June 2021, the Nomination and Remuneration Committee did not obtain
remuneration advice or recommendations from any external remuneration consultants.
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Directors' Report –
Remuneration Report
Remuneration Report (audited)
This Remuneration Report for the year ended 30 June 2021 outlines the remuneration arrangements of
the Group in accordance with the requirements of the Act and its regulations. This information has been
audited as required by section 308(3C) of the Act.
The Remuneration Report is presented under the following sections:
1. Introduction
2. Governance
3. Executive remuneration arrangements
4. Executive remuneration outcomes for FY21
5. Non-Executive Directors’ remuneration arrangements
6. Equity holdings of KMP
7. Related party transactions with KMP
1. Introduction
The Remuneration Report details the remuneration arrangements for key management personnel
(KMP) who are defined as those persons having authority and responsibility for planning, directing and
controlling the major activities of the Company and the Group, directly or indirectly, including any director
(whether executive or otherwise) of the Company.
For the purposes of this Report, the term KMP includes all Non-Executive Directors of the Board, the
Managing Director and Group Chief Executive Officer (CEO) and the Chief Financial Officer (CFO) of the
Company and the Group.
Key Management Personnel
Name
Position
Term as KMP in 2021
Non-Executive Directors (NEDs)
Raphael Geminder
Non-Executive Chairman
Lyndsey Cattermole
Non-Executive Director
Jonathan Ling
Carmen Chua
Non-Executive Director
Non-Executive Director
Michael Wachtel
Non-Executive Director
Full Year
Full Year
Full Year
Full Year
Full Year
Executive KMP
Sanjay Dayal
Paul Washer
Former KMP
Ray Horsburgh
Richard Betts
Managing Director and Group CEO Full Year
Chief Financial Officer
Appointed 15 March 2021
Former Non-Executive Director
Resigned 18 November 2020
Former Chief Financial Officer
Ceased to be KMP at 31 March 2021
There have been no other changes to KMP after the reporting date and before the date the financial report was
authorised for issue.
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Remuneration Report
3. Executive remuneration arrangements (continued)
Executive KMP remuneration mix
The Pact Executive Remuneration Approach on page 44 outlines the components of KMP remuneration, the
following table shows the target remuneration mix of each of those components for 2021(1)
CEO
CFO
41%
41%
18%
71%
29%
Fixed Remuneration
STI
LTI
(1) Target remuneration is calculated as Fixed Remuneration, plus STI at target, plus long-term incentives at
target (based on the fair value of performance rights at grant date).
Employee share purchase scheme
In FY21, Pact introduced an employee share purchase scheme, myPact, to further strengthen the link between
executive reward and shareholder value creation. The scheme provides an opportunity for employees to acquire
shares in Pact, aligning the financial interests of employees with the long-term growth of the Company.
Participation in the scheme is voluntary. Over 400 employees participated in the scheme.
Members of the Executive Leadership Team (including the CEO and CFO) may choose one of three
participation amounts to acquire shares in the Company: $20,000, $50,000 or $100,000. The ELT myPact
Plan provides for a Company co-contribution of 25% of the total cost of purchasing the shares. In FY21, both
the CEO and CFO participated to the maximum participation amount of $100,000, whereby Pact contributed
$25,000 and each executive contributed $75,000 via salary sacrifice arrangement.
Under the ELT myPact Plan, participants receive an allocation of shares equal in value to the chosen
participation amount. For each share allocated, the participant has the right to acquire one ordinary share that
will automatically exercise on the conversion date in accordance with the terms of the Plan.
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3. Executive remuneration arrangements
Remuneration principles and strategy
Pact’s executive remuneration framework is designed to drive Group strategy, organisational culture
and long-term shareholder value creation. It is underpinned by Pact’s governing reward principles that
articulate the intent and purpose of our executive reward framework.
The below diagram illustrates the remuneration framework for the CEO and CFO for the current year.
Pact Executive Remuneration Approach
Designed to drive Group strategy, organisational culture and long-term shareholder value creation
Governing principles underpinning our reward framework
Aligns with
shareholder
value creation
Attracts, retains
and motivates
capable talent
Reflects Group
strategy and
organisational
culture
Drives high
performance
culture that
recognises
outperformance
Simple and
transparent
Reward framework components
Fixed annual
remuneration (FAR)
Short-term incentive
(STI) at risk
Long-term incentive
(LTI) at risk
Purpose
Competitively set
to attract and
retain capable
talent reflecting
the role scope and
accountabilities
Determined based on
market positioning
statement
Reward for annual
performance to deliver
superior business,
customer and
shareholder value
Provides specific focus
on annual strategic
priorities
Performance
link
Sustained
performance and
leadership in executive
role
Payment
vehicle
and quantum
Base salary,
superannuation
May include other
benefits and cash
allowances
Target ASX200 Market
Median (excluding
Financial services and
mining)
Annual performance
targets:
• Group EBIT
• Divisional EBIT
• Operational and
strategic KPIs
• Safety
Annual cash incentive
Target opportunity
• CEO 100% FAR
• CFO 40% of FAR
• Maximum
opportunity
equivalent to 125%
of target for both
executive KMP
• Subject to Board
discretion and
clawback provision
Reward for the
creation of sustainable
long-term shareholder
value
Focuses on leading
positive organisational
culture and
engagement with
customers, community
and people
Three-year relative
total shareholder
return (relative TSR)
performance against
selected ASX 200
companies
Annual performance
rights grant
Target opportunity
• CEO 100% FAR
• CFO 30% of FAR
• Subject to Board
discretion and
clawback provision
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3. Executive remuneration arrangements (continued)
Detail of incentive plans
Opportunity
Performance
measures &
weighting
FY21 Short-term incentive plan
CEO: Target opportunity equivalent to 100% of FAR
CFO: Target opportunity equivalent to 40% of FAR
Maximum outcome for the CEO and CFO is capped at 125% of FAR
Former CFO: Target opportunity equivalent to 50% of base salary
STI is linked to Group EBIT, Divisional EBIT, operational and strategic KPIs, and
safety:
CEO: Group EBIT (90%), Group safety (10%)
CFO: Group EBIT (50%), operational and strategic KPI (40%), Group safety
(10%)
The Board considers these measures to be appropriate as they are strongly
aligned with the interests of shareholders. Group EBIT is a key indicator of
the underlying growth of the business, enabling the payment of dividends to
shareholders.
STI gateways
For any STI award to be made, the Group must achieve a baseline Group
financial performance as determined by the Board for the relevant performance
period. This is known as the Financial Gateway. For FY21, the STI Financial
Gateway was set at 100% of Group EBIT Target.
At an individual level, all STI participants must adhere to Pact Values, Code of
Conduct and comply with the Group’s mandatory risk and compliance training
requirements. This is known as the Individual Gateway. In the event a participant
does not satisfy the Individual Gateway, they will be automatically suspended
from participating in the STI plan in respect of the relevant performance period.
The consequence of the Individual Gateway reinforces Pact's expectation of,
and commitment to, the minimum standards of behaviour and conduct and
demonstrates tangible consequences for behaviour that may not warrant
termination of employment but still constitutes a breach of the Pact Values,
Code of Conduct and Risk and Compliance standards.
Payout schedule
Each performance measure will be assessed against a set target and will result
in a STI payout in accordance with the payout schedule below:
Performance against Target
% Payout against Target Opportunity
Below Target
Nil
Target (meets 100% of Target)
100% of Target
Stretch (meets 110% of Target)
125% of Target
Straight line vesting applies between target and stretch.
The table on page 49 provides additional information on these performance
measures, including an overview of performance outcomes.
Directors' Report –
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3. Executive remuneration arrangements (continued)
FY21 Long-term incentive plan
Opportunity
CEO: Maximum opportunity equivalent to 100% of FAR
CFO: Maximum opportunity equivalent to 30% of FAR(1)
Refer to LTI vesting schedule below
Instrument
Performance rights
Performance
period
Allocation
approach
Performance
hurdle
The performance period commences on the first day of that fiscal year and is measured over
three years.
The number of performance rights allocated to each KMP is based on their maximum LTI
opportunity divided by the five-day volume weighted average price (VWAP) following the
public announcement of the financial year results.
Vesting of rights is subject to relative Total Shareholder Return (rel. TSR^) hurdle over a three-
year performance period.
Peer Group: S&P/ASX 200 comparator group, excluding companies in the Financials, Metals
and Mining sectors.
LTI Vesting Schedule
TSR relative to peer group
Vesting %
At or above 75th percentile
100%
Between 50th and 75th percentile
pro rata vesting between 50% and 100%
At 50th percentile
Below 50th percentile
50%
Nil
^TSR measures a company’s share price movement, dividends paid and any return on
capital over a specific period. Relative TSR compares the ranking of the Group TSR over the
performance period with the TSR of other companies in a peer group.
LTI is also subject to an individual Gateway condition consistent with the STI plan, linked
to adherence to Pact Values, Code of Conduct and Risk and Compliance standards. In the
event a participant does not satisfy the Individual Gateway, they will forfeit their LTI vesting
entitlements for the relevant performance period, be suspended from participating in future LTI
grant opportunities and/or be subject to clawback subject to Board discretion.
If an executive resigns or is terminated for cause, any unvested LTIP awards will be forfeited,
unless otherwise determined by the Board. A “good leaver” will retain a pro rata number of
performance rights based on time elapsed since the initial grant date. Any such performance
rights will be subject to the original terms and conditions, and discretion of the Board.
Performance rights do not carry any dividend or voting entitlements prior to vesting. Shares
allocated upon vesting of performance rights will carry the same rights as other ordinary
shares.
In accordance with the Individual Gateway condition, 100% of the award can be forfeited
where there has been any fraud, dishonesty, or breach of obligations, including a material
misstatement of the financial statements.
Cessation of
employment
Rights attaching
to performance
rights
Clawback
Change of control
provisions
In the event of change of control, the performance period end date will be brought forward to
the date of change of control, and awards will vest based on performance over this shortened
period (subject to Board discretion).
(1) Mr Paul Washer, the CFO, is eligible to participate in the LTIP commencing 1 July 2021.
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3. Executive remuneration arrangements (continued)
Service agreements
Remuneration and other terms of employment for Executive KMP are formalised in service agreements.
The material terms of the employment contracts for the Executive KMP are summarised in the table
below.
Contractual terms
Conditions
Duration of contract
Permanent full time employment contract until notice given by either
party
Notice period
Three months’ notice by either party
Termination clauses
If an Executive is terminated due to genuine redundancy, they will be
paid a severance payment of the greater of three months annual base
salary or three weeks annual base salary for each completed year of
continuous service with the Group or a predecessor employing entity
acquired by the Group. Pro rata of severance payment entitlement
may apply for any incomplete year of continued service. The severance
payment is capped at a maximum of 52 weeks in total.
4. Executive remuneration outcomes for FY21
Business performance in FY21
The Group delivered solid growth in underlying earnings and margins, with improved volumes in key
segments and disciplined management of input costs. The Group’s performance demonstrates good
progress in the delivery of strategy.
The table below summarises key indicators of the performance of the Company and relevant shareholder
returns over the past 5 financial years.
Performance measure
2017
2018
2019
2020
2021
Statutory net profit/(loss) after
tax ($000)
Underlying Net profit after tax
(NPAT)(1) ($000)
90,341
74,488
(289,587)
88,847
87,534
100,003
94,661
77,307
73,245
93,544
Underlying NPAT growth %(1)
6.0%
(5.3%)
(18.3%)
(5.3%)
27.7%
Underlying EBIT(1) ($000)
169,416(2)
164,506(2)
148,404(2)
166,263
182,875
Underlying EBIT growth %
4.3%
(2.9%)
(9.8%)
12.0%(3)
10.0%
Dividends per ordinary share (cps)
Closing share price (30 June)
3 month average share price
(1 April to 30 June)
Earnings per share(1) (cps)
Earnings per share(1) growth %
23.0
5.99
6.44
33
3.1%
23.0
5.27
5.57
30
-
2.79
2.51
23
3.0
2.19
2.01
21
11.0
3.70
3.70
27
(9.1%)
(23.3%)
(8.7%)
28.6%
Cumulative TSR % (4)
25.7%
14.0%
(39.9%)
(49.1%)
(16.7%)
(1) Before underlying adjustments (refer Note 1.1 in the Consolidated Financial Report).
(2) EBIT before underlying adjustments from 2017 to 2019 exclude the impacts of AASB16.
(3) EBIT before underlying adjustments growth in 2020 is 1.7% excluding the impacts of AASB16.
(4) Cumulative TSR has been calculated using the same start date for each period (1 July 2017). The
3 month average share price has been used in all periods (the 3 month average share price for the
starting period was $5.46).
Directors' Report –
Remuneration Report
4. Executive remuneration outcomes for FY21 (continued)
STI Outcomes
Performance of STI measures
The table below outlines the performance of each STI measure for 2021.
Measure
Weighting (at target)
Performance commentary
Sanjay
Dayal
Paul
Washer
Richard
Betts
EBIT
90%
50%
50%
EBIT target was achieved
Operational and
strategic KPIs(1)
-
40%
40%
During the year target performance was
achieved
Group safety
10%
10%
10%
Measured by TRIFR performance and
implementation of the Group Safety Plan,
target was not achieved
(1) This includes financial performance metrics that align with maintaining targeted gearing.
STI outcome for 2021
The table below shows details of the Executive KMP STI opportunity and payments received for 2021.
Sanjay Dayal
Paul Washer
Former KMP
Richard Betts
LTIP Outcomes
LTIP allocations
Total STI $
STI earned%
of target
1,154,554
64,279
93%
90%
204,473
92%
The table below outlines the performance rights granted to the CEO for participating in the LTIP, and the
relevant performance period for each fiscal year. Mr Paul Washer, the CFO, is eligible to participate in the LTIP
commencing 1 July 2021.
Year
Grant date
Sanjay Dayal
Performance
rights
Granted(1)
Fair value
of rights at
grant date
Value of rights
included in
compensation
for the year(2)
Performance period
2021 LTIP
18 November 2020
497,967
$856,503
$285,501
1 July 2020 to 30 June 2023
2020 LTIP
13 November 2019
538,189
$721,173
$240,391
1 July 2019 to 30 June 2022
2019 LTIP
27 March 2019
69,784
$17,446
$7,700
1 July 2018 to 30 June 2021
$533,592
(1) The performance rights granted to Mr Dayal for the 2019 LTIP were on a pro rata basis aligning with his
commencement date of 3 April 2019.
(2) Following Mr Betts cessation of employment, his 2021, 2020 and 2019 LTIP rights were forfeited. No share-
based payment expense has been included for Mr Betts in the current year in relation to his 2021 tranche.
A reversal of share-based payment expense was recognised in the current year in relation to the 2020 and
2019 tranches.
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4. Executive remuneration outcomes for FY21 (continued)
LTIP Outcomes (continued)
Executive KMP performance rights testing
Directors' Report –
Remuneration Report
4. Executive remuneration outcomes for FY21 (continued)
Executive KMP remuneration for the year ended 30 June 2021
The table below show the LTI plan awards tested in the current financial year.
Executive
Year
Short-term benefits
Post-
employment
benefits
Long-
term
benefits
Share-based
payments (equity
settled)
Termination
payments
Total Performance
related %
Year
Performance period
Outcome
Sanjay Dayal
2019 LTIP
1 July 2018 to 30 June 2021
The 2019 grant was tested in July 2021. As the minimum
relative TSR performance hurdle was not met, awards in
relation to the 2019 grant have not vested.
Executive KMP performance rights holdings
The table below shows the movement in KMP performance rights holdings during the year, and the
balance of vested and unvested rights at the end of the financial year.
KMP(1) (2)
Balance at
1 July 2020
Number
granted
Number
lapsed/
forfeited
Balance at
30 June 2021
Vested at
30 June 2021
Unvested at
30 June 2021
Sanjay Dayal
607,973
497,967
-
1,105,940
-
1,105,940
(1) Mr Washer is eligible to participate in the LTIP commencing 1 July 2021.
(2) Mr Betts forfeited 205,534 rights during the year in relation to his 2021, 2020 and 2019 LTIP rights following
cessation of his employment.
Salary &
fees
STI &
bonuses
Other
benefits(2)
Superannuation
$
$
$
2021
1,215,300 1,154,554
48,021
2020 1,200,000 1,111,198
22,441
2021
170,833
64,279
65,807(2)
2020
-
-
-
$
25,000
25,000
7,428
-
-
-
-
-
Long
service
leave(3)
$
LTIP(4)
$
Employee
Share
Scheme(5)
$
$
$
533,592
25,000
- 3,001,467
248,112
-
-
-
25,000
-
-
-
-
-
-
2,606,751
333,347
-
399,825
1,031,487
-
953,027
2021
441,876(1)
204,473
17,148
18,750(1)
10,639 (61,224)(6)
2020
584,101
205,487
(6,963)
25,000
65,836
79,566
2021
1,828,009 1,423,306
130,976
51,178
10,639
472,368
50,000
399,825 4,366,301
2020
1,784,101
1,316,685
15,478
50,000
65,836
327,678
-
-
3,559,778
%
56%
52%
19%
-
14%
30%
43%
46%
Mr Sanjay
Dayal (CEO)
Mr Paul
Washer
(CFO)
Former
Executive
KMP
Mr Richard
Betts
(Former CFO)
Total
Executive
KMP
remuneration
(1) Salary & fees and superannuation for Mr Betts has been disclosed in the table above based on his period as a
designated KMP from the start of the year to 31 March 2021.
(2) Other benefits is the movement in the annual leave provision for Mr Dayal and Mr Betts. In relation to
Mr Washer this includes a $50,000 benefit in relation to relocation costs, and the remaining balance relates
to the movement in his annual leave provision.
(3) Long-term benefits is the movement in the long service leave provision in relation to long service leave
entitlements after 5 years of continuous service.
(4) An independent valuation of the performance rights was performed to establish the fair value in accordance
with AASB2: Share-based Payments. Valuation of the rights was done using Monte Carlo valuation
simulations.
(5) Includes the Company’s co-contribution in the ‘myPact’ employee share ownership scheme. For both
Mr Dayal and Mr Washer a $25,000 benefit has been included in the current year, representing 25% of the
maximum participation amount of $100,000.
(6) Following Mr Betts cessation of employment, 205,534 unvested LTIP rights were forfeited. The negative
amount of $61,224 is due to the reversal of share-based payment expense in the current year following the
forfeiture of these rights.
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4. Executive remuneration outcomes for FY21 (continued)
Executive KMP remuneration for the year ended 30 June 2021 (continued)
The table on the previous page shows KMP remuneration in accordance with statutory obligations and
accounting standards. The following table, which is audited, provides additional voluntary disclosure as
the Directors believe this information is helpful to assist shareholders in understanding the benefits that
the Executive KMP received during the financial year ended 30 June 2021. The table below has not been
prepared in accordance with Australian accounting standards. The benefits disclosed below excludes the
expense for rights that are unvested.
Fixed
Remuneration(1)
STI and
bonuses(2)
Other
benefits(3)
$
$
$
Performance
rights vested
in 2021(4)
$
Employee
share
scheme(5)
$
Total
$
Mr Sanjay
Dayal
Mr Paul
Washer
Mr Richard
Betts
1,240,300
1,154,554
48,021
178,261
64,279
65,807
460,626
204,473
17,148
-
-
-
25,000
2,467,875
25,000
333,347
-
682,247
(1) Fixed remuneration includes salary and fees, and superannuation contributions, calculated on the same
basis as the remuneration table on page 51.
(2) STI and bonuses attributable to the year ended 30 June 2021 are calculated on the same basis as the
remuneration table on page 51.
(3) Other benefits include the movement in the annual leave provision for Mr Dayal and Mr Washer shown
on an accruals basis, and a $50,000 benefit in relation to relocation costs for Mr Washer.
(4) The 2019 LTIP tranche was measured against the relative TSR hurdle as at 30 June 2021. The minimum
TSR hurdle has not been reached, therefore no benefits were received during the current financial year.
(5) The benefit arising from the employee share scheme is disclosed on the same basis as the
remuneration table on page 51.
Directors' Report –
Remuneration Report
5. Non-Executive Directors’ remuneration arrangements
Remuneration policy
The Committee seeks to set aggregate remuneration at a level that provides the Company with the ability
to attract and retain Non-Executive Directors (NEDs) of the highest calibre, whilst incurring a cost that is
acceptable to shareholders.
The amount of aggregate remuneration sought to be approved by shareholders and the fee structure is
reviewed annually against fees paid to NEDs of comparable companies (S&P/ASX 200 comparator group,
excluding companies in the Financial, Metals and Mining sector).
The Company’s Constitution and the ASX Listing Rules specify that the NED fee pool shall be determined from
time to time by a general meeting. Consistent with prior years, the total amount paid to NEDs must not exceed
a fixed sum of $1,000,000 per financial year in aggregate. Raphael Geminder does not receive a fee for his
position as Chairman and a NED of the Company.
Structure
The remuneration of NEDs consists of Directors’ fees and committee fees. The payment of additional fees for
serving on a committee or being the Chair of a committee recognises the additional time commitment required
by NEDs who serve on committees.
The table below summarises payments made for NED fees.
Responsibility
Board fees
2021
2020
Non-Executive Directors (excluding the Chairman)
$115,569
$112,750
Audit, Business Risk and Compliance Committee
Chair
Member
Nomination and Remuneration Committee
Chair
Member
$31,519
$30,750
$7,880
$7,688
$31,519
$30,750
$7,880
$7,688
NEDs do not participate in any incentive programs.
The remuneration of NEDs for the year ended 30 June 2021 is detailed in the following table.
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5. Non-Executive Directors’ remuneration arrangements (continued)
Non-Executive KMP remuneration for the year ended 30 June 2021
Non-Executive KMP
Year
Short-term
benefits
Post-employment
benefits
Fees
$
Superannuation
$
Total
$
Ms Lyndsey Cattermole
Mr Raphael Geminder
Mr Jonathan Ling
Ms Carmen Chua
Mr Michael Wachtel
Former Non-Executive KMP
Mr Ray Horsburgh
Mr Peter Margin
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
Total Non-Executive KMP remuneration
2021
2020
113,241
117,009
-
-
154,338
143,500
121,934
112,750
146,171
21,048
53,273
109,989
-
18,225
588,957
522,521
10,758
123,999
11,116
128,125
-
-
-
-
-
-
-
-
154,338
143,500
121,934
112,750
254
146,425
2,000
23,048
5,061
58,334
10,449
120,438
-
-
-
18,225
16,073
605,030
23,565
546,086
Directors' Report –
Remuneration Report
6. Equity holdings of KMP
The following table shows the respective shareholdings of KMP (directly and indirectly) including their related
parties and any movements during the year ended 30 June 2021:
KMP
Raphael Geminder
Lyndsey Cattermole
Jonathan Ling
Carmen Chua
Michael Wachtel
Sanjay Dayal
Paul Washer
Former KMP
Ray Horsburgh
Richard Betts
Balance
1 July 2020
152,252,175
529,879
48,786
150,000
-
40,000
-
80,971
9,284
Movements
-
11,554
-
-
41,925
-
-
-
-
Balance
30 June 2021
152,252,175
541,433
48,786
150,000
41,925
40,000
-
80,971(1)
9,284(2)
(1) The final shareholding of Mr Ray Horsburgh at 18 November 2020, the date he resigned as a Director.
(2) The final shareholding of Mr Richard Betts at 31 March 2021, the date he ceased to be a KMP.
7. Related party transactions with KMP
The following table provides the total amount of transactions with related parties for the year ended 30 June
2021:
$’000
Related parties — Directors' interests(1)
Sales
Purchases
Other
expenses
Net amounts
receivable
2021
2020
10,940
13,362
3,712
7,354
5,658
6,317
632
558
(1) Related parties — Directors' interests include the following entities: Pro-Pac Packaging Limited;
Centralbridge Pty Ltd (as trustee for the Centralbridge Unit Trust); Centralbridge Two Pty Ltd, Centralbridge
(NZ) Limited; Albury Property Holdings Pty Ltd; Green’s General Foods Pty Ltd; Remedy Kombucha Pty Ltd;
Gem-Care Products Pty Ltd; and P’Auer Pty Ltd (until November 2019).
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7. Related party transactions with KMP (continued)
Sales to related parties
The Group has sales of $10.9 million (2020: $13.4 million) to other related parties including Green’s General
Foods Pty Ltd, Remedy Kombucha Pty Ltd, Gem-Care Products Pty Ltd and P’Auer Pty Ltd until November
2019 in the prior year. Sales are for packaging and contract manufacturing services.
Pro-Pac Packaging Limited (Pro-Pac)
Pro-Pac, an entity for which Mr Raphael Geminder owns 51.6% (2020: 49.7%), is an exclusive supplier of
certain raw materials such as flexible film packaging, flexible plastic bags and tapes to Pact. Pact has
a supply agreement with Pro-pac that expires 31 December 2021. The total value of purchases by Pact
under this arrangement is approximately $3.7 million (2020: $4.2 million). The supply arrangement is at
arm’s length. Mr Jonathan Ling is also an Independent Non-Executive Director and Chairman of Pro Pac.
Directors' Report
Auditor's Independence Declaration
A copy of the auditor's independence declaration as required under section 307C of the Act is set out at
page 58.
Rounding
Is presented in Australian dollars with all values rounded to the nearest $1,000, unless otherwise stated,
in accordance with the ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191
dated 1 April 2016.
Property leases with related parties
Signed in accordance with a resolution of the Board of Directors:
The Group leased 11 properties (nine in Australia and two in New Zealand) from Centralbridge Pty Ltd (as
trustee for the Centralbridge Unit Trust), Centralbridge Two Pty Ltd, Centralbridge (NZ) Limited and Albury
Property Holdings Pty Ltd (“Centralbridge Entities”), which are each controlled by entities associated
with Mr Raphael Geminder and are therefore related parties of the Group (“Centralbridge Leases”). The
aggregate annual rent payable by Pact under the Centralbridge Leases for the period ended 30 June 2021
was $5.7 million (June 2020: $6.2 million). The rent payable under these leases was determined based on
independent valuations and market conditions at the time the leases were entered.
Terms and conditions of transactions with related parties
As detailed above, all transactions with related parties are made at arm’s length and on commercial terms.
There have been no guarantees provided or received for any related party receivables or payables.
Raphael Geminder
Chairman
18 August 2021
Sanjay Dayal
Managing Director and
Group Chief Executive Officer
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Ernst & Young
8 Exhibition Street
Melbourne VIC 3000 Australia
GPO Box 67 Melbourne VIC 3001
Tel: +61 3 9288 8000
Fax: +61 3 8650 7777
ey.com/au
Auditor’s Independence Declaration to the Directors of Pact Group
Holdings Ltd
As lead auditor for the audit of the financial report of Pact Group Holdings Ltd for the financial year
ended 30 June 2021, I declare to the best of my knowledge and belief, there have been:
a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Pact Group Holdings Ltd and the entities it controlled during the
financial year.
Ernst & Young
David Shewring
Partner
18 August 2021
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
19
Financial Report
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2021
$’000
Revenue
Raw materials and consumables used
Employee benefits expense
Notes
2021
2020
1.1, 1.2
1,761,572
1,809,158
(734,175)
(786,175)
5.2
(438,079)
(441,666)
Occupancy, repair and maintenance, administration and selling expenses
(293,843)
(292,919)
Interest and other income
Other (losses)/gains
Depreciation and amortisation expense
Impairment and write-off expense
Finance costs and loss on de-recognition of financial assets
Share of profit in associates
Profit before income tax expense
Income tax expense
Net Profit for the year
Net Profit attributable to equity holders of the parent entity
Other comprehensive income
Items that will not be reclassified subsequently to profit or loss
6.2
2.2
1.1
4.1
3.3
18,145
14,828
(6,939)
14,463
(132,013)
(135,544)
(2,687)
(11,793)
(51,766)
(63,437)
3,075
3,131
123,290
110,046
1.3
(35,756)
(21,199)
87,534
88,847
87,534
88,847
Gain/(loss) on remeasurement of defined benefit liability
339
(144)
Items that will be reclassified subsequently to profit or loss
Gain/(loss) on cash flow hedges taken to equity
Foreign currency translation losses
5,269
(3,285)
(6,429)
(2,753)
Income tax (expense)/benefit on items in other comprehensive income
(1,664)
1,088
Other comprehensive loss for the year, net of tax
Total comprehensive income for the year
Attributable to:
Equity holders of the parent entity
Total comprehensive income for the Group
cents
Basic earnings per share
Diluted earnings per share
(2,485)
(5,094)
85,049
83,753
85,049
83,753
85,049
83,753
1.1
1.1
25.4
25.3
25.8
25.7
The Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying
notes.
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Financial Report
Consolidated Statement of Financial Position
For the year ended 30 June 2021
$’000
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Contract assets
Other current financial assets
Prepayments
Total current assets
Non-current assets
Trade and other receivables
Prepayments
Property, plant and equipment
Investments in associates and joint ventures
Intangible assets and goodwill
Other non-current financial assets
Deferred tax assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Current tax liability
Employee benefits provisions
Other provisions
Lease liabilities
Other current financial liabilities
Total current liabilities
Non-current liabilities
Employee benefits provisions
Other provisions
Interest-bearing loans — bank borrowings
Lease liabilities
Other non-current financial liabilities
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings
Total equity
Notes
2021
2020
2.1
2.1
62,152
129,305
242,706
13,397
1,714
15,740
76,004
149,679
223,698
12,349
784
13,985
465,014
476,499
7
2,015
7
2,925
2.2
3.3
2.2
1,014,199
996,002
35,110
30,876
459,369
456,068
-
1.3
32,029
111
33,147
1,542,729
1,519,136
2,007,743
1,995,635
2.1
1.3
5.2
2.4
2.5,4.1
5.2
2.4
4.1
2.5,4.1
1.3
351,207
378,124
25,198
41,616
1,970
70,932
271
21,175
38,638
-
69,203
4,313
491,194
511,453
8,928
11,923
647,163
399,012
8,319
9,334
8,127
9,967
689,530
385,656
8,457
9,796
1,084,679
1,111,533
1,575,873
1,622,986
431,870
372,649
4.2
4.2
1,750,476
1,750,476
(902,383)
(901,251)
(416,223)
(476,576)
431,870
372,649
The Consolidated Statement of Financial Position should be read in conjunction with the accompanying
notes.
Financial Report
Consolidated Statement of Changes in Equity
For the year ended 30 June 2021
Attributable to equity holders of the Parent entity
Contributed
equity
Common
control
reserve
Cash
flow
hedge
reserve
Foreign
currency
translation
reserve
Share-
based
payments
reserve
Retained
earnings
Total
equity
$’000
Year ended 30 June 2021
As at 1 July 2020
1,750,476 (928,385)
(6,777)
31,144
2,767
(476,576)
372,649
Profit for the year
Other comprehensive
income/(loss)
Total comprehensive
income/(loss)
Dividends paid
Share-based payments
expense
Transactions with owners
in their capacity as owners
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,605
(6,429)
3,605
(6,429)
-
-
-
-
-
-
-
-
-
-
87,534
87,534
339
(2,485)
87,873
85,049
(27,520)
(27,520)
1,692
-
1,692
1,692
(27,520)
(25,828)
Balance as at 30 June 2021
1,750,476 (928,385)
(3,172)
24,715
4,459
(416,223) 431,870
Year ended 30 June 2020
As at 1 July 2019
1,750,476 (928,385)
(4,580)
33,897
2,157
(565,279)
288,286
Profit for the year
Other comprehensive loss
Total comprehensive (loss)
/income
Share-based payments
expense
Transactions with owners
in their capacity as owners
-
-
-
-
-
-
-
-
-
-
-
-
(2,197)
(2,753)
(2,197)
(2,753)
-
-
-
-
-
-
-
610
610
88,847
88,847
(144)
(5,094)
88,703
83,753
-
-
610
610
Balance as at 30 June 2020
1,750,476 (928,385)
(6,777)
31,144
2,767
(476,576)
372,649
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying
notes.
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Financial Report
Consolidated Statement of Cash Flows
For the year ended 30 June 2021
$’000
Notes
2021
2020
Cash flows from operating activities
Receipts from customers
Receipts from securitisation programs
Payments to suppliers and employees
Income tax paid
Interest received
Proceeds from/(repayments of) securitisation of trade debtors
1,153,783
980,845
855,898
1,057,888
(1,711,204)
(1,775,178)
(31,065)
(4,315)
588
3,196
1,534
(6,840)
Borrowing, trade debtor securitisation and other finance costs paid
(50,162)
(61,803)
Net cash flows provided by operating activities
4.1
221,034
192,131
Cash flows from investing activities
Payments for property, plant and equipment
(78,283)
(76,475)
Payments for investments in associates and joint ventures
(9,009)
(3,558)
Purchase of businesses and subsidiaries, net of cash acquired
3.1
(23,836)
Payments for deferred acquisition consideration
Proceeds from sale of property, plant and equipment
Proceeds from/(Payments for) joint venture loans
Sundry items
(23,307)
6,900
1,104
1,049
-
-
669
(105)
704
Net cash flows used in investing activities
(125,382)
(78,765)
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Repayment of lease liability principal
Payment of dividends
Net cash flows used in financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effect of exchange rate changes on cash and cash equivalents
247,997
315,139
(280,722)
(357,599)
(47,413)
(44,480)
(27,520)
-
(107,658)
(86,940)
(12,006)
76,004
(1,846)
26,426
49,950
(372)
Financial Report
Notes to the Financial Statements
Section 1 — Our performance
A key element of Pact’s strategy is to maximise long-term shareholder value. This section highlights the
results and performance of the Group for the year ended 30 June 2021.
1.1 Group results
$’000
Year ended 30 June 2021
Packaging and
Sustainability
Materials
Handling and
Pooling
Contract
Manufacturing
Services
Eliminations
Total
Revenue
1,131,088
344,008
321,915
(35,439)
1,761,572
Underlying EBITDA(1)
Underlying EBIT(2)
190,734
104,616
85,579
54,446
38,575
23,813
-
-
314,888
182,875
Packaging and
Sustainability
Materials
Handling and
Pooling
Contract
Manufacturing
Services
Eliminations
Total
$’000
Year ended 30 June 2020
Revenue
1,143,852
315,599
394,188
(44,481)
1,809,158
Underlying EBITDA(1)
Underlying EBIT(2)
181,272
90,806
73,012
44,200
47,523
31,257
-
-
301,807
166,263
(1) Underlying EBITDA — Earnings before underlying adjustments, finance costs and loss on de-recognition of
financial assets, net of interest income, tax, depreciation and amortisation.
(2) Underlying EBIT — Earnings before underlying adjustments, finance costs and loss on de-recognition of
financial assets, net of interest income, tax.
Pact’s chief operating decision-maker is the Managing Director and CEO, who has a focus on the financial
measures reported in the above table. As required by AASB 8: Operating Segments, the results above have
been reported on a consistent basis to that supplied to the Managing Director and CEO.
The Managing Director and CEO monitors results by reviewing the reportable segments based on a product
perspective as outlined in the table below. The resource allocation to each segment, and the aggregation of
reportable segments is based on that product portfolio.
Reportable segments
Products/services
Countries of Operation
Cash and cash equivalents at the end of the year
62,152
76,004
Packaging and Sustainability
The Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
Materials Handling
and Pooling
Manufacture and supply of rigid
plastic and metal packaging and
associated services
Recycling and sustainability services
Manufacture and supply of materials
handling products and the provision
of associated services
Pooling services
Contract Manufacturing
Services
Contract manufacturing and
packing services
Thailand
Hong Kong
South Korea
Nepal
India
India
Bangladesh
United Kingdom
Sri Lanka
Australia
New Zealand
China
Indonesia
Philippines
Singapore
Australia
New Zealand
China
Hong Kong
United States of
America
Australia
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Financial Report
Notes to the Financial Statements
1.1 Group results (continued)
Net profit after tax
The reconciliation of EBIT before underlying adjustments shown above and the net profit after tax
disclosed in the Consolidated Statement of Comprehensive Income is as follows:
$’000
Underlying EBIT
Underlying adjustments(1)
Transaction costs(2)
Restructuring costs(3)
Costs arising from factory fire(4)
Impairment and write-off expenses(4)
Insurance settlement for events in prior periods
Profit on sale of properties(5)
Net gain on lease modification(6)
Reversal of contingent consideration obligation(7)
Finalisation of acquisition consideration(8)
Asset write downs
Reported EBIT
Finance costs(9)
Net profit before tax
Income tax expense
Net profit after tax
Notes
2021
2020
182,875
166,263
(1,743)
(6,196)
(3,983)
(4,034)
(4,790)
-
(2,687)
(11,793)
1,787
4,408
-
-
-
-
(8,414)
-
-
4,544
30,000
(7,172)
(218)
6,537
174,461
172,800
(51,171)
(62,754)
123,290
110,046
(35,756)
(21,199)
87,534
88,847
(1) Underlying adjustments, referred to as significant items in prior periods. This includes items that are
individually material or do not relate to the operating business, and are reported outside of operational
results to the chief operating decision-maker. The measurement of underlying adjustments is
consistent with that used for significant items in prior periods.
(2) Transaction costs includes professional fees, stamp duty and all other costs associated with business
acquisitions and divestments.
(3) Business restructuring relates to the optimisation of business facilities across the Group.
(4) Clean up and other miscellaneous expenses ($4.0 million), and write-off of fixed assets and inventory
($2.7 million) arising from a factory fire at the Lurnea plant in the Contract Manufacturing segment. In
the prior year a customer contract acquired in a previous business combination was written down by
$11.8 million due to reduced future economic benefits expected.
(5) Profit from the sale of property in China in the Packaging and Sustainability segment.
(6) In the prior year, a net gain on lease modification was recognised as a difference between the gain on
lease modification for $9.9 million and derecognition of ROU assets for $5.4 million in accordance with
AASB 16: Leases.
(7) In the prior year, reversal of contingent consideration obligation was recognised on acquisition of the
retail accessories reuse business. The specific financial hurdles required for payment were not achieved.
In accordance with AASB 3: Business Combinations, changes to the fair value of amounts payable for
acquisitions is recorded in the Consolidated Statement of Comprehensive Income.
(8) In the prior year, adjustments recognised following completion of accounting for acquisitions made in
the year ended 30 June 2019.
(9) Net finance costs includes interest income of $595,000 (2020: $683,000).
Financial Report
Notes to the Financial Statements
1.1 Group results (continued)
Basic and diluted earnings per share
Earnings per share (EPS) (cents) — basic
Earnings per share (EPS) (cents) — diluted
Calculated using:
• Net profit attributable to ordinary equity holders ($’000)
• Weighted average of ordinary shares (shares) — basic
• Weighted average of ordinary shares (shares) — diluted
2021
25.4
25.3
2020
25.8
25.7
87,534
343,993,595
346,160,722
88,847
343,993,595
345,329,618
Earnings per share is calculated by dividing the net profit for the year attributable to ordinary equity holders of
Pact by the weighted average number of ordinary shares outstanding during the year.
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to include
the weighted average number of additional ordinary shares that would have been outstanding assuming the
conversion of all dilutive shares. This includes items such as performance rights as disclosed in Note 5.3.
1.2 Revenue from contracts with customers
Disaggregation of revenue from contracts with customers
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Year ended 30 June 2021
Australia
New Zealand
Asia
Revenue from asset hire services(3)
Inter-segment revenue
Revenue
Packaging and
Sustainability(1)
Materials
Handling
and
Pooling
Contract
Manufacturing
Services(2)
Eliminations
Total
611,006
161,733
321,838
- 1,094,577
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303,820
646
183,485
97,157
-
-
-
81,887
32,777
2,585
-
77
-
-
304,466
280,642
- 1,679,685
-
81,887
(35,439)
-
1,131,088
344,008
321,915
(35,439)
1,761,572
Revenue from contracts with customers
1,098,311
259,536
321,838
(1) 0.2% of total revenue for Packaging and Sustainability is recognised over time.
(2) 3.5% of total revenue for Contract Manufacturing Services is recognised over time.
(3) Revenue from asset hire services is accounted for under AASB 16: Leases.
Annual Report 2021OverviewPerformanceGovernanceShareholder Information
Financial Report
Notes to the Financial Statements
1.3 Taxation
Reconciliation of tax expense
$’000
Accounting profit before tax
Income tax calculated at 30% (2020: 30%)
Adjustments in respect of income tax of previous years
Lease surrender
Tax on unremitted foreign income
Overseas tax rate differential
Tax on finalisation of acquisition consideration and reversal of contingent
consideration obligation
Sundry items
Income tax expense reported in the Consolidated Statement of
Comprehensive Income
Comprising of:
• Current year income tax expense
• Deferred income tax expense / (benefit)
• Adjustments in respect of previous years income tax
2021
2020
123,290
110,046
36,987
33,014
1,491
(2,009)
-
(1,363)
1,799
(3,835)
-
(686)
35,756
33,662
603
1,491
2,258
(2,977)
(7,172)
(552)
21,199
28,933
(5,725)
(2,009)
Included in the above is a tax benefit on underlying adjustments of $2.4 million for the year ended 30 June
2021 (2020: $9.1 million).
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Financial Report
Notes to the Financial Statements
1.2 Revenue from contracts with customers (continued)
$’000
Year ended 30 June 2020
Australia
New Zealand
Asia
Revenue from asset hire services(3)
Inter-segment revenue
Revenue
Packaging and
Sustainability(1)
Materials
Handling
and
Pooling
Contract
Manufacturing
Services(2)
Eliminations
Total
617,973
162,882
394,131
292,954
138
191,851
57,026
-
-
-
92,203
41,074
3,350
-
57
-
-
-
-
-
1,174,986
293,092
248,877
1,716,955
92,203
(44,481)
-
1,143,852
315,599
394,188
(44,481) 1,809,158
Revenue from contracts with customers
1,102,778
220,046
394,131
(1) 0.2% of total revenue for Packaging and Sustainability is recognised over time.
(2) 2.5% of total revenue for Contract Manufacturing Services is recognised over time.
(3) Revenue from asset hire services is accounted for under AASB 16: Leases.
How Pact accounts for revenue
The core principle of AASB 15: Revenue from Contracts with Customers is that an entity recognises
revenue to depict the transfer of promised goods or services to customers in an amount that reflects the
consideration to which an entity expects to be entitled to in exchange for those goods and services.
An assessment is made by management whether the goods or products manufactured have an alternate
use to Pact, including whether these goods or products can be repurposed and sold without significant
economic loss to the Group.
Pact recognises revenue on the following basis:
(a) Delivery of goods or products
Where the goods or products are not branded and can be sold to more than one specific customer, the
performance obligation is the delivery of finished goods or product to the customer. The performance
obligation is satisfied when control of the goods or products has transferred to the customer.
(b) Manufacture of goods or products
Where the goods or products are manufactured for a specific customer which have no alternate use
and at all times throughout the contract Pact has the enforceable right to payment for performance
completed to date, a performance obligation is the service of manufacturing the specific goods or
products. This performance obligation is satisfied as the goods and products are manufactured. An
output method has been adopted to recognise revenue for performance obligations satisfied over time.
This method reflects Pact’s short manufacturing period.
In addition, Pact has obligations to store and deliver manufactured goods or products. These obligations
are satisfied as the goods or products are stored (on an over time basis) and when and as delivery occurs.
Contract assets are recognised for the manufacture and storage of goods or products as the performance
obligations are satisfied. Upon completion of delivery of the goods or products and acceptance by the
customer, the amounts recognised as contract assets are reclassified to trade receivables.
The Group allocates the transaction price to each performance obligation on a stand-alone selling price
basis. The stand-alone selling price of the products is based on list prices or a cost-plus margin approach,
which is determined by the Group’s expertise in the market and also taking into consideration the length
and size of contracts. Some contracts for sale of goods have variable consideration including items such as
volume rebates. Variable consideration is estimated at contract inception using the expected value method
based on forecast volumes and is subject to the constraint on estimates. This estimate is reassessed at
each reporting date.
Annual Report 2021OverviewPerformanceGovernanceShareholder Information
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Financial Report
Notes to the Financial Statements
1.3 Taxation (continued)
Recognised current and deferred tax assets and liabilities
$’000
Opening balance
Charged to income
Adjustments in respect of income tax of
previous years
2021
Deferred
income tax
2021
Current
income tax
Asset/
(Liability)
2020
Current
income tax
Asset/
(Liability)
2020
Deferred
income tax
(21,175)
23,351
3,360
(33,662)
(603)
(28,933)
5,154
5,725
153
(1,644)
(10,285)
12,294
Charged to other comprehensive income
(1,644)
1,644
Adjustment from adoption of AASB 16
Net payments
-
31,065
-
-
Foreign exchange translation movement
65
(53)
1,088
9,234
4,315
46
-
-
-
178
Closing balance
Comprises of:
Deferred tax assets
• Employee entitlements provision
• Provisions
• Unutilised tax losses
• Lease liability
• Other
Offset with deferred tax liability
Net deferred tax asset
Deferred tax liabilities
• Property, plant and equipment
• Intangibles
• Other
Offset with deferred tax asset
Net deferred tax liability
(25,198)
22,695
(21,175)
23,351
17,272
7,341
1,468
136,960
8,006
171,047
(139,018)
32,029
(145,098)
(3,496)
242
(148,352)
139,018
(9,334)
16,824
7,591
1,037
132,872
8,303
166,627
(133,480)
33,147
(139,643)
(3,983)
350
(143,276)
133,480
(9,796)
Key estimates and judgements — Taxation
Pact is subject to income tax in Australia and foreign jurisdictions. The calculation of the Group’s tax
charge requires management to determine whether it is probable that there will be sufficient future
taxable profits to recoup deferred tax assets. AASB Interpretation 23 Uncertainty over Income Tax
Treatment addresses the accounting for income taxes when tax treatments involve uncertainty
that affects the application of the recognition and measurement criteria in AASB 112: Income Taxes.
Judgements and assumptions are subject to risk and uncertainty, hence if final tax determinations
or future actual results do not align with current judgements, this may have an impact to the
carrying value of deferred tax balances and corresponding credits or charges to the Consolidated
Statement of Comprehensive Income and Consolidated Statement of Financial Position.
Financial Report
Notes to the Financial Statements
1.3 Taxation (continued)
How Pact accounts for taxation
Income tax charges:
• Comprise of current and deferred income tax charges and represent the amounts expected to be paid
to and recovered from the taxation authorities in the jurisdictions that Pact operates.
• Are recorded in Equity when the underlying transaction that the tax is attributable to is recorded
within Other Comprehensive Income.
Pact uses the tax laws in place or those that have been substantively enacted at reporting date to
calculate income tax. For deferred income tax, Pact also considers whether these tax laws are expected
to be in place when the related asset is realised or liability is settled. Management periodically re-
evaluate their assessment of their tax positions, in particular where they relate to specific interpretations
of applicable tax regulation.
Deferred tax assets and liabilities are recognised on all assets and liabilities that have different carrying
values for tax and accounting, including those arising from a single transaction, except for:
• initial recognition of goodwill; and
• any undistributed profits of Pact’s subsidiaries, associates or joint ventures where either the
distribution of those profits would not give rise to a tax liability or the Directors consider they have the
ability to control the timing of the reversal of the temporary differences.
Specifically, for deferred tax assets:
• They are recognised only to the extent that it is probable that there are sufficient future taxable
amounts to be utilised against. This assessment is reviewed at each reporting date.
• They are offset against deferred tax liabilities in the same tax jurisdiction, when there is a legally
enforceable right to do so.
• If acquired as part of a business combination, but not satisfying the criteria for separate recognition
at that date, would be recognised subsequently if new information about facts and circumstances
changed. The adjustment would either be treated as a reduction to goodwill (as long as it does not
exceed goodwill) if it was incurred during the measurement period or in the Consolidated Statement of
Comprehensive Income.
Australian tax consolidated group
Pact Group Holdings Ltd (the head entity) and its wholly-owned Australian subsidiaries formed a tax
consolidated group (Australian tax consolidated group), effective January 2014.
The Australian tax consolidated group continues to account for their own current and deferred tax
amounts. The Group has applied the Group allocation approach in determining the appropriate amount
of current and deferred taxes to allocate to members of the tax consolidated group. The head entity
also recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax
losses and unused tax credits assumed from controlled entities in the tax consolidated group.
A tax funding agreement is in place such that Pact Group Holdings Ltd pays/receives any taxes owed
by/owed to the Group to/from the Australian Tax Office. Assets or liabilities arising under this tax funding
agreement are recognised as amounts receivable from or payable to the head entity. Any difference
between the amounts assumed and amounts receivable or payable under the tax funding agreement are
recognised as a contribution to (or distribution from) wholly owned tax consolidated entities.
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Financial Report
Notes to the Financial Statements
1.4 Dividends
$’000
Dividends paid during the financial year
Proposed dividend(1)
2021
2020
27,520
-
20,640
10,320
(1) The Directors have determined to pay a final dividend of 6.0 cents per ordinary share after the end of
the financial year (2020: 3.0 cents).
Franking credit balance(2)
Franking account balance as at the end of the financial year at 30%
(2020: 30%)
9,800
4,690
Franking credits/(debits) that will arise from the payment/(refund) of income
tax payable as at the end of the financial year
10,700
10,000
Franking credits that will be utilised from the payment of dividends as at the
end of the financial year
-
-
Total franking credit available for the subsequent financial year
20,500
14,690
(2) Franking credits of 7,667 have been utilised during the financial year (2020: $Nil).
Financial Report
Notes to the Financial Statements
Section 2 — Our operating assets
This section highlights the primary operating assets used and liabilities incurred to support the Group’s
operating activities.
Liabilities relating to the Group’s financing activities are disclosed in Note 4.1 Net Debt, Deferred tax
assets and liabilities are disclosed in Note 1.3 Taxation and employee benefits provisions are disclosed in
Note 5.2 Employee Benefits Expenses and Provisions.
2.1 Working capital
Trade and other receivables
Trade and other receivables at 30 June comprise of:
$’000
Trade receivables(1)
Allowance for expected credit losses
Other receivables(2)
Total current trade and other receivables
(1) Below is a breakdown of the ageing of trade receivables:
Ageing of trade receivables as at 30 June ($’000)
,
2
9
0
0
0
1
6
9
5
4
6
,
6
7
0
1
1
,
5
8
5
6
,
0
7
2
1
,
8
3
9
2
,
0
7
0
1
,
9
8
2
3
,
2021
2020
78,357
113,354
(345)
51,293
(450)
36,775
129,305
149,679
Not due
< 30
31–60
> 61
Days
2021
2020
(2) At 30 June 2021 $27.7 million (2020: $26.7 million) has been recognised as part of other receivables
representing the Group’s participation in a securitisation program. The program requires the Group (or an
entity other than the bank) to be a participant. Given the short-term nature of this financial asset, the
carrying value of the associated receivable approximates its fair value and represents the Group’s maximum
exposure to the receivables derecognised as part of the program.
At 30 June 2021, the Group had expected credit losses of $0.3 million (2020: $0.4 million). The Group has a
number of mechanisms in place which assist in minimising financial losses due to customer non-payment.
These include:
• All customers who wish to trade on credit terms are subject to strict credit verification procedures, which
may include an assessment of their independent credit rating, financial position, past experience and
industry reputation.
• Individual risks limits, which are regularly monitored in-line with set parameters.
• Monitoring receivable balances on an ongoing basis.
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Notes to the Financial Statements
2.1 Working capital (continued)
Trade and other receivables (continued)
Expected credit loss model
Information about the credit risk exposure on the Group’s trade receivables using a provision matrix has
not been disclosed due to the immaterial amount of expected credit losses as at 30 June 2021.
In assessing expected credit losses, the Group has considered current economic conditions. Management
considers the credit risks associated with the pandemic to be sufficiently mitigated due to the diversity
and credit standing of the Group’s customers. Accordingly, the Group has not experienced a significant
increase in expected credit losses.
How Pact accounts for trade and other receivables
Pact’s trade receivables are non-interest-bearing, are recorded at the amount on the sales invoice
and include Goods and Services Tax (GST). Trade receivables generally have 30 day terms from the
end of the month.
For lease receivables, trade receivables and contract assets, the Group applies a simplified
approach in calculating expected credit losses (ECLs). Therefore, the Group does not track changes
in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date.
The Group has established a provision matrix that is based on its historical credit loss experience,
adjusted for forward-looking factors specific to the debtors and the economic environment. A
financial asset is written off when there is no reasonable expectation of recovering the contractual
cash flows.
Under the Group’s securitisation programs:
• The Group transfers substantially all the risks and rewards of receivables within the programs to a
third party.
• Receivables are sold at a discount and at the date of sale the receivable is derecognised and the
discount is included as part of the loss on derecognition of financial assets in the Consolidated
Statement of Comprehensive Income. The costs associated with establishing the program are
also recognised on a pro rata basis within the same account (refer Note 4.1).
• The Group may act as a servicer to the programs to facilitate the collection of receivables.
Income received for being a servicer is recorded as an offset to the loss on derecognition of
receivables.
• At balance date, a liability is recognised if received collections have not been paid to other
participants of the programs.
Financial Report
Notes to the Financial Statements
2.1 Working capital (continued)
Inventories
Inventories at 30 June comprise of:
$’000
Raw materials and stores
Work in progress
Finished goods
Total inventories
2021
2020
131,614
109,989
22,640
88,452
22,943
90,766
242,706
223,698
How Pact accounts for inventories
Inventories are recorded at cost, which for Pact includes:
• Raw materials: the invoice price of the product, net of any discount, rebates, duties and taxes, as well
as the cost of internal freight.
• Work in Progress and Finished Goods: cost of raw materials, direct labour and a proportion of
manufacturing overheads based on a normal level of operating capacity, but excluding costs that
relate to general administration, finance, marketing, selling and distribution.
In June 2021, IFRIC published an agenda decision in relation to the accounting treatment when
determining net realisable value (NRV) of inventories, in particular what costs are necessary to sell
inventories under IAS 2: Inventories.
The Group is currently assessing the impact the agenda decision will have on its current accounting
policy and whether an adjustment to inventory may be necessary. Accordingly, a reliable estimate of the
impact of the IFRIC agenda decision on the Group cannot be made at the date of this report. The Group
expects to complete the implementation of the above IFRIC agenda decision as part of its 31 December
2021 reporting.
Trade and other payables
Current trade and other payables at 30 June comprise of:
$’000
Trade payables
Other payables
Total current trade and other payables
2021
2020
273,154
261,405
78,053
116,719
351,207
378,124
How Pact accounts for trade and other payables
Trade and other payables are carried at their principal amounts, are not discounted and include GST.
They represent amounts owed for goods and services provided to the Group prior to, but were not paid
for, at the end of the financial year. The amounts are generally unsecured and are usually paid within
30 to 90 days of recognition.
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Financial Report
Notes to the Financial Statements
2.2 Non-current assets
The below outlines the geographical location of Pact’s property, plant and equipment, intangible assets
and goodwill:
$’000
Australia
New Zealand
Asia
Total
2021
2020
835,813
851,812
409,273
362,007
228,482
238,251
1,473,568
1,452,070
Property, plant and equipment
The key movements in property, plant and equipment over the year were:
$’000
Property(1)
Plant and
equipment
Assets
for hire
Right of
use asset
Total
Capital
work in
progress
Estimated useful life
Leasehold improvements: 10–15 years 3–20 years
10 years
Freehold: 40–50 years
3–20
years
n/a
Year ended 30 June 2021
At 1 July 2020 net of accumulated depreciation
Additions and transfers
Acquisition of subsidiaries and businesses
Subsequent reassessment of lease liability
Disposals
Write-off expense
Lease modification
57,072
5,510
-
-
(2,160)
(95)
-
68,576
13,831
-
(356)
(753)
-
477,871
37,316
364,142
59,601
996,002
2,950
16,131
1,855
-
-
27,303
(1,607)
(237)
-
-
-
-
24,317
(2,119)
95,022
41,134
(1,607)
(2,753)
(848)
24,317
-
-
-
-
-
Foreign exchange translation movement
(965)
(3,170)
(13)
(302)
(6,569)
Depreciation charge for the year
(4,608)
(66,405)
(3,837)
(55,649)
-
(130,499)
At 30 June 2021 net of accumulated depreciation
54,754
489,594
36,179
372,518
61,154 1,014,199
Represented by:
At cost
Accumulated depreciation
Year ended 30 June 2020
85,142
1,243,020
53,592
474,625
61,154
1,917,533
(30,388)
(753,426)
(17,413)
(102,107)
- (903,334)
At 1 July 2019 net of accumulated depreciation
53,375
466,850
29,337
-
88,980
638,542
Adoption of AASB16
Additions and transfers
Acquisition of subsidiaries and businesses
Receipt of lease incentive
Disposals
Derecognition of ROU assets
-
-
-
377,077
-
377,077
8,515
84,864
12,715
47,183
(29,263)
124,014
-
-
-
-
524
-
(1,552)
-
-
-
-
-
-
(2,909)
-
(5,379)
-
-
-
-
524
(2,909)
(1,552)
(5,379)
(2,755)
Foreign exchange translation movement
(433)
(2,704)
(94)
592
(116)
Depreciation charge for the year
At 30 June 2020 net of accumulated depreciation
(4,385)
57,072
(70,111)
(4,642)
(52,422)
-
(131,560)
477,871
37,316
364,142
59,601
996,002
Represented by:
At cost
85,821
1,195,231
49,780
416,564
59,601
1,806,997
Accumulated depreciation and impairment
(28,749)
(717,360)
(12,464)
(52,422)
-
(810,995)
(1) Property consists of the following: leasehold improvements of $40.6 million (2020: $34.7 million) and
accumulated depreciation of $16.8 million (2020: $13.8 million), and freehold property of $44.6 million (2020:
$51.1 million) and accumulated depreciation of $13.6 million (2020: $14.9 million).
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2.2 Non-current assets (continued)
Property, plant and equipment (continued)
Key estimates and judgements – Estimation of useful lives of assets
The estimation of the useful lives of assets, excluding the ROU assets, is based on historical experience.
In addition, the condition of the assets is assessed at least once per year and considered against the
remaining useful life. Adjustments to useful lives are made when considered necessary.
The estimation of the useful lives of ROU assets is based on the non-cancellable period of the lease plus
renewal options when the exercise of the option is considered to be reasonably certain.
Key estimates and judgements – Recoverability of property, plant and equipment
The Group assesses impairment of all assets at each reporting date by evaluating conditions specific
to the Group and to the particular asset that may lead to impairment. These include product and
manufacturing performance, technology, social, economic and political environments and future product
expectations. If an impairment trigger exists, the recoverable amount of the asset is determined to
assess if any impairment is required.
How Pact accounts for property plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation and any accumulated
impairment losses. Cost includes expenditure directly attributable to the acquisition of the item and
subsequent costs incurred to replace parts that are eligible for capitalisation. Depreciation is calculated
on a straight-line basis over the estimated useful life of the assets. Where assets are in the course of
construction at the reporting date they are classified as capital works in progress. Upon completion,
capital works in progress are reclassified to plant and equipment and are depreciated from this date.
The Group assesses at each reporting date whether there is an indication that an asset with a finite life
may be impaired. If any such indication exists, the Group makes an estimate of the asset’s recoverable
amount. An asset’s recoverable amount is the higher of its fair value less costs to sell and its value in
use and is determined for an individual asset, unless the asset generates cash inflows that are largely
dependent on those from other assets or groups of assets and the asset’s value in use cannot be
estimated to approximate its fair value. In such cases the asset is tested for impairment as part of the
CGU to which it belongs. When the carrying amount of an asset or CGU exceeds its recoverable amount,
the asset or CGU is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of the time value of money and the risks
specific to the asset. Impairment losses are recognised in the Consolidated Statement of Comprehensive
Income.
An assessment is also made at each reporting date as to whether there is any indication that previously
recognised impairment losses may no longer exist or may have decreased. If such an indication exists,
the recoverable amounts are estimated. A previously recognised impairment loss is reversed only if there
has been a change in the estimates used to determine the asset’s recoverable amount since the last
impairment loss was recognised. If this is the case the carrying amount of the asset is increased to its
recoverable amount. The increased amount cannot exceed the carrying amount that would have been
determined, net of depreciation, had no impairment loss been recognised for the asset in prior years.
Annual Report 2021OverviewPerformanceGovernanceShareholder Information
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Financial Report
Notes to the Financial Statements
2.2 Non-current assets (continued)
Goodwill and other intangibles
Intangible assets are comprised of the following:
$’000
Year ended 30 June 2021
Notes
Customer
contracts(1)
Other
intangibles(1)
Goodwill
Total
At 1 July 2020 net of accumulated amortisation
and impairment
Additions
Transfer to Property, Plant & Equipment
Foreign exchange translation movements
5,657
7,873
442,538
456,068
-
-
-
-
5,537
5,537
(40)
(19)
-
(40)
(663)
(682)
Amortisation
(911)
(603)
-
(1,514)
At 30 June 2021 net of accumulated amortisation
and impairment
4,746
7,211
447,412
459,369
Represented by:
At cost
28,106
11,834
678,544
718,484
Accumulated amortisation and impairment
(23,360)
(4,623)
(231,132)
(259,115)
Year ended 30 June 2020
At 1 July 2019 net of accumulated amortisation and
impairment
20,260
9,586
447,208
477,054
Additions
Transfer to Property, Plant & Equipment
Intangible asset arising on acquisition
-
-
-
Write-off expense
(11,793)
4
(520)
-
-
-
-
(595)
4
(520)
(595)
-
(11,793)
Foreign exchange translation movements
-
(23)
(4,075)
(4,098)
Financial Report
Notes to the Financial Statements
2.2 Non-current assets (continued)
Goodwill and other intangibles (continued)
$’000
2021
2020
Goodwill and intangible assets with indefinite lives are allocated to the following
group of CGUs and segments(1):
Packaging and Sustainability
Contract Manufacturing Services
Materials Handling and Pooling
(1) This is the lowest level where goodwill is monitored.
How Pact accounts for goodwill
Goodwill is:
261,870
254,623
21,030
21,030
166,274
168,647
449,174
444,300
• initially measured at cost, being the excess of the cost of the business combination over the Group’s
interest in the net fair value of the acquired identifiable assets, liabilities and contingent liabilities;
• subsequently measured at cost less any accumulated impairment losses; and
• reviewed for impairment annually or more frequently if events or changes in circumstances indicate
that the carrying value may be impaired.
Impairment is determined by assessing the recoverable amount of the CGU (or group of CGUs), to
which the goodwill relates. When the recoverable amount of the CGU (or group of CGUs) is less than
the carrying amount, an impairment loss is recognised. When goodwill forms part of a CGU (or group
of CGUs) and an operation within that unit is disposed of, the goodwill associated with the operation
disposed of is included in the carrying amount of the operation when determining the gain or loss on
disposal of the operation. Goodwill disposed of in this manner is measured based on the relative values
of the operation disposed of and the portion of the CGUs retained.
Amortisation
(2,810)
(1,174)
-
(3,984)
Key estimates and judgements — Impairment of goodwill and other intangibles
At 30 June 2020 net of accumulated amortisation
and impairment
5,657
7,873
442,538
456,068
Represented by:
At cost
28,106
11,829
673,670
713,605
Accumulated amortisation and impairment
(22,449)
(3,956)
(231,132)
(257,537)
(1) Customer contracts are recognised at cost and amortised on a straight-line basis over a period of 10
years (useful life). Other intangibles include a balance of $1.8 million which has an indefinite life and is
not amortised, all other intangibles are recognised at cost and amortised over their useful lives.
The recoverable amount of each of the CGUs has been determined based on value in use calculations
using cash flow projections contained within next year’s financial budget approved by management and
other forward projections up to a period of 5 years. Management have used their current expectations
and what is considered reasonably achievable when assigning values to key assumptions in their value
in use calculations. In the current period, management’s estimates and judgement also specifically
considered the potential risks arising from the Covid-19 pandemic. Management considers the risks
associated with the pandemic to be sufficiently mitigated due to the diversity of the Group’s customers
and products such that any prolonged impact from a pandemic will not result in a material change to any
of the assumptions adopted for impairment testing purposes.
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Financial Report
Notes to the Financial Statements
2.2 Non-current assets (continued)
Goodwill and other intangibles (continued)
Annual impairment testing
Impairment testing is undertaken annually using a value in use approach.
The discount rates and terminal growth rates applied to cash flow projections are detailed below.
The calculation of value in use for the segments below are sensitive to the following assumptions:
• Gross margins and raw material price movement — Gross margins reflect current gross margins
adjusted for any expected (and likely) efficiency improvements or price changes.
• Cash Flows — Cash flows are forecast for a period of five years. Cash flows beyond the one year
period are extrapolated using growth rates which are a combination of expected volume growth
and price growth. Rates are based on published industry research and economic forecasts relating
to GDP growth rates, adjusted for management’s view on customer performance.
• Discount rates — The discount rates are based on an external assessment of the Group’s pre-tax
weighted average cost of capital in conjunction with risk factors specific to the CGUs within the
operating segment.
2021
Discount rate (pre-tax)(1)
Terminal growth rate(1)
2020
Discount rate (pre-tax)(1)
Terminal growth rate(1)
Packaging and
Sustainability
Materials
Handling and
Pooling
Contract
Manufacturing
Services
9.4% - 15.4%
11.8% - 13.3%
1.0% - 5.2%
1.0% - 1.2%
9.4% - 17.0%
11.8% - 14.3%
1.0% - 5.9%
1.0% - 1.2%
12.9%
1.0%
13.6%
1.0%
(1) The % range of the discount rate and terminal growth rate is representative of the different countries
within each CGU.
The below table shows the carrying amount and headroom analysis across the segments:
Packaging and
Sustainability
Materials
Handling and
Pooling
Contract
Manufacturing
Services
Carrying amount (at 30 April) ($’000)(1)
1,121,970
395,113
198,119
Headroom (times)
Breakeven analysis(2)
Terminal growth rate; and
Discount rate
1.19
1.46
1.03
↓ 1.0%
↑ 1.0%
↓ 1.0%
↓ 0.5%
↑ 5.0%
- 0.0%
(1) Pact undertake annual impairment testing based on 30 April carrying values.
(2) This is the level at which the recoverable amount would be equal to the carrying amount.
Financial Report
Notes to the Financial Statements
2.3 Capital expenditure commitments and contingencies
Capital expenditure commitments
Capital expenditure commitments contracted for at reporting date, but not provided for are:
$’000
Payable within one year
Payable after one year but not more than five years
Total
Contingencies
2021
2020
45,985
24,139
7,870
6,419
53,855
30,558
In the prior year the Group reversed a contingent consideration obligation of $30 million relating to the
acquisition of TIC Retail Accessories, as specific financial hurdles required for payment were determined not
to have been achieved. On the 27 July 2021 the Group received a dispute notice in relation to this contingent
consideration obligation. The Group is responding to the dispute notice.
The Group is not party to any other legal proceedings that are expected, individually or in the aggregate, to
have a material adverse effect on its business, financial position or operating results.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to the
taxation authority.
2.4 Other provisions
Total other provisions at 30 June comprise of:
$’000
Current
Business restructuring
Total current provisions
Non-current
Make good on leased premises
Total non-current provisions
2021
2020
1,970
1,970
11,923
11,923
-
-
9,967
9,967
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Notes to the Financial Statements
2.4 Other provisions (continued)
Movement in provisions
Year ended 30 June 2021
At 1 July 2020
Provided for during the year
Acquisition of subsidiaries and
businesses
Utilised
Foreign exchange translation
movement
At 30 June 2021
Year ended 30 June 2020
At 1 July 2019
Adoption of AASB 16
Provided for during the year
Utilised
Foreign exchange translation
movement
At 30 June 2020
Fixed rent
provision
Business
restructuring(1)
Make good on
leased premises(2)
-
-
-
-
-
-
22,765
(22,765)
-
-
-
-
-
6,196
-
(4,226)
-
1,970
13,914
(10,357)
4,790
(8,354)
7
-
9,967
2,010
111
(101)
(64)
11,923
9,593
-
1,277
(859)
(44)
9,967
Total
9,967
8,206
111
(4,327)
(64)
13,893
46,272
(33,122)
6,067
(9,213)
(37)
9,967
(1) Business restructuring — The business restructuring programs relate to the optimisation of business
facilities across the Group.
(2) Make good on leased premises — In accordance with the form of lease agreements, the Group may
be required to restore leased premises to their original condition at the end of the lease term and upon
exiting the site. The provision is based on the costs which are expected to be incurred using historical
costs as a guide.
Key estimates and judgements — Business restructuring
Business restructuring provisions are only recognised when a detailed plan has been approved and
the business restructuring has either commenced or been publicly announced, or contracts relating
to the business restructuring have been entered into. Costs related to ongoing activities are not
provided for.
How Pact accounts for other provisions
Provisions are recognised when the following three criteria are met:
• the Group has a present obligation (legal or constructive) as a result of a past event;
• it is probable that an outflow of resources embodying economic benefits will be required to settle
the obligation; and
• a reliable estimate can be made of the amount of the obligation.
Provisions are measured at the present value of management’s best estimate of the expenditure
required to settle the present obligation at the reporting date. The discount rate used to determine
the present value reflects current market assessments of the time value of money and the risks
specific to the liability. When discounting is used, the increase in the provision due to the passage of
time is recognised as a financing cost.
Financial Report
Notes to the Financial Statements
2.5 Leases
Impacts on financial statements
The carrying amounts of the Group’s right of use assets and lease liabilities and the movements during the
period are as below:
$’000
Balance as at 1 July 2020
Additions
Acquisition of subsidiaries and
businesses
Subsequent remeasurement of lease
liability
Depreciation expense
Lease modification
Interest expense
Payments
Foreign exchange translation
movement
Property
353,525
13,143
27,303
Plant and
equipment
Total Right
of use assets
Total Lease
liabilities
10,617
2,988
-
364,142
454,859
16,131
27,303
15,866
27,192
(1,407)
(200)
(1,607)
(1,683)
(51,472)
24,099
-
-
(4,177)
218
-
-
(55,649)
24,317
-
-
-
23,289
26,117
(73,530)
(2,075)
(44)
(2,119)
(2,166)
Balance as at 30 June 2021
363,116
9,402
372,518
469,944
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370,636
Additions
Receipt of lease incentive
Depreciation expense
Derecognition of ROU assets
Lease modification
Settlement obligation for remaining
onerous leases
Interest expense
Payments
Foreign exchange translation
movement
39,523
(2,909)
(48,743)
(5,379)
-
-
-
-
6,441
7,660
-
(3,679)
-
-
-
-
-
377,077
47,183
(2,909)
(52,422)
(5,379)
-
-
-
-
397
195
592
466,149
46,404
-
-
-
(9,923)
(2,744)
26,364
(70,845)
(546)
Balance as at 30 June 2020
353,525
10,617
364,142
454,859
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Financial Report
Notes to the Financial Statements
2.5 Leases (continued)
Impacts on financial statements (continued)
In addition to the expenses detailed above, the Consolidated Statement of Comprehensive Income also
includes the following lease related expenses:
$’000
Expenses relating to short-term leases
Expenses relating to low-value leases
Variable lease payments
Property outgoings(1)
2021
1,510
358
(62)
2020
2,907
176
633
12,747
12,014
(1) Includes council rates, taxes, insurance and other lease related payments. Outgoings are 18.6% of the
Group’s property lease payments in the financial year (2020:19.7%).
The lease liabilities included in the Consolidated Statement of Financial Position are:
$’000
Current
Non-current
2021
2020
70,932
69,203
399,012
385,656
The maturity analysis of contractual undiscounted cash flows for lease liabilities are:
$’000
Less than one year
One to five years
More than five years
Total undiscounted liabilities
2021
2020
72,990
70,826
226,991
228,965
388,749
347,813
688,730
647,604
Financial Report
Notes to the Financial Statements
2.5 Leases (continued)
Impacts on financial statements (continued)
The amounts recognised in the statement of cash flows are:
$’000
Repayment of lease liability principal(1)
Interest payments(1)
Expenses relating to short-term leases
Expenses relating to low-value leases
Variable lease payments
Property outgoings
Onerous lease payments
2021
2020
47,413
44,480
26,117
1,510
358
(62)
26,364
2,907
176
633
12,232
11,934
-
2,744
(1) Of the total lease payments, 14.4% relates to property leases that exclude renewal options in the assessment
of the lease term. This includes warehouses, offices and shopfronts where the exercise of the option is not
reasonably certain.
Key estimates and judgements — Incremental borrowing rate
Where the Group cannot readily determine the interest rate implicit in the lease, it uses its incremental
borrowing rate (IBR) to measure lease liabilities. The IBR is the rate of interest that the Group would have
to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset
of a similar value to the right of use asset in a similar economic environment. The IBR therefore reflects
what the Group ‘would have to pay’, which requires estimation when no observable rates are available or
when they need to be adjusted to reflect the terms and conditions of the lease. The Group estimates the
IBR using observable inputs (such as market interest rates) when available.
Key estimates and judgements — Determining the lease term of contracts with renewal and
termination options
The Group determines the lease term as the non-cancellable term of the lease, together with any periods
covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered
by an option to terminate the lease, if it is reasonably certain not to be exercised.
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Notes to the Financial Statements
Section 3 — Our Operational Footprint
This section provides details of acquisitions which the Group has made in the financial year, as well
as details of controlled entities and interests in associates and joint ventures.
3.1 Business combinations
Summary of 30 June 2021 acquisition
$’000
Consideration paid or payable
Comprising of:
• Cash consideration paid
• Assets
-
Inventory
- Property, plant and equipment
- Right of use assets
- Prepayments
• Liabilities
- Lease liabilities
- Make good provision
- Employee benefits provisions
Fair value of identifiable net assets
Provisional goodwill arising on acquisition
Flight
Plastics
23,836
23,836
4,633
13,831
27,303
324
(27,192)
(111)
(489)
18,299
5,537
(1) On 31 January 2021, the Group paid a net $23.8 million consideration to the vendor to acquire 100%
of the net assets of Flight Plastics. Flight Plastics is a New Zealand based packaging manufacturer
with integrated PET recycling capability operating in the fresh food segment. The acquisition of Flight
Plastics compliments the Group's strategy to lead the Circular Economy through reuse, recycling and
packaging solutions.
Provisional goodwill of $5.5 million has arisen as a result of the purchase consideration exceeding the fair
value of identifiable net assets acquired, and represents the value attributed to Flight Plastic’s reputation
for quality and service. Goodwill is allocated to the Packaging and Sustainability reportable segment.
This goodwill will not be deductible for tax purposes.
From the date of acquisition to 30 June 2021 Flight Plastics NZ contributed $8.1 million of revenue and
other income, and $0.1 million to net profit before tax of the Group. If the combination had taken place
at 1 July 2020, contributions to revenue for the period ended 30 June 2021 would have been $13.4 million
higher and the contribution to profit before tax for the Group would have been $1.3 million higher.
Included within the Consolidated Statement of Comprehensive Income are acquisition-related costs of
$0.2 million.
Completion of prior year acquisition accounting
There were no acquisitions for the year ended 30 June 2020.
Financial Report
Notes to the Financial Statements
3.2 Controlled entities
Australian incorporated entities that are party to the Deed of Cross Guarantee at 30 June 2021(1)
Pact Group Industries (ANZ) Pty Ltd
Jalco Group Pty Ltd
Australian Pharmaceutical Manufacturers Pty Ltd
Jalco Automotive Pty Ltd
Pact Group Holdings (Australia) Pty Ltd
Jalco Powders Pty Ltd
Pact Group Finance (Australia) Pty Ltd
Jalco Plastics Pty Ltd
Power Plastics Pty Ltd
Jalco Australia Pty Ltd
Pascoes Pty Ltd
Bidware Pty Ltd
Jalco Care Products Pty Ltd
Packaging Employees Pty Ltd
Middleton Asset Financing & Leasing Pty Ltd
Jalco Cosmetics Pty Ltd
Alto Packaging Australia Pty Ltd
Jalco Promotional Packaging Pty Ltd
Summit Manufacturing Pty Ltd
VIP Plastic Packaging Pty Ltd
Astron Plastics Pty Ltd
Sunrise Plastics Pty Ltd
Skyson Pty Ltd
Brickwood (VIC) Pty Ltd
INPACT Innovation Pty Ltd
Brickwood (Dandenong) Pty Ltd
Cinqplast Plastop Australia Pty Ltd
Brickwood (NSW) Pty Ltd
Steri-Plas Pty Ltd
Brickwood (QLD) Pty Ltd
Sulo MGB Australia Pty Ltd
Alto Manufacturing Pty Ltd
VIP Steel Packaging Pty Ltd
Baroda Manufacturing Pty Ltd
VIP Drum Reconditioners Pty Ltd
Salient Asia Pacific Pty Ltd
Vmax Returnable Packaging Systems Pty Ltd
Plaspak Closures Pty Ltd
Viscount Plastics Pty Ltd
Viscount Plastics (Australia) Pty Ltd
Plaspak Pty Ltd
MTWO Pty Ltd
Viscount Rotational Mouldings Pty Ltd
Snopak Manufacturing Pty Ltd
Viscount Logistics Services Pty Ltd
Pact Group Industries (Asia) Pty Ltd
Viscount Pooling Company Pty Ltd
Viscount Plastics (China) Pty Ltd
Viscount Pooling Systems Pty Ltd*
Ruffgar Holdings Pty Ltd
Pact Retail Accessories (Australia) Pty Ltd
Davmar Investments Pty Ltd
* There is currently an option granted to a third party to purchase 50% shares in this entity. This option has not
been exercised.
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Notes to the Financial Statements
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Notes to the Financial Statements
3.2 Controlled entities (continued)
3.2 Controlled entities (continued)
Entities that are not party to the Deed of Cross Guarantee, incorporated in the following jurisdictions(1)
Australia
Hong Kong
Plaspak Contaplas Pty Ltd(2)
Pact Group Holdings (Hong Kong) Limited(12)
Plaspak Management Pty Ltd(2)
Roots Investment Holding Private Limited(7)
Plaspak (PET) Pty Ltd(2)
Plaspak Minto Pty Ltd(3)
Sustainapac Pty Ltd
New Zealand
Pact Group Holdings (NZ) Ltd
Pact Group Finance (NZ) Ltd
Pact Group (NZ) Ltd
VIP Steel Packaging (NZ) Ltd
VIP Plastic Packaging (NZ) Ltd
Alto Packaging Ltd
Pact Retail Accessories (Hong Kong) Ltd(13)
Pact Retail Accessories (Asia) Ltd(13)
Talent Group Development Ltd(13)
Fast Star International Holdings Ltd(13)
TIC Group Ltd(13)
India
Pact Closure Systems (India) Private Limited(12)
AMRS Business Services Private Limited(13)
Indonesia
Auckland Drum Sustainability Services Ltd
PT Plastop Asia Indonesia(14)
Viscount FCC Ltd
Tecpak Industries Ltd
Astron Plastics Ltd
Pacific BBA Plastics (NZ) Ltd
Viscount Plastics (NZ) Ltd
PT Plastop Asia Indonesia Manufacturing(14)
Korea
Pact Group Closure Systems Korea Ltd(7)
Stowers Containment Solutions Ltd
Nepal
Sulo NZ Ltd(4)
Pact Group Closure Systems Nepal Private Limited(12)
Pact Retail Accessories (New Zealand) Ltd(5)
China
Philippines
Plastop Asia Inc(15)
Guangzhou Viscount Plastics Co Ltd(6)
Pact Closure Systems (Philippines), Inc(12)
Langfang Viscount Plastics Co Ltd(6)
Changzhou Viscount Plastics Co Ltd(6)
Singapore
Pact Group Closure Systems (Guangzhou) Co. Ltd(7) Asia Peak Pte Ltd(12)
Pact Group Closure Systems (Tianjin) Co. Ltd)(7)
Pact Group Packaging Systems (Guangzhou)
Co. Ltd(9)
United States Of America
Dongguan Top Rise Trading Co. Ltd(10)
Pact Group (USA) Inc(16)
Regent Plastic Products Ltd(8)
Ningbo Xunxing Trade Co. Ltd(11)
Bangladesh
TIC Trading (Bangladesh) Ltd(11)
TIC Manufacturing (Bangladesh) Ltd(11)
TIC Industries (Bangladesh) Pty Ltd (11)
PGH Services LLC(13)
United Kingdom
TIC Group (Europe) Ltd(16)
(1) All entities are wholly owned
(2) Owned by Skyson Pty Ltd
(3) Owned by Snopak Manufacturing Pty Ltd
(4) Owned by Sulo MGB Australia Pty Ltd
(5) Owned by Pact Group Holdings (NZ) Ltd
(6) Owned by Viscount Plastics (China) Pty Ltd
(7) Owned by Pact Group Holdings (Hong Kong)
Limited
(8) Owned by Talent Group Development Ltd
(9) Owned by Roots Investment Holding Private
Limited
(10) Owned by TIC Group (Asia) Ltd
(11) Owned by Fast Star International Ltd
(12) Owned by Pact Group Industries (Asia) Pty Ltd
(13) Owned by Davmar Investments Pty Ltd
(14) Owned by Asia Peak Pte Ltd
(15) Owned by Ruffgar Holdings Pty Ltd
(16) Owned by Pact Group Industries (ANZ) Pty Ltd
Key estimates and judgements — Control and significant influence
Determining whether Pact can control or exert significant influence over an entity can at times require
judgement. It requires management to consider whether Pact is exposed to, or has the rights to, variable
returns from its involvement with the investee and has the ability to affect those returns through its
power over the investee. In making such an assessment, a range of factors are considered, including if
and only if the Group has: power over the investee (ie. existing rights that give it the current ability to
direct the relevant activities of the investee); exposure, or rights, to variable returns from its involvement
with the investee; and the ability to use its power over the investee to affect its returns.
How Pact accounts for controlled entities
Controlled entities are fully consolidated when the Group obtains control and cease to be consolidated
when control is transferred out of the Group. The Group controls an entity when it:
• is exposed, or has the rights, to variable returns from its involvement with the investee; and
• has the ability to affect those returns through its power over the entity, for example has the ability to
direct the relevant activities of the entity, which could affect the level of profit the entity makes.
3.3 Associates and joint ventures
Pact has entered into a number of strategic partnering arrangements with third parties and/or associates and
jointly controlled entities. The following are entities that Pact have significant influence or joint control over:
Entity
$’000
Spraypac
Products (NZ)
Ltd (Spraypac)(1)
Weener
Plastop Asia Inc
(Weener)(1)
Gempack
Weener
(Gempack)(1)
Weener Plastop
Indonesia Inc(1)
Australian
Recycled Plastics
Pty Ltd(1)
Circular Plastics
Australia Pty
Ltd (Circular
Plastics)(2)
Changzhou
Viscount Oriental
(Oriental Mould)(3)
Principal
place of
operation About
New
Zealand
Is an associate company distributing plastic bottles
and related spray products.
Pact’s
ownership
interest
Carrying
value
2021
2020
50% 776
976
Philippines A joint venture with Weener Plastik GMBH which
manufactures plastic jars and bottles for the personal
care, food and beverage and home care markets.
50% 1,861
2,133
Thailand
A joint venture with Weener Plastik GMBH which
manufactures plastic jars and bottles for the personal
care, food and beverage and home care markets.
Indonesia A joint venture with Weener Plastik GMBH which
manufactures closures and roll-on balls for the
personal care and home care markets.
Australia
A joint venture which processes kerbside collected
recyclable plastic materials to produce PET flake and
HDPE flake simultaneously.
Australia
A joint venture that will recycle PET bottles to produce
new bottles and food and beverage packaging.
50% 16,156 20,632
50% 3,273
3,012
50.8% 4,037
3,903
40% 9,007
-
China
Is an associate company, which is a manufacturer of
moulds, of which a proportion is purchased by the local
Chinese subsidiaries of Viscount Plastics (China) Pty Ltd. 40%
-
220
(1) Ownership interest at 30 June 2021 and 30 June 2020.
(2) On 3 August 2020 the Group entered into an agreement to acquire shares in Circular Plastics Australia Pty
Ltd, a company that will operate a new plastics recycling plant or plants in Australia.
(3) In September 2020 the Group sold a 40% share in Changzhou Viscount Oriental Mould Co Ltd. A loss on sale
of $0.1 million has been recognised in the Statement of Comprehensive Income.
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Notes to the Financial Statements
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Notes to the Financial Statements
3.3 Associates and joint ventures (continued)
3.3 Associates and joint ventures (continued)
In accordance with AASB 12: Disclosure of Interests in Other Entities, given the material carrying value of
the Group’s investment in Gempack and Circular Plastics, the table below shows summarised financial
information of the Group’s investment:
$’000
Summarised statement of financial position
Cash and cash equivalents
Other current assets
Non-current assets
Liabilities
Net assets
Carrying amount of the Group’s investment
Summarised statement of comprehensive
income
Interest expense
Depreciation and amortisation
Income tax expense
Gempack
2021
Circular
Plastics
2021
Gempack
2020
Circular
Plastics
2020
7,922
11,656
565
82
19,602
32,965
11,072
13,973
25,281
(6,868)
(11,096)
(9,061)
32,312
16,156
22,517
41,265
9,007
20,632
926
2,281
92
4
-
-
1,100
2,358
455
-
-
-
-
-
-
-
-
-
Summary of associates and joint venture financial information at 30 June(1)
$’000
Summarised statement of financial position
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
Carrying amount of the Group’s investment
Summarised statement of comprehensive income
Revenue
Expense
Net profit after tax
Group’s share of profit for the year
2021
2020
36,150
61,629
42,930
36,261
(20,961)
(16,401)
(2,727)
74,091
35,110
(1,337)
61,453
30,876
46,808
51,890
(40,634)
(45,664)
6,174
3,075
6,226
3,131
(1) Includes the Group’s investment in Gempack and Circular Plastics Australia Pty Ltd.
Summary of associates and joint venture financial information at 30 June (continued)
Dividends received from associates and joint ventures during the year was $1.6 million (2020: $0.7 million).
The joint ventures and associates had no contingent liabilities or material capital commitments at 30 June
2021 (2020: nil).
How Pact accounts for investment in associates and joint ventures and jointly controlled entities
An associate is an entity over which the Group has significant influence. Significant influence is the
power to participate in the financial and operating policy decisions of the investee, but is not control or
joint control over those policies. Generally significant influence is deemed if Pact has over 20% of the
voting rights.
A joint venture is a type of joint arrangement whereby the parties that have joint control of the
arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed
sharing of control of an arrangement, which exists only when decisions about the relevant activities
require the unanimous consent of the parties sharing control.
The Group uses the equity method to account for their investments in associates and joint ventures.
Under the equity method:
• Investments in the associates are carried at cost plus post-acquisition changes in the Group’s share of
associates’ net assets.
• Goodwill relating to an associate is included in the carrying amount of the investment and is not
tested for impairment separately.
• The Group’s share of its associates’ post-acquisition profits or losses is recognised in the Consolidated
Statement of Comprehensive Income, and its share of post-acquisition movements in reserves is
recognised in reserves.
• When the Group’s share of losses in an associate equals or exceeds its interest in the associate,
including any unsecured long-term receivables and loans, the Group does not recognise further losses
unless it has incurred obligations or made payments on behalf of the associate.
After application of the equity method, the Group determines whether it is necessary to recognise any
impairment loss with respect to the Group’s net investment in associates. At each reporting date, the
Group determines whether there is objective evidence that the investment in the associate is impaired.
If there is such evidence, the Group calculates the amount of impairment as the difference between the
recoverable amount of the associate and its carrying value, and then recognises the loss within ‘Share of
profit in associates’ in the Consolidated Statement of Comprehensive Income.
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Notes to the Financial Statements
Section 4 — Our Capital Structure
This section details specifics of the Group's capital structure. When managing capital,
management’s objective is to ensure that the entity continues as a going concern as well as
to provide optimal returns to shareholders and other stakeholders. Management also aims to
maintain a capital structure that ensures the lowest cost of capital available to the entity. Primary
responsibility for identification and control of capital and financial risks rests with the Treasury Risk
Management Committee.
4.1 Net debt
Debt profile
Pact has the following interest-bearing loans and borrowings as at 30 June 2021:
Current
$’000
Lease liabilities
Total current interest-bearing loans and borrowings
Notes
2.5
2021
70,932
70,932
2020
69,203
69,203
Financial Report
Notes to the Financial Statements
4.1 Net debt (continued)
Debt facilities
Facility
Maturity date
Working capital facility
Revolving with an annual review
Loan facility
Loan facility
Loan facility
Term facility
Subordinated term debt facility(2)
Total facilities
Facilities utilised
Facilities unutilised
January 2023
March 2023
July 2024
December 2024
July 2025
Total
Facilities
$’000
22,846
183,300
298,775
297,286
120,000
46,549
968,756
651,538
317,218
(2) This facility is denominated in USD and was translated to AUD using the AUD/USD spot rate as at 30 June
2021. The foreign currency exchange difference is fully-hedged with a cross currency swap. The fair value of
this swap at 30 June 2021 is $4.1 million and is disclosed as a hedge liability. The amount received by Pact on
initial drawdown was $50.3 million.
The Group uses interest rate swaps to manage interest rate risk.
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Non-current
$’000
Syndicated Facility Agreements(1)
Subordinated Debt Facility(1)(2)
Capitalised borrowing costs
Notes
2021
2020
Fair values
604,611
643,700
46,549
(3,997)
50,991
(5,161)
All loans and borrowings are initially recognised at the fair value of the consideration received less directly
attributable transaction costs.
The computation of the fair value of borrowings is derived using significant observable inputs (Fair Value
Hierarchy Level 2).
Total bank borrowings (including capitalised borrowing costs)
647,163
689,530
The carrying amount and fair value of the Group’s non-current borrowings are as follows:
Lease liabilities
2.5
399,012
385,656
Total non-current interest-bearing loans and borrowings
1,046,175
1,075,186
2021
$’000
Carrying
Value
Fair Value
Carrying
Value
2020
$’000
Fair Value
Syndicated Facility Agreements
604,611
604,611
643,700
643,700
Subordinated Debt Facility
46,549
46,549
50,991
50,991
Total bank borrowings
651,160
651,160
694,691
694,691
Annual Report 2021OverviewPerformanceGovernanceShareholder Information
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Notes to the Financial Statements
4.1 Net debt (continued)
Defaults and breaches
During the year, there were no defaults or breaches on any of the loan terms and conditions.
Finance costs and loss on de-recognition of financial assets
Pact has incurred the following finance costs during the year ending 30 June:
$’000
Interest expense on bank loans and borrowings
Borrowing costs amortisation
Amortisation of securitisation program costs
Sundry items
Total interest expense on borrowings
Interest expense on unwinding of provisions
Interest expense on lease liabilities
Total finance costs
Loss on de-recognition of financial assets
Total finance costs and loss on de-recognition of financial assets
2021
2020
20,557
28,852
2,058
3,416
387
296
654
819
23,298
33,741
511
536
26,117
26,364
49,926
1,840
51,766
60,641
2,796
63,437
How Pact accounts for loans and borrowings
All loans and borrowings are:
• Initially recognised at the fair value of the consideration received less directly attributable
transaction costs.
• Subsequently measured at amortised cost using the effective interest method, which is
calculated based on the principal borrowing amount less directly attributable transaction costs.
• Are classified as current liabilities unless the Group has an unconditional right to defer settlement
of the liability for at least 12 months after the reporting date.
Fair value of the Group’s interest-bearing loans and borrowings are determined by using a
discounted cash flow method, applying a discount rate that reflects the issuer’s borrowing rate at
the end of the reporting period. As the underlying debt has a floating interest rate (excluding the
impact of the separate interest rate swaps), the Group’s own performance risk at 30 June 2021 was
assessed to be insignificant.
The carrying amount of the Group’s current and non-current borrowings materially approximates
fair value. The computation of the fair value of borrowings is derived using significant observable
inputs (Fair Value Hierarchy Level 2).
Finance costs are recognised as an expense when incurred. Finance costs which are directly
attributable to the acquisition of, or production of, a qualifying asset are capitalised as part of the
cost of that asset using the weighted average cost of borrowings.
Financial Report
Notes to the Financial Statements
4.1 Net debt (continued)
Reconciliation of net profit/(loss) after tax to net cash flows from operations
$’000
Net profit/(loss) for the year
Non cash flows in operating profit/(loss):
Depreciation and amortisation
Loss on sale of property, plant and equipment
Share of net profit in associates
Share-based payments expense
Impairment and write-off expense
Other
Changes in assets and liabilities:
Decrease/(increase) in trade and other receivables
(Increase) in inventory
Decrease in current tax assets
Decrease/(Increase) in net deferred tax assets and liabilities
(Decrease) in trade and other payables
Increase in employee entitlement provisions
Increase/(decrease) in other provisions
Increase in current tax liabilities
Net cash flow provided by operating activities
2021
2020
87,534
88,847
132,013
135,544
261
883
(3,075)
(3,131)
1,335
-
45
610
11,793
208
15,825
(3,104)
(15,306)
(10,322)
-
712
3,360
(7,739)
(11,520)
(40,666)
3,749
3,972
5,489
2,998
(6,089)
18,939
221,034
192,131
How Pact accounts for cash and cash equivalents
Cash and cash equivalents in the Consolidated Statement of Financial Position comprise cash at bank
and on hand and short-term deposits with a maturity of 12 months or less that are readily convertible to
known amounts of cash and which are subject to an insignificant risk of change in value.
For the purposes of the Consolidated Statement of Cash Flows, cash and cash equivalents consist
of cash and cash equivalents as defined above, net of bank overdraft balances. Bank overdrafts are
included within interest-bearing loans and borrowings in current liabilities on the Consolidated Statement
of Financial Position. Cash flows are included in the Consolidated Statement of Cash Flows on a gross
basis and the GST component of cash flows arising from investing and financing activities which is
recoverable from, or payable to, the taxation authority are classified as operating cash flows.
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Notes to the Financial Statements
4.2 Contributed equity and reserves
Terms, conditions and movements of contributed equity
Ordinary shares are classified as equity. Ordinary shares entitle the holder to participate in dividends and
the proceeds on winding up of the Company in proportion to the number of shares held.
Number of
shares
2021
$’000
Number of
shares
2020
$’000
Movements in contributed equity
Ordinary shares:
Beginning of the year
343,993,595
1,750,476 343,993,595
1,750,476
Issuance of shares
End of the year
-
-
-
-
343,993,595
1,750,476 343,993,595
1,750,476
How Pact accounts for contributed equity
Issued and paid up capital is classified as contributed equity and recognised at the fair value of
the consideration received by the entity. Incremental costs directly attributable to the issue of new
shares or options are shown in contributed equity as a deduction, net of tax, from the proceeds.
Reserves
$’000
Foreign currency translation reserve(1)
Cash flow hedge reserve(2)
Common control transaction reserve(3)
Share-based payments reserve(4)
Total reserves
2021
24,715
(3,172)
2020
31,144
(6,777)
(928,385)
(928,385)
4,459
2,767
(902,383)
(901,251)
(1) The foreign currency translation reserve is used to record foreign exchange fluctuations arising from the
translation of the financial statements of foreign subsidiaries.
(2) This reserve records the portion of the gain or loss on a hedging instrument and the related transaction
in a cash flow hedge that are determined to be an effective relationship.
(3) The common control reserve of $928.4 million includes a balance of $942.0 million that arose through
a Group restructure in the financial year ended 30 June 2011, less $13.6 million in relation to the
acquisition of Viscount Plastics (China) Pty Ltd and Asia Peak Pte Ltd in the year ended 30 June 2014.
(4) The share-based payments reserve records items recognised as expenses representing the fair value of
employee rights.
Financial Report
Notes to the Financial Statements
4.3 Managing our financial risks
There are a number of financial risks the Group is exposed to that could adversely affect the achievement
of future business performance. The Group’s risk management program seeks to mitigate risks and reduce
volatility in the Group’s financial performance. Financial risk management is managed centrally by the Treasury
Risk Management Committee.
The Group’s principal financial risks are:
• Interest rate risk;
• Foreign currency risk;
• Liquidity risk;
• Credit risk; and
• Commodity price risk.
Managing interest rate risk
Pact seeks to manage its finance costs by assessing and, where appropriate, utilising a mix of fixed and
variable rate debt. When variable debt is utilised, it exposes the Group to interest rate risk.
What is the risk?
Pact has variable
interest rate debt,
and therefore
if interest rates
increase, the amount
of interest Pact is
required to pay would
also increase.
How does Pact
manage this risk?
• Utilises interest
rate swaps to lock
in the amount of
interest that Pact
will be required to
pay.
• Considers
alternative
financing and
mix of fixed and
variable debt, as
appropriate.
Impact at 30 June 2021
At 30 June 2021, the Group hedge cover is 38% (2020: 36%) of
its long-term variable debt excluding working capital facilities.
Sensitivity analysis performed by the Group showed that a +1
percentage point movement in AUD interest rates would reduce
net profit after tax by $2.0 million and increase equity by $0.2
million (2020: $2.5 million reduction in net profit after tax and
increase equity by $1.2 million).
Sensitivity analysis performed by the Group showed that a +1
percentage point movement in NZD interest rates would reduce
net profit after tax by $1.1 million and reduce equity by $0.6
million (2020: $1.1 million reduction in net profit after tax and
reduce equity by $0.2 million).
Sensitivity analysis performed by the Group showed that a +1
percentage point movement in USD interest rates would reduce
net profit after tax and equity by $0.4 million (2020: $0.5 million).
(1) The impact of a +/- 1% movement in interest rates was determined based on the Group’s mix of debt, credit
standing with finance institutions, the level of debt that is expected to be renewed and economic forecasters’
expectations.
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Notes to the Financial Statements
4.3 Managing our financial risks (continued)
Managing foreign currency risk
The Group’s exposure to the risk of changes in foreign exchange rates relates to the Group’s (i) operating
activities which are denominated in a different currency from the entity’s functional currency, (ii) financing
activities, and (iii) net investments in foreign subsidiaries.
The Group currently operates in 12 countries outside of Australia, with the following functional
currencies(1):
Country of domicile
New Zealand
Thailand
Singapore
China
Philippines
Indonesia
Hong Kong
Nepal
India
South Korea
Bangladesh
United Kingdom
Functional currency
NZD
THB
USD
RMB
PHP
IDR
HKD / USD
NPR
INR
KRW
BDT / USD
GBP
(1) Pact Retail Accessories (Australia) Pty Ltd is domiciled in Australia and has USD as its functional
currency.
Financial Report
Notes to the Financial Statements
4.3 Managing our financial risks (continued)
As Pact has an Australian dollar (AUD) presentation currency, which is also the functional currency of its
Australian entities, this exposes Pact to foreign exchange rate risk.
What is the risk?
How does Pact
manage this risk?
Impact at 30 June 2021
If transactions are
denominated in
currencies other
than the functional
currency of the
operating entity,
there is a risk of an
unfavourable financial
impact to earnings
if there is an adverse
currency movement.
Utilises forward
foreign currency
contracts to
eliminate or reduce
currency exposures
of individual
transactions once
the Group has
entered into a firm
commitment for a
sale or purchase.
As Pact has entities
that do not have
an Australian dollar
(AUD) functional
currency, if currency
rates move adversely
compared to the AUD,
then the amount
of AUD-equivalent
profit would decrease,
and the balance
sheet net investment
value would decline.
Pact utilises
borrowing in the
functional currency
of the overseas entity
to naturally hedge
offshore entities
where considered
appropriate. The
foreign currency
debt provides a
balance sheet hedge
of the asset, while
the foreign currency
interest cost provides
a natural hedge of
the offshore profit.
Managing liquidity risk
The Group has a significant exposure to the USD against the
AUD and NZD from USD purchase commitments, while the
Group’s exposure to sales denominated in currencies other than
the functional currency of the operating entity is less than 1%.
At 30 June 2021, the Group has the majority of its foreign
currency committed purchase orders hedged.
Sensitivity analysis of the foreign currency net transactional
exposures (including hedges) was performed to movements in
the Australian dollar against the relevant foreign currencies,
with all other variables held constant, taking into account all
underlying exposures and related hedges.
This analysis showed that a 10% movement in its major trading
currencies would not materially impact net profit after tax
and would have the following impact on equity for the largest
hedging position AUDUSD ($1.7) million to $1.4 million.
Sensitivity analysis performed by management showed that a
10% +/- movement in its major translational currencies as at
30 June 2021 would have the following impact on equity:
AUDNZD ($8.7) million to $10.6 million
AUDCNY ($13.0) million to $15.9 million
AUDUSD ($3.5) million to $4.3 million
AUDPHP ($2.8) million to $3.4 million
Sensitivity analysis performed by management showed that a
10% +/- movement in its major translational currencies during
the year, would have the following impact on net profit after tax:
AUDNZD ($2.5) million to $3.1 million
AUDUSD ($0.9) million to $1.1 million
Liquidity risk arises from the financial liabilities of the Group and the Group’s ability to meet its obligations to
repay these financial liabilities as and when they fall due. Pact has a range of liabilities at 30 June that will be
required to be settled at some future date.
What is the risk?
How does Pact
manage this risk?
Impact at 30 June 2021
The risk that Pact
cannot meet its
obligations to repay
its financial liabilities
as and when they fall
due.
• Having access
to an adequate
amount of
committed credit
facilities.
• Maintains a
The Directors have assessed that due to the Group’s access
to undrawn facilities and forecast positive cash flows into the
future they will be able to pay their debts as and when they fall
due, and therefore it is appropriate the financial statements are
prepared on a going concern basis.
balance between
continuity of
funding and
flexibility through
the use of bank
overdrafts, loans
and debtor
securitisation.
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Notes to the Financial Statements
Financial Report
Notes to the Financial Statements
4.3 Managing our financial risks (continued)
4.3 Managing our financial risks (continued)
The following table represents the changes in financial liabilities arising from financing activities:
$’000
1 July 2020 Cash flows
Non-cash
changes
Foreign
exchange
movement
30 June
2021
Lease liabilities
(454,859)
73,530
(89,597)
982
(469,944)
Non-current interest-bearing loans
and bank borrowings
(694,690)
32,725
-
10,805
(651,160)
Total liabilities from financing activities
(1,149,549)
106,255
(89,597)
11,787
(1,121,104)
Managing credit risk
Credit risk represents the loss that would be recognised if counterparties failed to meet their obligations under
a contract or arrangement. The Group is exposed to credit risk arising from its operating activities (primarily
from customer receivables) and financing activities. The Group manages this risk through the following
measures:
• Operating activities: The Group has in place a number of mechanisms to manage its exposure to customer
credit risk, discussed in Note 2.1, including debtor’s securitisation programs where substantially all the risks
and rewards of the receivables within the program are transferred to a third party.
• Financial activities: Restricting dealings to counterparties with high credit ratings and limiting concentration
of credit risk.
The maximum exposure to credit risk by class of recognised financial assets at the end of the reporting period
is equivalent to the carrying amount as presented in the Consolidated Statement of Financial Position.
Commodity price risk
The Group is exposed to commodity price risk from a number of commodities, including resin. The Group
manages these risks through customer pricing, including contractual rise and fall adjustments. The Group also
manages commodity price risk using resin forward contracts in circumstances where contractual rise and fall
adjustments are not in place to minimise the variability of cash flows arising from price movements.
The maturity profile of the Group’s assets and liabilities based on contractual undiscounted receipt /
payments terms is as follows:
$’000
≤ 6 months 6–12 months
1-5 years
Total
Year ended 30 June 2021
Financial assets(1)
Cash and cash equivalents
Trade and other receivables
Foreign exchange forward contracts(2)
Total inflows
Financial liabilities(1)
Trade and other payables
Foreign exchange forward contracts(2)
Interest rate swaps
Interest-bearing loans and bank
borrowings(3)(4)
62,152
129,305
74,685
266,142
(351,207)
(73,154)
(1,594)
(8,029)
-
-
4,380
4,380
-
(4,464)
(1,487)
-
7
2,800
2,807
62,152
129,312
81,865
273,329
-
(351,207)
(2,804)
(1,170)
(80,422)
(4,251)
(7,898)
(681,920)
(697,847)
Total outflows
Net outflow
(433,984)
(13,849)
(685,894)
(1,133,727)
(167,842)
(9,469)
(683,087)
(860,398)
Year ended 30 June 2020
Financial assets(1)
Cash and cash equivalents
Trade and other receivables
Foreign exchange forward contracts(2)
Total inflows
Financial liabilities(1)
76,004
149,679
74,818
300,501
-
-
2,760
2,760
-
7
348
355
76,004
149,686
77,926
303,616
Trade and other payables
(378,124)
-
-
(378,124)
Foreign exchange forward contracts(2)
(78,986)
(2,809)
(351)
(82,146)
Resin forward contracts
Interest rate swaps
Interest-bearing loans and bank
borrowings(3)(4)
Total outflows
Net outflow
(12)
(1,348)
(8,508)
-
-
(12)
(1,477)
(5,632)
(8,457)
(8,369)
(726,261)
(743,138)
(466,978)
(12,655)
(732,244)
(1,211,877)
(166,477)
(9,895)
(731,889)
(908,261)
(1) The Group’s principal financial instruments comprise cash, receivables, payables, bank loans, bank
overdrafts, finance leases and derivative instruments.
(2) Foreign exchange forward contracts are recorded as a net balance in the Consolidated Statement of
Financial Position, where in this table the contractual maturities are the gross undiscounted cash flows.
(3) When the Group is committed to make amounts available in instalments, each instalment is allocated
to the earliest period in which the Group is required to pay. These commitments include cash flows
associated with the cross currency swap.
(4) Refer Note 2.5 for details on lease maturity analysis.
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Notes to the Financial Statements
4.4 Financial instruments
Utilising hedging contracts to manage risk
As discussed above, the Group utilises interest rate swaps, foreign exchange forward contracts and resin
forward contracts to hedge its risks associated with fluctuations in interest rates, foreign currency and
resin prices. All of Pact’s hedging instruments are designated in cash flow hedging relationships, providing
increased certainty over future cash flows associated with foreign currency purchases or interest
payments on variable interest rate debt facilities.
How Pact accounts for derivative financial instruments in a cash flow hedge relationship
At the inception of a hedge relationship, the Group formally designates and documents the hedge
relationship to which the Group wishes to apply hedge accounting and the risk management
objective and strategy for undertaking the hedge. The documentation includes:
• identification of the hedging instruments
• the hedged items or transactions
• the nature of the risks being hedged; and how the entity will assess the hedging instrument’s
effectiveness in offsetting the exposure to changes in the hedged item’s fair value or cash flows
attributable to the hedged risk. Such hedges are expected to be highly effective in achieving
offsetting changes in fair value or cash flows and are assessed on an ongoing basis to determine
that they have actually been highly effective throughout the financial reporting period for which
they were designated.
Derivative financial instruments are:
• Recorded at fair value at inception and every subsequent reporting date.
• Classified as assets when their fair value is positive and as liabilities when their fair value is
negative.
The fair value of:
• Forward currency contracts are calculated by using valuation techniques such as present value
techniques, comparison to similar instruments for which market observable prices exist and other
relevant models used by market participants. These valuation techniques use both observable
and unobservable market inputs, which are not considered to be significant (Fair value hierarchy
level 2).
• Cross currency interest rate swaps and interest rate swap contracts is determined by reference to
market values for similar instruments (Fair value hierarchy level 2).
The effective portion of the gain or loss on the hedging instrument is recognised directly in equity,
while the ineffective portion is recognised in the Consolidated Statement of Comprehensive Income.
Amounts taken to equity are transferred to the Consolidated Statement of Comprehensive Income
when the hedge transaction affects the Consolidated Statement of Comprehensive Income, such
as when hedged income or expenses are recognised or when a forecast sale or purchase occurs.
When the hedged item is the cost of a non-financial asset or liability, the amounts taken to equity
are transferred to the initial carrying amount of the non-financial asset or liability.
If the forecast transaction is no longer expected to occur, amounts previously recognised in equity
are transferred to the Consolidated Statement of Comprehensive Income. If the hedging instrument
expires or is sold, terminated or exercised without replacement or rollover, or if its designation as
a hedge is revoked, amounts previously recognised in equity remain in equity until the forecast
transaction occurs. If the related transaction to which the hedging instrument relates is not
expected to occur, the amount is taken to the Consolidated Statement of Comprehensive Income.
Financial Report
Notes to the Financial Statements
4.4 Financial instruments (continued)
Effect on financial position and performance — hedging instruments
The impact of each hedged instrument and hedged item on the Consolidated Statement of Financial Position
of the Group is as follows:
$’000
Year ended 30 June 2021
Foreign exchange forward contracts(6) (7)
Cross currency swaps(6)
Interest rate swaps(6)
Year ended 30 June 2020
Foreign exchange forward contracts(6) (7)
Resin forward contracts(6)
Cross currency swaps(6)
Interest rate swaps(6)
Hedged
item
Notional
amount
Carrying
amount
Asset/
(Liability)
Change in
fair value(5)
Cash flow
hedge
reserve
Committed
purchases
FX
component
of debt
Floating
component
of debt
Committed
purchases
Committed
purchases
FX
component
of debt
Floating
component
of debt
82,570
1,715(1)
(271)(3)
(2,783)
273
46,549
(4,147)(2)
(4,961)
(286)
246,542
(4,172)(4)
4,285
(2,921)
79,746
74(1)
(4,301)(3)
(4,020)
(679)
234
(12)(3)
(12)
50,991
814(2)
814
-
77
246,716
(8,457)(4)
(2,387)
(5,944)
(1) The carrying amount is included in Other current financial assets in the Consolidated Statement of Financial
Position.
(2) The carrying amount is included in Other non-current financial liabilities in the Consolidated Statement of
Financial Position. The carrying amount recognised is the fair value of the cross currency swap, which is used
to hedge the USD loan. The impact from movements in foreign currency rates was $3.7million. This amount
fully offsets the translation of the USD loan.
(3) The carrying amount is included in Other current financial liabilities in the Consolidated Statement of
Financial Position.
(4) The carrying amount is included in Other non-current financial liabilities in the Consolidated Statement of
Financial Position.
(5) The change in fair value represents the difference between the current and previous period carrying amount
of hedge assets and hedge liabilities. The Group notes no ineffectiveness for the hedges undertaken.
(6) The fair value measurement of the hedged instruments represent level 2 of the fair value hierarchy.
(7) A gain of $1.1million (2020: $3.3million loss) is included in Other (losses)/gains in the consolidated statement
of comprehensive income.
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Notes to the Financial Statements
Financial Report
Notes to the Financial Statements
4.4 Financial instruments (continued)
4.4 Financial instruments (continued)
Effect on financial position and performance — hedging instruments (continued)
The effect of cash flow hedge noted in Other (losses)/gains line item in the Consolidated Statement of
Comprehensive Income is as follows:
$’000
Year ended 30 June 2021
Committed purchases
Floating component of debt
Cross currency swap
Resin forward contracts
Year ended 30 June 2020
Committed purchases
Floating component of debt
Cross currency swap
Floating component of debt
Total hedging gain/(loss)
recognised in OCI
Amount reclassified from
OCI to profit or loss
273
(2,921)
(286)
-
(679)
(5,944)
77
-
1,054
-
-
-
(3,265)
-
-
(12)
The impact of hedging on cash flow hedge reserve contained within the other comprehensive income/
(loss) is as follows:
$’000
Opening balance of cash flow hedge reserve
Effective portion of changes in fair value arising from:
- Foreign exchange forward contracts
-
Interest rate swaps
- Cross currency swap
Reversal of prior year cash flow hedge reserve
Tax effect
Closing balance of cash flow hedge reserve
2021
2020
(6,777)
(4,580)
273
(679)
(2,921)
(5,944)
(286)
6,777
238
(3,172)
77
4,580
(231)
(6,777)
How Pact accounts for foreign currency transactions
Transactions in foreign currencies are initially recorded in the functional currency of the individual entity
by applying the exchange rates ruling at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies are retranslated at the rate of exchange prevailing at reporting date.
Non-monetary items that are measured at:
• Historical cost in a foreign currency are translated using the exchange rate as at the date of the initial
transaction.
• Fair value in a foreign currency are translated using the exchange rates at the date when the fair value
was determined.
As at the reporting date the assets and liabilities of the controlled entities with non-Australian dollar
functional currencies are translated into the presentation currency of Pact at the rate of exchange at the
reporting date and their statements of comprehensive income are translated at the weighted average
exchange rate for the year (where appropriate).
The exchange rate differences arising on the translation to presentation currency are taken directly
to the foreign currency translation reserve, in equity. On disposal of a foreign entity, the deferred
cumulative amount recognised in equity relating to that particular foreign operation is recognised in the
Consolidated Statement of Comprehensive Income.
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Notes to the Financial Statements
Section 5 — Remunerating Our People
This section provides financial insight into employee reward and recognition designed to attract,
retain, reward and motivate high performing individuals so as to achieve the objectives of the
company, in alignment with the interests of the Group and its shareholders.
This section should be read in conjunction with the Remuneration Report, contained within
the Directors' Report, which provides specific details on the setting of remuneration for Key
Management Personnel.
5.1 Defined benefit plans
The Group has defined benefit plans in the following five entities:
• Pact Closure Systems (India) Private Ltd
• Pact Closure Systems (Philippines), Inc
• Pact Group Closure Systems Korea Ltd
• Plastop Asia Inc
• PT Plastop Indonesia Manufacturing
Under the Group’s Defined Benefit Plans, the amount of pension benefit that an employee will receive on
retirement is defined by reference to the employee’s length of service and final salary. The legal obligation
for any benefits remains with the Group, even if plan assets for funding the Defined Benefit Plan have
been set aside. Plan assets may include assets specifically designated to a long-term benefit fund as well
as qualifying insurance policies.
The liability recognised in the statement of financial position for Defined Benefit Plans is the present value
of the Defined Benefit Obligation (DBO) at the reporting date less the fair value of plan assets.
Management uses independent actuaries to estimate the DBO annually. Estimates reflect standard rates
of inflation, salary growth and mortality in those countries.
Re-measurement gains and losses arising from experience adjustments and changes in actuarial
assumptions are recognised directly in other comprehensive income. They are included as a separate
component of equity in the statement of financial position and in the statement of changes in equity. Net
interest expense on the net defined benefit liability is included in finance costs.
Financial Report
Notes to the Financial Statements
5.1 Defined benefit plans (continued)
Movement in net defined benefit liability/(asset)
The following table shows a reconciliation of the movement in the net defined benefit liability/(asset) and its
components for each entity:
$’000
Present value of
the defined benefit
obligation
Discount Rate
Salary Rate
At 1 July 2020
Current service cost
Net interest cost
Actuarial (gains)/losses:
Changes in financial
assumptions
Changes in experience
assumptions
Changes in demographic
assumptions
Benefits paid
Foreign exchange
translation movements
Present value of defined
benefit obligation at 30
June 2021
Pact Closure
Systems
(India)
Private Ltd (1)
Pact Closure
Systems
(Philippines)
Inc
Pact Group
Closure
Systems
Korea Ltd
Plastop
Asia Inc
PT Plastop
Indonesia
Manufacturing
Total
7.80%
12.0%
5.11%
5.0%
2.5%
3.0%
4.67%
3.5%
7.5%
5.0%
106
22
9
358
43
17
983
299
32
3
(64)
(174)
(14)
-
(2)
(7)
6
-
-
(20)
(74)
(4)
(36)
(18)
260
44
10
(41)
(27)
-
-
237
1,944
-
18
408
86
34
(242)
5
-
-
(104)
(4)
(38)
(12)
(29)
(86)
117
340
1,008
234
265
1,964
(1) Defined benefit obligations for CSI India comprises of Gratuity liability and Leave encashment liability.
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5.1 Defined benefit plans (continued)
The following table shows a reconciliation of the movement in the net defined benefit liability/(asset) and
its components for each entity.
$’000
Present value of
the defined benefit
obligation
Discount Rate
Salary Rate
At 1 July 2019
Current service cost
Net interest cost
Actuarial (gains)/losses:
Changes in financial
assumptions
Changes in experience
assumptions
Changes in demographic
assumptions
Benefits paid
Employer contributions
Transfer from provisions
Foreign exchange
translation movements
Present value of defined
benefit obligation at 30
June 2020
Pact Closure
Systems
(India)
Private Ltd (1)
Pact Closure
Systems
(Philippines)
Inc
Pact Group
Closure
Systems
Korea Ltd
Plastop
Asia Inc
PT Plastop
Indonesia
Manufacturing
Total
7.90%
12.0%
5.12%
6.0%
2.6%
4.5%
4.29%
4.0%
8.75%
5.0%
97
32
7
(2)
11
-
(2)
34
-
250
33
16
43
(11)
-
-
-
-
747
273
32
101
23
(28)
(182)
-
-
178
41
11
20
(5)
-
-
-
-
-
1,272
54
11
433
77
(15)
147
6
-
-
-
182
24
(28)
(184)
34
182
(71)
27
17
15
(1)
(13)
106
358
983
260
237
1,944
(1) Defined benefit obligations for CSI India comprises of Gratuity liability and Leave encashment liability.
Financial Report
Notes to the Financial Statements
5.1 Defined benefit plans (continued)
Measurement assumptions
Pact Closure Systems (India) Private Ltd
The discount rate assumption is based upon the market yields available on government bonds at the
accounting date with a term that matches that of the liabilities.
The salary rate assumption takes into account the inflation seniority, promotion and other relevant factors.
Pact Closure Systems (Philippines), Inc
The discount rate assumption is based on the theoretical spot yield curve calculated from the Bankers
Association of the Philippines (BAP) benchmark reference curve for the government securities market by
stripping the coupons from government bonds to create virtual zero-coupon bonds.
The salary rate assumption is based on the actual salary increment during the financial year.
Pact Group Closure Systems Korea Ltd
The discount rate assumption is based on yields available on high quality AA-corporate bonds.
The salary rate assumption is based on long-term expectations of salary increases for the employees within
the plan.
Plastop Asia Inc
The discount rate assumption is based on approximated zero-coupon yield of government bonds with
remaining period to maturity approximating the estimated average duration of benefit payment, as published
by the Philippine Dealing Exchange.
The salary rate assumption is based on the prevailing inflation rate and company policy.
PT Plastop Indonesia Manufacturing
The discount rate assumption is based on market yields at the end of the reporting period based on high
quality corporate bonds. The spot price used is released by Indonesia Bond Pricing Agency.
The salary rate assumption is based on the prevailing inflation rate and company policy.
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Financial Report
Notes to the Financial Statements
5.1 Defined benefit plans (continued)
Reconciliation of DBO and Fair Value of Plan Assets (continued)
The following table shows a reconciliation of the DBO and the fair value of plan assets that comprises the
net defined benefit liability/(asset) for each entity:
Year ended
30 June 2021
$’000
Defined Benefit
Obligation
Fair value of plan
assets
Present value of
net defined benefit
obligation at end of
the year
Year ended
30 June 2020
$’000
Defined Benefit
Obligation
Fair value of plan
assets
Present value of
net defined benefit
obligation at end of
the year
Pact Closure
Systems
(India)
Private Ltd (1)
Pact Closure
Systems
(Philippines)
Inc
Pact Group
Closure
Systems
Korea Ltd(3)
Plastop
Asia
Inc(2)
PT Plastop
Indonesia
Manufacturing(2)
Total
183
(66)
340
1,606
234
265
2,628
-
(598)
-
-
(664)
117
340
1,008
234
265
1,964
174
(68)
358
1,590
260
237
2,619
-
(607)
-
-
(675)
106
358
983
260
237
1,944
(1) The plan assets for Pact Closure Systems (India) Private Ltd relating to the gratuity liability comprises
of investments in 100% insurance policies.
(2) The plan assets for Pact Closure Systems (Philippines), Inc and Plastop Asia Inc and PT Plastop
Indonesia Manufacturing are held in the companies' own bank accounts.
(3) The plan assets for Pact Group Closure Systems Korea Ltd comprises of investments in 100% fixed
interest securities.
Financial Report
Notes to the Financial Statements
5.1 Defined benefit plans (continued)
Sensitivity analysis
The present value of the DBO is based on the assumptions detailed on page 107. Changes at the reporting date
to one of the assumptions, holding other assumptions constant, would have affected the DBO by the amounts
shown below:
$’000
Discount rate
Increase by 1 percentage point
Reduction by 1 percentage point
Salary increase rate
Increase by 1 percentage point
2021
(235)
275
264
2020
(260)
305
294
Reduction by 1 percentage point
(233)
(256)
Key estimates and judgements — Actuarial assessments
In accordance with AASB 119: Employee Benefits, defined benefit obligations are recognised to cover
obligations arising from current and future pension entitlements of active and (after the vesting
period has expired) former employees of the Group. For each geographic location, the discount rate
used to calculate the defined benefit obligations at each reporting date is determined on the basis of
current capital market data and long-term assumptions of future salary increases. These assumptions
vary depending on the economic conditions affecting the currency in which benefit obligations are
denominated and in which fund assets are invested, as well as capital market expectations. Benefit
obligations are calculated on the basis of current biometric probabilities as determined in accordance
with actuarial principles. The calculations also include assumptions about future employee turnover
based on employee age and years of service, probability of retirement and mortality rate.
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Financial Report
Notes to the Financial Statements
Financial Report
Notes to the Financial Statements
5.2 Employee benefits expenses and provisions
The Group’s employee benefits expenses for the year ended 30 June were as follows:
5.3 Share-based payments
Long term incentive plan (LTIP)
$’000
Wages and salaries
Defined contribution superannuation expense
Other employee benefits expense
Share-based payments expense
Total employee benefits expense
The current employee benefits provisions as at 30 June comprise of the following:
Annual leave
Long service leave
Total current provisions
2021
2020
393,273
396,029
19,599
23,515
1,692
19,614
25,413
610
438,079
441,666
24,123
17,493
21,465
17,173
41,616
38,638
The Group’s non-current employee benefits provisions of $8.9 million relate to long service leave
entitlements of $6.9 million (2020: $6.2 million), and a defined benefit net liability of $2.0 million
(2020: $1.9 million).
How Pact accounts for employee benefits
Provision is made for employee benefits accumulated as a result of employees rendering services
up to the reporting date. These benefits include wages and salaries, annual leave and long service
leave.
Benefits expected to be settled within 12 months of the reporting date are classified as current and
are measured at their nominal amounts based on remuneration rates which are expected to be paid
when the liability is settled.
The liability for long service leave is recognised and measured as the present value of expected
future payments to be made in respect of services provided by employees up to the reporting date
using the projected unit credit method. Under this method consideration is given to expected future
wage and salary levels, experience of employee departures, and periods of service. Expected future
payments are discounted using market yields at the reporting date on national government bonds
(except for Australia where high quality corporate bond rates are used in accordance with the
standards) with terms to maturity and currencies that match, as closely as possible, the estimated
future cash outflows.
Under the 2021 LTIP scheme 497,967 performance rights were granted to the CEO (approved by resolution at
the Annual General Meeting on 18 November 2020), and 736,273 performance rights were granted to senior
executives. These performance rights have performance hurdles and vesting conditions consistent with those
outlined in the 2021 Remuneration Report. The rights were independently valued to establish the fair value
in accordance with AASB 2: Share-based Payments. The fair value of each right at the valuation date of 18
November 2020 is $1.72.
The key assumptions in the independent valuation in relation to the 2021 LTIP were as follows:
Share price at valuation date
Annualised volatility
Annual dividend yield
Risk free rate
Expected life of performance right
Model used
$2.64
35.0%
3.2%
0.2%
36 months
Monte Carlo Simulation Model
In FY21 Pact introduced an employee share purchase scheme (myPact). The scheme provides an opportunity
for employees to acquire shares in Pact, aligning the financial interests of employees with the long-term growth
of the Company. Participation in the scheme is voluntary.
Under the Plan, all participants receive an allocation of shares equal in value to the chosen participation
amount. For each share allocated, the participant has the right to acquire one ordinary share that will
automatically exercise on the conversion date in accordance with the terms of the Plan. For some participants
Pact contributes 25% and the employee contributes 75% via salary sacrifice arrangements. The Pact
contribution has been recognised as a share-based payment expense in the current period.
Total share-based payments expense recognised in the current period was $1,692,000 (2020: $610,000).
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Financial Report
Notes to the Financial Statements
5.4 Key management personnel
Compensation of Key Management Personnel (KMP) of the Group
The amounts disclosed in the table below are the amounts recognised as an expense during the year
relating to KMP:
$’000
Short-term employee benefits
Post-employment benefits
Long-term employee benefits
Share-based payments expense
Termination payments
Total compensation
2021
3,971
67
11
522
400
4,971
2020
3,639
73
66
328
-
4,106
The following table provides the total amount of transactions with related parties for the year ended 30
June 2021:
$’000
Related parties — Directors'
interests(1)
Sales
Purchases
Other
expenses
Net amounts
receivable
2021
10,940
3,712
5,658
2020
13,362
7,354
6,317
632
558
(1) Related parties — Directors' interests include the following entities: Pro-Pac Packaging Limited,
Centralbridge Pty Ltd (as trustee for the Centralbridge Unit Trust), Centralbridge Two Pty Ltd,
Centralbridge (NZ) Limited, Albury Property Holdings Pty Ltd, Green’s General Foods Pty Ltd, Remedy
Kombucha Pty Ltd, Gem-Care Products Pty Ltd and P’Auer Pty Ltd (until November 2019).
Sales to related parties
The Group has sales of $10.9 million (2020: $13.4 million) to other related parties including Green’s General
Foods Pty Ltd, Remedy Kombucha Pty Ltd, Gem-Care Products Pty Ltd and P’Auer Pty Ltd until November
2019 in the prior year. Sales are for packaging and contract manufacturing services.
Pro-Pac Packaging Limited (Pro-Pac)
Pro-Pac, an entity for which Mr Raphael Geminder owns 51.6% (2020: 49.7%), is an exclusive supplier of
certain raw materials such as flexible film packaging, flexible plastic bags and tapes to Pact. Pact has
a supply agreement with Pro-pac that expires 31 December 2021. The total value of purchases by Pact
under this arrangement is approximately $3.7 million (2020: $4.2 million). The supply arrangement is at
arm’s length. Mr Jonathan Ling is also an Independent Non-Executive Director and Chairman of Pro Pac.
Property leases with related parties
The Group leased 11 properties (nine in Australia and two in New Zealand) from Centralbridge Pty Ltd (as
trustee for the Centralbridge Unit Trust), Centralbridge Two Pty Ltd, Centralbridge (NZ) Limited and Albury
Property Holdings Pty Ltd (“Centralbridge Entities”), which are each controlled by entities associated
with Mr Raphael Geminder and are therefore related parties of the Group (“Centralbridge Leases”). The
aggregate annual rent payable by Pact under the Centralbridge Leases for the period ended 30 June 2021
was $5.7 million (June 2020: $6.2 million). The rent payable under these leases was determined based on
independent valuations and market conditions at the time the leases were entered.
Terms and conditions of transactions with related parties
As detailed above, all transactions with related parties are made at arm’s length and on commercial terms.
There have been no guarantees provided or received for any related party receivables or payables.
Financial Report
Notes to the Financial Statements
Section 6 — Other Disclosures
This section includes additional financial information that is required by the accounting standards and
the Corporations Act 2001.
6.1 Basis of preparation
Basis of preparation and compliance
This Financial Report:
• Comprises the financial statements of Pact Group Holdings Ltd, being the ultimate parent entity, and its
controlled entities as specified in Note 3.2.
• Is a general purpose Financial Report.
• Has been prepared in accordance and complies with the requirements of the Corporations Act 2001,
Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting
Standards Board.
• Complies with International Financial Reporting Standards (IFRS) and Interpretations as issued by the
International Accounting Standards Board.
• Has been prepared on a historical cost basis except for derivative financial instruments, which are measured
at fair value.
• Has revenues, expenses and assets recognised net of GST except where the GST incurred on a purchase of
goods and services is not recoverable from the taxation authority, in which case GST is recognised as part
of the acquisition of the asset or as part of the expense item to which it relates. The net amount of GST
recoverable from or payable to the taxation authority is included as part of receivables or payables in the
Consolidated Statement of Financial Position.
• Has research and development expenses of $511,000 (2020: $415,000).
• Is presented in Australian dollars with all values rounded to the nearest $1,000, unless otherwise stated,
in accordance with the ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191
dated 1 April 2016.
• Has all intercompany balances, transactions, income and expenses and profit and losses resulting from intra-
group transactions eliminated in full.
The financial statements of the subsidiaries are prepared for the same reporting period as the Company, using
consistent accounting policies. The Group will adopt the new and amended standards and interpretations that
are issued, but not yet effective, at the date they become effective. The Group's results and disclosures will not
be materially impacted by these standards.
Comparatives
Comparative figures can be adjusted to conform to changes in presentation for the current financial period
where required by accounting standards or as a result of changes in accounting policy.
Where necessary, comparatives have been reclassified and repositioned for consistency with current period
disclosure. No material reclassifications have been made to prior period disclosures.
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Financial Report
Notes to the Financial Statements
Financial Report
Notes to the Financial Statements
6.2 Other (losses)/gains
6.3 Pact Group Holdings Ltd — Parent entity financial statements summary
The amounts disclosed in the table below are the amounts recognised in the Statement of
Comprehensive Income:
$’000
Underlying adjustments
Transaction costs
Restructuring costs
Losses arising from factory fire
Insurance settlement for events in prior periods
Profit on sale of properties
Net gain on lease modification
Reversal of contingent consideration obligation
Finalisation of acquisition consideration
Asset write downs
2021
2020
(1,743)
(6,196)
(3,983)
1,787
4,408
-
-
-
-
(4,034)
(4,790)
-
-
-
4,544
30,000
(7,172)
(218)
Total underlying adjustments (excluding impairment expenses) before tax
(5,727)
18,330
Other (losses)/gains
Unrealised losses on revaluation of foreign exchange forward contracts
(1,538)
(3,083)
Loss on sale of property, plant and equipment
Realised net foreign exchange gains/(losses)
Total other losses
(261)
587
(883)
99
(1,212)
(3,867)
Total (losses)/gains before tax
(6,939)
14,463
$’000
Current assets
Total assets
Net assets
Issued capital
Reserves
Retained earnings
Profit reserve
Total equity
Profit of the Parent entity
Total comprehensive income of the Parent entity
2021
107,368
2020
8,895
1,778,826
1,680,353
1,778,826
1,680,353
1,570,477
1,570,477
3,760
64
2,767
64
204,525
107,045
1,778,826
1,680,353
125,000
125,000
1
1
The above is a summary of the individual financial statements for Pact Group Holdings Ltd at 30 June. Pact
Group Holdings Ltd:
• is the ultimate parent of the Group;
• is a for-profit company limited by shares;
• is incorporated and domiciled in Australia;
• has its registered office at Building 3, 658 Church Street, Cremorne, Victoria, Australia; and
• is listed on the Australian Stock Exchange (ASX) and its shares are publicly traded.
How Pact accounted for information within parent entity financial statements
The financial information for the Company has been prepared on the same basis as the consolidated
financial statements, except as set out below:
• Investments in subsidiaries are accounted for at cost in the financial statements of Pact Group
Holdings Ltd.
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Notes to the Financial Statements
6.4 Deed of cross guarantee
$’000
Closed group consolidated income statement
Profit before income tax
Income tax expense
Net profit for the year
Retained earnings at beginning of the year
Net profit for the year
Dividends provided for
Adjustment on adoption of AASB 16
Retained earnings at end of the year
Closed group consolidated balance sheet
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Contract assets
Loans to related parties
Other current financial assets
Prepayments
Total current assets
Non-current assets
Prepayments
Property, plant and equipment
Investments in subsidiaries
Investments in associates and joint ventures
Intangible assets and goodwill
Other non-current financial assets
Deferred tax assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Loans from related parties
Current tax liability
Employee benefits provisions
Other provisions
Lease liabilities
Other current financial liabilities
Total current liabilities
Non-current liabilities
Employee benefits provisions
Other provisions
Interest bearing loans — bank borrowings
Lease liabilities
Other non-current financial liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings
Total equity
2021
2020
41,967
(12,376)
29,591
(230,202)
29,591
24,982
-
(175,629)
5,226
52,973
142,119
12,168
90,750
1,265
7,971
312,472
1,797
618,353
509,486
30,827
230,014
-
31,843
1,422,320
1,734,792
195,983
89,122
10,046
35,609
1,970
49,247
267
382,244
6,496
8,535
446,779
283,371
8,306
753,487
1,135,731
599,061
1,750,476
(975,786)
(175,629)
599,061
32,412
(3,503)
28,909
(280,571)
28,909
49,156
(27,696)
(230,202)
31,895
57,967
136,703
11,737
130,078
738
8,502
377,620
2,640
632,853
509,486
26,887
231,513
111
32,491
1,435,981
1,813,601
240,830
142,574
10,535
34,037
-
48,887
3,608
480,471
5,720
7,817
478,559
294,715
7,275
794,086
1,274,557
539,044
1,750,476
(981,230)
(230,202)
539,044
Financial Report
Notes to the Financial Statements
6.4 Deed of cross guarantee (continued)
Pact has a number of Australian entities that are party to a Deed of Cross Guarantee (Deed), representing the
‘Closed Group’, entered into in accordance with ASIC Class Order 98/1418. This Deed grants these entities relief
from preparing and lodging audited financial statements under the Corporations Act 2001.
The Closed Group is in a net current asset deficiency at balance date, however the Directors have assessed
that due to the Group’s access to undrawn facilities and forecast positive cash flows into the future they will be
able to pay their debts as and when they fall due (refer ‘Managing our liquidity risk’ at Note 4.3).
6.5 Auditors remuneration
During the year, the following fees were paid or payable for services provided by Pact Group Holdings Ltd’s
external auditors Ernst & Young:
$
Fees to Ernst & Young (Australia)
2021
2020
Fees for auditing the statutory financial report of the parent covering the Group
and auditing the statutory financial reports of any controlled entities
1,539,750
1,467,675
Fees for assurance services that are required by legislation to be provided by the
auditor
-
15,000
Fees for other assurance and agreed upon procedure services under other
legislation or contractual arrangements where there is discretion as to whether
the service is provided by the auditor or another firm
Fees for other services:
Tax compliance
Tax advisory
Remuneration services
Consulting fees
Total fees to Ernst & Young (Australia)
Fees to other overseas member firms of Ernst & Young
235,587
54,806
99,050
86,245
31,452
109,000
13,500
823,778
-
-
2,743,117
1,732,726
Fees for auditing the financial report of any controlled entities
429,059
539,213
Fees for other assurance and agreed upon procedure services under other
legislation or contractual arrangements where there is discretion as to whether
the service is provided by the auditor or another firm
-
7,876
Fees for other services:
Tax compliance
Tax advisory
Due diligence
Total fees to other overseas member firms of Ernst & Young
Total auditor’s remuneration
36,353
24,960
40,963
30,731
26,196
8,808
531,335
612,824
3,274,452
2,345,550
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Financial Report
Notes to the Financial Statements
Financial Report
Notes to the Financial Statements
6.6 Segment assets and segment liabilities
6.7 Geographic revenue
Segment assets
$’000
Packaging and Sustainability
Materials Handling and Pooling
Contract Manufacturing Services
Total Segment Assets
Reconciliation to total assets(1):
2021
2020
1,420,901
1,398,188
466,193
457,840
234,047
248,189
2,121,141
2,104,217
Receivables included in securitisation programs
(145,105)
(141,775)
Deferred tax assets
Inter-segment eliminations
Total assets
Segment liabilities
$’000
Packaging and Sustainability
Materials Handling and Pooling
Contract Manufacturing Services
Total Segment Liabilities
Reconciliation to total liabilities(1):
Interest-bearing liabilities
Income tax payable
Deferred tax liabilities
Inter-segment eliminations
Total liabilities
32,029
33,147
(322)
46
2,007,743
1,995,635
2021
2020
637,348
629,491
154,175
150,668
102,977
122,280
894,500
902,439
647,163
689,530
25,198
9,334
(322)
21,175
9,796
46
1,575,873
1,622,986
(1) These reconciling items are managed centrally and not allocated to reportable segments.
The table below shows revenue recognised in each geographic region that Pact operates in.
$’000
Australia
New Zealand
Asia
Total
6.8 Subsequent events
Plastics recycling joint ventures
2021
2020
1,179,013
1,270,816
299,996
287,329
282,563
251,013
1,761,572
1,809,158
On 26 July 2021 Pact and Cleanaway announced the intention to build a new plastics recycling facility at
Laverton, Victoria. Construction of the plant will start towards the end of the year and it is expected to be fully
operational by December 2022.
On 16 August 2021 Pact, Cleanaway, Asahi Beverages and Coca-Cola Europacific Partners (CCEP) announced
they have signed a Memorandum of Understanding to form a joint venture to build a new PET recycling facility.
A decision on the plant’s location is anticipated in the coming months and construction is expected to be
complete by 2023.
In the opinion of the Directors, other than the matters aforementioned, there have been no other material
matters or circumstances which have arisen between 30 June 2021 and the date of this report that have
significantly affected or may significantly affect the operations of the Group, the results of those operations
and the state of affairs of the Group in subsequent financial periods.
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Directors’ Declaration
In the Directors’ opinion:
1. The consolidated financial statements and notes, and the Remuneration Report included in the
Directors’ report are in accordance with the Corporations Act 2001 including:
(a) giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its
performance for the year ended on that date;
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(c) complying with International Financial Reporting Standards as disclosed in Note 6.1;
2. There are reasonable grounds to believe that the Company will be able to pay its debts as and when
they become due and payable; and
3. As at the date of this Declaration, there are reasonable grounds to believe that the members of the
Closed Group identified in Note 6.4 will be able to meet any obligations or liabilities to which they are or
may become subject by virtue of the Deed of Cross Guarantee described in Note 6.4.
This Declaration has been made after receiving the declarations required to be made to the Directors by
the Group Chief Executive Officer and Chief Financial Officer in accordance with section 295A of the
Corporations Act 2001 for the financial year ended 30 June 2021.
This Declaration is made in accordance with a resolution of the Directors.
Raphael Geminder
Chairman
Dated 18 August 2021
Sanjay Dayal
Managing Director and
Group Chief Executive Officer
Ernst & Young
8 Exhibition Street
Melbourne VIC 3000 Australia
GPO Box 67 Melbourne VIC 3001
Tel: +61 3 9288 8000
Fax: +61 3 8650 7777
ey.com/au
Independent Auditor's Report to the Members of Pact Group Holdings
Ltd
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Pact Group Holdings Ltd (the Company) and its subsidiaries
(collectively the Group), which comprises the Consolidated Statement of Financial Position as at
30 June 2021, the Consolidated Statement of Comprehensive Income, Consolidated Statement of
Changes in Equity and Consolidated Statement of Cash Flows for the year then ended, notes to the
financial statements, including a summary of significant accounting policies, and the Directors’
declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
a) giving a true and fair view of the consolidated financial position of the Group as at 30 June 2021
and of its consolidated financial performance for the year ended on that date; and
b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial report of the current year. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
a separate opinion on these matters. For each matter below, our description of how our audit
addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of
material misstatement of the financial report. The results of our audit procedures, including the
procedures performed to address the matters below, provide the basis for our audit opinion on the
accompanying financial report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
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Recoverability of goodwill and intangible assets
Information Other than the Financial Report and Auditor’s Report Thereon
Why significant
How our audit addressed the key audit matter
At 30 June 2021, the Group’s
consolidated statement of financial
position includes goodwill and intangible
assets of $459.4 million, representing
23% of total assets.
We examined the Group’s forecast cash flows used in the
impairment models, which underpin the Group’s
impairment assessment. We assessed the basis of
preparing those forecasts considering the historic
evidence supporting underlying assumptions.
The Group performs an annual
impairment test of its goodwill and
intangible assets.
The carrying value of goodwill and
intangible assets was a key audit matter
due to the significance of these balances
and the complexity of the impairment
assessment process due to the
judgements in estimating future market
conditions.
Judgements that are inherently
subjective and which were key areas of
focus of the audit include:
• Future cash flow assumptions;
• Discount rate and terminal growth
rate assumptions; and
• Sensitivities applied to the
impairment test.
The Group’s disclosures regarding
goodwill and intangible assets are
included in Note 2.2.
In considering future cash flow assumptions, we:
• Performed a comparison to the Group’s historic
trading performance
• Assessed the Group’s assumptions of the impact of
COVID-19 on cash flows
• Assessed the continuity of customer contracts
underlying revenue assumptions and where relevant,
obtained signed contracts for new customers.
In addition, we:
• Assessed the identification of the Cash Generating
Units where impairment testing is performed, taking
into consideration the levels at which Management
monitors business performance and the
interdependency of cash flows
• Assessed the other key assumptions such as discount
rates and growth rates with reference to publicly
available information on comparable companies in
the industry and markets in which the Group
operates
• Assessed the mathematical accuracy of the
impairment models and evaluated the Group’s
sensitivity calculations, including evaluating the
Group’s assessment of whether any reasonably
possible change in these key assumptions would
result in an impairment to goodwill or indefinite life
intangible assets
• We assessed the adequacy of disclosures in relation
to goodwill and intangible assets.
Where required, we involved our valuation specialists in
performing these procedures.
The Directors are responsible for the other information. The other information comprises the
information included in the Company’s 2021 Annual Report other than the financial report and our
auditor’s report thereon. We obtained the Directors’ Report that is to be included in the Annual
Report, prior to the date of this auditor’s report, and we expect to obtain the remaining sections of the
Annual Report after the date of this auditor’s report.
Our opinion on the financial report does not cover the other information and we do not and will not
express any form of assurance conclusion thereon, with the exception of the Remuneration Report
and our related assurance opinion.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information obtained prior to the date of this
auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The Directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the Directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the Directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters relating to going concern and using the
going concern basis of accounting unless the Directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
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As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
•
•
•
•
•
•
Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the Directors.
Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in
our auditor’s report to the related disclosures in the financial report or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up
to the date of our auditor’s report. However, future events or conditions may cause the Group
to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events
in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
We communicate with the Directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the Directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, actions
taken to eliminate threats or safeguards applied.
From the matters communicated to the Directors, we determine those matters that were of most
significance in the audit of the financial report of the current year and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
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Annual Report 2021A member firm of Ernst & Young Global LimitedLiability limited by a scheme approved under Professional Standards Legislation68Report on the Audit of the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in pages 42 to 56 of the Directors' report for the year ended 30 June 2021. In our opinion, the Remuneration Report of Pact Group Holdings Ltd for the year ended 30 June 2021, complies with section 300A of the Corporations Act 2001. Responsibilities The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. Ernst & Young David Shewring Wilfred Liew Partner Partner Melbourne 18 August 2021 OverviewPerformanceGovernanceShareholder Information
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Shareholder
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Packaging made
from 100% recycled
plastic
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Shareholder
Information
The shareholder information set out below is based on the information in the Pact Group Holdings Ltd
share register as at 30 June 2021.
Ordinary shares
Pact has on issue 343,993,595 fully paid ordinary shares.
Voting rights
The voting rights attaching to the only class of equity securities, being fully paid ordinary shares, are on
a show of hands every member present at a meeting in person or by proxy, attorney or representative has
one vote and, on a poll, has one vote for each fully paid ordinary share held.
Substantial shareholders
The following is a summary of the current substantial shareholders in the Company pursuant to notices
lodged with the ASX in accordance with section 671B of the Corporations Act as at 30 June 2021:
Name
Investors Mutual Ltd
Kin Group Pty Ltd1
1
Includes Kin Group Pty Ltd and Salvage Pty Ltd
Date of
interest
Number of
ordinary
shares
% of issued
capital
30/3/2021
22,519,891
6.55%
12/3/2020
152,252,175
44.26%
On-market buy-back
There is no current on-market buy-back in respect of the Company’s ordinary shares.
Distribution of securities held
Analysis of number of ordinary shareholders by size of holding
Range
1-1,000
1,001–5,000
5,001–10,000
10,001–100,000
100,001 and over
Total
Ordinary Shares
Number of
securities
2,043,091
12,062,348
9,004,478
20,264,270
300,619,408
Number of holders
4,199
4,646
1,204
885
48
10,982
343,993,595
There were 512 holders of less than a marketable parcel of ordinary shares (minimum of $500 which
is equivalent to 36,090 ordinary shares based on a market price of $4.00 at the close of trading on
31 August 2021).
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Top 20 largest shareholders
The names of the 20 largest quoted equity security holders as they appear on the Pact Group Holdings Ltd
share register are listed below:
Name
KIN GROUP PTY LTD
CITICORP NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
MANIPUR NOMINEES PTY LTD
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